TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 140
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....been made, furnished various evidences in support of its claim. However, the learned CIT(A) rejected the assessee's appeal both on legal grounds as well on merits and confirmed the assessment order as such. 4. The learned CIT(A) has sustained re-opening on the ground observing as under: "The appellant has contended before me that the reasons recorded by the A.O have been recorded by him without application of mind. I am not in agreement with this contention because in the reason itself, the AO has mentioned that he has considered the reply of the appellant regarding the investment in purchase of two immovable properties and found the reply unsatisfactory. With due respect to the judicial precedent cited by him, I am of the opinion that the appellant's case is materially different and hence ground no. 1 & 2 are dismissed." 5. Being aggrieved, assessee has come in appeal raising the following grounds: 1. "BECAUSE, upon due consideration of facts and in the overall circumstances of the case 'appellant' denies its liability to be assessed in terms of Notice dated 26.03.2015 said to be issued under section 148 of the 'Act'. 2. BECAUSE, while confirming the reopening in ....
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....justice and therefore, the additions made deserves to be quashed. 8. BECAUSE, the assessment order to the extent making addition is bad in law and against the facts of the case. 9. BECAUSE, assessee denies its liability against Interest charged under section 234A based on incorrect assumption of facts and Interest under section 234B and 234C is incorrectly charged." 6. It was submitted by the assessee that before recording reasons to believe a Letter dated 21.11.2014 was issued to the assessee, (APB-320) in compliance to which reply dated 02.02.2014 was furnished by the assessee submitting that assessee is an Income Tax assessee on records of Department, allotted PAN, his accounts are duly audited and property under question stood sourced from sale of land made by his father (ABP - 321-372). Thus, according to the assessee source of acquisition was explained and since thereafter nothing was heard from the side of Assessing officer and this was followed by notice under section 148 of the Act. He further submitted that Ld. CIT(A) while sustaining re-assessment proceedings omitted to consider that Letter dated 21.11.2014 was a mere non statutory letter and as such the learned ....
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....re, if such grounds do not find favour with the view held by the Bench in such an eventually the case will be re-fixed for hearing in respect of other grounds raised in the memo of appeal to such a proposal the parties have readily agreed. The objection raised by the learned Sr. D.R regarding the admissibly and maintainability of ground challenging the validity of notice under section 148 of the Act, on the pretext that the assessee having raised no objection with regard to the proprietary of reasons recorded cannot at this stage of proceedings raise this issue. We hold that such an objection raised by the learned Sr. D.R cannot be approved under law. 9. As the objection raised by the assessee is a purely legal objection going to the root of the jurisdiction of the matter and in view of the Hon'ble Apex Court judgment in the case of 'NTPC Vs CIT', (1998) 229 ITR 383 (SC) (APB-9-12) it can be raised at this stage even for the first time. The Hon'ble Supreme Court while dealing with ground raised before the ITAT for the first time relating to legal issue has held that Tribunal should not be prevented from considering questions of law arising in assessment proceedings although not r....
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....(Appeals) and also before the Tribunal, challenging the jurisdiction of the Assessing Officer. The Hon'ble High Court thus, found the approach of the Tribunal to be not in accordance with the law and thus, held that the issue of validity of reassessment proceedings is a jurisdictional issue. It goes to the root of the matter. The Tribunal ought to have examined the ground no.3 raised in the assessee's appeal on its merit without being prejudiced by the facts that the reassessment order has been passed on the ex-parte basis in which the proceedings the assessee has not objected to the initiation of the reassessment. Accordingly, question no.1 is answered in favour of assessee and against the department. 13. The learned Sr. D.R placed heavy reliance to the Judgment of Hon'ble Delhi High Court 'CIT vs. Safetag International India Pvt. Ltd.', (supra). The perusal of the case reveals that it nowhere lays down any proposition of law for which the learned Sr. D.R has sought to rely upon it. In this case assessee did not ask for the reasons recorded, participated in the assessment proceedings and raised objection before the learned CIT(A) about the validity of notice under section 14....
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....e case of Parsuram Pottery Works Co. Ltd. vs. ITO 106 ITR 1. (S.C) The Hon'ble Court held that "It has been said that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating and realizing that price should familiarize themselves with the relevant provisions and become well-versed with the law on the subject. Any remission on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity." In this view of the matter and particularly following the Hon'ble Supreme Court in the case of Parsuram Pottery Works Co. Ltd (supra) request of the learned Sr. D.R for setting aside the case is rejected. 17. We are alive of the settled position in law that the question of Jurisdiction is not a matter of acquiescence. The propr....
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....urce of investment was sourced from sale of agriculture Land held and possessed by his Father. Therefore, vaguely stating that such reply was unsatisfactory, without mentioning as to how the same was unsatisfactory and in which material terms the reply was lacking only leads us to believe that re-assessment proceedings are initiated for the verification of source of investment. In such circumstances, at the first place as rightly relied upon by the learned A.R to the order passed by the Amritsar Bench in the case of Amrik Singh (Supra) wherein the Tribunal in identical circumstances quashed the assessment holding that: "The letter itself makes no mention of the provision under which it has been issued. So the provisions have to be examined to ascertain as to under which provision it was issued; As per section 133(6), the concerned income tax authority may require any person, inter alia, to furnish information in relation to such points or matters, as in their opinion would be useful for, or relevant to, any enquiry or proceeding under the Act; Section 133(6) corresponds to section 38, of the Income-tax Act, 1922. It was amended in 1995 and the words 'enquiry or' were ins....
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....s nothing on record to suggest that any such prior approval was obtained herein. The letter, per se, also does not make mention of any such approval. Hence, the power exercised by the Incometax Officer, without compliance with the second proviso to section 133(6), would tantamount to an illegal exercise of power; However, be that as it may, this is not detrimental to the cause of the revenue. In the present case, the Income-tax Officer did not merely ask for information from the assessee. This takes the case out of the ken of section 133(6).The letter of enquiry being illegal, it was not obligatory on the assessee to respond to the same." Hence, non-response by the assessee to the enquiry letter cannot be said to constitute material before the Assessing Officer which could lead him to form any belief of escapement of income. 21. This leaves us, with only with a part of the reasons recorded which pertains to fact of purchase of property, sources of which allegedly remained unexplained at the stage of enquiry proceedings. As submitted before learned CIT(A) and also before us that no re-assessment proceedings can be initiated for the purpose of verification of sources of investmen....
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....f the Income-tax Department, the Assessing Officer cannot believe that there was income which has escaped assessment" 24. The ITAT, Delhi Bench in the case of 'Anil Singhal Vs ITO',' in ITA No. 2044/Del/2017 vide order dated 04.10.2017 was called upon to examine the legality of action initiated under section 147 where 'reasons' recorded were, as reproduced in the ITAT order in para-2 were as under: "In this case as per information available with this office the assessee has purchased an immovable property for Rs. 1,15,00,000/- during F.Y 2007-08 relevant to A.Y 2008-09. To verify the source of investment in the property, letters dated 27.01.2015 & 06.02.2015 were issued to the assessee requesting therein to submit the copy of ITR of the relevant year filed by him. Further, Inspector of this ward has served the letter on the above assessee personally for fixing the date 10.03.2015 for compliance but on the date fixed assessee neither submitted the reply nor attended the office, which shows that the assessee is deliberately not furnishing the source of investment in respect of purchase of property. In view of the above facts, I have reasons to believe that the income c....
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....tisfaction that investment in property is income of current year and which has escaped assessment; that the reasons recorded in the case in hand are no reasons in the eye of law, being completely barren and bald in nature as it is not mentioned that in what material terms the reply is lacking in nature; that the reasons do not show any mental exercise having been done by him before arriving at the satisfaction for escapement of income and thus, the AO made his conclusions, leaving the reader to guess for the material on basis of which of belief of escapement is founded. The so called reasons instead of being reasons to believe are reasons to suspect and sought to extend the scope of enquiry from the stage where it was left vide enquiry letter. The investment need not necessarily come from the income. It may be out of income exempted from tax, past savings, loans, gifts, liquidation of investment or sale of another property etc., notice under section 148 cannot be issued for verification of information, but here the jurisdictional satisfaction is the essential requirement has to be shown that there has been reason to believe that there was income chargeable to tax. The reasons rec....