TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 336
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....unt therefore, in order to have consistency in our decision both the appeals are heard together. 3. For brief facts we take ITA No. 393/Ag/2018 as a lead case in the case of Smt. PremwatiSuman that an information was received that assessee had purchased a property for Rs. 50,00,000/- alongwith her son ShriRanjeetSuman on 27.12.2007 and also paid Rs. 7,53,700/-. Subsequently, notice under section 148 was issued on 26.03.2015 after recording reasons. In response to the notice no return of income was filed and evidences filed to explain the sources of availability of funds did not favour with the view held by the learned Assessing officer who framed assessment vide order dated 31.03.2016 passed under section 144/147 of the Act determining total income at Rs. 22,13,439/-. 4. Before the learnedCIT(A) assessee has raised grounds regarding validity of re-opening and also submitted that the addition on merits has wrongly been made. However, the learnedCIT(A) rejected the appeal both on legal ground as well on merits and confirmed the assessment order as such. 5. The learned CIT(A) has sustained re-opening on the ground that before issuing notice under section 148 due enquiries were m....
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....ection 148 of the Act to be held without jurisdiction and consequent assessment order passed in pursuance of such an invalid Notice to be held as void-ab-intio. WITHOUT PREJUDICE TO THE ABOVE 6. BECAUSE, while confirming addition the authorities below failed to appreciate that the amount as was deposited in the Bank Account of the 'appellant' represented Cash available with the assessee raised from Loan and Sale Proceeds of Agriculture produce in preceding years therefore, even on merits no addition can be made. 7. BECAUSE, while making the addition of Rs. 23,09,381/- the 'AO' failed to consider that 'appellant' being an Agriculturist, having no source of Income liable for Tax and therefore, the authorities below was factually and legally wrong while making and sustaining addition towards alleged 'Income from undisclosed sources'. 8. BECAUSE, in any case and in any view of the matter impugned additions/disallowances and impugned assessment order is bad in law, illegal, unjustified, contrary to facts and law based upon incorrect assumption of facts and further without allowing adequate opportunity of hearing in violation of principals of natural justice and therefore, the ....
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....perty for Rs. 57,53,700/- [Purchase cost Rs. 50,00,000+ stamp duty of Rs. 7,53,700/-] n 27.12.20017 (during F.Y. 2007-08) relating to A.Y. 2008-09. As per records of this office they have not filed any return of income. The details are as under: - Purchase cost Rs. 50,00,000/- Stamps purchased Rs. 7,53,700/- Total Rs. 57,53,700 Half share of Smt. PremwatiSuman Rs. 28,76,850/- In view of above, I have reason to believe that income to the tune of Rs. 28,76,850/- has escaped assessment. Dated: 25.03.2015 Sd/- Income tax Officer 1(3), Agra" 9. Per contra, the learned D.RShriWaseemArshad, at the outset objected to the submissions made by the learnedA.R and stated that since assessee had not challenged the validity of notice under section 148 of the Act before the authorities below therefore, it cannot be allowed to raise this objection at this belated stage and thereby taking the revenue by surprise. For this he placed reliance to Hon'ble Supreme Court Judgment in the case of GKN Driveshafts (India) Ltd. v. ITO (2002) 125 Taxman 963(S.C) and CIT vs. Safetag International India Pvt. Ltd. ITA No. 355, 412 of 2010 ( Delhi High Court) . He thereafter, submitted that....
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.... facts as found by lower authorities and having a bearing on tax liability of assessee. 12. In the case of Shri Abdul MajidVsCIT(2006) 153 Taxman 131 (All) the Hon'ble Allahabad High Court framed following question of Law for its consideration at the instance of appeal preferred by the assessee: "1. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT, was in law justified in rejecting the additional grounds challenging the validity of assessment order on the basis of illegal initiation of proceedings u/s 148 without complying the provision of Section 148 (2)" The Hon'ble High Court held that "Further, it has been held that the plea with regard to the jurisdiction of the Officer goes into the root of the matter, therefore, even if not raised at the first instance before the Assessing Authority, it can be raised before the Appellate Authority at a later stage. In this view of the matter, we are of the opinion that the Tribunal has erred in not allowing the additional ground challenging the validity of the assessment order on the basis of illegal initiations of the proceedings under Section 148 of the Act." 13. In the case of Km.Teena Gupta Vs. ....
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....ion before learned CIT(A) based upon such reasons challenging the validity of reassessment proceedings and learned CIT(A) shall decide this issue on merits after hearing the parties. From the reading of the Judgment it is not understood as to how reference to this case help the cause of the revenue in the case on hands. Therefore, the case is distinguishable on facts. 15. Further reliance on the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. v. ITO (2002) 125 Taxman 963 for the proposition that the Hon'ble Supreme Court has required that immediately after receipt of notice under section 148 of the Act assessee has to furnish return of income and seek reasons recorded and thereafter file objection . Thus, as per his submission since assessee did not file return of income in compliance to notice under section 148 of the Act and also has not filed objection he is precluded from challenging the validity of reasons at this belated stage. We are afraid to approve this submission too. In the case of GKN Driveshafts (India) Ltd. (supra) the Hon'ble Supreme Court has only provided step wise procedure and nowhere it has been held that if objections are not filed before l....
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....nd that no return was filed by the assessee. 19. However, from the perusal of reasons as recorded by the learned Assessing officer the so called un-satisfaction of the learned Assessing officer qua the reply furnished by the assessee is not evident. It has rightly been argued by the learned A.R that application of mind can be seen from the recorded reasons only and for testing the validity of the reasons recorded no reference can be made to any other material even if any other material is available on assessment records except which is referred in the reasons recorded. This argument has judicial approval of law, in view of settled position requiring that for adjudicating the proprietary of re-assessment proceedings it is the recorded reasons of the ITO, which can only be considered and looked into. Reference in this regard can be usefully made to the decision of Hon'ble Allahabad High Court in the case of JamunaLalKabra vs. ITO reported in (1968) 69 ITR 461 (All.) wherein the Hon'ble High Court has held that "subsequent reference to other material cannot justify reopening of assessment as assumption of jurisdiction to reopen the assessment can be examined only on the basis of mat....
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....ction of the Assessing officer by the learned CIT(A), which observation and opinion of the learned CIT(A) do not find mention in the reasons recorded by the Assessing officer and thus has to be excluded for the purpose of consideration of the proprietary of reasons recorded. 21. Now, as held above the validity of re-opening has to be tested only on the basis of reasons recorded. The first part of reasons recorded speaks only of a fact which is not under dispute that assessee alongwith her son had jointly purchased a property, deed of which was furnished by the assessee before the learned Additional CIT as admitted in Letter dated 19.01.2015 issued by him and from which the detail mentioned in first part of reasons recorded are imported. 22. The last part of reasons recorded mentions the fact that assesse had not filed return of income, which according to learned D.R was itself sufficient ground for issuing notice under section 148 of the Act as this is a case of deemed escapement in view of clause (a) of section 147 of the Act. 23. The learnedAR contended that such an argument as raised by learned Sr. D.R is in the teeth of judgment of Hon'ble Bombay High Court in the case of....
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.... invested in purchase of land situated at 150, Rafi Ahmad Kidwai Nagar Scheme (Eldeco Green), Gomti Nagar, Lucknow, in the assessment year 1999-2000, by ShriChunniLal, Assistant Regional Transport Officer, 18, Civil Lines, Faizabad. During the course of investigation no clear detail of the said investment amounting to Rs. 5,38,860/- could be told. Therefore, I have sufficient reason to believe that the sum of Rs. 5,38,860/- invested in the purchase of land by ShriChunniLal, Assistant Regional Transport Officer, 18, Civil Lines, Faizabad in assessment year 1999-2000, has escaped income-tax assessment. Since return of income for the said year has not been filed by' the assessee. Therefore, keeping in view Explanation 2(a) of section 147 of the Income-tax Act, notice under section 148 is being issued." 25.1 Based on the above reproduced 'Reasons' challenge was made by the assessee regarding the validity of re-opening. The ITAT while quashing Notice under section 148 held as under: "From the above provisions, it is clear that the Assessing Officer must have reason to believe that any income chargeable to tax has escaped assessment. However, it cannot be said that if there i....
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....e fact of investment in property is akin to cash deposits in saving bank account as both being Investments and are assessable under section 69 of the Act, and such fact alone cannot be a reason for escapement of income and to clothe the learned Assessing officer with jurisdiction to issue notice under section 148 of the Act. The distinction noted by the learned CIT (A) is unconvincing and without any basis merely to circumvent and overcome the binding force of the referred decisions. ITAT, Delhi in the case of BirBahadur Singh Sijwali vs. ITO(2015) 68 SOT 197 (Delhi -Trib) wherein it was held that: "8.Let us, in the light of this legal position, revert to the facts of the case before us. All that the reasons recorded for reopening indicate is that cash deposits aggregating to Rs. 10,24,100 have been made in the bank account of the assessee, but the mere fact that these deposits have been made in a bank account does not indicate that these deposits constitute an income which has escaped assessment. The reasons recorded for reopening the assessment do not make out a case that the assessee was engaged in some business and the income from such a business has not been returned by the....
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....sfaction that any income has escaped assessment and that the reasons recorded in the case in hands are no reasons in the eye of lawas being completely barren and bald in nature. The content of reasons does not revealthat the AO has done some exercise by way of any enquiry having been conducted by him before arriving at the satisfaction for escapement of income. Reasons are his conclusions, leaving the reader to guess for the material on basis of which the belief of escapement is founded. In fact, the aforesaid reasonsare instead of being reasons to believe are reasons to suspect. The investment need not necessarily come from the income. It might be out of income exempt 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 of the essential requirement has to be shown that there has to be reason to believe that there was income chargeable to tax. The reasons recorded by the learned Assessing officer should speak his mind and the basis for coming to conclusion that investment had been sourced from income, which should have been ....