TaxTMI 
TaxTMI 
2021 (11) TMI 496
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....t appreciating that assessment order was void, invalid, non est as AO had no evidence of not finding ITR in his computer system. 1.3. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in law and on facts in not appreciating that assessment order was void, invalid, non est as Delhi HC order in Sonia Gandhi vs ACIT DATED 10.09.2018 was not applicable in present case as Assessing Officer had no germane material to the issue and hence he was required to do further investigation upon receipt of survey report. 2. Challenge to non dispatch of s.143(2) notice. Tax Effect -Rs. 6579,313/-. 2.1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in law and on facts in not appreciating that assessment order was void, invalid, non est as the s.143(2) notice was never dispatched by Assessing Officer. 2.2. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in law and on facts in not appreciating that relevant mater was whether speed post receipt dated 25.07.2013 was forged or not and not forensic examination. 3. Challenge to disposal of objection to issuance of s.148 notice by non speaking....
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.... 6.4. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in law and on facts in not appreciating that Assessing Officer could not have proceeded with assessment without waiting for 30 days after passing order of rejection to objections made by assessee for s.148 issuance. 7. Challenge to assessment order framed on reasons other than those on which belief for escapement of income was formed. -Tax Effect- Rs. 65,79,313/- 7.1.On the facts and in the circumstances of the case, the Ld. CIT(A) erred in law and on facts in not appreciating that assessment order has not been framed on reasons forming belief of income escapement. 8. Challenge to no addition made on reasons on which belief for escapement of income was formed. -Tax Effect- Rs. 65,79,313/- 8.1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in law and on facts in not appreciating that no addition has been made on reasons forming belief of income escapement. 9. Challenge to year of taxation.-Tax Effect- Rs. 65,79,313/-. 9.1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in law and on facts in not ap....
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....tigation Wing, Delhi wherein it is stated that Shri M. M. Tiwary Prop. Of M/s M.M. Engineering Services has received Rs. 1.00 Crore in F.Y.2007-08 On going through the AST System it is found that assessee has not filed return for A.Y. 2008-09 and on examining 26AS, it is found that assessee has total receipt of Rs. 1,76,11,272/- during the year. Further, it is stated in the survey report that during the survey proceedings u/s 133A, it was found that Shri Madan Mohan Tiwary and his family members are maintaining 61 bank account in various banks and were having 39 debit cards. Therefore on the basis of the facts narrated above, I have reasons to believe that the income of the assessee amounting to Rs. 1,76,11,272/- has escaped assessment in the hands of the assessee for which the assessment of the assessee needs to be reopened Under Section 147/148 of the I.T. Act, 1961. Sd/- (M.L. Gupta) Income Tax Officer, Ward 22(1),New Delhi 4. A perusal of the above reasons recorded would show that the Assessing Officer had got information through Investigation Wing that the assessee has received Rs. 1.60 crore from M/s M. M. Engineering Services. Further, the As....
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....gineering Services has received Rs. 1.60 crore in F.Y. 2007-08. On going through the AST System it is found that assessee has not filed return for A.Y, 2008-09 and on examining 26AS it is found that assessee has total receipt of Rs. 1,76,11,272/- during the year. Further it is stated in the survey report that during the survey proceedings u/s 133A it was found that Shri Madan Mohan Tiwary and his family members are maintaining 61 bank accounts in various banks and were having 39 debit cards. Therefore, on the basis of the facts narrated above, I have reason to believe that the income of the assessee amounting to Rs. 1,76,11,272/- has escaped assessment in the hands of the assessee for which the assessment of the assessee needs to be reopened under section 147/148 of the I.T. Act, 1961." (5) In this connection, the Assessee hereby records its preliminary objections to the issue of notice u/s 148 and resort to the reassessment provisions incorporated u/s 147/148 of the Income-tax Act,. 1961 as follows;- (i) Before proceeding further it would be pertinent to reproduce the provisions relating to reassessment of escaped income as incorporated in S 147....
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....though * His total income or * The total income of any other person in respect of which he is assessable under this Act. * During the previous year exceeded the maximum amount which is not chargeable to income-tax. • where a return of income has been furnished by the assessee but no assessment has been done and it is noticed by the Assessing Officer that the assessee - * has understated the income, or * has claimed excessive loss, deduction, allowance or relief in the return; • where an assessment has been made, but * income chargeable to tax has been under assessed; or * income chargeable to tax has been assessed at too low a rate; or * income chargeable to tax has been made the subject of excessive relief under the Income-tax Act, 1961 or * excessive loss or depreciation allowance or any other allowance has been computed under the Act. (iv) Thus S. 147 of the Income-tax Act, 1961 authorises and permits ah Assessing Officer to (re)assess income chargeable to tax if he has reason to believe that the said income for any assessment year has escaped assessment. The expre....
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....restoring to reassessment the most noted requirement is that the Assessing Officer should have reason to believe that income chargeable for the relevant assessment year has escaped assessment........ makes it clear that while the Assessing officer in initiating re-assessment proceedings are very wide, at the same time they are not all-encompassing in nature. These powers are vitally controlled by the words 'reason to believe' employed by the section, The reasons for formation of belief for reopening an assessment must have a rational connection or relevant bearing on the formation of the belief. The existence or otherwise of such a belief, on the part of the Assessing Officer, is hot a mere question of limitation but the very foundation of his jurisdiction. These words import the presence of the following four essential ingredients. i. some material or materials and not mere fancy, imagination, speculation, suspicion; ii. a nexus between such material and the belief of escapement of income from assessment; iii. an application of mind by the Assessing Officer to such material; and iv. an inference based on reason drawn tentatively by the officer t....
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.... filed on 12-10-2010. As such there is no tangible evidence of escapement of income to warrant a revisit of the assessment and resorting to assessment proceedings u/s 147/148 of the Income Tax Act, 1961 and accordingly the basis of recording of "reason to believe" as to escapement of income does not exist in the instant case. (xi) In the light of these facts, it is clear that issue of notice u/s 148 is only based on a change of opinion and the reasons to believe for the conclusion as to escapement of income are only conjectural and tangible and concrete which are the touchstones against which any action has to be judged. Accordingly, it is humbly submitted that the action of issues of notice u/s 148 is void, ab-initio and deserves to be filed and not dealt with further at this stage itself, (xii) The above view is also reinforced with reference to the following judicial decisions:- • Reason to belief a salutary safeguard "Reason to believe" is a common feature in taxing statutes, it has been considered to be the most salutary safeguard on the exercise of power by the officer concerned. It is made of two words "reason" and "to believe". The wo....
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....ication of the mind to some substantial material by the officer acting with a sense of responsibility. It would also postulate that information in possession of the AD is not a mere canard or an unverified piece of gossip but information which, in the circumstances, may be regarded as fairly reliable. C Venkata Reddy vs ITO [(1967) 66 ITR 212 (Mysore)] • Tangible material The existence of tangible material for formation of opinion, is a prerequisite L.R Gupta vs Union of India and Others - [(1992) 194 ITR 32 (Del)] • Belief induced by reason and not mere belief In existence of reasons The expression 'reason to believe' predicates that the Assessing Officer holds the belief induced by the existence of reasons for holding such belief. It contemplates existence of. reasons on which the belief is founded, and not merely a belief in the existence of reasons ind...... belief. Calcutta Discount Go. Ltd. v. AO - [(1961) 41 ITR 191 (SC)] : Bhadarmal Hazarimal v. 1.T.0 - [(1975) 100 ITR 159 (Gau)] In view of the above, it is clear that there is no ground to conclude that income has escaped assess....
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....vide letter dated 25.07.2013 has raised the following objections regarding re-opening of assessment u/s 148 of the I.T. Act, 1961. 3.1 In the beginning the assessee has given brief of his case that the return was filed in response to notice u/s 142 vide reply dated 12.10.2010 and thereafter notice u/s 148 was issued. The assessee has requested reason recorded for recourse to the assessment provisions u/s 148 of I.T.Act, 1961. The assessee has reproduced the provisions relating to reassessment of escaped income as incorporated in S. 147 and mentioned the relevant parts in his letter. The assessee has also mentioned the frame work of Section 148 to 151 of the I.T.Act, 1961. 3.2. The assessee has further stated that in the instant case a review of the reasons recorded for resorting to assessment proceedings and consequent issue of notice u/s 148 would make it clear that basis for the formation of the opinion that income has escaped assessment is the survey carried out by Investigation Wing. In this connection it is submitted that there is no tangible evidence to lead to the conclusion that the Assessee's income has "escaped assessment" so as to call for reassessment ....
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....s stage itself. 4. From the assessee's objections the following main issues arises: a) The reason for re-opening reassessment u/s 148 of the I.T. Act, 1961 for the escapement of income, are erroneous and untenable and nothing but the mere belief without any authentic material and copy of documents. b) The information provided by the Directorate of Income Tax (Investigation) through survey on 23/04/2012 or others is not sufficient to re-open the assessment when the assessing officer does not have the valid proof in advance. c) On going through the AST System it is found that assessee has not filed return for A.Y. 2008-09 and on examining 26AS it is found that assessee has total receipt of Rs. 1,76,11,272/- is not sufficient reason relating to reassessment of escaped income. 5 Coming to the objection as mentioned above, it is brought to your notice that it has already been mentioned that the relevant assessment in your case was reopened on the basis of information/Survey report received from the Income Tax Officer, Ward-1(2), Hyderabad during camp at New Delhi vide his letter F.No. ITO-Ward- 1 (2)/Hyd/Survey Report/2012-13 dated 24.04.2012....
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.... had escaped assessment. It can be said to have reason to belief that income had escaped assessment. The expression cannot be read to mean that the AO should have finally ascertained the facts by legal evidence or conclusion. Reason to believe has been interpreted and the apex court held that what is required is reason to believe and not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable escapement of income is not the concern at that stage. II Calcutta Discount Co. Ltd Vs ITO 236 ITR 34 It was held that it was the duty of the assessee to disclose all facts which had a bearing on the question, what inferences should be drawn from the facts so disclosed was a matter to be examined by the ITO. The Court further held that the ITO could issue a notice for reopening the assessment if he had reason to believe that the income, profit for gains has been under assessed and such under assessment was due to non disclosure of material facts by the assessee. The adequacy or otherwise of the grounds of such belief was not open to investigation by the Courts. III C....
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....chers of expenditure. 11. This may also be treated as notice u/s 142(1) of income tax act 1961. Compliance to this notice is to made before the undersigned on or before 06.01.2014 at 11:30A.M. either in person or through an authorized representative. Failure to compliance, will be treated as you have nothing to submit/explain against as above and the matter be disposed off on the merits and facts available on record." 6. A perusal of the above decision of the Assessing Officer would show that the Assessing Officer did not deal with objection of the assessee that assessee had duly filed his return of income and further that that the entire amount of receipt noted by the Assessing Officer from Form No.26AS was not income of the assessee rather the same was contractual receipt out of which the assessee has returned the taxable income in the Income Tax return. The assessee had contended that information on the basis of which, the Assessing Officer had reopened the assessment was wrong and that the true facts were brought to the knowledge of the Assessing Officer. However, the Assessing Officer totally ignored the above factual position and proceeded to frame the re-assessme....