2022 (8) TMI 1220

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....wed the Assessing Officer's identical reopening reasons that the assessees' taxable income liable to be assessed had escaped assessment. The same culminated in the impugned additions; involving varying sums, made in both these cases representing unexplained cash credits deposited in bank accounts. The CIT(A) has confirmed the Assessing Officer's action to this effect. 3. I have given my thoughtful consideration to vehement rival contentions and note that the tribunal's common order in very "Navale" ground involving ITA No.452/PUN/2019 and other cases involving identical reasons, has quashed the corresponding reopening(s) as follows :- "2. It is noticed first of all that the assessees' respective pleadings challenge correctness of the learned lower authorities action invoking section 148/147 mechanism by recording the following reasons : "In the case of M/s. Sinhagad Technical Education Society and Shri Maruti Navale Group, the search and seizure operation u/s.132 of the Income Tax Act, 1961 was conducted on 06/08/2013. The examination of assessee's savings Bank account statement of account number 7194 at Sangole Urban Co-operative Bank, Sangole, Dist - Solapur (SUCB, Sqangole)....

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....d the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 6. A plain look at the reasons for reopening the assessment, as produced before us, show that these reasons were recorded after the notice was served on 14th September 2009 as a mention about the fact of service of notice is set out in the recorded reasons itself. It is only elementary that the reasons are to be recorded before issuance of notice, and in the absence of any reasons for reopening having been recorded prior to reopening of assessment, the reassessment proceedings fail for this short reason alone. Hon'ble Bombay High Court, in the case of Prashant S. Joshi vs. ITO [(2010) 230 CTR (Bom) 232.] has observed: "The AO must have reasons to believe that such is the case (i.e. any income chargeable to tax has escaped assessment for a particular year) before he proceeds to issue notice under s. 147". In other words, when no reasons are recorded for reopening the assessment prior to issuance of notice, the reassessment proceedings must fail for that reason alone. However, for the reasons we will set out now, the conclusions will be no dif....

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....income escaping the assessments and the factors which indicate a legitimate suspicion about income escaping the assessment. The former category consists of the facts which, if established to be correct, will have a cause and effect relationship with the income escaping the assessment. The latter category consists of the facts, which, if established to be correct, could legitimately lead to further inquiries which may lead to detection of an income which has escaped assessment. There has to be some kind of a cause and effect relationship between reasons recorded and the income escaping assessment. While dealing with this aspect of the matter, it is useful to bear in mind the following observations made by Hon'ble Supreme Court in the case of ITO Vs Lakhmani Mewal Das [(1976) 103 ITR 437], " the reasons for the formation of the belief must have rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the ITO and the formation of this belief that there has been escapement of the income of the assessee from assessment in the particular year be....

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....al Representative has referred to a number of judicial precedents in support of her stand that even deposits in the bank account, as having come to the notice of the Assessing Officer through AIR, can be reason enough for holding the belief that income has escaped assessment. She has relied upon the decisions in the cases of CIT Vs Nova Promoters & Finlease Pvt Ltd [(2012)342 ITR 169] but then none of the questions before Hon'ble High Court had anything to do with reopening of assessment and this decision cannot, therefore, be taken as an authority on the legal issue which did not even come up for specific adjudication before Their Lordships. As for her reliance on Hon'ble Supreme Court's judgment in the case of Phool Chand Bajrang Lal Vs ITO [(1993) 203 ITR 456], that was case in which Their Lordships concluded that the AO "rightly initiated the reassessment proceedings on the basis of subsequent information, which was specific relevant and reliable, and after recording the reasons for formation of his own belief that in the original assessment proceedings, the assessee had not disclosed the material facts truly and fully and, therefore, income chargeable to tax had escaped assess....