Appeal Details
Counselvise Citation
10119914 RSA 2012
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-04-2012
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Next Hearing Date
23-04-2012
Assessment Year
2001-2002
Appeal Filed On
05-01-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS.47 TO 50/MUM/2012 (ASSESSMENT YEARS: 2000-01 TO 2001-2002 AND 2003-04 TO 2005-06) JAYESH P. DAMANI, HUF JAYESH P. DAMANI, HUF JAYESH P. DAMANI, HUF JAYESH P. DAMANI, HUF 44, VIJAY CHAMBERS, TRIBHUVANDAS ROAD, MUMBAI -400 007 ...... APPELLANT VS INCOME-TAX OFFICER WARD 16(1)(2), MUMBAI ..... RESPONDENT PAN: AAACH 6955 H ITA NOS.100 TO 102/MUM/2012 (ASSESSMENT YEARS: 2003-04, 2001-02 AND 2005-06) LILAM P. DAMANI, PRANLAL P. DAMANI, PRANLAL P. DAMANI, 44, VIJAY CHAMBERS, TRIBHUVANDAS ROAD, MUMBAI -400 007 ...... APPELLANT VS INCOME-TAX OFFICER WARD 16(1)(2), MUMBAI ..... RESPONDENT PAN: AEEPD 4492 F PAN: AABPD 7637 E ITA NOS.149 TO 150/MUM/2012 (ASSESSMENT YEARS: 2003-04 AND 2002-03) NITA A. DAMANI, NITA A. DAMANI, 44, VIJAY CHAMBERS, TRIBHUVANDAS ROAD, MUMBAI -400 007 ...... APPELLANT VS INCOME-TAX OFFICER WARD 16(1)(2), MUMBAI ..... RESPONDENT ITAS.47-50, 100-102 AND 149-150/M/2010 ITAS.185-186, 246-247 AND 268-269/M/2010 PRANLAL P. DAMANI & CLOSELY RELATED FOURTEEN OTHERS 2 PAN: AABPD 9763 C ITA NOS.185 TO 186/MUM/2012 (ASSESSMENT YEARS: 2003-04 AND 2005-06) PRITI J. DAMANI, PRITI J. DAMANI, 44, VIJAY CHAMBERS, TRIBHUVANDAS ROAD, MUMBAI -400 007 ...... APPELLANT VS INCOME-TAX OFFICER WARD 16(1)(2), MUMBAI ..... RESPONDENT PAN: AABPD 7632 A APPELLANT BY: SHRI M. SUBRAMANIAN RESPONDENT-REVENUE BY: S/SHRI PARASARTH NAIK & MURALI DATE OF HEARING: 23.04.2012 DATE OF PRONOUNCEMENT: 27.04.2012 ITA NOS.246 TO 247/MUM/2012 (ASSESSMENT YEARS: 2003-04 AND 2005-06) JAYESH J. DAMANI, JAYESH J. DAMANI, 44, VIJAY CHAMBERS, TRIBHUVANDAS ROAD, MUMBAI -400 007 ...... APPELLANT VS INCOME-TAX OFFICER WARD 16(1)(2), MUMBAI ..... RESPONDENT PAN: AABPD 7636 E ITA NOS.268 TO 269/MUM/2012 (ASSESSMENT YEARS: 2003-04 AND 2005-06) ALKESH P. DAMANI, HUF ALKESH P. DAMANI, 44, VIJAY CHAMBERS, TRIBHUVANDAS ROAD, MUMBAI -400 007 ...... APPELLANT VS INCOME-TAX OFFICER WARD 16(1)(2), MUMBAI ..... RESPONDENT ITAS.47-50, 100-102 AND 149-150/M/2010 ITAS.185-186, 246-247 AND 268-269/M/2010 PRANLAL P. DAMANI & CLOSELY RELATED FOURTEEN OTHERS 3 PAN: AACHA 5959 A PAN: AABPD 7498 Q APPELLANT BY: SHRI M. SUBRAMANIAN RESPONDENT BY: S/SHRI PARASARTH NAIK & MURALI DATE OF HEARING: 23.04.2012 DATE OF PRONOUNCEMENT: 27.04.2012 O R D E R R.S. PADVEKAR, JM : THIS BATH OF FIFTEEN APPEALS ARE FILED BY THE DIFFE RENT ASSESSES WHO ARE CLOSELY RELATED AND ALSO FAMILY MEMBERS. A LL THESE ASSESSES ARE REGULARLY ASSESSED TO TAX AND HAVE FILED THEIR RETURNS OF INCOME FOR THE RESPECTIVE ASSESSMENT YEARS. IN THE CASE OF AL L THESE ASSESSES THE A.O. ISSUED NOTICE U/S.148 BY INITIATING THE PROCEE DINGS U/S.147. IT IS PERTINENT TO NOTE HERE THAT IN NONE OF THESE CASES, EVEN THOUGH THE RETURN OF INCOMES WERE FILED BY THE ASSESSEES, THER E WAS NO SCRUTINY ASSESSMENT U/S.143(3) OF THE ACT. ALL THE ASSESSES HAVE CHALLENGED THE ACTION OF THE A.O. FOR INITIATING PROCEEDINGS U /S.147 AND ISSUANCE OF THE NOTICES U/S.148 BY TAKING FOLLOWING GROUNDS, WHICH ARE VERBATIM IN ALL THE APPEALS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT (A) ERRED IN DISMISSING THE AP PEAL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT (A) ERRED IN DISMISSING THE AP PEAL WITHOUT APPRECIATING FULLY AND PROPERLY THE FACTS O F THE CASE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT (A) ERRED IN UPHOLDING THE VAL IDITY OF THE PROCEEDINGS INITIATED BY ISSUANCE OF NOTICE U/S .148 OF THE I.T. ACT. 2. THE FACTS ARE COMMON IN ALL THESE APPEALS AND WH ICH ARE REVEALED FROM THE RECORD AS UNDER. THE ADDL. DIT ( INV.) UNIT-V, ITAS.47-50, 100-102 AND 149-150/M/2010 ITAS.185-186, 246-247 AND 268-269/M/2010 PRANLAL P. DAMANI & CLOSELY RELATED FOURTEEN OTHERS 4 MUMBAI SENT INFORMATION TO THE A.O. THAT ALL THESE ASSESSES HAVE CLAIMED TO HAVE RECEIVED ABOUT 27 GIFTS FROM DIFFER ENT NRIS IN THE F.YS. 1998-99 TO 2004-05, AGGREGATING ABOUT ` 30 LAKHS, RANGING FROM ` 50,000/- TO ` 3 LAKHS. IT APPEARS THAT THERE WAS SURVEY ACTION U/S.133A IN THE BUSINESS PREMISES OF M/S. STEPHEN O PTICAL INDUSTRIES, M/S. UNITY OPTICIANS AND M/S. OPTICO EN TERPRISES IN WHICH ALL THESE ASSESSES ARE PARTNERS. THE A.O. HA S GIVEN THE DETAILS OF THE GIFTS RECEIVED BY THESE ASSESSES IN THE ASSE SSMENT ORDERS, WHICH ARE AS UNDER: NAME AY-2000-01 AY 2001-02 AY-2002-03 AY-2003-04 AY -2004- 05 AY-2005-06 LILAMBEN DAMANI -- 1,00,000 -- 1,00,000 -- -- ALKESH DAMANI 1,00,000 -- -- 3,00,000 -- 1,00,000 NITA DAMANI 1,00,000 + 50,000 -- 1,00,000 50,000 -- -- JAYESH DAMANI -- 1,00,000 -- 1,00,000 -- 1,00,000 PRITI DAMANI -- 1,00,000 -- 50,000 -- 1,00,000 PRANLAL DAMANI 1,00,000 1,00,000 -- 3,00,000 -- 1,00,000 O.P.DAMANI HUF -- 1,50,000 -- -- -- -- ALKESH DAMANI HUF 1,00,000 -- -- 1,50,000 -- -- JAYESH P. DAMANI 80,000 50,000 -- 50,000 -- 1,00,000 3. THE A.O. HAS OBSERVED FROM SHRI PRANLAL DAMANI A ND SHRI ALKESH DAMANI HAVE CLAIMED TO HAVE PURCHASED 16,000 AND 21,000 SHARES RESPECTIVELY OF BETALAL GLOBAL SECURITIES LT D. IN BULK AND THOSE SHARES WERE SOLD BY VERY HIGH PRICES AND CLAIMED TH E LONG-TERM CAPITAL GAINS AND ALSO CLAIMED TO HAVE INVESTED IN THE PURC HASE OF THE FLATS AND EXEMPTION U/S.54F OF THE ACT IS CLAIMED. THOUG H THE A.O. HAS MADE THE OBSERVATION IN RESPECT OF PURCHASE OF THE SHARES AND SELLING THOSE SHARES FOR A PRICE NEARLY 22 TIMES OF THE SUM INVESTED BUT IN NONE OF THESE CASES THE A.O. HAD MADE ANY ADDITION ON THAT ISSUE. THE ONLY ADDITION MADE BY THE A.O. IN ALL THESE CAS ES IS IN RESPECT OF ITAS.47-50, 100-102 AND 149-150/M/2010 ITAS.185-186, 246-247 AND 268-269/M/2010 PRANLAL P. DAMANI & CLOSELY RELATED FOURTEEN OTHERS 5 THE GIFTS WHICH HAVE BEEN RECEIVED FROM THE FAMIL Y RELATIONS WHO ARE NRIS AS SHOWN IN THE ABOVE TABLE. 4. THE FIRST ISSUE FOR EXAMINATION IS WHETHER THE A .O. HAS LEGALLY ASSUMED THE JURISDICTION U/S.147 AND ISSUED THE NOT ICES U/S.148 OF THE ACT IN ALL THESE CASES. THE LD. COUNSEL FOR TH E ASSESSEES VEHEMENTLY ARGUES THAT AS PER THE REASONS RECORDED BY THE A.O. EVEN THERE IS NO WHISPER IN THE SAID REASONS THAT ANY IN COME HAS ESCAPED ASSESSMENT OR INCOME IS UNDERSTATED. HE SUBMITS T HAT THE A.O. HAS EXPRESSED HIS INTENTION TO VERIFY THE GENUINENESS O F ALL THESE GIFTS AS WELL AS THE LONG-TERM CAPITAL GAIN CLAIMED BY THE A SSESSEES ON THE SALE OF THE SHARES. HE SUBMITS THAT ALL THESE ASSESSEES ARE FAMILY MEMBERS SAVE: (I) ALKESH P. DAMANI, HUF (II) JAYESH P. DAMANI, HUF 5. HE SUBMITS THAT THE LAW IS WELL SETTLED THAT THE A.O. MUST HAS REASON TO BELIEVE AND THAT SHOULD REFLECT FROM THE REASONS RECORDED AND ONLY HIS INTENTION TO DO SOMETHING IS NOT SUFFI CIENT. HE RELIED ON THE FOLLOWING PRECEDENTS: (I) PRASHANT S. JOSHI VS. ITO -189 TAXMAN 1(BOM); (II) GERMAN REMEDY LTD. VS. DY.CIT -285 ITR 26 (BO M) 6. HE SUBMITS THAT THE TRIBUNAL HAS ALREADY CONSIDE RED THE LEGALITY OF THE NOTICES ISSUED UNDER SEC. 148 BY THE A.O. IN RESPECT OF TWO ASSESSES I.E. SHRI PRANLAL P. DAMANI AND SHRI ALKES H P. DAMANI. IN THOSE CASES, ON THE IDENTICAL SET OF FACTS AND ON T HE IDENTICAL REASONS THE A.O. HAS INITIATED THE PROCEEDINGS U/S.147 AND ISSUED THE NOTICES U/S.148. THE LD. COUNSEL FILED THE COPIES OF THE T RIBUNAL ORDER IN THE FOLLOWING CASES, WHICH ARE PLACED ON RECORD: (I) ITO, MUMBAI VS. PRANLAL P. DAMANI IN ITA NO.3747/M/2010 VIDE ORDER DATED 28.04.2011 AND (II) ITO, MUMBAI VS. ALKESH P. DAMANI IN ITA NO.3748/MUM/2010 ITAS.47-50, 100-102 AND 149-150/M/2010 ITAS.185-186, 246-247 AND 268-269/M/2010 PRANLAL P. DAMANI & CLOSELY RELATED FOURTEEN OTHERS 6 HE PLEADED FOR QUASHING NOTICES ISSUED U/S.148. PE R CONTRA THE LD. D.R. PLACED HIS HEAVY RELIANCE ON THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS P. LTD. 291 ITR 500. HE SUBMITS THAT AT THE TIME OF INITIATION PROCEEDINGS U/S.147, IT IS NOT NECESSARY FOR THE A.O. THAT THE A.O. SHOULD HAVE VERY STRONG LEGAL EVIDENCE AND AT THE SAID STAGE TH E FINAL OUTCOME OF THE PROCEEDINGS IS NOT RELEVANT. 7. I HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIE S AND PERUSED THE RECORDS. THE LD. D.R. FAIRLY CONCEDED THAT IN ALL THESE CASES ALL ASSESSEES REGULARLY FILED RETURNS U/S.139 BEFORE NO TICES UNDER SEC. 148 WERE ISSUED, BUT THOSE ALL RETURNS WERE ACCEPT ED U/S.143(1) OF THE ACT AND THERE WAS NO SCRUTINY ASSESSMENT. IN R ESPECT OF ALL THESE CASES ONLY ADDITION MADE BY THE A.O. AFTER COMPLETI NG THE ASSESSMENT U/S.143(3) R.W.S. 147 OF THE ACT IS IN RESPECT OF T HE AMOUNT OF THE DIFFERENT GIFTS CLAIMED TO HAVE BEEN RECEIVED BY THESE ASSESSEES IN THE DIFFERENT ASSESSMENT YEARS. ALL THOSE ADDITIONS AR E MADE U/S.68 OF THE ACT REJECTING THE EXPLANATIONS OF THESE ASSESSE ES. IN THE CASE OF THE TWO ASSESSEES, PARTICULARLY, SHRI PRANLAL P. DA MANI & SHIR ALKESH P. DAMANI FOR THE A.Y. 2004-05, ON THE IDENTICAL SE T OF FACTS AND REASONS THE TRIBUNAL HAS UPHELD THE ORDER OF THE LD . CIT (A) FOR QUASHING NOTICES ISSUED UNDER SEC. 148 OF ACT. IN THE CASE OF SHIR PRANLAL P. DAMANI, THE OPERATIVE PART OF THE ORDER OF THE TRIBUNAL READS AS UNDER: 10. RIVAL CONTENTIONS WERE HEARD. ON CAREFUL CONSI DERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITED BEFORE US, WE HOLD AS FOLLOWS. ON THE I SSUE OF REOPENING, REASONS RECORDED ARE EXTRACTED BELOW:- DURING THE COURSE OF SURVEY ACTION, IT WAS REVEALE D THAT THE ASSESSEE HAS DECLARED LONG TERM CAPITAL GAIN ON SALE OF SHARES AND CLAIMED EXEMPTION UNDER SECTION 34F OF T HE ACT, FOR ACQUISITION OF FLAT IN LIEU OF 5LONG TERM CAPITAL GAIN. IT IS ALSO SEEN THAT THE ASSESSEES INVESTMENTS WER E MULTIPLIED BY 22 TIMES WITHIN A SPAN OF 1 YEARS. H ENCE, ITAS.47-50, 100-102 AND 149-150/M/2010 ITAS.185-186, 246-247 AND 268-269/M/2010 PRANLAL P. DAMANI & CLOSELY RELATED FOURTEEN OTHERS 7 THE TRANSACTIONS OF LONG TERM CAPITAL GAIN REQUIRED TO BE SCRUTINIZED IN THE HANDS OF THE ASSESSEE. THOUGH THE INTENTION OF THE ASSESSING OFFICER MIGHT HAVE BEEN THAT HE HAD A REASON TO BELIEF THAT INCOME CHARGEAB LE TO TAX HAS ESCAPED ASSESSMENT, THE SAME HAS NOT MANIFESTED ITS ELF IN THE REASONS OF REOPENING. THE FIRST PART OF THE REASON S ARE ONLY FACTUAL RECORDING THAT THERE WAS A SURVEY AND IT WA S FOUND THAT THE ASSESSEE HAD DECLARED LONG TERM CAPITAL GAIN AN D CLAIMED EXEMPTION UNDER SECTION 54F. THE SECOND FACTUAL REC ORDING IS THAT THE ASSESSEES INVESTMENTS HAVE MULTIPLIED BY 22 TI MES WITHIN A SPAN OF 1 YEARS. THEREAFTER, ONLY RECORDING IS THA T THE LONG TERM CAPITAL GAINS ARE REQUIRED TO BE SCRUTINISED IN THE HANDS OF THE ASSESSEE. FOR SCRUTINY, NOTICE UNDER SECTION 143(2) OF THE ACT WOULD SUFFICE. THE ASSESSMENT CANNOT BE RE-OPENED F OR SCRUTINING THE SAME. THERE SHOULD BE POSITIVE INDICATION IN TH E REASONS RECORDED THAT THE ASSESSING OFFICER HAD REASON TO B ELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN THIS CASE, NO SUCH RECORDING IS THERE. THIS GROUND IS, THUS, D ECIDED IN FAVOUR OF THE ASSESSEE AND THE ORDER OF THE COMMISSIONER ( APPEALS) IS HEREBY UPHELD ON THIS GROUND. 11. SINCE WE HAVE DECIDED THE ISSUE OF RE-OPENING IN FAVOUR OF THE ASSESSEE, THE OTHER ISSUES RAISED BY THE REVENU E BECOME ACADEMIC IN NATURE, WHICH NEED NO SEPARATE ADJUDICA TION BY US. 8. THE SAID ORDER IS FOLLOWED IN THE CASE OF ANOTHE R ASSESSEE I.E. SHRI ALKESH P. DAMANI. 9. LET US SEE THAT HOW THE REASONS ARE RECORDED BY THE A.O., WHICH ARE ALMOST IDENTICAL IN ALL THESE CASES. IN THE CA SE OF JAYESH P. DAMANI IN ITA NO.49/M/2012 THE A.O. HAS FURNISHED T HE REASONS FILED HIS LETTER DATED 21.10.2008 (PAGE NO.7 OF THE COMPILATION), WHICH READS AS UNDER: NO.ITO-16(1)(2)/SCRUTINY/148/2008-09 DATED: 21.10.2008. ITAS.47-50, 100-102 AND 149-150/M/2010 ITAS.185-186, 246-247 AND 268-269/M/2010 PRANLAL P. DAMANI & CLOSELY RELATED FOURTEEN OTHERS 8 JAYESH P DAMANI HUF, 44, VIJAY CHAMBERS, TRIBHUVAN RD., MUMBAI -7 SIR, SUB: REASON RECORDED FOR RE-OPENING OF ASSESSMENT U/S.147 OF THE I.T. ACT, 1961 FOR A.Y. 2003-04 REG. REF: YOUR LETTER DATED 17/10/2008 * * * PLEASE REFER TO THE ABOVE. THE REASON RECORDED FOR REOPENING OF THE ASSESSMEN T/S FOR A.Y. 2003-04 IN THIS CASE ARE AS UNDER:- SURVEY REPORT RECEIVED FROM ADIT (INV.) UNIT V, MU MBAI WHEREIN IT WAS STATED THAT A SURVEY U/S.133A WAS CARRIED OUT A T THE BUSINESS PREMISES OF M/S. UNITY OPTICIANS AND M/S. OPTICO EN TERPRISES AT 384-A, KALBADEVI ROAD, MUMBAI -400 002 AND 44/4A-2, VIJAY CHAMBERS, TRIBHUVAN ROAD, MUMBAI 400 004. THESE FIRMS ARE OP ERATED BY MR. PRANLAL DAMANI AND HIS TWO SONS VIZ. MR. ALKESH AND MR. JAYESH DAMANI. DURING THE COURSE OF SURVEY ACTION, IT WAS REVEALE D THAT THE ASSESSEE HAS DECLARED LONG TERM CAPITAL GAIN ON SAL E OF SHARES AND CLAIMED EXEMPTION U/S.54F OF THE I.T. ACT, 1961 FOR ACQUISITION OF FLAT IN LIEU OF LONG TERM CAPITAL GAIN. IT IS ALSO SEEN TH AT THE ASSESSEES INVESTMENTS WERE MULTIPLIED BY 22 TIMES WITHIN A SP AN OF 1 YEARS. HENCE THE TRANSACTIONS OF LONG TERM CAPITAL REQUIRE D TO BE SCRUTINIZED IN THE HANDS OF THE ASSESSEE. FURTHER, IT WAS ALSO FOUND THAT THE GROUP OF FAMIL Y MEMBERS OF MR. PRANLAL DAMANI (AS PER ANNEXURE) HAVE OBTAINED GIFTS FROM VARIOUS PERSONS IN A.YS.2000-01 TO 2005-06. THE GENUINENES S OF ALL THESE GIFTS, NEEDS VERIFICATION. HENCE, FOR VERIFICATION OF THE ABOVE POINTS, THESE CASES ARE PROPOSED TO BE TAKEN UP FOR SCRUTINY U/S.148 OF THE I.T. ACT, 1961. THANKING YOU, YOURS FAITHFULLY, SD/- [AMRUT T. PATIL] INCOME-TAX OFFICER-16(1)(2) MUMBAI ITAS.47-50, 100-102 AND 149-150/M/2010 ITAS.185-186, 246-247 AND 268-269/M/2010 PRANLAL P. DAMANI & CLOSELY RELATED FOURTEEN OTHERS 9 10. IN THE CASE OF OTHER ASSESSEE ALSO THE REASONS RECORDED BY THE A.O. ARE VERBATIM. AS PER THE REASONS RECORDED B Y THE A.O., IN THE FIRST PARAGRAPH, THE A.O. HAS NOTED THAT THERE WAS SURVEY ACTION U/S.133A IN THE BUSINESS PREMISES OF M/S. UNITED OP TIATIONS AND M/S. OPTICO ENTERPRISES. IN THE SECOND PARAGRAPH T HE A.O. HAS OBSERVED THAT THE ASSESSEE DECLARED LONG-TERM CAPIT AL GAIN ON THE SALE OF THE SHARES AND CLAIMED EXEMPTION U/S.54F OF THE ACT SHOWING THE ACQUISITION OF THE FLAT. THE INVESTMENT OF THE ASS ESSEE WAS MULTIPLIED BY 22 TIMES WITHIN THE SPAN OF 18 MONTHS(1 & YEAR ) AND, HENCE, TRANSACTIONS OF LONG-TERM CAPITAL GAIN DECLARED BY ASSESSEES REQUIRED TO BE SCRUTINISED IN THE HANDS OF THE ASSESSEE. IN THE THIRD PARAGRAPH THE A.O. OBSERVED IN RESPECT OF THE GIFTS FROM VARI OUS PERSONS IN THE A.Y. 2000-01 TO 2005-06 THE GENUINENESS OF ALL THES E GIFTS NEEDS VERIFICATION. LASTLY, HE OBSERVED THAT HE HAS PROP OSED TO TAKE THOSE CASES FOR SCRUTINY U/S.148. OVERALL READING OF THE REASONS SHOWED THAT THE A.O. HIMSELF IS NOT SURE WHETHER THERE IS ANY ESCAPEMENT OF INCOME AND REASONS ONLY SHOWS HIS OPINION AND BE LIEF. MOREOVER, THERE IS NO POSITIVE REASONING THAT ANY INCOME HAS ESCAPED ASSESSMENT OR THERE IS ANY UNDERSTATEMENT OF INCOME BY THESE ASSESSES. THOUGH A.O. HAS MADE REFERENCE TO THE SHA RE TRANSACTIONS OF ALL THESE ASSESSEES TO SAVE FLYING REFERENCE IN THE ASSESSMENT ORDER, THERE IS NO FURTHER DISCUSSION OR ANY FINDING ON SA ID ISSUE. THE A.O. HAS ONLY DISCUSSED THE ISSUE IN RESPECT OF THE GIFT S CLAIMED TO HAVE BEEN RECEIVED BY THESE ASSESSEES. 11. IN THE CASE OF PRASHANT S. JOSHI (SUPRA) THE HO NBLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER: 9. SECTION 147 PROVIDES THAT IF THE ASSESSING OFFI CER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ES CAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 163, ASSESS OR REASSE SS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX, WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SU BSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. THE FIRST ITAS.47-50, 100-102 AND 149-150/M/2010 ITAS.185-186, 246-247 AND 268-269/M/2010 PRANLAL P. DAMANI & CLOSELY RELATED FOURTEEN OTHERS 10 PROVISO TO SECTION 147 HAS NO APPLICATION IN THE FA CTS OF THIS CASE. THE BASIC POSTULATE WHICH UNDERLINES SECTION 147 IS THE FORMATION OF THE BELIEF BY THE ASSESSING OFFICER THAT ANY INC OME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YE AR. THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT SUCH IS THE CASE BEFORE HE PROCEEDS TO ISSUE A NOTICE UNDER SEC TION 147. THE REASONS WHICH ARE RECORDED BY THE ASSESSING OFFICER FOR REOPENING AN ASSESSMENT ARE THE ONLY REASONS WHICH CAN BE CONSIDERED WHEN THE FORMATION OF THE BELIEF IS IMPU GNED. THE RECORDING OF REASONS DISTINGUISHES AN OBJECTIVE FRO M A SUBJECTIVE EXERCISE OF POWER. THE REQUIREMENT OF RECORDING REA SONS IS A CHECK AGAINST ARBITRARY EXERCISE OF POWER. FOR IT I S ON THE BASIS OF THE REASONS RECORDED AND ON THOSE REASONS ALONE THA T THE VALIDITY OF THE ORDER REOPENING THE ASSESSMENT IS TO BE DECI DED. THE REASONS RECORDED WHILE REOPENING THE ASSESSMENT CAN NOT BE ALLOWED TO GROW WITH AGE AND INGENUITY, BY DEVISING NEW GROUNDS IN REPLIES AND AFFIDAVITS NOT ENVISAGED WHE N THE REASONS FOR REOPENING AN ASSESSMENT WERE RECORDED. THE PRIN CIPLE OF LAW, THEREFORE, IS WELL SETTLED THAT THE QUESTION AS TO WHETHER THERE WAS REASON TO BELIEVE, WITHIN THE MEANING OF SECTIO N 147 THAT INCOME HAS ESCAPED ASSESSMENT, MUST BE DETERMINED W ITH REFERENCE TO THE REASONS RECORDED BY THE ASSESSING OFFICER. THE REASONS WHICH ARE RECORDED CANNOT BE SUPPLEMENTED B Y AFFIDAVITS. THE IMPOSITION OF THAT REQUIREMENT ENSU RES AGAINST AN ARBITRARY EXERCISE OF POWERS UNDER SECTION 148. THEIR LORDSHIP HAS ALSO EXPLAINED THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P . LTD. (SUPRA). THE RELEVANT PARAGRAPH OF THE JUDGMENT IS AS UNDER: 16. COUNSEL FOR THE REVENUE SUBMITTED BEFORE THE C OURT THAT IN THE PRESENT CASE, NO ASSESSMENT HAS TAKEN PLACE AND AT THE STAGE OF SECTION 143(1), THERE IS ONLY AN INTIMATIO N. RELIANCE IS SOUGHT TO BE PLACED ON THE JUDGMENT OF THE SUPREME COURT IN ASSISTANT COMMISSIONER OF INCOME TAX V/S. RAJESH JH AVERI STOCK ITAS.47-50, 100-102 AND 149-150/M/2010 ITAS.185-186, 246-247 AND 268-269/M/2010 PRANLAL P. DAMANI & CLOSELY RELATED FOURTEEN OTHERS 11 BROKERS P. LTD.8 THE JUDGMENT OF THE SUPREME COURT IN RAJESH JHAVERI HAS NOTICED THE DIFFERENCE BETWEEN THE EXPR ESSION `INTIMATION' AND `ASSESSMENT' AND THE SUPREME COURT HELD THAT IN THE SCHEME OF THINGS AN INTIMATION UNDER SECTION 14 3(1)(A) CANNOT BE TREATED AS AN ORDER OF ASSESSMENT. THE SUPREME C OURT HELD THAT THERE BEING NO ASSESSMENT UNDER SECTION 143(1) (A), THE QUESTION OF A CHANGE OF OPINION, AS CONTENDED DID N OT ARISE. THE JUDGMENT OF THE SUPREME ALSO EMPHASISES WHAT IS MEA NT BY THE EXPRESSION 'REASON TO BELIEVE' AND THE NATURE OF TH E BELIEF THAT IS TO BE FORMED BY THE ASSESSING OFFICER THAT THE INCO ME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE SUPREME COURT HELD THAT AT THE STAGE OF THE ISSUANCE OF A NOTICE UNDER SECTION 148, THE ASSESSING OFFICER MUST HAVE REASON TO BELI EVE THAT INCOME HAS ESCAPED ASSESSMENT AND AT THAT STAGE AN ESTABLISHED FACT THAT INCOME HAS ESCAPED ASSESSMENT IS NOT REQU IRED. THE SUPREME COURT HELD THUS :- SECTION 147 AUTHORISES AND PERMITS THE ASSESSING O FFICER TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF H E HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YE AR HAS ESCAPED ASSESSMENT. THE WORD 'REASON' IN THE PHRASE 'REASON TO BELIEVE' WOULD MEAN CAUSE OR JUSTIFICATI ON. IF THE ASSESSING OFFICER HAS CAUSE OR JUSTIFICATION TO KNO W OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON TO BELIEVE THAT AN INCOME HAD E SCAPED ASSESSMENT. THE EXPRESSION CANNOT BE READ TO MEAN T HAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCERTAIN ED THE FACT BY LEGAL EVIDENCE OR CONCLUSION....... AT THAT STAGE, THE FINAL OUTCOME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER WORDS, AT THE INITIATION STAGE, WHAT IS REQUIRED IS 'REASON TO BELIEVE', BUT NOT 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 P ERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THE M ATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN AT THAT STAGE. THIS IS SO BECAUSE THE FORMATION OF BELIEF BY THE ASSESSING OFFICER IS WITHIN THE REALM OF SUBJEC TIVE SATISFACTION.' THE SUPREME COURT HELD THAT SO LONG AS THE INGREDI ENTS OF SECTION 147 ARE FULFILLED, THE ASSESSING OFFICER IS FREE TO INITIATE PROCEEDINGS UNDER SECTION 147 AND FAILURE TO TAKE S TEPS UNDER ITAS.47-50, 100-102 AND 149-150/M/2010 ITAS.185-186, 246-247 AND 268-269/M/2010 PRANLAL P. DAMANI & CLOSELY RELATED FOURTEEN OTHERS 12 SECTION 143(3) WILL NOT RENDER HIM POWERLESS TO INI TIATE REASSESSMENT PROCEEDINGS EVEN WHEN AN INTIMATION UN DER SECTION 143(1) HAD BEEN ISSUED. IN OTHER WORDS, WHEN AN INT IMATION HAS BEEN ISSUED UNDER SECTION 143(1), THE ASSESSING OFF ICER IS COMPETENT TO INITIATE REASSESSMENT PROCEEDINGS PROV IDED THAT THE REQUIREMENTS OF SECTION 147 ARE FULFILLED. IN SUCH A CASE AS WELL, THE TOUCHSTONE TO BE APPLIED IS AS TO WHETHER THERE WAS REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. AS PER MANDATE OF SEC.147, AS HELD BY THEIR LORDSHI PS, THE REASONS WHICH ARE RECORDED BY THE A.O. FOR REOPENING AN ASS ESSMENT ARE THE ONLY REASONS WHICH ARE TO BE CONSIDERED WHEN THE FO RMATION OF THE BELIEF IS TO BE GATHERED. 12. IN THE PRESENT CASE, AS DISCUSSED HEREINABOVE, THE A.O. ONLY DESIRES TO VERIFY THE GENUINENESS OF THE GIFTS, W HICH AS PER ALL THESE ASSESSEES THEY HAVE ALREADY DISCLOSED SAME WHILE FI LING THEIR REGULAR RETURNS OF INCOME. IT IS WELL SETTLED PRINCIPLE OF LAW THAT THOUGH THE A.O. HAS POWER TO INITIATE THE PROCEEDINGS U/S.147 BUT THAT SHOULD BE ONLY BASED ON HIS BELIEF AND THE BELIEF MUST BE F ORMED ON THE REASONS RECORDED BY HIM. APART FROM THAT, I FIND THAT THIS ISSUE HAS ALREADY BEEN CONSIDERED BY THE TRIBUNAL IN THE CASES OF SHR I PRANLAL P. DAMANI AND SHRI ALKESH P. DAMANI AND IN THOSE CASES ALSO THE REASONS RECORDED BY THE A.O. ARE IDENTICAL. I, THE REFORE, HOLD THAT FROM REASONS RECORDED BY A.O. FORMATION OF BELIEF, IS A BSENT THAT THERE WAS ANY ESCAPEMENT OF INCOME OR UNDER STATEMENT OF INCO ME AND AS BASIC MANDATE OF SEC.147 HAS NOT BEEN FULFILLED THE PROCE EDINGS INITIATED BY THE A.O. U/S.147 ARE BAD IN LAW AND QUASH ALL NOTIC ES ISSUED UNDER SEC. 148 OF THE ACT IN ALL THESE CASES. IN CONSEQU ENCE, ALL THE ASSESSMENT ORDERS PASSED BY THE A.O., WHICH ARE SUB JECT MATTER OF ALL THESE APPEALS BEFORE HIM ARE CANCELLED. 13. SO FAR AS ITA NO.147/M/2012 AND 48/M/2012, THER E ARE ONE MORE STRONG REASON TO CANCEL ALL THE ASSESSMENTS U/ S.143 R.W.S.147. IN BOTH THESE ASSESSMENT ORDERS THE A.O. INITIATED THE PROCEEDINGS ITAS.47-50, 100-102 AND 149-150/M/2010 ITAS.185-186, 246-247 AND 268-269/M/2010 PRANLAL P. DAMANI & CLOSELY RELATED FOURTEEN OTHERS 13 U/S.147 BEYOND THE PERIOD OF THE FOUR YEARS FROM TH E END OF THE RESPECTIVE ASSESSMENT ORDERS. IN BOTH THESE CASES THE ADDITIONS MADE BY THE A.O. ARE ` 80,000/- AND ` 50,000/- RESPECTIVELY. AS PER THE PROVISIONS OF SEC.149(1)(B,) THE A.O. HAS JURISDICT ION TO ISSUE NOTICE U/S.148 BEYOND THE PERIOD OF FOUR YEARS ONLY IF THE ALLEGED ESCAPEMENT INCOME IS MORE THAN ` 1 LAKH. HENCE, OTHERWISE ALSO, IN THE ABOVE TWO CASES, THE NOTICES WERE ISSUED BY THE A.O. ARE BAD IN LAW AND ACCORDINGLY THIS ISSUE IS ALSO ANSWERED IN FAVOUR O F THE ASSESSEE AND AGAINST THE REVENUE. I DO NOT CONSIDER IT NECESSARY TO GO INTO THE MERITS OF ALL THESE CASES. 14. IN THE RESULT, ALL THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 7TH APRIL, 2012. SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 27TH APRIL, 2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-25, MUMBAI. 4) THE CIT 14, MUMBAI. 5) THE D.R. SMC BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN
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