Praveen Kumar Jain, Delhi V. ITO, New Delhi

ITA 1331/DEL/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2776 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 15-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 09-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR ANJULA JAIN
• Keywords: Reopening of assessment; Tangible material; Accommodation entries; Reason to believe; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 147

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - I : NEW DELHI BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER ITA NO. 1331 /DEL/ 2015 (ASSESSMENT YEAR: 2006 - 07 ) PRAVEEN KUMAR JAIN, C/O. KAPIL GOEL, ADV, F - 26/124, SECTOR - 7, ROHINI, DELHI PAN:AHHPK2948R VS. ITO, WARD - 39(3), NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SH. K APIL GOEL, ADV RESPONDENT BY : DR. ANJULA JAIN, SR. DR DATE OF HEARING 17.12.2015 DATE OF PRONOUNCEMENT 22 . 01 . 2016 O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 18.12.2014 OF LD. CIT(A), NEW DELHI FOR THE ASSESSMENT YEAR 2006 - 07 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - JURISDICTIONAL GROUNDS ON VALIDITY OF REOPENING PROCEEDINGS Y/S 148 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT - A ERRED IN NOT QUASHING THE PATENTLY INVALID REOPENING ACTION U/S 148 WHICH IS FULL OF ERRORS AND OMISSIONS AS EVIDENT FROM: ADDITION OF CASH DEPOSIT BEING WITHDRAWN ON SAME DATE (05.11.2005) FROM BANK A/C 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT - A ERRED IN NOT ACCEPTING ASSESSEE'S GENUINE AND BONAFIDE EXPLANAT ION FOR DEPOSIT OF CASH OF RS 600,000 BEING SOURCED FROM AVAILABLE CASH WITHDRAWAL OF EVEN DATE FROM VERY SAME BANK AND REJECTING THE SAME ON MERE CONJECTURES AND SURMISES AND HEARSAY. ADDITION BEYOND REASONS : LOW HOUSEHOLD WITHDRAWALS REDUCED TO RS55,000 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT - A ERRED IN NOT FULLY DELETING PART ADDITION SUSTAINED OF RS 58,000 ON ACCOUNT OF ALLEGED LOW HOUSEHOLD WITHDRAWALS BEYOND THE SCOPE OF REOPENING AND WITHOUT ANY COGENT MATE RIAL ON RECORDS. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO, AMEND, MODIFY, RESCIND, SUPPLEMENT OR ALTER ANY OF THE GROUNDS STATED HEREIN ABOVE, EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. A. THAT ON MERE CASH DEPOSIT WITHOUT ANYTHING MORE RE ASONS ARE FARMED WHICH IS INVALID WITHOUT LOOKING TO AVAILABLE ROI/ITR FILED ON PAGE NO. 2 31/3/2007 WITH ITO WARD 25(2) NEW DELHI ETC (PAGE 2 OF IMPUGNED ORDER); B. AS EVIDENT FROM PAGES 5/6 OF IMPUGNED ORDER LD AO HAS SIMPLY ACTED ON FARFETCHED INFORMATION SUPPLIE D BY INVESTIGATION WING WITHOUT INDEPENDENT APPLICATION OF MIND; C. THAT AFFIXTURE SERVICE MADE OF JURISDICTIONAL NOTICE U/S 148 AS APPARENT AND VIVID FROM INSPECTOR REPORT ON RECORDS IS PATENTLY BAD ON FACE OF IT; (PAGE 6/7 OF IMPUGNED ORDER) D. THAT V AGUE AND MECHANICAL APPROVAL IS ACCORDED BY JCIT RANGE 39 WHICH IS EX FACIE BAD AND INADEQUATE; (PAGE 2 OF IMPUGNED ORDER); C. THAT ON BASIS OF INVALID ISSUANCE OF NOTICE U/S 143(2) (DATED 23.01.2014) WITHOUT PRIOR ROI U/S 148 (REFER REASONS AND ORDER) AS SESSMENT IS FRAMED BY LD AO U/S 143(3) WHICH IS PATENTLY BAD; 3. THE ASSESSEE ALSO FILED A PETITION FOR ADMISSION OF ADDITIONAL GROUNDS AND RAISED THE ADDITIONAL GROUNDS AS UNDER: - 4. ADDITIONAL GROUND VALIDITY OF REOPENING U/S 148 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED C1T - A ERRED IN NOT QUASHING THE REOPENING ACTION OFLD AO WHERE AS APPARENT FROM PAGE2, OF IMPUGNED ASSESSMENT ORDER IT IS GLARING THAT REOPENING IS MADE ON MERE CASH DEPOSITS WHICH IS NOT 'TANG IBLE MATERIAL' PROVIDING 'LIVE NEXUS' WITH INCOME ESCAPEMENT ON JUST BORROWED SATISFACTION WITHOUT INDEPENDENT APPLICATION OF MIND. (COVERED BY DELHI ITA T A BENCH ORDER IN CASE OF BIR BAHADUR CASE DATED 20/1/2015) THAT ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE AND IN LAW, LEARNED CIJ - A ERRED IN NOT QUASHING THE REOPENING ACTION OF LD AO WHEREAS AFFIXTURE SERVICE OF JURISDICTIONAL REOPENING NOTICE U/S 148 AS EVIDENT FROM PAGE 6/7 OF IMPUGNED ORDER IS PATENTLY BAD. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CYT - A ERRED IN NOT QUASHING THE REOPENING ACTION OF LD AO WHERE ASSESSMENT HAVING BEEN FRAMED U/S 143(3)/147 OF THE ACT ON BASIS OF INVALID ISSUANCE OF NOTICE U/S 143(2) DATED 23.012014 WITHOUT PRIOR RO 1 ON RECORDS. 4. ARGUMENT ON ADMISSION OF T HE ADDITIONAL GROUNDS ARE HEARD. S INCE ALL THE ADDITIONAL G ROUNDS RAISED BY THE ASSESSEE ARE PURELY LEGAL IN NATURE GO TO THE ROOT OF THE MATTER THEREFORE, IN VIEW OF THE OF SERIES OF PRECEDENT INCLUDING THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS . CIT, 229 ITR 383 , THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE CHALLENGED THE VALIDITY OF REOPENING IS ADMITTED FOR HEARING AND ADJUDICATION. 5. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT IN THE REASONS RECORDED BY THE AO FOR REOPENING OF THE ASSESSMENT, THE AO STATED THAT AS PER RECORD THE PAGE NO. 3 ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE YEAR UNDER CONS IDERATION, WHEREAS THE ASSESSEE HAD DULY FILED ITS RETURN OF INCOME WITH ITO WARD - 25(2), NEW DELHI VIDE ACKNOWLEDGEMENT DATED 31 ST MARCH 2007. T HE LD AR HAS POINTED OUT THAT IN THE BINGING OF THE ASSESSMENT ORDER THE AO ITSELF HAS ADMITTED THIS FACT THAT THE MANUAL RETURN DECLARED AN INCOME OF RS.1 ,1 2 , 030 / - WAS FILED ON 31 ST MARCH 2007 WITH ITO WARD - 25(2), NEW DELHI. THUS THE LD AR HAS SUBMITTED THAT THE AO HAS PROCEEDED UNDER WRONG PRESUMPTION OF FACT THAT THE ASSESSEE HAS NOT FILED RETURN OF INCOME AND A CCORDINGLY PROPOSED TO REOPEN THE ASSESSMENT BY ISSUING A NOTICE U/S 148 ON THE BASIS OF INFORMATION RECEIVED FROM ITO (INVESTIGATION) REGARDING DEPOSIT OF CASH AMOUNTING RS. 6 LAC IN THE BANK ACCOUNT OF THE ASSESSEE. THE LD AR HAS FURTHER CONTENDED THAT F ROM THE REASONS RECORDED BY THE AO IT DOES NOT INDICATE HOW A DEPOSIT OF RS. 6 LAC IN THE BANK ACCOUNT OF THE ASSESSEE CAN BE A N INCOME ASSESSAB LE TO TAX AND HAS ESCAPE ASSESSMENT. THE AO HAS NOT RECEIVED ANY NEW MATERIAL OR INFORMATION WHICH WAS NOT ALREA DY WITH THE AO TO BELIEVE THAT THIS AMOUNT OF RS.6 LAC IS AN INCOME OF THE ASSESSEE WHICH HAS ESCAPED ASSESSMENT. IN ORDER TO FORM THE BELIEVE THERE MUST BE DIRECT NEXUS OR LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF THE AO AND FORMATION OF THE BELIEVE THAT THERE HAS BEEN ESCAPEMENT OF INCOME OF THE ASSESSEE FROM THE ASSESSMENT. THE LD AR HAS FORC EFULLY CONTENDED THAT A SUM DEPOSITED IN THE ACCOUNT ITSELF IS NOT SUFFICIENT TO F ORM AN OPINION THAT THIS WAS ASSESSABLE INCOME OF THE ASSESSEE AND H AS ESCAPED ASSESSMENT. THEREFORE THE SAID DEPOSIT ITSELF DOES NOT CONSTITUTED INCOME WHICH HAS ESCAPED ASSESSMENT. IN SUPPORT OF HI S CONTENTION HE HAS RELIED UPON THE FOLLOWING JUDGMENTS: - 1. ITA NO.3814/DEL/2011, BIR BAHADUR SINGH SIJWALI VS ITO 2. ITA NO.795/2009 - KARNATAKA HIGH COURT - SHRI C.M. MAHADEVA VS. CIT 3. ITA NO.877/DEL/2012 - SHREE BHAGWAN VS. ITO 4. 545/2015 - ITAT DELHI IN THE CASE OF PR. CIT - 4 VS.G & G PHARMA INDIA LTD 5. ITA NO. 811/DEL/2015 - GORDON V S. ITO 6. ON THE OTHER HAND THE LD DR HAS SUBMITTED THAT THE AO HAS RECORDED THE REASONS FOR REOPENING AND CLEARLY MENTIONED THAT IN THIS CASE INFORMATION RECEIVED FROM THE INVESTIGATION WING ABOUT THE CASH DEPOSIT OF RS.6 LAC IN THE BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH RAM G AR IA CO O PERATIVE BANK LTD. AND THE SOURCE OF WHICH ARE NOT COMMENSURATE WITH BUSINESS ACTIVITY OF THE PAGE NO. 4 ASSESSEE. THUS THERE WAS A FRESH INFORMATION AND TANGIBLE MATERIAL OF DEPOSIT OF CASH IN THE BANK ACCOUNT WITH THE AO TO FORM THE BELIEVE THAT INCOME ASSESSABLE TO TAX HAS ESCAPED A SSESSMENT. SHE HAS CONTENDED THAT W HEN THE INFORMATION WAS SPECIFIC AND NOT GENERAL OR VAG UE AND REFERRED TO THE TRANSACTION IN THE BANK ACCOUNT OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION THEN THE SUFFICIENCY OF REASON AND ESTABLISHING ON MERITS O F THE MATTER ARE NOT REQUIRED AT THE STAGE OF ISSUING OF NOTICE U/S 148. SHE HAS ALSO RELIED UPON THE JUDGMENT OF THE HONBLE HIGH COURT IN THE CASE OF CIT VS. NOVA PROMOTERS FINLEASE PVT. LTD. 342 ITR 169. 7. THE LD DR FURTHER CONTENDED THAT WHEN THE ASSE SSEE HAS DECLARED INCOME AT RS.12030 THEN THE DEPOSIT OF SUCH A HUGE AMOUNT OF RS.6 LACS IN THE BANK ACCOUNT ITSELF IS SUFFICIENT TO BELIEVE THAT THE INCOME ASSESSABLE TO TAX HAS ESCAPED. 8. I HAVE CONSIDERED THE RIVAL SUBMISSION AS WELL AS THE MATERIAL O N RECORD . T HE AO HAS REOPENED THE ASSESSMENT BY RECORDING THE REASON WHICH ARE REPRODUCED AT PAGE 2 OF THE ASSESSMENT ORDER AS UNDER: - 'REASONS FOR THE BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT IN THE CASE OF M/S SHALIMAR TRADING CORP. FOR THE ASSESSME NT YEAR 2006 - 07. IN THIS CASE, INFORMATION IS RECEIVED BY THIS OFFICE FROM THE ITO (INV), UNIT - V(1), NEW DELHI VIDE HIS LETTER DATED 28.03.2013 THEREIN STATING THAT M/S SHALIMAR TRADING CORP. HAD DEPOSITED CASH AMOUNTING TO RS.6,00,000/ - IN BANK A/C NO.181 9 MAINTAINED WITH RAMGARHIA CO - OPERATIVE BANK LIMITED, DESH BANDU GUPTA ROAD, PAHAR GANJ, NEW DELHI, THE SOURCES OF WHICH ARE NOT IN COMMENSURATE WITH HIS BUSINESS ACTIVITIES. FURTHER, SOURCES OF CASH 'DEPOSITED AND ITS UTILIZATION IS NOT KNOWN AND REMAINE D UNEXPLAINED. AFTER PERUSAL OF THE DETAILS RECEIVED FROM THE ITO (INV), UNIT - V(1), NEW DELHI, THE DETAILS OF INCOME TAX RETURN FILED BY M/S SHALIMAR TRADING CORP. FOR A.Y. 2006 - 07 WERE TRIED TO BE TAKEN OUT FROM LTD SYSTEM. HOWEVER, THE SAME WERE NOT FOU ND AVAILABLE THERE. THUS, AS PER OUR RECORD, THE ASSESSEE HAS NOT FILED ANY RETURN I NCO M E FOR A.Y, 2006 - 07 . THEREFORE, I HAVE REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX AMOUNTING TO RS. 6.00.000/ - FOR THE F.Y. 2005 - 06 RELEVANT TO A.Y. 2006 - 07 HAS ESCA PED ASSESSMENT AND IT IS A FIT CASE FOR INITIATION OF PROCEEDINGS U/S 147 OF THE ACT. PROPOSAL IN THE PRESCRIBED FORM FOR THE A.Y. 2006 - 07 (F.Y. 2005 - 06) IS SUBMITTED HEREWITH FOR KIND CONSIDERATION AND NECESSARY APPROVAL U/S 151(2) OF THE I.TAX ACT, 1961 AS THE SAME IS GETTING BARRED BY LIMITATION ON 31/3/2013. IF APPROVED, NOTICE U/S 148 OF THE ACT MAY BE ISSUED. PAGE NO. 5 9. AS IT IS MANIFEST FROM THE REASONS RECORDED BY THE AO THAT THE AO PROPOSED TO REOPEN THE ASSESSMENT BY ISSUING NOTICE U/S 148 ON THE BASIS OF INFORMATION RECEIVED THAT THE ASSESSEE DEPOSIT CASH AMOUNT OF RS.6 LAC IN THE BANK ACCOUNT . T HE AO HAS RECORDED IN THE REASONS THAT THE ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006 - 07. THIS FACT RECORDED BY THE AO THAT THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME FOR THE ASSESS MENT YEAR UNDER CONSIDERATION HAS TURN ED OUT TO BE INCORRECT AS THE ASSESSMENT ORDER BEGINS WITH THE NARRATION OF FACT THAT MA NUAL RETURN DECLAR ED RS112030/ - FILED ON 31.03.2007. THUS AT THE TIME OF PASSING THE ASSESSMENT ORDER THE AO WAS AWARE THAT RETURN FOR THE YEAR UNDER CONSIDERATION FILED ON 31 ST MARCH 2007. THEREFORE , IT IS CLEAR THAT THE AO PROCEED TO REOPEN ASSESSMENT ON THE BASIS OF INCORRECT ASSUMPTION OF THE FACT THAT THE ASSESSEE HAS NOT FILED A NY RETURN INCOME FOR THE YEAR UNDER CONSIDERATION. THIS WRONG ASSUMPTION OF FACT ALSO LEAD TO THE CONSEQUENTIAL REOPENING BY THE AO WITHOUT VERIFYING THE RECORD AVAILABLE WITH THE AO AS FILED BY THE ASSESSEE BEING RETURN OF INCOME AND THE OTHER DETAILS AND RECORD ALONG WITH RETURN OF INCOME. THUS , IT IS CLEAR THAT THE AO REOP EN THE ASSESSMENT UNDER WRONG PRESUMPTION OF FACT AND WITHOUT VERIFYING THE MATERIAL INFORMATION ALREADY AVAILABLE WITH THE AO IN THE SHAPE OF RETURN OF INCOME FILED BY THE ASSESSEE. TH IS FACT OF FILING OF RETURN WAS ALSO RECORDED BY THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) AT PAGE 3 OF THE IMPUGNED ORDER. FURTHER, THE RECOURSE OF REOPENING U/S 148/147 IS NOT TO FIRST ISSUE THE NOTICE AND THEN TO PROCEED TO INVESTIGATE AND FIND O UT IF THERE WAS INCOME ASSESSABLE TO TAX WHICH HAS ESCAPED ASSESSMENT RATHER IT IS PRE REQUISITE FOR ISSUING THE NOTICE U/S 14 8 THAT THE AO ON THE BASIS OF TANGIBLE MATERIAL AND INFORMATION H AS LEGITIMATE REASON TO BELIEVE THAT INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT. THE BELIEF MUST BE BASED ON A MATERIAL WHICH HAS DIRECT NEXUS TO THE INCOME ASSESSABLE HAS ESCAPED ASSESSMENT AND SHOULD NOT BE GUESS WORK AND TO ASCERTAIN THE SAME THROUGH THE PROCESS OF INVEST IGATION . THE PROVISION OF SECTION 148/147 CAN NOT BE USED SUCH INVESTIGATION TO ASCERTAIN WHERE INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT. IT IS APPARENT THAT THE REASON FOR REOPENING WAS ONLY ON INFORMATION OF DEPOSIT OF CASH OF RS.6 LAC IN THE BANK ACCOUNT. THEREFORE THE REASON FOR REOPEN ING WAS FOR FURTHER INVESTIGATION TO FIND OUT THE SOURCE OF THE CASH DEPOSIT BY THE ASSESSEE AS THE AO HAS NOT RECORDED ANYTHING THAT THIS DEPOSIT OF CASH IS FROM PARTICULAR SOURCE WHICH IS NOT DISCLOSED BY THE ASSESSEE IN PAGE NO. 6 THE BOOKS OF ACCOUNT OR IN THE RE TURN OF INCOME. THE DEPOSIT OF CASH IN THE BANK ACCOUNT OF THE ASSESSEE DOES NOT ESTABLISH ANY LIVE NEXUS BETWEEN THE INFORMATION AND FORMATION OF THE BELIEVE THAT THERE WAS ESCAPEMENT OF THE INCOME BY THE ASSESSEE. THERE MAY BE END NUMBER OF REASONS AND S OURCE S OF DEPOSIT OF CASH IN THE BANK WHICH MAY NOT CONSTITUTE THE SAME AS INCOME OF THE ASSESSEE AND THEREFORE MERELY DEPOSIT OF CASH IN BANK ITSELF WOULD NOT LEAD TO THE CONCLUSION OR BELIEVE THAT THE SAID AMOUNT IS ASSESSABLE INCOME OF THE ASSESSEE AND ESCAPEMENT OF ASSESSMENT. IN THE CASE IN HAND THERE ARE NUMBER OF WITHDRAWALS AND DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE IN QUESTION. IT IS CLEAR FROM THE DETAILS OF THE BANK ACCOUNT THAT PRIOR TO THE DEPOSIT OF THIS AMOUNT OF RS.6 LAC THERE WAS WITH DRAWALS OF ABOUT RS.14 LAC FROM THE SAID BANK ACCOUNT, THEREFORE IN THE ABSENCE OF ANY OTHER INFORMATION OR MATERIAL TO INDICATE T HE SOURCE OF THIS DEPOSIT OTHER THAN WITHDRAWALS FROM THE BANK ACCOUNT THE AO WAS NOT HAVING ANY TANGIBLE MATERIAL TO BELIEVE THAT THIS DEPOSIT OF RS.6 LAC CONSTITUTE THE INCOME OF THE ASSESSEE FOR WHICH THE SOURCE HAS NOT BEEN DISCLOSED BY THE ASSESSEE OR THE ASSESSEE IS NO T IN A POSITION TO DISCLOSE THE SOURCE . A CCORDINGLY THE REOPENING IS NOTHING BUT TO INVESTIGATE THE MATTER TO ASCERTAIN WHETHER THIS DEPOSIT WOULD CONSTITUTE THE INCOME OF THE ASSESSEE WHICH HAS ESCAPED THE ASSESSMENT OR NOT. IN THE CASE OF THE C.M. MAHADEVA VS. CIT , HONBLE KARNATAKA HIGH COURT WHILE DEALING WITH IDENTICAL FACTS OF REOPENING HAS OBSERVED IN PA RA 16 TO 19 HAS UNDER: - 16. THE FACTS OF THE AFORESAID CASE ARE QUITE SIMILAR TO THE ONE ON HAND. IN THE PRESENT CASE ALSO THE REASON FOR REOPENING IS FOR FURTHER INVESTIGATION TO FIND OUT THE SOURCE OF INVESTMENT FOR THE PURCHASE OF THE PROPERTY, WHICH IS NOT PERMISSIBLE IN LAW. 17. FURTHER IN THE CASE OF INCOME TAX OFFICER VS. LAKHMANI MEWAL DAS REPORTED IN (1976) 103 ITR 439, THE APEX COURT HAS HELD THAT THE REASONS FOR THE FORMATION OF THE BELIEF MUST HAVE A RATIONAL CONNECTION WITH OR RELEVANT BEARING ON THE FORMATION OF TH E BELIEF. RATIONAL CONNECTION POSTULATES THAT THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF THE INCOME TAX OFFICER AND THE FORMATION OF HIS BELIEF THAT THERE HAS BEEN ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM AS SESSMENT IN THE PARTICULAR YEAR BECAUSE OF HIS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. 18. IN THE PRESENT CASE, WHAT WE FIND IS THAT THERE IS NO NEXUS OR LIVE LINK BETWEEN THE MATERIAL WHICH HAD COME TO THE NOTICE OF THE ASSESSING OFFICER, AND THE FORMATION OF HIS BELIEF THAT THERE WAS ESCAPEMENT OF INCOME BY THE ASSESSEE WHICH MAY BE ASSESSABLE TO TAX. MERELY BY MENTIONING THE INCOME OF THE ASSESSEE IN THE ASSESSMENT YEAR, AND THE PAGE NO. 7 INVESTMENT MADE BY HIM FOR THE PURCHASE OF RESIDENTIAL PROP ERTY, IT CANNOT BE CONCLUDED THAT THE DIFFERENCE WOULD AUTOMATICALLY BE THE INCOME WHICH HAD ESCAPED ASSESSMENT. 19. THE SUBMISSION OF LEARNED COUNSEL FOR THE RESPONDENT - REVENUE, THAT READING OF THE FIRST PARAGRAPH OF THE REASON RECORDS ALONG WITH THE THI RD PARAGRAPH, WOULD AMOUNT TO THE ASSESSING OFFICER CONCLUDING THAT THE DIFFERENCE BETWEEN THE PURCHASE PRICE OF THE PROPERTY AND INCOME OF THE ASSESSEE IN THAT YEAR WAS THE REASON FOR WHICH REASSESSMENT NOTICE WAS GIVEN, IS NOT WORTHY OF ACCEPTANCE. DEFIN ITE AND SPECIFIC REASON HAVE TO BE RECORDED BY THE ASSESSING OFFICER BEFORE THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT, AS REPLY HAS TO BE GIVEN BY THE ASSESSEE TO SUCH REASON WHICH ARE RECORDED IN THE NOTICE. NOTHING CAN BE LEFT FOR THE PARTY TO CONJECTURE AND THEN PRESUME THAT SUCH COULD BE A REASON FOR THE ASSESSING OFFICER TO BELIEVE THAT THERE HAS BEEN ESCAPEMENT OF INCOME FROM ASSESSMENT TO TAX. 10. THUS, IT IS CLEAR THAT THE HONBLE HIGH COURT HAS MADE A CLEAR DISTINCTION BETWEEN THE DE F INITE/ SPECIFIC REASONS AND MERE MENTIONING THE INCOME OF THE ASSESSEE WITHOUT HAVING A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL WHICH HAS COME TO THE NOTICE OF THE AO AND FORM A BELIEVE THAT THERE WAS ESCAPEMENT OF THE INCOME BY THE ASSESSEE. A COORD INATE BENCH OF THIS TRIBUNAL IN THE CASE OF BIR BAHADUR SINGH SIJWALI VS ITO (SUPRA) WHILE DEALING AND OBSERVED IN PARA 8 TO 10 AS UNDER: - 8. LET US, IN THE LIGHT OF THIS LEGAL POSITION, REVERT TO THE FACTS OF THE CASE BEFORE US. ALL THAT THE REASONS RECO RDED 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 INC OME 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 ASSESSEE. AS WE DO NOT HAVE THE LIBER TY TO EXAMINE THESE REASONS ON THE BASIS OF ANY OTHER MATERIAL OR FACT, OTHER THAN THE FACTS SET OUT IN THE REASONS SO RECORDED, IT IS NOT OPEN TO US TO DEAL WITH THE QUESTION AS TO WHETHER THE ASSESSEE COULD BE SAID TO BE ENGAGED IN ANY BUSINESS; ALL THAT IS TO BE EXAMINED IS WHETHER THE FACT OF THE DEPOSITS, PER SE, IN THE BANK ACCOUNT OF THE ASSESSEE COULD BE BASIS OF HOLDING THE VIEW THAT THE INCOME HAS ESCAPED ASSESSMENT. THE ANSWER, IN OUR HUMBLE UNDERSTANDING, IS IN NEGATIVE. THE ASSESSING OFFICER HA S OPINED THAT AN INCOME OF RS.10,24,100 HAS ESCAPED ASSESSMENT OF INCOME BECAUSE THE ASSESSEE HAS RS.10,24,100 IN HIS BANK ACCOUNT BUT THEN SUCH AN OPINION PROCEEDS ON THE FALLACIOUS ASSUMPTION THAT THE BANK DEPOSITS CONSTITUTE UNDISCLOSED INCOME, AND OVER LOOKS THE FACT THAT THE SOURCES OF DEPOSIT NEED NOT NECESSARILY BE INCOME OF THE ASSESSEE. OF COURSE, IT MAY BE DESIRABLE, FROM THE POINT OF VIEW OF REVENUE AUTHORITIES, TO EXAMINE THE PAGE NO. 8 MATTER IN DETAIL, BUT THEN REASSESSMENT PROCEEDINGS CANNOT BE RESORTED TO ONLY TO EXAMINE THE FACTS OF A CASE, NO MATTER HOW DESIRABLE THAT BE, UNLESS THERE IS A REASON TO BELIEVE, RATHER THAN SUSPECT, THAT AN INCOME HAS ESCAPED ASSESSMENT. 9. LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO A NUMBER OF JUDICIAL PRECEDENT S 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 CA SES OF CIT VS NOVA PROMOTERS & FINLEASE PVT LTD [(2012)342 ITR 169] BUT THEN NONE OF THE QUESTIONS BEFORE HONBLE HIGH COURT HAD ANYTHING TO DO WITH REOPENING OF ASSESSMENT AND THIS DECISION CANNOT, THEREFORE, BE TAKEN AS AN AUTHORITY ON THE LEGAL ISSUE WH ICH DID NOT EVEN COME UP FOR SPECIFIC ADJUDICATION BEFORE THEIR LORDSHIPS. AS FOR HER RELIANCE ON HONBLE SUPREME COURTS 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 ASSESSMENT AND WE ARE UNABLE TO SEE ANYTHING ON THE FACTS OF THE PRESENT CASE WHICH ARE MATERIALLY SIMILAR TO THE FACTS OF THE SAID CASE. AS REGARDS HER RELIANCE ON THE DECISION OF A COORDINATE BENCH IN THE CASE OF MITHILA CREDIT SERVICES LIMITED VS ITO ORDER DATED 23.5.2014), IT IS IMPORTANT TO BEAR IN MIND THE FACT THAT IT WAS A CASE IN WHICH THE ASSESSING OFFICER HAD REOPENED THE ASSESSMENT ON THE B ASIS OF RECEIPT OF INFORMATION FROM DIRECTORATE OF INVESTIGATION, AND, AS NOTED BY THE ASSESSING OFFICER IN THE REASONS RECORDED FOR REOPENING THE ASSESSMENT, THE NAME OF THE ASSESSEE FIGURES AS ONE OF THE BENEFICIARIES OF THESE ALLEGED BOGUS TRANSACTIONS IN THE INFORMATION GIVEN BY THE DIRECTORATE. IF THE ASSESSEE WAS A BENEFICIARY OF SUCH A SCAM, THE INCOME WAS INDEED TO HAVE BEEN TAXED IN ITS HANDS BUT THEN IN THE CASE BEFORE US THE ONLY REASON FOR REASSESSMENT PROCEEDINGS WAS THE FACT OF DEPOSIT OF BA NK ACCOUNT WHICH BY ITSELF DOES NOT LEAD TO INCOME BEING TAXED IN THE HANDS OF THE ASSESSEE. LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO SEVERAL OTHER JUDICIAL PRECEDENTS IN SUPPORT OF THE PROPOSITION THAT AT THE STAGE OF INITIATION OF REASSESSMENT PROCEEDINGS, ALL THAT IS TO BE SEEN AS EXISTENCE, RATHER THAN ADEQUACY, OF THE MATERIAL TO COME TO THE CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT. TO US, THERE CANNOT BE ANY, AND THERE IS NO, DOUBT ON THE CORRECTNESS OF THIS PROPOSITION BUT THEN, AS WE HAVE ELABORATELY EXPLAINED EARLIER IN THIS ORDER, THE MATERIAL MUST INDICATE INCOME ESCAPING ASSESSMENT RATHER THAN DESIRABILITY OF FURTHER PROBE IN THE MATTER WHICH MAY OR MAY NOT LEAD TO INCOME ESCAPING THE ASSESSMENT. ON THE BASIS OF REASONS AS RECORDE D IN THIS CASE, SUCH AN INFERENCE ABOUT INCOME ESCAPING ASSESSMENT, IN OUR HUMBLE UNDERSTANDING, CANNOT BE DRAWN. PAGE NO. 9 11. THE SCOPE AND JURISDICTION OF SECTION 148 WAS ALSO DISCUSSED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR. COMMISSIONER OF INCOME TAX VS. G&G PHARMA INDIA LTD. (SUPRA) IN PARA 12 AND 13 HAS HELD AS UNDER: - 12. IN THE PRESENT CASE, AFTER SETTING OUT FOUR ENTRIES, STAT ED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10TH FEBRUARY 2003, FROM FOUR ENTITIES WHICH WERE TERMED AS ACCOMMODATION ENTRIES, WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTORATE OF INVESTIGATION, THE AO STATED: I HAVE ALSO PERUSED VA RIOUS MATERIALS AND REPORT FROM INVESTIGATION WING AND ON THAT BASIS IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK ACCOUNT BY WAY OF ABOVE ACCOMMODATION ENTRIES. THE ABOVE CONCLUSION IS UNHELPFUL IN UNDERSTAN DING WHETHER THE AO APPLIED HIS MIND TO THE MATERIALS THAT HE TALKS ABOUT PARTICULARLY SINCE HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE. ONCE THE DATE ON WHICH THE SO CALLED ACCOMMODATION ENTRIES WERE PROVIDED IS KNOWN, IT WOULD NOT HAVE BEEN DIFFICULT FOR THE AO, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE ASSESSEE, WHICH MUST HAVE BEEN TENDERED ALONG WITH THE RETURN, WHICH WAS FILED ON 14TH NOVEMBER 2004 A ND WAS PROCESSED UNDER SECTION 143(3) OF THE ACT. WITHOUT FORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE AO TO HAVE SIMPLY CONCLUDED: IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MON EY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES. IN THE CONSIDERED VIEW OF THE COURT, IN LIGHT OF THE LAW EXPLAINED WITH SUFFICIENT CLARITY BY THE SUPREME COURT IN THE DECISIONS DISCUSSED HEREINBEFORE, THE BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT CASE. 13. MR. SAWHNEY TOOK THE COURT THROUGH THE ORDER OF THE CIT(A) TO SHOW HOW THE CIT (A) DISCUSSED THE MATERIALS PRODUCED DURING THE HEARING OF THE APPEAL. THE COURT WOULD LIKE TO OBSERVE THAT THIS IS IN THE NATURE OF A POST MORTEM EXERCISE AFTER THE EVENT OF REOPENING OF THE ASSESSMENT HAS TAKEN PLACE. WHILE THE CIT MAY HAVE PROCEEDED ON THE BASIS THAT THE REOPENING OF THE ASSESSMENT WAS VALID, THIS DOES NOT SATISFY THE REQUIREMENT OF LAW THAT PRIOR TO THE REOPENING OF THE ASSESSMENT, THE AO HAS TO, APPLYING HIS MIND TO THE MATERIALS, CONCLUDE THAT HE HAS REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. UNLESS THAT BASIC JURISDICTIONAL REQUIREMENT IS SATISFIED A POST MORTEM EXERCISE OF ANALYSING MATERIALS PRODUCED SUBSEQUENT TO THE REOPENING WILL NOT RESCUE AN INHERENTLY DEFECTIVE REOPENING ORDER FROM INVALIDITY. 12. THUS IT IS CLEAR THAT THE BASIC REQUIREMENT FOR REOPENING OF ASSESSMENT THAT THE AO MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT WAS FOUND TO BE MISSING WHEN THE AO PROCEED TO R EOPEN THE ASSESSMENT WHICH IS IN NATURE OF A POST MORTEM EXERCISE AFTER THE EVENT OF REOPENING OF THE ASSESSMENT . T HEREFORE THE PAGE NO. 10 REOPENING OF THE ASSESSMENT WAS FOUND TO BE INVALID AS IT DOES NOT S ATIS FY THE REQUIREMENT OF LAW THAT PRIOR TO THE REOPENING OF THE ASSESSMENT THE AO HAS TO APPLY HIS MIND TO THE MATERIAL AND CONCLUDE THAT HE HAS REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. APPLYING THE A BOVE PROPOSITION OF LAW IT LEAVES NO DOUBT IN THE MIND THAT IN THE CASE ON HAND THE AO HAS REOPENED THE ASSESSMENT MECHANICALLY WITHOUT APPLICATION OF MIND TO CONCLUDE THAT THE SAID AMOUNT OF RS.6 LAC DEPOSIT IN THE BA NK ACCOUNT OF THE ASSESSEE CONSTITUTE S THE INCOME OF THE ASSESSEE AND THE SAME HAS ESCAPED ASSESSMENT. THE DECISION RELIED UPON BY THE LD DR IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE BECAUSE IN THE SAID CASE NOT ONLY THE ACCOMMODATION ENTRY WERE FOUND BY THE INVESTIGATION WING BUT THE MODUS OPERANDI WAS ALSO DETECTED AND THEREFORE IT WAS FOUND THAT THE AO WAS HAVING T HE SUFFICIENT MATERIAL AND INFORMATION TO FORM THE BELIEVE THAT THE INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT. IN VIEW OF THE FACTS AND CIRCUMSTANCES AS WELL AS THE DEC ISIONS RELIED UPON BY THE AR, THE REOPENING IS IN THE CASE OF THE ASSESSEE IS NOT VALID AND THE SAME IS QUASHED. SINCE THE REOPENING OF THE ASSESSMENT HELD TO BE INVALID THEREFO RE OTHER GROUNDS OF THE APPEAL BECOME INFRACTUOUS. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 . 01 . 2016 . - SD/ - ( VIJAY PAL RAO ) JUDICIAL MEMBER DATED : 22 / 01 / 2016 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI