Sri Rajkumar C(HUF), Bangalore V. Deputy Commissioner of Income tax, Circle-7(1), Bangalore

ITA 1379/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0469 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-03-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 12-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: PUJA KOTHARI
• Keywords: Search and seizure; Audit objection; Period of limitation; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 153A; 147; 148; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO S . 1379, 1380 & 1381/ BANG/20 14 (ASSESSMENT YEAR: 2005 - 06, 2006 - 07 & 2007 - 08 ) RAJKUMAR C (HUF), NO.259/B, 7 TH CROSS, HSR LAYOUT, SECTOR 1, BANGALORE - 560102. PAN:AAMHR4074B VS. APPELLANT DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 7(1), BANGALORE. RESPONDENT APPELLANT BY : SHRI PUJA KOTHARI, CA. RESPONDENT BY : DR.P. K.SRIHARI, ADDL.CIT(DR) DATE OF HEARING : 16/03/2016 DATE OF PRONOUNCEMENT : 27 /04/2016 O R D E R PER I NTURI RAMA RAO, AM : THESE ARE THE APPEALS FILED BY THE ASSESSEE, VIZ., RAJKUMAR C (HUF), DIRECTED AGAINST DIFFERENT ORDERS OF THE CIT(A) - III, BANGALORE, DATED 25/8/2014 FOR THE ASSESSMENT YEARS 2005 - 06, 2006 - 07 AND 2007 - 08. ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 2 OF 25 2. THE ASSESSEE RAISED THE FOLLOWING COMMON GROUNDS OF APPEAL: 3. BRIEFLY FACTS OF THE CASE ARE AS UNDER: A SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED IN THE CASE OF ONE SHRI K.J.PURUSHOTHAM REDDY ON 26/8/2008. DURING THE COURSE OF SEARCH OPERATIONS, THE RESIDENTIAL PREMISES OF SHRI C.RAJKUMAR, WERE ALSO COVERED. IT WAS STATED THAT AS A RESULT OF SEARCH AND SEIZURE OPERATIONS, CERTAIN DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED BY THE INVESTIGATION WING OF ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 3 OF 25 THE DEPARTMENT. DURING THE COURSE OF SEARCH OPERATIONS, IT WAS STATED THAT SHRI RAJKUMAR WHO IS THE KARTHA OF THE PRESENT APPELLANT I.E. RAJKUMAR C, HUF STATED THAT REGULAR RETURNS OF INC OME WERE BEING FILED IN THE INDIVIDUAL CAPACITY AND NO RETURNS WERE FILED IN THE STATUS OF RAJKUMAR C, HUF , APPELLANT HEREIN. IT IS STATED THAT SHRI RAJKUMAR APPEARED BEFORE THE INVESTIGATION WING OF THE DEPARTMENT AND GAVE A STATEMENT ON 26/ 0 8/2008 AND ALSO FILED A LETTER DATED 24/12/2008 BEFORE THE ADIT, INVESTIGATION WING THAT THE INCOME EARNED FROM REAL ESTATE ACTIVITIES BELONG TO THE HUF. HOWEVER, NO RETURNS WERE FILED. WHILE MATTER STOOD THUS, ASSESSMENTS WERE IN THE HANDS OF SHRI RAJKUMAR, I N HIS INDIVIDUAL CAPACITY WERE COMPLETED LU/S 143(3) READ WITH SEC.153C OF THE OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] ON 28/2/2010 FOR THE ASSESSMENT YEARS 2005 - 06 TO 2007 - 08 BRINGING THE INCOME EARNED FROM THE ACTIVIT Y OF REAL ESTATE TO TAX AND GAINS ARISING OUT OF SALE OF LANDS ETC. HOWEVER, ON APPEAL BEFORE THE CIT(A) , THE CONTENTION OF THE ASSESSEE THAT THE INCOME BELONGED TO HUF CAME TO BE ACCEPTED BY THE CIT(A). HOWEVER, THE CIT(A) HAD DIRECTED THE AO INITIATE ASSESSMENT PROCEEDINGS TO TAX THIS INCOME IN THE HANDS OF RAJKUMAR C, HUF THE RELEVANT PARAGRAPH OF THE ORDER OF THE CIT(A) FOR THE THREE YEARS ARE AS UNDER: 2005 - 06: LN VIEW OF THE FACT THAT THE LAND BELONGED TO THEIR HUE WHICH HAS COME TO THEM BY A RE GISTERED PARTITION DEED DATED 05.08.78, THE INCOME ARISING ON THE SALE OF THE ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 4 OF 25 PROPERTY OF 4 ACRES SITUATED IN SY NO.80 (2 ACRES) AND IN SY NO.8 1 (2 ACRES) SOLD TO M/S KRYSTAL PROJECTS INDIA PVT LTD AMOUNTING TO RS.1,44,75,000/ - SHALL BE ASSESSED IN THE HA NDS OF THE HUE AND THE AG'S ASSESSMENT OF THIS INCOME IN THE HANDS OF INDIVIDUAL IS HELD TO BE NOT CORRECT. A.O. IS DIRECTED TO PROCEED AGAINST THEIR HUF TO ASSESS THIS INCOME AND IF THE A.O. HAS NO JURISDICTION OVER THE HUE OF THE APPELLANT, HE SHALL REQU EST THE AG. HAVING JURISDICTION OVER THE HUF OF SRI C RAJKUMAR TO TAKE APPROPRIATE ACTION TO ASSESS INCOME ARISING ON THE SALE OF THE PROPERTY IN THE HANDS OF THE HUF. 2006 - 07: APPARENTLY, THE FACTS OF A.Y. 2005 - 06 AS NARRATED IN PARA 3.3 & 3.4. OF A.Y. 2 005 - 06 IN THIS ORDER ARE CLEARLY APPLICABLE AND SINCE THE NUCLEUS OF THE FUNDS HAVE COME FROM , THE HUF AND IN PARTICULAR FROM THE SALE OF KASAVANAHALLI LANDS AND OTHER ASSETS AND INCOME OF THE HUF, THE ABOVE INCOMES SHOULD HAVE BEEN ASSESSED IN THE HANDS OF THE APPELLANT'S HUF AND NOT IN HIS INDIVIDUAL CAPACITY. THE INCOME EARNED IN THE INDIVIDUAL CAPACITY OF RS.R4,50,000/ - HAS BEEN SEPARATELY ADMITTED BY REVISING THEIR RETURNS AND HENCE, IT IS HELD THAT A.O. SHALL TAKE STEPS TO ASSESS THE ABOVE INCOME OF RS.1,60,68,940/ - ONLY IN THE HANDS OF THEIR HUF AS DIRECTED IN AY 2005 - 06. 2007 - 08: 'APPARENTLY, THE FACTS OF A.Y. 2005 - 06 AS NARRATED IN PARA 3.3. OF A.Y 2005 - 06 IN THIS ORDER ARE CLEARLY APPLICABLE AND SINCE THE NUCLEUS OF THE FUNDS HAVE COME FROM THE HUF AND IN PARTICULAR FROM THE SALE OF KASAVANAHALLI LANDS AND OTHER ASSETS AND INCOME OF THE HUE, THE ABOVE INCOMES SHOULD HAVE BEEN ASSESSED IN THE HANDS OF THE APPELLANT'S HUF AND NOT IN HIS INDIVIDUAL CAPACITY. THE INCOME EARNED IN THE INDIVIDUAL CAPA CITY OF RS.54,72,500/ - HAS BEEN SEPARATELY ADMITTED BY REVISING THEIR RETURNS AND HENCE, IT IS HELD THAT A.O. SHALL TAKE STEPS TO ASSESS THE BALANCE INCOME OF RS.2,40,25,150 (RS.2,37,96,270/ - + RS.2,28,880/ - ) ONLY IN THE HANDS OF THEIR HUF AS DIRECTED IN 2005 - 06. 4. WE ARE GIVEN TO U NDERSTAND AT THE BAR THAT THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) WAS DISMISSED BY THIS TRIBUNAL. PURSUANT TO THE DIRECTIONS OF THE CIT(A), THE AO HAD ISSUED NOTICE U/S 148 TO THE APPELLANT I.E. ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 5 OF 25 RAJKUMAR C, HUF FOR THE ASSESSMENT YEARS 2005 - 06 TO 2007 - 08 RECORDING THE FOLLOWING REASONS: THE ASSESSEE IS IN THE BUSINESS OF REAL ESTATE AND HAS NOT DISCLOSED INCOME FROM REAL ESTATE T RANSACTIONS FOR A.Y. 2007 - 08. THE ASSESSEE HAD EARNED AT' INCOM E OF RS. 2,4025,150/ FOR A.Y 2007 - 08. THE ASSESSEE HAD NOT FILED ANY RETURN OF INCOME IN HIS CAPACITY OF HUE. THE ASSESSEE HAD NOT DISCLOSED THIS INCOME IN RETURN OF INCOMES FILED IN THE CAPACITY OF INDIVIDUAL. THERE WAS A SEARCH U/S. 132 OF IT ACT IN THE CASE OF SRI. PURUSHOTHAM REDDY OTHERS WHERE THE RESIDENCE OF THE ASSESSEE WAS COVERED OIL 26.08.200 8 . BASED ON THE INCRIMINATING MATER I AL SEIZED DCIT, CC - 2(2). BANGALORE HAD BROUGHT THESE AMOUNTS OF RS .2,40,25,150/ - FOR A.Y 2007 - 08 IN THE HANDS OF SRI C.R AJKUMAR (INDL.) IN T HE ASSESSMENT ORDER DT: 28.12.2010. THE ASSESSEE PREFERRED AN APPEAL BEFORE C1T(A) - VI, BANGALORE WHO IN HIS ORDER (D T 05 . 08 . 2011 HAS FIELD AS UNDER: SIMILARLY, FOR THE AY 2007 - 08 ON THE BASIS OF CASH FLOW STATEMENT CIT(A) HAS HELD TH AT AN AMOUNT OF RS.2,40,25,150/ - SHALL BE ASSESSED IN HUF CAPACITY. ON THE BASIS OF THE ABOVE FACTS, I HAVE REASON TO BELIEF THAT AN INCOME OF RS.2,40,25,150/ - HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT FOR WHICH THE NOTICE U/S 148 IS REQUIRED TO BE ISSUED FOR THE AY 2007 - 08. THE APPELLANT VEHEMENTLY CONTESTED THE RE - ASSESSMENT PROCEEDINGS ON THE GROUND THAT RE - ASSESSMENT PROCEEDINGS WERE PROMPTED BY THE DIRECTIONS OF THE CIT(A) IN THE CASE OF SHRI RAJKUMAR, INDIVIDUAL. THE AO HAD NOT APPLIED HIS MIND INDEPENDENTLY. THUS, IT WAS CONTESTED THAT THE RE - ASSESSMENT PROCEEDINGS WERE VITIATED FOR NON - APPLICATION OF MIND ON THE PART ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 6 OF 25 OF THE AO. THE AO BRUSHED ASIDE THE OBJECTIONS, HAD COMPLETED THE ASSESSMENT BY BRINGING TO TAX INCOME EARNED FROM PURCHASE AND SALE OF PROPERTIES AS WELL AS SALE OF ANCESTRAL PROPERTIES SITUATED AT SURVEY NO.85 & 186 SITUATED AT DODDATHIMMASANDRA VILLAGE, SY.NO.32 AT MEDAHALLY VILLAGE, SY.NO.310 AT SARJAPURA HOBLI AND SY.NO.24 AT MEDAHALLY VILLAGE A ND ALS O MADE SEVERAL OTHER ADDITIONS. 5. BEING AGGRIEVED BY THIS A SSESSMENT, RAJKUMAR, C (HUF) FILED APPEALS BEFORE CIT(A) CONTENDING INTER ALIA THE VALIDITY OF THE RE - ASSESSMENT PROCEEDINGS. THE CIT(A) UPHELD THE VALIDITY OF THE RE - ASSESSMENT PROCEEDINGS ON TH E GROUND THAT THE CASE OF THE APPELLANT FELL WITHIN CLAUSE (A) TO EXPLANATION 2 TO SEC.147 OF THE ACT AND THUS CIT(A) UPHELD THE RE - ASSESSMENT IN QUESTION. 6. BEING AGGRIEVED, APPELLANT IS BEFORE US IN PRESENT APPEALS . IT WAS CONTENDED BY THE LEARNED AR OF THE ASSESSEE BEFORE US THAT THE RE - ASSESSMENT PROCEEDINGS ARE MERELY BASED ON DIRECTIONS OF THE CIT(A) I N THE CASE OF SHRI RAJKUMAR C, INDIVIDUAL. SUCH DIRECTIONS ARE NOT NECESSARY FOR DISPOSAL OF THE APPEAL BEFORE THE CIT(A) BASED ON THE RATIO LAI D DOWN BY THE HON BLE SUPREME COURT IN THE CASE RAJINDER NATH VS. CIT ( 120 ITR 14). THUS IT WAS SUBMITTED THAT INITIATION OF RE - ASSESSMENT PROCEEDINGS ARE NOT VALID IN LAW. THE APPELLANT FURTHER RELIED ON THE DECISION OF THE CO - ORDINATE BENCH (AGRA) OF T HE TRIBUNAL IN THE CASE OF GAURAV LUTHRA VS. ITO IN ITA 278/AGRA/2011 DATED 4/6/2014. THE APPELLANT HAD ALSO DRAWN OUR ATTENTION TO THE ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 7 OF 25 PROVISIONS OF SEC.153C AND 148 CONTENDING THAT THE RE - ASSESSMENT PROCEEDINGS ARE NOT SUBSTITUTE FOR ASSESSMENT CONTEMPL ATED U/S 153A , 153 C OF THE ACT. IT WAS ALSO FURTHER CONTENDED THAT THE RE - ASSESSMENT SHOULD BE INITIATED ON THE OPINION FORMED BY THE AO ONLY . IN THE ABSENCE OF APPLICATION OF MIND BY THE AO TO FORM A BELIEF OR REASON THAT INCOME GOT ESCAPED ASSESSMENT, RE - ASSESSMENT PROCEEDINGS ARE NOT VALID IN LAW AND IN SUPPORT OF THIS PROPOSITION, RELIANCE WAS PLACED ON THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KAMADHENU STEEL & ALLOYS LTD. (248 ITR 33)(DEL). IT WAS FURTHER CONTENDED THAT IN COME CANNOT BE ASSESSED IN THE HANDS OF HUF AS PARTITION OF THE HUF HAD ALREADY BEEN TAKEN PLACE AND THE PARTITION DEED WAS ALREADY SEIZED BY THE DEPARTMENT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION S . 7. ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE CONTENDED THAT IT IS A CLEAR CASE OF ESCAPEMENT OF ASSESSMENT OF TAX AS DEFINED U/S 147 OF THE ACT AS NO RETURN WAS FILED BY THE APPELLANT THOUGH THERE WAS TAXABLE INCOME EXCEEDING MAXIMUM AMOUNT NOT CHARGEABLE TO TAX IN THE HANDS OF THE APP ELLANT. 8. WE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AT THE OUTSET, WE SHALL DEAL WITH THE PRELIMINARY GROUND CHALLENGING THE VERY VALIDITY OF THE RE - ASSESSMENT PROCEEDINGS AS IT GOES TO THE ROOT OF THE JURISDICTION OF THE ASSESSMENT PROCEEDINGS. I NDISPUTEDLY, SHRI RAJKUMAR MADE A STATEMENT BEFORE ADIT, INVESTIGATION WING OF THE DEPARTMENT ON 26/8/2008 ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 8 OF 25 AND SUBSEQUENTLY BY LETTER DATED 24/12/2008 THAT INCOME WAS EARNED FROM REAL ESTATE ACTIVITIES IN THE HANDS OF HUF OF WHICH HE WAS A K ARTHA . HOWEVER, NO RETURNS WERE FILED. R ETURNS WERE FILED IN THE INDIVIDUAL CAPACITY. HE ALSO ADMITTED THE SALE OF LAND OF ANCESTRAL PROPERTY SITUATED AT SY.NO.85 & 186 SITUATED AT DODDATHIMMASANDRA VILLAGE, SY.NO.32 AT MEDAHALLY VILLAGE, SY.NO.310 AT S ARJAPURA HOBLI AND SY.NO.24 AT MEDAHALLY VILLAGE. HE MADE AN ADMISSION THAT ALL THESE TRANSACTIONS TOOK PLACE IN THE HANDS OF HUF OF WHICH HE WAS A KARTHA. BUT THE AO HAS CHOSEN TO TAX THEM IN HIS INDIVIDUAL HANDS AND THE CIT(A) ACCEPTED THE SUBMISSION OF THE ASSESSEE THAT PROFITS ON ACCOUNT OF SALE OF AGRICULTURAL LAND AS WELL AS PROFITS EARNED FROM PURCHASE AND SALE OF PROPERTY WERE TAXABLE IN THE HANDS OF HUF. THIS ORDER OF THE CIT(A) CAME TO BE AFFIRMED BY THE TRIBUNAL. THE CIT(A), WHILE DEALING WITH THE APPEAL FILED BY C.RAJKUMAR, IN HIS INDIVIDUAL CAPACITY, HAD DIRECTED THE AO TO TAKE NECESSARY STEPS FOR ASSESSING IMPUGNED INCOME IN THE HANDS OF RAJKUMAR, C, (HUF). PURSUANT TO THESE DIRECTIONS, THE AO HAD INITIATED RE - ASSESSMENT PROCEEDINGS IN THE H ANDS OF THE APPELLANT. 9. IN THESE CIRCUMSTANCES, WE ARE REQUIRED TO ADJUDICATE THE VALIDITY OF THE RE - ASSESSMENT PROCEEDINGS IN THE PRESENT CASE. THE CONDITION PRECEDENT FOR INITIATING RE - ASSESSMENT PROCEEDINGS IS THAT THE AO SHOULD HAVE REASON TO B ELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. WHETHER THIS CONDITION IS SATISFIED BY THE AO OR NOT IS TO BE JUDGED FROM THE ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 9 OF 25 REASONS RECORDED BY THE AO U/S 148 FOR ISSUANCE OF NOTICE FOR RE - ASSESSMENT PROCEEDINGS. IT IS TRITE LAW THAT VALID ITY OF RE - ASSESSMENT IS TO BE JUDGED ONLY ON THE TOUCH - STONES OF REASONS RECORDED FOR ISSUANCE OF NOTICE U/S 148 OF THE ACT. 9.1 IN THIS CONNECTION, IT IS APT TO REPRODUCE THE OBSERVATIONS OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF N.D.BHATT, IAC OF IT VS. IBM WORLD TRADE CORPORATION (216 ITR 811 AT PAGE 823 ) : 'IT IS ALSO WELL - SETTLED THAT THE REASONS FOR REOPENING ARE REQUIRED TO BE RECORDED BY THE ASSESSING AUTHORITY BEFORE ISSUING ANY NOTICE UNDER SECTION 148 BY VIRTUE OF THE PROVISIONS OF SECTION 148(2) AT THE RELEVANT TIME. ONLY THE REASONS SO RECORDED CAN BE LOOKED AT FOR SUSTAINING OR SETTING ASIDE A NOTICE ISSUED UNDER SECTION 148. IN THE CASE OF EQUITABLE INVESTMENT CO. (P.) LTD. V. ITO [1988] 174 ITR 714 , A DIVISION BENCH OF THE CALCUTTA HIGH COURT HAS HELD THAT WHERE A NOTICE ISSUED UNDER SECTION 148 OF THE INCOME - TAX ACT, 1961, AFTER OBTAINING THE SANCTION OF THE COMMISSIONER OF INCOME - TAX IS CHALLENGED, THE ONLY DOCUMEN T TO BE LOOKED INTO FOR DETERMINING THE VALIDITY OF THE NOTICE IS THE REPORT ON THE BASIS OF WHICH THE SANCTION OF THE COMMISSIONER OF INCOME - TAX HAS BEEN OBTAINED. THE INCOME - TAX DEPARTMENT CANNOT RELY ON ANY OTHER MATERIAL APART FROM THE REPORT.' 11. THE SAME PRINCIPLE WAS REITERATED IN A JUDGMENT OF THE DIVISION BENCH OF THIS COURT IN HINDUSTAN LEVER LTD. V. R.B. WADKAR [2004] 268 ITR 332 (BOM.) : '...THE REASONS ARE REQUIRED TO BE READ AS TH EY WERE RECORDED BY THE ASSESSING OFFICER. NO SUBSTITUTION OR DELETION IS PERMISSIBLE. NO ADDITIONS CAN BE MADE TO THOSE REASONS. NO INFERENCE CAN BE ALLOWED TO BE DRAWN BASED ON REASONS NOT RECORDED. IT IS FOR THE ASSESSING OFFICER TO DISCLOSE AND OPEN HI S MIND THROUGH REASONS RECORDED BY HIM. HE HAS TO SPEAK THROUGH HIS REASONS....THE REASONS RECORDED SHOULD BE CLEAR AND UNAMBIGUOUS AND SHOULD NOT SUFFER FROM ANY VAGUENESS. THE REASONS RECORDED MUST DISCLOSE HIS MIND. REASONS ARE THE MANIFESTATION OF MIND OF THE ASSESSING OFFICER. THE REASONS RECORDED SHOULD BE SELF - EXPLANATORY AND SHOULD NOT KEEP THE ASSESSEE GUESSING FOR THE REASONS. REASONS PROVIDE LINK BETWEEN CONCLUSION AND EVIDENCE. THE REASONS RECORDED MUST BE BASED ON EVIDENCE. THE ASSESSING OFFICE R, IN THE EVENT OF ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 10 OF 25 CHALLENGE TO THE REASONS MUST BE ABLE TO JUSTIFY THE SAME BASED ON MATERIAL AVAILABLE ON RECORD.... THAT VITAL LINK IS THE SAFEGUARD AGAINST ARBITRARY REOPENING OF THE CONCLUDED ASSESSMENT. THE REASONS RECORDED BY THE ASSESSING OFFICER C ANNOT BE SUPPLEMENTED BY FILING AFFIDAVIT OF MAKING ORAL SUBMISSION, OTHERWISE, THE REASONS WHICH ARE LACKING IN MATERIAL PARTICULARS WOULD GET SUPPLEMENTED, BY THE TIME THE MATTER REACHES TO THE COURT, ON THE STRENGTH OF AFFIDAVIT OR ORAL SUBMISSIONS ADVA NCED.' 9.2 THE PRINCIPLE OF LAW THEREFORE IS WELL SETTLED THAT THE QUESTION AS TO WHETHER THERE WAS A REASON TO BELIEVE WITHIN THE MEANING OF SECTION 147 THAT INCOME ESCAPED ASSESSMENT MUST BE DETERMINED WITH REFERENCE TO THE REASONS RECORDED BY THE AO. FROM THE REASONS RECORDED BY THE AO, IT IS CLEAR THAT RE - ASSESSMENT PROCEEDINGS WERE INITIATED PURSUANT TO DIRECTIONS OF THE CIT(A) ONLY. F ROM THE REASONS RECORDED (EXTRACTED SUPRA), THE AO MENTIONED THAT THE APPELLANT WAS IN THE BUSINESS OF REAL ES TATE, HAD NOT FILED RETURN OF INCOME , HAD NOT DISCLOSED THIS INCOME IN THE RETURNS OF INCOME FILED IN INDIVIDUAL CAPACITY. IN THE SECOND PARA THE AO REFERRED TO THE FACT OF SEARCH AND SEIZURE OPERATIONS OF SHRI PURUSHOTHAM REDDY & OTHERS ALONG WITH OTHERS INCLUDING THE ASSESSEE ON 26/8/2008 . HE FURTHER REFERRED TO THE FACT THAT BASED ON THE INCRIMINATING DOCUMENTS FOUND AS A RESULT OF SEARCH AND SEIZURE OPERATIONS, THE ASSESSMENTS WERE MADE IN THE INDIVIDUAL HANDS OF SHRI C.RAJKUMAR, VIDE ASSESSMENT ORD ER DATED 28/12/2010. THE NEXT PARA REFERS TO THE DIRECTIONS OF THE CIT(A) IN THE CASE OF SHRI RAJKUMAR, INDIVIDUAL, TO ASSESS THE INCOME IN THE HANDS OF RAJKUMAR C (HUF). THE LAST PARA STATES ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 11 OF 25 THAT BASED ON THE ABOVE FACTS, HE HAD REASON TO BELIEVE THAT I NCOME HAD ESCAPED ASSESSMENT. THE AO HAD NOT EVEN RECORDED HIS SATISFACTION AS TO THE CORRECTNESS OF THE FINDINGS OF THE CIT(A) . THE AO HAD NOT RECORDED HIS FINDINGS AS TO HOW HE REACHED CONCLUSION THAT INCOME IN THE HANDS OF APPELLANT HAD ESCAPED ASSES SMENT OF TAX. THEREFORE, WE ARE UNABLE TO DISCERN WHETHER THE AO HAD APPLIED HIS MIND TO THE INFORMATION /DIRECTIONS OF CIT(A) AND INDEPENDENTLY ARRIVED AT A BELIEF THAT ON THE BASIS OF THE MATERIAL WHICH HE HAD BEFORE HIM, INCOME HAD ESCAPED ASSESSMENT. THE AO MERELY ACTED ON THE DIRECTIONS OF THE CIT(A). THE DIRECTIONS OF THE CIT(A) ARE NOT BINDING ON THE AO AND IT IS A MATTER OF RECORD THAT THE AO, IN FACT, HAD CHALLENGED THE CORRECTNESS OF THE CIT(A) S ORDER BEFORE THE TRIBUNAL WHICH CAME TO BE DISMI SSED. THE DIRECTIONS OF THE CIT(A) ARE ONLY IN THE FORM OF OPINION/VIEW OF THE CIT(A). THE AO HAS TO INDEPENDENTLY FORM AN OPINION THAT INCOME HAS ESCAPED ASSESSMENT WHICH IS NOT DISCERNIBLE FROM THE REASONS RECORDED. THE FORMATION OF BELIEF THAT INCOME ESCAPED ASSESSMENT ALSO VITIATED BY THE FACT THAT THE CORRECTNESS OF THE ORDER PASSED BY THE CIT(A) WAS CHALLENGED IN APPEAL BEFORE THE TRIBUNAL BY THE AO . THEREFORE, AO HAD NOT INDEPENDENTLY MADE UP HIS MIND ON THE BASIS OF INFORMATION IN HIS POSSESSION TO FORM OPINION THAT INCOME ESCAPED ASSESSMENT , WHICH IS SINE QUA NON FOR VALID INITIATION OF RE - ASSESSMENT PROCEEDINGS. ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 12 OF 25 9.3 I T IS TRITE LAW THAT THE INITIATION OF RE - ASSESSMENT PROCEEDINGS SHOULD BE DONE BY THE AO ONLY ON THE AO S OWN SATISFACTION AND NOT AT THE BEHEST OF THIRD PARTY, MORE SO, THE SUPERIOR AUTHORITIES. IN THIS CONTEXT, RELIANCE CAN BE PLACED ON THE DECISION S OF THE HON BLE DELHI HIGH COURT IN THE CASE S OF CIT VS. SFIL STOCK BROKING LTD. (325 ITR 285(DEL) , ATUL JAIN (299 ITR 383)(DEL) A ND JAY BHARAT MARUTI LTD. VS. CIT (324 ITR 289)(DEL) AND CIT VS. BATRA BHATTA CO. (321 ITR 526)(DEL) . THE HON BLE GUJARAT HIGH COURT IN THE CASE OF ADANI EXPORTS V. DCIT(ASSESSMENT) ( 240 ITR 224) AFTER REFERRING TO HON BLE SUPREME COURT JUDGMENT IN THE CAS E OF INDIAN & EASTERN NEWSPAPER SOCIETY LTD. VS. CIT (119 ITR 996) HELD AS FOLLOWS: THE POSITION OF INFORMATION CONTAINED IN AUDIT REPORT VIS - A - VIS FORMATION OF BELIEF BY THE ASSESSING OFFICER, THE EXISTENCE OF WHICH IS A CONDITION PRECEDENT FOR INITIATING PROCEEDINGS UNDER SECTION 147, EVEN AFTER AMENDMENT HAS BEEN SUCCINCTLY STATED BY THEIR LORDSHIPS IN INDIAN AND EASTERN NEWSPAPER SOCIETY V. CIT [1979] 119 ITR 996 (SC) (HEADNOTE): 'ALTHOUGH AN AUDIT PARTY DOES NOT POSSESS THE POWER TO PRONOUNCE ON THE LAW, IT NEVERTHELESS MAY DRAW THE ATTENTION OF THE INCOME - TAX OFFICER TO IT. LAW IS ONE THING, AND ITS COMMUNICATION ANOTHER. IF THE DISTINCTION BETWEEN THE SOURCE OF THE LAW AND THE COMMUNICATION OF THE LAW IS CAREFULLY MAINTAINED, THE CONFUSION WHICH OFTEN RESULTS IN APPLYING SECTION 147( B ) MAY BE AVOIDED. WHILE THE LAW MAY BE ENACTED OR LAID DOWN ONLY BY A PERSON OR BODY WITH AUTHORITY IN THAT BEHALF, THE KNOWLEDGE OR AWARENESS OF T HE LAW MAY BE COMMUNICATED BY ANYONE. NO AUTHORITY IS REQUIRED FOR THE PURPOSE. THAT PART ALONE OF THE NOTE OF AN AUDIT PARTY WHICH MENTIONS THE LAW WHICH ESCAPED THE NOTICE OF THE INCOME - TAX OFFICER CONSTITUTES 'INFORMATION' WITHIN THE MEANING OF SECTION 147( B ); THE PART WHICH EMBODIES THE OPINION OF THE AUDIT PARTY IN REGARD TO THE ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 13 OF 25 APPLICATION OR INTERPRETATION OF THE LAW CANNOT BE TAKEN INTO ACCOUNT BY THE INCOME - TAX OFFICER.' MORE IMPORTANTLY, THE COURT SAID (HEADNOTE): '. . . IN EVERY CASE, THE INCOM E - TAX OFFICER MUST DETERMINE FOR HIMSELF WHAT IS THE EFFECT AND CONSEQUENCE OF THE LAW MENTIONED IN THE AUDIT NOTE AND WHETHER IN CONSEQUENCE OF THE LAW WHICH HAS NOW COME TO HIS NOTICE HE CAN REASONABLY BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE BASI S OF HIS BELIEF MUST BE THE LAW OF WHICH HE HAS NOW BECOME AWARE. THE OPINION RENDERED BY THE AUDIT PARTY IN REGARD TO THE LAW CANNOT, FOR THE PURPOSE OF SUCH BELIEF, ADD TO OR COLOUR THE SIGNIFICANCE OF SUCH LAW. THE TRUE EVALUATION OF THE LAW IN ITS BEAR ING ON THE ASSESSMENT MUST BE MADE DIRECTLY AND SOLELY BY THE INCOME - TAX OFFICER. ' THE RATIO FULLY GOVERNS THE PRESENT CASE AND THE RECORD ILLUMINATES THE FAILURE OF THE ASSESSING OFFICER TO ADHERE TO THIS PRINCIPLE WHILE ISSUING NOTICE UNDER SECTION 148 IN THE PRESENT CASE. IT IS TRUE THAT SATISFACTION OF THE ASSESSING OFFICER FOR THE PURPOSE OF REOPENING IS SUBJECTIVE IN CHARACTER AND THE SCOPE OF JUDICIAL REVIEW IS LIMITED. WHEN THE REASONS RECORDED SHOW A NEXUS BETWEEN THE FORMATION OF BELIE F AND THE ESCAPEMENT OF INCOME, A FURTHER ENQUIRY ABOUT THE ADEQUACY OR SUFFICIENCY OF THE MATERIAL TO REACH SUCH BELIEF IS NOT OPEN TO BE SCRUTINISED. HOWEVER, IT IS ALWAYS OPEN TO QUESTION THE EXISTENCE OF SUCH BELIEF ON THE GROUND THAT WHAT HAS BEEN STA TED IS NOT THE CORRECT STATE OF AFFAIRS EXISTING ON RECORD. UNDOUBTEDLY, IN THE FACE OF THE RECORD, THE BURDEN LIES, AND HEAVILY LIES, ON THE PETITIONER WHO CHALLENGES IT. IF THE PETITIONER IS ABLE TO DEMONSTRATE THAT IN FACT THE ASSESSING OFFICER DID NOT HAVE ANY REASON TO BELIEVE OR DID NOT HOLD SUCH BELIEF IN GOOD FAITH OR THE BELIEF WHICH IS PROJECTED IN PAPERS IS NOT BELIEF HELD BY HIM IN FACT, THE EXERCISE OF AUTHORITY CONFERRED ON SUCH PERSON WOULD BE ULTRA VIRES THE PROVISIONS OF LAW AND WOULD BE AN ABUSE OF SUCH AUTHORITY. AS THE AFORESAID DECISION OF THE SUPREME COURT INDICATES THOUGH AUDIT OBJECTION MAY SERVE AS INFORMATION ON THE BASIS OF WHICH THE INCOME - TAX OFFICER CAN ACT, ULTIMATE ACTION MUST DEPEND DIRECTLY AND SOLELY ON THE FORMATION OF BEL IEF BY THE INCOME - TAX OFFICER ON HIS OWN WHERE SUCH INFORMATION IS PASSED ON TO HIM BY THE AUDIT THAT INCOME HAS ESCAPED ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 14 OF 25 ASSESSMENT. IN THE PRESENT CASE, BY SCRUPULOUSLY ANALYSING THE AUDIT OBJECTION IN GREAT DETAIL, THE ASSESSING OFFICER HAS DEMONSTRABLY SHOWN TO HAVE HELD THE BELIEF PRIOR TO THE ISSUANCE OF NOTICE AS WELL AS AFTER THE ISSUANCE OF NOTICE THAT THE ORIGINAL ASSESSMENT WAS NOT ERRONEOUS AND SO FAR AS HE WAS CONCERNED, HE DID NOT BELIEVE AT ANY TIME THAT INCOME HAS ESCAPED ASSESSMENT ON ACCOUN T OF ERRONEOUS COMPUTATION OF BENEFIT UNDER SECTION 80HHC. HE HAS BEEN CONSISTENT IN HIS SUBMISSION OF HIS REPORT TO THE SUPERIOR OFFICERS. THE MERE FACT THAT AS A SUBORDINATE OFFICER HE ADDED THE SUGGESTION THAT IF HIS VIEW IS NOT ACCEPTED, REMEDIAL ACTIO NS MAY BE TAKEN CANNOT BE SAID TO BE BELIEF HELD BY HIM. HE HAS NO AUTHORITY TO SURRENDER OR ABDICATE HIS FUNCTION TO HIS SUPERIORS, NOR THE SUPERIORS CAN ARROGATE TO THEMSELVES SUCH AUTHORITY. IT NEEDS HARDLY TO BE STATED THAT IN SUCH CIRCUMSTANCES THE CO NCLUSION IS IRRESISTIBLE THAT THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT WAS NOT HELD AT ALL BY THE OFFICER HAVING JURISDICTION TO ISSUE NOTICE AND RECORDING UNDER THE OFFICE NOTE ON FEBRUARY 8, 1997, THAT HE HAS REASON TO BELIEVE IS A MERE PRETENCE TO GIVE VALIDITY TO THE EXERCISE OF POWER. IN OTHER WORDS, IT WAS A COLOURABLE EXERCISE OF JURISDICTION BY THE ASSESSING OFFICER BY RECORDING REASONS FOR HOLDING A BELIEF WHICH IN FACT DEMONSTRABLY HE DID NOT HOLD THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSES SMENT DUE TO ERRONEOUS COMPUTATION OF DEDUCTION UNDER SECTION 80HHC, FOR THE REASONS STATED BY THE AUDIT. THE REASON IS NOT FAR TO SEEK. NOTWITHSTANDING THIS CLEAR POSITION OF LAW EMERGING FROM THE DECISION OF THE SUPREME COURT, THE INSTRUCTIONS OF T HE BOARD STILL PERSISTED THAT AS SOON AS AUDIT OBJECTIONS ARE RAISED, PROMPT REMEDIAL ACTION IN THE NATURE OF REASSESSMENT SHOULD BE TAKEN EVEN IF OBJECTION IS NOT ACCEPTED BY THE INCOME - TAX OFFICER. THE INSTRUCTIONS ARE BEING TAKEN FOR REMEDIAL ACTION, VI Z., REMEDIAL ACTION SHOULD INVARIABLY BE INITIATED AS A PRECAUTIONARY MEASURE IN RESPECT OF AUDIT OBJECTIONS, EVEN IF THE OBJECTION IS NOT ACCEPTED BY THE INCOME - TAX OFFICER OR WITHOUT THE ASSESSING AUTHORITY APPLYING HIS MIND TO SUCH INFORMATION FOR REACH ING HIS OWN CONCLUSION. ONCE THE REMEDIAL ACTION IS INITIATED, IT CAN BE DROPPED WITH THE APPROVAL OF THE COMMISSIONER OF INCOME - TAX IF THE OBJECTION RAISED IS ONE OF FACTS AND THE FACTS STATED TO THE AUDIT ARE FOUND TO BE INCORRECT. 9.4 NOW, THE L AW IS FAIRLY WELL SETTLED THAT THE DECISION TO REOPEN THE ASSESSMENT HAS TO BE TAKEN BY THE AO ALONE AND NO - ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 15 OF 25 ONE ELSE. IN OTHER WORDS, AO COULD NOT HAVE BEEN SUBJECTED TO ANY COMPULSION WHILE TAKING THE DECISION TO REOPEN THE ASSESSMENT. THE AO IS A QUASI - JUDICIAL AUTHORITY. THE QUASI - JUDICIAL AUTHORITY WHICH IS EXPECTED TO PERFORM STATUTORY FUNCTIONS CANNOT ACT ON THE DICTATES OF ANY AUTHORITY. IN THIS REGARD, IT IS APT TO REPRODUCE THE OBSERVATIONS MADE BY THE HON BLE DELHI HIGH COURT IN THE CASE OF SU N PHARMACEUTICALS INDUSTRIES LTD. VS. DCIT : 18. THAT A QUASI JUDICIAL AUTHORITY, WHICH IS EXPECTED TO EXERCISE STATUTORY FUNCTIONS ON AN OBJECTIVE CRITERIA, CANNOT ACT ON THE DICTATES OF ANY SUPERIOR AUTHORITY, OR ON ANY INSTRUCTION THAT MAY BE ISSUED BY AN AUTHORITY THAT MAY HAVE ADMINISTRATIVE CONTROL OVER SUCH QUASI - JUDICIAL AUTHORITY, IS FAIRLY WELL SETTLED. 19. IN COMMISSIONER OF POLICE BOMBAY V. GOVARDHAN DASS BHANJI AIR (1952) SC 16 THE SUPREME COURT WAS EXAMINING THE POWERS OF THE LICENSING AUTHO RITY UNDER THE BOMBAY POLICE ACT, 1951 AND THE RULES THEREUNDER. THE COURT NOTED THAT THE DISCRETION TO ISSUE OR CANCEL LICENCES WAS WITH THE COMMISSIONER OF POLICE AND NOT THE STATE GOVERNMENT. IT WAS HELD THAT 'NO OTHER PERSON OR AUTHORITY CAN DO IT'. 20. IN SIRPUR PAPER MILLS V. COMMISSIONER OF WEALTH - TAX (1970) 77 ITR 6 (SC) WHEN A COMMISSIONER OF WEALTH TAX (CWT) SOUGHT INSTRUCTIONS FROM THE CBDT ON HOW AN ASSESSMENT SHOULD BE FRAMED, THE COURT HAD NO HESITATION IN SETTING ASIDE THE CONSEQUENT ORDERS PASSED BY THE CWT. IT TOOK EXCEPTION TO THE CWT HAVING MERELY 'CARRIED OUT THE DIRECTIONS OF THE BOARD' INSTEAD OF HIMSELF DECIDING THE CASE. 21. IN ANIRUDHSINHJI JADEGA V. STATE OF GUJARAT (1995) 5 SCC 302, IT WAS REITERATED BY THE SUPREME COURT THAT O NCE A DISCRETION IS VESTED WITH A CERTAIN AUTHORITY, HE ALONE SHOULD EXERCISE THAT DISCRETION VESTED UNDER THE STATUTE AND IF HE ACTS IN ACCORDANCE WITH THE DIRECTION OR ANY COMPLIANCE WITH SOME HIGHER AUTHORITIES INSTRUCTION IT WOULD BE A CASE OF FAILUR E TO EXERCISE DISCRETION ALTOGETHER. ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 16 OF 25 22. RECENTLY IN COMMISSIONER OF INCOME TAX V. GREENWORLD CORPORATION (SUPRA) THE AO PASSED THE ORDER UNDER SECTION 148 OF THE ACT ON THE DICTATES OF THE CIT. THE SUPREME COURT STATED THAT WITHOUT GOING INTO THE QUESTI ON OF THE BONA FIDES OF THE AUTHORITIES UNDER THE ACT, 'THE ORDER OF ASSESSMENT PASSED BY THE ASSESSING OFFICER ON THE DICTATES OF THE HIGHER AUTHORITY, BEING WHOLLY WITHOUT JURISDICTION, WAS A NULLITY'. 23. IN M.P. TEWARI V. Y.P. CHAWLA (SUPRA), THIS CO URT WAS DEALING WITH A CIRCULAR ISSUED BY CBDT WHICH SOUGHT TO DELINEATE CERTAIN OFFENCES WHICH COULD NOT BE COMPOUNDED. THE COURT REFERRED TO SECTION 119 OF THE ACT AND HELD: IN THE EXERCISE OF ITS POWER TO ISSUE ORDERS AND CIRCULARS UNDER SECTION 119 OF THE INCOME - TAX ACT, 1961, THE CENTRAL BOARD CANNOT TAKE AWAY THE JUDICIAL OR QUASI - JUDICIAL FUNCTIONS OF THE COMMISSIONER AND VEST THEM IN ITSELF OR PUT THEM UNDER THE OVERALL SUPERVISION OF ITSELF OR THE MINISTER. THE BOARD CAN RELAX THE RIGOUR OF THE LA W OR GRANT RELIEF TO THE TAXPAYERS WHICH IS NOT TO BE FOUND IN THE STATUTE. BUT THE CENTRAL BOARD CANNOT DILUTE THE DISCRETION OF THE COMMISSIONER WHICH HAS BEEN CONFERRED BY THE STATUTE. 24. IN DR. M.L. PASSI V. CBDT (SUPRA) THE ABOVE LEGAL POSITION WA S REITERATED. IN CIT V. SPL S SIDDHARTHA LTD [2012] 345 ITR 223 (DEL) THE COURT FOUND THAT FOR THE PURPOSES OF SECTION 151 (1) OF THE ACT THE APPROVAL FOR ISSUANCE OF NOTICE UNDER SECTION 147 HAD TO BE GIVEN ONLY BY THE JOINT COMMISSIONER OR ADDITIONAL COM MISSIONER. INSTEAD THE APPROVAL WAS TAKEN, IN THAT CASE, FROM THE CIT (3) WHO WAS NOT COMPETENT TO APPROVE THE ACTION EVEN THOUGH HE WAS A HIGHER AUTHORITY. WHEN THE COURT EXAMINED THE FILE, IT FOUND THAT ALTHOUGH IT WAS ROUTED THROUGH THE ADDITIONAL COMMI SSIONER, HE DID NOT APPLY HIS MIND FOR DUE SANCTION BUT INSTEAD REQUESTED THE CIT TO ACCORD THE APPROVAL. THE COURT OBSERVED: THUS, IF AUTHORITY IS GIVEN EXPRESSLY BY AFFIRMATIVE WORDS UPON A DEFINED CONDITION, THE EXPRESSION OF THAT CONDITION EXCLUDES TH E DOING OF THE ACT AUTHORISED UNDER OTHER CIRCUMSTANCES THAN THOSE AS DEFINED. IT IS ALSO ESTABLISHED PRINCIPLE OF LAW THAT IF A PARTICULAR AUTHORITY HAS BEEN DESIGNATED TO RECORD HIS/HER SATISFACTION ON ANY PARTICULAR ISSUE, THEN IT IS THAT AUTHORITY ALON E WHO SHOULD APPLY HIS/HER INDEPENDENT MIND TO RECORD HIS/HER SATISFACTION AND FURTHER MANDATORY CONDITION IS THAT THE SATISFACTION RECORDED SHOULD BE INDEPENDENT AND NOT BORROWED OR DICTATED SATISFACTION. LAW IN THIS REGARD IS NOW WELLSETTLED. IN SH EO NARAIN JAISWAL V. ITO [1989] 176 ITR 352 (PATNA), IT WAS HELD: WHERE THE ASSESSING OFFICER DOES NOT HIMSELF EXERCISE HIS JURISDICTION UNDER SECTION 147 BUT ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 17 OF 25 MERELY ACTS AT THE BEHEST OF ANY SUPERIOR AUTHORITY, IT MUST BE HELD THAT ASSUMPTION OF JURISDIC TION WAS BAD FOR NONSATISFACTION OF THE CONDITION PRECEDENT. 25. THE GUJARAT HIGH COURT IN RAAJRATNA METAL INDUSTRIES LTD. V. ASST. COMMISSIONER OF INCOME TAX (DECISION DATED 30TH JULY 2014 IN SCA NO. 7140 OF 2014) SET ASIDE AN ORDER RE - OPENING AN ASSES SMENT SOLELY ON THE BASIS OF AUDIT OBJECTIONS, WHICH HAD NOT IN THE FIRST PLACE BEEN ACCEPTED BY THE AO . THUS, THE LAW IS FAIRLY WELL SETTLED THAT AO CANNOT ACT ON THE DICTATES OF HIGHER AUTHORITY TO REOPEN THE ASSESSMENT, WITHOUT APPLYING HIS MIND IN DEPENDENTLY TO THE FACTS OF THE CASE. WE ARE UNABLE TO DISCERN ANY INDEPENDENT APPLICATION OF MIND BY THE AO WHILE INITIATING THE IMPUGNED RE - ASSESSMENT PROCEEDINGS. 9.5 FURTHERMORE, EVEN THE DIRECTIONS ISSUED BY THE CIT(A) ARE BEYOND THE SCOPE OF THE SUBJECT MATTER OF APPEAL BEFORE HIM. THE CIT(A) CAN ONLY ISSUE SUCH DIRECTIONS WHICH ARE NECESSARY FOR DISPOSAL OF THE APPEAL BEFORE HIM. THIS PRINCIPLE WAS REITERATED BY THE H ON BLE SUPREME COURT IN THE CASE OF CIT VS. GREENWORLD CORPORATION (314 IT R 81) AS UNDER: . IN ITO V. MURLIDHAR BHAGWAN DAS [1964] 52 ITR 335 (SC), IT WAS HELD : 'THE PROCEEDINGS WOULD BE IN TIME, IF THE SECOND PROVISO TO SECTION 34( 3) OF THE ACT COULD BE INVOKED. THE QUESTION, THEREFORE, IS WHAT IS THE TRUE MEANING OF THE TERMS OF THE SECOND PROVISO TO SECTION 34(3) OF THE ACT. IT READS : PROVIDED FURTHER THAT NOTHING IN THIS SECTION LIMITING THE TIME WITHIN WHICH ANY ACTION MAY BE TAKEN, OR ANY ORDER, ASSESSMENT OR REASSESSMENT MAY BE MADE, SHALL APPLY TO A REASSESSMENT MADE UNDER SECTION 27 OR TO AN ASSESSMENT ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 18 OF 25 OR REASSESSMENT MADE ON THE ASSESSEE OR ANY PERSON IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAIN ED IN AN ORDER UNDER SECTION 31, SECTION 33, SECTION 33A, SECTION 33B, SECTION 66 OR SECTION 66A . PRIMA FACIE THIS PROVISO LIFTS THE BAN OF LIMITATION IMPOSED BY THE OTHER PROVISIONS OF THE SECTION IN THE MATTER OF TAKING AN ACTION IN RESPECT OF OR MAKIN G AN ORDER OF ASSESSMENT OR REASSESSMENT FALLING WITHIN THE SCOPE OF THE SAID PROVISO. THE SCOPE OF THE PROVISO IS CONFINED TO AN ASSESSMENT OR RE - ASSESSMENT MADE ON THE ASSESSEE OR ANY PERSON IN CONSEQUENCE OF AN ORDER TO GIVE EFFECT TO ANY FINDING OR DIR ECTION CONTAINED IN ANY ORDER MADE UNDER SECTION 31 I.E., IN AN APPEAL BEFORE THE ASSISTANT APPELLATE COMMISSIONER, UNDER SECTION 33 I.E., IN AN APPEAL BEFORE THE TRIBUNAL, UNDER SECTION 33A I.E., IN A REVISION BEFORE THE COMMISSIONER, UNDER SECTION 33B, I .E., IN A REVISION BEFORE THE COMMISSIONER AGAINST AN ORDER OF THE INCOME - TAX OFFICER, AND UNDER SECTIONS 66 AND 66A, I.E., IN A REFERENCE TO THE HIGH COURT AND APPEAL AGAINST THE HIGH COURT S ORDER TO THE SUPREME COURT. LEARNED COUNSEL FOR THE APPELLANT C ONTENDS THAT THE SCOPE OF THE PROVISO IS ONLY CONFINED TO THE ASSESSMENT OF THE YEAR THAT IS THE SUBJECT - MATTER OF THE APPEAL OR THE REVISION, AS THE CASE MAY BE. LEARNED COUNSEL FOR THE DEPARTMENT ARGUES THAT THE COMPREHENSIVE PHRASEOLOGY USED IN THE PROV ISO TAKES IN ITS BROAD SWEEP ANY FINDING GIVEN BY THE APPROPRIATE AUTHORITY NECESSARY FOR THE DISPOSAL OF THE APPEAL OR THE REVISION, AS THE CASE MAY BE, AND TO ANY DIRECTION GIVEN BY THE SAID AUTHORITY TO EFFECTUATE ITS FINDING AND THAT THE SAID FINDING O R DIRECTION MAY BE IN RESPECT OF ANY YEAR OR ANY PERSON. AS THE PHRASEOLOGY USED IN THE PROVISO IS NOT CLEAR OR UNAMBIGUOUS, THE QUESTION RAISED CANNOT BE SATISFACTORILY RESOLVED WITHOUT HAVING A PRECISE APPRECIATION OF A BRIEF HISTORY OF SECTION 34 OF THE ACT CULMINATING IN THE ENACTMENT OF THE PROVISO IN THE PRESENT FORM.' THIS COURT NOTICED THE DEVELOPMENT OF LAW AS ALSO THE FACT THAT THE DECISION OF THE INCOME - TAX OFFICER GIVEN IN A PARTICULAR YEAR DOES NOT OPERATE AS RES JUDICATA TO OPINE : 'THE LIF TING OF THE BAN WAS ONLY TO GIVE EFFECT TO THE ORDERS THAT MAY BE MADE BY THE APPELLATE, REVISIONAL OR REVIEWING TRIBUNAL WITHIN THE SCOPE OF ITS JURISDICTION. IF THE INTENTION WAS TO REMOVE THE PERIOD OF LIMITATION IN ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 19 OF 25 RESPECT OF ANY ASSESSMENT AGAINST ANY PERSON, THE PROVISO WOULD NOT HAVE BEEN ADDED AS A PROVISO TO SUB - SECTION (3) OF SECTION 34, WHICH DEALS WITH COMPLETION OF AN ASSESSMENT, BUT WOULD HAVE BEEN ADDED TO SUB - SECTION (1) THEREOF.' IN REGARD TO THE QUESTION THAT WHAT WOULD BE THE MEANING OF THE TERM FINDING OR DIRECTION , IT WAS HELD : 'A 'FINDING', THEREFORE, CAN BE ONLY THAT WHICH IS NECESSARY FOR THE DISPOSAL OF AN APPEAL IN RESPECT OF AN ASSESSMENT OF A PARTICULAR YEAR. THE APPELLATE ASSISTANT COMMISSIONER MAY HOLD, ON THE EVIDENCE, T HAT THE INCOME SHOWN BY THE ASSESSEE IS NOT THE INCOME FOR THE RELEVANT YEAR AND THEREBY EXCLUDE THAT INCOME FROM THE ASSESSMENT OF THE YEAR UNDER APPEAL. THE FINDING IN THAT CONTEXT IS THAT THAT INCOME DOES NOT BELONG TO THE RELEVANT YEAR. HE MAY INCIDENT ALLY FIND THAT THE INCOME BELONGS TO ANOTHER YEAR, BUT THAT IS NOT A FINDING NECESSARY FOR THE DISPOSAL OF AN APPEAL IN RESPECT OF THE YEAR OF ASSESSMENT IN QUESTION. THE EXPRESSION 'DIRECTION' CANNOT BE CONSTRUED IN VACUUM, BUT MUST BE COLLATED TO THE DIR ECTIONS WHICH THE APPELLATE ASSISTANT COMMISSIONER CAN GIVE UNDER SECTION 31. UNDER THAT SECTION HE CAN GIVE DIRECTIONS, INTER ALIA, UNDER SECTION 31(3)( B ), ( C ) OR ( E ) OR SECTION 31(4). THE EXPRESSION 'DIRECTIONS' IN THE PROVISO COULD ONLY REFER TO THE DI RECTIONS WHICH THE APPELLATE ASSISTANT COMMISSIONER OR OTHER TRIBUNALS CAN ISSUE UNDER THE POWERS CONFERRED ON HIM OR THEM UNDER THE RESPECTIVE SECTIONS. THEREFORE, THE EXPRESSION 'FINDING' AS WELL AS THE EXPRESSION 'DIRECTION' CAN BE GIVEN FULL MEANING, N AMELY, THAT THE FINDING IS A FINDING NECESSARY FOR GIVING RELIEF IN RESPECT OF THE ASSESSMENT OF THE YEAR IN QUESTION AND THE DIRECTION IS A DIRECTION WHICH THE APPELLATE OR REVISIONAL AUTHORITY, AS THE CASE MAY BE, IS EMPOWERED TO GIVE UNDER THE SECTIONS MENTIONED THEREIN.' IT WAS CLARIFIED THAT THE WORDS ANY PERSON WOULD REFER TO THOSE WHO WERE NOT NOMINEE PARTIES TO THE APPEAL ALTHOUGH THE ASSESSMENT OF THEIR INCOME WOULD DEPEND UPON THE ASSESSMENTS OF THE ASSESSEE. MUDHOLKAR, J. SPEAKING FOR THE MINO RITY REFERRED TO THIS COURT S DECISION IN S.C. PRASHAR V. VASANTSEN DWARKADAS [1963] 49 ITR 1 WHEREIN THE VALIDITY OF THE AFOREMENTIONED PROVISIONS WAS QUESTIONED; READ DOWN THE PROVISO APPENDED TO SECTION 34(1) STATING : ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 20 OF 25 '. . . NO DOUBT, THIS COURT HAS R ECENTLY HELD IN S.C. PRASHAR V. VASANTSEN DWARKADAS [1963] 49 ITR 1 THAT THE PROVISO, INSOFAR AS IT REMOVES THE BAR OF LIMITATION WITH RESPECT TO PERSONS OTHER THAN THE ASSESSEE, IS INVALID AS IT INFRINGES THE PROVISIONS OF ARTICLE 14 OF THE CONSTITUTION. THAT, HOWEVER, IS A QUESTION APART, WHAT WE HAVE TO CONSIDER IS THE LEGISLATIVE INTENT, AND FOR ASCERTAINING IT, IT IS LEGITIMATE TO LOOK ALSO AT THAT PART OF THE ENACTMENT WHICH HAS BEEN HELD TO BE INVALID. . . .' TO THE SIMILAR EFFECT ARE THE DECISIONS OF THIS COURT IN N. KT. SIVALINGAM CHETTIAR V. CIT [1967] 66 ITR 586 AND RAJINDER NATH V. CIT [1979] 120 ITR 14 1 . IN N. KT. SIVAL INGAM CHETTIAR S CASE ( SUPRA ), THIS COURT HELD : 'COUNSEL FOR THE COMMISSIONER CONTENDS THAT THE PRINCIPLE OF MURLIDHAR BHAGWAN DAS CASE DOES NOT GOVERN THE PRESENT CASE, BECAUSE IN THAT CASE PROCEEDINGS FOR ASSESSMENT WERE COMMENCED IN CONSEQUENCE OF O R TO GIVE EFFECT TO AN EXPRESS DIRECTION OF THE APPELLATE ASSISTANT COMMISSIONER AND IT WAS HELD BY THIS COURT THAT A DIRECTION NOT NECESSARY FOR THE DISPOSAL OF THE APPEAL IN RESPECT OF THE ASSESSMENT OF THE YEAR IN QUESTION BEFORE HIM WAS INOPERATIVE TO REMOVE THE BAR OF LIMITATION. COUNSEL SAYS THAT, WHERE A MERE FINDING IS RECORDED BY THE APPELLATE OR REVISIONAL AUTHORITY DIFFERENT CONSIDERATIONS ARISE AND THE BAR OF LIMITATION PRESCRIBED BY SECTION 34 WOULD BE REMOVED IF A PROCEEDING BE COMMENCED FOR A SSESSMENT IN CONSEQUENCE OF OR TO GIVE EFFECT TO THE FINDING. THIS ARGUMENT HAS, IN OUR JUDGMENT, NO FORCE. ****** IT IS CLEAR FROM THE OBSERVATION MADE BY THIS COURT THAT A FINDING WITHIN THE SECOND PROVISO TO SECTION 34(3) MUST BE NECESSARY FOR GIVING RE LIEF IN RESPECT OF THE ASSESSMENT OF THE YEAR IN QUESTION. THE COURT IN THAT CASE EXPRESSLY LENT APPROVAL TO THE OBSERVATIONS OF THE ALLAHABAD HIGH COURT IN PT. HAZARI LAL V. INCOME - TAX OFFICER, KANPUR THAT THE WORD FINDING ONLY COVERS MATERIAL QUESTION S WHICH ARISE IN A PARTICULAR CASE FOR DECISION BY THE AUTHORITY HEARING THE CASE OR THE APPEAL WHICH, BEING NECESSARY FOR PASSING THE FINAL ORDER OR GIVING THE FINAL DECISION IN THE APPEAL, HAS BEEN THE SUBJECT OF CONTROVERSY BETWEEN THE ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 21 OF 25 INTERESTED PARTIE S OR ON WHICH THE PARTIES CONCERNED HAVE BEEN GIVEN A HEARING.' (P. 589) IN RAJINDER NATH S CASE ( SUPRA ), THIS COURT HELD : 'THE EXPRESSIONS FINDING AND DIRECTION ARE LIMITED IN MEANING. A FINDING GIVEN IN AN APPEAL, REVISION OR REFERENCE ARISING OUT OF AN ASSESSMENT MUST BE A FINDING NECESSARY FOR THE DISPOSAL OF THE PARTICULAR CASE, THAT IS TO SAY, IN RESPECT OF THE PARTICULAR ASSESSEE AND IN RELATION TO THE PARTICULAR ASSESSMENT YEAR. TO BE A NECESSARY FINDING, IT MUST BE DIRECTLY INVOLVED IN THE D ISPOSAL OF THE CASE. IT IS POSSIBLE IN CERTAIN CASES THAT IN ORDER TO RENDER A FINDING IN RESPECT OF A, A FINDING IN RESPECT OF B MAY BE CALLED FOR. FOR INSTANCE, WHERE THE FACTS SHOW THAT THE INCOME CAN BELONG EITHER TO A OR B AND TO NO ONE ELSE, A FINDIN G THAT IT BELONGS TO B OR DOES NOT BELONG TO B WOULD BE DETERMINATIVE OF THE ISSUE WHETHER IT CAN BE TAXED AS A S INCOME. A FINDING RESPECTING B IS INTIMATELY INVOLVED AS A STEP IN THE PROCESS OF REACHING THE ULTIMATE FINDING RESPECTING A. IF, HOWEVER, THE FINDING AS TO A S LIABILITY CAN BE DIRECTLY ARRIVED AT WITHOUT NECESSITATING A FINDING IN RESPECT OF B, THEN A FINDING MADE IN RESPECT OF B IS AN INCIDENTAL FINDING ONLY. IT IS NOT A FINDING NECESSARY FOR THE DISPOSAL OF THE CASE PERTAINING TO A. THE SAME PRINCIPLES SEEM TO APPLY WHEN THE QUESTION IS WHETHER THE INCOME UNDER ENQUIRY IS TAXABLE IN THE ASSESSMENT YEAR UNDER CONSIDERATION OR ANY OTHER ASSESSMENT YEAR. AS REGARDS THE EXPRESSION DIRECTION IN SECTION 153(3)( II ) OF THE ACT, IT IS NOW WELL - SETTL ED THAT IT MUST BE AN EXPRESS DIRECTION NECESSARY FOR THE DISPOSAL OF THE CASE BEFORE THE AUTHORITY OR COURT. IT MUST ALSO BE A DIRECTION WHICH THE AUTHORITY OR COURT IS EMPOWERED TO GIVE WHILE DECIDING THE CASE BEFORE IT. THE EXPRESSIONS FINDING AND DI RECTION IN SECTION 153(3)( II ) OF THE ACT MUST BE ACCORDINGLY CONFINED. SECTION 153(3)( II ) IS NOT A PROVISION ENLARGING THE JURISDICTION OF THE AUTHORITY OR COURT. IT IS A PROVISION WHICH MERELY RAISES THE BAR OF LIMITATION OF MAKING AN ASSESSMENT ORDER UN DER SECTION 143 OR SECTION 144 OR SECTION 147. ITO V. MURLIDHAR BHAGWAN DAS [1964] 52 ITR 335 AND N. KT. SIVALINGAM CHETTIAR V. CIT [1967] 66 ITR 586 (SC). THE QUESTION FORMULATED BY THE TRIBUNAL RAISES THE POINT WHETHER THE AAC COULD CONVERT THE PROVISIONS OF SECTION 147(1) INTO THOSE OF SECTION 153(3)( II ) OF THE ACT. IN VIEW OF SECTION 153(3)( II ) DEALING WITH LIMITATION MERELY, I T IS NOT EASY TO APPRECIATE THE RELEVANCE OR VALIDITY OF THE POINT.' ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 22 OF 25 IT IS, THUS, EVIDENT THAT JURISDICTION TO ISSUE DIRECTIONS IS LIMITE D. . THEREFORE, IN THE LIGHT OF THE LAW ENUNCIATED IN THE ABOVE DECISIONS, IT IS CLEAR THAT THE DIRECTIONS OF THE CIT(A) TO AO TO REOPEN THE ASSESSMENTS IN THE CASE OF RAJKUMAR C (HUF) DOES NOT HOLD WATER. 9.6 TH IS ISSUE CAN BE ALSO APPROACHED FROM ANOTHER PROSPECTIVE. THE INFORMATION THAT THE APPELLANT EARNED THE SUBJECT INCOME WAS VERY MUCH AVAILABLE BE FORE THE AO AT THE TIME OF MAKING ASSESSMENTS IN THE INDIVIDUAL HANDS. IN FACT, ALL ALONG, IT IS THE CONTENTION OF SHRI C.RAJKUMAR, KARTHA OF THE APPELLANT BEFORE AO THAT THE INCOME HAS TO BE ASSESSED IN THE HANDS OF THE HUF. BUT AO HA D TAKEN A VIEW THAT THIS INCOME IS TAXABLE IN THE HANDS OF INDIVIDUAL. IT IS ONLY WHEN THE CIT(A), WHILE DEALING WITH THE APPEALS IN THE INDIVIDUAL HANDS OF C.RAJKUMAR, THE AO HAD COME TO THE CONCLUSION TO INITIATE PROCEEDINGS U/S 148 IN THE HANDS OF THE APPELLANT, IN ORDER TO CORRECT TH IS ERROR OF JUDGMENT EARLIER COMMITTED. T HIS IS NOT PERMISSIBLE, AS HELD BY THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF FIRST ITO, VS. A.Y.PANDURANGA RAO ( 128 ITR 250 ) WHEREIN IT WAS HELD AS FOLLOWS: . IN THE PRESENT CASE, THE PE TITIONERS' FAMILY HAD FILED A RETURN FOR THE ASSESSMENT YEAR 1962 - 63 IN RESPONSE TO THE EARLIER NOTICE UNDER SECTION 148. HENCE, THE FIRST OF THE TWO ALTERNATIVE CONDITIONS PRECEDENT UNDER THAT CLAUSE, DID NOT EXIST IN THE PRESENT CASE. SRI SRINIVASAN CONT ENDED THAT THE ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 23 OF 25 SECOND CONDITION ALSO WAS NOT SATISFIED IN THIS CASE BECAUSE THE ITO WAS IN POSSESSION OF ALL THE MATERIAL FACTS RELATING TO THE INCOME OF RS. 72,116 WHEN HE DROPPED THE PROCEEDINGS ON APRIL 11, 1968, AND THAT IF HE DID NOT TAX THAT INCOME F OR THE YEAR 1962 - 63, IT WAS NOT DUE TO ANY OMISSION OR FAILURE ON THE PART OF THE PETITIONERS' FAMILY TO DISCLOSE THAT INCOME OR ANY MATERIAL FACTS RELATING THERETO FULLY AND TRULY. SRI SRINIVASAN MAINTAINED THAT MERELY BECAUSE THE ITO HAD SUBSEQUENTLY TAK EN THE VIEW THEN THAT SUCH INCOME WAS TAXABLE FOR THE ASSESSMENT YEAR 1963 - 64 AND NOT FOR THE ASSESSMENT YEAR 1962 - 63, IT WAS NOT OPEN TO HIM (THE ITO) TO REOPEN THE ASSESSMENT AGAIN ON ACCOUNT OF HIS CHANGE OF OPINION AS TO THE ASSESSMENT YEAR IN WHICH SU CH INCOME COULD BE TAXED. IN SUPPORT OF HIS CONTENTION, SRI SRINIVASAN RELIED ON THE DECISION OF THE SUPREME COURT IN GEMINI LEATHER STORES V. ITO [1975] 100 ITR 1 . THERE, THE FACTS WERE THESE: THE ASSESSEE - FIRM HAD UTILISED CERTAIN DRAFTS FOR MAKING PURCHASES AT MADRAS AND CALCUTTA. THOSE DRAFTS REPRESENTED ITS UNDISCLOSED INCOME. THIS ASPECT OF THE MATTER WAS NOT CONSIDERED BY THE ITO AT THE TIME OF ORIGINAL ASSESSMENT. TO BRING SUCH UNDISCLOS ED INCOME TO TAX, HE SOUGHT TO REOPEN THE ASSESSMENT ON THE GROUND THAT THE AMOUNTS FOR WHICH THOSE DRAFTS HAD BEEN PURCHASED BY THE FIRM, HAD NOT BEEN RECORDED IN THE DISCLOSED ACCOUNTS OF THE FIRM. THE FIRM HAD CONTENDED THAT THE ITO COULD NOT INVOKE THE JURISDICTION UNDER SECTION 147( A ) OF THE ACT. UPHOLDING THAT CONTENTION, THIS IS WHAT THE SUPREME COURT OBSERVED (P. 4): ' IN THE CASE BEFORE US THE ASSESSEE DID NOT DISCLOSE THE TRANSACTIONS EVIDENCED BY THE DRAFTS WHICH THE INCOME - TAX OFFICER DISCOVERE D. AFTER THIS DISCOVERY THE INCOME - TAX OFFICER HAD IN HIS POSSESSION ALL THE PRIMARY FACTS, AND IT WAS FOR HIM TO MAKE NECESSARY ENQUIRIES AND DRAW PROPER INFERENCE AS TO WHETHER THE AMOUNTS INVESTED IN THE PURCHASE OF THE DRAFTS COULD BE TREATED AS PART O F THE TOTAL INCOME OF THE ASSESSEE DURING THE RELEVANT YEAR. THIS THE INCOME - TAX OFFICER DID NOT DO. IT WAS PLAINLY A CASE OF OVERSIGHT, AND IT CANNOT BE SAID THAT THE INCOME CHARGEABLE TO TAX FOR THE RELEVANT ASSESSMENT YEAR HAD ESCAPED ASSESSMENT BY REAS ON OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS. THE INCOME - TAX OFFICER HAD ALL THE MATERIAL FACTS BEFORE HIM WHEN HE MADE THE ORIGINAL ASSESSMENT. HE CANNOT NOW TAKE RECOURSE TO SECTION 147( A ) T O REMEDY THE ERROR RESULTING FROM HIS OWN OVERSIGHT.' ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 24 OF 25 HOWEVER, THE LEARNED STANDING COUNSEL CONTENDED THAT SINCE THE PETITIONERS' FAMILY HAD NOT DISCLOSED EVEN IN THE RETURN FILED ON APRIL 27,1967, THE INCOME FROM THE SALE OF THE LANDS, IT WAS A CLEAR CAS E WHERE THE INCOME HAD ESCAPED ASSESSMENT BY REASON OF THE OMISSION OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS, AND HENCE THE CASE CAME SQUARELY WITHIN THE AMBIT OF CLAUSE ( A ) OF SECTION 147 AND THAT THE IMPUGNED NOTICE UNDER SECTION 14 8 WAS VALID. THE ABOVE CONTENTION OVERLOOKS THAT WHEN THE ITO, AFTER CONSIDERING THE RETURN FILED ON APRIL 27, 1967, DROPPED THE PROCEEDINGS ON APRIL 11, 1968, HE HAD FULL KNOWLEDGE OF THE INCOME ARISING OUT OF THE SALE OF THE AGRICULTURAL LANDS. BUT HE T OOK THE VIEW THAT THAT INCOME COULD NOT BE BROUGHT TO TAX FOR THE ASSESSMENT YEAR 1962 - 63. THUS, IT WAS PLAINLY A CASE OF ERROR OF JUDGMENT ON HIS PART AND HIS NOT BRINGING TO TAX THAT INCOME WAS NOT DUE TO ANY OMISSION OR FAILURE ON THE PART OF THE PETITI ONERS' FAMILY TO DISCLOSE THAT INCOME OR ANY MATERIAL FACTS RELATING THERETO FULLY AND TRULY. IN OUR OPINION, THE DECISION OF THE SUPREME COURT IN GEMINI LEATHER STORES' CASE [1975] 100 ITR 1 FULLY SUPPORTS THE CONTENTION OF SRI SRINIVASAN. HENCE, THE ORDER OF THE LEARNED SINGLE JUDGE SHOULD BE UPHELD ON A GROUND DIFFERENT FROM THE ONE ON WHICH HE RESTED HIS ORDER. IN THE RESULT, WE DISMISS THIS APPEAL. 9.7 THUS, APPLYING THE ABOVE LEGAL POSITION TO THE FACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT THE AO HAD NOT SATISFIED THE CONDITION PRECEDENT FOR INVOKING THE PROVISIONS OF SEC.147 I.E. REASON TO BELIEVE THAT INCOME ESCAPED ASSESSMENT AND THEREFORE, WE HAVE NO HESITAT ION TO QUASH THE RE - ASSESSMENT PROCEEDINGS. 1 0 . SINCE WE HAVE QUASHED THE RE - ASSESSMENT PROCEEDINGS, WE CONSIDER IT NOT NECESSARY TO DEAL WITH THE GROUNDS RAISED ON MERITS OF ADDITION. ITA NO S . 1379 TO 1381 BANG/201 4 PAGE 25 OF 25 11. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORD ER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH OF APRIL , 2016 SD/ - SD/ - (VIJAY PAL RAO) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BANGALORE D A T E D : 27 /0 4 /2016 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) - II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE