SHRI SHUJAAT ALI KHAN, JAIPUR V. INCOME TAX OFFICER, WARD-6-1, JAIPUR

ITA 170/JPR/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 9427 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 12-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONISHA CHAUDHORY CIT A
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Tangible material; Accommodation entries; Reason to believe; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 50C; 234B; 133(6); 143(1); 139(1); 13; 147; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 170/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2008-09 SH. SHUJAAT ALI KHAN 2/304 GEETA MANDIR, JAWAHAR NAGAR, JAIPUR. CUKE VS. THE ITO, WARD-6(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AQZPK 1866 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI VINOD KUMAR GUPTA (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. MONISHA CHAUDHORY (ADDL.CIT) A LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 15/12/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 05/01/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER OF LD. CIT(A)-II, JAIPUR DATED 19.11.2018 PERTAINING TO AS SESSMENT YEAR 2008- 09 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GRO UNDS OF APPEAL:- 1. THE IMPUGNED ADDITION AND DISALLOWANCES MADE IN THE ORDER U/S 147/143(3) OF THE ACT DATED 02.02.2016 ARE BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION AND VARIOUS OTHER REASONS AND HENCE, THE SAME KINDLY BE DELETED. 2.RS.7,17,286/-: THE LD. CIT(A) ERRED IN LAW AS WEL L AS ON THE FACTS OF THE CASE IN CONFIRMING THE ADDITION OF RS. 7,17,286/- MADE ON ACCOUNT OF STCG. THE ADDITION SO MADE & CON FIRMED BY THE LD. CIT(A), IS CONTRARY TO THE PROVISIONS OF LA W AND FACTS HENCE, KINDLY BE DELETED IN FULL. ITA NO. 170/JP/2019 SH. SHUJAAT ALI KHAN VS. ITO 2 3. THE LD. AO FURTHER ERRED IN LAW AS WELL AS ON TH E FACTS OF THE CASE IN CHARGING INTEREST U/S 234A, 234B & 234C OF THE ACT. THE INTEREST SO CHARGED, BEING CONTRARY TO THE PROVISIO NS OF LAW AND FACTS, KINDLY BE DELETED IN FULL. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE CASE OF ASSESSEE WAS REOPENED U/S 147 OF THE ACT AND NOTICE U/S 148 WAS ISSUED ON 25.03.2015, IN RESPONSE TO WHICH ROI WAS FILED ON 1 6.06.2015 DECLARING TOTAL INCOME OF RS.1,04,500/- AS INCOME FROM COMMIS SION. THE CASE WAS REOPENED ON THE GROUND OF ALLEGED SALE OF IMMOV ABLE PROPERTY BY THE ASSESSEE FOR SALE CONSIDERATION OF RS. 7,00,000 /-, THE VALUE OF WHICH WAS ADOPTED AT RS.7,17,826/- BY STAMP VALUING AUTHO RITY. THE ASSESSMENT U/S 143(3) R.W.S 147 WAS COMPLETED AFTER MAKING ADDITION OF RS. 7,71,826/- BEING ALLEGED UNDISCLOSED SHORT T ERM CAPITAL GAIN ON ALLEGED SALE OF IMMOVABLE PROPERTY AFTER INVOKING SECTION 50C OF THE ACT. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD .CIT(A), WHICH WAS DECIDED BY LD. CIT(A) VIDE ORDER DATED 19.11.2018 S USTAINING THE FINDINGS OF THE AO AND ADDITION MADE U/S 148 OF THE ACT. AGAINST THE SAID ORDER OF THE LD CIT(A), THE ASSESSEE IS IN APP EAL BEFORE US. 3. DURING THE COURSE OF HEARING, THE LD AR SUBMITTE D THAT THE ASSESSEE IS AN INDIVIDUAL DRAWING INCOME FROM COMMI SSION. DURING THE YEAR, TOTAL INCOME OF RS. 1,04,500/- WAS EARNED WHI CH WAS BELOW THE MAXIMUM AMOUNT NOT CHARGEABLE TO TAX, THEREFORE NO RETURN OF INCOME WAS FILED BY THE ASSESSEE. DURING THE YEAR UNDER CO NSIDERATION, THE ASSESSEE GOT A POWER OF ATTORNEY IN HIS FAVOR ON 27 .10.2007 FROM ONE SHRI NISHIKANT KHOPKAR FOR SALE OF A PROPERTY BEING FLAT NO. AT 2/304, JAWAHAR NAGAR, JAIPUR. THE PROPERTY WAS OWNED AND P OSSESSED BY SHRI NISHIKANT KHOPKAR. THE AFORESAID PROPERTY WAS SOLD TO SHRI AMIT AHUJA ON 29.12.2007 BY SHRI NISHIKANT KHOPKAR FOR SALE CO NSIDERATION OF ITA NO. 170/JP/2019 SH. SHUJAAT ALI KHAN VS. ITO 3 RS. 7,00,000/- THROUGH REGISTERED SALE DEED DATED 2 9.12.2007. AS THE ASSESSEE WAS POWER OF ATTORNEY HOLDER OF THE SELLER SHRI NISHIKANT KHOPKAR, THEREFORE, THE REGISTRY DOCUMENTS WERE PRE SENTED BY THE ASSESSEE FOR REGISTRATION AS POWER OF ATTORNEY HOLD ER. THE AO GOT CERTAIN CIB INFORMATION THAT THE ASSESSEE HAS SOLD A PROPERTY FOR SALE CONSIDERATION OF RS.7,00,000/- WHOSE VALUE TAKEN FO R THE PURPOSE OF STAMP DUTY VALUATION HAS BEEN TAKEN AT RS.7,17,286/ - AND ON THIS BASIS, AO ENTERTAINED A REASON TO BELIEVE THAT INCOME TO T HE EXTENT OF RS.7,17,286/- HAS ESCAPED THE ASSESSMENT AND THE CA SE OF ASSESSEE WAS REOPENED U/S 148 AFTER RECORDING OF REASONS DAT ED 25.03.2015. 4. IT WAS SUBMITTED BY THE LD AR THAT AFTER RECORDI NG THE ABOVE MENTIONED REASONS, THE AO OBTAINED COPY OF REGISTER ED SALE DEED FROM THE OFFICE OF SUB-REGISTRAR-2, JAIPUR, BY ISSUING N OTICE U/S 133(6) DATED 03.08.2015. THE ADDITION OF RS.7,17,286/- WAS MADE BY THE AO ON THE GROUND OF ALLEGED UNDISCLOSED CAPITAL GAIN EARNED B Y THE ASSESSEE ON SALE OF PROPERTY FOR RS.7,00,000/-, WHOSE VALUE FOR THE PURPOSE OF STAMP DUTY VALUATION HAS BEEN TAKEN AT RS.7,17,286/ - HOLDING THE ASSESSEE TO BE THE OWNER OF THE PROPERTY AND INVOKI NG SECTION 50C OF THE ACT. 5. IT WAS SUBMITTED BY THE LD AR THAT A PERUSAL OF THE REASONS RECORDED REVEALS THAT THE AO WAS OF BELIEF THAT THE ASSESSEE HAS SOLD THE PROPERTY FOR RS. 7,00,000/- AND ON THIS GROUND, THE ACTION OF INITIATION U/S 148 OF THE ACT WAS TAKEN, WHEREAS IN FACT, THE ASSESSEE NEVER SOLD ANY PROPERTY AS HE WAS THE MERE POWER OF ATTORNEY HOLDER ACTING ON BEHALF OF SELLER AND OWNER OF PROPERTY WA S SHRI NISHIKANT KHOPKAR. THEREFORE, THE GROUND SO TAKEN BY THE AO TO FORM BELIEF OF ESCAPEMENT IS FACTUALLY INCORRECT. TO SALE SOMETHIN G IN SOMEONES OWN RIGHT, FIRSTLY, THE PERSON MUST OWN THE SAME AND TH ERE IS NO SUCH ITA NO. 170/JP/2019 SH. SHUJAAT ALI KHAN VS. ITO 4 EVIDENCE THAT THE ASSESSEE WAS HAVING OWNERSHIP OF SAID PROPERTY. ONCE, IT IS AN ESTABLISHED FACT THAT ASSESSEE WAS N OT THE OWNER OF PROPERTY, HOW CAN HE SELL THE SAME. THEREFORE, THE REASONS SO RECORDED WERE ON WRONG PRESUMPTION AND WITHOUT LOOKING INTO THE CORRECT FACTS OF THE CASE. IN SUPPORT OF OUR CONTENTION WE RELY UPON THE DECISION OF HONBLE COORDINATED BENCH IN THE CASE OF SHAILESH K UMAR CHATURVEDI VS ITO (ITA NO.1026/JP/2019 ORDER DATED 07.07.2020). 6. IT WAS FURTHER SUBMITTED THAT IN THE INSTANT CAS E, THE REASONS WERE RECORDED BY THE AO ON 25.03.2015 ON THE BASIS OF CIB INFORMATION AVAILABLE THAT A PROPERTY HAS BEEN SOLD BY THE ASSE SSEE FOR SALE CONSIDERATION OF RS.7,00,000/- AND ON THE BASIS OF SAID INFORMATION AND NON FILING OF RETURN, IT WAS CONCLUDED THAT THE IN COME HAS ESCAPED THE ASSESSMENT. AFTER RECORDING THE REASONS, A NOTICE U/S 133(6) DATED 03.08.2015 WAS ISSUED TO SUB-REGISTRAR-2 TO OBTAIN THE COPY OF REGISTERED SALE DEED OF THE TRANSACTION. IT VIEW OF THESE FACTS, IT EMERGES THAT THE AO WAS HAVING INFORMATION FROM TWO SOURCES VIZ. INFORMATION RECEIVED IN THE FORM OF CIB REPORT AND INFORMATION (REGISTERED SALE DEED) OBTAINED FROM THE SUB-REGIST RAR BY WAY OF NOTICE U/S 133(6). IT IS IMPORTANT TO NOTE THAT THE REGISTERED SALE DEED WAS OBTAINED BY THE AO AFTER RECORDING THE REASONS, THUS, AT THE TIME OF RECORDING THE REASONS, THERE WAS NO TANGIBLE MATERI AL IN THE HANDS OF THE AO TO HAVE ANY REASON TO BELIEVE THAT INCOME TO THE EXTENT OF RS.7,17,286/- HAS ESCAPED THE ASSESSMENT AND THE AO WAS HAVING THE CIB INFORMATION ONLY. 7. IT WAS FURTHER SUBMITTED THAT THE REPORT OF THE CIB WAS ONLY SUFFICIENT TO MAKE A PRIMA FACIE REASON TO SUSPECT THAT THE SOME PROPERTY HAS BEEN SOLD BY SHRI SHUJJAT ALI KHAN BUT IT WAS NOT SUFFICIENT ENOUGH TO DRAW A CONCLUSION THAT THE INCOME HAS ESC APED THE ITA NO. 170/JP/2019 SH. SHUJAAT ALI KHAN VS. ITO 5 ASSESSMENT. TO CONVERT REASON TO SUSPECT INTO REASO N TO BELIEVE SOME TANGIBLE MATERIAL WAS NEEDED. THEREFORE, TO REACH T O SUCH A DECISIVE FINDING THE AO WAS EXPECTED TO OBTAIN THE SAID REGI STERED SALE DEED, BEFORE RECORDING THE REASONS, FROM SUB-REGISTRAR OR FROM THE ASSESSEE, BUT NOTHING OF THIS SORT WAS DONE. THIS SHOWS THAT THE AO MERELY GONE BY THE REPORT OF CIB. IN THIS REGARD RELIANCE IS PL ACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF MEENAKSHI OVERSEAS PVT LTD VS ITO (2017) 395 ITR 677 (DELHI) WHEREIN THE HONBLE HIGH COURT HELD AS UNDER: THE REOPENING OF ASSESSMENT UNDER SECTION 147 IS A POTENT POWER NOT TO BE LIGHTLY EXERCISED. IT CERTAINLY CAN NOT BE INVOKED CASUALLY OR MECHANICALLY. THE HEART OF THE PROVISIO N IS THE FORMATION OF BELIEF BY THE AO THAT INCOME HAS ESCAP ED ASSESSMENT. THE REASONS SO RECORDED HAVE TO BE BASE D ON SOME TANGIBLE MATERIAL AND THAT SHOULD BE EVIDENT FROM R EADING THE REASONS. IT CANNOT BE SUPPLIED SUBSEQUENTLY EITHER DURING THE PROCEEDINGS WHEN OBJECTIONS TO THE REOPENING ARE CO NSIDERED OR EVEN DURING THE ASSESSMENT PROCEEDINGS THAT FOLLOW. THIS IS THE BARE MINIMUM MANDATORY REQUIREMENT OF THE FIRST PAR T OF SECTION 147 (1) OF THE ACT. 8. IT WAS FURTHER SUBMITTED THE NON AVAILABILITY OF ANY TANGIBLE INFORMATION AT THE TIME OF RECORDING OF REASONS IS FURTHER SUPPORTED BY THE FACT THAT IN THE REASONS, THE ASSESSEE WAS TERM ED AT SELLER, WHEREAS IN THE REGISTERED SALE DEED, THE NAME OF ASSESSEE I S CLEARLY MENTIONED AS GPA HOLDER OF NISHIKANT KHOPKAR. THUS, THE INFOR MATION IN THE POSSESSION OF AO AND OBTAINED U/S 133(6) WERE CONTR ADICTORY TO EACH OTHER. AS MENTIONED ABOVE, AFTER RECORDING THE REA SONS, THE AO HAS SUBSEQUENTLY WRITTEN A LETTER U/S 133(6) TO SUB REG ISTRAR-2 TO OBTAIN THE ITA NO. 170/JP/2019 SH. SHUJAAT ALI KHAN VS. ITO 6 COPY OF SALE DEED. GIVEN THAT, ON THE BASIS OF THIS TRANSACTION, AO FORMED A REASON OF ESCAPEMENT IN THE HANDS OF THE A SSESSEE, THEREFORE, IT WAS ESSENTIAL ON HIS PART TO AT LEAST EXAMINE TH E CORRECT FACTS OF THE TRANSACTION BEFOREHAND. THERE IS NO DISPUTE THAT TH E AO CAN RELY UPON THE INFORMATION RECEIVED BUT AT THE SAME TIME, WHER E HE IS ASSUMING JURISDICTION U/S 147, HE IS REQUIRED TO CARRY OUT F URTHER EXAMINATION TO MAKE A ESTABLISH FORMATION OF BELIEF THAT INCOME HA S ESCAPED, WHEREAS, NOTHING OF THIS SORT WAS DONE. IN SUPPORT OF HIS CO NTENTIONS, HE HAS RELIED UPON THE DECISION OF JAIPUR BENCH IN THE CAS E OF M/S. BALAJI HEALTH CARE PVT. LTD VS. ITO (ITA NOS. 566 & 567/JP/2018 VIDE ORDER DATED 30.1.2019) . 9. IT WAS ACCORDINGLY SUBMITTED THAT IN VIEW OF THE SE FACTS AND CIRCUMSTANCES, ONCE THE AO REACHED TO A DECISIVE FI NDING THAT THE ASSESSEE HAS SOLD THE PROPERTY AND THE SALE CONSIDE RATION OF RS.7,00,000/-WHOSE VALUE ADOPTED FOR STAMP DUTY VAL UATION PURPOSE OF RS.7,17,286/- HAS ESCAPED THE ASSESSMENT, HE WAS TO MAKE SOME INQUIRY TO BRING SOME TANGIBLE MATERIAL RATHER THAN COMPLETELY RELYING UPON A ONE LINE INFORMATION AND THEN WAS TO EXAMINE THE CORRECT FACTS TO ESTABLISH THE NEXUS BETWEEN THE MATERIAL AND FOR MATION OF BELIEF THAT INCOME HAS ESCAPED. THE TANGIBLE MATERIAL WHICH FOR MS THE BASIS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT MUST BE EVIDENT FROM A READING OF THE REASONS BUT AS THERE WAS NO SUCH TANGIBLE MATERIAL WITH THE AO AND ONLY CONCLUSIONS HAVE BEEN DRAWN . THEREFORE, IN ABSENCE OF THESE PRE CONDITIONS, THE ASSUMPTION OF JURISDICTIO N U/S 147 HAS NO LEGAL BASIS AND RESULTANTLY THE ASSESSMENT MADE U/S 148 D ESERVES TO BE QUASHED. 10. PER CONTRA, THE LD. DR SUBMITTED THAT THE AO W AS IN RECEIPT OF CIB INFORMATION THAT ASSESSEE HAS SOLD AN IMMOVABLE PROPERTY AND THUS ITA NO. 170/JP/2019 SH. SHUJAAT ALI KHAN VS. ITO 7 HAD RECEIVED SALE CONSIDERATION FOR TRANSFER OF PRO PERTY WHICH WAS NOT DISCLOSED TO THE DEPARTMENT IN ABSENCE OF ANY RETUR N OF INCOME AND THEREFORE, IT IS A CLEAR CASE OF ESCAPEMENT OF INCO ME AND THE AO WAS JUSTIFIED IN INITIATING THE PROCEEDINGS U/S 148 WHI CH HAVE BEEN RIGHTLY UPHELD BY THE LD CIT(A). HE ACCORDINGLY SUPPORTED THE ORDER PASSED BY THE LOWER AUTHORITIES AND HAS RELIED UPON THE FINDI NGS OF LD. CIT(A) WHEREIN AT PARA 2.3, IT WAS HELD AS UNDER:- 2.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSE SSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. ASSESSEE CHAL LENGED THE REOPENING PROCEEDINGS. ASSESSING OFFICER HAS INFORM ATION THAT ASSESSEE RECEIVED SALE CONSIDERATION FOR TRANSFER O F PROPERTY AND SAME WAS NOT DISCLOSED IN RETURN OF INCOME. THEREFO RE, I UPHELD THE ACTION OF ASSESSING OFFICER IN REOPENING THE CA SE. THIS GROUND OF APPEAL IS DISMISSED. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS A SETTLED LEGAL PROPOSI TION THAT THE SATISFACTION OF THE ASSESSING OFFICER FOR ASSUMPTION OF JURISDIC TION U/S 147 OF THE ACT SHOULD BE DISCERNABLE FROM THE REASONS SO RECORDED AND THE REASONS ALONE SHOULD BE CONSIDERED FOR DETERMINING WHETHER THE ASSESSING OFFICER IS IN POSSESSION OF THE MATERIAL/INFORMATIO N BASIS WHICH HE HAS FORMED THE REASONABLE BELIEF THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR . FOR ASSUMPTION OF JURISDICTION U/S 147, THE ASSESSING OFFICER MUST FORM A PRIMA FACIE VIEW ON THE BASIS OF TANGIBLE MATERIAL IN HIS POSSE SSION THAT THERE IS AN ESCAPEMENT OF INCOME, THE OPINION SO FORMED MAY BE SUBJECTIVE BUT THE REASONS RECORDED OR THE INFORMATION AVAILABLE O N RECORD MUST SHOW THAT THE OPINION IS NOT A MERE SUSPICION, THE REASO NS RECORDED AND/OR THE DOCUMENTS AVAILABLE ON RECORD MUST SHOW A LINK/ NEXUS AND RELEVANCY TO THE OPINION FORMED BY THE ASSESSING OF FICER REGARDING ITA NO. 170/JP/2019 SH. SHUJAAT ALI KHAN VS. ITO 8 ESCAPEMENT OF INCOME AND THE REASONS ARE REQUIRED T O BE READ AS THEY WERE RECORDED BY THE ASSESSING OFFICER. IT IS FOR T HE ASSESSING OFFICER TO DISCLOSE AND OPEN HIS MIND THROUGH THE REASONS RECO RDED BY HIM AND HE HAS TO SPEAK THROUGH THE REASONS THAT THE INCOME CH ARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN THE PRESENT CASE, THE REASO NS RECORDED BY THE ASSESSING OFFICER BEFORE ISSUANCE OF NOTICE U/S 148 READ AS UNDER:- AS PER INFORMATION AVAILABLE ON RECORD, DURING THE PERIOD UNDER CONSIDERATION, THE ASSESSEE HAS SOLD IMMOVABLE PROP ERTY FOR CONSIDERATION OF RS. 7,00,000/- WHICH HAS BEEN VALU ED AT RS. 7,17,286/- FOR THE PURPOSE OF CHARGING STAMP DUTY. ON VERIFICATION OF RECORD, IT HAS BEEN FOUND THAT THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME. THUS THE ASSESSEE HAS F AILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT. THEREFORE, I HAVE THE REASON TO BELIEVE THAT THE ABOVE INCOME OF RS. 7,17,286/-, WHICH IS CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 12. ON PERUSAL OF THE REASONS SO RECORDED, WE FIND THAT THE ASSESSING OFFICER HAD RECEIVED CERTAIN INFORMATION THAT THE ASSESSEE HAD SOLD AN IMMOVEABLE PROPERTY FOR CONSIDERATION OF RS 7 LACS AND WHICH HAS BEEN VALUED AT RS 7.17 LACS FOR THE PURPOSES OF CHARGING STAMP DUTY. THE NATURE AND SOURCE OF SUCH INFORMATION IS NOT DISCERNABLE FROM THE REASONS SO RECORDED NOR THE SPECIFIC OF TH E IMMOVABLE PROPERTY IN TERMS OF LOCATION, SIZE, PURCHASER, ETC HAS BEEN STATED, THEREFORE, THE QUESTION THAT HAS BEEN RAISED BEFORE US IS ABOUT THE TANGIBLE NATURE OF SUCH INFORMATION AND MATERIAL IN POSSESSION OF THE AO AND THE NEXUS THEREOF WITH FORMATION OF BELIEF T HAT THE INCOME HAS ESCAPED ASSESSMENT. IT HAS BEEN CONTENDED BY THE LD AR THAT THE INFORMATION SO REFERRED IN THE REASONS RECORDED IS ONLY THE CIB REPORT RECEIVED BY THE ASSESSING OFFICER, A FACT WHICH IS CORROBORATED BY THE ASSESSING OFFICER WHERE HE HAD SUBSEQUENTLY ISSUED A NOTICE U/S 133(6) ITA NO. 170/JP/2019 SH. SHUJAAT ALI KHAN VS. ITO 9 TO SUB-REGISTRAR-2 TO OBTAIN COPY OF THE SALE DEED. IT IS AN ADMITTED FACT THAT THE SAID NOTICE U/S 133(6) WAS ISSUED ON 3.08.2015 SUBSEQUENT TO RECORDING OF REASONS BY THE AO ON 25. 03.2015. THEREFORE, WE FIND THAT AS ON THE DATE OF RECORDING OF REASONS BY THE AO, ONLY PIECE OF INFORMATION IN POSSESSION OF THE AO WAS THE CIB REPORT THAT THE ASSESSEE HAS SOLD CERTAIN IMMOVEABL E PROPERTY AND THE AO WAS NOT EVEN HAVING A COPY OF THE SALE DEED OR T HE SPECIFICS OF THE IMMOVEABLE PROPERTY, WHICH TO OUR MIND, RAISES A QU ESTION MARK ON THE TANGIBLE NATURE OF SUCH INFORMATION IN TERMS OF WHE THER IT IS REAL OR ACTUAL RATHER THAN IMAGINARY AND WHETHER IT ACTUALL Y RELATES TO THE ASSESSEE OR NOT. WHERE THE AO STILL WISHES TO RELY ON THE REPORT OF CIB, GIVEN THAT SUCH REPORT IS MORE OF A GENERIC REPORT AND NOT CONTAINING EXACT SPECIFICS OF OF IMMOVEABLE PROPERTY AND OTHER PARTICULARS OF THE TRANSACTION, IT IS EXPECTED THAT THE AO ON RECEIPT OF SUCH REPORT SHOULD CARRY OUT FURTHER EXAMINATION BEFORE ARRIVING AT TH E PRIMA FACIE VIEW THAT INCOME HAS ESCAPED ASSESSMENT AND THE MATTER I S FIT FOR ISSUANCE OF NOTICE U/S 148 OF THE ACT. SUCH EXAMINATION IS REQUIRED TO BE CARRIED OUT BEFORE ISSUANCE OF NOTICE U/S 148 AS THE SAME I S REQUIRED FOR THE ASSESSING OFFICER TO FORM HIS OWN INDEPENDENT OPINI ON THAT THE INCOME HAS ESCAPED ASSESSMENT. IN THE INSTANT CASE, THERE IS NO SUCH EXAMINATION AND INVESTIGATION CARRIED OUT BY THE AO AND INFACT, ONLY AFTER RECORDING OF THE REASONS, HE HAS SOUGHT COPY OF THE SALE DEED FROM THE SUB-REGISTRAR WHERE THE ASSESSEE HAS BEEN SHOWN AS POWER OF ATTORNEY HOLDER OF THE OWNER OF THE IMMOVEABLE P ROPERTY WHICH AGAIN RAISES A QUESTION MARK ON THE TANGIBLE NATURE OF THE CIB REPORT. WE THEREFORE FIND THAT THE AO HAS MERELY GONE BY TH E CIB REPORT AND WAS NOT EVEN IN POSSESSION OF THE SALE DEED AND THE EXACT SPECIFICS OF THE TRANSACTION AT THE TIME OF RECORDING OF REASONS AND THEREFORE, IT IS A ITA NO. 170/JP/2019 SH. SHUJAAT ALI KHAN VS. ITO 10 CASE WHERE THE PROCEEDINGS ARE VITIATED FOR WANT OF TANGIBLE MATERIAL IN POSSESSION OF THE AO AND LACK OF REASON TO BELIEVE WHICH IS MORE IN THE REALM OF SUSPICION RATHER THAN FORMATION OF OPINION THAT INCOME HAS ESCAPED ASSESSMENT. THE REASONS THUS RECORDED AND/ OR THE DOCUMENTS AVAILABLE ON RECORD, THEREFORE, DONT SHOW A LINK/N EXUS AND RELEVANCY TO THE OPINION FORMED BY THE ASSESSING OFFICER REGARDI NG ESCAPEMENT OF INCOME. FURTHER, EVEN THOUGH THE REOPENING IN THE PRESENT CASE WAS AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT A.Y 2008-09, GIVEN THAT THERE WAS NO ORIGINAL RETURN OF INCOME F ILED BY THE ASSESSEE AND CONSEQUENT ASSESSMENT, IT WAS NOT NECESSARY FOR THE AO TO SHOW THAT THERE WAS ANY FAILURE TO DISCLOSE FULLY OR TRU LY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT IN TERMS OF PROVISO TO SECTION 147 OF THE ACT WHICH IS NOT APPLICABLE IN THE INSTANT CASE. SI MILAR VIEW HAS BEEN TAKEN BY THE COORDINATE BENCH IN CASE OF BALAJI HEALTHCARE PVT LTD (SUPRA) WHEREIN THE RELEVANT FINDINGS READ AS UNDER : 20.FURTHER, IT IS NOTED THAT AFTER RECORDING OF THE REASONS, THE ASSESSING OFFICER HAS SUBSEQUENTLY WRITTEN A LETTER ON 30.08.2013 TO ACIT, NEW DELHI R EQUESTING FOR COPY OF STATEMENTS OF SURENDRA KUMAR JAIN,VIRENDRA KUMAR JAIN AT WHOSE PREMISES THE SEARCH WAS CONDUCTED AND P C AGARWAL, SO CALLED MEDIATOR IN THESE TRANSACTIONS. GIVEN THAT S EARCH PROCEEDINGS IN RESPECT OF THESE TWO PERSONS HAVE FO RMED THE BASIS FOR THE PRESENT REASSESSMENT PROCEEDINGS IN T HE HANDS OF THE ASSESSEE, IT WAS ESSENTIAL TO AT LEAST EXAMINE THE STATEMENTS OF THESE THREE PERSONS AND SEIZED MATERIAL IF ANY F OUND DURING THE COURSE OF SEARCH WHICH IN ANY WAYS INDICATE THA T THESE TWO PERSONS HAVE CARRIED OUT CERTAIN TRANSACTIONS WITH THE ASSESSEE AND PRIMA FACIE THESE TRANSACTIONS ARE SUSPECTED TO BE ACCOMMODATION ENTRIES AND NOT ACTUAL TRANSACTIONS. HOWEVER, THERE IS NOTHING IN THE REASONS SO RECORDED THAT TH E ASSESSING OFFICER HAS GONE THROUGH THE STATEMENTS SO RECORDED DURING THE COURSE OF SEARCH AND THE SEIZED MATERIAL TO SHOW PR IMA FACIE ITA NO. 170/JP/2019 SH. SHUJAAT ALI KHAN VS. ITO 11 LINKAGE OF ASSESSEES UNDISCLOSED INCOME BEING ROUT ED BACK IN FORM OF SHARE CAPITAL. THIS SHOWS THAT THE ASSESSIN G OFFICER HAS MERELY GONE BY THE REPORT OF THE DIT, INVESTIGATION WING AND THE SAID REPORT EVEN DIDNT HAVE THE STATEMENTS OF THES E PERSONS WHICH EITHER FIND MENTION IN THE REPORT OR AS ENCLO SURES WHEN THE SAME WAS FORWARDED TO THE ASSESSING OFFICER. THEREF ORE, IT TRANSPIRES THAT THERE IS NO FURTHER EXAMINATION WHI CH HAS BEEN CARRIED OUT BY THE ASSESSING OFFICER. THE FACT THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME U/S 139(1) WAS VERY MUCH IN THE KNOWLEDGE OF THE ASSESSING OFFICER AND THE LATTER C OULD HAVE VERIFIED THE TRANSACTIONS WITH THE REPORTED TRANSAC TIONS IN THE FINANCIAL STATEMENTS AND COULD HAVE ASKED FOR MORE INFORMATION TO ESTABLISH THE NECESSARY NEXUS, HOWEVER NOTHING O F THAT SORT HAS BEEN DONE BY THE ASSESSING OFFICER AND HE HAS M ERELY GONE BY THE REPORT OF DIT, INVESTIGATION WING. IT IS TRU E THAT THE ASSESSING OFFICER CAN RELY ON THE REPORT OF DIT, IN VESTIGATION WING BUT AT THE SAME TIME, WHERE HE IS ASSUMING JUR ISDICTION U/S 147, HE IS REQUIRED TO CARRY OUT FURTHER EXAMINATIO N AND ANALYSIS IN ORDER TO ESTABLISH THE NEXUS BETWEEN THE MATERIA L AND FORMATION OF BELIEF THAT INCOME HAS ESCAPED ASSESSM ENT AND IN ABSENCE THEREOF, THE ASSUMPTION OF JURISDICTION U/S 147 HAS NO LEGAL BASIS AND RESULTANT REASSESSMENT PROCEEDINGS DESERVE TO BE SET-ASIDE. OUR VIEWIS FORTIFIED BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF MEENAKSHI OVERSEAS PVT. LTD. (SUPRA) WHEREIN IT WAS HELD AS UNDER:- 19. A PERUSAL OF THE REASONS AS RECORDED BY THE AO REVEALS THAT THERE ARE THREE PARTS TO IT. IN THE FIRST PART, THE AO HAS REPRODUCED THE PRECISE INFORMATION HE HAS RECEIVED FROM THE INVESTIGATION WING OF THE REVENUE. THIS INFORMATION IS IN THE FORM OF DETAILS OF THE AMOUNT OF CREDIT RECEIVED, T HE PAYER, THE PAYEE, THEIR RESPECTIVE BANKS, AND THE CHEQUE NUMBE R. THIS INFORMATION BY ITSELF CANNOT BE SAID TO BE TANGIBLE MATERIAL. 20. COMING TO THE SECOND PART, THIS TELLS US WHAT T HE AO DID WITH THE INFORMATION SO RECEIVED. HE SAYS: 'THE INFORMAT ION SO RECEIVED HAS BEEN GONE THROUGH.' ONE WOULD HAVE EXP ECTED HIM ITA NO. 170/JP/2019 SH. SHUJAAT ALI KHAN VS. ITO 12 TO POINT OUT WHAT HE FOUND WHEN HE WENT THROUGH THE INFORMATION. IN OTHER WORDS, WHAT IN SUCH INFORMATI ON LED HIM TO FORM THE BELIEF THAT INCOME ESCAPED ASSESSMENT. BUT THIS IS ABSENT. HE STRAIGHTAWAY RECORDS THE CONCLUSION THAT 'THE ABOVE SAID INSTRUMENTS ARE IN THE NATURE OF ACCOMMODATION ENTRY WHICH THE ASSESSEE HAD TAKEN AFTER PAYING UNACCOUNTED CAS H TO THE ACCOMMODATION ENTRY GIVEN(SIC GIVER)'. THE AO ADDS THAT THE SAID ACCOMMODATION WAS 'A KNOWN ENTRY OPERATOR' THE SOUR CE BEING 'THE REPORT OF THE INVESTIGATION WING'. 21. THE THIRD AND LAST PART CONTAINS THE CONCLUSION DRAWN BY THE AO THAT IN VIEW OF THESE FACTS, 'THE ALLEGED TRANSA CTION IS NOT THE BONAFIDE ONE. THEREFORE, I HAVE REASON TO BE BELIEV E THAT AN INCOME OF RS. 5,00,000 HAS ESCAPED ASSESSMENT IN TH E AY 2004- 05 DUE TO THE FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSE SSMENT... ' 22. AS RIGHTLY POINTED OUT BY THE ITAT, THE 'REASON S TO BELIEVE' ARE NOT IN FACT REASONS BUT ONLY CONCLUSIONS, ONE AFTER THE OTHER. THE EXPRESSION 'ACCOMMODATION ENTRY' IS USED TO DESCRIB E THE INFORMATION SET OUT WITHOUT EXPLAINING THE BASIS FO R ARRIVING AT SUCH A CONCLUSION. THE STATEMENT THAT THE SAID ENTR Y WAS GIVEN TO THE ASSESSEE ON HIS PAYING 'UNACCOUNTED CASH' IS AN OTHER CONCLUSION THE BASIS FOR WHICH IS NOT DISCLOSED. WH O IS THE ACCOMMODATION ENTRY GIVER IS NOT MENTIONED. HOW HE CAN BE SAID TO BE 'A KNOWN ENTRY OPERATOR' IS EVEN MORE MYSTERI OUS. CLEARLY THE SOURCE FOR ALL THESE CONCLUSIONS, ONE AFTER THE OTHER, IS THE INVESTIGATION REPORT OF THE DIT. NOTHING FROM THAT REPORT IS SET OUT TO ENABLE THE READER TO APPRECIATE HOW THE CONC LUSIONS FLOW THERE FROM. 23. THUS, THE CRUCIAL LINK BETWEEN THE INFORMATION MADE AVAILABLE TO THE AO AND THE FORMATION OF BELIEF IS ABSENT. TH E REASONS MUST BE SELF EVIDENT, THEY MUST SPEAK FOR THEMSELVES. TH E TANGIBLE MATERIAL WHICH FORMS THE BASIS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT MUST BE EVIDENT FROM A READING O F THE REASONS. THE ENTIRE MATERIAL NEED NOT BE SET OUT. H OWEVER, ITA NO. 170/JP/2019 SH. SHUJAAT ALI KHAN VS. ITO 13 SOMETHING THEREIN WHICH IS CRITICAL TO THE FORMATIO N OF THE BELIEF MUST BE REFERRED TO. OTHERWISE THE LINK GOES MISSIN G. 24. THE REOPENING OF ASSESSMENT UNDER SECTION 147 I S A POTENT POWER NOT TO BE LIGHTLY EXERCISED. IT CERTAINLY CAN NOT BE INVOKED CASUALLY OR MECHANICALLY. THE HEART OF THE PROVISIO N IS THE FORMATION OF BELIEF BY THE AO THAT INCOME HAS ESCAP ED ASSESSMENT. THE REASONS SO RECORDED HAVE TO BE BASE D ON SOME TANGIBLE MATERIAL AND THAT SHOULD BE EVIDENT FROM R EADING THE REASONS. IT CANNOT BE SUPPLIED SUBSEQUENTLY EITHER DURING THE PROCEEDINGS WHEN OBJECTIONS TO THE REOPENING ARE CO NSIDERED OR EVEN DURING THE ASSESSMENT PROCEEDINGS THAT FOLLOW. THIS IS THE BARE MINIMUM MANDATORY REQUIREMENT OF THE FIRST PAR T OF SECTION 147 (1) OF THE ACT. 25. AT THIS STAGE IT REQUIRES TO BE NOTED THAT SINC E THE ORIGINAL ASSESSMENT WAS PROCESSED UNDER SECTION 143(1) OF TH E ACT, AND NOT SECTION 143(3) OF THE ACT, THE PROVISO TO SECTI ON 147 WILL NOT APPLY. IN OTHER WORDS, EVEN THOUGH THE REOPENING IN THE PRESENT CASE WAS AFTER THE EXPIRY OF FOUR YEARS FROM THE EN D OF THE RELEVANT AY, IT WAS NOT NECESSARY FOR THE AO TO SHO W THAT THERE WAS ANY FAILURE TO DISCLOSE FULLY OR TRULY ALL MATE RIAL FACTS NECESSARY FOR THE ASSESSMENT. 26. THE FIRST PART OF SECTION 147(1) OF THE ACT REQ UIRES THE AO TO HAVE 'REASONS TO BELIEVE' THAT ANY INCOME CHARGEABL E TO TAX HAS ESCAPED ASSESSMENT. IT IS THUS FORMATION OF REASON TO BELIEVE THAT IS SUBJECT MATTER OF EXAMINATION. THE AO BEING A QU ASI JUDICIAL AUTHORITY IS EXPECTED TO ARRIVE AT A SUBJECTIVE SAT ISFACTION INDEPENDENTLY ON AN OBJECTIVE CRITERIA. WHILE THE R EPORT OF THE INVESTIGATION WING MIGHT CONSTITUTE THE MATERIAL ON THE BASIS OF WHICH HE FORMS THE REASONS TO BELIEVE THE PROCESS O F ARRIVING AT SUCH SATISFACTION CANNOT BE A MERE REPETITION OF TH E REPORT OF INVESTIGATION. THE RECORDING OF REASONS TO BELIEVE AND NOT REASONS TO SUSPECT IS THE PRE- CONDITION TO THE ASSUMPTION OF JURISDICTION UNDER SECTION 147 OF THE ACT. THE REASONS TO BELIEV E MUST DEMONSTRATE LINK BETWEEN THE TANGIBLE MATERIAL AND THE FORMATION ITA NO. 170/JP/2019 SH. SHUJAAT ALI KHAN VS. ITO 14 OF THE BELIEF OR THE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. 36. IN THE PRESENT CASE, AS ALREADY NOTICED, THE R EASONS TO BELIEVE CONTAIN NOT THE REASONS BUT THE CONCLUSIONS OF THE AO ONE AFTER THE OTHER. THERE IS NO INDEPENDENT APPLICATIO N OF MIND BY THE AO TO THE TANGIBLE MATERIAL WHICH FORMS THE BAS IS OF THE REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT. THE CONCLUSIONS OF THE AO ARE AT BEST A REPRODUCTION OF THE CONCLUSION IN THE INVESTIGATION REPORT. INDEED IT IS A 'BORROW ED SATISFACTION'. THE REASONS FAIL TO DEMONSTRATE THE LINK BETWEEN TH E TANGIBLE MATERIAL AND THE FORMATION OF THE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. 37. FOR THE AFOREMENTIONED REASONS, THE COURT IS SA TISFIED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, NO ERROR H AS BEEN COMMITTED BY THE ITAT IN THE IMPUGNED ORDER IN CONC LUDING THAT THE INITIATION OF THE PROCEEDINGS UNDER SECTION 147 /148 OF THE ACT TO REOPEN THE ASSESSMENTS FOR THE AYS IN QUESTION D OES NOT SATISFY THE REQUIREMENT OF LAW. SUBSEQUENTLY, THE HONBLE DELHI HIGH COURT IN CASE OF RMG POLYVINYL LTD. (SUPRA) HAS HELD AS UNDER:- 12.RECENTLY, IN ITS DECISION DATED 26TH MAY, 2017 IN ITA NO. 692/2016 PR. CIT V.MEENAKSHI OVERSEAS, THIS COURT D ISCUSSED THE LEGAL POSITION REGARDING REOPENING OF ASSESSMENTS W HERE THE RETURN FILED AT THE INITIAL STAGE WAS PROCESSED UND ER SECTION143(1) OF THE ACT AND NOT UNDER SECTION 143(3) OF THE ACT. THE REASONS FOR THE REOPENING OF THE ASSESSMENT IN THAT CASE WE RE MORE OR LESS SIMILAR TO THE REASONS IN THE PRESENT CASE, VI Z., INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING REGARDING ACCOMMODATION ENTRIES PROVIDED BY A 'KNOWN' ACCOMMO DATION ENTRY PROVIDER. THERE, ON FACTS, THE COURT CAME TO THE CONCLUSION THAT THE REASONS WERE, IN FACT, IN THE FORM OF CONC LUSIONS 'ONE AFTER THE OTHER' AND THAT THE SATISFACTION ARRIVED AT BY THE AO WAS ITA NO. 170/JP/2019 SH. SHUJAAT ALI KHAN VS. ITO 15 A 'BORROWED SATISFACTION' AND AT BEST 'A REPRODUCTI ON OF THE CONCLUSION IN THE INVESTIGATION REPORT.' 13. AS IN THE ABOVE CASE, EVEN IN THE PRESENT CASE, THE COURT IS UNABLE TO DISCERN THE LINK BETWEEN THE TANGIBLE MAT ERIAL AND THE FORMATION OF THE REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. IN THE PRESENT CASE TOO, THE INFORMATIO N RECEIVED FROM THE INVESTIGATION WING CANNOT BE SAID TO BE TA NGIBLE MATERIAL PER SE WITHOUT A FURTHER INQUIRY BEING UND ERTAKEN BY THE AO. IN THE PRESENT CASE THE AO DEPRIVED HIMSELF OF THAT OPPORTUNITY BY PROCEEDING ON THE ERRONEOUS PREMISE THAT ASSESSEE HAD NOT FILED A RETURN WHEN IN FACT IT HAD . IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRETY O F FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSUMPTION OF JURISD ICTION AND INITIATION OF THE PROCEEDINGS UNDER SECTION 147 OF THE ACT TO REOPEN THE ASSESSMENT PROCEEDINGS DOES NOT SATISFY THE REQUIREMENT OF LAW AND IS HEREBY SET-ASIDE. IN THE RESULT, GROUND NO. 1 OF THE ASSESSEES APPEAL IS ALLOWED. 13. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRE TY OF FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE DECISIO NS REFERRED SUPRA, THE ASSUMPTION OF JURISDICTION AND INITIATION OF TH E PROCEEDINGS UNDER SECTION 147 OF THE ACT TO REOPEN THE ASSESSMENT PRO CEEDINGS ARE VITIATED AND DOES NOT SATISFY THE REQUIREMENT OF LA W AND SUCH ACTION ON THE PART OF THE ASSESSING OFFICER CANNOT BE ACCEPTE D AND THE NOTICE UNDER SECTION 148 AND CONSEQUENT PROCEEDINGS ARE TH US SET-ASIDE. IN THE RESULT, GROUND NO. 1 OF THE ASSESSEES APPEAL I S ALLOWED. 14. IN VIEW OF THE ABOVE DISCUSSIONS WHERE THE REA SSESSMENT PROCEEDINGS HAVE BEEN QUASHED AND SET-ASIDE, THE OT HER GROUNDS OF APPEAL TAKEN BY THE ASSESSEE HAVE BECOME ACADEMIC A ND ARE THUS DISMISSED AS INFRUCTUOUS. ITA NO. 170/JP/2019 SH. SHUJAAT ALI KHAN VS. ITO 16 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/01/2021. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 05/01/2021. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SH. SHUJAAT ALI KHAN, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD-6(1), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 170/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR