Pandrol Rahee Technologies Pvt. Ltd., , Kolkata V. ITO, Ward - 8(3), Kolkata , Kolkata

ITA 1731/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4999 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 13-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: K K KHEMKA
• Keywords: Reopening of assessment; Unexplained cash credit; Source of fund; Question of law; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 37(1); 143(1); 143(2); 139(1); 113; 13; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENCH KOLKATA BEFORE SHRI S. S. GODARA, JM & DR. A.L. SAINI, AM ITA NOS.1728,1729,1730,1731&1732/KOL/2018 (ASSESSMENT YEARS: 2007-08, 2008-09, 2009-10, 2010-11 & 2011-12) PANDROL RAHEE TECHNOLOGIES PVT. LTD. FLAT-1C, 1 ST FLOOR, 4, HO CHI MINH SARANI, KOLKATA 700071. VS. ITO, WARD-8(3), KOLKATA ./ ./PAN/GIR NO. : AADCP4569R ( /APPELLANT ) .. ( / RESPONDENT ) APPELLANT BY : SHRI K. K. KHEMKA, ADVOCATE RESPONDENT BY : SMT. RANU BISWAS, ADDL. CIT / DATE OF HEARING : 19/12/2019 /DATE OF PRONOUNCEMENT : 19/02/2020 / O R D E R PER DR. A. L. SAINI, AM: THE CAPTIONED FIVE APPEALS FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEARS 2007-08, 2008-09, 2009-10, 2010-11 & 2011-12, ARE DIRECTED AGAINST THE SEPARATE ORDERS PASSED BY COMMISSIONER OF INCOME TAX, KOLKATA WHICH IN TURN ARISE OUT OF SEPARATE ASSESSMENT ORDERS PASSED BY ASSESSING OFFICER U/S 147/143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. SINCE, THE ISSUES INVOLVED IN ALL THE APPEALS ARE COMMON AND IDENTICAL; THEREFORE, THESE APPEALS HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE, THE GROUNDS AS WELL AS THE FACTS NARRATED IN ITA NO.1728/KOL/2018, FOR ASSESSMENT YEAR 2007-08, HAVE BEEN TAKEN INTO CONSIDERATION FOR DECIDING THE ABOVE APPEALS EN MASSE . 3. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN ITA NO.1728/KOL/2018 FOR ASSESSMENT YEAR 2007-08 ARE AS FOLLOWS: ITA NOS.1728,1729,1730,1731&1732/KOL/2018 PANDROL RAHEE TECHNOLOGIES PVT. LTD. 2 1. FOR THAT LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE NOTICE U/S. 148 AND PROCEEDINGS U/S. 147 OF THE I.T. AS VALID. 2. (A) FOR THAT THE NOTICE AND ENTIRE PROCEEDINGS U/S. 147 OF THE I.T. ACT IS VOID AB INITIO WRONG, ILLEGAL, BAD IN LAW AS WELL AS ON FACTS AND TIME BARRED. (B) FOR THAT ENTIRE PROCEEDINGS U/S. 147 ARE BAD IN LAW AND FACTS FOR INTERPOLATION IN THE DATES PUT ON RECORDS. (C) FOR THAT PROCEEDINGS U/S. 147 ARE BAD IN LAW AND ON FACTS FOR NOT FOLLOWING SET AND DECIDED PRINCIPALS OF LAW AND DECISION AVAILABLE, PARTICULARLY WHEN THERE IS NO SATISFACTION OF ASSESSING OFFICER REGARDING ANY ESCAPEMENT OF INCOME AND QUANTIFICATION THEREOF IN THE REASONS RECORDED AND WHEN IT IS APPARENT THAT AO ONLY WANTED 'VERIFICATION'. (D) FOR THAT PROCEEDINGS U/S. 147 ARE BAD IN LAW AND ON FACTS IN NOT DISPOSING OF PRELIMINARY OBJECTIONS' AS PER PROVISION OF LAW. (E) FOR THAT PROCEEDINGS U/S 147 ARE ALSO BAD IN LAW AND ON FACTS IN MAKING ADDITIONS/DISALLOWANCES ON THE ISSUES OTHER THAN THE 'ISSUE' (EXISTENCE OF WHICH IS DENIED) FOR WHICH THE NOTICE U/S. 148 WAS ISSUED. 3. FOR THAT THE APPELLANT CRAVES LEAVE TO TAKE/AMEND ANY OTHER ADDITIONAL/ALTERNATIVE GROUND/GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 3. THE FACTS OF THE CASE WHICH CAN BE STATED QUITE SHORTLY ARE AS FOLLOWS. ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR SHOWING TOTAL INCOME OF RS. NIL. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE IT ACT, 1961. LATER ON, THE ASSESSING OFFICER REOPENED THE ASSESSMENT FOR A.Y. 2007-08 ON THE BASIS OF FACT THAT THERE WERE INVESTMENTS MADE IN THE ASSESSEE COMPANY BOTH FROM FOREIGN SOURCE CATEGORIZED AS FOREIGN INVESTMENT AND FROM INDIAN COMPANY. THE DETAILS OF SOURCES OF THIS INVESTMENT MADE BY INDIAN COMPANY WAS NOT FURNISHED BY THE ASSESSEE. ON PERUSAL OF THE BANK STATEMENT A/C NO.00501200026910 MAINTAINED WITH AXIS BANK LTD., SHAKESPEARE SARANI, KOLKATA, THE AO OBSERVED THAT MAJORITY OF TRANSACTIONS ARE WITH RAHEE INFRATECH LTD. AND THE AMOUNT OF SHARE CAPITAL HAS BEEN RECEIVED FROM RAHEE INFRATECH LTD, HOWEVER NO EVIDENCE RELATED TO IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS WAS SUBMITTED BY THE ASSESSEE. ACCORDINGLY PROCEEDINGS U/S. 147 OF THE I.T. ACT WAS INITIATED AND NOTICE U/S 148 WAS ISSUED ON 31.03.2014. ITA NOS.1728,1729,1730,1731&1732/KOL/2018 PANDROL RAHEE TECHNOLOGIES PVT. LTD. 3 DURING THE ASSESSMENT STAGE, THE ASSESSEE CHALLENGED THE REASSESSMENT BUT THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE AND FRAMED THE ASSESSMENT U/S 143(3)/147 OF THE ACT BY MAKING ADDITIONS UNDER THE HEAD UNEXPLAINED CASH CREDIT TO THE TUNE OF RS.20,83,600/- AND U/S 37(1) OF THE ACT TO THE TUNE OF RS.50,67,063/-. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER AND DISMISSED THE TECHNICAL GROUNDS RAISED BY THE ASSESSEE U/S 147/148 OF THE ACT OBSERVING THE FOLLOWING: DECISION: I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE AR OF THE APPELLANT AND THE FACTS AVAILABLE ON RECORD. FROM THE MATERIAL ON RECORD, IT IS NOTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RAILWAY TRACK MANUFACTURING. FOR THE RELEVANT ASSESSMENT YEAR 2007-08, THE APPELLANT FILED ITS RETURN OF INCOME U/S. 139(1) ON 27.10.2007 SHOWING TOTAL LOSS OF RS. 24,23,855/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. I HAVE ALSO PERUSED THE ASSESSMENT ORDER U/S 147/143(1) AND THE REASONS RECORDED BY THE AO FOR REOPENING OF THE ASSESSMENT. THERE WAS NO ASSESSMENT FRAMED EARLIER U/S. 143(3). IN THESE GROUNDS OF APPEAL THE APPELLANT HAS IN SUM & SUBSTANCE CHALLENGED THE VALIDITY OF THE REOPENING OF ASSESSMENT BY THE AO U/S 148 OF THE ACT. THE FIRST CONTENTION RAISED BY THE AR OF THE APPELLANT IS THAT THE NOTICE U/S. 148 WAS ISSUED FIRST AND THE REASONS WERE RECORDED LATER. IN THIS CONTEXT IT HAS BEEN STATED THAT THE REASONS WERE RECORDED ON 17TH OF MAY 2014. THE AR IS CONTENDING THAT FIRST THE DATE OF RECORDING REASONS WAS TYPED AS 7TH MAY 2014. AND THEREAFTER IT WAS LATER CHANGED BY HAND TO 31 ST OF MARCH 2014. THE A/R, THEREFORE, HAS ARGUED THAT THE NOTICE WAS ISSUED ON 31.03.2014 WITHOUT RECORDING OF REASONS. ON PERUSAL OF THE COPY OF REASONS RECORDED IT IS OBSERVED THAT ITEM AT SL. NO. 7 PERTAINS TO DATE OF FILING OF THE RETURN. THE DATE 17.05.2014, WHICH THE A/R IS REFERRING TO WAS PROBABLY INADVERTENTLY TYPED AGAINST THE COLUMN REFERRING TO DATE OF FILING OF THE RETURN. THEREFORE, THE SAME HAS BEEN STRUCK OFF BY THE AO. AS REGARDS THE DATE OF RECORDING OF REASONS IS CONCERNED IT IS OBSERVED THAT THE SAME HAS BEEN SIGNED BY THE ITO, 7(2)-KOL, ON 31.03.2014. FURTHER IN THIS CASE APPROVAL OF JOINT CIT HAS ALSO BEEN RECEIVED ON 31.03.2014 AND ENDORSEMENT TO THAT EFFECT IS ALSO APPEARING ON THE COPY OF THE REASONS RECORDED WHICH HAS BEEN FILED BY THE APPELLANT (PAGE 20 OF PAPER BOOK). IN THIS CASE THE INFORMATION WAS RECEIVED BY THE AO FROM THE ENFORCEMENT DIRECTORATE. THEREFORE THE ASSESSING OFFICER WHILE REOPENING THE ASSESSMENT WAS OF THE OPINION THAT FULL AND TRUE DISCLOSURE HAD NOT BEEN MADE BY THE APPELLANT. THE HON'BLE HIGH COURT HAS OBSERVED ABOVE THAT 'IT IS NOT NECESSARY THAT THE ASSESSING OFFICER MUST HAVE CONCLUSIVE EVIDENCE TO HOLD THAT INVARIABLY ADDITIONS WOULD BE MADE IN THE INCOME ITA NOS.1728,1729,1730,1731&1732/KOL/2018 PANDROL RAHEE TECHNOLOGIES PVT. LTD. 4 OF THE ASSESSEE. THE CONCLUSION THEREFORE IS THAT AT THE TIME OF REOPENING THE AO MUST HAVE A REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, NOTWITHSTANDING THE FACT THAT SUBSEQUENTLY ON VERIFICATION OF ALL FACTS AND EVIDENCES THE AO MAY NOT MAKE THE PROPOSED ADDITION. IN VIEW OF THE ABOVE THE REOPENING OF THE ASSESSMENT, IN MY OPINION IS PROPER AND THEREFORE THE APPEAL OF THE ASSESSEE ON THIS IS HEREBY DISMISSED. 5. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 6. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT REASONS RECORDED BY THE ASSESSING OFFICER U/S 147 OF THE ACT IS NOT VALID AND VERY VAGUE THEREFORE REOPENING MADE BY THE ASSESSING OFFICER IS BAD IN LAW. APART FROM THIS, THE LD. COUNSEL HAS ALSO RELIED ON THE SUBMISSIONS MADE BEFORE THE LD CIT(A). 7. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 8. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS BROUGHT ON RECORD. FIRST OF ALL, WE ANALYZE THE REASONS RECORDED BY THE ASSESSING OFFICER, WHICH IS REPRODUCED BELOW: THE CASE OF THE ASSESSEE IS BEING ASSESSED AT THE WARD OF 7(2), KOLKATA, DCIT CIRCLE- 10, KOLKATA M.NO.DCIT, CIR-10/MISC/2013-14/1520 DATED: 18.03.2014 HAS SENT INFORMATION IN RESPECT OF RAHEE GROUP OF COMPANIES. THE FOREIGN SHARE HOLDING OF 60% BY M/S PENDROL LIMITED; U.K. AND 40% BY RAHEE INDUSTRIES LTD. (PRESENTLY RAHEE INFRATECH LIMITED). THE JOINT VENTURE COMPANY PANDROL RAHEE TECHNOLOGIES PVT. LTD. IS TO PROMOTE AND MARKETING THE PRODUCTS OF PANDROL LIMITED, UK AS PER AGREEMENT DATED 02.03.2004 BETWEEN M/S. RAHEE INDUSTRIES LTD. AND M/S PENDROL LIMITED. IT APPEARS FROM THE BANK STATEMENT OF M/S PENDROL RAHEE TECHNOLOGIES PVT. , THAT THERE ARE HUGE HIGH VALUE TRANSACTIONS REFLECTED IN BOTH IN THE DEBIT AND CREDIT ENTRIES OF THE ACCOUNT NO.005010200026910 MAINTAINED WITH AXIS BANK LTD., SHAKESPEARE SARANI, KOLKATA, EXCEPT THE TRANSITIONS OF FDI INVESTMENTS. THESE ARE CERTAIN TRANSACTIONS OF HIGH AMOUNTS APPEAR TO BE VERY SUSPICIOUS. THE INVESTIGATION ITA NOS.1728,1729,1730,1731&1732/KOL/2018 PANDROL RAHEE TECHNOLOGIES PVT. LTD. 5 UNDER FEMA, 1999 IS GOING ON BY THEIR DIRECTORATE. IN THE MEANTIME, THE MATTER WAS REFERRED TO OUR DEPARTMENT FOR EXAMINING THE CASE FROM THE INCOME TAX POINT OF VIEW. A COPY OF THE BANK STATEMENT OBTAINED FROM THE BANK STATEMENT IS ENCLOSED. ON EXAMINATION OF THE DOCUMENTS IT APPEARS THAT FOREIGN INVESTMENT TO THE EXTENT OF RS.1,72,53,731/- RECEIVED IN THE ACCOUNT OF M/S. PANDROL RAHEE TECHNOLOGIES PVT. LTD. AS AGAINST 60% SHARES UNDER FDI SCHEME IN THE SAID ACCOUNT OF M/S PANDROL RAHEE TECHNOLIGIES PVT. LTD. FROM 11.02.2005 TO 20.06.2012. THE DETAILS OF 40% OF RS.1,15,00,000/- (APPX.) OF SHARE MONEY INVESTMENT OF RS.1,15,00,000/- (APPX.) BY THE INDIAN COMPANY AS AGAINST THE FOREIGN INVESTMENT OF RS.1,72,53,731/- ALREADY DEPOSITED BY THE FOREIGN INVESTOR HAS NOT YET BEEN FURNISHED BY THE PARTY TO THE FEMA. IT IS VERY INTERESTING THAT THE PARTY HAS NOT YET FURNISHED THE DETAILS OF 40% SHARE MONEY AS WELL AS ITS SOURCE OF FUND INVESTED IN THE SAID J.V. COMPANY BY INDIAN COMPANY AS AGAINST 60% SHARE OF RS.1,72,53,731/- ALREADY DEPOSITED BY THE FOREIGN INVESTOR I.E. M/S PENDROL LIMITED. WHILE CHECKING THE STATEMENT THE TRANSACTIONS REFLECTED IN THE ACCOUNT IN THE NAME OF CARBONAIRE INDUSTRIES, EHWARNATH CONSTRUCTION, RAHEE INFRATECH LTD. INDUSTRIES LIMITED AND KAY PEE INDUSTRIES, M/S PANDROL RAHEE TECHNOLOGIES LTD. ETC IS TO BE GIVEN SPECIAL ATTENTION WHILE EXAMINING THE ACCOUNTS FOR INCOME TAX ANGEL AS STATED BY THE FEMA. IT COULD BE SEEN THAT THERE ARE BOTH DEBIT AND CREDIT ENTRIES IN THE NAME OF RAHEE INFRATECH LTD. THE COMPANY IS YET TO START ITS MANUFACTURING IN INDIA. AS THE DETAILS FURNISHED BY THE OTHER ADAGENCIES ARE NOT ENOUGH AND THE INFORMATION AVAILABLE IN THE RECORDS ARE NOT SATISFACTORY, TO EXPLAIN INCOME,WHICH HAS NOT BEEN PROPERLY DISCLOSED, NECESSARY VERIFICATIONS ARE REQUIRED IN THE CASE. THEREFORE I HAVE REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AS THE ABOVE DISCUSSION, I DEEM IT, THAT IT IS A FIT CASE FOR REOPENING U/S 147 BY ISSUANCE OF NOTICE U/S 148. THE LD COUNSEL FOR THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE ABOVE REASONS RECORDED BY ASSESSING OFFICER ON THE FOLLOWING COUNTS: (I).THE MAIN GRIEVANCE OF THE ASSESSING OFFICER IS THAT ASSESSEE IS ENGAGED IN HAWALA TRANSACTIONS. HOWEVER, LD AO FAILED TO PROVE THE HAWALA TRANSACTIONS. IN FACT, THERE WAS NO HAWALA TRANSACTION. (II).RE-OPENING OF ASSESSMENT U/S 147 WAS INITIATED BY AO FOR NECESSARY VERIFICATION ONLY WHICH IS NOT PERMISSIBLE IN LAW. WE REPRODUCE BELOW, THE RELEVANT PORTION OF THE REASONS RECORDED, WHICH SHOWS THAT REASONS WERE RECORDED ONLY FOR VERIFICATION OF CERTAIN DEBIT AND CREDIT ENTRIES AND TO VERIFY THE DETAILS FURNISHED BY OTHER AGENCIES: ITA NOS.1728,1729,1730,1731&1732/KOL/2018 PANDROL RAHEE TECHNOLOGIES PVT. LTD. 6 IT APPEARS FROM THE BANK STATEMENT OF M/S PENDROL RAHEE TECHNOLOGIES PVT., THAT THERE ARE HUGE HIGH VALUE TRANSACTIONS REFLECTED IN BOTH IN THE DEBIT AND CREDIT ENTRIES OF THE ACCOUNT NO.005010200026910 MAINTAINED WITH AXIS BNAK LTD., SHAKESPEARE SARANI, KOLKATA, THE TRANSITIONS OF FDI INVESTMENTS. THESE ARE CERTAIN TRANSACTIONS OF HIGH AMOUNTS APPEAR TO BE VERY SUSPICIOUS. THE COMPANY IS YET TO START ITS MANUFACTURING IN INDIA. AS THE DETAILS FURNISHED BY THE OTHER ADAGENCIES ARE NOT ENOUGH AND THE INFORMATION AVAILABLE IN THE RECORDS ARE NOT SATISFACTORY, TO EXPLAIN INCOME,WHICH HAS NOT BEEN PROPERLY DISCLOSED, NECESSARY VERIFICATIONS ARE REQUIRED IN THE CASE. HAVING GONE THROUGH THE ABOVE REASONS RECORDED BY ASSESSING OFFICER, WE NOTICED THAT REASONS WERE RECORDED BY AO ONLY FOR NECESSARY VERIFICATIONS OF CERTAIN FACTS . THE ASSESSING OFFICER COULD DO THE NECESSARY VERIFICATION BY ISSUING NOTICE UNDER SECTION 143(2)/143(3) OF THE ACT. THE PROVISIONS OF SECTION 147 OF THE ACT, THAT IS, REASSESSMENT CAN BE USED BY ASSESSING OFFICER IF THERE IS TANGIBLE MATERIAL WHICH SHOWS THAT INCOME HAS ESCAPED ASSESSMENT. THE VERIFICATION OF THE INCOME TAX RETURN FILED BY THE ASSESSEE U/S 139(1) OF THE ACT MAY BE DONE BY ASSESSING OFFICER BY ISSUING NOTICE 143(2)/143(3) OF THE ACT. THEREFORE, REASONS RECORDED BY THE ASSESSING OFFICER IS BAD IN LAW. AN ASSESSMENT CAN BE REOPENED ONLY IF THERE IS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. IN KELVINATOR OF INDIA LTD. V. CIT [2010] 320 ITR 561 (SC) THE HON`BLE SUPREME COURT HAS STATED THAT THE EXPRESSION 'REASON TO BELIEVE' CANNOT COMPREHEND A MERE CHANGE OF OPINION WHICH WOULD ONLY AMOUNT TO AN IMPERMISSIBLE REVIEW. THEREFORE, AN ASSESSMENT CANNOT BE REOPENED MERELY TO VERIFY THE GENUINENESS OF THE EXPENSES/CLAIMS. THEREFORE, THE NOTICE OF RE-ASSESSMENT U/S 147 OF THE ACT, FOR VERIFICATION OF NECESSARY DETAILS WAS NOT VALID AS HELD BY HON`BLE DELHI HIGH COURT ALSO IN THE CASE OF LE PASSAGE TO INDIA TOURS & TRAVELS V. ACIT [2014] 369 ITR 109 (DEL), WHEREIN IT WAS HELD AS FOLLOWS: 5. IN THE PRESENT CASE THE REASONS TO BELIEVE - EXTRACTED ABOVE - NOWHERE REVEAL AS TO WHAT TANGIBLE MATERIAL WHICH THE AO CAME TO OBTAIN TO JUSTIFY THE REASSESSMENT NOTICE. IN THE PREVIOUS INSTANCE, THE REASSESSMENT NOTICE WAS BASED ON THE ASSUMPTION THAT A MUCH LARGER INCOME HAD ACCRUED TO THE ASSESSEE WHEREAS ONLY A FRACTION OF ITS WAS OFFERED IN THE P & L ACCOUNT. IN THE PRESENT CASE, A SOMEWHAT SIMILAR, IF NOT IDENTICAL, ITA NOS.1728,1729,1730,1731&1732/KOL/2018 PANDROL RAHEE TECHNOLOGIES PVT. LTD. 7 GROUND HAS BEEN MADE OUT I.E. THAT OF EXPENSES INCURRED ABROAD HAVE NOT BEEN REVEALED. THIS WAS AN ASPECT WHICH WAS KNOWN TO THE AO AT THE TIME OF THE ORIGINAL ASSESSMENT; THE EXPLANATIONS BY THE ASSESSEE APPEAR TO HAVE BEEN TAKEN INTO ACCOUNT. AT THE TIME WHEN THE FIRST REASSESSMENT NOTICE WAS ISSUED A FACET OF THIS WAS TAKEN INTO CONSIDERATION AND IN FACT CITED IN THE REASONS TO BELIEVE. A VIRTUAL ASSERTION OF THE SAME REASONS IN DIFFERENT WORDS DOES NOT CLOTHE THE REASSESSMENT NOTICE, IN THE OPINION OF THE COURT, WITH ANY MORE SANCTITY, NOR DOES IT TAKE AWAY THE VICE OF LACK OF JURISDICTION NOTICED IN THE ORDER IN WP 8685/2010. MOREOVER, AN ASSESSMENT CANNOT BE REOPENED MERELY TO VERIFY THE GENUINENESS OF THE EXPENSES AS THAT WOULD AMOUNT TO AN IMPERMISSIBLE FISHING OR ROWING ENQUIRY WITHOUT ANY TANGIBLE MATERIAL TO SHOW ESCAPEMENT OF INCOME. FOR THE ABOVE REASONS IT IS HELD THAT THE IMPUGNED NOTICE IS NOT JUSTIFIED AND BEYOND THE AUTHORITY OF LAW. IT IS ACCORDINGLY QUASHED AND THE WRIT PETITION IS ALLOWED. (III). THE REOPENING OF ASSESSMENT IN THE ASSESSEE`S CASE WAS INITIATED ON THE BASIS OF FEMA INFORMATION BUT THE FEMA DROPPED THE PROCEEDINGS BEFORE DATE OF REASSESSMENT ON 17/03/2015. (SEE PAGE 97 TO 113 OF PAPER BOOK), HENCE REASSESSMENT PROCEEDINGS WERE NOT VALID. (IV).AMOUNT ESCAPED FROM ASSESSMENT IS NOT KNOWN AT THE TIME OF ISSUE OF NOTICE U/S 147/148 OF THE ACT, THEREFORE REASONS RECORDED BY ASSESSING OFFICER IS NOT VALID. IT IS IMPORTANT TO MENTION HERE THAT NOTICE U/S 147/148 HAS BEEN ISSUED ON THE BASIS OF REASON TO BELIEVE AND THERE IS NO TANGIBLE MATERIAL TO COME TO CONCLUSION THAT THERE IS A ESCAPEMENT OF INCOME AND THE SAID REASON HAVE NO LIVE LINK WITH THE FORMATION OF THE BELIEF. THE SAME FACT WAS ALSO CONFIRMED BY THE HON`BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC). (V) THE ASSESSING OFFICER IN THE REASONS RECORDED RELIED ON THE FEMA TRANSACTIONS BUT IN THE REASSESSMENT ORDER FRAMED BY HIM U/S 147/148 OF THE ACT HE DID NOT MAKE ANY ADDITION RELATED TO FEMA TRANSACTIONS. THEREFORE, LD COUNSEL STATED THAT AO CAN NOT TAX FURTHER TRANSACTION WHICH MIGHT HAVE COME TO HIS KNOWLEDGE DURING THE REASSESSMENT PROCEEDINGS, AS THE PRIMARY REASONS RECORDED BY HIM DID ITA NOS.1728,1729,1730,1731&1732/KOL/2018 PANDROL RAHEE TECHNOLOGIES PVT. LTD. 8 NOT SURVIVE. IN THAT VIEW OF THE MATTER, THE OTHER ADDITIONS MADE IN THE SAID REASSESSMENT ORDER WHICH WERE NOT PART OF THE REASONS RECORDED FOR REOPENING THE ASSESSMENT ARE NOT SUSTAINABLE IN THE EYES OF LAW EVEN AFTER INSERTION OF EXPLANATION 3 TO SECTION 147 OF THE ACT BY FINANCE ACT, 2009. WE NOTE THAT AO MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS THOUGH THE REASONS FOR SUCH ISSUE WERE NOT INCLUDED IN THE NOTICE; HOWEVER, IF AFTER ISSUING A NOTICE UNDER SECTION 148 OF THE ACT, THE AO ACCEPTED THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REASON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM INDEPENDENTLY TO ASSESS SOME OTHER INCOME, FOR THAT LD COUNSEL RELIES ON THE JUDGMENT OF HON`BLE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS (I) LIMITED 331 ITR 236 (BOM), WHEREIN IT WAS HELD AS FOLLOWS: 21. EXPLANATION 3 LIFTS THE EMBARGO, WHICH WAS INSERTED BY JUDICIAL INTERPRETATION, ON THE MAKING OF AN ASSESSMENT OR REASSESSMENT ON GROUNDS OTHER THAN THOSE ON THE BASIS OF WHICH A NOTICE WAS ISSUED UNDER S. 148 SETTING OUT THE REASONS FOR THE BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. THOSE JUDICIAL DECISIONS HAD HELD THAT WHEN THE ASSESSMENT WAS SOUGHT TO BE REOPENED ON THE GROUND THAT INCOME HAD ESCAPED ASSESSMENT ON A CERTAIN ISSUE, THE AO COULD NOT MAKE AN ASSESSMENT OR REASSESSMENT ON ANOTHER ISSUE WHICH CAME TO HIS NOTICE DURING THE PROCEEDINGS. THIS INTERPRETATION WILL NO LONGER HOLD THE FIELD AFTER THE INSERTION OF EXPLN. 3 BY THE FINANCE ACT (NO. 2) OF 2009. HOWEVER, EXPLN. 3 DOES NOT AND CANNOT OVERRIDE THE NECESSITY OF FULFILLING THE CONDITIONS SET OUT IN THE SUBSTANTIVE PART OF S. 147. AN EXPLANATION TO A STATUTORY PROVISION IS INTENDED TO EXPLAIN ITS CONTENTS AND CANNOT BE CONSTRUED TO OVERRIDE IT OR RENDER THE SUBSTANCE AND CORE NUGATORY. SEC. 147 HAS THIS EFFECT THAT THE AO HAS TO ASSESS OR REASSESS THE INCOME ('SUCH INCOME') WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH, COMES TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS. HOWEVER, IF AFTER ISSUING A NOTICE UNDER S. 148, HE ACCEPTED THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REASON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM INDEPENDENTLY TO ASSESS SOME OTHER INCOME. IF HE INTENDS TO DO SO, A FRESH NOTICE UNDER S. 148 WOULD BE NECESSARY, THE LEGALITY OF WHICH WOULD BE TESTED IN THE EVENT OF A CHALLENGE BY THE ASSESSEE. ITA NOS.1728,1729,1730,1731&1732/KOL/2018 PANDROL RAHEE TECHNOLOGIES PVT. LTD. 9 THIS VIEW HAS ALSO BEEN VENTILATED BY THE HON`BLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES LTD,336 ITR 136 (DEL), WHEREIN IT WAS HELD AS FOLLOWS: 18. WE ARE IN COMPLETE AGREEMENT WITH THE REASONING OF THE DIVISION BENCH OF BOMBAY HIGH COURT IN THE CASE OF JAGANMOHAN RAO (SUPRA) [SICJET AIRWAYS (I) LTD. (SUPRA)]. WE MAY ALSO NOTE THAT THE HEADING OF S. 147 IS 'INCOME ESCAPING ASSESSMENT' AND THAT OF S. 148 'ISSUE OF NOTICE WHERE INCOME ESCAPED ASSESSMENT'. SEC. 148 IS SUPPLEMENTARY AND COMPLIMENTARY TO S. 147. SUB-S. (2) OF S. 148 MANDATES REASONS FOR ISSUANCE OF NOTICE BY THE AO AND SUB-S. (1) THEREOF MANDATES SERVICE OF NOTICE TO THE ASSESSEE BEFORE THE AO PROCEEDS TO ASSESS, REASSESS OR RECOMPUTE ESCAPED INCOME. SEC. 147 MANDATES RECORDING OF REASONS TO BELIEVE BY THE AO THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. ALL THESE CONDITIONS ARE REQUIRED TO BE FULFILLED TO ASSESS OR REASSESS THE ESCAPED INCOME CHARGEABLE TO TAX. AS PER EXPLN. 3 IF DURING THE COURSE OF THESE PROCEEDINGS THE AO COMES TO CONCLUSION THAT SOME ITEMS HAVE ESCAPED ASSESSMENT, THEN NOTWITHSTANDING THAT THOSE ITEMS WERE NOT INCLUDED IN THE REASONS TO BELIEVE AS RECORDED FOR INITIATION OF THE PROCEEDINGS AND THE NOTICE, HE WOULD BE COMPETENT TO MAKE ASSESSMENT OF THOSE ITEMS. HOWEVER, THE LEGISLATURE COULD NOT BE PRESUMED TO HAVE INTENDED TO GIVE BLANKET POWERS TO THE AO THAT ON ASSUMING JURISDICTION UNDER S. 147 REGARDING ASSESSMENT OR REASSESSMENT OF ESCAPED INCOME, HE WOULD KEEP ON MAKING ROVING INQUIRY AND THEREBY INCLUDING DIFFERENT ITEMS OF INCOME NOT CONNECTED OR RELATED WITH THE REASONS TO BELIEVE, ON THE BASIS OF WHICH HE ASSUMED JURISDICTION. FOR EVERY NEW ISSUE COMING BEFORE AO DURING THE COURSE OF PROCEEDINGS OF ASSESSMENT OR REASSESSMENT OF ESCAPED INCOME, AND WHICH HE INTENDS TO TAKE INTO ACCOUNT, HE WOULD BE REQUIRED TO ISSUE A FRESH NOTICE UNDER S. 148. 9. IN THE ASSESSEE`S CASE THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE IT ACT, 1961. LATER ON, THE ASSESSING OFFICER REOPENED THE ASSESSMENT FOR A.Y. 2007- 08 ON THE BASIS OF FACT THAT THERE WERE INVESTMENTS MADE IN THE ASSESSEE COMPANY BOTH FROM FOREIGN SOURCE CATEGORIZED AS FOREIGN INVESTMENT AND FROM INDIAN COMPANY. WHERE NO ASSESSMENT HAD BEEN MADE U/S 143(3), IT CANNOT BE CONCLUDED THAT THE INCOME HAS ESCAPED ASSESSMENT, FOR THAT LD COUNSEL RELIED ON THE JUDGMENT OF THE HON`BLE DELHI HIGH COURT IN THE CASE OF VED & CO., 302 ITR 328, WHEREIN IT WAS HELD AS FOLLOWS: ITA NOS.1728,1729,1730,1731&1732/KOL/2018 PANDROL RAHEE TECHNOLOGIES PVT. LTD. 10 2. THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 29TH SEPT., 1994 DECLARING AN INCOME OF RS. 17,88,830. WITHOUT PROCESSING THE RETURN, THE AO ON 5TH JUNE, 1996 RECORDED REASONS FOR ISSUING A NOTICE TO THE ASSESSEE FOR REASSESSMENT ON THE GROUND THAT THE ASSESSEE HAS WRONGLY CLAIMED EXCESSIVE DEDUCTION UNDER S. 80-O OF THE IT ACT, 1961 AND THAT INCOME HAS ESCAPED ASSESSMENT. THEREAFTER, ON 11TH JUNE, 1996 THE RETURN OF INCOME WAS PROCESSED BY THE AO UNDER S. 143(1)(A) OF THE ACT AND ON THE SAME DATE NOTICE WAS ISSUED TO THE ASSESSEE UNDER S. 148 OF THE ACT REQUIRING IT TO FILE ITS RETURN OF INCOME. 3. IN CIT VS. KELVINATOR OF INDIA LTD. (2002) 174 CTR (DEL)(FB) 617 : (2002) 256 ITR 1 (DEL)(FB), A FULL BENCH OF THIS COURT OBSERVED THAT AN ORDER OF ASSESSMENT CAN BE PASSED EITHER IN TERMS OF SUB-S. (1) OF S. 143 OR SUB-S. (3) OF S, 143 OF THE ACT. INSOFAR AS THE PRESENT CASE IS CONCERNED, IT IS AN ADMITTED POSITION THAT NO ASSESSMENT ORDER WAS PASSED UNDER S. 143(3) OF THE ACT AND THAT THE RETURN OF THE ASSESSEE WAS PROCESSED UNDER S. 143(1) OF THE ACT ONLY ON 11TH JUNE, 1996. 4. IN TRUSTEES OF H.E.H. THE NIZAMS SUPPLEMENTAL FAMILY TRUST VS. CIT (2000) 159 CTR (SC) 114 : (2000) 242 ITR 381 (SC), THE SUPREME COURT OBSERVED : 'IT IS SETTLED LAW THAT UNLESS THE RETURN OF INCOME ALREADY FILED IS DISPOSED OF, NOTICE FOR REASSESSMENT UNDER S. 148 OF THE IT ACT, 1961, CANNOT BE ISSUED, I.E. NO REASSESSMENT PROCEEDINGS CAN BE INITIATED SO LONG AS ASSESSMENT PROCEEDINGS PENDING ON THE BASIS OF RETURN ALREADY FILED ARE NOT TERMINATED.' 5. FROM THE DATES THAT WE HAVE MENTIONED ABOVE AND THE LAW AS LAID DOWN, IT IS CLEAR THAT ASSESSMENT PROCEEDINGS TERMINATED UNDER S. 143(1) OF THE ACT ONLY ON 11TH JUNE, 1996. IN OTHER WORDS, ON 5TH JUNE, 1996, WHEN THE AO MADE UP HIS MIND TO ISSUE A NOTICE TO THE ASSESSEE UNDER S. 147/148 OF THE ACT, A VALID RETURN OF INCOME FILED BY THE ASSESSEE WAS STILL PENDING BEFORE HIM AND WHICH COULD HAVE BEEN PROCESSED. 6. IT IS SUBMITTED BY LEARNED COUNSEL FOR THE REVENUE THAT SINCE THE PERIOD FOR ISSUING A NOTICE TO THE ASSESSEE UNDER S. 143(2) OF THE ACT HAD ALREADY ELAPSED, AND THE AO WAS OF THE VIEW THAT INCOME HAD ESCAPED ASSESSMENT, THE AO HAD NO OPTION BUT TO RESORT TO CL. (B) OF EXPLN. 2 TO S. 147 OF THE ACT FOR INITIATING REASSESSMENT PROCEEDINGS. THIS CLAUSE READS AS FOLLOWS : 'SEC. 147 XXXXX EXPLANATION 1 : XXXXX EXPLANATION 2 : FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : (A) XXXX (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE AO THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN; (C) XXXXX' 7. THE SUBMISSION MADE BY LEARNED COUNSEL FOR THE REVENUE IS THAT A RETURN OF INCOME WAS FURNISHED BY THE ASSESSEE AND BEFORE ANY ASSESSMENT WAS FRAMED, IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAD UNDERSTATED ITS INCOME AND CLAIMED EXCESSIVE DEDUCTION IN THE RETURN AND, THEREFORE, ACTION COULD BE TAKEN UNDER SS. 147 AND 148 OF THE ACT. CONSEQUENTLY, THE CONCLUSION ARRIVED AT BY THE TRIBUNAL WAS INCORRECT. ITA NOS.1728,1729,1730,1731&1732/KOL/2018 PANDROL RAHEE TECHNOLOGIES PVT. LTD. 11 8. WE ARE OF THE OPINION THAT IN VIEW OF THE DECISIONS THAT WE HAVE MENTIONED ABOVE, FOR THE PURPOSES OF INITIATING REASSESSMENT PROCEEDINGS, THE AO COULD NOT HAVE MADE UP HIS MIND THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT WHILE A VALID RETURN WAS STILL PENDING BEFORE HIM. IF THE AO HAD ALLOWED THE TIME TO ELAPSE FOR TAKING ACTION UNDER S. 143(2) OF THE ACT, IT WAS ENTIRELY HIS OWN DOING. WHAT THE AO IS NOW TRYING TO DO IN AN INDIRECT (AND INCORRECT) MANNER IS WHAT HE COULD NOT HAVE DONE DIRECTLY. 9. THE FURTHER CONTENTION RAISED ON BEHALF OF THE REVENUE IS THAT EVEN IF NO ASSESSMENT ORDER WAS FRAMED, THE AO COULD ISSUE A NOTICE FOR REASSESSMENT. WE ARE OF THE VIEW THAT IF NO ASSESSMENT HAD BEEN MADE, THERE WAS NO OCCASION FOR THE AO TO CONCLUDE THAT INCOME HAD ALREADY ESCAPED ASSESSMENT. 10. THIS BEING THE POSITION, WE ARE OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION AND WE DO NOT FIND ANY ERROR IN THE VIEW THAT HAS BEEN TAKEN BY THE TRIBUNAL IN THIS REGARD. 11. CONSEQUENTLY, THE APPEAL IS DISMISSED. 10. ON RECEIPT OF REASONS, THE ASSESSEE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE AND THE A.O. IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER - GKN DRIVESHAFTS (INDIA) LTD. V. ITO & OTHERS [2003] 259 ITR 19 (SC). THE LD COUNSEL SUBMITTED THAT AO HAS NOT DISPOSED OF THE OBJECTIONS OF THE ASSESSEE BY PASSING A SPEAKING ORDER, THEREFORE REASSESSMENT PROCEEDINGS INITIATED BY AO IS NULL AND VOID IN THE EYE OF LAW. 11. NOW, WE ANALYZE THE CONDITIONS OF REOPENING OF ASSESSMENT IN THE ASSESSEE`S CASE UNDER CONSIDERSTION: CONDITIONS LAID DOWN IN SECTION 147 : IF THE A.O. HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. (I).THERE MUST BE MATERIAL FOR THE BELIEF: IN THE ASSESSEE`S CASE THERE IS NO MATERIAL TO BELIEVE. THE REASSESSMENT PROCEEDINGS WERE INITIATED BY THE ASSESSING OFFICER FOR VERIFICATION OF CERTAIN INFORMATION WHICH IS NOT A TANGIBLE MATERIAL. (II).CIRCUMSTANCES MUST EXIST AND CANNOT BE DEEMED TO EXIST FOR ARRIVING AT AN OPINION. IN THE ASSESSEE`S CASE THE REASONS RECORDED BY THE AO IS A GENERAL STATEMENT. THERE IS NO OPINION FRAMED BY AO. ITA NOS.1728,1729,1730,1731&1732/KOL/2018 PANDROL RAHEE TECHNOLOGIES PVT. LTD. 12 (III).REASONS TO BELIEVE MUST BE HONEST AND NOT BASED ON SUSPICION, GOSSIP, RUMOUR OR CONJECTURE. IN THE ASSESSEE`S CASE THE REASONS WERE RECORDED BASED OF FEMA INFORMATION. IN THE REASSESSMENT PROCEEDINGS U/S 147/148 THERE WAS NO ANY ADDITION ON ACCOUNT OF FEMA INFORMATION, HENCE REASONS RECORDED BY THE AO WERE BASED ON SUSPICION, GOSSIP, RUMOUR OR CONJECTURE. (IV).REASONS REFERRED TO MUST DISCLOSE THE PROCESS OF REASONING BY WHICH THE AO HOLDS REASONS TO BELIEVE AND CHANGE OF OPINION DOES NOT CONFER JURISDICTION TO REASSESS. IN THE ASSESSEE`S CASE THERE IS NO REASON TO BELIEVE, IT IS A GENERAL STATEMENT TO VERIFY CERTAIN INFORMATION. (V).THERE MUST BE NEXUS BETWEEN MATERIAL AND BELIEF; WHICH IS ABSENT IN THE ASSESSEE`S CASE UNDER CONSIDERATION. (VI).REASONS RECORDED DOES NOT SHOW APPLICATION OF MIND BY THE AO. HENCE IN THE ASSESSEE`S CASE UNDER CONSIDERATION, THE ESSENTIAL CONDITIONS OF REOPENING THE ASSESSMENT HAVE FAILED, THEREFORE, THE REOPENING U/S 147 OF THE ACT IS NOT JUSTIFIED. AT THE COST OF REPETITION, WE STATE THAT THE HON`BLE SUPREME COURT, IN THE CASE OF KELVINATOR OF INDIA LTD (REPORTED IN 320 ITR 561(SC)) HELD THAT THOUGH THE POWER TO REOPEN UNDER THE AMENDED SECTION 147 IS MUCH WIDER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS REASON TO BELIEVE FAILING WHICH SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE AO TO RE-OPEN ASSESSMENTS ON THE BASIS OF MERE CHANGE OF OPINION, WHICH CANNOT BE PER SE REASON TO RE-OPEN. ONE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO RE-ASSESS. THE AO HAS NO POWER TO REVIEW; HE HAS THE POWER TO RE-ASSESS. BUT RE-ASSESSMENT HAS TO BE BASED ON ITA NOS.1728,1729,1730,1731&1732/KOL/2018 PANDROL RAHEE TECHNOLOGIES PVT. LTD. 13 FULFILLMENT OF CERTAIN PRE-CONDITION AND IF THE CONCEPT OF CHANGE OF OPINION IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF RE-OPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF CHANGE OF OPINION AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE AO. HENCE, AFTER 1.4.1989, THE AO HAS POWER TO RE-OPEN, PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. 12. THEREFORE, IN THE LIGHT OF THE AFORESAID JUDICIAL PRECEDENTS AND OTHER CASE LAWS, WE NOTE THAT TO INITIATE REOPENING OF THE ASSESSMENT, THE LD. AO MUST HAVE 'REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. SUCH REASON TO BELIEVE MUST BE BASED ON SOME MATERIAL COMING TO THE POSSESSION OF THE LD. ASSESSING OFFICER WHICH MAY TRIGGER REASON TO SUSPECT. IT MUST BE KEPT IN MIND THAT THE REASON TO BELIEVE MUST HAVE A RATIONAL CONNECTION WITH OR RELEVANT BEARING ON THE FORMATION OF THE BELIEF, I.E, THERE MUST BE THE DIRECT NEXUS OR LINK BETWEEN THE MATERIAL AND THE FORMATION OF SUCH BELIEF. SINCE IN THE INSTANT CASE, THE REOPENING WAS INITIATED TO VERIFY CERTAIN INFORMATION OR TO CONDUCT ENQUIRY. THE REOPENING OF ASSESSMENT IN THE ASSESSEE`S CASE WAS INITIATED ON THE BASIS OF FEMA INFORMATION BUT THE FEMA DROPPED THE PROCEEDINGS BEFORE DATE OF REASSESSMENT ON 17/03/2015 AND AO DID NOT MAKE ANY ADDITION BASED ON FEMA TRANSACTION. AMOUNT ESCAPED FROM ASSESSMENT IS NOT KNOWN AT THE TIME OF ISSUE OF NOTICE U/S 147/148 OF THE ACT. ON RECEIPT OF REASONS, THE ASSESSEE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE AND THE A.O. IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. WE NOTE THAT AO HAS NOT DISPOSED OF THE OBJECTIONS OF THE ASSESSEE BY PASSING A SPEAKING ORDER. THE ASSESSING OFFICER HAVING NOT CARRIED OUT THE SCRUTINY ASSESSMENT WITHIN THE PRESCRIBED STATUTORY LIMIT, CANNOT BE GIVEN ANOTHER INNINGS FOR NO FAULT OF THE ASSESSEE AND THEREFORE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, ITA NOS.1728,1729,1730,1731&1732/KOL/2018 PANDROL RAHEE TECHNOLOGIES PVT. LTD. 14 WE ARE OF THE CONSIDERED OPINION THAT REASON TO BELIEVE WHICH IS THE JURISDICTIONAL PRECONDITION TO REOPEN THE ASSESSMENT AS REQUIRED BY THE LAW HAS NOT MET IN THE REASONS RECORDED IN THE INSTANT CASE AND THEREFORE THE ACTION OF THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT IS NULL IN THE EYES OF LAW AND HENCE WE ARE INCLINED TO QUASH THE INITIATION OF REASSESSMENT PROCEEDINGS BEING AB-INITIO VOID. 13. IN THE RESULT, APPEALS FILED BY THE ASSESSEE IN ITA NOS.1728, 1729,1730,1731 AND 1732/KOL/2018, ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19/02/2020. SD/- (S. S. GODARA) SD/- (A. L. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED: 19/02/2020 RS, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT- PANDROL RAHEE TECHNOLOGIES PVT. LTD. 2. / THE RESPONDENT.- ITO, WARD-8(3), KOLKATA 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. [ / GUARD FILE. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR, I.T.A.T, KOLKATA BENCHES, KOLKATA .