Harmeet Singh, Delhi V. ITO, New Delhi

ITA 1939/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6726 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 26-12-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 11-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Keywords: Reopening of assessment; Gift; Source of fund; Competent authority; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC-I : NEW DELHI) BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 1939/DEL/2016 ASSESSMENT YEAR: 2008-09 HARMEET SINGH VS. ITO, WARD-36(1), C/O KAPIL GOEL, ADV. NEW DELHI F-26/124, SECTOR-7, ROHINI, DELHI 110 085 (PAN: BHRPA6630P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. KAPIL GOEL, ADV. REVENUE BY : SH. AMRIT LAL, SR. DR ORDER THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDE R DATED 8.5.2014 OF THE LD. CIT(A)-ROHTAK PERTAINING TO ASSESSMENT YEAR 200 8-09 AND RAISED THE FOLLOWING GROUNDS:- JURISDICTIONAL GROUND: CORAM NON JUDICE 1. THAT ON THE FACTS, AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE REOPENING ACT ION OF LD A0 ULS 148 MADE IN VIOLATION OF MANDATORY JURISDICTION AL CONDITIONS STIPULATED UNDER THE ACT; 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE REOPENING ACTION OFLD AO U/S 148 ON NON EXISTING BASIS OF CASH DEPOSITS WITH CENTURIAN BANK OF PUNJAB WHICH WAS NOT PROVED TILL PASSING OF FINAL ORDER 2 AND AN UNSUBSTANTIATED & VAGUE AIR INFORMATION IS SOLE BASIS OF ENTIRE ORDER; 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE REOPENING ACTION OF LD AO ULS 148 WHEREFROM ASSESSEE'S AFFIDAVIT THAT HE H AS NO BANK A/C WITH CENTURIAN BANK OF PUNJAB (DATED 22/512014) FIL ED BEFORE LD CIT-APPEALS ALONG WITH REMAND REPORT DATED 18112120 14 STATING HDFC BANK STATEMENT BEING FIRST TIME OBTAINED IN AP PELLATE PROCEEDINGS VIDE LETTER DATED 11.12.2014 BY LD A0, BEING POST MORTEM EXERCISE, CANNOT RESCUE AN INHERENTLY INVALI D REOPENING; 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LD CIT-A ERRED IN SUSTAINING THE REOPENING ACTION OF LD A D ULS 148, WHERE REASONS RECORDED ARE TOTALLY SILEN T ON A) CONTENTS OF INFORMATION AVAILABLE TO LD AO AND B) NO DETAILS WHATSOEVER OF ANY BANK ALE ARE MENTIONED AND C) MERE CASH DEPOSIT S IS TREATED TO BE EQUIVALENT TO INCOME ESCAPING ASSESSMENT; 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LD AO ERRED IN REOPENING THE CASE ULS 148 O F THE ACT, WITHOUT LEGAL AND VALID MANDATORY SERVICE OF NOTICE U/S 148 OF THE ACT; 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LD AO ERRED IN SUSTAINING THE ADDITION OF R S 14,69,823/- OUT OF TOTAL ADDITION OF RS 40,49,500 WITHOUT CONSI DERING THE FACT THAT ASSESSEE HAS FULLY EXPLAINED ITS CASE AND LD A O PASSED THE ORDER U/S 1471144 ON NON EXISTING BASIS, 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LD AO ERRED IN SUSTAINING THE ADDITION OF R S 14,69,823/- OUT OF TOTAL ADDITION OF RS 40,49,500/- WITHOUT CON SIDERING THE FACT THAT IMPUGNED ORDER PASSED IS EX- PARTE TO ASSESSEE WITHOUT MATERIAL ON RECORDS. PRAYER / RELIEF CLAIMED 3 1. TO QUASH THE IMPUGNED REOPENING ORDER U/S 147114 4 OF THE ACT FOR NON FULFILLMENT OF PRIOR JURISDICTIONAL CON DITIONS; 2. TO HOLD LD AO WRONGLY MADE ADDITION ON MERITS; 3. ANY OTHER RELIEF AS DEEMED FIT IN CIRCUMSTANCES OF THE CASE THAT THE APPELLANT CRAVES LEAVE TO ADD, TO, AMEND, MODIFY, RESCIND, SUPPLEMENT OR ALTER ANY OF THE GROUNDS STATED HEREI N ABOVE, EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT IN THIS CA SE ASSESSMENT WAS MADE U/S. 144/147 OF THE I.T. ACT, 1961 ON 25.3.2014. AN INF ORMATION IN THIS CASE WAS AVAILABLE THAT THE ASSESSEE HAS MADE CASH DEPOSITS IN HIS SAVINGS BANK ACCOUNT MAINTAINED WITH CENTURION BANK OF PUNJAB. DURING T HE RELEVANT ASSESSMENT YEAR, THE ASSESSE HAD NOT FILED ANY ITR FOR ASSESSM ENT YEAR 2008-09, THEREFORE, THE CASE WAS REOPENED UNDER SECTION 147 OF THE I.T. ACT IN PURSUANT TO VARIOUS NOTICES. IN RESPONSE TO THE NOTICES, THE ASSSESSE ES AR ATTENDED THE PROCEEDINGS AND ADMITTED THAT THE ASSESSEE HAD NOT FILED THE RE TURN AND IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE I.T. ACT, THE AR FILED RE TURN WITH AN INCOME OF RS. 1,06,490/-. THE ASSESSEE WAS ENGAGED IN SMALL SCALE BUSINESS OF SALE / PURCHASE OF MOTOR VEHICLES ON COMMISSION BASIS. DUR ING THE COURSE OF PROCEEDINGS, THE ASSESSEE WAS CONFRONTED WITH THE F ACT THAT THERE WERE DEPOSITS IN BANK ACCOUNT AND SOUGHT EXPLANATION FOR THE SAM E. HOWEVER, ON NON-RECEIPT OF REPLY, A SUM OF RS. 40,49,500/- WAS ADDED AS CA SH CREDIT UNDER SECTION 68 OF THE I.T. ACT AND ACCORDINGLY, THE AO COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT AT RS. 41,55,990/- VIDE HIS ORDER DATED 25.3.20 14. 4 3. AGAINST THE ORDER OF THE AO, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 11.1.2016 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED WITH THE AFORESAID ORDER OF THE LD . CIT(A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL FOR CHALLENGING THE LEGA L ISSUE RAISED VIDE GROUND NO.1 & 2, AS AFORESAID. 5. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSES SEE HAS ONLY ARGUED THE LEGAL GROUND AND STATED THAT THE REOPENING ACTION O F THE AO AND CONFIRMATION THEREOF BY THE LD. CIT(A) IS IN VIOLATION OF MANDAT ORY JURISDICTIONAL CONDITIONS STIPULATED UNDER THE ACT. IT WAS FURTHER STATED TH AT THE REOPENING ACTION OF AO U/S. 148 OF THE ACT ON NON EXISTING BASIS OF CASH DEPOSITS WITH CENTURIAN BANK OF PUNJAB WHICH WAS NOT PROVED TILL PASSING OF FINA L ORDER AND AN UNSUBSTANTIATED & VAGUE AIR INFORMATION IS SOLE BASIS OF ENTIRE ORD ER. IT WAS FURTHER STATED THAT IN THIS CASE REASONS RECORDED ARE TOTALLY SILENT ON A) CONTENTS OF INFORMATION AVAILABLE TO LD AO AND B) NO DETAILS WHATSOEVER OF ANY BANK ALE ARE MENTIONED AND C) MERE CASH DEPOSITS IS TREATED TO BE EQUIVALE NT TO INCOME ESCAPING ASSESSMENT. IT WAS THE FURTHER CONTENTION THAT REO PENING IN THE CASE ULS 148 OF THE ACT IS WITHOUT LEGAL AND VALID MANDATORY SERVIC E OF NOTICE U/S 148 OF THE ACT. T HERE IS NO NEXUS BETWEEN THE PRIMA FACIE INFERENCE ARRIVED IN THE REASONS RECORDED AND INFORMATION AVAILABLE WITH THE OFFICE OF THE AO. HE FURTHER STATED THAT THE INFORMATION WAS RESTRICTED TO CASH DEPOSIT S IN BANK ACCOUNT BUT THERE WAS NO MATERIAL MUCH LESS TANGIBLE, CREDIBLE, COGENT AN D RELEVANT MATERIAL TO FORM A REASON TO BELIEVE THAT CASH DEPOSITS REPRESENTED IN COME OF THE ASSESSEE. IT WAS 5 THE FURTHER CONTENTION OF THE LD. COUNSEL OF THE AS SESSEE THAT THE PROCEEDINGS INITIATED ARE BASED ON SURMISES, CONJECTURES AND SU SPICION AND THEREFORE, THE SAME ARE WITHOUT JURISDICTION. HE FURTHER STATED T HAT THE REASONS RECORDED ARE HIGHLY VAGUE, FAR-FETCHED AND CANNOT BY ANY STRETCH OF IMAGINATION LEAD TO CONCLUSION OF ESCAPEMENT OF INCOME AND THERE ARE ME RELY PRESUMPTION IN NATURE. HE STATED THAT IT IS A CASE OF MECHANICAL ACTION O N THE PART OF THE AO AS THERE IS NON-APPLICATION OF MIND MUCH LESS INDEPENDENT APPL ICATION OF MIND SO AS TO SHOW THAT HE FORMED AN OPINION BASED ON ANY MATERIA L THAT SUCH DEPOSITS REPRESENTED INCOME. TO SUPPORT HIS AFORESAID CO NTENTION, HE RELIED UPON THE FOLLOWING CASE LAWS AND ATTACHED THE COPIES OF THE SAID DECISIONS WITH HIS PAPER BOOK. - SH. AMRIK SINGH VS. ITO REPORTED IN 159 ITD 329 (ASR) - DELHI ITAT, SMC BENCH DECISION IN THE CASE OF VINOD MAHESHWARI ORDER DATED 9.9.2016. - DELHI ITAT SMC BENCH DECISION IN CASE OF RAHUL BHANDARI ORDER DATED 8.9.2016. - DELHI ITAT, SMC BENCH DECISION IN THE CASE OF MARIYAM ISMAIL RAJWANI - PRAVEEN KUMAR JAIN VS. ITO IN ITA NO. 1331/D/2015 FOR THE AY 2006-07 DATED 22.1.2016. - AHMEDABAD ITAT SMC BENCH DECISION IN THE CASE OF MUNI DEVI ORDER DATED 15.9.2016 6 - ITAT, LUCKNOW BENCH IN THE CASE OF SH. GYAN PRAKASH MOTWANI ORDER DATED 31.8.2016 IN VIEW OF THE ABOVE, HE REQUESTED THAT BY FOLLOWI NG THE AFORESAID PRECEDENTS THE REASSESSMENT PROCEEDINGS OF THE AO MAY BE QUASHED BY ACCEPTING THE APPEAL FILED BY THE ASSESSEE. 6. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER PA SSED BY THE AUTHORITIES BELOW AND STATED THAT THE AO HAS PROPERLY RECORDED THE REASONS FOR REOPENING BY DUE APPLICATION OF MIND, HENCE, THE APPEAL OF THE A SSESSEE MAY BE DISMISSED. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE REVENUE AUTHO RITIES AND THE CASE LAWS CITED BY THE ASSESSEES COUNSEL ON THE ISSUE IN DISPUTE. IN OUR VIEW, IT IS VERY MUCH NECESSARY TO REPRODUCE THE REASONS RECORDED BY THE AO BEFORE ISSUE OF NOTICE U/S. 148 FOR REOPENING OF ASSESSMENT WHICH READS AS UNDER:- REASONS RECORDED FOR ISSUANCE OF NOTICE U/S. 148 O F THE I.T. ACT IN THE CASE OF SH. HARMEET SINGH, 2/54, GEETA COLONY, NEW DELHI FOR THE ASSESSMENT YEAR 2008-09. 27.03.2013 INFORMATION BASED ON NON-FILTER AIR DATA AVAILABLE ON THE ITD SYSTEM REVEALS THAT SH. HARMEET SINGH HAS DEPOSITED CASH OF RS. 40,49,500/- IN THE SAVING BANK ACCOUNT ON VARIOUS D ATES DURING THE FY 2007-08 PERTAINING TO AY 2008-09. PERUSAL OF THE DATABASE IN 7 THE ITD SYSTEM SHOWS THAT THE ASSESSEE HAS NOT FILE D ANY ITR FOR THE AY 2008-09, THEREBY IT CAN BE CONCLUDED THAT TH E DISCLOSED INCOME IS BELOW TAXABLE LIMITS AND IN ABSENCE OF DI SCLOSED SOURCES OF INCOME /CASH, IT IS REASONABLY CONCLUDED THAT IN COME EQUIVALENT TO THE CASH DEPOSITS HAS ESCAPED ASSESSMENT AND THE SAME IS CHARGEABLE TO TAX FOR AY 2008-09. THE ONUS TO DISC LOSE THE TRUE AND FULL PARTICULARS OF INCOME LIES ON THE ASSESSE E, HENCE IT CAN BE CONCLUDED THAT ASSESSEE HAS FAILED TO DISCLOSE SOUR CES OF CASH DEPOSITS. IN VIEW OF THE EXPLANATION 2 OF PROVISO 2 OF SECTION 147 OF THE ACT, SINCE NO RETURN OF INCOME HAS BEEN FURNISH ED AND INCOME EXCEEDS TAXABLE LIMITS, CASE OF THE ASESSEE NEEDS T O BE REOPENED U/S. 147/148 OF THE ACT TO BRING TO TAX THE INCOME EQUIVALENT TO CASH DEPOSIT OF RS. 40,94,500/- WHICH HAS ESCAPED A SSESSMENT. IN THE INSTANT CASE, THE DEPARTMENT IS IN POSSESS ION OF CREDIBLE INFORMATION RELATING TO THE DEPOSIT OF CAS H WHICH IS SUFFICIENT FOR FORMING REASON TO BELIEVE FOR ESCAP EMENT OF INCOME. IN THE CASE OF ITO VS. LAKHMANI MEWAL DAS, PHOOLCH AND BAJRANG LAL & ANRTHRS VS. ITO, RAYMOND WOOLEN MILLS VS. IT O AND DESH RAJ UDYOG VS. ITO, THE APEX COURT HAS HELD THAT FAI LURE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS IS SUFFICIENT REASON FOR FORMING THE BELIEF FOR ESCAPEMENT OF INCOME. 8 IN VIEW OF THE ABOVE FACTS, I HAVE THEREFORE, REA SON TO BELIEVE THAT INCOME OF RS. 40,94,500/- PERTAINING T O THE FY 2007- 08 RELEVANT TO AY 2008-09 HAS ESCAPED ASSESSMENT AN D TO BRING TO TAX SUCH INCOME, PROCEEDINGS U/S. 147/148 OF THE AC T IS BEING INITIATED. ISSUE NOTICE U/S 148 OF THE ACT. SD/- ITO, WARD 36(1), NEW DELHI 8. AFTER GOING THROUGH THE REASONS RECORDED BY THE ITO, WARD-36(1), NEW DELHI REWARI, I AM OF THE VIEW THAT THERE IS NO NEX US BETWEEN THE PRIMA FACIE INFERENCE ARRIVED IN THE REASONS RECORDED AND INFOR MATION; THE INFORMATION WAS RESTRICTED TO CASH DEPOSITS IN BANK ACCOUNT BUT THE RE WAS NO MATERIAL MUCH LESS TANGIBLE, CREDIBLE, COGENT AND RELEVANT MATERIAL TO FORM A REASON TO BELIEVE THAT CASH DEPOSITS REPRESENTED INCOME OF THE ASSESSEE; THAT THE PROCEEDINGS INITIATED ARE BASED ON SURMISES, CONJECTURES AND SUSPICION AN D THEREFORE, THE SAME ARE WITHOUT JURISDICTION; THAT THE REASONS RECORDED AR E HIGHLY VAGUE, FAR-FETCHED AND CANNOT BY ANY STRETCH OF IMAGINATION LEAD TO CONCLU SION OF ESCAPEMENT OF INCOME AND THERE ARE MERELY PRESUMPTION IN NATURE; THAT I T IS A CASE OF MECHANICAL ACTION ON THE PART OF THE AO AS THERE IS NON-APPLICATION O F MIND MUCH LESS INDEPENDENT APPLICATION OF MIND SO AS TO SHOW THAT HE FORMED AN OPINION BASED ON ANY MATERIAL THAT SUCH DEPOSITS REPRESENTED INCOME. K EEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE CASE LAW APPLICABLE IN THE CASE 9 OF THE ASSESSEE, I AM OF THE CONSIDERED VIEW THAT THE REOPENING IN THE CASE OF THE ASSESSEE FOR THE ASSTT. YEAR IN DISPUTE IS BAD IN L AW AND DESERVES TO BE QUASHED. MY VIEW IS SUPPORTED BY THE FOLLOWING JUDGMENTS/DEC ISIONS:- A. AMRIK SINGH VS ITO REPORTED IN 159 ITD 329 (ASR ) WHEREIN IT HAS BEEN HELD AS UNDER AND THE DECISION OF BIR BAHADUR SINGH SIJAWALI (SUPRA) HAS BEEN FOLLOWED IN THIS CASE. '44. IT IS THIS QUESTION WHICH TAKES US BACK TO THE APPLICABILITY/NON- APPLICABILITY OF THE DECISION IN BIR BAHADUR SINGH SIJWALI (SUPRA). THE RATIO THEREOF HAS NOT AT ALL BEEN DISPUTED BY T HE DEPARTMENT. IN FACT, THE ONLY DISPUTE WHICH HAS BEEN RAKED UP I S THE APPLICABILITY OR OTHERWISE THEREOF TO THE FACTS OF THE PRESENT CASE, IN VIEW OF THE POSITION THAT THE INITIATION OF THE ASSESSMENT PROCEEDINGS U/S 147 IN THE PRESENT CASE STANDS PREC EDED BY THE ISSUANCE OF THE ALLEGED ENQUIRY LETTER BY THE ITO. THIS DISPUTE HAS BEEN DEALT WITH IN DETAIL IN THE FOREGOING PARAGRAP HS. 45. IN 'BIR BAHADUR SINGH SIJWALI' (SUPRA), IT HAS BEEN HELD THAT WHERE THE AO ISSUED A NOTICE U/S 148 ON THE GROUND THAT THERE WAS ,FIN ESCAPEMENT OF INCOME AND THE BELIEF REGARD ING SUCH ESCAPEMENT OF INCOME WAS FORMED ON THE FALLACIOUS A SSUMPTION OF THE AO THAT BANK DEPOSITS CONSTITUTED UNDISCLOSED I NCOME, OVER- LOOKING THE FACT THAT THE SOURCE OF THE DEPOSITS NE ED NOT NECESSARILY BE THE INCOME OF THE ASSESSEE, THE REASSESSMENT PRO CEEDINGS 10 CANNOT BE SUSTAINED. IN THE PRESENT CASE, SIMILARLY , THE BASIS OF INITIATION OF THE ASSESSMENT PROCEEDINGS U/S 147 WA S THE INFORMATION WITH THE DEPARTMENT, OF THE DEPOSITS MA DE BY THE ASSESSEE IN HIS BANK ACCOUNT. 46. 'BIR BAHADUR SINGH SIJWALI' (SUPRA), MAKES REFE RENCE TO 'HINDUSAN LEVER LTD. VS. R.B. WADKAR'. 26R TTR 332 (BORN.), TO HOLD THAT THE REASONS RECORDED FOR REOPENING THE AS SESSMENT ARE TO BE EXAMINED ON A STANDALONE BASIS AND NOTHING CAN B E ADDED TO THE REASONS. IT WAS ALSO OBSERVED THAT THE REASONS MUST POINT OUT TO AN INCOME ESCAPING ASSESSMENT AND NOT MERELY NEED O F AN ENQUIRY WHICH MAY RESULT IN DETECTION OF AN INCOME ESCAPING ASSESSMENT. IT WAS OBSERVED THAT IT IS NECESSARY THAT THERE MUST B E SOMETHING WHICH INDICATES, EVEN IF IT DOES NOT ESTABLISH, THE ESCAPEMENT OF INCOME FROM ASSESSMENT; THAT IT IS ONLY ON THAT BAS IS THAT THE AO CAN FORM A PRIMA-FACIE BELIEF THAT AN INCOME HAS ES CAPED ASSESSMENT; THAT MERELY BECAUSE SOME FURTHER INVEST IGATIONS HAVE NOT BEEN CARRIED OUT, WHICH, IF MADE, COULD HAVE LE D TO DETECTION OF AN INCOME ESCAPING ASSESSMENT, THIS CANNOT BE REASO N ENOUGH TO HOLD THE VIEW THAT THE INCOME HAS ESCAPED ASSESSMEN T; AND THAT THERE HAS TO BE SOME KIND OF CAUSE AND EFFECT OF RE LATIONSHIP BETWEEN THE REASONS RECORDED AND THE INCOME ESCAPIN G ASSESSMENT. THE OBSERVATIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF 'ITO VS. LAKHMANI MEWAL DAS', 103 ITR 437 ( SC), WERE 11 REPRODUCED. AS UNDER: 'THE REASONS FOR THE FORMATIO N OF THE BELIEF MUST HAVE RATIONAL CONNECTION WITH OR RELEVANT BEAR ING ON THE FORMATION OF THE BELIEF. RATIONAL CONNECTION POSTUL ATES THAT THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MAT ERIAL COMING TO THE NOTICE OF THE ITO AND THE FORMATION OF THIS BEL IEF THAT THERE HAS BEEN ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT IN THE PARTICULAR YEAR BECAUSE OF HIS FAILURE TO DISCL OSE FULLY AND TRULY ALL MATERIAL FACTS. IT IS NO DOUBT TRUE THAT THE CO URT CANNOT GO INTO SUFFICIENCY OR ADEQUACY OF THE MATERIAL AND SUBSTIT UTE ITS OWN OPINION FOR THAT OF THE ITO ON THE POINT AS TO WHET HER ACTION SHOULD BE INITIATED FOR REOPENING ASSESSMENT. AT TH E SAME TIME WE HAVE TO BEAR IN MIND THAT IT IS NOT ANY AND EVERY M ATERIAL, HOWSOEVER VAGUE AND INDEFINITE OR DISTANT, REMOTE A ND FARFETCHED, WHICH WOULD WARRANT THE FORMATION OF THE BELIEF REL ATING TO ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM ASSES SMENT.' 47. IT WAS FURTHER 'OBSERVED AS FOLLOWS: '8. LET US , IN THE LIGHT OF THIS LEGAL POSITION, REVERT TO THE FACTS OF THE CAS E BEFORE US. ALL THAT THE REASONS RECORDED FOR REOPENING INDICATE IS THAT CASH DEPOSITS AGGREGATING TO RS.L0,24,100/- HAVE BEEN MADE IN THE BANK ACCOUNT OF THE ASSESSEE, BUT THE MERE FACT THAT THESE DEPOS ITS HAVE BEEN MADE IN A BANK ACCOUNT DOES NOT INDICATE THAT THESE DEPOSITS CONSTITUTE AN INCOME WHICH HAS ESCAPED ASSESSMENT. THE REASONS RECORDED FOR REOPENING THE ASSESSMENT DO NOT MAKE O UT A CASE THAT 12 THE ASSESSEE WAS ENGAGED IN SOME BUSINESS AND THE I NCOME FROM SUCH A BUSINESS HAS NOT BEEN RETURNED BY THE ASSESS EE. AS WE DO NOT HAVE THE LIBERTY TO EXAMINE THESE REASONS ON TH E BASIS OF ANY OTHER MATERIAL OR FACT, OTHER THAN THE FACTS SET OU T IN THE REASONS SO RECORDED, IT IS NOT OPEN TO US TO DEAL WITH THE QUE STION AS TO WHETHER THE ASSESSEE COULD BE SAID TO BE ENGAGED IN ANY BUSINESS; ALL THAT IS TO BE EXAMINED IS WHETHER THE FACT OF T HE DEPOSITS, PER SE, IN THE BANK ACCOUNT OF THE ASSESSEE COULD BE BASIS OF HOLDING THE VIEW THAT THE INCOME HAS ESCAPED ASSESSMENT. THE AN SWER, IN OUR HUMBLE UNDERSTANDING, IS IN NEGATIVE. THE ASSESSING OFFICER HAS OPINED THAT AN INCOME OF RS.L 0,24, 1 00/- HAS ESCA PED ASSESSMENT OF INCOME BECAUSE THE ASSESSEE HAS RS.L0,24,100/- I N HIS BANK ACCOUNT BUT THEN SUCH AN OPINION PROCEEDS ON THE FA LLACIOUS ASSUMPTION THAT THE BANK DEPOSITS CONSTITUTE UNDISC LOSED INCOME, AND OVERLOOKS THE FACT THAT THE SOURCES OF DEPOSIT NEED NOT NECESSARILY BE INCOME OF THE ASSESSEE. OF COURSE, I T MAY BE DESIRABLE, FROM THE POINT OF VIEW OF REVENUE AUTHOR ITIES, TO EXAMINE THE MATTER IN DETAIL, BUT THEN REASSESSMENT PROCEED INGS CANNOT BE RESORTED TO ONLY TO EXAMINE THE FACTS OF A CASE, NO MATTER HOW DESIRABLE THAT BE, UNLESS THERE IS A REASON TO BELI EVE, RATHER THAN SUSPECT, THAT AN INCOME HAS ESCAPEMENT ASSESSMENT.' 48. THE TRIBUNAL CONCLUDED THUS: 'BUT THEN IN THE CASE BEFORE US THE ONLY REASON FOR REASSESSMENT PROCEEDINGS WAS THE FA CT OF DEPOSIT 13 OF BANK ACCOUNT WHICH BY ITSELF DOES NOT LEAD TO IN COME BEING TAXED IN THE HANDS OF THE ASSESSEE. LEARNED DEPARTM ENTAL REPRESENTATIVE HAS REFERRED TO SEVERAL OTHER JUDICI AL PRECEDENTS IN SUPPORT OF THE PROPOSITION THAT AT THE STAGE OF INI TIATION OF REASSESSMENT PROCEEDINGS, ALL THAT IS TO BE SEEN IS EXISTENCE, RATHER THAN ADEQUACY, OF THE MATERIAL TO COME TO THE CONCL USION THAT INCOME HAS ESCAPED ASSESSMENT. THERE CANNOT BE ANY, AND THERE IS NO, DOUBT ON THE CORRECTNESS OF THIS PROPOSITION BU T THEN, AS WE HAVE ELABORATELY EXPLAINED EARLIER IN THIS ORDER, T HE MATERIAL MUST INDICATE INCOME ESCAPING ASSESSMENT RATHER THAN DES IRABILITY OF FURTHER PROBE IN THE MATTER WHICH MAY OR MAY NOT LE AD TO INCOME ESCAPING THE ASSESSMENT, IN OUR HUMBLE UNDERSTANDIN G, CANNOT BE DRAWN.' 49. NOW, IN KEEPING WITH 'BIR BAHADUR SINGH SIJ WALI' (SUPRA), THIS 'INFORMATION CANNOT FORM A VALID BASIS FOR INITIATI NG ASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE LT. ACT. AS OB SERVED IN 'BIR BAHADUR SINGH SIJWALI' (SUPRA), THE MERE FACT THAT THE DEPOSITS HAD BEEN MADE IN THE BANK ACCOUNT DOES NOT INDICATE THA T THESE DEPOSITS CONSTITUTE INCOME WHICH HAS ESCAPED ASSESS MENT. 50. THUS, IT WAS A MERE SUSPICION OF THE AO, THAT PROMP TED HIM TO INITIATE ASSESSMENT PROCEEDINGS UNDER SECTION 147, WHICH IS NEITHER COUNTENANCED, NOR SUSTAINABLE IN LAW. TOO, THE AO PROCEEDED ON THE FALLACIOUS ASSUMPTION THAT THE BAN K DEPOSITS 14 CONSTITUTED UNDISCLOSED INCOME, OVER-LOOKING THE FA CT THAT THE SOURCE OF THE DEPOSITS NEED NOT NECESSARILY BE THE INCOME OF THE ASSESSEE. THAT BEING SO, IN KEEPING WITH 'BIR BAHAD UR SINGH SIJWALI' (SUPRA), THE REASONS RECORDED TO INITIATE ASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE ACT AND ALL PR OCEEDINGS PURSUANT THERETO, CULMINATING IN THE IMPUGNED ORDER , ARE CANCELLED. GROUND NO.2 IS, ACCORDINGLY, ACCEPTED.' B. ITAT, DELHI BENCH DECISION IN CASE OF PRAVEEN K UMAR JAIN V ITO IN ITA NO. 1331/D/2015 FOR ASSESSMENT YEAR 2006 -07 DATED 22.1.2015 WHEREIN IT HAS BEEN HELD AS UNDER:- '12. THUS IT IS CLEAR THAT THE BASIC REQUIREMENT FO R REOPENING OF ASSESSMENT THAT THE AO MUST APPLY HIS MIND TO THE M ATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT WAS FOUND TO BE MISSING WHEN THE AO PROCEED TO REOPEN THE ASSESSMENT WHICH IS IN NATURE OF A PO ST MORTEM EXERCISE AFTER THE EVENT OF REOPENING OF THE ASSESS MENT. THEREFORE THE REOPENING OF THE ASSESSMENT WAS FOUND TO BE INV ALID AS IT DOES NOT SATISFY THE REQUIREMENT OF LAW THAT PRIOR TO TH E REOPENING OF THE ASSESSMENT THE AO HAS TO APPLY HIS MIND TO THE MATE RIAL AND CONCLUDE THAT HE HAS REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. APPLYING THE ABOVE PROPOSIT ION OF LAW IT LEAVES NO DOUBT IN THE MIND THAT IN THE CASE ON HAN D THE AO HAS 15 REOPENED THE ASSESSMENT MECHANICALLY WITHOUT APPLIC ATION OF MIND TO CONCLUDE THAT THE SAID AMOUNT OF RS.6 LAC DEPOSI T IN THE BANK ACCOUNT OF THE ASSESSEE CONSTITUTES THE INCOME OF T HE ASSESSEE AND THE SAME HAS ESCAPED ASSESSMENT. THE DECISION RELIE D UPON BY THE LD DR IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE BECAUSE IN THE SAID CASE NOT ONLY THE ACCOMMODATION ENTRY WERE FOUND BY THE INVESTIGATION WING BUT THE MODUS OPERANDI WAS ALSO DETECTED AND THEREFORE IT WAS FOUND THAT THE AO WAS HAVING THE S UFFICIENT MATERIAL AND INFORMATION TO FORM THE BELIEVE THAT T HE INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT. IN VIEW O F THE FACTS AND CIRCUMSTANCES AS WELL AS THE DECISIONS RELIED UPON BY THE AR, THE REOPENING IS IN THE CASE OF THE ASSESSEE IS NOT VAL ID AND THE SAME IS QUASHED. SINCE THE REOPENING OF THE ASSESSMENT HELD TO BE INVALID THEREFORE OTHER GROUNDS OF THE APPEAL BECOME INFRAC TUOUS.' C. ITAT, DELHI SMC DECISION IN THE CASE OF MUNNI DEVI 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E RELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AND THE CASE LAWS CITED BY THE ASSESSEE S COUNSEL ON THE ISSUE IN DISPUTE. IN OUR VIEW, IT IS VERY MUCH NECE SSARY TO REPRODUCE THE REASONS RECORDED BY THE AO BEFORE ISS UE OF NOTICE U/S. 148 FOR REOPENING OF ASSESSMENT WHICH READS AS UNDER:- 16 AS PER AIR INFORMATION FOR FY 2006-07 RECEIVED IN THIS OFFICE, THE ASSESSEE HAS MADE CASH DEPOSITS OF RS. 49,42,000/- IN BANK ACCOUNT WITH CANARA BANK, PULHA WAS, REWARI. A QUERY NOTICE WAS ISSUED TO THE ASSESSEE O N 24.1.2012. BUT NO RESPONSE HAS BEEN RECEIVED FROM THE ASSESSEE. I, THEREFORE HAVE REASON TO BELIEVE THAT THE ASSESS E HAS DEPOSITED CASH IN HIS BANK ACCOUNT OUT OF HIS INCOM E FROM UNEXPLAINED SOURCES. ACCORDINGLY, INCOME TO THE E XTENT OF RS. 49,42,000/- AND ANY OTHER INCOME WHICH SUBSEQUE NTLY COMES TO THE NOTICE OF THE UNDERSIGNED HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT, 1961. ISSUE NOTICE U/S. 148 OF THE I.T. ACT, 1 961 FOR THE ASSESSMENT YEAR 2007-08. SD/- (O.P. POONIA) INCOME TAX OFFICER, WARD-2, REWARI 12. AFTER GOING THROUGH THE REASONS RECORDED BY THE ITO, WARD-2, REWARI, I AM OF THE VIEW THAT THERE IS NO N EXUS BETWEEN THE PRIMA FACIE INFERENCE ARRIVED IN THE REASONS RE CORDED AND INFORMATION; THE INFORMATION WAS RESTRICTED TO CAS H DEPOSITS IN BANK ACCOUNT BUT THERE WAS NO MATERIAL MUCH LESS TA NGIBLE, 17 CREDIBLE, COGENT AND RELEVANT MATERIAL TO FORM A RE ASON TO BELIEVE THAT CASH DEPOSITS REPRESENTED INCOME OF THE ASSESS EE; THAT EVEN THE COMMUNICATION DATED 24.1.2012 COULD NOT BE MADE A BASIS TO ASSUME JURISDICTION IN VIEW OF THE FACT THAT SUCH A N ENQUIRY LETTER IS AN ILLEGAL ENQUIRY LETTER AND THUS CANNOT BE RELIED UPON; THAT THE PROCEEDINGS INITIATED ARE BASED ON SURMISES, CONJEC TURES AND SUSPICION AND THEREFORE, THE SAME ARE WITHOUT JURIS DICTION; THAT THE REASONS RECORDED ARE HIGHLY VAGUE, FAR-FETCHED AND CANNOT BY ANY STRETCH OF IMAGINATION LEAD TO CONCLUSION OF ES CAPEMENT OF INCOME AND THERE ARE MERELY PRESUMPTION IN NATURE; THAT IT IS A CASE OF MECHANICAL ACTION ON THE PART OF THE AO AS THERE IS NON- APPLICATION OF MIND MUCH LESS INDEPENDENT APPLICAT ION OF MIND SO AS TO SHOW THAT HE FORMED AN OPINION BASED ON ANY M ATERIAL THAT SUCH DEPOSITS REPRESENTED INCOME. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE CASE LAW APPLICABLE IN THE CASE OF THE ASSESSEE, I AM OF TH E CONSIDERED VIEW THAT THE REOPENING IN THE CASE OF THE ASSESSEE FOR THE ASSTT. YEAR IN DISPUTE IS BAD IN LAW AND DESERVES TO BE QUASHED. MY VIEW IS SUPPORTED BY THE FOLLOWING JUDGMENTS/DECISIONS:- A. BIR BAHADUR SINGH SIJAWALI REPORTED IN 68 SOT 19 7 (DEL) WH3RIEN IT HAS BEEN HELD AS UNDER:- 18 'SECTION 68, READ WITH SECTIONS 147 AND 148, OF THE LNCOME-TAX ACT, 1961 - CASH CREDITS (BANK DEPOSIT) - ASSESSMENT YEA R 2008-09 - ASSESSEE DEPOSITED CERTAIN SUM IN HIS SAVING BANK A CCOUNT BUT NO RETURN OF INCOME WAS FILED BY HIM - ASSESSING OFFIC ER ISSUED NOTICE UNDER SECTION 148 ON GROUND THAT THERE WAS AN ESCAP EMENT OF INCOME - WHETHER WHERE ASSESSING OFFICER PROCEEDED ON FALLACIOUS ASSUMPTION THAT BANK DEPOSITS CONSTITUTED UNDISCLOS ED INCOME AND OVERLOOKED FACT THAT SOURCE OF DEPOSIT NEED NOT NEC ESSARILY BE INCOME OF ASSESSEE, REASSESSMENT PROCEEDINGS 'WAS T O BE SET ASIDE - HELD. YES [PARAS 8 & 10. [IN FAVOUR OF ASSESSEE] B. AMRIK SINGH VS ITO REPORTED IN 159 ITD 329 (ASR) WHEREIN IT HAS BEEN HELD AS UNDER AND THE DECISION OF BIR BAHADUR SINGH SIJAWALI (SUPRA) HAS BEEN FOLLOWED IN THIS CASE. '44. IT IS THIS QUESTION WHICH TAKES US BACK TO THE APPLICABILITY/NON- APPLICABILITY OF THE DECISION IN BIR BAHADUR SINGH SIJWALI (SUPRA). THE RATIO THEREOF HAS NOT AT ALL BEEN DISPUTED BY T HE DEPARTMENT. IN FACT, THE ONLY DISPUTE WHICH HAS BEEN RAKED UP I S THE APPLICABILITY OR OTHERWISE THEREOF TO THE FACTS OF THE PRESENT CASE, IN VIEW OF THE POSITION THAT THE INITIATION OF THE ASSESSMENT PROCEEDINGS U/S 147 IN THE PRESENT CASE STANDS PREC EDED BY THE ISSUANCE OF THE ALLEGED ENQUIRY LETTER BY THE ITO. THIS DISPUTE HAS BEEN DEALT WITH IN DETAIL IN THE FOREGOING PARAGRAP HS. 19 45. IN 'BIR BAHADUR SINGH SIJWALI' (SUPRA), IT HAS BEEN HELD THAT WHERE THE AO ISSUED A NOTICE U/S 148 ON THE GROUND THAT THERE WAS ,FIN ESCAPEMENT OF INCOME AND THE BELIEF REGARD ING SUCH ESCAPEMENT OF INCOME WAS FORMED ON THE FALLACIOUS A SSUMPTION OF THE AO THAT BANK DEPOSITS CONSTITUTED UNDISCLOSED I NCOME, OVER- LOOKING THE FACT THAT THE SOURCE OF THE DEPOSITS NE ED NOT NECESSARILY BE THE INCOME OF THE ASSESSEE, THE REASSESSMENT PRO CEEDINGS CANNOT BE SUSTAINED. IN THE PRESENT CASE, SIMILARLY , THE BASIS OF INITIATION OF THE ASSESSMENT PROCEEDINGS U/S 147 WA S THE INFORMATION WITH THE DEPARTMENT, OF THE DEPOSITS MA DE BY THE ASSESSEE IN HIS BANK ACCOUNT. 46. 'BIR BAHADUR SINGH SIJWALI' (SUPRA), MAKES REFE RENCE TO 'HINDUSAN LEVER LTD. VS. R.B. WADKAR'. 26R TTR 332 (BORN.), TO HOLD THAT THE REASONS RECORDED FOR REOPENING THE AS SESSMENT ARE TO BE EXAMINED ON A STANDALONE BASIS AND NOTHING CAN B E ADDED TO THE REASONS. IT WAS ALSO OBSERVED THAT THE REASONS MUST POINT OUT TO AN INCOME ESCAPING ASSESSMENT AND NOT MERELY NEED O F AN ENQUIRY WHICH MAY RESULT IN DETECTION OF AN INCOME ESCAPING ASSESSMENT. IT WAS OBSERVED THAT IT IS NECESSARY THAT THERE MUST B E SOMETHING WHICH INDICATES, EVEN IF IT DOES NOT ESTABLISH, THE ESCAPEMENT OF INCOME FROM ASSESSMENT; THAT IT IS ONLY ON THAT BAS IS THAT THE AO CAN FORM A PRIMA-FACIE BELIEF THAT AN INCOME HAS ES CAPED ASSESSMENT; THAT MERELY BECAUSE SOME FURTHER INVEST IGATIONS HAVE 20 NOT BEEN CARRIED OUT, WHICH, IF MADE, COULD HAVE LE D TO DETECTION OF AN INCOME ESCAPING ASSESSMENT, THIS CANNOT BE REASO N ENOUGH TO HOLD THE VIEW THAT THE INCOME HAS ESCAPED ASSESSMEN T; AND THAT THERE HAS TO BE SOME KIND OF CAUSE AND EFFECT OF RE LATIONSHIP BETWEEN THE REASONS RECORDED AND THE INCOME ESCAPIN G ASSESSMENT. THE OBSERVATIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF 'ITO VS. LAKHMANI MEWAL DAS', 103 ITR 437 ( SC), WERE REPRODUCED. AS UNDER: 'THE REASONS FOR THE FORMATIO N OF THE BELIEF MUST HAVE RATIONAL CONNECTION WITH OR RELEVANT BEAR ING ON THE FORMATION OF THE BELIEF. RATIONAL CONNECTION POSTUL ATES THAT THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MAT ERIAL COMING TO THE NOTICE OF THE ITO AND THE FORMATION OF THIS BEL IEF THAT THERE HAS BEEN ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT IN THE PARTICULAR YEAR BECAUSE OF HIS FAILURE TO DISCL OSE FULLY AND TRULY ALL MATERIAL FACTS. IT IS NO DOUBT TRUE THAT THE CO URT CANNOT GO INTO SUFFICIENCY OR ADEQUACY OF THE MATERIAL AND SUBSTIT UTE ITS OWN OPINION FOR THAT OF THE ITO ON THE POINT AS TO WHET HER ACTION SHOULD BE INITIATED FOR REOPENING ASSESSMENT. AT TH E SAME TIME WE HAVE TO BEAR IN MIND THAT IT IS NOT ANY AND EVERY M ATERIAL, HOWSOEVER VAGUE AND INDEFINITE OR DISTANT, REMOTE A ND FARFETCHED, WHICH WOULD WARRANT THE FORMATION OF THE BELIEF REL ATING TO ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM ASSES SMENT.' 21 47. IT WAS FURTHER 'OBSERVED AS FOLLOWS: '8. LET US , IN THE LIGHT OF THIS LEGAL POSITION, REVERT TO THE FACTS OF THE CAS E BEFORE US. ALL THAT THE REASONS RECORDED FOR REOPENING INDICATE IS THAT CASH DEPOSITS AGGREGATING TO RS.L0,24,100/- HAVE BEEN MADE IN THE BANK ACCOUNT OF THE ASSESSEE, BUT THE MERE FACT THAT THESE DEPOS ITS HAVE BEEN MADE IN A BANK ACCOUNT DOES NOT INDICATE THAT THESE DEPOSITS CONSTITUTE AN INCOME WHICH HAS ESCAPED ASSESSMENT. THE REASONS RECORDED FOR REOPENING THE ASSESSMENT DO NOT MAKE O UT A CASE THAT THE ASSESSEE WAS ENGAGED IN SOME BUSINESS AND THE I NCOME FROM SUCH A BUSINESS HAS NOT BEEN RETURNED BY THE ASSESS EE. AS WE DO NOT HAVE THE LIBERTY TO EXAMINE THESE REASONS ON TH E BASIS OF ANY OTHER MATERIAL OR FACT, OTHER THAN THE FACTS SET OU T IN THE REASONS SO RECORDED, IT IS NOT OPEN TO US TO DEAL WITH THE QUE STION AS TO WHETHER THE ASSESSEE COULD BE SAID TO BE ENGAGED IN ANY BUSINESS; ALL THAT IS TO BE EXAMINED IS WHETHER THE FACT OF T HE DEPOSITS, PER SE, IN THE BANK ACCOUNT OF THE ASSESSEE COULD BE BASIS OF HOLDING THE VIEW THAT THE INCOME HAS ESCAPED ASSESSMENT. THE AN SWER, IN OUR HUMBLE UNDERSTANDING, IS IN NEGATIVE. THE ASSESSING OFFICER HAS OPINED THAT AN INCOME OF RS.L 0,24, 1 00/- HAS ESCA PED ASSESSMENT OF INCOME BECAUSE THE ASSESSEE HAS RS.L0,24,100/- I N HIS BANK ACCOUNT BUT THEN SUCH AN OPINION PROCEEDS ON THE FA LLACIOUS ASSUMPTION THAT THE BANK DEPOSITS CONSTITUTE UNDISC LOSED INCOME, AND OVERLOOKS THE FACT THAT THE SOURCES OF DEPOSIT NEED NOT 22 NECESSARILY BE INCOME OF THE ASSESSEE. OF COURSE, I T MAY BE DESIRABLE, FROM THE POINT OF VIEW OF REVENUE AUTHOR ITIES, TO EXAMINE THE MATTER IN DETAIL, BUT THEN REASSESSMENT PROCEED INGS CANNOT BE RESORTED TO ONLY TO EXAMINE THE FACTS OF A CASE, NO MATTER HOW DESIRABLE THAT BE, UNLESS THERE IS A REASON TO BELI EVE, RATHER THAN SUSPECT, THAT AN INCOME HAS ESCAPEMENT ASSESSMENT.' 48. THE TRIBUNAL CONCLUDED THUS: 'BUT THEN IN THE CASE BEFORE US THE ONLY REASON FOR REASSESSMENT PROCEEDINGS WAS THE FA CT OF DEPOSIT OF BANK ACCOUNT WHICH BY ITSELF DOES NOT LEAD TO IN COME BEING TAXED IN THE HANDS OF THE ASSESSEE. LEARNED DEPARTM ENTAL REPRESENTATIVE HAS REFERRED TO SEVERAL OTHER JUDICI AL PRECEDENTS IN SUPPORT OF THE PROPOSITION THAT AT THE STAGE OF INI TIATION OF REASSESSMENT PROCEEDINGS, ALL THAT IS TO BE SEEN IS EXISTENCE, RATHER THAN ADEQUACY, OF THE MATERIAL TO COME TO THE CONCL USION THAT INCOME HAS ESCAPED ASSESSMENT. THERE CANNOT BE ANY, AND THERE IS NO, DOUBT ON THE CORRECTNESS OF THIS PROPOSITION BU T THEN, AS WE HAVE ELABORATELY EXPLAINED EARLIER IN THIS ORDER, T HE MATERIAL MUST INDICATE INCOME ESCAPING ASSESSMENT RATHER THAN DES IRABILITY OF FURTHER PROBE IN THE MATTER WHICH MAY OR MAY NOT LE AD TO INCOME ESCAPING THE ASSESSMENT, IN OUR HUMBLE UNDERSTANDIN G, CANNOT BE DRAWN.' 23 49. NOW, IN KEEPING WITH 'BIR BAHADUR SINGH SIJ WALI' (SUPRA), THIS 'INFORMATION CANNOT FORM A VALID BASIS FOR INITIATI NG ASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE LT. ACT. AS OB SERVED IN 'BIR BAHADUR SINGH SIJWALI' (SUPRA), THE MERE FACT THAT THE DEPOSITS HAD BEEN MADE IN THE BANK ACCOUNT DOES NOT INDICATE THA T THESE DEPOSITS CONSTITUTE INCOME WHICH HAS ESCAPED ASSESS MENT. 50. THUS, IT WAS A MERE SUSPICION OF THE AO, THAT PROMP TED HIM TO INITIATE ASSESSMENT PROCEEDINGS UNDER SECTION 147, WHICH IS NEITHER COUNTENANCED, NOR SUSTAINABLE IN LAW. TOO, THE AO PROCEEDED ON THE FALLACIOUS ASSUMPTION THAT THE BAN K DEPOSITS CONSTITUTED UNDISCLOSED INCOME, OVER-LOOKING THE FA CT THAT THE SOURCE OF THE DEPOSITS NEED NOT NECESSARILY BE THE INCOME OF THE ASSESSEE. THAT BEING SO, IN KEEPING WITH 'BIR BAHAD UR SINGH SIJWALI' (SUPRA), THE REASONS RECORDED TO INITIATE ASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE ACT AND ALL PR OCEEDINGS PURSUANT THERETO, CULMINATING IN THE IMPUGNED ORDER , ARE CANCELLED. GROUND NO.2 IS, ACCORDINGLY, ACCEPTED.' C. APEX COURT JUDGMENT IN THE CASE OF PARIMISETTI SETHARAMAMMA VS. CIT REPORTED IN 57 ITR 532 HAS HELD AS UNDER:- 'BY SECTIONS 3 AND 4 THE ACT IMPOSES A GENERAL LIAB ILITY TO TAX UPON ALL INCOME. BUT THE ACT DOES NOT PROVIDE THAT WHATE VER IS RECEIVED BY A PERSON MUST BE REGARDED AS INCOME LIABLE TO TA X. IN ALL CASES 24 IN WHICH A RECEIPT IS SOUGHT TO BE TAXED AS INCOME, THE BURDEN LIES UPON THE DEPARTMENT TO PROVE THAT IT IS WITHIN THE TAXING PROVISION. WHERE HOWEVER A RECEIPT IS OF THE NATURE OF INCOME, THE BURDEN OF PROVING THAT IT IS NOT TAXABLE BECAUSE IT FALLS WIT HIN AN EXEMPTION PROVIDED BY THE ACT LIES UPON THE ASSESSEE. THE APP ELLANT ADMITTED THAT SHE HAD RECEIVED JEWELLERY AND DIVERSE SUMS OF MONEY FROM SITA DEVI AND SHE CLAIMED THAT THESE WERE GIFTS MAD E OUT OF LOVE AND AFFECTION. THE CASE OF THE APPELLANT WAS THAT T HE RECEIPTS DID NOT FALL WITHIN THE TAXING PROVISION: IT WAS NOT HE R CASE THAT BEING INCOME THE RECEIPTS WERE EXEMPT FROM TAXATION BECAU SE OF A STATUTORY PROVISION. IT WAS THEREFORE FOR THE DEPAR TMENT TO ESTABLISH THAT THESE RECEIPTS WERE CHARGEABLE TO TAX.' D. ITAT, DELHI BENCH DECISION IN CASE OF PRAVEEN K UMAR JAIN V ITO IN ITA NO. 1331/D/2015 FOR ASSESSMENT YEAR 2006 -07 DATED 22.1.2015 WHEREIN IT HAS BEEN HELD AS UNDER:- '12. THUS IT IS CLEAR THAT THE BASIC REQUIREMENT FO R REOPENING OF ASSESSMENT THAT THE AO MUST APPLY HIS MIND TO THE M ATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT WAS FOUND TO BE MISSING WHEN THE AO PROCEED TO REOPEN THE ASSESSMENT WHICH IS IN NATURE OF A PO ST MORTEM EXERCISE AFTER THE EVENT OF REOPENING OF THE ASSESS MENT. THEREFORE THE REOPENING OF THE ASSESSMENT WAS FOUND TO BE INV ALID AS IT DOES 25 NOT SATISFY THE REQUIREMENT OF LAW THAT PRIOR TO TH E REOPENING OF THE ASSESSMENT THE AO HAS TO APPLY HIS MIND TO THE MATE RIAL AND CONCLUDE THAT HE HAS REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. APPLYING THE ABOVE PROPOSIT ION OF LAW IT LEAVES NO DOUBT IN THE MIND THAT IN THE CASE ON HAN D THE AO HAS REOPENED THE ASSESSMENT MECHANICALLY WITHOUT APPLIC ATION OF MIND TO CONCLUDE THAT THE SAID AMOUNT OF RS.6 LAC DEPOSI T IN THE BANK ACCOUNT OF THE ASSESSEE CONSTITUTES THE INCOME OF T HE ASSESSEE AND THE SAME HAS ESCAPED ASSESSMENT. THE DECISION RELIE D UPON BY THE LD DR IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE BECAUSE IN THE SAID CASE NOT ONLY THE ACCOMMODATION ENTRY WERE FOUND BY THE INVESTIGATION WING BUT THE MODUS OPERANDI WAS ALSO DETECTED AND THEREFORE IT WAS FOUND THAT THE AO WAS HAVING THE S UFFICIENT MATERIAL AND INFORMATION TO FORM THE BELIEVE THAT T HE INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT. IN VIEW O F THE FACTS AND CIRCUMSTANCES AS WELL AS THE DECISIONS RELIED UPON BY THE AR, THE REOPENING IS IN THE CASE OF THE ASSESSEE IS NOT VAL ID AND THE SAME IS QUASHED. SINCE THE REOPENING OF THE ASSESSMENT HELD TO BE INVALID THEREFORE OTHER GROUNDS OF THE APPEAL BECOME INFRAC TUOUS.' E. AMRIK SINGH VS ITO REPORTED IN 159 ITD 329 (ASR ) WHEREIN IT HAS BEEN HELD AS UNDER:- 26 '17. THUS, TO REITERATE, WITH EFFECT FROM 01.07.199 5, THE CONDITION THAT SOME PROCEEDING MUST BE PENDING IS NO LONGER A PPLICABLE. UNDER THE EARLIER PROVISIONS OF SECTION 133(6), THE PRESCRIBED AUTHORITIES HAD THE POWER TO CALL FOR ANY INFORMATI ON FROM ANY PERSON WHICH WOULD BE USEFUL FOR, OR RELEVANT TO, A NY PROCEEDING UNDER THE ACT. THE AMENDMENT IN SUBSECTION (6) EMPO WERS THE PRESCRIBED AUTHORITIES TO CALL FOR INFORMATION FOR THE PURPOSE OF ANY INQUIRY UNDER THE ACT EVEN IN CASES WHERE NO PR OCEEDING IS PENDING. HOWEVER, AN INCOME TAX AUTHORITY BELOW THE RANK OF DIRECTOR OR COMMISSIONER CAN EXERCISE THE SAID POWE R IN RESPECT OF AN INQUIRY ONLY WITH THE PRIOR APPROVAL OF THE D IRECTOR OR THE COMMISSIONER. 18. IN THE PRESENT CASE, THE ENQUIRY LETTER DATED 1 3.03 .2008 WAS ISSUED BY THE INCOME TAX OFFICER, I.E., AN OFFICER BELOW THE RANK OF THE INCOME TAX AUTHORITIES REFERRED TO IN THE SECON D PROVISO TO SECTION 133(6). THUS, IN KEEPING WITH THE SAID SECO ND PROVISO TO SECTION 133(6), PRIOR APPROVAL WAS REQUIRED TO BE O BTAINED FROM THE COMPETENT AUTHORITY BEFORE EXERCISING POWER UND ER SECTION 133(6). 19. THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY SUCH PRIOR APPROVAL WAS OBTAINED HEREIN. THE LETTER, PER SE, A LSO DOES NOT MAKE MENTION OF ANY SUCH APPROVAL. HENCE, THE POWER EXERCISED 27 BY THE ITO, WITHOUT COMPLIANCE WITH THE SECOND PROV ISO TO SECTION 133(6), WOULD TANTAMOUNT TO AN ILLEGAL EXERCISE OF POWER. 20. HOWEVER, BE THAT AS IT MAY, THIS IS NOT DETRIME NTAL TO THE CAUSE OF THE DEPARTMENT. IN THE PRESENT CASE, THE ITO DID NOT MERELY ASK FOR INFORMATION FROM THE ASSESSEE. THIS TAKES THE C ASE OUT OF THE KEN OF SECTION 133(6), AS SHALL PRESENTLY BE SEEN.' 13. IN VIEW OF ABOVE, I AM OF THE CONSIDERED VIEW THAT THE ABOVE LEGAL ISSUE IS EXACTLY THE SIMILAR AND IDENTICAL TO THE ISSUE INVOLVED IN THE PRESENT APPEAL AND IS SQUARELY COVE RED BY THE DECISIONS AS DISCUSSED ABOVE. HENCE, RESPECTFULLY FOLLOWING THE ABOVE PRECEDENTS, I DECIDE THE LEGAL ISSUE IN DISP UTE IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE AND QUASH THE REAS SESSMENT PROCEEDINGS BEING BAD IN LAW AND ILLEGAL. 14. AS I HAVE ALREADY HELD THAT THE REASSESSMENT IS BAD IN LAW, I DO NOT FIND IT NECESSARY TO DECIDE OTHER ISSUES WHI CH ARE ON MERITS OF THE CASE. 15. IN THE RESULT, THE ASSESSEES APPEAL STANDS A LLOWED. 9. IN VIEW OF ABOVE, I AM OF THE CONSIDERED VIEW T HAT THE ABOVE LEGAL ISSUE IS EXACTLY THE SIMILAR AND IDENTICAL TO THE ISSUE INVOLVED IN THE PRESENT APPEAL AND IS SQUARELY COVERED BY THE DECISIONS AS DISCUSS ED ABOVE. HENCE, RESPECTFULLY FOLLOWING THE ABOVE PRECEDENTS, I DEC IDE THE LEGAL ISSUE IN DISPUTE 28 IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE AN D QUASH THE REASSESSMENT PROCEEDINGS BEING BAD IN LAW AND ILLEGAL. 10. AS I HAVE ALREADY HELD THAT THE REASSESSMENT IS BAD IN LAW, I DO NOT FIND IT NECESSARY TO DECIDE OTHER ISSUES WHICH ARE ON MERIT S OF THE CASE. 11. IN THE RESULT, THE ASSESSEES APPEAL STANDS A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 10-2-2017. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED : 10-2-2017 SR BHATANGAR COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.