Sh. Joginder Singh, Jalandhar V. The Income-tax Officer, Jalandhar

ITA 222/ASR/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9743 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 07-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Reassessment proceedings
• Section: 143(3); 148

Judgement Text

I.T.A. NO.222/ASR/2014 ASSESSMENT YEAR2005-06 PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR [CORAM: PRAMOD KUMAR AM AND A.D. JAIN JM] I.T.A. NO.222/ASR/2014 ASSESSMENT YEAR:2005-06 JOGINDER SINGH, ..APPELLANT ES-225, MAKHDOOMPURA, JALANDHAR. [PAN:ABOPS 0558 G] VS. INCOME-TAX OFFICER, RESPONDENT WARD III(1), JALANDHAR. APPEARANCES BY: J.S. BHASIN FOR THE APPELLANT TARSEM LAL FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: JUNE 05, 2015 DATE OF PRONOUNCING THE ORDER: JUNE 11, 2015 O R D E R PER PRAMOD KUMAR: 1. THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 23 RD JANUARY 2014, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 14 7 OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2005-06. 2. WE CONSIDER IT APPROPRIATE TO HEAR THIS APPAL, U NDER PROVISO TO RULE 11 OF THE APPELLATE TRIBUNAL RULES 1963, ON THE FOLLOWING GRO UND: I.T.A. NO.222/ASR/2014 ASSESSMENT YEAR2005-06 PAGE 2 OF 11 WHEN ADDITION MADE BY THE ASSESSING OFFICER, ON THE PECULIAR FACTS AND CIRCUMSTANCES OF THIS CASE AND ON THE BASIS OF REAS ONS RECORDED FOR REOPENING THE ASSESSMENT, ARE DELETED, THE CIT(A) O UGHT ALSO TO HAVE HELD, AS A COROLLARY TO THIS ACTION AND ON THE PECU LIAR FACTS OF THIS CASE, THAT REASSESSMENT ITSELF WAS UNSUSTAINABLE IN LAW. 3. THE PARTIES WERE ACCORDINGLY, PUT TO NOTICE THOU GH, IN THE LIGHT OF THE ISSUES RAISED DURING THE YEAR, THIS GROUND WAS SLIGHTLY MO DIFIED DURING THE COURSE HEARING. THE REGISTRY WAS ALSO DIRECTED TO FIND OUT WHETHER THERE IS ANY CROSS APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE CIT(A). WE ARE INF ORMED THAT NO CROSS APPEAL IS FILED AGAINST THIS ORDER. LEARNED DEPARTMENTAL REPR ESENTATIVE DID NOT OBJECT TO OUR REFRAMING THE GROUND OF APPEAL BUT SUBMITTED, BY WA Y OF A WRITTEN NOTE DATED 5 TH JUNE 2014, THAT THE LEARNED CITA) COULD NOT DO SO IN VIEW OF THE JU DGMENT OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF MANJINDER SINGH KANG VS CIT REPORTED AT 344 ITR 358 . IT IS IN THIS BACKDROP THAT WE PROCEED TO DISPO SE OF THIS APPEAL ON THE ABOVE GROUND OF APPEAL. 4. TO ADJUDICATE ON THE ABOVE GROUND OF APPEAL, ONL Y A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. THIS IS A CASE OF REOPENED ASS ESSMENT. AS FOR THE REASONS FOR WHICH THE ASSESSMENT WAS REOPENED IS EVIDENT FROM T HE FOLLOWING OBSERVATIONS AT PAGES 1-2 OF THE ASSESSMENT ORDER: AN INFORMATION WAS GATHERED BY THE DEPARTMENT THAT THE ASSESSEE ALONGWIH SH. NARINDER SINGH, MRS. ASPINDER KAUR, SH. JASWIND ER SINGH, SMT. NIRMAL KAUR, SM. MOHINDER KAUR, SH. SURINDER MOHAN SINGH A ND SH. JIWAN SINGH WERE RUNNING A FIRM UNDER THE NAME AND STYLE OF M/S . CITY PLAZA, JALANDHAR WHEREIN THEY WERE DEALING IN REAL ESTATE BUSINESS. VIDE DISSOLUTION DEED DATED 05.03.2003, OLD FIRM WAS DISSOLVED AND SH. JO GINDER SINGH ALONG WITH SMT. MOHINER KAUR, SH. SURINDER MOHAN SINGH AND SH. JIWAN SINGH CONTINUED THE BUSINESS AND TOOK OVER THE FIRM. AS P ER SAID DISSOLUTION DEED, THESE CONTINUING PARTNERS PAID THE FOLLOWING AMOUNT S, THROUGH POST DATED CHEQUES TO THE OUTGOING PARTNERS : I.T.A. NO.222/ASR/2014 ASSESSMENT YEAR2005-06 PAGE 3 OF 11 CHEQUE NO. DATED AMOUNT DRAWN ON 225073 10.03.2005 23,57,000 PNB CIVIL LINES 225074 20.03.2005 23,57,000 PNB CIVIL LINES 225075 31.03.2005 23,57,000 PNB CIVIL LINES FURTHER, THE CONTINUING PARTNERS ALSO SETTLED THE L OAN ACCOUNT WITH THE CITIZEN URBAN CO-OPERATIVE BANK LIMITED, JALANDHAR WHEREIN REPAYMENT OF LOAN OF RS.40,90,630/- AND INTEREST OF RS.40,92,568/- WAS M ADE DURING THE FINANCIAL YEAR 2004-05. IT WAS SEEN THAT THE PAYMENT MADE AS ABOVE WAS MUCH MORE THAN THE INCOME DECLARED BY THE ASSESSEE. THEREFORE , MY PREDECESSOR AFTER RECORDING THE REASONS AND AFTER OBTAINING NECESSARY PERMISSION FROM THE THEN ADDL. CIT, RANGE III, JALANDHAR REOPENED THE ASSESS MENT IN THIS CASE BY ISSUE OF NOTICE U/S. 148 OF I.T. ACT ON 29.3.2012, WHICH WAS SERVED ON THE ASSESSEE ON 29.03.2012. IN RESPONSE TO THIS NOTICE, THE ASSESSEE HIMSELF ATTENDED BEFORE MY PREDECESSOR ON 24.4.2012 AND FIL ED A LETTER ALONG WITH A COPY OF THE RETURN OF HIS INCOME. IT WAS FURTHER ST ATED BY THE ASSESSEE BEFORE THE THEN AO THAT HIS RETURN ALREADY FILED ON 11.1.2 006 MAY BE TREATED TO HAVE BEEN FILED IN RESPONSE TO NOTICE U/S. 148. 5. IN THE ASSESSMENT FRAMED AS A RESULT OF THE REAS SESSMENT PROCEEDINGS, THE ASSESSING OFFICER DID MAKE ADDITIONS IN RESPECT OF THE REASONS FOR WHICH ASSESSMENT WAS REOPENED. THE MATTER TRAVELLED IN APPEAL BEFORE THE CIT(A) AND ONE OF THE CONTENTIONS OF THE ASSESSEE WAS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE JURISDICTION UNDER SECTION 147/148 HAS BE EN WRONGLY INVOKED BY THE ITO. IN THE SUBMISSIONS MADE BY THE ASSESSEE, WHICH HAVE BEEN EXTENSIVELY REPRODUCED BY THE CIT(A), IT WAS INTER ALIA SUBMITTED BY THE ASSESSEE THAT, NONE OF THE ABOVE ALLEGATIONS (I.E. REASONS FOR REOPENING THE REASSESSMENT) HAD ANY SOUND BASIS TO REACH A SATISFACTION (THAT INCOME HAS ESCAPED ASSESSMENT) MANDATED UNDER SECTION 148. THESE SUBMISSIONS, HOWEVER, DID NOT FIND FAV OUR WITH THE LEARNED CIT(A) WHO UPHELD REOPENING OF THE ASSESSMENT BY OBSERVING AS FOLLOWS: 5.4. I HAVE CONSIDERED THE ASSESSMENT ORDER AS WEL L AS THE WRITTEN SUBMISSIONS OF THE ASSESSEE ON THE ISSUE UNDER REFE RENCE. I HAVE ALSO CONSIDERED THE OTHER MATERIAL BROUGHT ON RECORD IN THE CASE OF THE PARTNERSHIP FIRM M/S. CITY PLAZA, RAINIK BAZAR, JALANDHAR. ON T HE PERUSAL OF MATERIAL I.T.A. NO.222/ASR/2014 ASSESSMENT YEAR2005-06 PAGE 4 OF 11 BROUGHT ON RECORD IT HAS BEEN NOTICED THAT THE ASSE SSING OFFICER WAS HAVING PLENTY OF REASONS TO ISSUE NOTICE U/S. 148 OF THE A CT. DURING THE COURSE OF INVESTIGATIONS BY THE ADIT(INV.), THE ASSESSEE HAS NOT DISCLOSED THE FACTS WHICH ARE NOW BEING DISCLOSED AT THE TIME OF APPELL ATE PROCEEDINGS. MOREOVER, PROOF OF PAYMENT MADE BY THE BUYER HAS NO T BEEN FILED. THE CHEQUES ISSUED BY SHRI SURINDER MOHAN SINGH TO THE OUTGOING PARTNERS WERE FOUND TO BE DRAWN ON AN ACCOUNT WHICH WAS NOT IN HI S NAME OR IN THE NAME OF PARTNERSHIP FIRM. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT HE ASSESSING OFFICER IS FULLY JUSTIFIE D IN ASSUMING JURISDICTION IN THIS CASE U/S. 147/148 OF THE ACT AND MAKING ASSESS MENT IN THIS CASE. IN THE RESULT, THE GROUND OF APPEAL NO. 1 TAKEN BY THE ASS ESSEE IS, THEREFORE, DISMISSED. 6. QUITE INTERESTINGLY, EVEN AS THE CIT(A) UPHELD T HE REASSESSMENT PROCEEDINGS THE VERY ADDITIONS MADE ON THE BASIS OF THE REASONS FOR REOPENING WERE QUASHED. THE REASONING ADOPTED BY THE CIT(A) IN CANCELLING T HESE ADDITIONS WERE AS FOLLOWS: 6.4. I HAVE CONSIDERED THE ASSESSMENT ORDER AS WEL L AS THE WRITTEN SUBMISSIONS OF THE ASSESSEE. I HAVE ALSO CONSIDERED THE OTHER MATERIAL BROUGHT ON RECORD IN THE CASE OF PARTNERSHIP FIRM M /S CITY PLAZA AS WELL AS IN THE CASE OF OTHER PARTNERS. DURING THE COURSE OF AP PELLATE PROCEEDINGS, IT HAS BEEN SUBMITTED BY THE ASSESSEE THAT THE PAYMENTS MA DE BY THE PARTNERSHIP FIRM M/S. CITY PLAZA OR BY ITS CONTINUING PARTNERS WERE MADE OUT OF THE SALE PROCEEDS OF THE COMMERCIAL BUILDING KNOWN AS CITY P LAZA. NOT ONLY THIS, IT HAS FURTHER BEEN STATED THAT THE PAYMENTS TO THE OUTGOI NG PARTNERS AS WELL AS THE PAYMENT TO M/S. CITIZEN URBAN CO-OPERATIVE BANK TOW ARDS TERM LOAN AND INTEREST THEREON HAS BEEN MADE DIRECTLY BY THE PURC HASER OF PROPERTY KNOWN AS CITY PLAZA BUILDING I.E. BY SH. PREM KUMAR BHAGA T. THE NECESSARY EVIDENCE WITH REGARD TO THE PAYMENT OF BANK LOAN AN D INTEREST THEREON HAS ALSO BEEN BROUGHT ON RECORD. THE PAYMENTS TO THE OU TGOING PARTNERS WERE ALSO FOUND TO BE MADE BY THE PURCHASER OF THE PROPE RTY. THE DETAILS OF THE PAYMENTS TO OUTGOING PARTNERS ARE GIVEN IN THE SALE DEED ITSELF WHICH IN FACT HAVE BEEN MADE DURING F.Y. 2005-06. THE POST DATED CHEQUES WERE ALSO NOT EN-CASHED BY THE OUTGOING PARTNERS AND THEY RECEIVE D THE PAYMENT IN RESPECT OF THEIR SHARE DIRECTLY FROM THE PURCHASER OF THE P ROPERTY I.E. FROM SHRI PREM KUMAR BHAGAT. THESE FACTS AND ALSO SUBMISSIONS MADE BY THE ASSESSEE WITH REGARD TO THE PAYMENT TO OUTGOING PARTNERS AND BANK HAVE ALSO NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER. IN THESE FAC TS AND IN THE CIRCUMSTANCES I.T.A. NO.222/ASR/2014 ASSESSMENT YEAR2005-06 PAGE 5 OF 11 OF THE CASE, I AM OF THE OPINION THAT THE PAYMENTS TO OUTGOING PARTNERS AS WELL S IN RESPECT OF BANK LOAN AND INTEREST ARE SATISFAC TORILY EXPLAINED BY THE ASSESSEE WITH DOCUMENTARY EVIDENCE. I AM, THEREFORE , OF THE OPINION THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE AD DITIONS WHICH HAVE BEEN CHALLENGED VIDE GROUNDS OF APPEAL NO. 2, 3, 4 & 5. THE ADDITIONS OF RS.17,67,750/-, RS.10,22,657/- AND RS.10,23,142/- A RE, THEREFORE, DIRECTED TO BE DELETED. IN THE RESULT, GROUNDS OF APPEAL NO. 2, 3, 4 & 5 TAKEN BY THE ASSESSEE ARE ALLOWED. 7. THE SHORT QUESTION BEFORE US REALLY IS WHETHER I N SUCH CIRCUMSTANCES THE CIT(A) OUGHT ALSO TO HAVE CANCELLED THE REASSESSMEN T PROCEEDINGS AS WELL AND WHETHER THERE IS ANY CONTRADICTION IN THE ACTION OF THE CIT(A) IN UPHOLDING THE REASSESSMENT PROCEEDINGS AND QUASHING THE ADDITIONS MADE ON THE BASIS OF THE REASONS RECORDED FOR REOPENING THE ASSESSMENT. THIS QUESTION ASSUMES SIGNIFICANCE IN THE LIGHT OF THE FACT THAT WHILE THESE ADDITIONS STAND DELETED, SOME OTHER ADDITIONS, MADE DURING THE COURSE OF REOPENED ASSESSMENT, CONT INUE TO SURVIVE. 8. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 9. WE HAVE NOTED THAT THE ASSESSMENT WAS REOPENED O N THE GROUND THAT THE PARTNERSHIP FIRM CITI PLAZA, IN WHICH THE ASSESSEE HAD 25% SHARE, HAD ISSUED THREE POST DATED CHEQUES OF RS 23,57,000 EACH AND MADE BA NK PAYMENTS OF RS 40,90,630 TOWARDS PRINCIPAL AND RS 40,92,568 TOWARD S INTEREST, WHEREAS THE ABOVE PAYMENTS WERE MUCH MORE THAN THE INCOME DECLARED B Y THE ASSESSEE. LEARNED CIT(A) HIMSELF HOLDS, IN PARAGRAPH 6.4 EXTRACTED AB OVE, THAT THE POST DATED CHEQUES ISSUED BY THE PARTNERSHIP FIRM WERE NOT ENCASHED AN D THAT THE BANK PAYMENTS WERE NOT MADE BY THE PARTNERSHIP FIRM BUT BY THE BUYERS OF THE PROPERTY SOLD BY THE PARTNERSHIP FIRM. DURING THE APPELLATE PROCEEDINGS, THE ASSESSING OFFICER WAS DULY CONFRONTED WITH THE RELATED FACTS AND HE COULD NOT, AS THE CIT(A) HAS NOTED IN SO MANY WORDS, CONTROVERT THE STAND OF THE ASSESSEE. C LEARLY, THEREFORE, THE REASONS FOR REOPENING THE ASSESSMENT WERE INCORRECT. THE CIT(A) HAS HELD SO AND THE ASSESSING OFFICER IS NOT IN CHALLENGE AGAINST THESE FINDINGS. YET, WHEN IT CAME TO I.T.A. NO.222/ASR/2014 ASSESSMENT YEAR2005-06 PAGE 6 OF 11 ADJUDICATE UPON THE CHALLENGE TO THE VALIDITY OF RE ASSESSMENT PROCEEDINGS, THE CIT(A) HOLDS THAT THE ASSESSING OFFICER WAS HAVI NG PLENTY OF REASONS TO ISSUE NOTICE UNDER SECTION 148 OF THE ACT. HE DOES SO ON THE BASIS THAT (A) THE ASSESSEE HAD NOT DISCLOSED THE FACTS WHICH ARE NOW BEING DIS CLOSED AT THE TIME OF APPELLATE PROCEEDINGS, AND THAT (B) THE CHEQUES ISSUED BY S HRI SURINDER MOHAN SINGH (I.E. A PERSON OTHER THAN THE ASSESSEE) TO THE OUTGOING PARTNERS WERE FOUND TO BE DRAWN ON AN ACCOUNT WHICH WAS NOT IN HIS NAME OR IN THE NAME OF THE PARTNERSHIP FIRM. THESE THINGS WERE, IN OUR CONSIDERED VIEW, WHOLLY IRRELEV ANT INASMUCH AS THESE THINGS HAVE NOTHING TO DO WITH THE REASONS OF REOPENING THE ASS ESSMENT AS NOTED IN THE REASSESSMENT ORDER ITSELF. 10. IN ANY EVENT, IT WAS NOT THE REVENUES CASE THA T THE ASSESSEE FAILED TO DISCLOSE WHAT HE OUGHT TO HAVE DISCLOSED UNDER THE LAW. SUCH A NON DISCLOSURE, THEREFORE, CANNOT BE A REASON ENOUGH TO UPHOLD THE VALIDITY OF REASSESSMENT PROCEEDINGS. SIMILARLY, THE CHEQUES TO THE OUTGOING PARTNER OF THE FIRM, IN WHICH ASSESSEE IS A PARTNER, HAVING BEEN ISSUED BY AN ACC OUNT OTHER THAN THE ACCOUNT OF THE ASSESSEE OR OF THE PARTNERSHIP FIRM CANNOT BE A REASON ENOUGH TO COME TO THE CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT IN T HE HANDS OF THE ASSESSEE. THERE IS NO CAUSE AND EFFECT RELATIONSHIP IN THIS F ACT AND THE INCOME ESCAPING ASSESSMENT IN THE HANDS OF THE ASSESSEE. 11. IT IS A WELL SETTLED LEGAL POSITION, AS HELD BY HONBLE BOMBAY HIGH COURT, IN THE CASE OF HINDUSTAN LEVER LTD. VS. R.B. WADKAR [(2004) 268 ITR 332 (BOM)], THAT WHEN IT COMES TO EXAMINING THE VALIDITY OF REASSESS MENT PROCEEDINGS, '.... NO INFERENCE CAN BE ALLOWED TO BE DRAWN ON THE BASIS O F REASONS NOT RECORDED. IT IS FOR THE AO TO DISCLOSE AND OPEN HIS MIND THROUGH THE REASONS RECORDED BY HIM . HONBLE BOMBAY HIGH COURT, IN THE CASE OF PRASHANT S. JOSHI VS. ITO [(2010) 324 ITR 154 (BOM)] HAS OBSERVED : ' THE AO MUST HAVE REASONS TO BELIEVE THAT SUCH IS THE CASE (I.E. ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR A PARTICULAR YEAR) BEFORE HE PROCEEDS TO ISSUE NOTICE UNDER S. 147 ' AND THAT ' THE REASONS WHICH ARE RECORDED BY THE AO ARE THE ON LY REASONS WHICH CAN BE CONSIDERED WHEN FORMATION OF BELIEF IS IMPUGNED '. IN VIEW OF I.T.A. NO.222/ASR/2014 ASSESSMENT YEAR2005-06 PAGE 7 OF 11 THESE DISCUSSIONS, AND THE CORRECTNESS OF THE REASO NS RECORDED FOR REOPENING THE ASSESSMENT HAVING BEEN DECIDED AGAINST THIS ASSESSE E, THE CIT(A) OUGHT ALSO HAVE HELD THAT THE VERY REASSESSMENT PROCEEDINGS ARE LEG ALLY UNSUSTAINABLE ON THE FACTS OF THIS CASE. THERE IS AN INHERENT CONTRADICTION I N THE APPROACH OF THE CIT(A). 12. LEARNED DEPARTMENTAL REPRESENTATIVES DEFENCE F OR THE STAND OF THE CIT(A)S ORDER IS RELIANCE ON HONBLE JURISDICTIONAL HIGH CO URTS JUDGMENT IN THE CASE OF MAJINDER SINGH KANG (SUPRA). THAT WAS A CASE IN WHICH THEIR LORDSHIPS HAVE HELD THAT EVEN WHEN THE ASSESSING OFFICER DOES NOT MAKE ANY ADDITION IN RESPECT OF THE REASONS FOR WHICH REASSESSMENT PROCEEDINGS ARE INIT IATED, THE REASSESSMENT PROCEEDINGS CAN STILL BE VALID NEVERTHELESS. TO QUO TE THE OBSERVATIONS MADE BY THEIR LORDSHIPS, A PLAIN READING OF EXPLANATION 3 TO SECTION 147 CLE ARLY DEPICTS THAT THE ASSESSING OFFICER HAS POWER TO MAKE ADDITIONS E VEN ON THE GROUND ON WHICH RE-ASSESSMENT NOTICE MIGHT NOT HAVE BEEN ISSU ED IN CASE DURING REASSESSMENT PROCEEDINGS, HE ARRIVES AT A CONCLUSIO N THAT SOME OTHER INCOME HAS ESCAPED ASSESSMENT WHICH COMES TO HIS NOTICE DU RING THE COURSE OF PROCEEDINGS FOR RE-ASSESSMENT UNDER SECTION 148 OF THE ACT AND THAT THE PROVISION NOWHERE POSTULATES OR CONTEMPLATES THAT I T IS ONLY WHEN THERE IS SOME ADDITION ON THE GROUND ON WHICH RE-ASSESSMENT HAD BEEN INITIATED, THAT THE ASSESSING OFFICER CAN MAKE ADDITIONS ON ANY OTH ER GROUND ON THE BASIS OF WHICH INCOME MAY HAVE ESCAPED ASSESSMENT. THE SLP FILED BY THE ASSESSEE, AGAINST THE VIEW SO EXPRESSED BY THEIR LORDSHIPS, H AS BEEN DISMISSED BY HONBLE SUPREME COURT ON 19.08.2011. 13. THE VIEW SO TAKEN BY THEIR LORDSHIPS IS THE LAW IN THE JURISDICTION OF HONBLE PUNJAB & HARYANA HIGH COURT EVEN THOUGH OTHER HONB LE HIGH COURTS HAVE TAKEN A CONTRARY VIEW. THE JUDICIAL PRECEDENTS FROM OTHER H ONBLE HIGH COURTS, AS AVAILABLE IN THE PUBLIC DOMAIN AND EVEN AFTER TAKING NOTE OF THE VIEWS SO EXPRESSED BY THEIR LORDSHIPS, HAVE TAKEN A CONTRARY VIEW OF THE MATTER , SUCH AS IN THE CASES OF CIT VS MOHMED JUNED DADANI [(2013) 258 CTR 268 (GUJRAT)], CIT VS JET AIRWAYS [(2011) 331 ITR 236 (BOMBAY)], RANBAXY LABORATORIES LIMITED VS CIT [(2011)336 ITR 136 (DELHI)], ACIT VS MAJOR DEEPAK M EHTA [(2012) 344 ITR 641 I.T.A. NO.222/ASR/2014 ASSESSMENT YEAR2005-06 PAGE 8 OF 11 (CHATTISGARH)]. ALL THESE DECISIONS WERE DEALING WITH THE LAW AS I T STOOD AFTER THE INSERTION OF EXPLANATION 3 TO SECTION 147 BUT THEN THE VIEWS SO EXPRESSED BEING CONTRARY TO THE LAW LAID DOWN BY HONBLE JURISDICTI ONAL HIGH COURTS, THESE DECISIONS CANNOT INDEED BE APPLIED ON THIS ASSESSEE. BE THAT AS IT MAY, THAT IS A PURELY ACADEMIC ASPECT OF THE MATTER. 14. THERE CANNOT POSSIBLY BE ANY TWO OPINIONS WITH REGARD TO THE ENUNCIATION OF LAW BY THEIR LORDSHIPS IN MAJINDER SINGH KANGS CAS E (SUPRA). HOWEVER, WE FIND THAT THE RELIANCE BY THE LEARNED DEPARTMENTAL REPRESENTA TIVE ON THIS DECISION, ON THE FACTS OF THIS CASE, TO BE INAPT. IN MAJINDER SINGH KANGS CASE, THEIR LORDSHIPS HAVE NOWHERE HELD THAT THE PROPOSITION OF LAW LAID DOWN THEREIN TO BE APPLICABLE EVEN TO THE CASES WHEREIN EVEN WHEN REASONS RECORDED FOR RE OPENING THE ASSESSMENT ARE HELD TO BE INCORRECT, AND THUS UNSUSTAINABLE IN LAW , THE ASSESSING OFFICER CAN STILL GO AHEAD AND MAKE ADDITIONS IN THE REASSESSMENT PROCEE DINGS IN RESPECT OF REASONS OTHER THAN THE REASONS RECORDED FOR REOPENING THE R EASSESSMENT. HONBE HIGH COURTS JUDGMENT IN THE CASE OF MAJINDER SINGH KANG S CASE (SUPRA) HAS NOT BEEN SHOWN TO HAVE ALTERED, EVEN SUB SILIENTIO, THE WELL SETTLED LEGAL POSITION THAT THE VALIDITY OF REASSESSMENT PROCEEDINGS IS A SINE QUA NON FOR ANY ADDITIONS BEING MADE TO THE INCOME OF THE ASSESSEE, DURING THE COURSE OF THE REASSESSMENT PROCEEDINGS- WHETHER IN RESPECT OF THE REASONS RECORDED FOR REOP ENING THE ASSESSMENT OR IN RESPECT OF THE REASONS OTHER THAN THE REASONS RECOR DED FOR REOPENING THE ASSESSMENT. 15. MOREOVER, PARTICULARLY IN THE LIGHT OF THE SCHE ME OF LAW AS VISUALIZED BY HONBLE SUPREME COURTS DECISION IN THE CASE OF GKN DRIVESHAFTS VS ITO [(2003) 259 ITR 101 (SC)] , SUCH A SITUATION WOULD BE RATHER RARE . 16. THE REASON IS THIS. THE REASONS FOR REOPENING T HE ASSESSMENT, AS IS THE SCHEME OF LAW VISUALIZED AND SET OUT BY HONBLE SUP REME COURT IN THE GKN DRIVESHAFTS CASE (SUPRA), ARE TO BE CONFRONTED TO THE ASSESSEE AND THE ASSESSEE I.T.A. NO.222/ASR/2014 ASSESSMENT YEAR2005-06 PAGE 9 OF 11 HAS AN OPPORTUNITY TO REBUT THESE REASONS. THIS IS A STAGE PRIOR TO THE ASSESSING OFFICER PROCEEDING WITH THE REASSESSMENT PROCEEDING S AND AFTER HE HAS ISSUED NOTICE FOR REOPENING THE ASSESSMENT. IN A SITUATION IN WHICH THE ASSESSEE CAN CONVINCE THE ASSESSING OFFICER THAT THESE REASONS A RE NOT GOOD ENOUGH TO MAKE THE ADDITIONS, THE REASSESSMENT PROCEEDINGS ARE TO BE D ROPPED ANYWAY. 17. THERE IS NO BAR ON THE NATURE OF MATERIAL THAT THE ASSESSEE MAY SEEK TO RELY UPON, EVEN AT THE FIRST STAGE, TO DEMONSTRATE THAT THE REASONS FOR REOPENING ARE UNSUSTAINABLE IN LAW AND EVEN THIS ADJUDICATION BY THE ASSESSING OFFICER IS SUBJECT MATTER OF LEGAL SCRUTINY BY THE APPELLATE AUTHORITI ES IN THE COURSE OF THE SAME APPELLATE PROCEEDINGS AS AGAINST THE REASSESSMENT O RDER. THE SCHEME OF LAW, AS LAID DOWN BY THE HONBLE SUPREME COURT IN GKN DRIVE SHAFTS CASE, THUS PROVIDES FOR DUAL ADJUDICATION BY THE ASSESSING OFFICER ON THE C ORRECTNESS OF THE REASONS RECORDED FOR REOPENING THE ASSESSMENT- ONE AT THE S TAGE OF DEALING WITH THE OBJECTIONS OF THE ASSESSEE PRIOR TO PROCEEDING WITH THE REASSESSMENT PROCEEDINGS, AND THE OTHER AT THE POINT OF TIME WHEN, DURING THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS TO TAKE A CALL ON ADDITIONS T O BE MADE IN RESPECT OF THESE REASONS. THAT IS WHERE THERE IS A PARADIGM SHIFT IN THE SCHEME OF THINGS POST GKN DRIVERSHAFT DECISION. IN A SITUATION IN WHICH, DURI NG THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FINDS THESE REASONS TO BE SO INCORRECT THAT HE CONCLUDES THAT NO INCOME HAS ESCAPED THE ASSESSMENT AND THE ADDITI ONS ON THAT COUNT ARE UNWARRANTED, THE SAME SHOULD HAVE BEEN THE POSITION AT THE STAGE OF ADJUDICATING ON THE CORRECTNESS OF THE REASONS RECORDED IN THE PRE- REASSESSMENT PROCEEDINGS. IN THE LATTER PROCEEDINGS ALSO, THE ASSESSEE HAS THE LIBER TY TO BRING THE MATERIAL, OTHER THAN THAT AVAILABLE TO THE ASSESSING OFFICER ON HIS RECO RDS, THAT NO INCOME HAS ESCAPED ASSESSMENT. THE CONCLUSIONS IN THESE TWO SETS OF S OMEWHAT PARALLEL EXERCISES CANNOT, THEREFORE, BE ORDINARILY DIFFERENT. IN OTHE R WORDS, WHEN THE ASSESSING OFFICER IS SATISFIED THAT NO ADDITIONS CAN BE MADE ON THE B ASIS OF THE REASONS OF REOPENING, AS RECORDED BY HIM, HE HAS TO DROP THE REASSESSMENT PROCEEDING AT THIS INITIAL STAGE ITSELF. WHEN THE EXAMINATION OF CORRECTNESS OF TH E REASONS RECORDED COME UP FOR I.T.A. NO.222/ASR/2014 ASSESSMENT YEAR2005-06 PAGE 10 OF 11 ADJUDICATION BEFORE THE APPELLATE AUTHORITIES, THE APPROACH, THEREFORE, CANNOT BE ANY DIFFERENT EITHER. 18. IN THE CASE BEFORE HONBLE JURISDICTIONAL HIGH COURT, AS EVIDENT FROM THE EXTRACTS FROM THE CIT(A)S ORDER REPRODUCED THEREIN , THE REASSESSMENT WAS QUASHED ON THE GROUND THAT THE ASSESSING OFFICER COULD NOT MAKE ADDITIONS IN RESPECT OF THE INCOME WHICH HAD NOT ESCAPED ASSESSMENT FOR WHICH N O NOTICE HAD BEEN GIVEN TO THE ASSESSEE UNDER SECTION 148 READ WITH SECTION 14 7 OF THE ACT. THEIR LORDSHIPS APPRECIATED THAT TO THAT EXTENT THE LEGAL PROPOSITI ON WAS INCORRECT IN THE LIGHT OF INSERTION OF EXPLANATION 3 TO SECTION 147, AND THE EARLIER JUDICIAL PRECEDENTS, WHICH WERE RELIED UPON BY THE ASSESSEE, DID NOT HOLD GOOD LAW, AS THEIR LORDSHIPS MADE CLEAR IN NO UNCERTAIN WORDS. THE CORRECTNESS OF THE REASONS OF REOPENING WAS NOT AN ISSUE BEFORE THEIR LORDSHIPS. THE CORRECTNESS OF TH E REASONS FOR REOPENING WAS NOT, DIRECTLY OR INDIRECTLY, IN CHALLENGE. 19. AS IS EVIDENT FROM THE DISCUSSIONS EARLIER IN T HIS ORDER, HERE IS A CASE IN WHICH THE VERY REASONS ON ACCOUNT OF WHICH THE CIT(A) HAS DELETED THE QUANTUM ADDITIONS WERE ALSO GOOD ENOUGH TO HOLD THAT THE INITIATION O F REASSESSMENT PROCEEDINGS IS BAD IN LAW AND YET THE CIT(A) WAS FIGHTING SHY OF THE L OGICAL CONCLUSIONS THERETO AND NATURAL COROLLARIES TO THESE FINDINGS. IT IS ALSO I MPORTANT TO BEAR IN MIND THE FACT THAT THE RELIEF SO GRANTED BY THE CIT(A), ON THE BASIS O F WHICH THE ADDITIONS IN RESPECT OF THE REASONS RECORDED FOR REOPENING THE ASSESSMENT W ERE DELETED AND WHICH WERE, IN OUR CONSIDERED VIEW, GOOD ENOUGH TO QUASH THE REASS ESSMENT ITSELF, IS NOT EVEN CHALLENGED IN FURTHER APPEAL. THESE FINDINGS OF THE CIT(A) HAVE THUS REACHED FINALITY. AND ARE NOT EVEN IN DISPUTE BEFORE US. IF SUCH BE T HE FACTS, THERE CAN BE NO JUSTIFICATION FOR TAKING THESE FINDINGS TO ITS LOGI CAL CONCLUSIONS AND, BASED ON THESE UNCONTROVERTED FINDINGS, QUASH THE REASSESSMENT ITS ELF. WHAT HELD GOOD FOR DELETING THE ADDITIONS ON THE BASIS OF THE REASONS RECORDED THE ASSESSMENT, ON THE FACT OF THIS CASE AND IN OUR HUMBLE UNDERSTANDING, WAS GOOD ENOUGH TO HOLD THE REASONS FOR REOPENING THE ASSESSMENT TO BE INCORRECT AS WELL. W E ARE UNABLE TO SEE ANY LEGALLY I.T.A. NO.222/ASR/2014 ASSESSMENT YEAR2005-06 PAGE 11 OF 11 SUSTAINABLE REASONS TO COME TO DIFFERENT CONCLUSION S. IN OUR CONSIDERED VIEW, THEREFORE, THE CIT(A) OUGHT TO HAVE QUASHED THE REA SSESSMENT AS WELL. 20. IN VIEW OF THESE DISCUSSIONS, AND BEARING IN MI ND ENTIRETY OF THE CASE, WE HOLD THAT THE CIT(A) OUGHT TO HAVE, ON THE PECULIAR FACT S AND CIRCUMSTANCES OF THE CASE, QUASHED THE REASSESSMENT PROCEEDINGS AS WELL. WE, T HEREFORE, QUASH THE REASSESSMENT PROCEEDINGS. AS REASSESSMENT ITSELF IS QUASHED AS ABOVE, NOTHING ELSE SURVIVES FOR ADJUDICATION. 21. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TER MS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 11 TH DAY OF JUNE, 2015. SD/- SD/- A D JAIN PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 11 TH DAY OF JUNE 2015 *AKS/- COPIES TO: (1) THE APPELLANT (2) THE RESPONDE NT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR FIT FOR PUBLICATION (JM) (AM)