SATISH N DOSHI HUF, MUMBAI V. ITO WD 21(2)(4), MUMBAI

ITA 2329/MUM/2009

• Counselvise Citation: 232919914 RSA 2009
• Duration Of Justice: 2 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 29-09-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 13-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: I P RATHI
• Keywords: Search and seizure; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 54F; 142(1); 147; 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, I, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND B. RAMAKOTAIAH ( A.M ) ITA NO.2329/MUM/2009 (ASSESSMENT YEAR : 2001-02) SATISH N DOSHI HUF, 503, CLEMSONS CRAFT, GUJARATI MANDAL ROAD, OPP.RAJPURIA BAUG, VILE-PARLE (E), MUMBAI-400057 PAN: AAAHS1388D INCOME TAX OFFICER WARD 21(2)(4), PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 APPELLANT V/S RESPONDENT DATE OF HEARING : 29.9.2011 DATE OF PRONOUNCEMENT :12.10.2011 APPELLANT BY : SHRI I.P.RATHI RESPONDENT BY : SHRI SUNIL KUMAR SINGH O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 30.1.2009 PASSED BY THE LD . CIT(A) FOR THE ASSESSMENT YEAR 2001-02. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE A SSESSEE AN HUF DERIVES INCOME FROM BUSINESS, LONG TERM CAPI TAL GAINS AND INTEREST INCOME. THE RETURN WAS FILED DE CLARING TOTAL INCOME AT RS.1,49,160/-. IN THIS CASE AN INT IMATION HAS BEEN RECEIVED BY THE AO FROM THE DY. DIRECTOR OF IN COME TAX (INV.) WHEREIN IT WAS STATED THAT A DETAILED INQUIR Y WAS CONDUCTED IN THE CASE OF MR.T.C.KOTHARI, M/S GOLD S TAR ITA NO.2329/MUM/2009 (ASSESSMENT YEAR : 2001-02) 2 FINVEST PVT.LTD. AND M/S. RICHMOND SECURITIES P.LTD ., BROKER COMPANIES. THE BROKER COMPANIES AND MR. I.C. CHOK SHI FACILITATED A NUMBER OF PARTIES BY WAY OF ISSUING BOGUS CAPITAL GAIN BILLS. THIS FACT HAS BEEN ADMITTED BY MR. CHOKSHI VIDE HIS STATEMENT DATED 26.4.2002 AND FURTHER ADM ITTED THAT HE HAD ISSUED BOGUS BILLS OF SHARE TRANSACTI ONS AND CHARGED THE COMMISSION ACCORDINGLY. THE PARTIES P AID HIM CASH EQUIVALENT TO THE BILLS AMOUNT AND RECEIVED CHEQUES FROM THE BROKER COMPANIES. IN THIS WAY, BOTH THE PARTIES ACTED PURELY IN THEIR MANUAL PECUNIARY INTEREST. UL TIMATELY, RESULTED IN TAX EVASION BY THE ULTIMATE BENEFICIARI ES OF SUCH TRANSACTIONS. THE AO OBSERVED THAT THE ASSESSEE HA S ADOPTED THE SAME METHOD AND HAS SHOWN LONG TERM CA PITAL GAIN OF RS.1,94,849/-. A NOTICE U/S 148 OF THE IN COME TAX ACT, 1961 (IN SHORT THE ACT) WAS ISSUED TO THE ASS ESSEE ON 29.4.2005 AFTER OBTAINING THE APPROVAL OF THE JT,C IT, RANGE 21(2), MUMBAI. IN RESPONSE TO THE NOTICE, THE ASSES SEE HAS STATED THAT THE RETURN OF INCOME FILED ON 11.7.2001 MAY BE TREATED AS FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. IN RESPONSE TO THE NOTICES U/S 142(1) AND 143(2), THE ASSESSEE STATED AS UNDER: I AM IN RECEIPT OF THE REASONS FOR REOPENING OF TH E ASSESSMENT AND ALSO COPY OF STATEMENT OF MR. MUKESH CHOKSI IN THIS REGARD, I HAVE TO STATE AS UNDER: ITA NO.2329/MUM/2009 (ASSESSMENT YEAR : 2001-02) 3 MY HUF HAD PURCHASED THE SHARES OF RASHEL AGRO LIMITED THROUGH A BROKER MR. PRAVIN RAIYANI ON 16.4.1999 AND THESE SHARES WERE DULY TRANSFERRED IN OUR NAME BY THE TRANSFER LETTER OF THE COMPANY DATE D 31.5.1999. THESE SHARES WERE DULY SHOWN AS INVESTMENT IN OUR BALANCE SHEET AS ON 31.03.2000 RELEVANT TO A.Y. 2000-01 FILED WITH OUR RETURN OF I NCOME FOR A.Y. 2000-01. THESE SHARES HAVE BEEN SOID IN T HE YEAR UNDER REFERENCE THROUGH BROKER AT PREVAILING MARKET RATE AFTER HOLDING THESE SHARES FOR MORE THA N ONE YEAR. AND PAYMENT FOR THE SALE CONSIDERATIONS HAVE BEEN RECEIVED BY CHEQUE. THESE TRANSACTIONS AR E DULY REFLECTED IN OUR BANK STATEMENT AND HAVE BEEN IDENTIFIED WITH COPY OF BANK STATEMENT ALREADY FILE D WITH YOU. COPIES OF ALL THESE DOCUMENTS HAVE ALREAD Y BEEN SUBMITTED TO YOU IN OUR EARLIER HEARINGS. AS PER COPY OF STATEMENT OF MR. MUKESH CHOKSI GIVEN BY YOU, HE HAS STATED THAT HE IS THE DIRECTOR OF FI VE COMPANIES HE IS ALSO STATED TO BE AUTHORIZED SIGNAT ORY OF RICHMOND SECURITIES PVT. LIMITED. IT IS STATED IN THE STATEMENT THAT RICHMOND SECURITIES PVT. LIMITED IS A DEALER OF INTERCONNECTED STOCK EXCHANGE OF INDIA L TD. IN THE SAME STATEMENT, HE HAS STATED THAT HE WAS ISSUING FAKE BILLS FOR SHARE TRANSACTIONS TO VARIO US PARTIES AND RECEIVING COMMISSION, BUT NOWHERE IN T HE SAID STATEMENT, HE HAS REPORTED OUR NAME I.E. NAME OF SATISH N. DOSHI-HUF. WE ARE NOT AWARE OF ANY BOGUS / FAKE TRANSACTIONS DONE BY MR. MUKESH CHOKSI WITH OTHER PARTIES. SINCE OUR TRANSACTIONS ARE GENUINEL Y TAKEN PLACE WITH SUPPORTING BILL FOR PURCHASE, SUPPORTING CONTACT NOTE AND BILL FOR SALE, SHARE TRANSFER LETTER FROM THE COMPANY AND PAYMENT RECE IPT FOR SALE OF SHARES DULY REFLECTED IN OUR BANK STATEMENT, IT CAN NOT BE SAID THAT OUR TRANSACTIO N TO BE FAKE. FROM THE AFORESAID FACTS, STATEMENT OF MR. MUKESH CHOKSI, COPIES OF CONTRACT NOTES AND BILLS FOR SA LE OF SHARES, IT IS EVIDENT THAT THERE IS NO CONNECTION BETWEEN THE ALLEGED TRANSACTIONS AS STATED BY MR. MUKESH CHOKSI AND OUR TRANSACTION OF SALE OF SHARES . IN OUR CASE, THE TRANSACTIONS FOR SALE OF SHARES HAVE BEEN ROUTED THROUGH INTERCONNECTED EXCHANGE OF INDIA LTD . WITH A SPECIFIC TRADE NO. AND ORDER NO. FOR SALE O F SHARES OF RASHEL AGRO LIMITED AS PER THE RATES PREVAILING ON THAT DATE WITH THE INTERCONNECTED ITA NO.2329/MUM/2009 (ASSESSMENT YEAR : 2001-02) 4 EXCHANGE OF INDIA LTD. EVEN THE CONTRACT NOTE AND B ILL FOR SALE OF THOSE SHARES ISSUED BY THE RICHMOND SECURITIES ARE NOT SIGNED BY MR. MUKESH CHOKSI. T HIS PROVES THAT THESE TRANSACTIONS ARE TOTALLY DIFFER ENT FROM THOSE REFERRED BY MR. MUKESH CHOKSI IN HIS STATEMENT. UNDER THESE CIRCUMSTANCES, IT PROVES THAT OUR TRANSACTIONS WERE FOR SALE OF SHARES AND PAYMENT RECEIVED WAS AS SALE CONSIDERATION FOR THESE SH ARES. FURTHER MR. MUKESH CHOKSIS STATEMENT HAS NO CONNECTION WITH OUR TRANSACTION WE HAD WITH RICHMON D SECURITIES PVT.LTD. WE THEREFORE REQUEST YOU TO TREAT OUR TRANSACTIONS OF CAPITAL GAIN AS GENUINE TRANSACTIONS AND ACCEPT OU R CLAIM OF CAPITAL GAIN AS PER RETURN OF INCOME FIL ED WITH YOU. WITHOUT PREJUDICE TO THE ABOVE, IF YOUR HONOUR IS N OT SATISFIED WITH THE ABOVE EXPLANATION, WE MAY REQ UEST YOUR HONOUR TO FACILITATE US TO CROSS EXAMINE MR. MUKESH CHOKSI OR HIS STATEMENT. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS ALS O FILED CONTRACT NOTE OF PURCHASE AND SALE OF 8200 SHARES OF RASHEL AGRO TECH. LIMITED. THE AO FURTHER OBSERVED THAT IT WAS STATED THAT THE ASSESSEE HAD ENTERED INTO A GENUIN E TRANSACTIONS OF SHARES. THE LONG TERM CAPITAL GA INS RECEIVED BY THE ASSESSEE IS RS.3,89,050/- CLEARED THROUGH THE ACCOUNT WITH SHAMRAO VITHAL CO-OPERATIVE BAN K LTD., WHEREAS THE AMOUNT SHOWN BY THE DDIT(INV.) IS RS,3,23,660/- VIDE CHEQUE NO.626148/- DATED 23.8.20 00. NO SUCH CHEQUE DATED 23.8.2000 HAS BEEN ENCHASED BY THEM. ITA NO.2329/MUM/2009 (ASSESSMENT YEAR : 2001-02) 5 HOWEVER, THE AO IN VIEW OF THE SUBMISSIONS OF MR. MUKESH CHOKSI RECORDED ON 26.4.2002 DID NOT ACCEPT THE AS SESSEES SUBMISSIONS AND TREATED THE AMOUNT OF LONG TERM C APITAL GAIN OF RS.3,89,050/- AS UNEXPLAINED INCOME OF THE ASSESSEE AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSES SEE U/S 68 OF THE ACT. 3. BEFORE THE LD. CIT(A) THE ASSESSEE HAS CHALLENGE D THE VALIDITY OF THE PROCEEDINGS U/S 147 AND ALSO THE Q UANTUM OF ADDITION MADE BY THE AO. THE. LD. CIT(A) WHILE U PHOLDING THE ACTION OF THE AO U/S 148 CONFIRMED THE ADDITIO N MADE BY THE AO. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE REOPENING OF THE ASSESSMENT U/S 147/148 , SUSTENANCE OF ADDITION OF RS.3,89,050/-, DISALLOWA NCE OF EXEMPTION U/S 54F AND DENIAL OF OPPORTUNITY TO CRO SS- EXAMINATION OF THE PERSON WHOSE STATEMENT WAS RELIE D UPON BY THE AO/CIT(A). 5. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE AO AND THE LD. CIT(A) THAT TH E TRANSACTIONS OF PURCHASE AND SALE OF THE SHARES SHO WN BY THE ASSESSEE ARE GENUINE FURTHER SUBMITS THAT THE SHAR ES WERE ITA NO.2329/MUM/2009 (ASSESSMENT YEAR : 2001-02) 6 SOLD THROUGH THE BROKERS AT THE PREVAILING MARKET RATE AFTER HOLDING THE SHARES FOR MORE THAN ONE YEAR AND THE PAYMENT OF SALE CONSIDERATION WAS RECEIVED BY CHEQUE. THES E TRANSACTIONS ARE DULY REFLECTED IN THE BANK STATEME NT. IN SUPPORT, THE ASSESSEE HAS FILED ALL DOCUMENTARY EVI DENCE INCLUDING THE BROKERS BILLS AND LETTER FROM THE CO MPANY M/S RASHEL AGRO TECH. LIMITED FOR TRANSFER OF SHARES IN THE ASSESSEES NAME. HE FURTHER SUBMITS THAT THE AO H AS RELIED ON THE STATEMENT OF MR.MUKESH CHOKSI DATED 26.4.20 02 WHEREIN VIDE QUESTION NO.6 HE WAS ASKED DURING FY 2001- 02 WHAT WAS THE TOTAL TURNOVER OF M/S GOLD STAR FI NVEST PVT.LTD.? FROM THE SAID QUESTION HE SUBMITS THAT IT IS CLEAR THAT MR.MUKESH CHOKSI WAS ASKED ABOUT THE TRANSACT IONS ENTERED INTO FOR THE FY 2001-02 WHEREAS THE PRESE NT CASE IS FOR THE FY 2000-01 RELEVANT TO THE ASSESSMENT Y EAR 2001- 02, THEREFORE, THE STATEMENT RELIED ON BY THE AO IS NOT AT ALL APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE A SSESSEES CASE. HE FURTHER SUBMITS THAT IN THE REASONS RECO RDED BY THE AO U/S 148, IT WAS MENTIONED THAT THE ASSESSEE HAS TAKEN SHORT /LONG TERM CAPITAL GAIN OF RS.3,23,559/- ON THE SALE AND IN SUPPORT A PHOTOCOPY OF THE CHEQUE OF CITI BA NK DATED 17.8.2000 FOR RS.3,23,559.75 WAS GIVEN TO THE ASSES SEE AND ON THAT BASIS THE ASSESSEES CASE WAS RE-OPENED U/S 148 OF THE ACT. HOWEVER, NO SUCH TRANSACTION WAS ENTERED I NTO BY THE ASSESSEE INASMUCH AS IT DOES NOT BELONG TO THE ITA NO.2329/MUM/2009 (ASSESSMENT YEAR : 2001-02) 7 ASSESSEE. HE FURTHER SUBMITS THAT IN THE ASSESSM ENT ORDER, THE AO HAS NOT MADE ADDITION OF RS.3,23,559/- BU T THE ADDITION ON SALE OF 8200 SHARES OF RS.3,89,050/- H AS BEEN MADE. HE, THEREFORE, SUBMITS THAT THE PROCEEDINGS INITIATED BY THE AO U/S 148 ARE NOT VALID IN LAW. HE THEREFO RE SUBMITS THAT IN VIEW OF THE DOCUMENTARY EVIDENCE SUBMITTED BY THE ASSESSEE, THE ASSESSEE HAS ENTERED INTO THE GENUIN E TRANSACTION OF SALE OF SHARES, THEREFORE, THE AO HA S ERRED IN MAKING THE ADDITION OF RS.3,89,050/- THE LEARNED COUNSEL FOR THE ASSESSEE AFTER FILING THE PAPER BOOK CONTAI NING THE DECISIONS UP TO PAGES 1 TO 117 OF THE PAPER BOOK, REFERRED ONLY ONE CASE IN SUPPORT OF HIS CASE I.E. BINA H K ANAKIA V/S ITO IN ITA NOS.2452 & 2453/MUM/2006 (AYS 2000-01-20 01- 02) DATED 23.1.2009. 6. ON THE OTHER HAND, THE LD. DR WHILE RELYING ON T HE ORDER OF THE AO AND LD. CIT(A) SUBMITS THAT THE PLEA TAK EN BY THE ASSESSEE-COMPANY AT THIS STAGE IS NEW PLEA WHICH DO ES NOT ARISE FROM THE ORDER OF THE LD. CIT(A), THEREFORE, THE LD. CIT(A) WAS FULLY JUSTIFIED IN HOLDING THAT PROCEED INGS INITIATED BY THE AO U/S 148 ARE VALID IN LAW AND IN SUSTENANCE OF THE ADDITION OF RS.3,89,050/- AND T HEREFORE, THE ORDER PASSED BY THE LD. CIT(A) BE UPHELD. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT ITA NO.2329/MUM/2009 (ASSESSMENT YEAR : 2001-02) 8 THE OUTSET, IT IS NECESSARY TO REPRODUCE THE COPY OF THE REASONS RECORDED BY THE AO U/S 148 OF THE ACT WH ICH ARE AS UNDER : SATISH N.DOSHI(HUF) AY 2001-02 27.04.2005 ON THE BASIC OF INFORMATION RECEIVED FROM DDIT(INV. ) UNIT V(4), MUMBAI SHRI SATIS N. DOSHI (HUF) HAS TAKEN SHORT/LONG TERM CAPITAL GAIN OF RS.3,23,559/-. TH E ASSESSEE ENTERED INTO SHAM SHARE TRANSACTION WITH RASHEL AGRO LIMITED FOR RS.323559/- AND HENCE I H AVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT FOR AY 2001-02. IN VIEW OF THE ABOVE, I PROPOSE TO REOPEN THE CASE BY ISSUE OF NOTICE U/S 148 FOR THE AY 2001-02 PUT UP FOR APPROVAL PLEASE. (D. S. RAO) IN COME TAX OFFICER, WARD 21 (2)(4), MUMBAI. DISCUSSED AND APPROVED. NOTICE U/S 148 MAY BE ISSUE D. SD/- CIT., RANGE 21(2) M UMBAI WE FURTHER FIND THAT THE AO HAS ALSO SUPPLIED PHOTO COPY OF THE CHEQUE OF CITI BANK DATED 17.8.2000 FOR RS.3,23 ,559.75 SHOWING THE AMOUNT OF THE CHEQUE. THE LEARNED COU NSEL FOR THE ASSESSEE WHILE REFERRING TO THE STATEMENT OF M R.MUKESH CHOKSI RECORDED U/S 131 ON 26.4.2002 SUBMITTED THA T ITA NO.2329/MUM/2009 (ASSESSMENT YEAR : 2001-02) 9 MR.CHOKSI HAS NOWHERE STATED THE NAME OF THE ASSES SEE I.E. SATISH N. DOSHI-HUF. IT WAS FURTHER STATED THAT TH E SAID STATEMENT IS PERTAINING TO FY 2001-02 WHEREAS THE ASSESSEES CASE PERTAINS TO FY 2000-01 RELEVANT TO THE ASSESSMENT YEAR 2001-02. IT WAS FURTHER STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE AO HAS N OT MADE ANY ADDITION AMOUNTING TO RS.3,23,559/- ON ACCOUNT OF SHORT/LONG TERM CAPITAL GAIN. IN SUPPORT THE ASSES SEE HAS ALSO FILED ALL DOCUMENTARY EVIDENCE TO SHOW THAT HE HAS SOLD 8200 SHARES OF RASHEL AGRO TECH.LIMITED THROUGH BR OKER ALONG WITH SHARE TRANSFER CERTIFICATE FROM THE COM PANY M/S RASHEL AGRO TECH.LIMITED APPEARING AT PAGE 13 OF TH E ASSESSEES PAPER BOOK. NO CONTRARY MATERIAL WAS BR OUGHT ON RECORD BY THE REVENUE TO CONTROVERT THE ABOVE FACT UAL MATRIX OF THE CASE. THERE IS NO LIVE LINK BETWEEN THE REA SONS RECORDED BY THE AO AND THE ADDITION MADE BY THE AO. WE DO NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE LE ARNED DR THAT THE PLEA TAKEN BY THE ASSESSEE IS NEW PLEA WHI CH DOES NOT BORNE OUT FROM THE ORDER OF THE LD. CIT(A). HOWEVER, WE FIND THAT ALL THESE SUBMISSIONS ARE DULY MENTIONED IN PARAGRAPH 4 OF THE ASSESSMENT ORDER WHICH HAVE ALSO BEEN EXTRACTED IN PARAGRAPH 2 OF THIS ORDER, THUS THE AS SESSEE HAS NOT TAKEN ANY NEW PLEA, THEREFORE, THE PLEA TAKEN B Y THE LD. DR IS DEVOID OF ANY MERIT AND THE SAME IS, THEREFOR E, REJECTED. ITA NO.2329/MUM/2009 (ASSESSMENT YEAR : 2001-02) 10 8. IN THE CASE OF CIT V/S (1) KELVINATOR OF INDIA LTD. (2010) 320 ITR 561(SC), THE HONBLE SUPREME COURT OBSERVED AND HELD (PAGE 564): ON GOING THROUGH THE CHANGES, QUOTED ABOVE, MADE T O SECTION 147 OF THE ACT, WE FIND THAT, PRIOR TO THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, REOPENING COULD BE DONE UNDER THE ABOVE TWO CONDITIONS AND FULFILMENT OF THE SAID CONDITIONS ALONE CONFERRED JURISDICTION ON THE ASSESSING OFFICER TO MAKE A BACK ASSESSMENT, BUT I N SECTION 147 OF THE ACT (WITH EFFECT FROM 1ST APRIL , 1989), THEY ARE GIVEN A GO-BY AND ONLY ONE CONDITION HAS REMAINED, VIZ., THAT WHERE THE ASSESSING OFFICER H AS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT, CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. THER EFORE, POST-1ST APRIL, 1989, POWER TO REOPEN IS MUCH WIDER . HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETAT ION TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSMENTS ON THE BASI S OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO REASSESS. THE ASSESSING OFFICER HAS NO PO WER TO REVIEW ; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILLMENT OF CERT AIN PRECONDITIONS AND IF THE CONCEPT OF 'CHANGE OF OPIN ION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSESSMENT, REV IEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'C HANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK ABUSE OF P OWER BY THE ASSESSING OFFICER. HENCE, AFTER 1ST APRIL, 198 9, THE ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED TH ERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION TH AT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION O F THE BELIEF. 9. IN AAYOJAN DEVELOPERS V/S ITO (2011) 335 ITR 2 34 (GUJ), THE HONBLE GUJARAT HIGH COURT HAS OBSERVED AND HEL D (PAGE 254): 40..THUS, UNLESS THE SUBSTRATUM IS LAID IN THE RE ASONS, CLEARLY DEMONSTRATING THE TWIN BELIEF, THAT IS, THE BELIEF ITA NO.2329/MUM/2009 (ASSESSMENT YEAR : 2001-02) 11 THAT INCOME HAS ESCAPED ASSESSMENT AND THE BELIEF T HAT SUCH ESCAPEMENT IS BY REASON OF FAILURE ON THE PAR T OF THE ASSESSEE, FILING AN AFFIDAVIT AND STATING THE S AME BEFORE THE COURT FOR THE FIRST TIME WOULD AMOUNT TO BRINGING ON RECORD MATERIAL WHICH DID NOT FORM THE BASIS OF FORMATION OF SUCH BELIEF. THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS HAS TO BE RECORDED IN THE REASONS, THOUGH THE SAME MAY BE ELABORATED BY FILING AN AFFIDAVIT. BUT IN THE A BSENCE OF FORMATION OF ANY SUCH BELIEF BEING RECORDED IN THE REASONS, IT NOT OPEN FOR THE ASSESSING OFFICER TO E XPRESS FORMATION OF SUCH BELIEF FOR THE FIRST TIME BY WAY OF AFFIDAVIT-IN-REPLY FILED IN THE COURT. 10. IN THE CASE OF CIT V/S JET AIRWAYS (I) LTD. (2 011) 331 ITR 236 (BOM), THE HONBLE BOMBAY HIGH COURT HAS HELD (PAGE 247): 22..HOWEVER, IF AFTER ISSUING A NOTICE UNDER SEC TION 148, HE ACCEPTED THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORME D A REASON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS NOT O PEN TO HIM INDEPENDENTLY TO ASSESS SOME OTHER INCOME. IF H E INTENDS TO DO SO, A FRESH NOTICE UNDER SECTION 148 WOULD BE NECESSARY, THE LEGALITY OF WHICH WOULD BE TESTE D IN THE EVENT OF A CHALLENGE BY THE ASSESSEE. 11. APPLYING THE RATIO OF THE ABOVE DECISIONS TO TH E FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THERE IS NO LIVE LINK BETWEEN THE REASONS RECORDED BY THE AO AND THE ADDI TION MADE AND ALSO IN THE ABSENCE OF ANY TANGIBLE MATERI AL TO SHOW THAT THE TRANSACTIONS OF 8200 SHARES OF RA SHEL AGRO TECH. LIMITED AMOUNTING TO RS.3,89,050/- ARE NOT GE NUINE, WE ARE OF THE VIEW THAT THE ASSESSMENT COMPLETED BY THE AO IS BAD IN LAW, THE SAME IS, THEREFORE, QUASHED. ITA NO.2329/MUM/2009 (ASSESSMENT YEAR : 2001-02) 12 12. SINCE WE HAVE QUASHED THE PROCEEDINGS U/S 148, WE DO NOT CONSIDER IT NECESSARY TO DECIDE OTHER THE ISSUE S ON MERITS AND ACCORDINGLY, THE OTHER GROUNDS TAKEN BY THE ASS ESSEE ARE REJECTED. 13. IN THE RESULT, THE ASSESSEES APPEAL STANDS PA RTLY ALLOWED TO THE EXTENT AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH O CT., 2011. SD SD (B. RAMAKOTAIAH) (D .K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 12 OCTOBER., 2011 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI