Smt. Taramani M. Gattani, Surat V. The Income tax Officer, Ward-5(4), Surat

ITA 250/AHD/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0162 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-10-2009
• Assessment Year: 1998-1999
• Appeal Filed On: 15-01-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Assessee Lawyers: R K MALPANI
• Keywords: Unexplained cash credit; Gift; Depreciation; Income from undisclosed sources; Tangible material; Reason to believe; Reassessment proceedings; TDS; Capital Gains
• Section: 143(3); 133A; 234B; 143(1); 143(2); 147; 148; 139; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, A-BENCH, AHMEDABAD. BEFORE: SHRI T K SHARMA, JUDICIAL MEMBER, AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER. ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) TARAMANI M. GATTANI P-3318, NEW TEXTILE MARKET, RING ROAD, SURAT. VERSUS INCOME TAX OFFICER, WARD 5(4), SURAT. (APPELLANT) (RESPONDENT) PAN: ADPPG 8110 M FOR THE APPELLANT: SMT. R.K. MALPANI, CA FOR THE RESPONDENT GOVIND SINGHAL, SR. DR ORDER PER D C AGRAWAL (ACCOUNTANT MEMBER): THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FOLLOWING GROUNDS:- 1. THAT THE HON'BLE C.I.T. HAS ERRED IN UPHOLDING THE VALIDITY OF THE RE-ASSESSMENT PROCEEDINGS U/S 147/148 OF THE I. T. ACT, 1961(THE ACT) AND THE RE-ASSESSMENT ORDER PASSED THEREBY. THE APPELLANT PRAYS THAT THE WHOLE OF THE RE-ASSESSMENT PROCEEDINGS AND THE RE-ASSESSMENT ORDER PASSED THEREBY ARE WRON G, BAD-IN-LAW AND BEYOND THE LAW. 2. THAT THE HON'BLE C.I.T. HAS ERRED IN SUSTAINING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 2,36,121/- ON ACCOUNT OF OPENING CAPITAL ACCOUNT OF THE ASSESSEE. 3. THAT THE HON'BLE C.I.T. HAS ERRED IN SUSTAINING THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT OF RS. 39,400/-. 2 ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) 4. THAT THE HON'BLE C.I.T. HAS ERRED IN SUSTAINING ADDITION OF RS. 9,250/- ON ACCOUNT OF TREATING THE PETTY GIFTS RECE IVED BY THE APPELLANT AS UNEXPLAINED CREDITS. 5. THAT THE HON'BLE C.I.T. HAS ERRED IN SUSTAINING THE INTEREST CHARGED BY LEARNED ASSESSING OFFICER OF RS. 17,520/ - U/S 234A OF THE ACT WHICH IS COMPLETELY WRONG, ERRONEOUS AND BE YOND THE LAW. 6. THAT THE HON'BLE C.I.T. HAS ERRED IN SUSTAINING THE INTEREST CHARGED OF RS.94,170/- U/S 234B OF THE ACT WHICH IS NOT ONLY WRONG-IN-LAW BUT IT ALSO INCORRECT AND ERRONEOUS. 2. THE ASSESSEE IS MAINLY AGGRIEVED AGAINST THE REO PENING OF THE ASSESSMENT UNDER SECTION 147/148. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD ORIGINALLY FILED RETURN OF INCOME ON 0 9-09-1999 WHICH SEEMS TO HAVE BEEN PROCESSED. SUBSEQUENTLY, A SURV EY UNDER SECTION 133A WAS CARRIED OUT ON 11-03-2005 IN THE CASE OF O NE SHRI. PANKAJ DANAWALA C.A. ON THE BASIS OF INFORMATION IN RESPE CT OF THIS SURVEY RECEIVED FROM THE INVESTIGATION WING SURAT, A NOTIC E UNDER SECTION 148 OF THE ACT WAS ISSUED AND SERVED ON THE ASSESSEE ON 30 -03-2005. THE PROCEEDINGS FOR ASSESSMENT WAS STARTED ON THE RETUR N ORIGINALLY FILED AS REQUESTED BY THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE DETAILS OF LOANS AN D ADVANCES MADE BY THE ASSESSEE TO ANY PARTY AND NATURE AND SOURCE OF SUCH LOANS. THE CAPITAL ACCOUNT OF THE ASSESSEE REFLECTED AN OPENING BALANC E OF RS. 2,36,121/-. FURTHER DURING THE ACCOUNTING YEAR RELEVANT TO ASSE SSMENT YEAR 1998- 1999, THE ASSESSEE HAD ADVANCED LOAN TO 21 PARTIES TOTALING TO RS. 3,08,671/- AS PER DETAILS GIVEN IN ASSESSMENT ORDER . IN ADDITION, ASSESSEE HAD SHOWN TO HAVE RECEIVED LOAN OF RS. 39,400/- FRO M ONE SHRI. RAMGOPAL YADAV AND SHRI. VISHNUPRASAD YADAV FOR A S UM OF RS. 19,700/- EACH. REGARDING OPENING CAPITAL LEARNED A SSESSING OFFICER 3 ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) OBSERVED THAT DURING THE ASSESSMENT YEAR ASSESSEE H AS NOT UNDERTAKEN ANY BUSINESS ACTIVITY. HIS SOLE SOURCE OF INCOME IS MIS CELLANEOUS RECEIPTS AND INTEREST. NO MATERIAL WAS PLACED TO PROVE THE OPEN ING BALANCE. THE ADDRESS OF THE PERSONS TO WHOM THE LOANS WERE SHOWN TO HAVE BEEN ADVANCED IS NOT FURNISHED BEFORE THE ASSESSING OFFI CER. ON THE OTHER HAND, DURING THE SURVEY UNDER SECTION 133A, STATEME NT OF SHRI. PANKAJ DANAWALA, CA, WAS RECORDED. ACCORDING TO HIM HE CR EATED BOGUS CAPITAL IN RESPECT OF SEVERAL ASSESSEES WHICH INCLUDED THIS GROUP OF THE ASSESSEE ALSO. THE LEARNED ASSESSING OFFICER OBSERVED THAT SHRI. DANAWALA IN HIS STATEMENT ACCEPTED THAT BOGUS CAPITAL WAS CREATED I N THE RETURN OF VARIOUS PERSONS BY SHOWING BOGUS GIFTS AND BOGUS ASSETS, WH ICH WERE SHOWN LIQUIDATED LATER, MONEY THROUGH CHEQUE WAS COLLECTE D AGAINST SALE OF SUCH BOGUS ASSETS AND UNACCOUNTED CASH RECEIVED FROM PAR TIES, DESIROUS OF ENTRIES WAS PAID TO THE PERSON WHO PURCHASED SUCH B OGUS ASSETS FOR WHICH CHEQUES WERE PAID BY THEM. AGAINST SUCH CHEQUES DE POSITED IN BANK BY ACCOUNT CHEQUES WERE ISSUED TO THE PARTIES GIVING C ASH, AS LOAN/ADVANCES. ON THIS BASIS THE ASSESSING OFFICER TREATED THE OPE NING BALANCE AS INCOME FROM UNDISCLOSED SOURCES OF THE ASSESSEE, PARTICUL ARLY, WHEN ACCORDING TO HIM, ASSESSEE COULD NOT PROVE THAT ASSESSEE HAS EAR NED ANY INCOME IN EARLIER YEARS BY WAY OF SAVINGS. HE ALSO OBSERVED THAT ALL THESE TRANSACTIONS WERE IN CASH AND CASH WAS INTRODUCED I N THE CAPITAL ACCOUNT. 3. LD. COMMISSIONER OF INCOME TAX(APPEALS) CONFIRME D THE REOPENING OF THE ASSESSMENT BY HOLDING THAT INFORMA TION WAS RECEIVED FROM INVESTIGATION WING THAT SHRI. DANAWALA HAS ACC EPTED IN HIS STATEMENT THAT HE FILED RETURNS IN THE NAMES OF VARIOUS PERSO NS INCLUDING THE ASSESSEE IN WHICH HE HAS INTRODUCED BOGUS CAPITAL. REGARDING ADDITION IN RESPECT OF OPENING CAPITAL, LD. COMMISSIONER OF INC OME TAX(APPEALS) UPHELD THE REASONING OF ASSESSING OFFICER AS ACCORD ING TO HIM ASSESSEE 4 ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) FAILED TO SHOW THAT OPENING BALANCE WAS ACCUMULATED SAVINGS OF EARLIER YEARS OR THAT LOANS AND ADVANCES WERE QUITE OLD AND ASSESSEE WAS NOT IN POSITION TO FURNISH CONFIRMATION FROM THOSE PARTIES . HE ACCORDINGLY, UPHELD THE ADDITION AS MADE UNDER SECTION 68. 4. BEFORE US, LEARNED AR FOR THE ASSESSEE CHALLENGE D THE REOPENING OF THE ASSESSMENT ON THE GROUND THAT REASONS RECORDED BY THE ASSESSING OFFICER DO NOT CONNECT THE ASSESSEE WITH THE INFORM ATION AND ALSO WITH ANY ESCAPEMENT OF INCOME IN THAT YEAR. SO FAR AS O PENING CAPITAL WAS CONCERNED, IT WAS ALREADY DISCLOSED IN THE RETURN F ILED ON 09-09-1999. IN ABSENCE OF ANY MATERIAL SHOWING THAT THOSE CAPITAL WAS BOGUS OR THAT IT WAS INCOME DURING THIS YEAR IT COULD NOT BE ADDED A S THE INCOME OF THE ASSESSEE. LEARNED AR REFERRED TO THE ANNEXURE-A PL ACED IN THE ASSESSEES PAPER BOOK SHOWING REASONS RECORDED, AND SUBMITTED THAT ASSESSING OFFICER HAS MADE REFERENCE TO THE ASSESSM ENT YEAR 2001-2002 AND 2002-2003 ONLY AND A GENERAL REMARK HAS BEEN MA DE THAT BOGUS GIFTS FROM THE ASSESSMENT YEAR 1991-1992 IN THE NA MES OF VARIOUS DONORS WOULD BE SHOWN. MERE GENERAL INFORMATION R ECORDED IN THE REASONS WILL NOT EMPOWER THE ASSESSING OFFICER TO R EOPEN THE ASSESSMENT UNDER SECTION 147/148. THERE HAS TO BE A LIVE NEXU S BETWEEN INFORMATION IN POSSESSION OF THE ASSESSING OFFICER AND THE ASSE SSEE AND ESCAPEMENT OF INCOME IN RESPECT OF ASSESSMENT YEAR SOUGHT TO B E REOPENED. HE SUBMITTED THAT THERE ARE VARIOUS JUDGMENTS ON THIS ISSUE. 5. AGAINST THIS, LEARNED DR RELIED ON THE ORDER OF THE AUTHORITIES BELOW AND SUBMITTED THAT ORIGINAL ASSESSMENT WAS CO MPLETED UNDER SECTION 143(1) THEREFORE PRESENT INFORMATION IS SUF FICIENT TO REOPEN THE ASSESSMENT. 5 ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN ORDER TO EXAMINE WHETHER REASONS REC ORDED BY THE ASSESSING OFFICER CONFER JURISDICTION UPON HIM TO R EOPEN THE ASSESSMENT, WE REPRODUCE THE REASONS AS UNDER: THE ADDITIONAL CIT, RANGE-5, SURAT, VIDE HIS CONFI DENTIAL LETTER NO. SRI/ADDL.R-5/S&S/PD/04-05 DATED 23.03.2005, FOR WARDED TWO LETTERS, VIDE NO. ADDL.DIT(INV)/SRT/S&S/DANAWALA/20 04-05 AND NO.DDIT (INV.)-II/SRI/S&S/DANAWALA/2004-05 DATED 21 .03.2005, REGARDING SURVEY U/S. 133A OF THE I.T. ACT CARRIED OUT IN THE CASE OF SHRI. PANKAJ DANAWALA AND RE-OPENING OF THE CASES. 2. IT IS REPORTED BY THE DY.DIT(INV.)-II, SURAT THA T HE HAS CONDUCTED A SURVEY U/S. 133A OF THE I.T. ACT IN THE CASE OF S HRI. PANJAK DANAWALA. DURING THE COURSE OF SURVEY, IT WAS DETE CTED THAT SHRI DANAWALA WAS CREATING BOGUS CAPITAL IN THE RETURN O F INCOME OF VARIOUS PERSONS BEING FILED BY HIM. THIS BOGUS CAP ITAL WAS THUS BEING USED TO PROVIDE CASH CREDIT ENTRIES TO HIS CL IENTS. THUS, IT IS A SYSTEMATIC MANNER HE WAS ASSISTING PEOPLE TO LAUNDE R MONEY. IN HIS STATEMENT, SHRI. DANAWALA HAS ADMITTED THAT THE RE WERE TWO METHOD OF CREATING BOGUS CAPITAL. ONE- OPENING BAL ANCE IN CAPITAL ACCOUNT WAS INCREASED AND DID NOT MATCH WITH CLOSIN G BALANCE OF CAPITAL ACCOUNT FOR EARLIER YEAR. FOR EXAMPLE, IF CLOSING BALANCE IN A.Y. 2001-02 HAS RS. 3,00,000/- THE OPENING BALANCE FOR A.Y. 2002- 03 WAS SHOWN AS RS. 18,00,000/- AND BOGUS CAPITAL O F RS. 15,00,000/- WAS CREATED. THIS DISCREPANCY REMAINED UNDETECTED DUE TO NON-CLUBBING OF RETURNS OF INCOME IN SMALL C ASES. THE SECOND METHOD FOR CREATING BOGUS CAPITAL WAS TO SHO W BOGUS GIFTS FROM AN EARLIER YEAR. FOR EXAMPLE, IN HIS CAPITAL ACCOUNT FOR A.Y. 2002-03, BOGUS GIFTS FROM A.Y. 1991-92 IN THE NAMES OF VARIOUS DONORS WOULD BE SHOWN, WHEREAS IN FACTS NO SUCH GIF T WAS RECEIVED AND DISCLOSED IN HIS RETURN OF INCOME. 2.1 THE BOGUS CAPITAL THUS CREATED WAS ADJUSTED IN THE BALANCE SHEET BY SHOWING SOME FICTITIOUS ASSETS (MOSTLY AS BOGUS DEBTORS) WHEN THE ENTRIES WERE TO BE GIVEN TO THE CLIENTS, T HESE ASSETS WERE LIQUIDATED AND CASH WAS BROUGHT IN. THIS CASH WAS USED TO PROVIDE CASH CREDIT ENTRIES TO THE CLIENTS. IN HIS STATEME NT, SHRI DANAWALA HAS CATEGORICALLY ADMITTED THAT ALL SUCH CASH WAS P ROVIDED BY THE BENEFICIARIES OF THE CASH CREDIT. THEREFORE, IN SU CH CASES, IT IS CLEAR THAT SUCH CASH CREDIT ENTRIES ARE REQUIRED TO BE TA XED IN THE HANDS OF THE BENEFICIARIES IN THE A.Y. WHEN THE ENTRIES H AS BEEN BROUGHT INTO BOOKS BY THEM OR WHEN THE FICTITIOUS ASSETS WE RE LIQUIDATED 6 ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) AND CASH WAS PROVIDED FOR SAME BY THE BENEFICIARIES . IN HIS STATEMENT, SHRI DANAWALA HAS IDENTIFIED BENEFICIARI ES OF ALMOST ALL THE RETURNS BEING FILED BY HIM. 3. THE DY. CIT (INV.)-II, SURAT, VIDE HIS ABOVE REF ERRED LETTER, HAS FORWARDED THE LIST OF PERSONS, WHO ARE THE BENEFICI ARIES OF BOGUS CAPITAL AND BOGUS GIFTS CREATED BY SHRI. DANAWALA. THE ASSESSEE IS ALSO ONE OF THE BENEFICIARIES. AS SUCH, THERE HAS BEEN INTRODUCED OF BLACK MONEY THROUGH THIS RETURN OF INCOME FOR WHICH THE ASSESSEE IS RESPONSIBLE OR ALL THE CONSEQUENTIAL ACTION, EIT HER OF HAVING CONNIVANCE WITH SHRI PANKAJ DANAWALA OR HAS BEEN AB ATED BY HIM INTRODUCING THE UNEXPLAINED CAPITAL. THEREFORE, I HAVE REASON TO BELIEVE THAT THERE IS AN ESCAPEMENT OF ASSESSMENT F OR A.Y. 1998- 99. 7. ANALYSIS OF ABOVE REASONS INDICATED THAT ASSESSM ENT IS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM ADDITIONAL D IT, INVESTIGATION WING, SURAT. THE SECOND PARA INDICATED THAT SHRI. DANAWALA WAS CREATING BOGUS CAPITAL IN THE RETURN OF INCOME OF VARIOUS PE RSONS FILED BY HIM. THIS BOGUS CAPITAL WAS USED BY HIM TO LAUNDER MONEY . A MODUS-OPRENDI OF CREATING BOGUS CAPITAL WAS DESCRIBED BY HIM IN P ARA 2. IN PARA 3 ALSO SAME MODUS-OPRENDI HAS BEEN FURTHER EXPLAINED. IN PARA 3 THE DY. DIT, INVESTIGATION WING, SURAT FORWARDED A LIST OF PERSO NS WHO WERE CLAIMED TO BE THE BENEFICIARIES OF BOGUS CAPITALS AND BOGUS GIFTS. THE ASSESSEE WAS ALSO ONE OF THE BENEFICIARIES. ON THIS BASIS A SSESSING OFFICER INFERRED WITH THERE HAS BEEN INTRODUCED OF BLOCK M ONEY THROUGH THIS RETURN OF INCOME FOR WHICH THE ASSESSEE IS RESPONSI BLE FOR ALL THE CONSEQUENTIAL ACTIONS EITHER OF HAVING CONNIVANCE W ITH SHRI. PANKAJ DHANAWALA OR HAS BEEN ABATED BY HIM BY INTRODUCING THE UNEXPLAINED CAPITAL. THEREFORE, I HAVE REASON TO BELIEVE THAT THERE IS AN ESCAPMENT OF ASSESSMENT FOR ASSESSMENT YEAR 1998-1999. 8. IN THIS REGARD, WE REFER TO SECTIONS 147 AND 149 AS UNDER: 7 ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) 147. INCOME ESCAPING ASSESSMENT.--IF THE ASSESSING OFFICER, HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSE SS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH H AS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RE COMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANC E, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTE R IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS T HE RELEVANT ASSESSMENT YEAR): PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER T HE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PAR T OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE T O A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECT ION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. EXPLANATION 1.--PRODUCTION BEFORE THE ASSESSING OFF ICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENC E COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEA NING OF THE FOREGOING PROVISO. EXPLANATION 2.--FOR THE PURPOSES OF THIS SECTION, T HE FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY:-- (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF AN Y OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOM E OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR REL IEF IN THE RETURN; 8 ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT-- (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSES SED; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A R ATE; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCE SSIVE RELIEF UNDER THIS ACT; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR AN Y OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED. 149. TIME LIMIT FOR NOTICE.--(1) NO NOTICE UNDER SE CTION 148 SHALL BE ISSUED FOR THE RELEVANT ASSESSMENT YEAR,-- (A) IF FOUR YEARS HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE CASE FALLS UNDER CLAUSE (B); (B) IF FOUR YEARS, BUT NOT MORE THAN SIX YEARS, HAV E ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE INCO ME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AMOUNTS TO OR I S LIKELY TO AMOUNT TO ONE LAKH RUPEES OR MORE FOR THAT YEAR. EXPLANATION.--IN DETERMINING INCOME CHARGEABLE TO T AX WHICH HAS ESCAPED ASSESSMENT FOR THE PURPOSES OF THIS SUB-SEC TION, THE PROVISIONS OF EXPLANATION 2 OF SECTION 147 SHALL AP PLY AS THEY APPLY FOR THE PURPOSES OF THAT SECTION. (2) THE PROVISIONS OF SUB-SECTION (1) AS TO THE ISS UE OF NOTICE SHALL BE SUBJECT TO THE PROVISIONS OF SECTION 151. (3) IF THE PERSON ON WHOM A NOTICE UNDER SECTION 14 8 IS TO BE SERVED IS A PERSON TREATED AS THE AGENT OF A NON-RE SIDENT UNDER SECTION 163 AND THE ASSESSMENT, REASSESSMENT OR REC OMPUTATION TO BE MADE IN PURSUANCE OF THE NOTICE IS TO BE MADE ON HIM AS THE AGENT OF SUCH NON-RESIDENT, THE NOTICE SHALL NOT BE ISSUED AFTER THE EXPIRY OF A PERIOD OF TWO YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. 9. A COMBINED READING OF THESE 2 SECTIONS REQUIRE T HAT FOR REOPENING OF THE ASSESSMENT, FOLLOWING CONDITIONS SHOULD BE S ATISFIED: (1) ANY INCOME WHICH IS CHARGEABLE TO TAX 9 ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) (2) HAS ESCAPED ASSESSMENT (3) FOR ANY ASSESSMENT YEAR (4) ASSESSING OFFICER IS SATISFIED/ HAS REASON TO BELIEVE ON THE EXISTENCE OF ABOVE 3 PARAMETERS (5) IN CASE ASSESSMENT SOUGHT TO BE REOPENED FALLS BETWEEN 4 TO 6 YEARS THERE SHOULD BE ADDITIONAL CONDITION SATISF IED THAT ESCAPEMENT OF INCOME HAS BEEN DUE TO OMISSION OR FA ILURE ON THE PART OF THE ASSESSEE (1) TO MAKE A RETURN U/S 139(1 ) OR IN RESPONSE TO NOTICE U/S SECTION 142(1)/148(1) OR (2) TO DISCLOS E TRENDS OR FULLY ALL MATERIAL FACTS NECESSARY FOR THE RELEVANT ASSES SMENT YEAR. 10. WHEN WE APPLY ABOVE CONDITIONS TO THE REASONS R ECORDED, WE FIND THAT THE INFORMATION IN POSSESSION OF THE ASSESSING OFFICER, HAS NO RELATIONSHIP WITH ANY INCOME CHARGEABLE TO TAX. TH ERE IS ALSO NO MENTION THAT SUCH INCOME HAS NOT BEEN ASSESSED OR HAS ESCAP ED ASSESSMENT AND FINALLY THERE IS NO CO-RELATIONSHIP OF ANY ALLEGED ESCAPEMENT WITH THE PRESENT ASSESSMENT YEAR. THE INFORMATION RECEIVED BY THE ASSESSING OFFICER IS NOT PROVIDED TO THE ASSESSEE AS ALLEGED BY LEARNED AR, AND ALSO IS GENERAL IN NATURE AND CONTENTS AND DOES NOT SPEC IFICALLY LINK THE ASSESSEE. THOUGH, SHRI. DANAWALA MIGHT HAVE SO STA TED ABOUT THE MODUS- OPRENDI THAT HE IS INVOLVED IN CREATING BOGUS CAPIT AL, BUT, HOW THE PRESENT ASSESSEE HAS RECEIVED AN INCOME WHICH IS CHARGEABLE TO TAX AND WHICH HAS NOT BEEN OFFERED FOR TAXATION AND WHICH IS ASSESSAB LE IN THE ASSESSMENT YEAR 1998-99 IS NOT SPELT OUT. WITHOUT CARRYING OU T ANY INQUIRY PRIOR TO FORMATION OF THE BELIEF IT CANNOT BE SAID THAT ASSE SSING OFFICER HAS ACTUALLY APPLIED HIS MIND ABOUT THE CORRECTNESS OF INFORMATION AND CONNECTION OF THE ASSESSEE WITH THIS INFORMATION AN D HOW HE DERIVED NEXUS, IF ANY, OF ESCAPEMENT OF INCOME IN THE CASE OF THE ASSESSEE FOR THE PRESENT ASSESSMENT YEAR, WITH THE INFORMATION RECEI VED FROM INVESTIGATION 10 ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) WING. THE STATEMENT GIVEN BY SHRI. DANAWALA HAS NO T BEEN MADE PART OF REASONS RECORDED SO THAT IT CAN BE FOUND WHETHER WH AT SHRI DANAWALA STATED HAD ANY LIVE NEXUS WITH THE THREE INGREDIENT S OF SECTION 147 AS SPELT OUT ABOVE. IF REASONS SO RECORDED BY THE ASSESSING OFFICER DID NOT REFLECT AS TO WHAT INCOME HAS ESCAPED ASSESSMENT AND WHETHE R THAT INCOME WAS CHARGEABLE TO TAX IN THE ASSESSMENT YEAR WHICH IS S OUGHT TO BE REOPENED AND THAT SAID INCOME HAD ACTUALLY ACCRUED TO THE AS SESSEE IN THAT ASSESSMENT YEAR, IT CANNOT BE SAID THAT SATISFACTIO N ARRIVED BY THE ASSESSING OFFICER WAS VALID. THOUGH IT IS UNDISPUT ED THAT SUFFICIENCY OF REASONS RECORDED BY THE ASSESSING OFFICER CANNOT BE CHALLENGED BUT RELEVANCY AND CONNECTIVITY OF THE MATERIAL IN THE I NFORMATION WITH THE ASSESSEE, WITH THE ASSESSMENT YEAR, WITH THE INCOME , AND WITH ESCAPEMENT THEREOF ARE RELEVANT AND MUST NECESSARILY BE REFLEC TED FROM THE REASONS RECORDED, BEFORE ASSESSING OFFICER ASSUMES JURISDIC TION FOR REOPENING THE ASSESSMENT. 11. THE MENTIONING OF QUANTUM IN THE REASONS RECORD ED IS IMPORTANT FOR THE PURPOSES OF SECTION 149 WHICH PRESCRIBES SO ME CONDITIONS FOR REOPENING OF THE ASSESSMENT BEYOND 4 YEARS WHICH IS THAT INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT SHOULD BE MORE THAN RS. 1,00,000/-. IN THE PRESENT REASONS RECORDED, THERE IS NO WHISPER ABOUT THE AMOUNT WHICH THE ASSESSEE HAS EARNED AND WHICH WAS CHARGEABLE TO TAX AND WHICH HAS ESCAPED ASSESSMENT, IN THE CASE OF THE ASSESSEE, FO R THE PRESENT ASSESSMENT YEAR. IF AMOUNT ESCAPED IS LESS THAN RS . 50,000/-, REOPENING WOULD BE INVALID. HENCE, MENTIONING OF AMOUNT WHIC H HAS ESCAPED ASSESSMENT IS NECESSARY TO BE MENTIONED IN THE REAS ONS RECORDED. 11 ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) 12. ACCORDINGLY, WE HOLD THAT REASONS RECORDED FOR OF THE ASSESSMENT ARE VAGUE AND SUPERFLUOUS. IN THIS REGARD WE REFER TO THE DECISIONS OF HON'BLE DELHI HIGH COURT IN UNITED ELECTRICAL PRIVA TE COMPANY LTD. VS. CIT (2002) 258 ITR 317 (DELHI) WHEREIN IT IS HELD T HAT ON THE BASIS OF GENERAL INFORMATION WHICH DO NOT PROVIDE FOUNDATION FOR ASSESSING OFFICERS BELIEF, THE REOPENING WOULD BE UNSUSTAINA BLE. NOT ALL INFORMATION CAN JUSTIFY THE INFERENCE OF ESCAPED AS SESSMENT. SUCH INFORMATION SHOULD HAVE RATIONAL NEXUS OR RELEVANT BEARING ON THE INFERENCES. THE ASSESSMENT WAS SOUGHT TO BE REOPEN ED IN RESPECT OF THE LOAN TAKEN BY THE ASSESSEE THROUGH ACCOUNT PAY CHEQ UES, INTEREST PAID THEREON, AND TDS MADE THEREON, THEN THE REOPENING O F THE ASSESSMENT ON THE BASIS, BEING COMMUNICATION RECEIVED FROM THE AS SESSING OFFICER OF THE BORROWER PARTY WITHOUT FURTHER INQUIRY BY THE A SSESSING OFFICER OF THE ASSESSEE (BORROWING PARTY) WOULD BE INVALID. IN TH IS REGARD WE REPRODUCE HEAD NOTES FROM THAT JUDGMENT AS UNDER: THE EXISTENCE OF TANGIBLE MATERIAL FOR THE FORMATI ON OF OPINION IS A PRE-REQUISITE FOR INITIATION OF ACTION UNDER SECT ION 147 OF THE INCOME-TAX ACT, 1961, AS AMENDED WITH EFFECT FROM A PRIL 1, 1989. SECTION 147 POSTULATES THAT THE ASSESSING OFFICER M UST HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT: THER E SHOULD BE FACTS BEFORE HIM THAT REASONABLY GIVE RISE TO THE B ELIEF. WHEN A CHALLENGE IS MADE TO THE ACTION UNDER SECTIO N 147 WHAT THE COURT IS REQUIRED TO EXAMINE IS WHETHER SOME MATERI AL EXISTS ON RECORD FOR THE ASSESSING OFFICER TO FORM THE REQUIS ITE BELIEF AND THE REASONS FOR THE BELIEF HAVE A RATIONAL NEXUS OR A R ELEVANT BEARING TO THE FORMATION OF SUCH BELIEF AND ARE NOT EXTRANE OUS OR IRRELEVANT FOR THE PURPOSE OF THAT SECTION. BUT THE SUFFICIENC Y OF THE GROUNDS WHICH INDUCED THE ASSESSING OFFICER TO ACT UNDER TH AT SECTION IS NOT A JUSTICIABLE ISSUE. THE POWER VESTED IN THE COMMISSIONER UNDER SECTION 151 TO GRANT OR NOT GRANT APPROVAL TO THE ASSESSING OFFICER TO R EOPEN AN ASSESSMENT IS COUPLED WITH A DUTY. THE COMMISSIONER IS REQUIRED TO APPLY HIS MIND TO THE PROPOSAL PUT UP TO HIM FOR APPROVAL IN THE 12 ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) LIGHT OF THE MATERIAL RELIED UPON BY THE ASSESSING OFFICER. THAT POWER CANNOT BE EXERCISED CASUALLY AND IN A ROUTINE MANNER. THE PETITIONER, A COMPANY ENGAGED IN THE BUSINESS O F MANUFACTURING ELECTRICAL GOODS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 1996-97 DECLARING AN INCOME OF RS. 9,26,867. THE RETURN OF INCOME WAS ACCOMPANIED BY VARIOUS DOCUMEN TS AND ANNEXURES INCLUDING THE AUDIT REPORT AND THE LIST O F LOANS. ONE OF THE LOANS WAS FOR RS. 7,40,000 RAISED FROM VFL COMP ANY, AND, ACCORDING TO THE PETITIONER, THE LOAN WAS TAKEN ON TWO DIFFERENT DATES THROUGH ACCOUNT PAYEE CHEQUES, TAX WAS DEDUCT ED FROM THE INTEREST PAID THEREON AND PAID TO THE CREDIT OF THE CENTRAL GOVERNMENT AND THE LOAN WAS REPAID IN APRIL, 1977, BY ACCOUNT PAYEE CHEQUE. NO NOTICE WAS RECEIVED BY THE PETITIO NER UNDER SECTION 143(2) WITHIN 12 MONTHS OF THE DATE OF FILI NG THE RETURN. ON MAY 5, 2002, THE PETITIONER RECEIVED A NOTICE UNDER SECTION 148. THE REASON FOR REOPENING THE ASSESSMENT WAS THAT VK J DIRECTOR OF VFL HAD STATED THAT VFL HAD RECEIVED CASH FROM THE PETITIONER AND DEPOSITED THE SAME INTO THE BANK AND THEREAFTER A C HEQUE OF EQUAL AMOUNT WAS GIVEN. IN FACT, HOWEVER, THE STATEMENT O F VKJ RECORDED BY THE ASSESSING OFFICER WAS TOO GENERAL : IT DID N OT MENTION ANY NAME MUCH LESS THE NAME OF THE PETITIONER. NOR HAD VKJ FURNISHED SUBSEQUENTLY ANY LIST OF CREDITORS. ON A WRIT PETIT ION CHALLENGING THE VALIDITY OF THE NOTICE UNDER SECTION 148 : HELD, _ QUASHING THE NOTICE, THAT THERE WAS NO INFORMATI ON ON RECORD WHICH COULD PROVIDE FOUNDATION FOR THE ASSES SING OFFICERS BELIEF THAT THE PETITIONERS TRANSACTION WITH VFL W AS NOT GENUINE AND THE PETITIONERS INCOME HAD ESCAPED ASSESSMENT. THE ACTION OF THE ASSESSING OFFICER WAS NOT SUSTAINABLE. 13. IN CIT VS. ATUL JAIN/CIT VS. SMT. VINITA JAIN 2 008 299 ITR 383 HON'BLE DELHI HIGH COURT HELD THAT ASSESSMENT COULD NOT BE REOPENED ON SCANTY AND VAGUE INFORMATION WHOSE CORRECTNESS WAS NOT VERIFIED. THERE WAS INFORMATION THAT ASSESSEE MADE ENTRY OF CAPITAL GAINS BY PAYING CASH WITH PREMIUM FOR TAKING A CHEQUE FOR THAT AMOUNT. IT WAS HELD THAT ASSESSING OFFICER COULD NOT HAVE INITIATED REASSESS MENT PROCEEDINGS IN A MECHANICAL MANNER WITHOUT ANY VERIFICATION OF THE A LLEGED INFORMATION. THE REPORT RECEIVED FROM ANOTHER OFFICER COULD NOT BY ITSELF BECOME 13 ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) REASONS FOR SANCTION FOR ISSUE OF NOTICE. THE ASSE SSING OFFICER COULD NOT IGNORE SUBSTANCE BY REGARDING ONLY A FORM. THERE SH OULD BE INFORMATION WHICH SHOULD BE MORE THAN MERE RUMOR, GOSSIP OR HUN CH. IN THIS REGARD WE REFER TO THE HEAD NOTES FROM THIS JUDGMENT AS UN DER: THERE MUST BE REASON TO BELIEVE WARRANTING THE I SSUANCE OF A NOTICE OF REASSESSMENT BY THE ASSESSING OFFICER. IF THERE ARE NO REASONS, THEN THE ENTIRE FOUNDATION FOR INITIATING THE PROCEEDINGS IS BAD AND THE NOTICE INITIATING PROCEEDINGS MUST BE Q UASHED. MERE SATISFACTION OF THE ASSESSING OFFICER FOR THE ISSUA NCE OF A NOTICE IS NOT ENOUGH, THERE MUST BE REASONS ON RECORD WHICH L ED HIM TO BELIEVE THAT A NOTICE SHOULD BE ISSUED. AFTER A FOU NDATION BASED ON INFORMATION IS SET UP, THERE MUST STILL BE SOME REA SONS WHICH WARRANT THE HOLDING OF A BELIEF SO AS TO NECESSITAT E THE ISSUANCE OF A NOTICE UNDER SECTION 148 OF THE INCOME-TAX ACT, 1 961. THE ASSESSEES PURCHASED SHARES AND SUBSEQUENTLY SOL D THESE SHARES AT A MUCH HIGHER VALUE. FOR THE ASSESSMENT YEAR 199 7-98, THE ASSESSEES DISCLOSED LONG-TERM CAPITAL GAINS ARISING FROM THE TRANSACTION. ON THE BASIS OF THE INFORMATION RECEIV ED BY THE DEPUTY DIRECTOR (INVESTIGATION), THE ASSESSING OFFICER ISS UED NOTICE UNDER SECTION 148. THE FILES WERE THEN PUT UP BEFORE THE COMMISSIONER AND IN RESPONSE TO THE QUESTION WHETHER THE COMMISS IONER WAS SATISFIED THAT INCOME HAD ESCAPED ASSESSMENT, HE WR OTE YES. THEREAFTER, THE ASSESSING OFFICER REASSESSED THE IN COME AND CHARGED INTEREST AND LEVIED PENALTY. THE COMMISSION ER (APPEALS) ALLOWED RELIEF PARTLY BUT THE TRIBUNAL CONCLUDED TH E ISSUE IN FAVOUR OF THE ASSESSEES. ON APPEAL: HELD, _ DISMISSING THE APPEALS THAT THE ONLY INFORMATION WAS THAT THE ASSESSEE HAD TAKEN A BOGUS ENTRY OF CAPITAL GAI NS BY PAYING CASH ALONG WITH SOME PREMIUM FOR TAKING A CHEQUE FO R THAT AMOUNT. THE INFORMATION DID NOT INDICATE THE SOURCE OF THE CAPITAL GAINS WHICH IN THIS CASE WERE SHARES. THERE WAS NO INFORMATION WHICH SHARES HAD BEEN TRANSFERRED AND WITH WHOM THE TRANSACTION HAD TAKEN PLACE. THE ASSESSING OFFICER DID NOT VERI FY THE CORRECTNESS OF THE INFORMATION RECEIVED BY HIM BUT MERELY ACCEPTED THE TRUTH OF THE VAGUE INFORMATION IN A MECHANICAL MANNER. THE ASSESSING OFFICER HAD NOT EVEN RECORDED HIS SATISFA CTION ABOUT THE CORRECTNESS OR OTHERWISE OF THE INFORMATION FOR ISS UING A NOTICE UNDER SECTION 148. WHAT HAD BEEN RECORDED BY THE AS SESSING 14 ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) OFFICER AS HIS REASONS TO BELIEVE WAS NOTHING MOR E THAN A REPORT GIVEN BY HIM TO THE COMMISSIONER. THE SUBMISSION OF THE REPORT WAS NOT THE SAME AS RECORDING OF REASONS TO BELIEVE FOR ISSUING A NOTICE. THE ASSESSING OFFICER HAD CLEARLY SUBSTITUT ED FORM FOR SUBSTANCE AND THEREFORE THE ACTION OF THE ASSESSING OFFICER WAS NOT SUSTAINABLE. CHHUGAMAL RAJPAL V. CHALIHA (S. P.) [1971] 79 ITR 6 03 (SC) APPLIED. 14. IN CIT VS. PRADIPKUMAR GUPTA (2008) 303 ITR 95 DELHI IT WAS HELD THAT REOPENING OF THE ASSESSMENT IS NOT PERMIS SIBLE ON MERE ADVERSE STATEMENTS FROM OTHERS. SUCH STATEMENTS BY THEMSEL VES DO NOT CONSTITUTE INFORMATION UNLESS THE ASSESSING OFFICER HAS MADE I NQUIRES THEREON AND INFERRED UNDER STATEMENT OF INCOME. IN THIS REGARD WE REFER TO FOLLOWING HEAD NOTES FROM THAT DECISION:- THE ASSESSING OFFICER RECEIVED INFORMATION WHILE CA RRYING OUT POST SEARCH ENQUIRIES RELATING TO A THIRD PARTY A, SOLE PROPRIETOR OF J, THAT A WAS PROVIDING BOGUS TRANSACTIONS PURPORTI NG TO BE SALE OR PURCHASE OF FOOD GRAIN ITEMS AND THAT THE CASH DEPO SITS WITH HIM WERE FROM PARTIES WHO HAD APPROACHED HIM FOR ACCOM MODATION ENTRIES IN THE FORM OF AGRICULTURAL RECEIPTS. ENQU IRIES SHOWED THAT THE ASSESSEES WERE THE BENEFICIARIES OF SUCH ILLEGA L TRANSACTIONS. THEREFORE BASED ON THE SWORN STATEMENT OF A, REASSE SSMENT PROCEEDINGS AGAINST THE ASSESSEES UNDER SECTIONS 14 7 AND 148 OF THE INCOME-TAX ACT, 1961 WERE INITIATED. THE ASSESS EES CONTENDED THAT THEY HAD TAKEN AGRICULTURAL LAND ON LEASE FROM ONE M AND THE RENT HAD BEEN PAID IN CASH. THE ASSESSEES DEMANDED AN OPPORTUNITY TO CROSS EXAMINE A BUT THIS WAS DENIED ON THE GROUND THAT THE STATEMENT OF THIS PERSON WAS RECORDED BY T HE DEPUTY DIRECTOR INCOME-TAX (INVESTIGATION). THE ASSESSEES CONTENDED THAT SALES TO J WERE GENUINE AND SUBMITTED COPIES OF THE BILLS ISSUED. THE APPELLATE TRIBUNAL DELETED THE AGRICULTURAL INC OME IN THE SUM DECLARED BY THE ASSESSEES. ON APPEAL : HELD, THAT THE ASSESSMENT HAD NOT BEEN COMPLETED UNDER S ECTION 143(3) OF THE ACT. THERE WERE BANKING TRANSACTIONS BETWEEN THE ASSESSEES AND A. THE REASSESSMENT PROCEEDINGS HAD B EEN INITIATED AFTER SEVERAL YEARS OF THE ACCEPTANCE OF THE RETURN UNDER SECTION 143(1) OF THE ACT. THE ASSESSEES FAILURE TO BRING THE PERSON TILLING 15 ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) THE LAND ON THEIR BEHALF COULD NOT INEXORABLY LEAD TO THE CONCLUSION THAT NO AGRICULTURAL INCOME HAD BEEN GENERATED BY T HE ASSESSEES. SUCH AN INFERENCE COULD ONLY BE DRAWN FROM THE STAT EMENT OF A TO THE EFFECT THAT THE TRANSACTIONS BETWEEN HIM AND TH E ASSESSEES WERE BOGUS. THEREFORE, IT WAS MANDATORY FOR THE REVENUE TO PRODUCE A FOR CROSS EXAMINATION BY THE ASSESSEES ON THEIR SPE CIFIC DEMAND. ONCE SECTION 147 OR 148 WAS RESORTED TO, THE ASSESS ING OFFICER MUST FIRST DISCHARGE THE BURDEN OF SHOWING THAT INC OME HAD ESCAPED ASSESSMENT. IT WAS ONLY THEREAFTER THAT THE ASSESSEES HAD TO PROVIDE ALL THE ANSWERS. THE TRIBUNAL ARRIVED AT TH E CORRECT CONCLUSION. 15. THE IMPORTANCE OF LIVE NEXUS BETWEEN INFORMATIO N AND ESCAPEMENT OF INCOME AND CONSEQUENT SATISFACTION ARRIVED AT BY THE ASSESSING OFFICER IS EMPHASIZED BY VARIOUS COURTS. WE REFER TO FOLLO WING JUDGMENTS FOR THE BENEFIT. 1. INDRAPRASTH CHEMICALS PRIVATE LIMITED VS. CIT(20 04) 271 ITR 113 DELHI 2. ITO VS. LAKHMANI MEMALDAS (1976) 103 ITR 437 (SC ) 3. DASS FRIENDS BUILDERS PRIVATE LIMITED VS. DCIT ( 2006) 280 ITR 77 ALLAHABAD 4. CIT VS. SMT. MANIBEN VALJI SHAH (2006) 283 ITR 4 53 ALLAHABAD 5. VIJAYKUMAR N. HIRAKHANWALA HUF VS. ITO (2006) 28 7 ITR 443 BOMBAY 6. UNIVERSAL SUBSCRIPTION AGENCY PRIVATE LTD. VS. J OINT CIT (2007) 293 ITR 244 ALLAHABAD 16. IN VIEW OF THE ABOVE, WE HOLD THAT TREASONS REC ORDED BY THE ASSESSING OFFICER DO NOT REVEAL ANY LIVE NEXUS OF T HE INFORMATION WITH THE ASSESSEE, AMOUNT OF INCOME, AS TO WHETHER IT IS CHA RGEABLE TO TAX, AND WHETHER IT HAS ESCAPED THE ASSESSMENT. ONCE BASIC INGREDIENTS FOR ACQUIRING JURISDICTION UNDER SECTION 147 ARE NOT RE CORDED BY THE 16 ITA NO.250/AHD/2007 (ASSESSMENT YEAR 1998-1999) ASSESSING OFFICER, THEN IT COULD NOT BE SAID THAT H E HAD ANY REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT. THE PRESENT REASON SO RECORDED CANNOT CONFER JURISDICTI ON ON THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT. 17. ACCORDINGLY, REOPENING OF THE ASSESSMENT IS CAN CELLED. 18. WE ACCORDINGLY DO NOT CONSIDER IT NECESSARY TO DEAL THE ISSUE AND ANY OTHER GROUNDS ON MERIT. 19. AS A RESULT ASSESSMENT FRAMED BY THE ASSESSING OFFICER IS CANCELLED AND APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DATED 30 TH OCTOBER, 2009. SD/- SD/- (T.K. SHARMA) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTA NT MEMBER AHMEDABAD; DATED: 30/10/2009 ANKIT* COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT, 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD.