ACIT-I, Kanpur V. M/S PANKAJ AGRAWAL,HUF, Kanpur

ITA 261/LKW/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78591 (ITAT-LUCKNOW)
• Duration Of Justice: 3 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-05-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 06-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: S K GARG; P K KAPOOR
• Keywords: Reopening of assessment; Capital asset; Recovery proceedings; Cost of acquisition; Tangible material; Wrong claim; Difference of opinion; Benefit of exemption; Reason to believe; Change of opinion
• Section: 143(3); 54F; 142(1); 148; 54; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 261/LKW/2011 ASSESSMENT YEAR: 2002 - 03 ASSTT. CIT - 1 KANPUR V. M/S PANKAJ AGARWAL, HUF 5 3/10, NAYAGANJ KANPUR PAN: AADHP7566D (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. ALOK MITRA, D.R. RESPONDENT BY: SHRI. S. K. GARG, ADVOCATE & SHRI. P. K. KAPOOR, C.A. DATE OF HEARING: 23 0 5 2014 DATE OF PRONOUNCEMENT: 10 0 7 2014 O R D E R PE R SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) ON A SOLITARY GROUND THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ANNULLING ASSESSMENT UNDER SECTION 144 READ WITH 147 OF THE INCOME - TAX ACT, 1961 (H EREINAFTER CALLED IN SHORT THE ACT') WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER BEFORE INITIATING PROCEEDINGS UNDER SECTION 147 OF THE ACT. THEREFORE, THE ORDER OF THE LD. CIT(A) NEEDS TO BE QUASHED AND THE ORDER PASSED BY THE ASSESSING OFFICER BE RESTORED. 2 . THE FACTS IN BRIEF CULLED OUT FROM THE ORDERS OF THE LOWER AUTHORITIES ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005 - 06, THE ASSESSING OFFICER HAD ISSUED A LETTER TO THE ASSESSEE ASKING IT TO FURNISH DETAILS/EXPLANATIONS PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : FOR AS MANY AS 26 QUERIES. SOME OF THESE QUERIES WERE IN RESPECT OF PURCHASE AND SALE OF SHARES PERTAINED TO THE PERIOD COVERED IN ASSESSMENT YEAR 2002 - 03. THE ASSESSEE HAS FILED A REPLY BEFORE T HE ASSESSING OFFICER ON 30.11.2007 WHEREIN ASSESSEE HAD SUBMITTED MOST OF THE DETAILS. WITH REGARD TO THE DETAILS FOR PURCHASE AND SALE OF SHARES PERTAINING TO ASSESSMENT YEAR 2002 - 03, THE ASSESSEE IN RESPONSE TO POINT NO.19 STATED THAT SOME OF THE INFORM ATION REGARDING PURCHASE AND SALE OF SHARES HAVE ALREADY BEEN ENCLOSED IN THE RETURN FOR ASSESSMENT YEAR 2002 - 03 AND FOR OTHER DETAILS AT LEAST 15 TO 20 DAYS TIME SOUGHT FOR COMPILATION. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) O F THE ACT FOR ASSESSMENT YEAR 2005 - 06 ON 30.11.2007. THE ASSESSING OFFICER HAS ALSO INITIAT ED PROCEEDINGS UNDER SECTION 147 OF THE ACT AGAINST THE ASSESSEE FOR ASSESSMENT YEAR 2002 - 03 AS EARLY AS ON 30.12.2007 AFTER RECORDING THE REASONS. IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT, ASSESSEE VIDE LETTER DATED 14.2.2008 HAS STATED THAT THE RETURN FILED IN ORIGINAL ON 9.8.2002 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. ASSESSEE ALSO SOUGHT COPY OF THE REASONS RECORDED BY THE ASSESSING OFFICER WHICH WERE SUPPLIED TO THE ASSESSEE. ASSESSEE FILED OBJECTION T O THE REASONS RECORDED, WHICH WERE REJECTED BY THE ASSESSING OFFICER AND THE ASSESSEE WAS DULY INFORMED. THE ASSESSING OFFICER SOUGHT CERTAIN INFORMATION, BU T IT WAS NOT COMPLIED WITH BY THE ASSESSEE DESPITE VARIOUS OPPORTUNITIES AFFORDED TO IT. HAVING NARRATED VARIOUS OPPORTUNITIES AFFORDED TO THE ASSESSEE, THE ASSESSING OFFICER PROCEED ED WITH THE MATTER AND HAS FRAMED THE ASSESSMENT UNDER SECTION 147/144 OF THE A CT AT AN INCOME OF RS.43,07,530/ - . 3 . BEFORE THE LD. CIT(A), ASSESSEE HAS MAINLY CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT , BESIDES ASSAILING THE ASSESSMENT ORDER ON MERIT. THE LD. CIT(A) ANNULLED THE ASSESSMENT HAVING OBSERVED THAT THE ASSESS ING OFFICER DID NOT HAVE ANY MATERIAL IN HIS POSSESSION WHICH COULD PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : JUSTIFY THE FORMATION OF BELIEF FOR INITIATING PROCEEDINGS UNDER SECTION 147 OF THE ACT FOR ASSESSMENT YEAR 2002 - 03. THE LD. CIT(A) HAS NOT ADJUDICATED THE ISSUE RAISED BEFORE HIM ON MERI T. 4 . THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL ASSAILING THE ORDER OF THE LD. CIT(A) ON THE GROUND THAT HE HAS RECORDED CERTAIN INCORRECT FACTS IN HIS ORDER BEFORE CONCLUDING THAT THE ASSESSING OFFICER DID NOT HAVE ANY MATERIAL IN HIS POSSESSIO N WHICH COULD JUSTIFY FORMATION OF BELIEF FOR INITIATING PROCEEDINGS UNDER SECTION 147/148 OF THE ACT. THE LD. CIT(A) IN PARA 6.5 OF HIS ORDER HAS OBSERVED THAT THE RETURN FOR ASSESSMENT YEAR 2002 - 03 WAS NOT ON RECORD WHEN NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED, WHEREAS THE ASSESSING OFFICER, WHILE FORMING A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, HAS RECORDED IN THE REASONS THAT RETURN OF INCOME FOR ASSESSMENT YEAR 2002 - 03 WAS FILED ON 29.8.2002 DECLARING TOTAL INCOME AT RS.1, 25,880/ - , WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THE ASSESSING OFFICER HAS ALSO NOTED IN THE REASONS RECORDED THE COMPUTATION OF CAPITAL GAINS AS DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME. THE LD. D.R. HAS FURTHER INVITED OUR ATTENTI ON TO PARA 6.6 OF THE ORDER OF THE LD. CIT(A) WITH THE SUBMISSION THAT THE LD. CIT(A) HAS RECORDED THAT ASSESSING OFFICER HAS ISSUED A NOTICE UNDER SECTION 148 OF THE ACT EVEN WITHOUT LOOKING TO THE RETURN OF INCOME OF THE ASSESSEE, WHEREAS IN THE REASONS RECORDED, THE ASSESSING OFFICER HAS SPECIFICALLY MENTIONED THE FIGURES FOUND IN THE RETURN OF INCOME OF THE ASSESSEE. THE LD. D.R. HAS FURTHER CONTENDED THAT THE ORIGINAL RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT, THEREFORE, THE ASSESSING OFFIC ER HAS NO OCCASION TO APPLY HIS MIND TO THE CLAIMS R AISED BY THE ASSESSEE IN ITS RETURN OF INCOME. 5 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2005 - 06, CERTAIN INFORMATION WERE SURFACED WITH REGARD TO THE TRANSACTION OF SHARES PERTAIN ING TO ASSESSMENT YEAR 2002 - 03. THE ASSESSING OFFICER PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : HAS EXAMINED THE EVIDENCE OR THE INFORMATION COLLECTED DURING THE COURSE OF ASSESSMENT FOR ASSESSMENT YEAR 2005 - 06 AND APPLIED HIS MIND TO THE INFORMATION SURFACED IN THE COURSE OF ASSESSMENT PROCEEDIN GS FOR ASSESSMENT YEAR 2005 - 06 AND RETURNS FILED BY THE ASSESSEE AND THEREAFTER FORMED A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, BEFORE ISSUING NOTICE UNDER SECTION 148 OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSE SSEE WAS ASKED TO FURNISH CERTAIN INFORMATION, BUT HE DID NOT COMPLY WITH IT AND ALL THE TIME HE SOUGHT ADJOURNMENT FOR ONE REASON OR THE OTHER. ULTIMATELY, THE ASSESSING OFFICER HAD NO OPTION BUT TO FRAME THE ASSESSMENT UNDER SECTION 147 READ WITH 144 OF THE ACT, BUT THE LD. CIT(A) WITHOUT APPRECIATING THE FACTS, HAS ANNULLED THE ASSESSMENT AFTER HOLDING THAT THE ASSESSING OFFICER DID NOT HAVE ANY MATERIAL IN POSSESSION TO JUSTIFY THE FORMATION OF BELIEF IN INITIATING PROCEEDINGS UNDER SECTION 147/148 OF THE ACT. THE LD. D.R. HAS ALSO DISTINGUISHED THE CASE LAWS REFERRED TO BY THE LD. CIT(A), WITH THE SUBMISSION THAT IN THOSE CASES , THE ORIGINAL ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE ACT. 6 . THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, BE SIDES PLACING RELIANCE UPON THE ORDER OF THE LD. CIT(A), HAS CONTENDED THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND TO THE INFORMATION RECEIVED , AS THERE WAS NO SUFFICIENT MATERIAL TO FORM A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMEN T . S INCE THE ASSESSING OFFICER DID NOT HAVE SUFFICIENT MATERIAL TO JUSTIFY THE FORMATION OF BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT , THE REOPENING OF ASSESSMENT IS ILLEGAL, INVALID AND THE LD. CIT(A) HAS RIGHTLY ANNULLED THE ASSESSMENT . HE HAS ALSO PLACED RELIANCE UPON THE FOLLOWING JUDGMENTS: - ( I ) CHHUGAMAL RAJPAL VS. S.P. CHLLHA & ORS [1971] 79 ITR 603 (SC). PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : ( II ) INCOME TAX OFFICER & ORS. VS. LAKHMANI MEWAL DAS [1976] 103 ITR 437 (SC). ( III ) CIT VS. BATRA BHATTA COMPANY [2010] 321 ITR 526 (DEL.) ( IV ) CI T VS. KELVINATOR OF INDIA [2010] 320 ITR 561 (SC) ( V ) ASSTT. CIT VS. STAR FERRO ALLOYS (P) LTD. [2004] 90 ITD 63 ( VI ) CIT VS. ORIENT CRAFT LTD., [2013] 354 ITR 536 (DEL.) ( VII ) CIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. [2007] 291 ITR 500 (SC) ( VIII ) CIT VS. M/S KANODIA & SO NS (I.T.A. NO.365/2009 BY HON'BLE ALLAHABAD HIGH COURT. ( IX ) GERMAN REMEDIES LTD. VS. DCIT [2006] 287 ITR 494 (BOM.) 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW, MATERIAL PLACED ON RECORD AND THE JUDGMENTS REFER RED TO BY THE PARTIES. AS PER ASSESSMENT ORDER, THE RETURN FOR ASSESSMENT YEAR 2002 - 03 WAS FILED ON 29.8.2002 DECLARING TOTAL INCOME AT RS.1,25,880/ - WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. UNDISPUTEDLY DURING THE COURSE OF ASSESSMENT PROCEE DINGS FOR ASSESSMENT YEAR 2005 - 06, THE ASSESSING OFFICER ISSUED A LETTER TO THE ASSESSEE ASKING IT TO FURNISH DETAILS/EXPLANATIONS WITH REGARD TO THE PURCHASE AND SALE OF SHARES IN ORDER TO VERIFY THE CLAIM OF CAPITAL GAIN UNDER SECTION 54F OF THE ACT. DU RING THE COURSE OF ENQUIRY, IT WAS SURFACED THAT THE ASSESSEE HAS MADE CERTAIN PURCHASE OF SHARES IN ASSESSMENT YEAR 2002 - 03 AND ALSO CLAIMED EXEMPTION UNDER SECTION 54F OF THE ACT WITH RESPECT TO THE CAPITAL GAIN. THE ASSESSING OFFICER HAS COMPLETED ASSE SSMENT FOR ASSESSMENT YEAR 2005 - 06, BUT THE INFORMATION SURFACED DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2005 - 06 WAS EXAMINED BY THE ASSESSING OFFICER FOR THE PURPOSE OF REOPENING OF ASSESSMENT FOR ASSESSMENT YEAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : 2002 - 03. SINCE TH E ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT FOR ASSESSMENT YEAR 2002 - 03 INITIALLY UNDER SECTION 143(1) OF THE ACT, HE HAD NO OCCASION TO APPLY HIS MIND WITH REGARD TO THE CLAIM OF DEDUCTION RAISED UNDER SECTION 54F OF THE ACT ON RECEIPT OF CAPITAL GAI N ACCRUED ON SALE OF SHARES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2005 - 06, THE ASSESS ING OFFICER HAS ISSUED NOTICE UNDER SECTION 142(1) OF THE ACT REQUESTING THE ASSESSEE TO FURNISH INFORMATION AND DOCUMENTS WITH REGARD TO LONG TERM CAPITAL GAIN, HAVING OBSERVED THAT IN ASSESSMENT YEAR 2002 - 03 ASSESSEE HAD SOLD SHARES AND THE CAPITAL GAIN ACCRUED TO IT WAS DEPOSITED IN CAPITAL GAIN SCHEME AND ALSO PURCHASED A HOUSE UNDER SECTION 54F(1) OF THE ACT. BUT THE ASSESSEE FAILED TO UTIL IZE THE AMOUNT DEPOSITED IN THE CAPITAL GAIN ACCOUNT WITHIN THE STIPULATED PERIOD. ACCORDING TO SECTION 54F OF THE ACT, PROPORTIONATE DEEMED CAPITAL GAIN IS REQUIRED TO BE OFFERED FOR TAXATION AND THE DEDUCTION CLAIMED IN ASSESSMENT YEAR 2002 - 03 WOULD BE DISALLOWED. NOTICE ISSUED UNDER SECTION 142(1) OF THE ACT WAS NOT COMPLIED WITH BY THE ASSESSEE WITH REGARD TO MOST OF THE QUERIES RAISED BY THE ASSESSING OFFICER. IN ASSESSMENT YEAR 2005 - 06, ASSESSEE HAS AVOIDED TO FURNISH INFORMATION AND DOCUMENTS TO P ROVE THE GENUINENESS OF PURCHASE AND SALE OF SHARES, THEREFORE, PURCHASE AND SALE OF SHARES WERE NOT GENUINE AND WHILE CONCLUDING THE ASSESSMENT, THE ASSESSING OFFICER WAS ALSO OF THE VIEW THAT THE IMPUGNED TRANSFER IN CAPITAL GAIN ACCOUNT WAS OUT OF UNEXP LAINED DEPOSIT RECEIVED BY THE ASSESSEE AND NOT OUT OF SALE PROCEEDS OF SHARES. THE ENQUIRY MADE AND EVIDENCE COLLECTED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2005 - 06 , WERE CAREFULLY EXAMINED BY THE ASSESS ING OFFICER WHILE RECORDING THE REASONS FOR REOPENING OF ASSESSMENT. THE REASONS RECORDED BY THE ASSESSING OFFICER ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: - PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 7 - : 'THE ASSESSEE HAS SUBMITTED ITS RETURN OF INCOME FOR A.Y. 2002 - 03 ON 29TH AUGUST, 2002 DECLARING TOTAL INCOME OF RS. 1,25,880/ - WHICH WAS PROCESSED ON INCOME RETURNED U/S 143(1) OF THE ACT. AS PER STATEMENT OF INCOME, THE ASSESSEE HAS DECLARED INCOME UNDER THE LONG TERM CAPITAL GAINS AT NIL ON THE BASIS OF COMPUTATION GIVEN AS UNDER: - INCO ME FROM CAPITAL GAINS LONG TERM CAPITAL GAIN SALE CONSIDERATION OF SHARES ACQUIRED ON 4.4.2000 41,81,645/ - LESS: COST OF ACQUISITION 1,00,905/ - : 40,80,740/ - LESS: SHORT TERM LOSS B/F (A.Y. 2001 - 02) 1,050/ - 40,79,690/ - LESS: D EDUCTION U/S 54F, BEING PURCHASE OF HOUSE AT 7/181 - A, DULEX BUNGLOW UNIT NO.4,SWAROOP NAGAR, KANPUR 19,93,000/ - AMOUNT DEPOSIT UNDER CAPITAL GAINS SCHEME IN U.B.I. GENERALGANJ,KANPUR 22,00,000/ - 41,93,000/ - IN ASSESSEE CASE FOR A.Y. 200 5 - 06, THE ASSESSMENT WAS MADE U/S 143(3) WHEREAS OBSERVATION IS MADE AS UNDER: - ' 2. THE RETURN OF INCOME FOR A.Y. 2005 - 06 WAS FILED ON 29 JULY, 2005 DECLARING A TOTAL INCOME AT RS. 22,05,840/ - , WHICH INCLUDES INCOME UNDER THE HEAD CAPITAL GAINS AS U NDER: - LONG TERM CAPITAL GAINS AMOUNT IN CAPITAL GAINS SCHEME A/C NOT UTILIZED 21,35,282/ - IN ASSESSMENT YEAR 2002 - 03 THE ASSESSEE HAD SOLD SHARES FOR RS.41,81,645.00 AND THE LONG TERM CAPITAL GAINS WERE RS. 40,79,690.00. ASSESSEE DEPOSITED RS. 21,88,645 .00 IN CAPITAL GAINS SCHEME A/C U/S 54F(4) AND PURCHASED HOUSE FOR RS. 19,93,000.00 U/S 54F(1). SINCE THE ASSESSEE FAILED TO UTILIZE THE AMOUNT DEPOSITED IN CAPITAL GAINS SCHEME A/C U/S 54F(4) WITHIN THE STIPULATED PERIOD OF 3 YEARS ACCORDING TO SECTION 54 F THEREFORE THE PROPORTIONATE DEEMED CAPITAL GAINS IS OFFERED FOR TAXATION. 3. IN VIEW OF FACTS MENTIONED ABOVE, THE GENUINENESS OF INCOME UNDER THE HEAD LONG TERM CAPITAL GAINS HAD TO BE LOOKED INTO AS IT MIGHT BE INCOME UNDER THE HEAD OTHER SOURCES. IN T HE HANDS OF PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 8 - : PANKAJ AGARWAL, HUF, THE GENUINENESS OF DEDUCTION OF RS.19,93,000/ - U/S 54 F(1) HAD ALSO TO BE CONSIDERED. IN CASE THE ASSESSEE FAILED TO SUBSTANTIATE HIS CLAIM OF INCOME UNDER THE HEAD LONG TERM CAPITAL GAINS, THE DEDUCTION CLAIMED BY HIM IN A .Y. 2002 - 03 WILL BE DISALLOWED. 4. IN VIEW OF ABOVE BACKDROP OF THE CASE, THE ASSESSEE VIDE NOTICE U/S 142(1) DATED 24.10.2007 WAS REQUESTED TO FURNISH INFORMATION AND DOCUMENTS WITH REGARD TO LONG TERM CAPITAL GAINS AS UNDER: - NOTICE U/S 142 (1) OF THE I NCOME TAX ACT, 1961 PAN - AADHP7566D _____________:_________ FILE NO. :: 282 TO PANKAJ AGARWAL, HUF 53/10, NAYAGANJ, KANPUR. SIR/MADAM, SUB: ASSESSMENT PROCEEDINGS FOR A.Y. 2005 - 06 - PLEASE REFER TO THIS OFFICE NOTICE ISSUED UNDER SECTION 143(2) DATED 27/ 07/2006 FOR A.Y. 2005 - 06. YOU HAVE NOT MADE COMPLIANCE OF THESE NOTICES. YOU ARE ALSO REQUESTED TO FURNISH THE DETAILS / INFORMATION / DOCUMENTS AS UNDER : - LONG TERM CAPITAL GAIN : IN YOUR RETURN OF INCOME FOR A.Y. 2005 - 06, YOU HAVE STATED THAT SHARES FOR RS.41,81,645/ - WERE SOLD AND THE TOTAL LONG TERM CAPITAL GAINS WAS 40,79,690/ - , OUT OF LONG TERM CAPITAL OF RS.40,290,680/ - , YOU HAVE DEPOSITED RS.21,88,645/ - IN CAPITAL GAINS SCHEME A/C U/S 54F(4) AND PURCHASED HOUSE FOR RS. 19,93,000/ - U/S 54F (1). Y OU HAVE FURTHER STATED THAT AMOUNT DEPOSITED UNDER CAPITAL GAIN SCHEME A/C U/S 54F(4) COULD NOT BE UTILIZED WITHIN THE STIPULATED PERIOD OF 3 YEARS AND PROPORTIONATE DEEMED CAPITAL GAIN AMOUNTING TO RS.21,35,282/ - WERE OFFERED FOR TAXATION UNDER THE CAPITA L GAIN FOR A.Y. 2005 - 06. IN THIS REGARD, YOU ARE REQUESTED TO PLEASE FURNISH THE FOLLOWING INFORMATION: - I) DISTINCTIVE NO. OF SHARES CERTIFICATES, PURCHASED AND SOLD AND NAME AND ADDRESS OF THE COMPANY. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 9 - : II) COPY OF TRANSFER MEMO OF SHARES PURCHASED AN D SOLD, III) NAME AND ADDRESS OF PERSONS FROM WHOM SHARES WERE PURCHASED AND SHARES WERE SOLD. III) NAME AND ADDRESS OF PERSONS FROM WHOM SHARES WERE PURCHASED AND SHARES WERE SOLD. IV) PLEASE STATE WHETHER THE SHARES WERE GOT TRANSFERRED IN YOUR NAME AFTER PURCHASE. IF YES, FURNISH COPY OF SHARE REGISTRATION CERTIFICATE ISSUED BY THE COMPANY. V) PLEASE STATE WHETHER THE TRANSACTION OF SALE AND PURCHASE WERE MADE THROUGH STOCK EXCHANGE. VI) PLEASE FURNISH NAME AND ADDRESS OF BROKER THROUGH WHOM SHAR ES WERE PURCHASED. VII) PLEASE GIVE DETAILS OF PAYMENT MADE FOR PURCHASE OF SHARES ALOGNWITH COPY OF BANK ACCOUNT IN SUPPORT THEREOF. VIII) PLEASE FURNISH THE NAME OF PERSONS WHO PURCHASED SHARES SOLD BY YOU AND ALSO GIVE DETAILS OF PAYMENT MADE BY THAT PERSONS. IX) PLEASE GIVE THE QUOTED RATE OF SHARES ON THE DATES OF PURCHASE AND SALE. X) COPY OF CAPITAL GAIN A/C FROM BANK. XI) COPY OF ACKNOWLEDGEMENT SLIP, COMPUTATION OF INCOME FOR A.Y. 2002 - 03. COPY OF ORDER U/S 143(1) & 143(3) OF THE AC T. PLEASE GIVE DETAILS AND JUSTIFICATION OF DEDUCTION U/S 54F OF RS.19,93,000/ - . 5. AS MENTIONED EARLIER, THE ASSESSEE HAS NOT MADE COMPLIANCE OF MOST OF THE QUERIES MENTIONED ABOVE. THE ASSESSEE HAS ONLY SUBMITTED THE COPY OF RETURN OF ITS INCOME FOR A.Y. 2002 - 03 TOGETHER WITH STATEMENT OF INCOME ENCLOSED THEREIN AND COPY OF BANK ACCOUNT OF THE HUF IN UNION BANK OF INDIA, GENERALGANJ, KANPUR. IT HAS BEEN SUBMITTED THAT THE ASSESSMENT FOR A.Y. 2002 - 03 WAS MADE U/S 143(1) OF THE ACT ON RETURNED INCOME. FURTH ER SUBMISSIONS MADE BY THE ASSESSEE VIDE LETTER DATED 30.11.2007 VIDE PARA 16, 17 18 AND 19 IS REPRODUCED AS UNDER : - ' 16. THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR A.Y. 2002 - 03 ON 09.08.2002 VIDE RECEIPT NO.12679, COPY OF WHICH IS ENCLOSED IN ANNEX URE - H. ASSESSMENT WAS MADE U/S 143(1) ON RETURNED INCOME. 17. COPY OF CAPITAL GAINS SCHEME A/C IS IN ANNEXURE - I. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 10 - : 18. IN ASSESSMENT YEAR 2002 - 03 THE ASSESSEE HAD SOLD SHARES FOR RS.41,81,645/ - AND THE LONG TERM CAPITAL GAINS WERE RS.40,79,690/ - . ASSESSE E DEPOSITED RS.21,88,645/ - IN CAPITAL GAINS SCHEME A/C U/S 54F(4) AND PURCHASED HOUSE FOR RS.19,93,000.00 U/S 54F(1). SINCE THE ASSESSEE FAILED TO UTILIZE THE AMOUNT DEPOSITED IN CAPITAL GAINS SCHEME A/C U/S 54F(4) WITHIN STIPULATED PERIOD OF 3 YEARS ACCOR DING TO SECTION 54F(4) , THEREFORE, THE PROPORTIONATE DEEMED CAPITAL GAINS IS OFFERED FOR TAXATION, COPY OF PURCHASE DEED OF THE HOUSE INVESTED U/S 54F IS ANNEXED AT 8 ABOVE. 19. SOME OF THE INFORMATION REGARDING PURCHASE AND SALE OF SHARES ARE ALREADY B EEN DISCLOSED IN RETURN OF A.Y. 2002 - 03. FOR OTHER DETAILS AT LEAST 15 - 20 DAYS BE ALLOWED, FOR COMPLETION.' 6. APART FROM ABOVE INFORMATION, THE ASSESSEE HAS SUBMITTED COPY OF PURCHASE DEED DATED 31.10.2001 OF HOUSE PROPERTY NO.7/181A, DUPLEX BUNGALOW, U NIT - IV, 7/181, SWAROOP NAGAR, KANPUR FROM M/S DELUX BUILDERS FOR RS.19,93,000/ - INCLUDING THE COST OF STAMP ,ETC. THE SAID PROPERTY WAS PURCHASED IN THE NAME OF SHRI PANKAJ KAYA S/O LATE SHRI BAL GOVIND KAYA, 53/10, NAYAGANJ, KANPUR. 7. THE ASSESSEE HAS AL SO SUBMITTED COPY OF BANK ACCOUNT NO.9307, UNION BANK OF INDIA, GENERALGANJ, KANPUR AND IT IS SUBMITTED THAT FOLLOWING CREDIT ENTRIES REPRESENT SALE PROCEEDS OF SHARES. 2.7.2001 19,94,000/ - BY CLG. 16.8.2001 21,87,645/ - BY CLG. IT HAS BEEN SUBMITTED THAT FROM THIS ACCOUNT A SUM OF RS.22,00,000/ - WAS TRANSFERRED ON 13.08.2002 TO CAPITAL GAIN A/C NO.40254 IN UNION BANK OF INDIA, GENERALGANJ, KANPUR. 8. AS MENTIONED EARLIER, THE ASSESSEE HAS AVOID ED TO FURNISH INFORMATION AND DOCUMENTS TO PROVE GENUINENESS OF PURCHASE AND SALE OF SHARES. HE HAS AVOIDED TO FURNISH COPY OF TRANSFER MEMO, DISTINCTIVE NUMBER OF SHARES, NAME AND ADDRESS OF PERSONS TO WHOM SHARES WERE SOLD AND FROM WHOM THE SHARES WERE P URCHASED. NAME & ADDRESS OF BROKER AT THE TIME OF PURCHASE AND SALE, NAME OF THE COMPANY WHOSE SHARES WERE PURCHASED AND SOLD. WHETHER THE TRANSACTIONS WERE MADE THROUGH STOCK EXCHANGE OR NOT. THESE INFORMATION AND DOCUMENTS WERE IN EXCLUSIVE POSSESSION OF THE ASSESSEE AND BY VIRTUE OF NON PRODUCTION OF SUCH INFORMATION AND DOCUMENTS, IT IS HELD THAT THERE WAS NO GENUINE PURCHASE AND SALE OF SHARES IN F.Y. 2002 - 03 RELEVANT TO A.Y. 2002 - 03. THEREFORE, THE CREDIT ENTRIES IN THE BANK ACCOUNTS OF THE ASSESSEE P URPORTED TO HAVE BEEN PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 11 - : RECEIVED IS HELD TO BE UNEXPLAINED DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE FOR A.Y. :2002 - 03. AS A SEQUEL OF THIS CONCLUSION, IT IS HELD THAT THE ASSESSEE HAS WRONGLY CLAIMED BENEFIT OF EXEMPTION U/S 54F ON A/C OF PURCHASE OF PROP ERTY IN A.Y. 2002 - 03. FURTHER IT IS ALSO HELD THAT THE AMOUNT TRANSFERRED IN THE CAPITAL GAINS A/C WAS OUT OF UNEXPLAINED DEPOSIT RECEIVED BY THE ASSESSEE AND NOT OUT OF THE SALE PROCEEDS OF THE SHARES. IN VIEW OF THIS, ACTION U/S 148 FOR A.Y. 2002 - 03 WILL BE TAKEN IN THE HANDS OF THE ASSESSEE AS PER LAW.' 3. IN VIEW OF FOREGOING FACTS, I HAVE REASON TO BELIEF THAT THE DEPOSITS IN ASSESSES BANK ACCOUNT NO.9307 IN UNION BANK OF INDIA, GENERALGANJ, KANPUR MENTIONED HEREIN AS UNDER REPRESENTS UNEXPLAINED DEPOS ITS IN THE HANDS OF THE ASSESSEE FOR A.Y. 2002 - 03 AND IT DID NOT REPRESENT SALE PROCEEDS OF SHARES SOLD. 2.7.2001 19,94,000/ - BY CLG. 16.8.2001 21,87,645/ - BY CLG. - 4. THEREFORE, I HAVE REASONS TO BELIE VE THAT THE TAXABLE INCOME TO THE EXTENT OF RS. 41,81,645/ - HAS ESCAPED FROM ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS ALSO CLAIMED DEDUCTION U/S 54F OF RS. 19,93,000/ - FOR PURCHASE OF RESIDENTIAL PROPERTY W RONGLY AS THERE WAS NO GENUINE INCOME FOR PURCHASE AND SALE OF SHARES. APART FROM THIS, THE DEDUCTION U/S 54F IS ALSO NOT ADMISSIBLE IN VIEW OF THE FACT THAT THE PROPERTY WAS PURCHASED NOT BY THE ASSESSEE, HUF BUT BY SHRI PANKAJ AGARWAL IN HIS INDIVIDUAL C APACITY AS THE SALE DEED WAS REGISTERED IN HIS INDIVIDUAL NAME. THE ASSESSEE HAS ALSO WRONGLY CLAIMED DEDUCTION OF RS.22,00,000/ - ON A/C OF DEPOSITS IN CAPITAL GAINS SCHEME BECAUSE THERE WAS NO GENUINE CAPITAL GAINS ACCRUED TO IT. SD. DY. COMMISSIONER OF LNCOMETAX - 1, KANPUR 09.01.2008 NOTICE U/S 148 IS BEING ISSUED WITH THE APPROVAL OF THE JT. COMMISSIONER OF INCOME TAX RANGE - 1, KANPUR COMMUNICATED VIDE HIS OFFICE LETTER F. NO. JCIT RANGE - 1/07 - 08/151 (2)/148/PANKAJ KAYA - HUF/1433 DATED 04 TH DECEMBER, 2007. SD. DY. COMMISSIONER OF LNCOMETAX - 1, KANPUR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 12 - : 8 . THEREAFTER , NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED AND IN RESPONSE THERETO ASSESSEE VIDE LETTER DATED 14.1.2008 HAS STATED THAT THE RETURN FILED IN ORIGINAL ON 9.8.2002 MAY BE TREATED AS RETURN FILED IN COMPLIANCE TO NOTICE UNDER SECTION 148 OF THE ACT. VIDE SAID LETTER, ASSESSEE ASKED THE ASSESSING OFFICER TO SUPPLY COPY OF REASONS RECORDED , WHICH WAS LATER ON SUPPLIED, TO WHICH ASSESSEE HAS FILED OBJECTIONS WHICH WAS ALSO DISPOSED OF BY THE ASSESSING OFFICER. AFTER REJECTING THE OBJECTIONS RAISED BY THE ASSESSEE, ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH INFORMATION RELATING TO SALE AND PURCHASE OF SHARES AND GENUINENESS OF CLAIM OF DEDUCTION UNDER SECTION 54F O F THE ACT, BUT MOST OF THE TIME ASSESSEE SOUGHT ADJOURNMENT AND DID NOT FURNISH THE REQUISITE INFORMATION BEFORE THE ASSESSING OFFICER AND FINALLY ASSESSING OFFICER WAS FORCED TO COMPLETE THE ASSESSMENT UNDER SECTION 144 OF THE ACT. THE ASSESSING OFFICER HAS RECORDED CHRONOLOGICAL EVENTS WITH REGARD TO THE PROCEEDINGS UNDERTAKEN BY HIM IN ORDER TO ESTABLISH HOW THE ASSESSEE HAS MADE COMPLIANCE OF THE NOTICES ISSUED TO HIM, IN PARA 3.1 OF HIS ORDER. 9 . THOUGH THE ASSESSEE HAS RAISED VARIOUS GROUNDS ON MERIT BE FORE THE LD. CIT(A), APART FROM ASSAILING THE VALIDITY OF REOPENING OF ASSESSMENT, BUT THE LD. CIT(A) HAS ADJUDICATED THE APPEAL ON THE POINT OF VALIDITY OF REOPENING OF ASSESSMENT AND ON MERIT HE HAS NOT GIVEN ANY FINDING. THE LD. CIT(A) HAS ANNULLED THE ASSESSMENT HAVING HELD THAT THE ASSESSING OFFICER DID NOT HAVE ANY MATERIAL IN POSSESSION TO JUSTIFY FORMATION OF BELIEF FOR INITIATING PROCEEDINGS UNDER SECTION 147/148 OF THE ACT FOR ASSESSMENT YEAR 2002 - 03. THEREFORE, REOPENING WAS NOT VALID AND ASSES SMENT FRAMED CANNOT SURVIVE. BUT FROM A CAREFUL PERUSAL OF THE REASONS RECORDED BY THE ASSESSING OFFICER BEFORE ISSUING NOTICE UNDER SECTION 148 OF THE ACT, THE ASSESSING OFFICER HAS TAKEN COGNIZANCE OF THE PROCEEDINGS UNDERTAKEN DURING THE COURSE OF ASSE SSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2005 - 06 WHERE THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT ON ACCOUNT OF PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 13 - : CAPITAL GAIN ACCRUED TO THE ASSESSEE ON SALE OF SHARES WAS THOROUGHLY EXAMINED. THE ASSESSING OFFICER HAS ALSO TAKEN NOTE THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2005 - 06, ASSESSEE HAS NOT FURNISHED INFORMATION AND DOCUMENTS TO PROVE THE GENUINENESS OF PURCHASE AND SALE OF SHARES. IN ASSESSMENT YEAR 2002 - 03 , ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 54F OF T HE ACT ON THE CAPITAL GAIN ACCRUED TO IT ON SALE OF SHARES. ONCE ASSESSEE COULD NOT PROVE THE GENUINENESS OF SALE AND PURCHASE OF SHARES, THE CLAIM OF CAPITAL GAIN UNDER SECTION 54F OF THE ACT BECAME DOUBTFUL AND IN ASSESSMENT YEAR 2005 - 06 , THE ASSESSING OFFICER HAS GIVEN A CATEGORICAL FINDING IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS WRONGLY CLAIMED BENEFIT OF DEDUCTION UNDER SECTION 54F OF THE ACT ON ACCOUNT OF PURCHASE OF PROPERTY IN ASSESSMENT YEAR 2002 - 03, A ND THE CREDIT ENTRIES IN THE BANK ACCOUN T OF THE ASSESSEE REPORTED TO HAVE BEEN RECEIVED , IS HELD TO BE UNEXPLAINED DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE FOR ASSESSMENT YEAR 2002 - 03. THESE FINDINGS IN ASSESSMENT YEAR 2005 - 06 ARE SUFFICIENT TO FORM A BELIEF FOR THE ASSESSING OFFICER FOR RE OPENING THE ASSESSMENT FOR ASSESSMENT YEAR 2002 - 03. BESIDES, THE ASSESSING OFFICER HAS ALSO EXAMINED THE BANK ACCOUNTS WITH UNION BANK OF INDIA AND HAS NOTICED THAT SALE AND PURCHASE OF SHARES WERE RECORDED. SINCE ASSESSMENT FOR ASSESSMENT YEAR 2002 - 03 W AS FRAMED UNDER SECTION 143(1) OF THE ACT, THE ASSESSING OFFICER HAD NO OCCASION TO EXAMINE THE VERACITY OF THE CLAIM OF THE ASSESSEE AND ALSO GENUINENESS OF THE SALE OF SHARES. 10 . WE HAVE CAREFULLY EXAMINED THE REASONS RECORDED BY THE ASSESSING OFFICER AND WE FIND THAT THERE WAS SUFFICIENT MATERIAL BEFORE THE ASSESSING OFFICER TO FORM A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 2002 - 03. WE HAVE ALSO TAKEN NOTE OF THE FACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER HAS AFFORDED VARIOUS OPPORTUNITIES TO THE ASSESSEE TO PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 14 - : PRODUCE THE RELEVANT INFORMATION WITH REGARD TO SALE AND PURCHASE OF SHARES, BUT THE ASSESSEE COULD NOT PRODUCE IT DESPITE VARIOUS OPPORTUNITIES AFFORDED TO IT AND FINALLY ASSES SING OFFICER WAS CONSTRAINED TO COMPLETE THE ASSESSMENT UNDER SECTION 144 OF THE ACT. WE HAVE ALSO CAREFULLY EXAMINED THE CASE LAWS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE AND WE FIND THAT ALL THE CASE LAWS ARE DISTINGUISHABLE ON FACTS. THEREFORE, NO ASSISTANCE CAN BE DRAWN IN FAVOUR OF THE ASSESSEE. 11 . IN THE CASE CHHUGAMAL RAJPAL VS. S.P. CHLLHA & ORS (SUPRA), THE REOPENING OF ASSESSMENT WAS DONE ON THE BASIS OF THE OFFICE REPORT OF THE LD. COMMISSIONER OF INCOME - TAX AND WHILE RECORDING REASONS, THE ASSESSING OFFICER HAS OBSERVED THAT ASSESSMENT IS REOPENED FOR INVESTIGATING THE TRUTH OF ALLEGED TRANSACTIONS. IN THAT CASE , THE HON'BLE SUPREME COURT HAS RIGHTLY HELD THAT FOR MAKING ENQUIRY/INVESTIGATION, ASSESSMENT CANNOT BE REOPENED. BEFORE REOPENIN G OF ASSESSMENT, THE ASSESSING OFFICER IS REQUIRED TO FORM A REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 12 . IN THE CASE OF INCOME TAX OFFICER & ORS. VS. LAKHMANI MEWAL DAS (SUPRA), ASSESSMENT WAS ORIGINALLY FRAMED UNDER SECTION 23( 3) OF THE INDIAN INCOME - TAX ACT, 1922 AND LATER ON THE ASSESSING OFFICER REOPENED ASSESSMENT BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT. IN THAT CASE, THEIR LORDSHIPS OF THE HON'BLE SUPREME COURT HAVE HELD THAT THE GROUNDS O R REASONS WHICH LEAD TO THE FORMATION OF THE BELIEF CONTEMPLATED BY SECTION 147(A) OF THE ACT MUST HAVE MATERIAL BEARING ON THE QUESTION OF ESCAPEMENT OF INCOME OF THE ASSESSEE FROM ASSESSMENT BECAUSE OF HIS FAILURE OR OMISSION TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. ONCE T HERE EXIST REASONABLE GROUNDS FOR THE INCOME TAX OFFICER TO FORM THE ABOVE BELIEF, THAT WOULD BE SUFFICIENT TO CLOTHE HIM WITH JURISDICTION TO ISSUE NOTICE. THEIR LORDSHIPS FURTHER HELD THAT WHETHER THE GROUNDS ARE ADEQUATE OR NOT IS NOT A MATTER FOR THE COURT TO INVESTIGATE. THE SUFFICIENCY OF PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 15 - : GROUNDS WHICH IN DUCE THE INCOME TAX OFFICER IS, THEREFORE, NOT A JUSTIFIABLE ISSUE. THE EXISTENCE OF THE BELIEF CAN BE CHALLENGED BY THE ASSESSEE BUT NOT THE SUFFICIENCY OF REASONS FOR THE BELIEF. THE EXPRESSION REASON TO BELIEVE DOES NOT MEAN A PURELY SUBJECTIVE SATISFACTION ON THE PART OF THE INCOME TAX OFFICER. THE REASON MUST BE HELD IN GOOD FAITH. IT CANNOT BE MERELY A PRETENCE. THEIR LORDSHIPS FURTHER HELD THAT IT IS OPEN TO THE COURT TO EXAMINE WHETHER THE REASONS FOR THE FORMATION OF THE BELIEF HAVE A RATIONAL CONNECTION WITH OR A RELEVANT BEARING ON THE FORMATION OF THE BELIEF AND ARE NOT EXTRANEOUS OR IRRELEVANT FOR THE PURPOSE OF THE SECTION. 13 . IN THE CASE OF CIT VS. BATRA BHATTA COMPANY (SUPRA), THEI R LORDSHIPS OF THE HON'BLE DELHI HIGH COURT HAVE HELD THAT IT IS NOT JUST THE BELIEF OF THE ASSESSING OFFICER THAT IS MATERIAL, BUT SUCH A BELIEF MUST BE BASED ON CERTAIN REASONS. IT DOES NOT MATTER WHETHER THE BELIEF IS ULTIMATELY PROVED RIGHT OR WRONG, BUT THERE MUST BE SOME MATERIAL UPON WHICH SUCH A BELIEF CAN BE FOUNDED. IN THAT CASE, THE ASSESSING OFFICER REOPENED THE ASSESSMENT HAVING RECORDED THE REASONS THAT THE CLAIM OF THE ASSESSEE THAT LAND IS AGRICULTURAL AND HENCE NOT CAPITAL ASSET REQUIRES MUCH DEEPER SCRUTINY. THEIR LORDSHIPS THEN HELD THAT THE PROCEEDINGS UNDER SECTION 147 ARE NOT TO BE INVOKED AT THE MERE WHIM AND FANCY OF AN ASSESSING OFFICER AND IT HAS TO BE SEEN IN EVERY CASE AS TO WHETHER THE INVOCATION IS ARBITRARY OR REASONABLE. M ERELY BECAUSE THE ASSESSING OFFICER FELT THAT THE ISSUE REQUIRED 'MUCH DEEPER SCRUTINY', IS NOT GROUND ENOUGH FOR INVOKING SECTION 147. IT IS NOT BELIEF PER SE THAT IS A PRE - CONDITION FOR INVOKING SECTION 147 OF THE SAID ACT BUT A BELIEF FOUNDED ON REASONS . 14 . IN THE CASE OF CIT VS. KELVINATOR OF INDIA (SUPRA), THE ISSUE WAS RE - EXAMINED BY THE HON'BLE APEX COURT IN THE LIGHT OF THE AMENDMENTS AND THEIR LORDSHIPS HAVE HELD THAT THE CONCEPT OF 'CHANGE OF OPINION' ON THE PART OF THE ASSESSING OFFICER TO REOPEN TH E ASSESSMENT DOES NOT STAND OBLITERATED AFTER THE SUBSTITUTION OF SECTION 147 OF THE ACT BY THE DIRECT TAX PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 16 - : LAWS (AMENDMENT) ACT, 1987. AFTER THE AMENDMENT, THE ASSESSING OFFICER HAS TO HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, BUT THIS DO ES NOT IMPLY THAT THE ASSESSING OFFICER CAN REOPEN AN ASSESSMENT ON MERE CHANGE OF OPINION. THE CONCEPT OF 'CHANGE OF OPINION' MUST BE TREATED AS AN IN - BUILT TEST TO CHECK THE ABUSE OF POWER. HENCE AFTER APRIL 1, 1989, THE ASSESSING OFFICER HAS POWER TO RE OPEN AN ASSESSMENT, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASON MUST HAVE A LINK WITH THE FORMATION OF THE BELIEF. 15 . IN THE CASE OF ASSTT. CIT VS. STAR FERRO ALLOYS (P) LTD. (SUP RA), THE DELHI BENCH OF THE TRIBUNAL HAS HELD THAT REOPENING OF ASSESSMENT FOR MAKING ROVING ENQUIRIES IS INVALID, AS THE ASSESSING OFFICER NOWHERE RECORDED THAT HE HAS REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. 16 . IN THE CASE OF CIT VS. ORIENT CRA FT LTD. (SUPRA), THE HON'BLE DELHI HIGH COURT HAS HELD THAT IN THE ABSENCE OF ANY TANGIBLE MATERIAL AVAILABLE WITH THE ASSESSING OFFICER TO FORM THE REQUISITE BELIEF REGARDING ESCAPEMENT OF INCOME, THE REOPENING OF THE ASSESSMENT IS UNSUSTAINABLE IN THE EY ES OF LAW . IN THAT CASE, THE ASSESSING OFFICER SIMPLY PERUSED THE RETURN OF INCOME AND FORMED A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. EXCEPT RETURN OF INCOME, NO OTHER TANGIBLE MATERIAL WAS AVAILABLE WITH THE ASSESSING OFFICER TO F ORM A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THEREFORE, THEIR LORDSHIPS HAVE HELD THAT REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT IS NOT VALID. 17 . WE HAVE ALSO CAREFULLY PERUSED THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CA SE OF CIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. (SUPRA), IN WHICH THEIR LORDSHIPS HAVE ALSO EXAMINED THE SCOPE OF REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT WHERE THE ORIGINAL ASSESSMENT WAS FRAMED UNDER SECTION 143(1) OF THE ACT AND THEIR LO RDSHIPS HAVE HELD PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 17 - : THAT AS PER SECTION 147 OF THE ACT, AS SUBSTITUTED W.E.F. 1.4.1989 , IF THE ASSESSING OFFICER FOR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT , IT CONFERS JURISDICTIO N TO REOPEN THE ASSESSMENT WHERE THE CASE I S NOT COVERED BY THE PROVISO TO SECTION 143 OF THE ACT. INTIMATION UNDER SECTION 143(1)(A) OF THE ACT CANNOT BE TREATED TO BE AN ORDER OF ASSESSMENT AND IF THERE IS NO ASSESSMENT UNDER SECTION 143(1)(A) OF THE ACT , QUESTION OF CHANGE OF OPINION DOES NOT A RISE. THE RELEVANT OBSERVATIONS OF THE HON'BLE APEX COURT IS EXTRACTED HEREUNDER: - THE EXPRESSIONS 'INTIMATION' AND 'ASSESSMENT ORDER' HAVE BEEN USED AT DIFFERENT PLACES. THE CONTEXTUAL DIFFERENCE BETWEEN THE TWO EXPRESSIONS HAS TO BE UNDERSTOOD IN THE CONTEXT THE EXPRESSIONS ARE USED. ASSESSMENT IS USED AS MEANING SOMETIMES 'THE COMPUTATION OF INCOME', SOMETIMES 'THE DETERMINATION OF THE AMOUNT OF TAX PAYABLE' AND SOMETIMES 'THE WHOLE PROCEDURE LAID DOWN IN THE ACT FOR IMPOSING LIABILITY UPON THE TAXPAY ER'. IN THE SCHEME OF THINGS THE INTIMATION UNDER S. 143(L)(A) CANNOT BE TREATED TO BE AN ORDER OF ASSESSMENT. THE DISTINCTION IS ALSO WELL BROUGHT OUT BY THE STATUTORY PROVISIONS AS THEY STOOD AT DIFFERENT POINTS OF TIME. UNDER S. I43(L)(A) AS IT STOOD PR IOR TO 1ST APRIL, 1989, THE AO HAD TO PASS AN ASSESSMENT ORDER IF HE DECIDED TO ACCEPT THE RETURN, BUT UNDER THE AMENDED PROVISION, THE REQUIREMENT OF PASSING OF AN ASSESSMENT ORDER HAS BEEN DISPENSED WITH AND INSTEAD AN INTIMATION IS REQUIRED TO BE SENT. VARIOUS CIRCULARS SENT BY THE CBDT SPELL OUT THE INTENT OF THE LEGISLATURE, I.E., TO MINIMIZE THE DEPARTMENTAL WORK TO SCRUTINIZE EACH AND EVERY RETURN AND TO CONCENTRATE ON SELECTIVE SCRUTINY OF RETURNS. IT MAY BE NOTED ABOVE THAT UNDER THE FIRST PROVISO TO THE NEWLY SUBSTITUTED S. 143(1), W.E.F. 1ST JUNE, 1999, EXCEPT AS PROVIDED IN THE PROVISION ITSELF, THE ACKNOWLEDGEMENT OF THE RETURN SHALL BE DEEMED TO BE AN INTIMATION UNDER S. 143(1) WHERE (A) EITHER NO SUM IS PAYABLE BY THE ASSESSEE, OR (B) NO REFUN D IS DUE TO HIM. IT IS SIGNIFICANT THAT THE ACKNOWLEDGEMENT IS NOT DONE BY ANY AO, BUT MOSTLY BY MINISTERIAL STAFF. CAN IT BE SAID THAT ANY 'ASSESSMENT' IS DONE BY THEM ? THE REPLY IS AN EMPHATIC 'NO'. THE INTIMATION UNDER S. 143(L)(A) WAS DEEMED TO BE A N OTICE OF DEMAND UNDER S. 156, FOR THE APPARENT PURPOSE OF MAKING MACHINERY PROVISIONS RELATING TO RECOVERY OF TAX APPLICABLE. BY SUCH APPLICATION ONLY RECOVERY INDICATED TO BE PAYABLE IN THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 18 - : INTIMATION BECAME PERMISSIBLE. AND NOTHING MORE CAN BE INFERRED F ROM THE DEEMING PROVISION. THEREFORE, THERE BEING NO ASSESSMENT UNDER S. 143(L)(A), THE QUESTION OF CHANGE OF OPINION DOES NOT ARISE. SEC. 147 AUTHORISES AND PERMITS THE AO TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT IN COME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE WORD 'REASON' IN THE PHRASE 'REASON TO BELIEVE' WOULD MEAN CAUSE OR JUSTIFICATION. IF THE AO HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE R EASON TO BELIEVE THAT AN INCOME HAD ESCAPED ASSESSMENT. THE EXPRESSION CANNOT BE READ TO MEAN THAT THE AO SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. THE SCOPE AND EFFECT OF S. 147 AS SUBSTITUTED W.E.F. 1ST APRIL, 1989, AS ALS O SS. 148 TO 152 ARE SUBSTANTIALLY DIFFERENT FROM THE PROVISIONS AS THEY STOOD PRIOR TO SUCH SUBSTITUTION. UNDER THE OLD PROVISIONS OF S. 147, SEPARATE ELS. (A) AND (B) LAID DOWN THE CIRCUMSTANCES UNDER WHICH INCOME ESCAPING ASSESSMENT FOR THE PAST ASSESSM ENT YEARS COULD BE ASSESSED OR REASSESSED. TO CONFER JURISDICTION UNDER S. 147(A) TWO CONDITIONS WERE REQUIRED TO BE SATISFIED FIRSTLY THE AO MUST HAVE REASON TO BELIEVE THAT INCOME PROFITS OR GAINS CHARGEABLE TO INCOME - TAX HAVE ESCAPED ASSESSMENT, AND SEC ONDLY HE MUST ALSO HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT HAS OCCURRED BY REASON OF EITHER OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BOTH THESE CONDITIONS W ERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE THE AO COULD HAVE JURISDICTION TO ISSUE NOTICE UNDER S. 148 R/W S. 147(A). BUT UNDER THE SUBSTITUTED S. 147 EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORDS IF THE AO FOR WHATEVER REASON HAS REA SON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IT CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. IT IS HOWEVER TO BE NOTED THAT BOTH THE CONDITIONS MUST BE FULFILLED IF THE CASE FALLS WITHIN THE AMBIT OF THE PROVISO TO S. 147. THE CASE AT HAND IS COVERE D BY THE MAIN PROVISION AND NOT THE PROVISO. SO LONG AS THE INGREDIENTS OF S. 147 ARE FULFILLED, THE AO IS FREE TO INITIATE PROCEEDING UNDER S. 147 AND FAILURE TO TAKE STEPS UNDER S. 143(3) WILL NOT RENDER THE AO POWERLESS TO INITIATE REASSESSMENT PROCEEDI NGS EVEN WHEN INTIMATION UNDER S. 143(1) HAD BEEN THE APPEAL IS ALLOWED WITHOUT ANY ORDERS AS TO COSTS. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 19 - : 18 . OUR ATTENTION WAS ALSO INVITED TO THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S KANODIA & SONS (SUPRA) AND WE FIND THAT IN THAT CASE THE ASSESSING OFFICER HAS REOPENED ASSESSMENT HAVING SIMPLY RECORDED THAT THE FACTS OF THIS YEAR ARE SIMILAR TO THE OTHER ASSESSMENT YEAR IN WHICH ADDITIONS WERE MADE ON ACCOUNT OF DEALING IN SHARES. NOTHING HAS BEEN RECORDED IN THE REAS ONS RECORDED ABOUT ANY TANGIBLE MATERIAL ON THE BASIS OF WHICH THE ASSESSING OFFICER FORMED A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. FOR THE SAKE OF REFERENCE, WE EXTRACT THE REASONS RECORDED BY THE ASSESSING OFFICER AS UNDER: - TH E FACTS OF THIS YEAR ARE SIMILAR TO ASSESSMENT YEAR 1996 - 97 WHEREIN ADDITION OF ABOVE RS.12 L AKHS HAS BEEN MADE ON ACCOUNT OF DEALING IN SHARES. THE BASIS OF ADDITION HAS BEEN DISCUSSED IN DETAIL IN THE BODY OF THE ASSESSMENT ORDER. IN THIS YEAR ALSO LOSS OF RS.14 LAKHS HAS BEEN CLAIMED WHICH IS TO BE DISALLOWED. ALSO THE EXPENSES IN THE HEAD OFFICE ACCOUNT ARE TO BE EXAMINED SINCE HUGE ADDITIONS HAVE BEEN MADE IN ASSESSMENT YEAR 1996 - 97 19 . HAVING EXAMINED THE REASONS RECORDED BY THE ASSESSING OFFICER, THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT THE ASSESSING OFFICER HAD SIMPLY RECORDED FINDINGS IN THE ASSESSMENT ORDER PASSED FOR ASSESSMENT YEAR 1996 - 97 AND VAGUE REFERENCE WAS MADE THAT SIMILAR WAS THE POSITION IN RESPECT OF ASSESSMENT YEAR IN QUESTI ON. THEREFORE, THE REASONS RECORDED BY THE ASSESSING OFFICER WERE NOT HONEST REASONS AND THERE IS NOTHING TO SHOW FROM THIS REASON THAT INCOME HAS ESCAPED ASSESSMENT AND ASSESSMENT HAS BEEN PRIMARILY REOPENED WITH A VIEW TO MAKE ENQUIRIES AND CONDUCT EXAM INATION ON VARIOUS EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT. THE RELEVANT OBSERVATIONS OF THEIR LORDSHIPS ARE EXTRACTED HEREUNDER: - PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 20 - : THE REASONS HAVE BEEN RECORDED ON THE BASIS OF WHICH THE ASSESSING AUTHORITY HAS INITIATED PROCEEDINGS UNDER SECT ION 147 OF THE ACT. IT HAD ALREADY BEEN REPRODUCED ABOVE. FROM A PERUSAL OF THE REASONS RECORDED BY THE ASSESSING OFFICER, WE FIND THAT HE HAD SIMPLY RECORDED THE FINDING IN THE ASSESSMENT ORDER PASSED FOR THE ASSESSMENT YEAR 1996 - 97 AND A VAGUE REFERENCE WAS MADE THAT SIMILAR WAS THE POSITION IN RESPECT OF THE ASSESSMENT YEAR IN QUESTION. THE ASSESSMENT ORDER WAS FOR THE ASSESSMENT YEAR 1996 - 97 ON WHICH OBSERVATION REGARDING THE PREVIOUS ASSESSMENT YEAR HAD BEEN MADE, HAS ALSO BEEN REPRODUCED ABOVE, WHILE QUOTING THE ORDER PASSED BY CIT APPEAL. FROM THE PERUSAL OF THE ORDER IT IS ABSOLUTELY CLEAR THAT THERE IS NO REFERENCE TO ANY TRANSACTION FOR THE ASSESSMENT YEAR 1995 - 96. THE COMMISSIONER OF INCOME TAX WAS, THEREFORE, PERFECTLY JUSTIFIED IN HOLDING THAT T HE REASONS RECORDED BY THE ASSESSING OFFICER WERE NOT HONEST REASON AND THERE IS NOTHING TO SHOW FROM THIS REASON THAT INCOME HAS ESCAPED ASSESSMENT AND ASSESSMENT HAS BEEN PRIMARILY REOPENED WITH A VIEW TO MAKE ENQUIRIES AND CONDUCT EXAMINATION OF VARIOUS EXPENSES DEBITED TO PROFIT AND LOSS ACCOUNT. THIS ORDER HAS BEEN AFFIRMED BY THE TRIBUNAL. 20 . WE HAVE ALSO EXAMINED THE OTHER JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT REFERRED TO BY THE ASSESSEE IN THE CASE OF GERMAN REMEDIES LTD. VS. DCIT (SUPRA), BUT TH IS JUDGMENT IS NOT RELEVANT, AS IT WAS ON THE ISSUE OF GRANTING OF APPROVAL BY THE LD. COMMISSIONER OF INCOME - TAX FOR REOPENING OF ASSESSMENT WITHOUT APPLICATION OF MIND. IN THAT CASE, ASSESSMENT WAS ORIGINALLY FRAMED UNDER SECTION 143(3) OF THE ACT AND T HEREAFTER ASSESSMENT WAS REOPENED AFTER OBTAINING APPROVAL FROM THE LD. COMMISSIONER OF INCOME - TAX. 21 . TURNING TO THE FACTS OF THE CASE, WE FIND THAT TH E ASSESSMENT WAS REOPENED ON THE BASIS OF SPECIFIC FINDING OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2005 - 06 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHILE COMPLETING ASSESSMENT FOR ASSESSMENT YEAR 2005 - 06 AN EXHAUSTIVE ENQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS GIVEN A SPECIFIC FINDING IN THE A SSESSMENT ORDER PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 21 - : THAT THERE WAS NO GENUINE PURCHASE AND SALE OF SHARES IN FINANCIAL YEAR 2001 - 02 RELE VANT TO ASSESSMENT YEAR 2002 - 03. T HEREFORE, CREDIT ENTRIES IN THE BANK ACCOUNT OF THE ASSESSEE PURPORTED TO HAVE BEEN RECEIVED, IS HELD TO BE UNEXPLAINED D EPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE FOR ASSESSMENT YEAR 2002 - 03. IT WAS FURTHER HELD BY THE ASSESSING OFFICER THAT ASSESSEE HAS WRONGLY CLAIMED BENEFIT OF EXEMPTION UNDER SECTION 54F OF THE ACT ON ACCOUNT OF PURCHASE OF PROPERTY IN ASSESSMENT YEAR 2002 - 03. THE RELEVANT FINDING S OF THE ASSESSING OFFICER IN ASSESSMENT YEAR 2005 - 06 IN THE ASSESSMENT ORDER IS EXTRACTED HEREUNDER AGAIN FOR REFERENCE, THOUGH FOR THE SAKE OF REPETITION: - 8. AS MENTIONED EARLIER, THE ASSESSEE HAS AVOIDED TO FURNISH INFOR MATION AND DOCUMENTS TO PROVE GENUINENESS OF PURCHASE AND SALE OF SHARES. HE HAS AVOIDED TO FURNISH COPY OF TRANSFER MEMO, DISTINCTIVE NUMBER OF SHARES, NAME AND ADDRESS OF PERSONS TO WHOM SHARES WERE SOLD AND FROM WHOM THE SHARES WERE PURCHASED. NAME & AD DRESS OF BROKER AT THE TIME OF PURCHASE AND SALE, NAME OF THE COMPANY WHOSE SHARES WERE PURCHASED AND SOLD. WHETHER THE TRANSACTIONS WERE MADE THROUGH STOCK EXCHANGE OR NOT. THESE INFORMATION AND DOCUMENTS WERE IN EXCLUSIVE POSSESSION OF THE ASSESSEE AND B Y VIRTUE OF NON PRODUCTION OF SUCH INFORMATION AND DOCUMENTS, IT IS HELD THAT THERE WAS NO GENUINE PURCHASE AND SALE OF SHARES IN F.Y. 2002 - 03 RELEVANT TO A.Y. 2002 - 03. THEREFORE, THE CREDIT ENTRIES IN THE BANK ACCOUNTS OF THE ASSESSEE PURPORTED TO HAVE BE EN RECEIVED IS HELD TO BE UNEXPLAINED DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE FOR A.Y. :2002 - 03. AS A SEQUEL OF THIS CONCLUSION, IT IS HELD THAT THE ASSESSEE HAS WRONGLY CLAIMED BENEFIT OF EXEMPTION U/S 54F ON A/C OF PURCHASE OF PROPERTY IN A.Y. 2002 - 0 3. FURTHER IT IS ALSO HELD THAT THE AMOUNT TRANSFERRED IN THE CAPITAL GAINS A/C WAS OUT OF UNEXPLAINED DEPOSIT RECEIVED BY THE ASSESSEE AND NOT OUT OF THE SALE PROCEEDS OF THE SHARES. IN VIEW OF THIS, ACTION U/S 148 FOR A.Y. 2002 - 03 WILL BE TAKEN IN THE HA NDS OF THE ASSESSEE AS PER LAW.' 22 . WHEN THERE IS A SPECIFIC FINDING BY THE ASSESSING OFFICER IN OTHER ASSESSMENT YEAR THAT THE ASSESSEE HAS RAISED WRONG CLAIM OF EXEMPTION UNDER SECTION 54F OF THE ACT ON ACCOUNT OF PURCHASE IN PROPERTY , THAT IS SUFFICIENT MA TERIAL FOR THE ASSESSING OFFICER TO FORM A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN THAT YEAR, WHICH HAS BEEN PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 22 - : REFERRED BY THE ASSESSING OFFICER. IN THE INSTA NT CASE, THE ASSESSING OFFICER HA S NOT CONFINED HIMSELF ONLY TO THE FINDINGS RECORDED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FOR 2005 - 06, BUT THE ASSESSING OFFICER HAS FURTHER EXAMINED THE RETURN OF INCOME FILED BY THE ASSESSEE IN THE LIGHT OF THE FINDINGS GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FOR ASSESS MENT YEAR 2005 - 06 AND THERE AFTER HE FORMED A BELIEF THAT THE INCOME CHARGEABLE TO TAX TO THE EXTENT OF RS.41,81,645/ - HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. THEREFORE, THE BELIEF FORMED BY THE ASSESSING OFFICER CANNOT BE SAID THAT IT HAS BEEN FORMED SIMPLY ON THE BASIS OF OBSERVATIONS OF THE ASSESSING OFFICER IN OTHER ASSESSMENT YEAR. WE ARE, THEREFORE , OF THE VIEW THAT REOPENING OF THE ASSESSMENT IN THE INSTANT CASE IS VALID, AS IT HAS BEEN DONE AFTER FORMING A BELIEF THAT I NCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. WE , ACCORDINGLY , HOLD THAT THE REOPENING OF ASSESSMENT IS VALID AND WE SET ASIDE THE ORDER OF THE LD. CIT(A) IN THIS REGARD. 23 . SINCE THE LD. CIT(A) HAS NOT ADJUDICATED THE APPEAL ON MERIT, WE RESTORE THE MAT TER TO HIS FILE WITH A DIRECTION TO RE - ADJUDICATE THE APPEAL ON MERIT ON ALL THE ISSUES RAISED BEFORE HIM BY PASSING A REASONED ORDER. NEEDLESS TO MENTION HERE THAT PROPER OPPORTUNITY BE AFFORDED TO THE ASSESSEE WHILE ADJUDICATING THE APPEAL. 24 . IN THE RESULT, APPEAL OF THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 10.7.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10 TH JU LY , 2014 JJ: 23 - 2606 PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 23 - : CO PY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )