I.T.O.- 4(4), Agra V. Smt. Urmila Singhal, Agra

ITA 286/AGR/2011

• Counselvise Citation: 28620314 RSA 2011
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-06-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 27-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Keywords: Reopening of assessment; Unexplained investment; Gift; Income from undisclosed sources; Source of fund; Initiation of penalty proceedings; Accommodation entries; Reason to believe; Reassessment proceedings; Set aside
• Section: 271(1)(c); 40A(3); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.286/AGR/2011 ASSESSMENT YEAR: 2003-04 INCOME TAX OFFICER 4(4), VS. SMT. URMILA SINGHAL , AGRA. 9/109, JATI KATRA, AGRA. (PAN: ABNPS 7245 K). C.O. NO.22/AGR/2012 (IN ITA NO.286/AGR/2011) ASSESSMENT YEAR: 2003-04 SMT. URMILA SINGHAL, VS. INCOME TAX OFFICER 4( 4), 9/109, JATI KATRA, AGRA. AGRA. (PAN: ABNPS 7245 K). (APPELLANTS) (RESPONDENTS) REVENUE BY : SHRI A.K. SHARMA, JR. D.R. ASSESSEE BY : SHRI RAJENDRA SHARMA, ADVOCATE DATE OF HEARING : 21.06.2012 DATE OF PRONOUNCEMENT OF ORDER : 20.07.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION B Y THE ASSESSEE HAVE BEEN FILED AGAINST THE ORDER DATED 02.05.2011 PASSE D BY THE LD. CIT(A)-II, AGRA FOR THE ASSESSMENT YEAR 2003-04. ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 2 2. THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL IS IN RESPECT OF DELETION OF ADDITION OF RS.10,29,566/- UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) ON ACCOUNT OF UNEXPLAINED INCOME SHOWN AS SALE CONSIDERATION OF SHARES. 3. THE GROUNDS RAISED IN THE CROSS OBJECTION BY THE ASSESSEE READ AS UNDER :- 1. THAT THE NOTICE ISSUED U/S 147 OF INCOME TAX AC T FOR RE-OPENING OF THE CLOSED ASSESSMENT IS ILLEGAL, RESULTANT TO A SSESSMENT COMPLETED U/S 148/143 IS LIABLE TO BE ANNULLED BEING IN THE O RIGINAL RETURN FILED, THE ASSESSEE HAS DISCLOSED FULLY AND TRULY ALL THE MATERIAL FACTS, NECESSARY FOR HER ASSESSMENT, IN THE REASON RECORDE D U/S 147, NO ANY SPECIFIC MATERIAL RELATED TO THE INCOME ESCAPED ASS ESSMENT WAS AVAILABLE WITH THE AO FOR RE-OPENING OF THE CLOSED ASSESSMENT, ASSESSMENT RE-OPENED U/S 147 IS HIGHLY UNJUSTIFIED AND ILLEGAL. NOTICE ISSUED U/S 148 OF INCOME TAX ACT IS LIABLE TO BE AN NULLED. 2. WHILE REOPENING OF THE ASSESSMENT U/S 147, THE A UTHORITIES BELOW HAVE COMPLETELY IGNORED THE FACTS, THAT THE R EASONS RECORDED FOR RE-OPENING OF THE ASSESSMENT WERE IN RESPECT OF RS. 70,000/- RECEIVED FROM AYUSHI BROKER (PART OF THE SHORT TERM CAPITAL GAIN DULY SHOWN IN THE RETURN OF INCOME FILED) WHILE IN THE RE-ASSESSM ENT THE ADDITION WAS MADE AT RS.1029566/- IN RESPECT OF OTHER TRANSACTIO NS IN RESPECT OF THE AMOUNT RECEIVED FROM DEEPAK SECURITY, THUS THE REAS ONS RECORDED FOR RE-OPENING OF THE ASSESSMENT WERE NOT RELIABLE, SPE CIFIC, RELATED WITH THE INCOME ALLEGED TO BE ESCAPED, NOTICE ISSUED U/S 148 ON THE ABOVE REASONS IS NOT AS PER LAW, LIABLE TO BE CANCELLED. 4. THE BRIEF FACTS OF THE CASE ARE THAT INFORMATION WAS RECEIVED FROM INVESTIGATION WING, AGRA THAT THE ASSESSEE HAD TAKE N BOGUS ENTRIES OF SALE OF SHARES. THE ASSESSING OFFICER (A.O.) AFTER RECORDI NG THE REASONS OF RE-OPENING ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 3 ISSUED NOTICE UNDER SECTION 148 OF THE ACT DATED 31 .03.2008. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE A.O. ADDED RS.10,2 9,566/- UNDER SECTION 68 OF THE ACT ON THE GROUND THAT THE ASSESSEE PURCHASED 9000 SHARES FOR RS.90,000/- OF G.L. COMMERCIAL LIMITED @ RS.10/- PER SHARE AND THE SAME WAS SOLD FOR RS.10,29,566/- TO M/S. DEEPAK SECURITIES. AS PER THE INVESTIGATIO N WING OF THE DEPARTMENT, THESE TRANSACTIONS WERE BOGUS. THE A.O. ACCORDINGLY HELD THAT THE SHARE TRANSACTIONS ARE BOGUS, THEREFORE, A SUM OF RS.10,29,566/- IS ASSESS ABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. THE A.O. MADE ADDITION UNDER SECTION 68 OF THE ACT. 5. THE ASSESSEE CHALLENGED THE ORDER OF THE A.O. ON LEGAL GROUND AS WELL AS ON MERIT. IT WAS CHALLENGED BEFORE THE CIT(A) THAT NO TICE UNDER SECTION 148 OF THE ACT WAS ISSUED BY THE A.O. AFTER FOUR YEARS. THE R E-OPENING WAS ALSO CHALLENGED BEFORE THE CIT(A) ON THE GROUND THAT THERE WERE NO REASONS TO BELIEVE, DIRECTLY RELATED TO THE MATERIAL BEFORE THE A.O. WHICH IS TO BE SPECIFIC, RELIABLE, RELEVANT AND DIRECTLY RELATED TO THE ASSESSEE, FOR THE PARTICULA R ASSESSMENT YEAR AND ALSO OF THE PARTICULAR TRANSACTION, WAS AVAILABLE WITH THE A.O. FOR RECORDING OF THE REASONS, REQUIRED FOR REOPENING OF THE COMPLETED ASSESSMENT UNDER SECTION 147 OF THE ACT. IT WAS SUBMITTED BEFORE THE CIT(A) THAT ON THE BASI S OF WHICH THE A.O. REOPENED THE ASSESSMENT BUT LATER ON THE A.O. DID NOT MAKE A NY ADDITION WHILE COMPLETING THE REASSESSMENT. IN THE REASONS RECORDED, THE A.O . HAS MENTIONED THAT THE INFORMATION HAS BEEN RECEIVED TO THE A.O. IN RESPEC T OF AMOUNT OF RS.70,000/- IN ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 4 BOOKS OF ACCOUNT OF THE ASSESSEE WHICH WAS RECEIVED FROM AYUSHI STOCK BROKER (P) LTD., SANJAY PLACE, AGRA WHILE COMPLETING REASS ESSMENT THE A.O. MADE ADDITION OF RS.10,29,566/- IN RESPECT OF SALE PROCE ED OF SHARES RECEIVED THROUGH DEEPAK SECURITIES, NEW DELHI. THERE WAS DIFFERENCE IN MATERIAL ON THE BASIS OF WHICH THE REASONS WERE RECORDED AND LATER ON THE IN COME ALLEGED TO BE TREATED IN RESPECT OF INCOME ESCAPED ASSESSMENT. THUS, THE RE ASONS RECORDED WERE NOT THE SAME OR RELATED TO THE INCOME WHICH THE A.O. HAS AS SESSED IN THE REASSESSMENT COMPLETED UNDER CONSIDERATION. APART FROM THE ABOV E, THE ASSESSEE HAS ALSO CHALLENGED REOPENING ON OTHER GROUNDS ALSO. THE CI T(A) FOLLOWED THE DECISION IN THE CASE OF BRIJ MOHAN AGARWAL AND HELD THAT THE A. O. WAS RIGHT IN ISSUING NOTICE UNDER SECTION 148 OF THE ACT AND THE SAME HAS TO BE HELD AS VALID. ACCORDINGLY, THE GROUND OF APPEAL RAISED BY THE ASSESSEE WAS DISMISS ED. HOWEVER, THE CIT(A) WHILE DELETING THE ADDITION ON MERIT FOLLOWED THE D ECISION OF I.T.A.T. AGRA BENCH. IT IS RELEVANT TO NOTE THAT ON SIMILAR SET OF FACTS THE CIT(A) HAS FOLLOWED THE SAME DECISION OF I.T.A.T., AGRA BENCH IN OTHER CASES. T HE I.T.A.T., AGRA BENCH FOUND THAT THE CIT(A) DELETED THE ADDITION WITHOUT RECORD ING COMPLETE FACTS OF THE CASE. THE I.T.A.T., AGRA BENCH HAS SENT BACK THOSE MATTER S TO THE FILE OF REVENUE AUTHORITIES. 6. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE ASSESSEE HAS RAISED LEGAL GROUND IN CROSS OBJEC TION, THEREFORE, WE THINK IT ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 5 PROPER TO FIRST DECIDE THE GROUNDS RAISED IN CROSS OBJECTION. THE SHORT LEGAL ISSUE RAISED BY THE ASSESSEE IN CROSS OBJECTION WHETHER U NDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE A.O. RECORDED REASON FOR ESCAPEMENT OF INCOME BUT WHILE COMPLETING RE-OPENING ASSESSMENT THE A.O. DID NOT MAKE ANY ADDITION ON REASONS RECORDED AND MADE DIFFERENT ADDITION, THE A CTION OF THE A.O. IS CORRECT OR NOT ? TO EXAMINE THIS ISSUE, WE WOULD LIKE TO REPR ODUCE THE REASONS RECORDED BY THE A.O. OF WHICH COPY HAS BEEN PLACED AT PAGE NO.3 OF THE PAPER BOOK, READS AS UNDER :- REASON FOR INITIATING PROCEEDINGS U/S. 147 OF THE IT ACT. ON THE BASIS OF INFORMATION RECEIVED FROM ADDL. DIT (INV), AGRA VIDE HIS LETTER F.NO. ADDL.DIT(INV.)/AGRA/ACCOM.ENT RIES/2007-08 DATED 28.03.2008 THROUGH ADDL. CIT, RANGE-4, AGRAS LETTER F.NO. ADDL.CIT/R-4/AGRA/ACCOMMODATIONA ENTRIES/2007-08 DA TED 29.03.2008, THAT THE ASSESSEE HAS OBTAINED ACCOMMOD ATION ENTRIES AND RECEIVED AN AMOUNT OF RS.70,000/- ON 23.08.2002 THROUGH INSTRUMENT NO.58777 BY ARRANGING/OBTAINING UNRELIAB LE DOCUMENTS ETC. IN THE FORM OF SHARE APPLICATION MONEY/CAPITAL GAINS/GIFTS ETC. DURING THE F.Y. 2002-03 FROM AYUSHI STOCK BROKERS P VT. AND THE SAME IS DEPOSITED IN HER BANK SBI, SEO KA BAZAR, AGRA. ON THE BASIS OF INFORMATION RECEIVED FROM ADDL. DIT (INV.), AGRA VIDE HIS LETTER DATED 28.03.2008, I HAVE REASO NS TO BELIEVE THAT THE INCOME EARNED AS UNEXPLAINED ENTRY FOR RS.70,00 0/- HAS ESCAPED ASSESSMENT AND LIABLE TO BE TAXED IN F.Y. 2002-2003 RELEVANT TO A.Y. 2003-04. 7. ON PERUSAL OF RECORDS, WE FIND THE ADMITTED FACT S THAT THE CASE OF THE ASSESSEE WAS RE-OPENED ON THE GROUND THAT THE ASSESSEE HAS O BTAINED ACCOMMODATION ENTRIES ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 6 AND RECEIVED AMOUNT OF RS.70,000/- ON 23.08.2002 TH ROUGH UNRELIABLE DOCUMENTS IN THE FORM OF SHARE APPLICATION MONEY/CAPITAL GAIN S/GIFTS ETC. DURING THE F.Y. 2002-03 FROM AYUSHI STOCK BROKERS PVT. LTD. AND THE SAME WAS DEPOSITED IN STATE BANK OF INDIA, SEO KA BAZAAR, AGRA. THE A.O. HAS R EASON TO BELIEVE THAT THE INCOME EARNED IS UNEXPLAINED AND ENTRY FOR RS.70,00 0/- HAS ESCAPED ASSESSMENT AND LIABLE TO BE TAXED FOR A.Y. 2003-04. THE A.O. MADE ADDITION OF RS.10,29,566/- ON THE GROUND THAT THE ASSESSEE PURC HASED 9000 SHARES FOR RS.90,000/- OF M/S. G.L. COMMERCIAL LIMITED AND SAM E WAS SOLD TO M/S. DEEPAK SECURITY, ANSARI ROAD, DARYAGANJ, DELHI FOR RS.10,2 9,566/-. THUS, IT IS CLEAR THAT THE ADDITION MADE BY THE A.O. WAS DIFFERENT THAN RE ASONS RECORDED UNDER SECTION 148 OF THE ACT. TO EXAMINE THIS ISSUE, WE WOULD LI KE TO DISCUSS SOME JUDICIAL PRONOUNCEMENTS WHICH ARE AS UNDER :- 7.1 HONBLE SUPREME COURT IN THE CASE OF SHEO NATH SINGH VS. APPELLATE ASST. COMMISSIONER OF INCOME-TAX, 82 ITR 147 HELD THE WORDS REASON TO BELIEVE SUGGEST THAT THE BEL IEF MUST BE THAT OF AN HONEST AND REASONABLE PERSON BASED UPON REASONABLE GROUNDS AND THAT THE INCOME-TAX OFFICER MAY ACT ON DIRECT OR CIRCUMSTANTIAL EVIDENCE BUT NOT ON MERE SUSPICION, GOSSIP OR RUMOUR. THE INCOME-TAX OFFICER WOULD BE ACTING WITHOUT JURI SDICTION IF THE REASON FOR HIS BELIEF THAT THE CONDITIONS ARE SATIS FIED DOES NOT EXIST OR IS NOT MATERIAL OR RELEVANT TO THE BELIEF REQUIRED BY THE SECTION. THE COURT CAN ALWAYS EXAMINE THIS ASPECT THOUGH THE DEC LARATION OR ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 7 SUFFICIENCY OF THE REASONS FOR THE BELIEF CANNOT BE INVESTIGATED BY THE COURT. 7.2 HONBLE DELHI HIGH CURT IN THE CASE OF CIT VS. ATUL JAIN & SMT. VINITA JAIN, 299 ITR 383 HELD 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 LED H IM TO BELIEVE THAT A NOTICE SHOULD BE ISSUED. AFTER A FOUNDATION BASED ON INFORMATION IS SET UP, THERE MUST STILL BE SOME REASONS WHICH WARR ANT THE HOLDING OF A BELIEF SO AS TO NECESSITATE THE ISSUANCE OF A NOT ICE UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961. THE ASSESSEE PURCHASED SHARES AND SUBSEQUENTLY SOL D THESE SHARES AT A MUCH HIGHER VALUE. FOR THE ASSESSMENT Y EAR 1997-98, 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 COMMISSIONE R WAS SATISFIED THAT INCOME HAD ESCAPED ASSESSMENT, HE WROTE YES. THEREAFTER, THE ASSESSING OFFICER REASSESSED THE INCOME AND CHARGED INTEREST AND LEVIED PENALTY. THE COMMISSIONER (APPEALS) ALLOWED RELIEF PARTLY BUT THE TRIBUNAL CONCLUDED THE ISSUE IN FAVOUR OF THE A SSESSEES. ON APPEAL: HELD, DISMISSING THE APPEALS, THAT THE ONLY INFORMATION W AS THAT THE ASSESSEE HAD TAKEN A BOGUS ENTRY OF CAPITAL GAI NS BY PAYING CASH ALONG WITH SOME PREMIUM FOR TAKING A CHEQUE FOR THA T AMOUNT. THE INFORMATION DID NOT INDICATE THE SOURCE OF THE CAPI TAL GAINS WHICH IN THIS CASE WERE SHARES. THERE WAS NO INFORMATION WHI CH SHARES HAD BEEN TRANSFERRED AND WITH WHOM THE TRANSACTION HAD TAKEN PLACE. THE ASSESSING OFFICER DID NOT VERIFY THE CORRECTNESS OF THE INFORMATION RECEIVED BY HIM BUT MERELY ACCEPTED THE TRUTH OF TH E VAGUE INFORMATION IN A MECHANICAL MANNER. THE ASSESSING O FFICER HAD NOT ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 8 EVEN RECORDED HIS SATISFACTION ABOUT THE CORRECTNES S OR OTHERWISE OF THE INFORMATION FOR ISSUING A NOTICE UNDER SECTION 148. WHAT HAD BEEN RECORDED BY THE ASSESSING OFFICER AS HIS REASONS T O BELIEVE WAS NOTHING MORE THAN A REPORT GIVEN BY HIM TO THE COMM ISSIONER. THE SUBMISSION OF THE REPORT WAS NOT THE SAME AS RECORD ING OF REASONS TO BELIEVE FOR ISSUING A NOTICE. THE ASSESSING OFFICER HAD CLEARLY SUBSTITUTED FORM FOR SUBSTANCE AND THEREFORE THE AC TION OF THE ASSESSING OFFICER WAS NOT SUSTAINABLE. 7.3 HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SMT. PARAMJIT KAUR, 311 ITR 38 HELD THE ASSESSEE FILED HER ORIGINAL RETURN DECLARING NIL INCOME. THE ASSESSING OFFICER INITIATED REASSESSMENT PROCEE DINGS ON THE BASIS OF INFORMATION RECEIVED FROM THE SURVEY CIRCLE THAT THE ASSESSEE HAD GOT PREPARED A DEMAND DRAFT FOR A SUM OF RS.83,040 WHICH WAS NOT ACCOUNTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. ON APPEAL BY THE ASSESSEE THE FIRST APPELLATE AUTHORITY UPHELD THE V ALIDITY OF THE NOTICE UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961, BUT SET ASIDE THE ASSESSMENT ON THE ADDITION MADE BY THE ASSESSING OF FICER AND REMITTED THE MATTER TO HIM TO FRAME A FRESH ASSESSM ENT. ON SECOND APPEAL, THE TRIBUNAL HELD THAT SINCE THE ASSESSING OFFICER FAILED TO INCORPORATE THE MATERIAL AND ITS SATISFACTION FOR R EOPENING THE ASSESSMENT, THE SAME WAS INVALID. ON A REFERENCE : HELD, THAT THE ASSESSING OFFICER HAD NOT EXAMINED THE INFORMATION RECEIVED FROM THE SURVEY CIRCLE BEFORE RECORDING HIS OWN SATISFACTION OF ESCAPED INCOME AND INITIATING REASS ESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAD THUS ACTED O NLY ON THE BASIS OF SUSPICION AND IT COULD NOT BE SAID THAT IT WAS BASE D ON BELIEF THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED INCOME. THE AS SESSING OFFICER HAD TO ACT ON THE BASIS OF REASONS TO BELIEVE AND NOT ON REASONS TO SUSPECT. THE TRIBUNAL RIGHTLY CONCLUDED THAT THE A SSESSING OFFICER HAD FAILED TO INCORPORATE THE MATERIAL AND HIS SATI SFACTION FOR REOPENING THE ASSESSMENT AND THEREFORE THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT FOR REASSESSMENT PROCEEDINGS WAS NOT VALID. ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 9 7.4 HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF JAMNA LAL KABRA VS. ITO & OTHERS, 69 ITR 461 (ALL) HELD THE BUSINESS OF MANUFACTURING DAL CARRIED ON BY TH E PETITIONER-FAMILY WAS PARTITIONED AND WAS TAKEN OVE R BY A PARTNERSHIP. THE OTHER PROPERTIES OF THE FAMILY WHI CH CONTAINED, INTER ALIA, A DAL MILL CONTINUED AS FAMILY PROPERTIES. TH E PARTNERSHIP HAD TAKEN ON HIRE THE DAL MILL OWNED BY THE PETITIONER- FAMILY AND IN IS ASSESSMENT FOR 1963-64 SOUGHT TO DEDUCT THE RENT PA ID THEREFOR. THOUGH THE INCOME-TAX 0FFICER AND THE APPELLATE ASS ISTANT COMMISSIONER DISALLOWED THE CLAIM, THE TRIBUNAL ALL OWED THE SAME. THEREAFTER, AFTER OBTAINING THE SANCTION OF THE COM MISSIONER, THE INCOME-TAX OFFICER ISSUED A NOTICE UNDER SECTION 14 8 FOR REOPENING THE ASSESSMENT ON THE PETITIONER UNDER SECTION 147( A). THE PETITIONER APPLIED TO THE HIGH COURT FOR THE ISSUE OF A WRIT O F CERTIORARI TO QUASH THE SAID NOTICE. HELD, (L) THE RECORDING OF REASONS BEFORE ISSUING A NOTICE UNDER SECTION 148 IS MANDATORY AND PREREQUISITE TO THE AS SUMPTION OF JURISDICTION BY THE OFFICER FOR INITIATING PROCEEDI NGS FOR ASSESSING OR REASSESSING INCOME WHICH HAS ESCAPED ASSESSMENT; (2) THE REASONS ARE OF PARTICULAR SIGNIFICANCE WHE N ACTION IS TAKEN UNDER SECTION 147(A) BECAUSE THEY INDICATE TH E REASONS WHICH THE OFFICER HAD IN MIND FOR BELIEVING THAT INCOME H AD ESCAPED ASSESSMENT BY REASON OF ONE OR OTHER DEFAULT OF THE ASSESSEE SPECIFIED THEREIN; (3) IN ORDER TO JUSTIFY ACTION UNDER SECTION 147(A ), IT IS NOT OPEN TO THE OFFICER TO REFER TO REASONS OTHER THAN THOSE RECORDED BY HIM PURSUANT TO SECTION 148(2); (4) IN THE INSTANT CASE THERE IS NOTHING IN THE RE ASONS SO RECORDED BY THE OFFICER ATTRACTING THE TERMS IN WH ICH SECTION 147(A) IS SET OUT SO FAR AS THE PETITIONER IS CONCERNED ; AND (5) HENCE, THE NOTICE UNDER SECTION 148 AND THE PR OCEEDINGS TAKEN PURSUANT THERETO HAVE TO BE QUASHED. ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 10 7.5 HONBLE HIGH COURT OF DELHI IN THE CASE OF RANB AXY LABORATORIES LIMITED VS. CIT, 336 ITR 136 (DELHI) HELD THE ASSESSEE-COMPANY WAS ENGAGED IN THE BUSINESS O F MANUFACTURE AND TRADING OF PHARMACEUTICALS PRODUCTS . THE ASSESSING OFFICER ACCEPTED THE RETURNED INCOME OF THE ASSESSE E BUT INITIATED REASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE I NCOME-TAX ACT, 1961, IN RESPECT OF CLUB FEES, GIFTS AND PRESENTS A ND PROVISION FOR LEAVE ENCASHMENT. WHILE COMPLETING THE REASSESSMENT HOWEVER, HE DID NOT MAKE ADDITIONS ON ACCOUNT OF THESE ITEMS BUT IN STEAD REDUCED THE DEDUCTIONS UNDER SECTIONS 80HH AND 80-1. THE COMMIS SIONER (APPEALS) HELD THAT IN THE ORIGINAL ASSESSMENT THE POWERS OF THE ASSESSING OFFICER WERE LIMITED TO THE EXTENT OF PRI MA FACIE ADJUSTMENT ONLY. ON THE MERITS OF THE ADDITIONS, THE COMMISSIO NER (APPEALS) FOLLOWED HIS ORDER OF ASSESSMENT YEAR 1996-97. ON A PPEAL THE TRIBUNAL HELD THAT THE ASSUMPTION OF JURISDICTION B Y INITIATING REASSESSMENT PROCEEDINGS WAS VALID AND REASSESSMENT COULD NOT BE ANNULLED. IT WAS A SEPARATE ISSUE THAT AFTER VALIDL Y ASSUMING JURISDICTION THE POINTS ON WHICH REASSESSMENT WAS P ROPOSED WERE NOT ADDED/DISALLOWED. AT THE SAME TIME UNDER SECTION 14 7 THE ASSESSING OFFICER COULD ALSO ASSESS SUCH INCOME WHICH HAD ESC APED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE C OURSE OF THE PROCEEDINGS UNDER SECTION 147. ON APPEAL: HELD, THAT SECTION 148 WAS SUPPLEMENTARY AND COMPLE MENTARY TO SECTION 147. SUB-SECTION (2) OF SECTION 148 MANDATE S REASONS FOR ISSUANCE OF NOTICE BY THE ASSESSING OFFICER AND SUB -SECTION (1) MANDATES SERVICE OF NOTICE TO THE ASSESSEE BEFORE T HE ASSESSING OFFICER PROCEEDS TO ASSESS, REASSESS OR RECOMPUTE ESCAPED I NCOME. SECTION 147 MANDATES RECORDING OF REASONS TO BELIEVE BY THE ASSESSING OFFICER THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED ASSES SMENT. ALL THESE CONDITIONS WERE REQUIRED TO BE FULFILLED TO ASSESS OR REASSESS THE ESCAPED INCOME CHARGEABLE TO TAX. UNDER EXPLANATION 3 IF DURING THE COURSE IF THE PROCEEDINGS THE ASSESSING OFFICER COM ES TO THE CONCLUSION THAT SOME ITEMS HAVE ESCAPED ASSESSMENT, THEN NOTWITHSTANDING THAT THOSE ITEMS WERE NOT INCLUDED IN THE REASONS TO BELIEVE AS RECORDED FOR INITIATION OF THE PROCEEDIN GS AND THE NOTICE, HE WOULD BE COMPETENT TO MAKE ASSESSMENT OF THOSE ITEM S. FOR EVERY NEW ISSUE COMING BEFORE THE ASSESSING OFFICER DURIN G THE COURSE OF ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 11 PROCEEDINGS OF ASSESSMENT OR REASSESSMENT OF ESCAPE D INCOME, AND WHICH HE INTENDS TO TAKE INTO ACCOUNT, HE WOULD BE REQUIRED TO ISSUE A FRESH NOTICE UNDER SECTION 148. THE ASSESSING OFFIC ER WAS SATISFIED WITH THE JUSTIFICATIONS GIVEN BY THE ASSESSEE REGAR DING THE ITEMS OF CLUB FEES, GIFTS AND PRESENTS AND PROVISION FOR LEA VE ENCASHMENT, BUT DURING THE ASSESSMENT PROCEEDINGS, HE FOUND THE DED UCTION UNDER SECTIONS 80HH AND 80-1 AS CLAIMED BY THE ASSESSEE T O BE NOT ADMISSIBLE. HE CONSEQUENTLY PROCEEDED TO MAKE DEDUC TIONS UNDER SECTIONS 80HH AND 80-1 AND ACCORDINGLY REDUCED THE CLAIM ON THESE ACCOUNTS. THE VERY BASIS OF INITIATION OF PROCEEDIN GS FOR WHICH REASONS TO BELIEVE WERE RECORDED WAS INCOME ESCAPIN G ASSESSMENT IN RESPECT OF ITEMS OF CLUB FEES, GIFTS AND PRESENTS, ETC., BUT WHILE THESE ITEMS WERE NOT DISTURBED, THE ASSESSING OFFICER PRO CEEDED TO REDUCE THE CLAIM OF DEDUCTION UNDER SECTIONS BOHR AND 80-1 WHICH WAS NOT PERMISSIBLE. THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE ASSESSING OFFICER HAD THE JURISDICTION TO REASSESS ISSUES OTH ER THAN THE ISSUES IN RESPECT OF WHICH PROCEEDINGS WERE INITIATED BUT HE WAS NOT JUSTIFIED WHEN THE REASONS FOR THE INITIATION OF THOSE PROCEE DINGS CEASED TO SURVIVE. 7.6 HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD, 331 ITR 236 (BOM) HELD (HEAD NOTE) EXPLANATION 3 TO SECTION 147 OF THE INCOME TAX ACT , 1961, WAS INSERTED BY THE FINANCE (NO.2) ACT OF 2009, WITH EF FECT FROM APRIL 1, 1989. THE EFFECT OF THE EXPLANATION IS THAT EVEN T HOUGH THE NOTICE THAT HAS BEEN ISSUED UNDER SECTION 148 CONTAINING THE RE ASONS FOR REOPENING THE ASSESSMENT DOS NOT CONTAIN A REFERENC E TO A PARTICULAR ISSUE WITH REFERENCE TO WHICH INCOME HAS ESCAPED AS SESSMENT, THE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE WHICH HAS ESCAPED ASSESSMENT, WHEN SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDING S. PARLIAMENT HAVING USED THE WORDS ASSESS OR REASSESS SUCH INCO ME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED AS SESSMENT, THE WORDS AND ALSO CANNOT BE READ AS BEING IN THE ALT ERNATIVE. ON THE CONTRARY, THE CORRECT INTERPRETATION WOULD BE TO RE GARD THOSE WORDS AS BEING CONJUNCTIVE. IT IS OF SOME SIGNIFICANCE THAT PARLIAMENT HAS NOT USED THE WORD OR. THE LEGISLATURE DID NOT REST C ONTENT BY MERELY USING THE WORD AND. THE WORDS AND AS WELL AS ' ALSO' HAVE BEEN ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 12 USED TOGETHER AND IN CONJUNCTION. EVIDENTLY, WHAT P ARLIAMENT INTENDS BY USE OF THE WORDS AND ALSO IS THAT THE ASSESSIN G OFFICER, UPON THE FORMATION OF A REASON TO BELIEVE UNDER SECTION 147 AND THE ISSUANCE OF A NOTICE UNDER SECTION 148(2) MUST ASSESS OR REASSE SS : (I) SUCH INCOME; AND ALSO (II) ANY OTHER INCOME CHARGEABLE T O TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SU BSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. EXPLA NATION 3 DOES NOT AND CANNOT OVERRIDE THE NECESSITY OF FULFILLING THE CONDITIONS SET OUT IN THE SUBSTANTIVE PART OF SECTION 147. AN EXPLANATIO N TO A STATUTORY PROVISION IS INTENDED TO EXPLAIN ITS CONTENTS AND C ANNOT BE CONSTRUED TO OVERRIDE IT OR RENDER THE SUBSTANCE AND CORE NUG ATORY. SECTION 147 HAS THIS EFFECT THAT THE ASSESSING OFFICER HAS O AS SESS OR REASSESS THE INCOME (SUCH INCOME) WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAP ED ASSESSMENT AND WHICH COMES TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS. HOWEVER, IF AFTER ISSUING A NOTICE UNDER SECTION 14 8, HE ACCEPTS THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOM E WHICH HE HAS INITIALLY FORMED A REASON TO BELIEVE HAD ESCAPED AS SESSMENT, HAS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS NOT OP EN TO HIM INDEPENDENTLY TO ASSESS SOME OTHER INCOME. IF HE I NTENDS TO DO SO, A NOTICE UNDER SECTION 148 WOULD BE NECESSARY IN THE EVENT OF CHALLENGE BY THE ASSESSEE. THE EFFECT OF SECTION 147 AS IT N OW STANDS AFTER THE AMENDMENT OF 2009 CAN THEREFORE, BE SUMMARIZED AS F OLLOWS : (I) THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR ; (II) UPON THE FORMATION OF THAT BELIEF AND BEFORE H E PROCEEDS TO MAKE AN ASSESSMENT, REASSESSMENT OR RECOMPUTATION, THE A SSESSING OFFICER HAS TO SERVE ON THE ASSESSEE A NOTICE UNDER SUB-SEC TION (1) OF SECTION 148 (III)_ THE ASSESSING OFFICER MAY ASSESS OR REA SSESS SUCH INCOME, WHICH HE HAS REASON TO BELIEVE, HAS ESCAPED ASSESSM ENT AND ALSO ANY OTHER INCOME, CHARGEABLE TO TAX WHICH HAS ESCAPED A SSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURS E OF THE PROCEEDINGS UNDER THE SECTION; AND (IV) THOUGH THE NOTICE UNDER SECTION 148(2) DOES NOT INCLUDE A PARTICULAR ISSUE WITH RESPECT TO WHICH INCOME HAS ESCAPED ASSESSMENT, HE MAY NONE TH E LESS, ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE WHICH H AS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 13 7.7 HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF CIT VS. SHRI RAM SINGH, 306 ITR 343 (RAJ) HELD PURSUANT TO SEARCH OPERATIONS, THE ASSESSING OFFIC ER ISSUED A NOTICE TO THE ASSESSEE UNDER SECTION 148 OF THE INC OME TAX ACT, 1961, ON THE GROUND THAT THE ASSESSEE HAD PURCHASED A PLO T OF LAND FROM UNDISCLOSED SOURCES OF INCOME. THE ASSESSEE EXPLAI NED THAT HE HAD PURCHASED THE LAND FROM HIS AGRICULTURAL INCOME WHI CH WAS LYING DEPOSITED WITH A COMPANY AND FILED THE RETURN ACCOR DINGLY. THE ASSESSING OFFICER MADE AN ADDITION TO THE INCOME OF THE ASSESSEE ON THE GROUND OF UNEXPLAINED INVESTMENT. THE COMMISSI ONER OF INCOME TAX (APPEALS) UPHELD THE ADDITION MADE BY THE ASSES SING OFFICER ON THE GROUND THAT THE ASSESSEE HAD FAILED TO PROVE TH E SOURCE OF THE DEPOSITS. THE TRIBUNAL HELD THAT THE PROCEEDINGS F OR REASSESSMENT UNDER SECTION 148 OF THE ACT WERE INITIATED BY THE ASSESSING OFFICER BASED ON NON-EXISTING FACTS. ON APPEAL : HELD, DISMISSING THE APPEAL, THAT THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE PROCEEDINGS FOR REASSESSMENT UNDER SECTION 148 OF THE ACT WERE INITIATED BY THE ASSESSING OFFICER BASED ON NO N-EXISTING FACTS, BECAUSE ULTIMATELY THE ASSESSEE HAD BEEN ABLE TO EX PLAIN THE INCOME, WHICH THE ASSESSING OFFICER BELIEVED TO HAVE ESCAPE D ASSESSMENT. THE ASSESSING OFFICER WAS JUSTIFIED IN INITIATING THE P ROCEEDINGS UNDER SECTION 147 OF THE ACT. BUT ONCE THE ASSESSING OFF ICER REACHED THE CONCLUSION THAT THE INCOME WHICH HE BELIEVED TO HAV E ESCAPED INVESTMENT HAD BEEN EXPLAINED, THE ASSESSING OFFICE R DID NOT CONTINUE TO POSSESS JURISDICTION TO TAX ANY OTHER INCOME, WH ICH CAME TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDING S. 7.8 HON'BLE HIGH COURT OF RAJASTHAN IN THE CASE OF ADDL. COMMISSIONER OF INCOME TAX VS. KEJRIWAL IRON STORES, 168 ITR 715 (R AJ.) HELD THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT LEVIABLE IN CAS E WHERE COMMENCEMENT OF PENALTY ON A PARTICULAR GROUND AND FINALLY LEVIED P ENALTY ON DIFFERENT GROUND. THE HEAD-NOTE OF THE JUDGEMENT IS REPRODUCED AS UNDER : - ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 14 THE SATISFACTION FOR INITIATION OF PENALTY PROCEED INGS HAS TO BE RECORDED BY THE INCOME-TAX OFFICER AND THE BASIS FO R THE SATISFACTION OF THE INCOME-TAX OFFICER CANNOT SUBSEQUENTLY BE AL TERED BY THE INSPECTING ASSISTANT COMMISSIONER WHILE PROCEEDING TO IMPOSE THE PENALTY. THE ASSESSEE-FIRM FILED ITS RETURN FOR THE ASSESSME NT YEAR 1970- 71 AND WHILE EXAMINING THE SAME AND SCRUTINIZING TH E ACCOUNTS OF THE ASSESSEE, THE INCOME TAX OFFICER FOUND THAT THE ASS ESSEE HAD MADE PURCHASES AND MADE PAYMENTS IN CASH FOR SUCH PURCHA SES EXCEEDING RS.2,500. THE INCOME TAX OFFICER ALSO FOUND THAT T HERE WERE DISCREPANCIES IN THE DATES OF PAYMENTS AND RECEIPTS BETWEEN THE PURCHASER AND THE SELLER. THE INCOME TAX OFFICER C AME TO THE CONCLUSION THAT THERE WERE INFRINGEMENTS OF THE PRO VISIONS OF SECTION 40A(3) OF THE INCOME TAX ACT, 1961, AND THUS A TOTA L AMOUNT OF RS.16,250/- WAS DISALLOWED AND ADDED BACK TO THE TO TAL INCOME. THE INCOME TAX OFFICER ALSO MADE ON ADDITION OF RS.5,09 2 TO THE TOTAL INCOME OF THE ASSESSEE BY ESTIMATING THE INCOME BY SALE BY REJECTION OF THE ACCOUNT BOOKS AND ENTRIES IN THE ACCOUNT BOO KS OF THE ASSESSEE. WHILE PASSING THE ASSESSMENT ORDER, THE INCOME TAX OFFICER ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)( C) AND REFERRED THE MATTER TO THE INSPECTING ASSISTANT COMMISSIONER. T HE INSPECTING ASSISTANT COMMISSIONER HELD THAT THE ASSESSEE WAS N OT GUILTY OF COMMITTING GROSS OR WILLFUL NEGLECT, SO AS TO ATTRA CT THE TRADING ADDITION OF RS,5,092. HOWEVER, AS REGARDS THE ADDI TION OF RS16,250, THE INSPECTING ASSISTANT COMMISSIONER HELD THAT THE RE WAS AN INFRINGEMENT OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT AND THAT THERE WAS A SUBSTANTIAL DIFFERENCE IN THE DATES OF PAYMENT SHOWN BY THE ASSESSEE AND THE SELLER. IT WAS OBSERVED THAT THE BOOKS OF ACCOUNT WERE UNRELIABLE AND INCORRECT AND THE ADDITION OF R S.16,250/- WAS FULLY JUSTIFIED. THE INSPECTING ASSISTANT COMMISSI ONER IMPOSED PENALTY BUT THE TRIBUNAL SET ASIDE THE ORDER LEVYIN G PENALTY. ON A REFERENCE : HELD, THAT ALTHOUGH THE INCOME-TAX OFFICER NOTICED THAT THERE WERE DISCREPANCIES IN THE DATES OF PAYMENT AND RECE IPT AS DISCLOSED BY THE ASSESSEE AND THE SELLER, YET THE ADDITION OF RS.16,250 WAS MADE BY THE INCOME TAX OFFICER ON ACCOUNT OF INFRINGEMEN T OF THE PROVISIONS OF SECTION 40A(3) ONLY. THE INSPECTING ASSISTANT COMMISSIONER WAS OF THE VIEW THAT THE ADDITION OF R S.16,250 TO THE ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 15 TOTAL INCOME OF THE ASSESSEE COULD BE JUSTIFIED ON TWO GROUNDS, NAMELY, INFRINGEMENT OF THE PROVISION OF SECTION 40 A(3) OF THE ACT AND ALSO ON ACCOUNT OF THE FACT THAT THOSE TRANSACTIONS REPRESENTED UNEXPLAINED INVESTMENTS ON THE PART OF THE ASSESSEE , AS THE ASSESSEE WAS SHOWING THE CASH BALANCES WITHOUT CORRESPONDING WITHDRAWALS IN RESPECT OF THE AMOUNTS ALLEGED TO HAVE BEEN PAID TO THE SELLERS. IT WAS OPEN TO THE INSPECTING ASSISTANT COMMISSIONER TO IN ITIATE FRESH PENALTY PROCEEDINGS ON THE BASIS OF THE AFORESAID C ONCLUSION ARRIVED AT BY HIM IN HIS PENALTY ORDER DATED FEBRUARY 11, 1 972, BUT IN THE ABSENCE OF INITIATION OF ANY FRESH PROCEEDINGS, THE INSPECTING ASSISTANT COMMISSIONER OF INCOME TAX COULD NOT MODIFY THE BAS IS ON WHICH THE INCOME TAX OFFICER PROCEEDED TO RECORD HIS SATISFAC TION FOR INITIATION OF PENALTY PROCEEDINGS. THE CANCELLATION OF PENALT Y WAS JUSTIFIED, 7.9 HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE C ASE OF CIT VS. ATLAS CYCLE INDUSTRIES, 180 ITR 319 (P&H) HELD HELD, (I) THAT THE TRIBUNAL WAS RIGHT IN CANCELLIN G THE REASSESSMENT AS BOTH THE GROUNDS ON WHICH THE REASS ESSMENT NOTICE WAS ISSUED WERE NOT FOUND TO EXIST, AND, THEREFORE, THE INCOME-TAX OFFICER DID NO GET JURISDICTION TO MAKE A REASSESSM ENT. 8. IN THE LIGHT OF ABOVE DISCUSSIONS, IF WE CONSIDE R THE FACTS OF THE CASE UNDER CONSIDERATION THAT THE REASONS FOR RE-OPENING THE C OMPLETED ASSESSMENT THAT THE A.O. HAS REASON TO BELIEVE THAT THE ASSESSEE HAS OB TAINED ACCOMMODATION ENTRIES RECEIVED FOR RS.70,000/- ON ACCOUNT OF SHARES FROM AYUSHI STOCK BROKERS PVT. LTD. BUT WHILE MAKING ADDITION THE A.O. MADE ADDITION OF RS.10,29,566/- ON DIFFERENT TRANSACTION THAT THE ASSESSEE PURCHASED 9000 SHARES OF G.L. COMMERCIAL LIMITED AND WERE SOLD THROUGH BROKER DEEPAK SECURITIES. TH E ASSESSEE HAS DECLARED SHORT TERM CAPITAL GAIN IN RESPECT OF TRANSACTION PERTAIN ING TO RS.70,000/- FOR WHICH THE ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 16 A.O. RECORDED REASONS FOR REOPENING. THE A.O. DID NOT RECORD REASON FOR REOPENING OF ASSESSMENT IN RESPECT OF 9000 SHARES F OR WHICH ADDITION WAS MADE. THE LD. AUTHORISED REPRESENTATIVE DEMONSTRATED THIS FACT BY REFERRING PAGE NOS.4 TO 8 OF ASSESSEES PAPER BOOK WHERE COPY OF ACCOUNT OF ASSESSEE IN BOOKS OF ACCOUNT OF M/S. AYUSHI STOCK BROKERS (P) LTD. (PAGE NO.4 OF PAPER BOOK) AND IN THE BOOKS OF ACCOUNT OF DEEPAK SECURITIES (PAGE NO.8 OF PB). PAGE NO.2 OF PAPER BOOK WHERE A COPY OF COMPUTATION OF TOTAL INCOME FOR A.Y . 2003-04 HAS BEEN PLACED. THUS, ADMITTEDLY THE REASONS RECORDED AND ADDITIONS MADE ARE DIFFERENT TRANSACTIONS. IT IS ALSO ADMITTED FACT THAT THE A. O. DID NOT MAKE ANY ADDITION IN RESPECT OF TRANSACTION FOR WHICH REASONS WERE RECOR DED. WE ARE AWARE THAT THE A.O. HAD JURISDICTION TO REASSESS INCOME OTHER THAN INCOME IN RESPECT OF WHICH PROCEEDINGS UNDER SECTION 147 WERE INITIATED BUT HE HAS NO JURISDICTION IN DOING SO WHEN THE VERY REASON FOR INITIATION FOR THOSE PROCE EDINGS CEASE TO SURVIVE. THE LEGISLATURE CAN NOT BE PRESUMED TO HAVE INTENDED TO GIVE BLANKET POWERS TO THE A.O. THAT ON ASSUMING JURISDICTION UNDER SECTION 14 7 REGARDING ASSESSMENT OR REASSESSMENT OF ESCAPED INCOME, HE WOULD GO ON MAKI NG SCRUTINY ENQUIRY AND THEREBY INCLUDING DIFFERENT ITEMS OF INCOME NOT CON NECTED OR RELATED WITH THE REASONS TO BELIEVE ON THE BASIS OF WHICH HE ASSUMED JURISDICTION. WE, THEREFORE, FIND THAT THE JURISDICTION ACQUIRED BY THE A.O. UND ER SECTION 147 IS NOT IN ACCORDANCE WITH LAW. THEREFORE, THE ORDER OF THE A .O. IS LIABLE TO BE QUASHED. WE DO ACCORDINGLY. SINCE THE ORDER OF THE A.O. HAS BE EN QUASHED ON LEGAL ISSUE, ITA NO.286/AGR/2011 & CO NO.22/AGR/2012 A.Y. 2003-04 . 17 THEREFORE, WE DO NOT WANT TO GO INTO THE MERIT OF T HE CASE AND ACCORDINGLY WE DO NOT EXPRESS ANY OPINION ON THE MERIT OF THE CASE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D AND CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY