M/s Maria Seva Sangha, Bangalore V. Asst.D,I,T, Bangalore

ITA 320/BANG/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95286 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 05-03-2015
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: VANAJA
• Keywords: Tangible material; Fair market value; Reason to believe; Reassessment proceedings
• Section: 143(3); 147

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.102(BANG.)/2014 (ASSESSMENT YEAR : 2005-06) SMT. PADMAKSHI SHARMA, W/O K. SRINIVAS SHARMA, D.NO.1-24(2), VANI MANDIRAM, NEAR VARUNA THEERTHA, KOTA-576 221 PAN NO.AXAPS8985P APPELLANT VS THE INCOME-TAX OFFICER, WARD-1, UDUPI RESPONDEN T DATE OF HEARING : 13-10-2015 DATE OF PRONOUNCEMENT : APPELLANT BY : SMT M.R.VANAJA, ADVOCATE RESPONDENT BY : DR. P.K.SRIHARI, ADDL.CIT O R D E R PER SHRI G. MANJUNATHA, AM; THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A), MYSORE DATED 9-10-2013 RELATING TO ASSESSME NT YEAR : 2005-06. ITA NO.102(B)14 2 2. THE ASSESSEE IS AN INDIVIDUAL, FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 ON 28-07-2005 DECLARING TOTAL INCOME OF RS.80,48,250/-, CONSISTING OF INCOME FROM LONG TERM CAPITAL GAINS (LTCG) AND INCOME FROM OTHER SOURCES. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE IT ACT, 1 961 BY THE ACIT, UDUPI AND COMMUNICATION DATED 01-10-2005 WAS SERVED ON THE ASSESSEE. DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR, THE ASSESSEE HAS SOLD A CONVERTED LAND MEASUR ING 16.5 ACRES IN KOTEKAR VILLAGE, MANGALORE TALUK TO KARNATAKA HO USING BOARD FOR A CONSIDERATION OF RS.2.31 CRORES AND DECLARED THE CAPITAL GAIN IN THE RETURN OF INCOME FILED U/S 139(1). WHILE C OMPUTING THE CAPITAL GAIN, THE FMV OF THE LAND AS ON 1-4-1981 WA S TAKEN AT RS. 600/- PER CENT CONSIDERING THE PREVAILING MARKET CO NDITIONS IN 1981. THE AO SOUGHT TO RE-OPEN THE ASSESSMENT FOR T HE REASON THAT ASSESSEE HAD SOLD LAND FOR A CONSIDERATION OF RS.2.31 CRORES, HAS NOT FILED THE RETURN OF INCOME ADMITTING THE R ESULTANT CAPITAL GAINS THEREFORE, ISSUED NOTICE US 148 ON 31-03-2012 . 3. IN RESPONSE TO THE NOTICE U/S 148, THE ASSESSEE HAD FILED RETURN OF INCOME ON 16-04-2012, ADMITTING THE SAME INCOME ITA NO.102(B)14 3 RETURNED EARLIER. ON 17-4-2012, SHE HAD FILED A LET TER STATING THAT THE SHE HAD ALREADY FILED HER RETURN OF INCOME U/S 139(1) ON 28- 09-2005 AND THE SAME WAS PROCESSED U/S 143(1) BY TH E DEPARTMENT AND REQUESTED AO TO FURNISH THE REASONS FOR REOPENING THE ASSESSMENT. THE AO VIDE HIS LETTER DA TED 7-7-2012 SUPPLIED THE REASONS RECORDED FOR REOPENING THE ASS ESSMENT WHICH IS AS UNDER. AS PER DEED OF SALE DATED 18-06-2004 (COPY ENCLOSED) THE ASSESSEE MRS.PADMAKSHI, W/O K SRINIVAS SHARMA, VANI MANDIRAM, NEAR VARUN THEERTHA, KOTA, UDUPI DISTRICT HAS SOLD A NON- AGRICULTURAL IMMOVABLE PROPERTY WITH S.NO.315/182(16.5 ACRES) AT KOTEKAR VILLAGE, MANGALORE TALUK OF RS.2.31 CRORES IN FAVOUR OF KARNATAKA HOUSING BOARD, CAUVERY BHAVAN. CONSIDERING THE HUGE SALE CONSIDERATION, THE ASSESSEE IS LIABLE TO PAY CAPITAL GAIN TAX. THE ASSESSEE HAS NOT FILED RETURN OF INCOME SO FAR. HENCE, TO BRING INTO TAX, THE CAPITAL GAIN, PROPOSA L FOR ISSUE OF NOTICE UNDER SECTION 148 IS SUBMITTED HEREWITH FOR KIND PERUSAL. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS ALREADY FILED HIS R ETURN OF INCOME ITA NO.102(B)14 4 U/S 139(1) AND DECLARED THE CAPITAL GAIN ON SALE OF PROPERTY. THEREFORE, RE-OPENING THE ASSESSMENT ON THE SAME RE ASON I.E NON- FILING OF THE RETURN IS NOT VALID, THEREFORE, REQUE STED TO DROP THE RE- ASSESSMENT PROCEEDINGS. THE AO HOWEVER, WITHOUT A DJUDICATING THE ISSUE ON THE VALIDITY OF THE REASSESSMENT PROCE EDINGS, PROCEED TO COMPLETE THE ASSESSMENT IGNORING THE OBJECTIONS FILED BY THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE AO POINTED OUT THAT THE ASSESSEE HAS TAKEN THE FAIR MA RKET VALUE (FMV) OF LAND AT RS. 600/- PER CENT WHICH IS QUITE HIGH. HE THEREFORE, ISSUED SHOW CAUSE NOTICE WHEREIN, HE HAS PROPOSED TO TAKE THE FMV OF THE LAND AT RS. 229/- PER CENT AND ASKED THE ASSESSEE TO EXPLAIN THE BASIS ON WHICH SHE HAS ADOP TED THE FMV OF RS. 600/- PER CENT AS ON 01-04-1981. THE ASSESSE E HAS CONTENDED BEFORE THE AO THAT SHE HAD ADOPTED THE FM V CONSIDERING THE PREVAILING MARKET CONDITIONS. HOWEV ER, THE AO DID NOT CONVINCED WITH THE ASSESSEES EXPLANATION ADOPT ED THE FMV OF THE LAND AT RS.229/- PER CENT AND RE-COMPUTED THE C APITAL GAINS. 5. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE AS SESSEE ITA NO.102(B)14 5 CHALLENGED THE VALIDITY OF THE RE-OPENING THE ASSES SMENT AND ALSO AGITATED THE ISSUE ON MERITS. HOWEVER, THE CIT(A) DID NOT ADJUDICATED THE ISSUE ON THE VALIDITY OF THE RE-OPE NING THE ASSESSMENT, BUT GAVE HIS FINDING ON THE MERITS OF T HE ISSUE AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. AGGRIEV ED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT TH E AO WHILE, RECORDING THE REASONS FOR ISSUE OF NOTICE U/S 148 O F THE ACT, HAS NOT RECORDED HIS SATISFACTION THAT INCOME HAS ESCAP ED ASSESSMENT IN TERMS OF SEC.147 OF THE IT ACT. HE HAS NOT MADE ANY DILIGENT ENQUIRY AS TO WHETHER THE ASSESSEE HAS FILED HER RE TURN OF INCOME OR NOT. HE SIMPLY ISSUED NOTICE U/S 148 WITHOUT B EING SATISFIED THAT HE HAS REASON TO BELIEVE THAT INCOME HAS ESCAP ED ASSESSMENT. HE FURTHER ARGUED THAT THE AO SIMPLY S TATED THAT THE ASSESSEE WAS ENTERED INTO CERTAIN TRANSACTION AND W ITHOUT VERIFYING WHETHER SHE HAS FILED RETURN OF INCOME FO R THE RELEVANT ASSESSMENT YEAR, HAD ISSUED NOTICE U/S 148 OF THE A CT TO BRING TO TAX THE INCOME INVOLVED IN THE SAID TRANSACTIONS. THE AO HAS NOT RECORDED ANY REASON THAT MADE HIM TO BELIEVE THAT T HE INCOME HAS ITA NO.102(B)14 6 ESCAPED ASSESSMENT IS IN EXCESS OF RS.1.00 LAKH AND THEREFORE, HE SOUGHT PERMISSION FROM THE JOINT/ADDL. CIT TO INVOK E POWER U/S 148 OF THE T ACT, 1961. HE FURTHER SUBMITTED THAT IF THE AO IS PERMITTED TO RE-OPEN THE ASSESSMENT ON SUCH FLIMSY GROUND, IN A CASUAL MANNER THE FLOODGATES OF MISUSE OF POWER WIL L BE OPENED AND THE HAPLESS ASSESSEE WILL BE LEFT TO THE MERCY OF THE AO AND THE CONSEQUENTIAL HARASSMENT OF THE ASSESSEE. HE F URTHER SUBMITTED THAT ONCE THE RETURN OF INCOME HAS ALREAD Y BEEN FILED U/S 139(1) AND THE CAPITAL GAIN IS OFFERED TO TAX A ND HAS BEEN TAXED AS SUCH, THE AO HAS NO POWER TO REASSESS AND DETERMINED THE FMV OF THE PROPERTY AS ON 01-04-1981. THE ASSE SSE FURTHER, SUBMITTED THAT THE AO HAS NOT SPECIFICALLY MENTIONE D IN THE NOTICE THAT INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASS ESSMENT IS RS. 1,00,000/- OR MORE, HAVING NOT BEEN MENTIONED T HIS FACT IN THE REASSESSMENT NOTICE GIVEN AFTER 4 YAERS, THAT T O AT THE END OF THE SIXTH YEAR, THE SAID NOTICE IS NOT A VALID NOTI CE AS PER LAW. THEREFORE, THE ASSESSE REQUESTED TO QUASH THE RE-AS SESSMENT ORDER PASSED U/S 147 OF THE IT ACT, 1961. ON THE OT HER HAND, LEARNED DR STRONGLY SUPPORTED THE ORDER OF THE CIT( A) AND URGED TO UPHELD THE CIT(A)S ORDER. ITA NO.102(B)14 7 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD AND ALSO CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. THE AO RE-OPENED THE ASSESSMENT ON THE SOLE GROUND THAT THE INCOME CHARGEABLE TO TAX HAS BEEN E SCAPED ASSESSMENT AS THE ASSESSEE HAS NOT DISCLOSED THE RE SULTANT CAPITAL GAINS ON TRANSFER OF IMMOVABLE PROPERTY. THE AO I N THE REASON RECORDED FOR RE-OPENING OF THE ASSESSMENT HAD CLEAR LY SAID THAT THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR. THEREFORE, THE INCOME CHARGEABL E TO TAX HAS BEEN ESCAPED ASSESSMENT IN VIEW OF THE PROVISIONS O F SECTION 147. THE ASSESSEE ON THE OTHER HAND, CONTENDED THAT SHE HAD FILED HER RETURN OF INCOME U/S 139(1) FOR THE RELEVANT ASSESS MENT YEAR DISCLOSING THE CAPITAL GAIN ON TRANSFER OF IMMOVABL E PROPERTY AND PAID THE TAXES ACCORDINGLY. SHE FURTHER SUBMITTED T HAT THE RETURN IS VERY MUCH AVAILABLE WITH THE AO, AT THE TIME OF INITIATION OF PROCEEDINGS U/S 147 OF THE ACT, THE AO HAD PROCESSE D SUCH RETURN U/S 143(1) OF THE IT ACT, THEREFORE, RE-OPENING OF ASSESSMENT BASED ON THE GROUND THAT RETURN IS NOT FILED IS BAD IN LAW. ITA NO.102(B)14 8 8. SEC.147 OF THE IT ACT, 1961 AUTHORISES THE AO TO ASSESS OR RE-ASSESSS THE INCOME CHARGEABLE TO TAX, IF HE HAS REASON TO BELIEVE THAT THE INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE EXPRESSION REASON USED IN THE SECTI ON MEANS CAUSE OR JUSTIFICATION. THE AO HAS CAUSE OF JUSTIFI CATION TO KNOW OR SUPPOSE THE INCOME HAS ESCAPED ASSESSMENT, IT CAN B E SAID TO HAVE REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSE SSMENT. AT THE STAGE OF ISSUANCE OF NOTICE U/S 148 OF THE IT A CT, IT IS NOT NECESSARY FOR THE AO TO HAVE ESTABLISHED THE FACT F OR ESCAPEMENT OF INCOME BUT WHAT IS NECESSARY IS THAT THERE MUST BE RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FO RMED A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. IN THE PRESENT CASE ON HAND, THE ONLY REASON ON WHICH THE AO SOUGHT TO HAV E RE-OPENED THE ASSESSMENT IS THAT ASSESSEE HAS NOT FILED THE R ETURN OF INCOME THEREFORE, HE WANTS TO BRING TO TAX THE CAPITAL GAI NS FROM THE SALE OF IMMOVABLE PROPERTY. BUT, THE FACT IS THAT THE AS SESEE HAS ALREADY FILED HER RETURN OF INCOME DISCLOSING THE C APITAL GAIN ON TRANSFER OF IMMOVABLE PROPERTY IN THE ORIGINAL RETU RN FILED U/S 139(1) OF THE ACT. IN FACT, THIS FACT WAS NOT DISP UTED BY THE AO. AT THE TIME OF ASSESSMENT, THE ASSESSEE HAD BROUGHT TO THE NOTICE ITA NO.102(B)14 9 OF THE AO THAT THE REASON ON WHICH THE AO SOUGHT TO HAVE RE- OPENED THE ASSESSMENT WHICH IS NOT IN EXISTENCE THE REFORE, REQUESTED TO DROP THE ASSESSMENT PROCEEDINGS. ONCE , THE AO CAME TO KNOW THAT THE RETURN OF INCOME WHICH WAS AL READY FILED AND THE CAPITAL GAIN IS OFFERED TO TAX IN THE SAID RETURN, INSTEAD PUTTING AN END TO THE PROCEEDINGS, PROCEEDED TO COM PLETE THE ASSESSMENT ON THE SAME REASON WHICH IS NOT A VALID GROUND FOR RE- OPENING THE ASSESSMENT. 9. THE POWER OF AO, TO RE-OPEN THE ASSESSMENT THOUG H WIDE, IS NOT PLENARY. THE WORDS OF THE STATUTE ARE REASON TO BELIEVE AND NOT REASON TO SUSPECT. THE RE-OPENING OF THE ASSESSMENT AFTER A LAPSE OF SIX YEARS IS A SERIOUS MATTER FOR THE REASON THA T IF, ASSESSMENT IS RE-OPENED ON THE GROUND WHICH IS NOT IN EXISTENC E AT THE TIME OF INITIATING THE PROCEEDINGS WOULD CAUSE LOT OF INCON VENIENCE TO THE ASSESSEE. THE LINK OR CLOSE NEXUS WHICH SHOULD BE T HERE BETWEEN THE MATERIALS BEFORE THE AO TO PROVE THAT THERE IS ESCAPEMENT OF INCOME. IN THE INSTANT CASE, THE AO PURELY ON GUES S WITHOUT APPLICATION OF MIND ISSUED NOTICE TO REOPEN THE ASS ESSMENT BY STATING THAT THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME FOR THE ITA NO.102(B)14 10 RELEVANT ASSESSMENT YEAR. THE AO HAS NOT BROUGHT OU T ANY TANGIBLE FRESH MATERIAL EVIDENCE WHICH SHOWS THE ES CAPEMENT OF INCOME CHARGEABLE TO TAX. ONCE IT IS PROVED THAT TH E RETURN OF INCOME HAS BEEN FILED U/S 139(1) AND THE CAPITAL GA INS IS OFFERED TO TAX AND HAS BEEN TAXED AS SUCH, THE AO HAS NO PO WERS TO ASSESS AND DETERMINE THE FMV OF THE PROPERTY AS ON 01-04-1981. HIS POWER IS STRICTLY LIMITED TO VERIFY WHETHER THE RETURN OF INCOME IS FILED AND THE CAPITAL GAIN IS DECLARED OR NOT. HE HAS NO REASON TO LOOK INTO THE METHOD OF COMPUTATION OF CAPITAL G AIN WHICH IS NOT AN ISSUE OF RE-OPENING THE ASSESSMENT. 10. IT IS PERTINENT TO MENTION HERE THAT THE CASE L AWS RELIED UPON BY THE ASSESSEE OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF MAHESH KUMAR GUPTA VS CIT IN WRIT TAX NO.1086 OF 20 07 WHEREIN IT HAS BEEN HELD AS UNDER; THE ONLY POINT URGED AND PRESSED BEFORE US IS WHETHER IN ABSENCE OF ANYTHING IN THE REASONS RECORDED TO SUGGEST THAT THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT IS RS. ONE LAKH OR MORE HAVING NOT BEEN MENTIONED THE RE- ASSESSMENT NOTICE GIVEN AFTER FOUR YEARS OF THE CLOSE OF THE ASSESSMENT ORDER IS VALID OR NOT. ITA NO.102(B)14 11 FOR THE REASONS GIVEN ABOVE, WE FIND SUFFICIENT FORCE IN THE ARGUMENT OF THE LEARNED COUNSEL FOR TH E PETITIONER THAT ON THE BASIS OF THE REASONS RECORDED BY THE AO, THE INITIATION OF THE REASSESSMENT PROCEEDINGS RELEVANT TO THE ASSESSMENT YEAR 2000-2001 BY MEANS OF THE NOTICE DATED 23.3.2007 AFTER MORE THAN FOUR YEARS IS CLEARLY BARRED BY TIME. 11. NOW COMING TO THE POINT, WHETHER THERE WOULD BE ANY DIFFERENCE BETWEEN INTIMATION U/S 143(1) AND ASSESS MENT U/S 143(3), WHEN THERE WAS CLEAR ABSENT OF VALID REASON TO BELIEVE COUPLED WITH TANGIBLE MATERIALS. IN THE PRESENT CAS E THERE ARE NO FRESH MATERIALS WITH THE AO TO SUGGEST THAT HIS FOR MATION OF REASON TO BELIEVE IS SUPPORTED BY TANGIBLE MATERIALS. ON P ERUSAL OF THE RETURN OF INCOME FILED BY THE ASSESSE U/S 139(1), W E ARE OF THE OPINION THAT THE AO HAS NOT APPLIED HIS MIND AND HI S FORMATION OF BELIEF IS PURELY ON GUESS WORK. THERE IS NO WHISPER IN THE REASONS RECORDED THAT THERE IS ANY TANGIBLE MATERIAL WHICH CAME TO THE POSSESSION OF AO SUBSEQUENT TO THE ISSUE OF INTIMAT ION. IT IS WORTHWHILE TO MENTION HERE THE HONBLE DELHI HIGH C OURT DECISION ITA NO.102(B)14 12 IN THE CASE OF CIT VS. ORIENT CRAFT LTD. (2013) 354 ITR 536 WHEREIN, THE HONBLE COURT OBSERVED AS UNDER: S. 147 PERMITS AN ASSESSMENT TO BE REOPENED IF THE RE IS REASON TO BELIEVE. IT MAKES NO DISTINCTION BETWEEN AN ORDER U/S 143(3) OR AN INTIMATION U/S 143(1). ACCOR DINGLY, IT IS NOT PERMISSIBLE TO ADOPT DIFFERENT STANDARDS WHILE INTERPRETING THE WORDS REASON TO BELIEVE VIS--VI S S. 143(1) AND S. 143(3). THE DEPARTMENTS ARGUMENT THAT THE SAME RIGOROUS STANDARDS WHICH ARE APPLICABLE IN THE INTERPRETATION OF THE EXPRESSION WHEN IT IS APPLIED TO THE REOPENING OF A S. 143(3) ASSESSMENT CANNOT APPLY TO A S. 143(1) INTIMATION IS NOT ACCEPTABLE BECAUSE IT WOUL D PLACE AN ASSESSEE WHOSE RETURN IS PROCESSED U/S 143(1) IN A MORE VULNERABLE POSITION THAN AN ASSESSEE IN WHOSE CASE THERE IS A FULL-FLEDGED S. SCRUTINY ASSESSMENT U/S 143(3). W HETHER THE RETURN IS PUT TO SCRUTINY OR IS ACCEPTED WITHOU T DEMUR IS NOT A MATTER WHICH IS WITHIN THE CONTROL OF ASSESSE E. AN INTERPRETATION WHICH MAKES A DISTINCTION BETWEEN TH E MEANING AND CONTENT OF THE EXPRESSION REASON TO BE LIEVE ITA NO.102(B)14 13 BETWEEN A CASE WHERE A S. 143(3) ASSESSMENT IS MADE AND ONE WHERE AN INTIMATION U/S 143(1) IS MADE MAY LEAD TO UNINTENDED MISCHIEF , BE DISCRIMINATORY & LEAD TO ABSURD RESULTS . IN KELVINATOR 320 ITR 561 (SC) IT WAS HELD THAT THE TERM REASON TO BELIEVE MEANS THAT T HERE IS TANGIBLE MATERIAL AND NOT MERELY A CHANGE OF OPI NION AND THIS PRINCIPLE WILL APPLY EVEN TO S. 143(1) INT IMATIONS. ON FACTS, THE AO REACHED THE BELIEF THAT THERE WAS ESCAPEMENT OF INCOME ON GOING THROUGH THE ROI FIL ED BY THE ASSESSEE. THIS IS NOTHING BUT A REVIEW OF THE EARLIER PROCEEDINGS AND AN ABUSE OF POWER BY THE AO. THERE IS NO WHISPER IN THE REASONS RECORDED OF ANY TANGIBLE MATERIAL WHICH CAME TO THE POSSESSION OF THE AO SUBSEQUENT TO THE ISSUE OF THE INTIMATION. IT REFLECTS AN ARBITRARY EXERCISE OF THE POWER CONFERRED U/S 147 ( RAJESH JHAVERI STOCK BROKERS 291 ITR 500 (SC) DISTINGUISHED) 12. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTAN CES OF THE CASE AND RATIOS OF THE CASE LAWS AND IN THE LIGHT O F THE DISCUSSIONS ITA NO.102(B)14 14 MADE ABOVE, WE ARE OF THE OPINION THAT THERE WAS NO TANGIBLE MATERIAL POINTED OUT BY AO IN THE REASONS RECORDED, ON THE BASIS OF WHICH AO COULD HAVE FORMED A REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTIO N 147. THEREFORE, NOTICE ISSUED U/S 148 OF THE IT ACT, 196 1 BY THE AO IS BAD AND INVALID IN THE EYE OF THE LAW AND THUS, THE PROCEEDINGS INITIATED U/S 147 OF THE IT ACT, 1961 IS HEREBY QUA SHED. CONSEQUENTLY, THE ASSESSMENT MADE BY THE AO U/S 147 OF THE IT ACT, IS CANCELLED. 13. SINCE, WE HELD THAT NOTICE ISSUED U/S 148 IS BA D IN LAW, CONSEQUENTLY ASSESSMENT MADE BY THE AO IS QUASHED, THE OTHER ISSUES CHALLENGED IN THIS APPEAL ON MERITS ARE ACAD EMIC, HENCE NOT ADJUDICATED AT THIS POINT OF TIME. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 16 TH OCTOBER, 2015. SD/- SD/ - (VIJAY PAL RAO) (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: BANGALORE DATED: 16-10-2015 AM* ITA NO.102(B)14 15 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. CIT(A) 4. CIT 5. DR BY ORDER AR, ITAT, BANGALORE