Mohd. Yousuf Wani, Srinagar V. Income tax Officer, Srinagar

ITA 372/ASR/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5843 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 21-12-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 21-08-2009
• Court: TRIBUNAL
• Assessee Lawyers: R C KHANNA
• Keywords: Business income; Search and seizure; Principle of natural justice; Question of law; Reason to believe; Reassessment proceedings
• Section: 143(3); 133(6); 147; 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR. BEFORE SHRI H.L. KARWA, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER. I.T.A. NO.372(ASR)/2009. (ASSESSMENT YEAR: 2004-05) SHRI MOHD. YOUSUF WANI, THE INCOME TAX OFFICER, R/O SHOPIAN, SRINAGAR. WARD 2, SRINAGAR. (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI R.C. KHANNA, C.A. RESPONDENT BY: SHRI TARSEM LAL, D.R. ORDER PER H.L. KARWA, VICE PRESIDENT. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A), BHATINDA DATED 22-6-2009, RELATING TO THE A SSESSMENT YEAR 2004-05. 2. IN THIS APPEAL, THE ASSESSEE HAS TAKEN THE FOLLO WING GROUNDS:- 1. THAT THE ORDER PASSED BY THE LD. A.O. IS ARBITR ARY AND CONTRARY TO THE FACTS AND BAD IN LAW AND WORTHY COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. 2. THAT THE ORDER PASSED BY THE LD. A.O. IS ILLEGAL AND IS DEVOID OF ANY FORCE OF LAW IN AS MUCH AS THE REASSESSMENT PRO CEEDINGS HAD BEEN SET IN MOTION WHILE THE ORIGINAL RETURN FI LED WAS STILL LYING PENDING FOR DISPOSAL AND WORTHY CIT(A) HAS ER RED IN CONFIRMING THE SAME. 3. THAT THE REASONS RECORDED BY THE LD. A.O. ARE WI THOUT APPLICATION OF MIND IN AS MUCH AS HE STATES THAT NO RETURN OF INCOME HAS BEEN FILED AND HE IS RESORTING TO SECTIO N 148 AND 2 WORTHY CIT(A) HAS ERRED IN CONFIRMING THE SAME IN F AVOUR OF A.O. 4. WITHOUT PREJUDICE TO MY ABOVE GROUNDS OF APPEAL, WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ILLEGALITY OF TH E A.O. THAT HE HAS ILLEGALLY TRAVELLED BEYOND THE SCOPE OF SECTION 148, WHICH IS ILLEGAL AS DECIDED BY THE VARIOUS HIGH COURTS AND A PPROVED BY THE HONBLE SUPREME COURT. 5. THAT THE WORTHY CIT(A) HAS ERRED IN LAW AND ON F ACTS IN CONFIRMING THE ADDITION OF RS.29,41,852/- OUT OF CA PITAL ACCRETION. 6. THAT THE WORTHY CIT(A) HAS ERRED IN LAW AND ON F ACTS IN CONFIRMING IN DISALLOWING 50% OF SUNDRY CREDITORS A MOUNTING TO RS.11,25,000/-. 7. THAT THE WORTHY CIT(A) HAS ERRED IN LAW AND ON F ACTS IN CONFIRMING IN APPLYING A RATE OF 8% AND MAKING AN A DDITION OF RS.4,12,640/- AS BUSINESS INCOME. 8. THAT THE WORTHY CIT(A) HAS ERRED IN LAW AND ON F ACTS IN CONFIRMING AN ADDITION OF RS.78,145/- AS NON AGRICU LTURE INCOME. 9. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR WITHDRAW ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. 3. VIDE GROUND NOS.1 TO 4 OF THE APPEAL, THE ASSESS EE HAS CHALLENGED THE VALIDITY OF THE REOPENING UNDER SECTION 147/148 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). THE FACTS RELATING TO THIS ISSUE ARE THAT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 1-11-2004 DECLA RING INCOME OF RS.1,44,800/- AND AGRICULTURAL INCOME OF RS.1,95,00 0/-. THE RETURN WAS PROCESSED ON 2-6-2005. SUBSEQUENTLY, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 8-3-2006 IN RESPONSE TO CERTAIN INFOR MATION RECEIVED FROM THE EXTERNAL AGENCIES, I.E. VIGILANCE DEPARTMENT. IN RESPONSE TO NOTICE UNDER 3 SECTION 148 OF THE ACT, THE ASSESSEE SUBMITTED THAT THE RETURN ALREADY FILED ON 1-11-2004 BE TREATED AS FILED IN RESPONSE TO SAID NOTICE. THEREAFTER, THE A.O. ISSUED THE NOTICE UNDER SECTION 143(2) OF THE ACT. THE A.O. ISSUED NOTICE UNDER SECTION 142(1`) OF THE ACT ON 14-11-20 06. IN RESPONSE TO ABOVE NOTICES, THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNT . HOWEVER, THE ASSESSEE FAILED TO PRODUCE ANY BILLS OR VOUCHERS IN RESPECT OF DIFFERENT EXPENSES/DEDUCTIONS CLAIMED BY HIM IN THE PROFIT AN D LOSS ACCOUNT. THE A.O. HAS OBSERVED THAT AS PER THE INFORMATION RECEI VED BY HIM FROM THE EXTERNAL SOURCES, I.E. VIGILANCE DEPARTMENT, THE AS SESSEE DURING THE RELEVANT PREVIOUS YEAR PAID RS.87,00,000/- TO HIS SON, SHRI BILAL AHMAD WANI FOR PURCHASE OF LAND. THE ASSESSEE VIDE QUESTIONNAIRE DATED 14-11-2006 WAS ASKED TO FURNISH NECESSARY EVIDENCE REGARDING THIS INVESTMENT. IN THIS REGARD, THE ASSESSEE SUBMITTED THAT A LOAN OF RS.35 ,20,000/- WAS TAKEN FROM J&K BANK, PULWAMA AND THERE STANDS CAPITAL OF RS.34 .66 LACS REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE AS ON 31-3-2004, BESIDES TRADE CREDITORS OF RS.22.05 LACS. IT WAS ALSO STATED THAT FDR OF RS.4 0 LACS GOT MATURED DURING THE RELEVANT YEAR AND WERE CREDITED TO THE SAID BAN K ACCOUNT. THE REPLY FURNISHED BY THE ASSESSEE WAS FOUND INADEQUATE BY T HE A.O. THE A.O. MADE CERTAIN ADDITIONS/DISALLOWANCES AND COMPUTED THE TO TAL INCOME OF THE ASSESSEE AS UNDER:- 1. INCOME OUT OF CAPITAL ACCRETION 29,41,852/- AS DISCUSSED ABOVE. 2. SUNDRY CREDITORS DISALLOWED AS DISCUSSED ABOVE. 11,25,000/- 3. INCOME FROM BUSINESS AS DISCUSSED ABOVE. 4,12, 640/- 4. INCOME FROM OTHER SOURCES AS DECLARED BY THE ASSESSEE. 78,145/- 4 TOTAL INCOME OF THE ASSESSEE. 45,57,637/- AGRICULTURAL INCOME FOR RATE PURPOSES. 1,95,00 0/- 4. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE RAISED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL:- 1. THAT THE REASSESSMENT ORDER PASSED BY THE LD. A .O. IS ILLEGAL AND IS DEVOID OF ANY FORCE OF LAW IN AS MUCH AS THE REA SSESSMENT PROCEEDINGS HAD BEEN SET IN MOTION WHILE THE ORIGIN AL RETURN FILED WAS STILL LYING PENDING FOR DISPOSAL. 2. THAT THE REASONS RECORDED BY THE LD. A.O. ARE WI THOUT APPLICATION OF MIND IN AS MUCH AS HE STATES THAT NO RETURN OF INCOME HAS BEEN FILED AND HE IS RESORTING TO SECTIO N 148. 3. WITHOUT PREJUDICE TO MY ABOVE GROUNDS OF APPEAL, HE HAS ILLEGALLY TRAVELED BEYOND THE SCOPE OF SECTION 148, WHICH IS ILLEGAL AS DECIDED BY THE VARIOUS HIGH COURTS AND A PPROVED BY THE HONBLE SUPREME COURT. 4.1 THE LEARNED CIT(A) DISMISSED THE ADDITIONAL GROUNDS OF APPEAL OF THE ASSESSEE, OBSERVING AS UNDER:- THE ADDITIONAL GROUND NO.(I) & (II), RELATE TO THE PROCEEDINGS U/S.147/148. FIRST OF ALL THE APPELLANTS CONTENT ION THAT THE RETURN FILED BY THE APPELLANT WAS PENDING FOR DISPOSAL AT THE TIME OF INITIATION OF RE-ASSESSMENT PROCEEDINGS IS FACTUALLY INCORRECT SINCE THE RETURN FILED BY THE APPELLANT WAS ALREADY DISPOSED OF VIDE TMS NO.3168 DATED 2-6-2005. MOREOVER, THE NOTICE U/S.148 WAS IS SUED AND SERVED UPON THE APPELLANT AFTER DULY RECORDING THE REASONS . IN THIS CASE, IT IS SEEN THAT THERE WAS INFORMATION BEFORE THE AO FROM THE EXTERNAL AGENCIES I.E. VIGILANCE DEPARTMENT REG ARDING THE ESCAPEMENT OF INCOME BY THE APPELLANT GROUP OF CASE S. THE AO HAS CONSIDERED AND WEIGHED THIS INFORMATION AND FORMED HIS REASONS. SUCH INFORMATION THROUGH COMMUNICATION WAS HELD TO BE A BASIS FOR HAVING REASON TO BELIEVE BY THE ASSESSING OFFICER. 5 I FIND THAT THE MATTER IS COVERED BY THE LATEST JUD GMENT OF HONBLE SUPREME COURT IN THE CASE OF ACIT V. RAJESH JAVERI STOCK BROKERS PVT. LTD. REPORTED AT 291 ITR 500 (SC). THE HONBL E APEX COURT HAS HELD THAT AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE P ERSON COULD HAVE FORMED THE REQUISITE BELIEF. WHETHER MATERIAL WOUL D CONCLUSIVELY PROVE ESCAPEMENT OF INCOME IS NOT THE CONCERN AT TH AT STAGE. THIS IS SO BECAUSE THE FORMATION OF THE BELIEF IS WITHIN TH E REALM OF THE SUBJECTIVE SATISFACTION OF THE ASSESSING OFFICER. I RESPECTFULLY FOLLOW THE JUDGMENT OF HONBLE APEX COURT AND UPHOLD THE A CTION OF THE AO OF THE REOPENING THE ASSESSMENT. 4.2 NOW THE ASSESSEE IN APPEAL BEFORE THE TRIBUNAL AGAI NST THE ORDER OF THE CIT(A), BHATINDA DATED 22-6-2009. 4.3 BEFORE US, SHRI R.C. KHANNA, C.A., THE LEARNED COUN SEL FOR THE ASSESSEE, SUBMITTED THAT REASSESSMENT PROCEEDINGS A RE PENDING, FIRSTLY THE REASONS HAVE BEEN RECORDED IN CONCISE MANNER, IN CO MPLETE DISREGARD OF THE FACTS ON THE FILE OF THE A.O. AND HE HAS TRAVELED B EYOND THE SCOPE OF REASSESSMENT PROCEEDINGS. HE FURTHER SUBMITTED THAT THE A.O. HAS STATED IN THE REASONS (WHICH ARE UNDATED) WHICH HE HAS OBTAIN ED FROM THE INFORMATION, WHICH WAS SUPPLIED FROM THE VIGILANCE DEPARTMENT. T HIS REPORT WAS NEVER SUPPLIED TO THE ASSESSEE FOR COMMENTS. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE ACTION OF THE A.O. IS CONTRARY TO THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF KISHAN CHAND C HELA RAM (125 ITR 713), WHEREIN THE HONBLE SUPREME COURT HELD THAT T HE MATERIAL COLLECTED BY THE A.O. AND USED BY THE A.O. MUST BE CONFRONTED TO THE ASSESSEE FOR REBUTTAL. SHRI R.C. KHANNA, C.A., THE LEARNED COUN SEL FOR THE ASSESSEE, SUBMITTED THAT AGAIN IT IS AN INCURABLE LEGAL INFIR MITY IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. THE A.O. HAS ACCEPT ED THE REPORT OF THE VIGILANCE ORGANIZATION AS A GOSPEL TRUTH WITHOUT CO NDUCTING HIS INDEPENDENT ENQUIRIES TO VERIFY THE CORRECTNESS OF REPORT ABOUT THE ASSESSEE. SHRI R.C. 6 KHANNA, C.A., THE LEARNED COUNSEL FOR THE ASSESSEE, ALSO SUBMITTED THAT THE REASSESSMENT PROCEEDINGS ARE FOR THE BENEFIT OF THE REVENUE AND GREAT ONUS IS CAST UPON THE REVENUE IN RESPECT OF REASSESSMENT PROCEEDINGS BEGINNING WITH THE RECORDING OF REASONS, OBTAINING OF SANCTIO N FROM HIGHER AUTHORITIES WHERE NEED BE AND ABOVE ALL TO CONFINE HIMSELF TO T HE SCOPE OF REASSESSMENT PROCEEDINGS AS SPELLED OUT BY HIM IN THE REASONS RE CODED. SHRI R.C. KHANNA, C.A., THE LEARNED COUNSEL FOR THE ASSESSEE, ALSO POINTED OUT THAT THE A.O. HAS SPECIFIED THAT THE PROCEEDINGS ARE IN RESP ECT OF ONE FDR OF RS.5 LACS AND INTEREST THEREON AMOUNTING TO RS.6832 /-. HOWEVER, THE PERUSAL OF REASSESSMENT ORDER WILL REVEAL THAT HE HAS NOT M ADE ANY ADDITION IN THE REASSESSMENT ORDER PERTAINING TO THIS FDR BUT HE TR AVELLED TO OTHER ISSUES, WHICH WERE BEYOND THE SCOPE OF SECTION 148, THEREFO RE, ALL THE ADDITIONS MADE ARE ILLEGAL AS PER THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF VIPAN KHANNA VS. C.I.T. (2002) 255 ITR 220 (P&H), WHICH WAS DECIDED BY THE HONBLE PUNJAB AND HARYANA COURT BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F SUN ENGINEERING COMPANY. 4.4 SHRI R.C. KHANNA, C.A., THE LEARNED COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE LEARNED CIT(A) HAS NOT CORRECTLY APPRECIATED THE DECISION OF THE HONBE SUPREME COURT IN THE CASE OF CIT (ASS TT.) VS.RAJESH JHAVERI STOCK BROKERS PVT. LTD. (2007) 291 ITR 500 (SC) WHE REIN IT IS STATED THAT THERE MUST BE A BELIEF WHICH MUST BE ARRIVED A T BY THE A.O. AND THAT THERE MUST BE SOME MATERIAL BEFORE THE A.O. SO AS TO ARRIVE AT SUCH A BELIEF IN ORDER THAT THE EXPRESSION REASON TO BELIEVE IS TRIGGERED. SHRI R.C. KHANNA, C.A., THE LEARNED COUNSEL FOR THE ASSESSEE, POINTED OUT THAT THE REASONS RECORDED BY THE A.O. IN THE INSTANT CASE, T HERE IS ONLY AN INFORMATION WHICH HAS PURPORTEDLY BEEN RECEIVED FROM THE VIGILA NCE DEPARTMENT. HE HAS 7 POINTED OUT THAT THE REASONS RECORDED BY THE A.O. A RE UNDATED. THAT MEANS THE A.O. HAS NOT APPLIED HIS MIND. SHRI R.C. KHANNA , C.A., THE LEARNED COUNSEL FOR THE ASSESSEE, ALSO POINTED OUT THAT THE REASONS RECORDED BY THE A.O. ARE WITHOUT APPLICATION OF MIND INASMUCH AS HE STATED THAT NO RETURN OF INCOME HAS BEEN FILED AND HE HAS RESORTED TO SECTIO N 148 OF THE ACT. 5. ON THE CONTRARY IN THE ASSESSMENT ORDER, THE A.O . HAS CATEGORICALLY STATED THAT ORIGINAL RETURN OF INCOME IN THIS CASE WAS FILED ON 1-11-2004 DECLARING INCOME OF RS.1,44,800/- AND AGRICULTURAL INCOME OF RS.1,95,000/-. EVEN IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT, THE ASSESSEE HAS CATEGORICALLY STATED THAT THE RETURN ALREADY FILED ON 1-11-2004 BE TREATED AS FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF TH E ACT. 5.1 IN VIEW OF THE ABOVE, THE LEARNED COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THERE WAS NO BELIEF WHATSOEVER, FOUND BY THE A.O. THAT THERE WAS ANY ESCAPEMENT OF INCOME. ACCORDING TO THE LEARNED COUN SEL FOR THE ASSESSEE, HE A.O. HAS MERELY ACTED ON THE DIRECTION OF THE VIGIL ANCE DEPARTMENT AND THE ADDITIONAL C.I.T., SRINAGAR RANGE, SRINAGAR, WHICH HAS BEEN ALSO REFERRED TO IN THE SO-CALLED REASONS RECORDED. SHRI R.C. KHANNA , C.A., THE LEARNED COUNSEL FOR THE ASSESSEE, FURTHER SUBMITTED THAT TH E A.O. HAS NOT INDEPENDENTLY MADE UP HIS MIND ON THE BASIS OF INFO RMATION RECEIVED FROM THE VIGILANCE DEPARTMENT. SHRI R.C. KHANNA, C.A., THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF C.I.T. VS. SFIL STOCK BROKING LTD. (2010) 3 25 ITR 285 (DEL.). IN VIEW OF THE ABOVE, SHRI R.C. KHANNA, C.A., THE LEAR NED COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE REASSESSMENT ORDER AS WELL AS THE ORDER OF THE CIT(A) UPHOLDING THE REASSESSMENT PROCEEDINGS AS VA LID, MAY BE QUASHED. 6. SHRI TARSEM LAL, THE LEARNED D.R., WHILE APPEARI NG FOR THE REVENUE, STRONGLY SUPPORTED THE ORDER OF THE A.O. AND SUBMIT TED THAT THE A.O. WAS 8 HAVING MATERIAL IN HIS POSSESSION IN THE SHAPE OF L ETTER RECEIVED FROM THE VIGILANCE DEPARTMENT, ON THE BASIS OF WHICH, THE A. O. DID FORM A BELIEF AND, THEREFORE, THE ORDER OF THE CIT(A) MAY BE UPHELD. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E ALSO GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT C ASE, THE A.O. INITIATED THE PROCEEDINGS UNDER SECTION 147/148 OF THE ACT BY REC ORDING THE FOLLOWING REASONS:- OFFICE OF THE INCOME TAX OFFICER, WARD 3, SRINAGA R. 1. NAME OF THE ASSESSEE SHRI MOHD. YOUSUF WANI 2. ADDRESS OF THE ASSESSEE SHOPIAN, KASHMIR 3. STATUS INDIVIDUAL 4. ASSESSMENT YEAR 2004-05. REASONS FOR INITIATION OF PROCEEDING UNDER SECTION 148 OF THE INCOME TAX ACT, 1961. IN THIS CASE INFORMATION WAS RECEIVED FROM J&K VIGI LANCE ORGANIZATION DURING AUGUST THROUGH THE OFFICE OF TH E ADDL. COMMISSIONER OF INCOME TAX, SRINAGAR RANGE, SRINAGA R. THE INFORMATION WAS TITLED AS UNDER:- INFORMATION IN THE CASE OF SHRI MOHD. YOUSUF WANI, FOREST CONTRACTOR, S/O SHRI MOHD RAMZAN WANI, R/O SHOPIAN PRESENTLY AT RAJ BAGH, SRINAGAR AND REFLECTION OF U NACCOUNTED ASSETS OF SHRI MOHD YOUSUF WANI. THE INFORMATION SUPPLIED BY THE VIGILANCE ORGANIZAT ION WAS CONSTITUTED OF TWO PAGES (IN LETTER FORM) AND PHOTO OF FOURTEEN (14) CASH CERTIFICATES/FIXED DEPOSITS IN THE NAME OF SHR I MOHD YOUSUF WANI AND ITS OTHER FAMILY MEMBERS. AFTER ANALYZING THE ENTIRE INFORMATION IT WAS NOTIC ED THAT THE ASSESSEE HAS PURCHASED THE FOLLOWING CASH CERTIFICA TES/FDRS FROM THE J&K BANK, PULWAMA ON THE DATES SHOWN EACH AND PROCE EDINGS UNDER 9 THE INCOME TAX ACT AS MENTIONED BELOW WERE INITIATE D IN RESPECT OF THE RELEVANT ASSESSMENT YEAR:- SR. NO. DATE TYPE AMOUNT 1. 19-8-2003 PURCHASE OF 5 LACS FDR/CCR NO.(0870833) 2. 17-11-2003 INTEREST ON 6832/- FDR/CCR 5,06,832/- AS PER RECORDS THE ASSESSEE HAS NOT FILED HIS RETUR N OF INCOME FOR THE SAID ASSTT. YEAR AND AS SUCH I HAVE REASON TO BELIEVE THAT THE INCOME OF RS.5,06,832/- HAS ESCAPED ASSESSMENT FOR THE ASSTT. YEAR UNDER REFERENCE. ACCORDINGLY NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 IS BEING ISSUED IN THIS CASE. SD/- INCOME TAX OFFICER, WARD 3, SRINAGAR. 7.1 AT THE FIRST INSTANCE, WE MAY POINT OUT THAT THE SO -CALLED REASONS RECORDED BY THE A.O. ARE MERE INFORMATION RECEIVED FROM THE J & K VIGILANCE ORGANIZATION DURING AUGUST THROUGH THE OF FICE OF THE ADDITIONAL COMMISSIONER OF INCOME TAX, SRINAGAR RANGE, SRINAGA R. WE MAY ALSO POINT OUT THAT THE SO-CALLED REASONS RECORDED BY THE A.O. ARE UN-DATED, WHICH MEANS THAT THE A.O. HAS NOT APPLIED HIS MIND WHILE RECORDING THE REASONS. IN THE SO-CALLED REASONS RECORDED, THE A.O. HAS ALSO M ENTIONED THAT AS PER RECORDS THE ASSESSEE HAS NOT FILED HIS RETURN OF IN COME FOR THE ASSESSMENT YEAR AND AS SUCH I HAVE REASON TO BELIEVE THAT THE INCOME OF RS.5,06,832/- HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR UNDE R REFERENCE. THE ABOVE OBSERVATION NOTED BY THE A.O. IS WRONG AND C ONTRARY TO THE RECORDS. 10 FROM THE ASSESSMENT ORDER DATED 29-12-2006 PASSED U NDER SECTION 143(3) OF THE ACT, IT IS CLEAR THAT THE ORIGINAL RETURN IN TH IS CASE WAS FILED BY THE ASSESSEE ON 1-11-2004 DECLARING INCOME OF RS.1,44,8 00/- AND AGRICULTURAL INCOME OF RS.1,95,000/-. SUBSEQUENTLY, THE NOTICE U NDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THA T, THE ASSESSEE SUBMITTED THAT THE RETURN ALREADY FILED ON 1-11-2004 BE TREAT ED AS FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. IN OUR VIEW, THE A.O. HAS CASUALLY RECORDED THE REASONS. IN FACT, HE HAS NOT CARED TO SEE THE RETURN OF INCOME OF THE ASSESSEE, WHICH WAS FILED WELL WITHIN TIME FOR THE YEAR UNDER CONSIDERATION. THIS FACT ALONE SHOWS NON-APPLICATIO N OF MIND BY THE A.O. WE ALSO FIND THAT THE A.O. EVEN DID NOT EXAMINE THE ASSESSEE UNDER SECTION 131 OR 133(6) OF THE ACT TO ASCERTAIN THE TRUTH WIT H REGARD TO THE CONTENTS OF THE LETTER SENT BY THE VIGILANCE DEPARTMENT. IT IS ALSO WORTHWHILE TO MENTION HERE THAT THE PERUSAL OF THE ASSESSMENT ORDER WILL REVEAL THAT THE A.O. HAS NOT MADE ANY ADDITION IN THE REASSESSMENT ORDER PERTAIN ING TO THE FDRS MENTIONED IN THE SO-CALLED REASONS RECORDED BUT HE HAS TRAVELLED TO OTHER ISSUES. THIS FACT ALONE SHOWS THAT THE SO-CALLED R EASONS RECORDED BY THE A.O. WERE MADE WITHOUT APPLICATION OF MIND BY THE A.O. I N OUR CONSIDERED VIEW, RELIANCE PLACED BY THE A.O. ON THE LETTER OF VIGILA NCE DEPARTMENT WAS NOT SUFFICIENT TO MAKE A BELIEF THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT. IN THE PRESENT CASE, THE REASON FOR FO RMATION OF BELIEF WAS ONLY THE INFORMATION RECEIVED FROM THE VIGILANCE ORGANIZ ATION. IN OUR OPINION, THE SO-CALLED REASON RECORDED BY THE A.O. COULD NOT BE HELD THE REASON FOR PROCEEDINGS UNDER SECTION 147/148 OF THE ACT, SINCE IT WAS ONLY AN INFORMATION AND WAS NOT AT ALL DISCERNIBLE AS TO WH ETHER THE A.O. HAS APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIV ED AT A BELIEF, ON THE BASIS OF MATERIAL WHICH HE HAD BEFORE HIM, THE INCO ME OF THE ASSESSEE HAD 11 ESCAPED ASSESSMENT. WHILE TAKING SUCH A VIEW, WE A RE FORTIFIED BY THE RATIO LAID IN THE JUDGMENT OF THE HONBLE DELHI HIGH COUR T IN THE CASE OF C.I.T. VS. SFIL STOCK BROKING LTD. (2010) 325 ITR 285 (DEL HI) (SUPRA), WHEREIN IT HAS BEEN HELD AS UNDER:- AFTER HAVING HEARD THE COUNSEL FOR THE PARTIES, WE ARE INCLINED TO AGREE WITH THE SUBMISSIONS MADE BY THE RESPONDENT/A SSESSEE. WE FIND THAT THE SUPREME COURT IN RAJESH JHAVERI [2007] 291 ITR 500 MADE IT ABSOLUTELY CLEAR THAT BEFORE AN ASSESSING OFFICER I SSUES A NOTICE UNDER SECTION 148, THEREBY REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE SAID ACT, HE MUST HAVE SOME BASIS FOR FORMING S UCH A BELIEF. THE SUPREME COURT MADE IT CLEAR THAT THE BASIS OF SUCH BELIEF COULD BE DISCERNED FROM THE MATERIAL ON RECORD WHICH WAS AVA ILABLE WITH THE ASSESSING OFFICER. HOWEVER, THE SUPREME COURT IN R AJESH JHAVERI [2007] 291 ITR 500 DID NOT SAY THAT IT WAS NOT NECE SSARY FOR THE ASSESSING OFFICER TO FORM A BELIEF AND THAT THE M ERE FACT THAT THERE WAS SOME MATERIAL ON RECORD WAS SUFFICIENT. IN THE PRESENT CASE, WE FIND THAT THE FIRST SENTEN CE OF THE SO- CALLED REASONS RECORDED BY THE ASSESSING OFFICER IS MERE INFORMATION RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME TAX (IN VESTIGATION). THE SECOND SENTENCE IS A DIRECTION GIVEN BY THE VERY SA ME DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION) TO ISSUE A NOTICE UND ER SECTION 148 AND THE THIRD SENTENCE AGAIN COMPRISES OF A DIRECTION G IVEN BY THE ADDITIONAL COMMISSIONER OF INCOME TAX TO INITIATE P ROCEEDINGS UNDER SECTION 148 IN RESPECT OF CASES PERTAINING TO THE R ELEVANT WARD. THESE THREE SENTENCES ARE FOLLOWED BY THE FOLLOWING SENTE NCE, WHICH IS THE CONCLUDING PORTION OF THE SO-CALLED REASONS: THUS, I HAVE SUFFICIENT INFORMATION IN MY POSSESSI ON TO ISSUE NOTICE UNDER SECTION 148 IN THE CASE OF M/S.SFIL ST OCK BROKING LTD. ON THE BASIS OF REASONS RECORDED AS ABOVE. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSING OFFI CER REFERRED TO THE INFORMATION AND THE TWO DIRECTIONS AS REASONS ON THE BASIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTICE UNDER SECTION 148 . WE ARE AFRAID THAT THESE CANNOT BE THE REASONS FOR PROCEEDING UND ER SECTION 147/148 OF THE SAID ACT. THE FIRST PART IS ONLY AN INFORMA TION AND THE SECOND AND THE THIRD PARTS OF THE BEGINNING PARAGRAPH OF T HE SO-CALLED REASONS 12 ARE MERE DIRECTIONS. FROM THE SO-CALLED REASONS, I T IS NOT AT ALL DISCERNIBLE AS TO WHETHER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIVED AT A B ELIEF THAT, ON THE BASIS OF THE MATERIAL WHICH HE HAD BEFORE HIM, INCO ME HAD ESCAPED ASSESSMENT. CONSEQUENTLY, WE FIND THAT THE TRIBUNAL HAS ARRIVED AT THE CORRECT CONCLUSION ON THE FACTS. THE LAW IS WELL S ETTLED. THERE IS NO SUBSTANTIAL QUESTION OF LAW WHICH ARISES FOR OUR CO NSIDERATION. THE APPEAL IS DISMISSED. FROM THE ABOVE, IT IS CLEAR THAT THE HONBLE DELHI HIGH COURT HAS ALSO CONSIDERED THE DECISION OF THE HONBLE SUPREME COUR T RENDERED IN THE CASE OF CIT VS. RAJESH JHAVERI (2007) 291 ITR 500 AND AF TER CONSIDERING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F RAJESH JHAVERI (SUPRA), THE DELHI HIGH COURT CONCLUDED THAT THE A.O. HAS NO T APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIVED AT A BELIEF T HAT ON THE BASIS OF THE MATERIAL WHICH HE HAD BEFORE HIM, INCOME HAD ESCAPE D ASSESSMENT. IN THE INSTANT CASE ALSO, IT IS CRYSTAL CLEAR THAT THE A.O . HAS NOT APPLIED HIS MIND AND ALSO NOT INDEPENDENTLY ARRIVED AT A BELIEF THAT ON THE BASIS OF THE MATERIAL HE HAD BEFORE HIM, INCOME HAS ESCAPED ASSESSMENT, AND THEREFORE, WE ALLOW GROUND NOS.1 TO 4 OF THE APPEAL AND QUASH THE REASS ESSMENT ORDER. 8. SINCE WE HAVE QUASHED THE REASSESSMENT ORDER DAT ED 29-12-2006 AND, THEREFORE, WE DO NOT THINK IT NECESSARY TO DECIDE G ROUNDS OF APPEAL RAISED ON MERITS BY THE ASSESSEE IN THIS APPEAL. 9. IN THE RESULT, THE APPEAL IS ALLOWED AS INDICATE D ABOVE. THE ORDER PRONOUNCED IN THE OPEN COURT ON 6TH JUN E, 2011. SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER. VICE PRESIDENT. DATED: 6TH JUNE, 2011. KC/- 13