M/s Rashi Buildcon (P) Ltd., Mathura V. I.T.O.-3(3), Mathura

ITA 407/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0649 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 8 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-05-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 23-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Reopening of assessment; Unexplained expenditure; Capital asset; Depreciation; Search and seizure; Loose papers; Rule of consistency; Source of fund; Question of law; Wrong claim; Accommodation entries; Right to appeal; Sham transactions; Bogus loan; Reason to believe
• Section: 69C; 2(14); 133A; 143(1); 147; 148; 37; 154; 139

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.407/AGRA/2012 ASSESSMENT YEAR: 2004-05 M/S. RASHI BUILDCON (PVT.) LTD. VS. INCOME TAX O FFICER 3(3), SARASWAT PARA, FARAH, MATHURA. DISTRICT MATHURA. (PAN : AAHCS 0929 E). (APPELLANT) (RESPONDENT) APPELLANT BY : DR. RAKESH GUPTA, C.A. RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 29.05.2013 DATE OF PRONOUNCEMENT : 21.06.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 15.03.2012. PASSED BY THE LD. CIT(A)-I, AGRA FOR THE ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE HAS RAISED AS MANY AS 16 GROUNDS OF APPEAL. HOWEVER, AT THE TIME OF HEARING THE LD. AUTHORISED REPRESENTATIVE S UBMITTED THAT EFFECTIVELY THERE ARE TWO GROUNDS OF APPEAL. THE FIRST GROUND IS IN RESPECT OF REOPENING OF 2 ITA NO.407/AGRA/2012 A.Y. 2004-05 COMPLETED ASSESSMENT UNDER SECTION 147 OF THE INCOM E TAX ACT, 1961 (THE ACT HEREINAFTER) AND ANOTHER GROUND IS IN RESPECT OF AD DITION OF RS.38,09,500/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY A NOTICE UNDER SECTION 14 8 OF THE ACT WAS ISSUED ON 27.03.2009 WHICH WAS SERVED ON 31.03.2009. THE REA SONS RECORDED FOR REOPENING IS REPRODUCED FROM PAGE NO.2 OF THE A.O.S ORDER AS UNDER :- (PAGE NO.2) INFORMATION HAS BEEN RECEIVED FROM ADIT(INV)-1,AGR A THAT M/S RASHI BUILDCON PVT. LTD., SARASWATPARA, FARAH, DIST. MATH URA HAS RECEIVED FOLLOWING ACCOMMODATION ENTRIES FROM M/S AAYUSHI ST OCK BROKERS (FORMERLY KNOWN AS COSMOS FINANCIAL SERVICES PVT. LTD., 38-4B /IF, FRIENDS CENTRE, SANJAY PLACE, AGRA :- INSTRUMENT NO. INSTRUMENT DATE BANK DETAILS AMOUNT CLEARING DATE 78483 10.10.2003 CANARA BANK, 1500000 11.10.200 3 KAMLA NAGAR, AGRA 78489 13.10.2003 ----DO---- 1500000 14.10.2 003 78490 14.10.2003 ----DO---- 80000 15.10. 2003 ------------ 3800000 ------------ M/S RASHI BUILDEON PVT. LTD., FARAH (PAN AAHCS0929E ) WAS EARLIER FILING ITS RETURN OF INCOME IN THE NAME OF M/S SAGAR SOPAS PVT. LTD., FIROZABAD BYE PASS ROAD, AGRA WITH ITO 4(3), AGRA. AFTER CHA NGE OF NAME FROM M/S SAGAR SOPAS PVT.LTD. TO M/S RASHI BUILDCON PVT., FA RAH, THE COMPANY IS FILING RETURN OF INCOME WITH ITO 3(3), MATHURA. M/S RASHI BUILDCON PVT. LTD., FARAH HAS RECEIVED TH E ACCOMMODATION ENTRIES AMOUNTING TO RS.38,00,000/- AS ABOVE IN THE MONTH OF OCTOBER, 03, I.E., PERTAINING TO ASST. YEAR 2004-05, WHICH APPEA R TO HAVE ESCAPED 3 ITA NO.407/AGRA/2012 A.Y. 2004-05 ASSESSMENT. IN VIEW OF THESE FACTS, I HAVE REASON T O BELIEVE THAT INCOME TO THE TUNE OF ACCOMMODATION ENTRIES AMOUNTING TO RS.38,00 ,000/- HAS ESCAPED ASSESSMENT FOR THE ASSTT. YEAR 2004-05. 4. THE A.O. AFTER CONSIDERING THE ASSESSEES SUBMIS SION NOTED THAT A SURVEY UNDER SECTION 133A OF THE ACT WAS CARRIED OUT ON 24 .04.2001 IN THE CASE OF M/S. AAYUSHI STOCK BROKERS PVT. LTD. IN WHICH A LARGE NU MBER OF INCRIMINATING BOOKS OF ACCOUNTS, BILLS, LOOSE PAPERS, DIARIES ETC. RELATIN G TO FINANCIAL YEARS 2000-01 AND 2001-02 WERE FOUND AND IMPOUNDED. DURING THE COURS E OF ASSESSMENT, DETAILED ENQUIRIES WERE MADE BY THE A.O. FROM THE PERSONS WH O HAD MADE TRANSACTIONS WITH M/S. AAYUSHI STOCK BROKERS PVT. LTD. AFTER CONSIDE RING THE MATERIAL ON RECORD, IT WAS FOUND BY THE A.O. THAT THOUGH THE DECLARED BUSI NESS OF M/S. AAYUSHI STOCK BROKERS PVT. LTD. WAS THAT OF A SHARE BROKER BUT TH E SAID SHARE BROKER WAS ACTUALLY INVOLVED IN MONEY LAUNDERING BUSINESS ON A VERY LAR GE SCALE AND IN THE GRAB OF SHARE BOOKING BUSINESS, THE ASSESSEE WAS ACTUALLY P ROVIDING ACCOMMODATION ENTRIES IN THE SHAPE OF BOGUS SHARE MONEY, SHARE AP PLICATION MONEY, LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN ETC. 5. THE A.O. MADE THE ADDITION OF RS.38,00,000/- ON THE BASIS OF CREDIT IN BANK ENTRIES ACCOUNT. THE A.O. HAS ALSO CALCULATED THE AMOUNT OF EXPENDITURE FOR THIS PURPOSE. THE RELEVANT FINDING OF THE A.O. IS AS UN DER :- (PAGE NO.8) 4 ITA NO.407/AGRA/2012 A.Y. 2004-05 AS PER THE FACTS AND EVIDENCES DISCUSSED ABOVE AND IN TOTALITY OF THE CIRCUMSTANTIAL EVIDENCES APPARENT IN THIS CA SE IT IS EVIDENT THAT THE ALLEGED RECEIPT OF RS.38,00,000/- (1500000 + 15 00000 + 800000) IN THE BANK, ACCOUNT NO. KHCA000002939 OF THE ASSES SEE WITH CANARA BANK, KAMLA NAGAR, AGRA FROM M/S AAYUSHI STO CK BROKERS PVT. LTD. IN THE GARB OF SALE CONSIDERATION OF SHAR ES OF M/S PRASH PRINTING & PUBLICATION (P) LTD., M/S B.V. FINANCE & LEASING (P) LTD. AND M/S ANUPAM TILES (P) LTD. WERE SHAM TRANSACTION S. THE FACT IS THAT THE ASSESSEE WAS REQUIRING FUNDS FOR INVESTMEN TS AND THAT IS WHY HE RESORTED TO TAKE SHELTER OF ACCOMMODATION ENTRIE S BUY BECOMING PART OF THIS RACKET. AS SUCH HE PLOUGHED BACK HIS O WN UNDISCLOSED MONEY WITH THE HELP OF ACCOMMODATION ENTRY OPERATOR S. THE FACT IS THAT THESE SHARES WERE NEVER PURCHASED BY THE ASSES SEE IN THE FINANCIAL YEAR 2002-03, COPY OF BANK ACCOUNT OF M/S AAYUSHI STOCK BROKER, DETAILS OF BROKERAGE AND OTHER RELEVANT DET AILS REQUIRED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ALL TH E DOCUMENTARY EVIDENCES BROUGHT ON RECORD AND DISCUSSED ABOVE AND THE CIRCUMSTANTIAL EVIDENCES ESTABLISH THAT THE ASSESSE E HAS FAILED TO SUBSTANTIATE THE GENUINENESS OF THE SAID CREDITS. THE ASSESSEE HAS THUS FAILED TO DISCHARGE HIS ONUS IN THIS REGARD TO SUBSTANTIATE THE GENUINENESS OF THE CREDIT ENTRY OF RS.38,00,000/- IN THE BANK ACCOUNT WITH CANARA BANK, AGRA. HENCE, THE AMOUNT OF RS.38,00,000/- IS HELD TO BE UNEXPLAINED AND IS ORD ERED TO BE ADDED TO THE INCOME OF THE ASSESSEE AS INCOME FROM OTHER SOU RCES. BESIDES THAT IT IS APPARENT THAT THE ENTRY OF THE ALLEGED TRANSA CTIONS OF SHARES AMOUNTING TO RS.38,00,000/- WOULD HAVE BEEN TAKEN O N COMMISSION @ 0.25%, THE RATE PREVALENT AT THAT TIME FOR SUCH ENT RIES AS PER THE REPORT OF THE WING. ACCORDINGLY, A SUM OF RS.9500/- IS ALSO ADDED TO THE INCOME OF THE ASSESSEE AS EXPLAINED EXPENDITURE WITHIN THE MEANING OF SECTION 69C OF THE I.T. ACT, 1961. I AM SATISFIED THAT THE ASSESSEE HAS CONCEALED THE INCOME OF RS.38,00,000/- AND RS.9500/- BY WAY OF WILLFUL ATTE MPTS OF CLAIMING ACCOMMODATION CREDITS ENTRIES AS GENUINE TRANSACTIO NS OF SHARES AND COMMISSION PAID TO ENTRY PROVIDER AS DISCUSSED ABOV E AND IS THEREFORE, LIABLE FOR THE PENALTY UNDER SECTION 271 (1)(C) OF THE I.T. ACT,1961. 5 ITA NO.407/AGRA/2012 A.Y. 2004-05 6. THUS, THE A.O. MADE ADDITION OF TOTAL AMOUNT OF RS.38,09,500/-. 7. BEFORE THE CIT(A) THE ASSESSEE HAS CHALLENGED TH E REOPENING. THE CIT(A), AFTER CONSIDERING THE ASSESSEES SUBMISSION, CONFIR MED THE ACTION OF THE A.O. FOR REOPENING OF ASSESSMENT UNDER SECTION 147 AS UNDER :- (PAGE NOS.7 & 8) HOWEVER, FACTS THE CASES IN THE PRESENT APPEAL ARE DIFFERENT THAN THE FACTS OF ALL THE CASE LAWS CITED BY THE LD . AR IN HIS WRITTEN SUBMISSION. IN PRESENT CASE, THE FACT OF THE CASE I S THAT THE ORIGINAL RETURN FILED BY THE ASSESSEE (APPELLANT) WAS ONLY P ROCESSED U/S 143(1)(A) WITHOUT DOING ANY SECURITY OR EXAMINING T HE CORRECTNESS OF THE DETAILS OF INCOME DECLARED BY THE ASSESSEE IN T HE RETURN OF INCOME AND SUCH ACCEPTANCE OF RETURN OF INCOME U/S 143(1)( A) HAS BEEN HELD BY THE HONBLE SUPREME COURT IN CASE OF ACIT VS. RA JESH JHAVERY STOCK BROKERS PVT. LTD. (2007) 161 TAXMAN 316 AS NO T AN ASSESSMENT ORDER AND ASSESSMENT PROCEEDING FOR SUCH RETURNS CAN BE INITIATED UNDER 147, IF THE AO FOR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AND SUCH REASON CONFERS JURISDICTION UPON HIM TO REOPEN THE CASE, IF SUCH R EASON PROVIDES A CAUSE OR JUSTIFICATION TO REOPEN THE ASSESSMENT PROCEEDING. IT HAS ALSO BEEN HELD BY THE HONBLE SUPREME COURT IN THE ABOVE CITED CASE THAT IF THE ASSESSING OFFICER HAS CAUSE JUSTIFICA TION TO KNOW OR SUPPOSE THAT INCOME HAS ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON TO BELIEVE THAT AN INCOME HAD ESCAPED ASSESS MENT AND THE EXPRESSION REASON TO BELIEVE CANNOT BE READ TO ME AN THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCERTAINED T HE FACT BY LEGAL EVIDENCE OR CONCLUSION. THE ABOVE DECISION OF HONB LE SUPREME COURT HAS BEEN FOLLOWED BY THE HONBLE PUNJAB & HAR YANA HIGH COURT IN A RECENT DECISION IN CASE OF OM INTERNATIO NAL VS. CIT (2011) 15 TAXMAN.COM 184 IN WHICH, REOPENING OF PROCEEDING U/S 147 IS HELD TO BE VALID BECAUSE RETURN OF INCOME WAS EARLIER PR OCESSED U/S 143(1)(A) ONLY. IN THE PRESENT CASE UNDER APPEAL ALSO, THE INITIAL RETURN FILED BY THE ASSESSEE WAS PROCESSED U/S 143(1)(A) ONLY AND I NFORMATION WAS 6 ITA NO.407/AGRA/2012 A.Y. 2004-05 RECEIVED BY THE AO THAT BOGUS ENTRIES OF LONG TERM CAPITAL GAIN WAS PROVIDED BY CERTAIN BROKERS TO A NUMBER OF ASSESSEE IN AGRA IN WHICH, NAME OF THE ASSESSEE (APPELLANT) WAS ALSO INCLUDED AND HENCE, SUCH INFORMATION PROVIDED A CAUSE TO THE AO TO REOPEN THE CASE OF THE ASSESSEE (APPELLANT) U/S 147 AS PR THE DECISION OF HONBLE SUPREME COURT IN CASE OF ACIT VS. RAJESH JHAVERI STOCK BROK ERS PVT. LTD. (SUPRA). AFTER GOING THROUGH THE CASE RECORD, I HAV E FOUND THAT THE AO HAS RECORDED THE REASON FOR ESCAPEMENT OF INCOME ON THE BASIS OF THE INFORMATION PROVIDED BY THE INVESTIGATION WING ABOU T RECEIPT OF RS.38 LAC SHOWN BY THE ASSESSEE ON ACCOUNT OF SALE OF SH ARE BEING IN FACT, AN ACCOMMODATION ENTRY AND SUCH INFORMATION WHICH P ROVIDED TRIGGER POINT TO THE AO IS THE CAUSE FOR THE REOPENING OF THE ASSESSMENT PROCEEDING OF THE ASSESSEE(APPELLANT) ESPECIALLY, W HEN ITS EARLIER RETURN WAS ONLY PROCESSED U/S 143(1)(A) WHICH IS NO T AN ASSESSMENT AT ALL AND THERE IS NO CLEAR EVIDENCE ON RECORD WHETHE R SUCH RETURN WAS NOT IN POSSESSION OF THE AO. IT IS ONLY IMAGINATION OF LD. AR THAT THE AO HAS NOT SEEN THE ORIGINAL RETURN. IN ANY WAY, TH E INFORMATION ABOUT ACCOMMODATION ENTRY HAS NOTHING TO DO WITH TH E RETURN OF INCOME BECAUSE SUCH ACCOMMODATION ENTRIES ARE NEVER DECLARED IN THE RETURN OF INCOME IN THE PROPER FORM. THEREFORE, I DO NOT AGREE WITH THE LD. AR THAT IN ABSENCE OF THE RETURN OF IN COME, THE AO COULD NOT HAVE REOPENED THE ASSESSMENT PROCEEDING, SPECIA LLY WHEN SUCH RETURN OF INCOME WAS NOT EARLIER ASSESSED AND ACCEP TED ONLY U/S 143(1)(A). THEREFORE, I FIND THAT THE AO IS LEGALLY CORRECT IN REOPENING OF THE ASSESSMENT PROCEEDING OF THE ASSESSEE (APPEL LANT) U/S 147 AND HENCE, NOTICE ISSUED BY HIM U/S 148 AND SUBSEQUENT ASSESSMENT ORDER PASSED U/S 147/143(3) IS ALSO LEGALLY VALID. THEREF ORE, ALL GROUNDS FROM GROUND NO.1 TO 5 ARE DISMISSED. 8. THE CIT(A) WHILE DEALING THE ISSUE ON MERIT NOTI CED THAT THE MAIN ISSUE IN DISPUTE WAS AS TO HOW SHARES OF THREE COMPANIES I.E . M/S PRAS PRINTING & PUBLISHING PVT. LTD., M/S B.V. FINANCIAL & LEASING PVT. LTD. AND M/S ANUPAM TILES PVT. LTD. WERE ACQUIRED BY THE ASSESSEE AND F ROM WHICH ACCOUNT OF THE ASSESSEE THE PAYMENTS WERE MADE TO PURCHASE THESE S HARES. THE CIT(A) ON HIS 7 ITA NO.407/AGRA/2012 A.Y. 2004-05 OWN ENQUIRY FOUND THAT IN NONE OF THESE SALE AND PU RCHASE BILLS ANY DISTINCTIVE NUMBERS OF SHARES ARE MENTIONED. IT WAS ALSO FOUND THAT SHARES OF M/S PRAS PRINTING & PUBLISHING PVT. LTD., M/S. B.V. FINANCE & LEASING PVT. LTD AND M/S. ANUPAM TILES PVT. LTD HAVE NOT BEEN DIRECTLY ALLOTT ED TO THE ASSESSEE COMPANY. THE CIT(A) AFTER A DETAILED DISCUSSION OBSERVED THA T THERE SHOULD BE SOME END TO CREATION OF SUCH DEVICES AND THESE FACTS AND CIRCUM STANCES CLEARLY PROVES THAT THE ASSESSEE FAILED TO ESTABLISH ACQUISITION OF ANY OF SUCH SHARES EITHER OF M/S KEDIA INFOTECH LTD. AND M/S G.K. CONSULTANT LTD. OR SHARE S OF THREE COMPANIES I.E. M/S PRAS PRINTING & PUBLISHING PVT. LTD, M/S B.V. FINAN CIAL & LEASING PVT. LTD. AND M/S ANUPAM TILES PVT. LTD. CLAIMED TO HAVE BEEN SOL D DURING THE YEAR UNDER CONSIDERATION BECAUSE THERE IS NO EXPLAINED SOURCE OF FUND OF RS.38,00,000/- AVAILABLE WITH THE ASSESSEE JUSTIFYING ACQUISITION OF SUCH SHARES. THE CIT(A) HELD THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE SOURC E OF ACQUISITION OF SHARES OF THESE THREE COMPANIES. THE RELEVANT FINDING OF CIT(A) IS REPRODUCED AS UNDER :- (PAGE NO.19) 6.5 IN VIEW OF MY ABOVE FINDINGS THAT THE LD. AR H AS FAILED TO ESTABLISH THE SOURCE OF ACQUISITION OF SHARES OF TH REE COMPANIES WHICH HAVE BEEN CLAIMED TO BE SOLD DURING THE YEAR UNDER CONSIDERATION FOR EXPLAINING THE RECEIPT OF RS.38 LAC, I FIND THAT TH E AO IS CORRECT IN HOLDING THAT THE AMOUNT OF RS.38 LAC IS UNEXPLAINED AND LIABLE TO BE ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE(APPELLA NT) UNDER THE HEAD INCOME FROM OTHER SOURCE AND THIS AMOUNT IS IN THE NATURE OF UNEXPLAINED MONEY SHOULD BE ADDED AS PER PROVISION OF SECTION 69A OF THE INCOME TAX, 1961 BECAUSE IF ACQUISITION OF A LLEGED SHARES IS NOT 8 ITA NO.407/AGRA/2012 A.Y. 2004-05 ESTABLISHED, THEIR SALE CLAIMED TO HAVE BEEN MADE W ITHOUT MENTIONING THEIR DISTINCTIVE NUMBERS IN THE SALE BILL CANNOT B E SAID TO BE GENUINE SALE OF SHARES TO EXPLAIN RECEIPT OF RS.38 LAC. SINCE THE AMOUNT OF RS.38 LAC HAS BEEN FOUND TO BE IN THE NATURE OF AN ACCOMMODATION ENTRY AND SUCH ACCOMMODA TION ENTRY IN THE MARKET ARE PROVIDED ONLY ON PAYMENT OF CERTAIN COMMISSION AND THE O HAS COMPUTED A VERY REASONABLE AMOUNT OF RS.9 ,500/- @ 0.25% OF THE AMOUNT OF ENTRY. IN MY CONSIDERED OPINION SU CH AMOUNT OF COMMISSION FOR OBTAINING ENTRY OF RS.38 LAC IS VERY MUCH JUSTIFIED AND HENCE, ADDITION OF RS.9,500/- IS ALSO CONFIRMED. 6.6 IN VIEW OF MY ABOVE DECISION, I CONFIRM THE ADD ITION OF RS.38 LAC BEING UNEXPLAINED MONEY U/S 69A AND ALSO THE AM OUNT OF RS.9,500/- AS COMMISSION PAID FOR OBTAINING THE ABO VE ENTRY TO BE ADDED U/S 69C AS UNEXPLAINED EXPENDITURE, ALL THE G ROUNDS TAKEN BY THE APPELLANT FROM GROUND NO.6 TO 9 ARE DISMISSED. 9. IN RESPECT OF REOPENING OF THE ASSESSMENT UNDER SECTION 147 OF THE ACT THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESS EE CHALLENGED THE REOPENING ONLY ON THE GROUND THAT THE REASONS RECORDED WERE N OT IN ACCORDANCE WITH LAW. THE REASON RECORDED BY THE A.O. BASED ON BORROWED SATIS FACTION. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT IN THE REASONS RECORD ED, THERE WAS NO REASON TO BELIEVE. HE SUBMITTED THAT FOR REOPENING COMPLETED ASSESSMENT UNDER SECTION 147, THERE MUST BE REASON TO BELIEVE AND NOT MERELY BELI EF. THE LD. AUTHORISED REPRESENTATIVE IN SUPPORT OF HIS CONTENTION RELIED UPON THE FOLLOWING DECISIONS:- I) CIT V BATRA BHATTA COMPANY 321 ITR 526 (DELHI) II) CIT VS. SFIL STOCK BROKING LTD. 325 ITR 285 (DE L) III) CIT VS. SMT. PARAMJIT KAUR, 311 ITR 38 (P&H) IV) SARTHAK SECURITIES CO. (P) LTD. VS. ITO, 329 IT R 110 (DEL) 9 ITA NO.407/AGRA/2012 A.Y. 2004-05 V) SHREE RAJASTHAN SYNTEX LTD. VS. ACIT, 93 ITD 78 (JD) 10. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THA T THE ORDER OF I.T.A.T., JODHPUR BENCH IN THE CASE OF SHREE RAJASTHAN SYNTEX PVT. LTD, 93 ITD 78 (JD) HAS BEEN CONFIRMED BY THE HONBLE RAJASTHAN HIGH COURT REPORTED IN 313 ITR 231 (RAJ). 11. ON MERIT, THE LD. AUTHORISED REPRESENTATIVE SUB MITTED THAT IT IS ADMITTED FACT THAT THE ASSESSEE HAS SOLD SHARES WHICH WERE PURCHA SED IN EARLIER YEAR. LD. AUTHORISED REPRESENTATIVE IN SUPPORT OF HIS CONTENT ION DREW OUR ATTENTION ON PAGE NO.92 OF THE PAPER BOOK WHERE AT SCHEDULE-B INVESTM ENT AS ON 31.03.2003 HAS BEEN PLACED. THE SAME IS REPRODUCED AS UNDER :- S.NO. PARTICULARS FIGURE AS AT 31.03.2003 FIGURE AS AT 31.03.2002 A. G.K. CONSULTANTS LIMITED (1,12,820 SHARES @ 81.83 EACH) 9231550/- 17572880/- B. KEDIA INFOTECH LIMITED (92,000 SHARES @ 25.36 EACH) - 2333120/- C. ANUPAM TILES PRIVATE LIMITED (1,00,000 SHARES @ 10 EACH) 1000000/- - D. ASPEN HOLDINGS PRIVATE LIMITED (10,000 SHARES @ 100 EACH) 1000000/- - E. B.V. FINANCE & LEASING PRIVATE LIMITED (11,000 SHARES @ 100 EACH) 1100000/- - 10 ITA NO.407/AGRA/2012 A.Y. 2004-05 G. PRASH PRINTING & PUBLICATIONS PVT. LTD. (4000 SHARES @ 500 EACH) 2000000/- - H. SIF PIPE & METAL PRIVATE LIMITED (25,000 SHARES @ 10 EACH) 250000/- - TOTAL INVESTMENT 14581550/- 19906000/- 12. FROM THE ABOVE INVESTMENT SCHEDULE, THE LD. AUT HORISED REPRESENTATIVE POINTED OUT THAT THE ASSESSEE HAS CLEARLY SHOWN THE INVESTMENT IN THREE COMPANIES NAMELY M/S. ANUPAM TILES PVT. LTD. RS.10,00,000/-, M/S. B.V. FINANCE & LEASING PVT. LTD. RS.11,00,000/- OUT OF WHICH THE ASSESSEE HAS SOLD 8,00,000 SHARES & M/S. PRASH PRINTING & PUBLICATIONS PVT. LTD. RS.20,00,00 0/- LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE HAS SUBMITTED CONFIRMATION FROM M/S AAYUSHI STOCK BROKERS PVT. LTD. IN SUPPORT OF T HE FACT THAT THE ASSESSEE RECEIVED AMOUNT OF RS.38,00,000/- AGAINST THE SALE OF SHARES THROUGH THREE DIFFERENT CHEQUES OF RS.15,00,000/-, RS.15,00,000/- AND RS.8, 00,000/-, ALL ARE DATED 10 TH OCTOBER, 2003. THE LD. AUTHORISED REPRESENTATIVE F URTHER REFERRED PAGE NO.84 OF THE ASSESSEES PAPER BOOK WHERE COPY OF BANK ACCOUN T OF BROKER HAS BEEN PLACED AND SUBMITTED THAT THE PAYMENT RECEIVED TO THE ASSE SSEE THROUGH CHEQUES. LD. AUTHORISED REPRESENTATIVE WHILE REFERRING PAGE NO.7 OF AOS ORDER SUBMITTED THAT SURVEY UNDER SECTION 133A OF THE ACT WAS CARRIED OU T IN CASE OF AAYUSHI STOCK BROKERS PVT. LTD. ON 24.04.2001 WHEREAS THE CASE OF THE ASSESSEE UNDER CONSIDERATION IS FOR A.Y. 2004-05. THE LD. AUTHORI SED REPRESENTATIVE REFERRED 11 ITA NO.407/AGRA/2012 A.Y. 2004-05 PAGE NO.76 OF THE PAPER BOOK WHERE COPY OF ASSESSME NT ORDER IN CASE OF AAYUSHI STOCK BROKERS PVT. LTD. HAS BEEN PLACED WHERE NO SU CH AMOUNT HAS BEEN TAKEN IN CASE OF AAYUSHI STOCK BROKERS PVT. LTD. LD. AUTHO RISED REPRESENTATIVE SUBMITTED THAT IN THIS REGARD BURDEN IS ON THE REVENUE. HE R ELIED UPON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. PRA DEEP KUMAR GUPTA, 303 ITR 95 (DEL). THE LD. AUTHORISE REPRESENTATIVE FURTHER SUBMITTED THAT THE A.O. MADE OUT THE CASE THAT THE AMOUNT RECEIVED ON SALE OF SH ARES WAS NOT GENUINE WHEREAS THE CIT(A) HAS GIVEN FINDING THAT THE PURCHASE WAS NOT GENUINE, BUT IN FACT, THE SHARES WERE PURCHASED IN LAST YEAR AND THE SAME HAS BEEN SHOWN IN THE BALANCE SHEET OF THE ASSESSEE. 13. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, RELIED UPON THE ORDERS OF A.O. AND CIT(A) AND SUBMITTED THAT IN SUC H CIRCUMSTANCES, THE REASONS RECORDED ARE IN ACCORDANCE WITH LAW AND THE A.O. HA S RIGHTLY REOPENED THE ASSESSMENT. THE LD. DEPARTMENTAL REPRESENTATIVE IN HIS CONTENTION RELIED UPON THE FOLLOWING JUDGMENT:- I) ITO VS. PURUSHOTTAM DAS BANGUR & ANOTHER, 224 I TR 362 (SC) II) CONSOLIDATED PHOTO & FINVEST LIMITED VS. ACIT, 281 ITR 394 (DEL) 14. ON MERIT, THE LD. DEPARTMENTAL REPRESENTATIVE R ELIED UPON THE ORDERS OF REVENUE AUTHORITIES AND RELIED UPON JUDGEMENT OF HO NBLE PUNJAB & HARYANA 12 ITA NO.407/AGRA/2012 A.Y. 2004-05 HIGH COURT IN THE CASE OF BALBIR CHAND MAINI VS. CI T & ANOTHER, 340 ITR 161 (P&H). HE HAS ALSO RELIED UPON THE ORDER OF I.T.A. T. IN THE CASE OF ITO VS. SHRI SAYENDRA SHARMA IN ITA NO.584/AGR/2008 VIDE ORDER D ATED 25.06.2010. 15. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES, RECORDS PERUSED AND GONE THROUGH DECISIONS CITED. SINCE THE FIRST EFFE CTIVE GROUND OF APPEAL IS IN RESPECT OF SECTION 147 OF THE ACT, TO EXAMINE THE I SSUE, WE WOULD LIKE TO REPRODUCE THE RELEVANT SECTION 147 OF THE ACT AS UNDER :- [ INCOME ESCAPING ASSESSMENT. 147. IF THE [ASSESSING] OFFICER [HAS REASON TO BELIEVE] THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, A SSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RE COMPUTE THE L OSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY B E, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SE CTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSM ENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOU R YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECT ION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS59 NECESSARY FOR HIS AS SESSMENT, FOR THAT ASSESSMENT YEAR: [PROVIDED FURTHER THAT THE ASSESSING OFFICER MAY A SSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHI CH ARE THE SUBJECT- MATTER OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT.] 13 ITA NO.407/AGRA/2012 A.Y. 2004-05 EXPLANATION 1.PRODUCTION BEFORE THE ASSESSING OFFI CER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COUL D WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROV ISO. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, TH E FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT, NAMELY : (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED B Y THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF AN Y OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOM E-TAX ; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE A SSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN ; (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESSE D ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RA TE ; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXC ESSIVE RELIEF UNDER THIS ACT ; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR A NY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED.] 16. TO APPRECIATE THE ISSUE, WE WOULD LIKE TO REFER CERTAIN JUDICIAL PRONOUNCEMENTS WHICH ARE AS UNDER:- PHOOL CHND BAJARANG LAL AND ANOTHER VS. ITO, 203 IT R 456 (SC) IN THIS JUDGMENT IT WAS HELD THAT FROM THE PLAIN PHRASEOLOG Y OF THE SECTIONS OF THE ACT, IT APPEARS THAT TWO CONDITIONS PRECEDENT WHICH ARE REQ UIRED TO BE SATISFIED BEFORE AN INCOME-TAX OFFICER CAN ACQUIRE JURISDICTION TO PROC EED UNDER CLAUSE (A) OF SECTION 14 ITA NO.407/AGRA/2012 A.Y. 2004-05 147 READ WITH SECTIONS 148 AND 149 OF THE ACT, BEYO ND THE PERIOD OF FOUR YEARS BUT WITHIN A PERIOD OF EIGHT YEARS FROM THE END OF THE RELEVANT YEAR, ARE : (A) THAT THE INCOME-TAX OFFICER MUST HAVE REASON TO BELIEVE THAT THE INCOME, PROFITS OR GAINS CHARGEABLE TO TAX HAD EITHER BEEN UNDER ASSESSED OR HAD ESCAPED ASSESSMENT AND (B) THAT THE INCOME-TAX OFFICER MUST HAVE REASON TO BEL IEVE THAT SUCH ESCAPEMENT OR UNDERASSESSMENT WAS OCCASIONED BY REASON OF OMISSIO N OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR THE ASSESSMENT. BOTH THESE CONDITIONS MUST CO-EXIST IN ORDER TO CON FER JURISDICTION ON THE INCOME- TAX OFFICER. THE INCOME-TAX OFFICER IS OBLIGED, BEF ORE INITIATING PROCEEDINGS UNDER SECTION 148 OF THE ACT, TO RECORD THE REASONS FOR T HE FORMATION OF HIS BELIEF TO REOPEN THE ASSESSMENT. S.P. AGARWALLA ALIAS SUKHDEO PRASAD AGARWALLA VS. I TO [1983] 140 ITR 1010 (CAL.) - IN THIS JUDGMENT IT WAS HELD THAT A MERE CONFES SIONAL STATEMENT BY A THIRD PARTY (WHO IS A LENDER OF THE ASSESSEE) THAT HE WAS A MERE NAME-LENDER AND THAT ALL HIS TRANSACTIONS OF LOANS WERE BOGUS, WITHOUT NAMIN G THE ASSESSEE AS ONE WHO HAD OBTAINED BOGUS LOANS, WOULD NOT BE SUFFICIENT TO HO LD THAT THE ASSESSEES INCOME HAD ESCAPED ASSESSMENT 15 ITA NO.407/AGRA/2012 A.Y. 2004-05 PURITY TECHTEXTILE PVT. LTD. VS. ACIT 325 ITR 459 ( BOMB) - IN THIS JUDGMENT IT WAS HELD THAT VALIDITY OF EXERCISE OF POWERS TO RE- OPEN AN ASSESSMENT HAS TO BE DECIDED WITH REFERENCE TO REASONS RECORDED WHILE RE -OPENING AN ASSESSMENT - WHERE THE AO HAD NO REASON TO BELIEVE THAT INCOME H AD ESCAPED ASSESSMENT, REASONS RECORDED WHILE RE-OPENING THE ASSESSMENT DI D NOT JUSTIFY THE EXERCISE OF THE POWER U/S 148.. DASS FRIRNDS BUILDERS P. LTD. VS. DCIT(2006) 280 IT R 77(ALL) - IN THIS JUDGMENT IT WAS HELD THAT UNDER SECTION 147 OF IT A CT,1961, THE WORDS ARE REASON TO BELIEVE AND NOT REASON TO SUSPECT THE BELIEF ENTERTAINED BY THE AAO MUST NOT BE ARBITRARY OR RATIONAL. IT MUST BE IN GOOD FA ITH AND NOT A MERE PRETENCE, SHOULD HAVE A RATIONAL CONNECTION AND RELEVANT BEARING ON THE FORMATION OF THE BELIEF, AND SHOULD NOT BE EXTRANEOUS OR IRRELEVANT. THE MATERIA L SHOULD BE RELATING TO THE PARTICULAR YEAR, WHICH THE ASSESSMENT IS SOUGHT TO BE REOPENED. IT IS NOT ANY AND EVERY MATERIAL, HOWEVER VAGUE AND INDEFINITE OR DIS TANT, REMOTE AND FAR-FETCHED, WHICH WOULD WARRANT THE FORMATION OF THE BELIEF REL ATING TO ESCAPEMENT OF INCOME. JOHRI LAL (HUF) VS. CIT(1973 ) 88 ITR 439 (SC) - IN THIS JUDGMENT IT WAS HELD THAT WHEN THERE IS NO MATERIAL TO SHOW THAT THE OFF ICER FORMED BELIEF REGARDING 16 ITA NO.407/AGRA/2012 A.Y. 2004-05 ESCAPEMENT OF INCOME OR RECORDED HIS REASONS AND OB TAINED SANCTION FOR PROCEEDING UNDER S. 34(1)(A), WHETHER THE TRIBUNAL CAN JUSTIFY PROCEEDINGS UNDER S. 34(1)(A)? THE FORMATION OF THE BELIEF BY THE INCOM E-TAX OFFICER BEFORE INVOKING S. 34(1)(A) IS A CONDITION PRECEDENT. THE FULFILLMENT OF THIS CONDITION IS NOT A MERE FORMALITY, IT IS MANDATORY. THEREFORE, THE FAILURE TO FULFILL THAT CONDITION WOULD VITIATE THE ENTIRE PROCEEDINGS. JOTI PRASAD VS. STATE OF HARYANA 1993 AIR 1167 (SC) - T HE HONBLE SUPREME COURT WHILE DEALING WITH THE MEANING OF EXPRESSION REASON TO BELIEVE IN SECTION 26 OF THE INDIAN PENAL CODE HELD THAT REASON TO BEL IEVE IS NOT THE SAME AS SUSPICION AND A PERSON MUST HAVE REASON TO BELIEVE IF THE CIRCUMSTANCES ARE SUCH THAT A REASONABLE MAN WOULD, BY PROBABLE REASONING, CONCLUDE OR INFER REGARDING THE NATURE OF THE THING CONCERNED. ITO VS. LAKHMANI MEWAL DAS (1976) 103 ITR 437 (SC) - IN THIS JUDGMENT IT WAS HELD THAT THE REASONS FOR THE FORMATION OF THE BELIEF MUST HAVE A RATIONAL CONNECTION WITH OR RELEVANT BEARING ON THE FORMATIO N OF THE BELIEF. RATIONAL CONNECTION POSTULATES THAT THERE MUST BE A DIRECT N EXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF THE INCOME-TAX OFF ICER AND THE FORMATION OF HIS 17 ITA NO.407/AGRA/2012 A.Y. 2004-05 BELIEF THAT THERE HAS BEEN ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT IN THE PARTICULAR YEAR BECAUSE OF HIS FA ILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. IT IS NO DOUBT TRUE THAT THE CO URT CANNOT GO INTO THE SUFFICIENCY OR ADEQUACY OF THE MATERIAL AND SUBSTITUTE ITS OWN OPI NION FOR THAT OF THE INCOME-TAX OFFICER ON THE POINT AS TO WHETHER ACTION SHOULD BE INITIATED FOR REOPENING ASSESSMENT. AT THE SAME TIME WE HAVE TO BEAR IN MIN D THAT IT IS NOT ANY AND EVERY MATERIAL, HOWSOEVER VAGUE AND INDEFINITE OR DISTANT , REMOTE AND FAR-FETCHED,. WHICH WOULD WARRANT THE FORMATION OF THE BELIEF RELATING TO ESCAPEMENT OF THE INCOME OF THE ASSESSEE. FROM ASSESSMENT. THE FACT THAT THE WO RDS 'DEFINITE INFORMATION' WHICH WERE THERE IN SECTION 34 OF THE ACT OF 1922, AT ONE TIME BEFORE ITS AMENDMENT IN 1948, ARE NOT THERE IN SECTION 147 OF THE ACT OF 1961, WOULD NOT LEAD TO THE CONCLUSION THAT ACTION CAN NOW BE TAKEN FOR REOPENING ASSESSMENT EVEN IF THE INFORMATION IS WHOLLY VAGUE, INDEFINITE, FAR-FETCHE D AND REMOTE. THE REASON FOR THE FORMATION OF THE BELIEF MUST BE HELD IN GOOD FAITH AND SHOULD NOT BE A MERE PRETENCE. THE POWERS OF THE INCOME-TAX OFFICER TO REOPEN ASSE SSMENT, THOUGH WIDE, ARE NOT PLENARY. THE WORDS OF THE STATUTE ARE 'REAS ON TO BELIEVE' AND NOT 'REASON TO SUSPECT'. THE REOPENING OF THE ASSESSMENT IS A SERI OUS MATTER. THE ACT, NO DOUBT, CONTEMPLATES THE REOPENING OF THE ASSESSMENT IF GRO UNDS EXIST FOR BELIEVING THAT 18 ITA NO.407/AGRA/2012 A.Y. 2004-05 INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THE UNDERLYING REASON FOR THAT IS THAT INSTANCES OF CONCEALED INCOME OR OTHER INCOME ESCAPING ASSESSMENT IN A LARGE NUMBER OF CASES COME TO THE NOTICE OF THE INCOME-TA X AUTHORITIES AFTER THE ASSESSMENT HAS BEEN COMPLETED. THE PROVISIONS OF TH E ACT IN THIS RESPECT DEPART FROM THE NORMAL RULE THAT THERE SHOULD BE, SUBJECT TO RIGHT OF APPEAL AND REVISION, FINALITY ABOUT ORDERS MADE IN JUDICIAL AND QUASI-JU DICIAL PROCEEDINGS. IT IS, THEREFORE, ESSENTIAL THAT BEFORE SUCH ACTION IS TAK EN THE REQUIREMENTS OF THE LAW SHOULD BE SATISFIED. GANGA SARAN AND SONS P. LTD. VS. ITO(1981) 130 ITR 1(SC) - IN THIS JUDGMENT IT WAS HELD THAT IT IS WELL SETTLED AS A RESULT OF SEVERAL DECISIONS OF THIS COURT THAT TWO DISTINCT CONDITIONS MUST BE SATISFIED BEFORE TH E ITO CAN ASSUME JURISDICTION TO ISSUE NOTICE UNDER S. 147(A). FIRST, HE MUST HAVE R EASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND, SECONDL Y, HE MUST HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT IS BY REASON OF THE OM ISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR HIS ASSESSMENT. IF EITHER OF THESE CONDITIONS IS NOT FU LFILLED, THE NOTICE ISSUED BY THE ITO WOULD BE WITHOUT JURISDICTION. THE IMPORTANT WO RDS UNDER S. 147(A) ARE ' HAS REASON TO BELIEVE ' AND THESE WORDS ARE STRONGER TH AN THE WORDS ' IS SATISFIED '. THE BELIEF ENTERTAINED BY THE ITO MUST NOT BE ARBITRARY OR IRRATIONAL. IT MUST BE 19 ITA NO.407/AGRA/2012 A.Y. 2004-05 REASONABLE OR IN OTHER WORDS IT MUST BE BASED ON RE ASONS WHICH ARE RELEVANT AND MATERIAL. THE COURT, OF COURSE, CANNOT INVESTIGATE INTO THE ADEQUACY OR SUFFICIENCY OF THE REASONS WHICH HAVE WEIGHED WITH THE ITO IN C OMING TO THE BELIEF, BUT THE COURT CAN CERTAINLY EXAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE A HEARING ON THE MATTERS IN REGARD TO WHICH HE IS REQUIRED TO EN TERTAIN THE BELIEF BEFORE HE CAN ISSUE NOTICE UNDER S. 147(A). IF THERE IS NO RATION AL AND INTELLIGIBLE NEXUS BETWEEN THE REASONS AND THE BELIEF, SO THAT,. ON SUCH REASO NS, NO ONE PROPERLY INSTRUCTED ON FACTS AND LAW COULD REASONABLY ENTERTAIN THE BELIEF , THE CONCLUSION WOULD BE INESCAPABLE THAT THE ITO COULD NOT HAVE REASON TO B ELIEVE THAT ANY PART OF THE INCOME OF THE ASSESSEE HAD ESCAPED .( SEE ALSO.(200 4) 271 ITR 113 (SC) INDRA PRASTHA CHEMICALS P. LTD V CIT) ITO VS. NAWAB MIR BARKAT ALI KHAN BAHADUR [1974] 97 ITR 239 (SC)/RAYMOND WOOLLEN MILLS LTD. VS. ITO [1999] 236 ITR 34 (SC) - IN THESE JUDGMENTS IT WERE HELD THAT BELIEF SHOULD NOT BE AR BITRARY OR IRRATIONAL BUT BASED ON RELEVANT AND MATERIAL REASONS - THE IMPORTANT WORDS UNDER SECTION 147 ARE HAS REASON TO BELIEVE AND THESE WORDS ARE STRONGER THA N THE WORDS IS SATISFIED. THE BELIEF ENTERTAINED BY THE ITO MUST NOT BE ARBITRARY OR IRRATIONAL. IT MUST BE REASONABLE OR IN OTHER WORDS IT MUST BE BASED ON RE ASONS WHICH ARE RELEVANT AND MATERIAL. THE COURT CANNOT OF COURSE INVESTIGATE IN TO THE ADEQUACY OR SUFFICIENCY 20 ITA NO.407/AGRA/2012 A.Y. 2004-05 OF THE REASONS WHICH HAVE WEIGHED WITH THE ITO IN C OMING TO THE BELIEF, BUT THE COURT CAN CERTAINLY EXAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE A BEARING ON THE MATTERS IN REGARD TO WHICH HE IS REQUIRED TO ENTERTAIN THE BELIEF BEFORE HE CAN ISSUE NOTICE UNDER SECTION 147. S. NARAYANAPPA VS. CIT [1967] 63 ITR 219 (SC) - IN THIS JUDGMENT IT WAS HELD THAT BELIEF MUST BE IN GOOD FAITH, AND CANNOT MEREL Y BE PRETENCE - THE EXPRESSION REASON TO BELIEVE DOES NOT MEAN A PURELY SUBJECTI VE SATISFACTION ON THE PART OF THE ITO. THE BELIEF MUST BE HELD IN GOOD FAITH; IT CANN OT MERELY BE PRETENCE - SHEO NATH SINGH VS. AAC [1971] 82 ITR 147 (SC) - IN THIS JUDGMENT IT WAS HELD THAT SUSPICION, GOSSIP OR RUMOUR SHOULD NOT FO RM THE BASIS - THE WORDS REASON TO BELIEVE SUGGEST THAT THE BELIEF MUST BE THAT OF AN HONEST AND REASONABLE PERSON BASED UPON REASONABLE GROUNDS, AND THAT THE ITO MAY ACT ON DIRECT OR CIRCUMSTANTIAL EVIDENCE BUT NOT ON MERE SUSPICION, GOSSIP OR RUMOUR. THE ITO WOULD BE ACTING WITHOUT JURISDICTION IF THE REASON FOR HIS BELIEF THAT THE CONDITIONS ARE SATISFIED DOES NOT EXIST OR IS NOT MATERIAL OR RELEVANT TO THE BELIEF REQUIRED BY THE SECTION EXTRANEOUS AND IRRELEVANT MATERIAL SHOU LD NOT BE BASIS FOR CONCLUSION 21 ITA NO.407/AGRA/2012 A.Y. 2004-05 CIT VS. DAULAT RAM RAWATMULL [1973] 87 ITR 349 (SC) ; ITO VS. LAKSHMANI MEWAL DAS [1976] 103 ITR 437 (SC). IN THESE JUDGMENTS IT WERE HELD THAT THERE SHOULD BE SOME DIRECT NEXUS BETWEEN THE CONCLUSION OF FACT ARRIVED AT BY THE AUTHORITY CONCERNED AND THE PRIMARY FACTS UPON WHIC H THAT CONCLUSION IS BASED. THE USE OF EXTRANEOUS AND IRRELEVANT MATERIAL IN AR RIVING AT THAT CONCLUSION WOULD VITIATE THE CONCLUSION OF FACT. COMMISSIONER OF INCOME-TAX, DELHI-XI VS. BATRA BHAT TA COMPANY, 321 ITR 526 (DELHI). THE BRIEF FACTS OF THIS CASE ARE THAT THE ASSESSEE -COMPANY HAD SOLD ITS AGRICULTURAL LAND AND CLAIMED EXEMPTION UNDER SECTI ON 2(14) ON THE GROUND THAT THE AGRICULTURAL LAND SOLD BY IT WAS NOT A CAPITAL ASSE T AND, CONSEQUENTLY, NO CAPITAL GAINS ACCRUED IN ITS HANDS. ITS RETURN WAS PROCESSE D UNDER SECTION 143(1)(A). SUBSEQUENTLY, THE ASSESSING OFFICER REOPENED THE AS SESSMENT ON THE GROUND THAT THE CLAIM OF ASSESSEE, THAT THE LAND WAS AGRICULTUR AL IN NATURE AND, HENCE, NOT A CAPITAL ASSET, REQUIRED MUCH DEEPER SCRUTINY. THERE AFTER, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT HOLDING THAT THE LAND SOLD BY THE ASSESSEE WAS A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) AND, ACCO RDINGLY, DETERMINED LONG-TERM CAPITAL GAIN ACCRUED TO THE ASSESSEE. ON APPEAL, TH E COMMISSIONER (APPEALS) HELD THAT MERELY BY SAYING THAT THE ISSUE REQUIRED MUCH DEEPER SCRUTINY, NO BELIEF COULD BE SAID TO HAVE BEEN FORMED ENTITLING THE ASSESSING AUTHORITY TO ISSUE A NOTICE UNDER SECTION 148 IN ORDER TO INITIATE REASSESSMENT PROCE EDINGS; AND THAT NO NEW FACT OR 22 ITA NO.407/AGRA/2012 A.Y. 2004-05 ANY OTHER MATERIAL HAD BEEN BROUGHT TO THE FILE FRO M THE DATE ON WHICH THE EARLIER RETURN HAD BEEN PROCESSED TO THE DATE WHEN THE REAS ONS WERE RECORDED AND, THEREFORE, THE ASSUMING OF JURISDICTION BY THE ASSE SSING OFFICER UNDER SECTION 147 AND THE ISSUANCE OF NOTICE UNDER SECTION 148 WERE I LLEGAL. THEREFORE, THE COMMISSIONER (APPEALS) ANNULLED THE ASSESSMENT. THE TRIBUNAL UPHELD THE ORDER OF THE COMMISSIONER (APPEALS).ON APPEAL THE COURT H ELD THAT A READING OF THE REASONS RECORDED DID NOT DISCLOSE THAT THE ASSESSIN G OFFICER, IN FACT, HAD REASONS TO BELIEVE THAT ANY INCOME HAD ESCAPED ASSESSMENT. IT IS NOT JUST THE BELIEF OF THE ASSESSING OFFICER THAT IS MATERIAL, BUT SUCH A BELI EF MUST BE BASED ON CERTAIN REASONS. THERE WAS NO INDICATION AS TO ON WHAT INFO RMATION OR ON WHAT MATERIAL THE ASSESSING OFFICER HAD HARBOURED THE BELIEF THAT THE CLAIM OF THE ASSESSEE REQUIRED DEEPER SCRUTINY. IN FACT, NO NEW MATERIAL WAS ON RE CORD AFTER THE FILING OF THE RETURN TILL THE ISSUANCE OF NOTICE UNDER SECTION 147. THE PROCEEDINGS UNDER SECTION 147 ARE NOT TO BE INVOKED AT THE MERE WHIM AND FANCY OF THE ASSESSING OFFICER. IT HAS TO BE SEEN IN EVERY CASE AS TO WHETHER THE INVOCATION IS ARBITRARY OR REASONABLE ONE MERELY BECAUSE THE ASSESSING OFFICER FELT THAT THE ISSUE REQUIRED MUCH DEEPER SCRUTINY, IT WAS NOT ENOUGH GROUND FOR INVOKING SE CTION 147. IT IS NOT BELIEF PER SE THAT IS A PRE-CONDITION FOR INVOKING SECTION 147, B UT A BELIEF FOUNDED ON REASONS. THE EXPRESSION USED IN SECTION 147 IS IF THE ASSES SING OFFICER HAS REASON TO BELIEVE AND NOT IF THE ASSESSING OFFICER BELIEVES . THERE MUST BE SOME BASIS 23 ITA NO.407/AGRA/2012 A.Y. 2004-05 UPON WHICH THE BELIEF CAN BE BUILT. IT DOES NOT MAT TER WHETHER THAT BELIEF IS ULTIMATELY PROVED RIGHT OR WRONG, BUT THERE MUST BE SOME MATERIAL UPON WHICH SUCH A BELIEF CAN BE FOUNDED. THE COURT OBSERVED TH AT IN THE INSTANT CASE, BOTH THE COMMISSIONER (APPEALS) AS WELL AS THE TRIBUNAL HAD RETURNED THE CONCURRENT FINDING OF FACT THAT THERE WAS NO MATERIAL BEFORE T HE ASSESSING OFFICER ON THE BASIS OF WHICH HE COULD HAVE MAINTAINED A BELIEF THAT THE AGRICULTURAL LAND SOLD BY THE ASSESSEE WAS A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14 ). IN FACT, THE ASSESSING OFFICER DID NOT EVEN HAVE SUCH A BELIEF. THE EXPRESSION REQUIRES MUCH DEEPER SCRUTINY INDICATES THAT THE ASSESSING OFFIC ER WAS EMBARKING ON MERE EXPLORATION WITHOUT ANY BELIEF, MUCH LESS A BELIEF BASED ON REASONS AND MATERIALS. THE COURT HELD THAT CONSEQUENTLY, THERE WAS NO ERRO R IN THE DECISION OF THE TRIBUNAL. NO SUBSTANTIAL QUESTION OF LAW AROSE FOR CONSIDERATION OF THE HIGH COURT. THE APPEAL WAS DISMISSED. SARTHAK SECURITIES CO. (P.) LTD. VS. INCOME-TAX OFF ICER, 329 ITR 110 (DEL) . THE BRIEF FACTS OF THIS CASE WERE THAT THE ASSESSEE HAD ALLOTTED CERTAIN SHARES TO FOUR COMPANIES ON 31-3-2003 IN ACCORDANCE WITH ITS MEMOR ANDUM AND ARTICLES OF ASSOCIATION. SAID COMPANIES WERE ACTIVE AS PER THE RECORDS OF THE REGISTRAR OF COMPANIES, WERE ASSESSED TO INCOME-TAX AND HAD BEEN ALLOTTED PERMANENT ACCOUNT NUMBER. THE RETURN FILED BY THE ASSESSEE FOR THE RE LEVANT ASSESSMENT YEAR WAS 24 ITA NO.407/AGRA/2012 A.Y. 2004-05 PROCESSED UNDER SECTION 143(1). HOWEVER, THEREAFTER , THE ASSESSING OFFICER ISSUED IT A NOTICE UNDER SECTION 148 ON THE GROUND THAT ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING, HE HAD REASON TO BELIEVE THAT THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRIES FROM FOUR COMPANIES AS SHARE APPLICATION MONEY OR AS UNSECURED LOAN. THE ASSESSEE FILED OBJECTIONS STATING THAT THE REASONS DID NOT DISCLOSE THE BASIS ON WHICH THE ADDL. DIT HAD TERME D THE RECEIPT OF MONEY BY THE ASSESSEE FROM FOUR INCORPORATED BODIES TOWARDS SHAR E APPLICATION MONEY AS BOGUS ACCOMMODATION ENTRIES; THAT BLIND ACCEPTANCE OF THE INFORMATION FURNISHED BY THE ADDL. DIT COULD NOT FORM REASONS LEADING TO THE BEL IEF BY THE ASSESSING OFFICER OF ANY ESCAPEMENT OF INCOME AND THE ASSESSING OFFICER HAD TO INDEPENDENTLY APPLY HIS MIND TO THE INFORMATION RECEIVED FROM THE ADDL. DIT AND ARRIVE AT THE BELIEF THAT INCOME HAD ESCAPED ASSESSMENT; AND THAT EVEN A S PER THE ALLEGED INFORMATION PROVIDED BY THE ADDL. DIT HIMSELF, ALL THE FOUR COM PANIES HAD BANK ACCOUNTS AND PAYMENTS WERE MADE BY THEM TO THE ASSESSEE-COMPANY THROUGH BANKING CHANNELS. THE ASSESSING OFFICER REJECTED THE ASSESSEES OBJEC TIONS. ON WRIT, THE COURT HELD AS UNDER :- 15. ON SCANNING OF THE ANATOMY OF THE AFORESAID PR OVISION, IT IS CLEAR AS CRYSTAL THAT THE FORMATION OF BELIEF IS A CONDITION PRECEDENT AS REGARDS THE ESCAPEMENT OF THE TAX PERTAINING TO THE ASSESSMENT YEAR BY THE ASSESSING OFFICER. THE ASSESSING OFFICER IS REQUIRED TO FORM AN OPINION BEFORE HE PROCEEDS TO ISSUE A NOTICE. THE VALIDITY OF REASONS , WHICH ARE SUPPOSED TO SUSTAIN THE FORMATION OF AN OPINION, IS CHALLENGEAB LE. THE REASONS TO BELIEVE ARE REQUIRED TO BE RECORDED BY THE ASSESSING OFFICE R. 25 ITA NO.407/AGRA/2012 A.Y. 2004-05 16. IN THIS REGARD, IT IS APT TO REPRODUCE A PASSAG E FROM N.D. BHATT, IAC V. I.B.M. WORLD TRADE CORPN. [1995] 216 ITR 811 (BOM.) : 'IT IS ALSO WELL-SETTLED THAT THE REASONS FOR REOPE NING ARE REQUIRED TO BE RECORDED BY THE ASSESSING AUTHORITY BEFORE ISSUING ANY NOTICE UNDER SECTION 148 BY VIRTUE OF THE PROVISIONS OF SECTION 148(2) AT THE RELEVANT TIME. ONLY THE REASON SO RECORDED CAN BE LOOKED AT FOR SUSTAINING OR SETTING ASIDE A NOTICE ISSUED UNDER SECTION 148. IN THE CASE OF EQUITABLE INVESTMENT CO. (P.) LTD. V. ITO [1988] 174 ITR 714, A DIVISION BENCH OF THE CALCUTTA HIGH COURT HAS HELD THAT WHERE A NOTIC E ISSUED UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961, AFTER OBTA INING THE SANCTION OF THE COMMISSIONER OF INCOME-TAX IS CHALLENGED, THE O NLY DOCUMENT TO BE LOOKED INTO FOR DETERMINING THE VALIDITY OF THE NOT ICE IS THE REPORT ON THE BASIS OF WHICH THE SANCTION OF THE COMMISSIONER OF INCOME-TAX HAS BEEN OBTAINED. THE INCOME-TAX DEPARTMENT CANNOT RELY ON ANY OTHER MATERIAL APART FROM THE REPORT.' 17. IN HINDUSTAN LEVER LTD. V. R.B. WADKAR [2004] 2 68 ITR 332 1 (BOM.), A DIVISION BENCH HAS OPINED THUS : '. . . THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE ASSESSING OFFICER. NO SUBSTITUTION OR DELETION IS P ERMISSIBLE. NO ADDITIONS CAN BE MADE TO THOSE REASONS. NO INFERENCE CAN BE A LLOWED TO BE DRAWN BASED ON REASONS NOT RECORDED. IT IS FOR THE ASSESS ING OFFICER TO DISCLOSE AND OPEN HIS MIND THROUGH REASONS RECORDED BY HIM. HE HAS TO SPEAK THROUGH HIS REASONS. IT IS FOR THE ASSESSING OFFICE R TO REACH TO THE CONCLUSION AS TO WHETHER THERE WAS FAILURE ON THE P ART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT FOR THE CONCERNED ASSESSMENT YEAR. IT IS FOR THE ASSESS ING OFFICER TO FORM HIS OPINION. IT IS FOR HIM TO PUT HIS OPINION ON RECORD IN BLACK AND WHITE. THE REASONS RECORDED SHOULD BE CLEAR AND UNAMBIGUOUS AN D SHOULD NOT SUFFER FROM ANY VAGUENESS. THE REASONS RECORDED MUST DISCL OSE HIS MIND. REASONS ARE THE MANIFESTATION OF MIND OF THE ASSESS ING OFFICER. THE REASONS RECORDED SHOULD BE SELF-EXPLANATORY AND SHO ULD NOT KEEP THE ASSESSEE GUESSING FOR THE REASONS. REASONS PROVIDE THE LINK BETWEEN CONCLUSION AND EVIDENCE. THE REASONS RECORDED MUST BE BASED ON EVIDENCE. THE ASSESSING OFFICER, IN THE EVENT OF CH ALLENGE TO THE REASONS, MUST BE ABLE TO JUSTIFY THE SAME BASED ON MATERIAL AVAILABLE ON RECORD. 26 ITA NO.407/AGRA/2012 A.Y. 2004-05 HE MUST DISCLOSE IN THE REASONS AS TO WHICH FACT OR MATERIAL WAS NOT DISCLOSED BY THE ASSESSEE FULLY AND TRULY NECESSARY FOR ASSESSMENT OF THAT ASSESSMENT YEAR, SO AS TO ESTABLISH THE VITAL LINK BETWEEN THE REASONS AND EVIDENCE. THAT VITAL LINK IS THE SAFEGUARD AGAINST ARBITRARY REOPENING OF THE CONCLUDED ASSESSMENT. THE REASONS RECORDED BY T HE ASSESSING OFFICER CANNOT BE SUPPLEMENTED BY FILING AN AFFIDAVIT OR MA KING AN ORAL SUBMISSION, OTHERWISE, THE REASONS WHICH WERE LACKI NG IN THE MATERIAL PARTICULARS WOULD GET SUPPLEMENTED, BY THE TIME THE MATTER REACHES TO THE COURT, ON THE STRENGTH OF AFFIDAVIT OR ORAL SUBMISS IONS ADVANCED.' [EMPHASIS SUPPLIED] 18. IN ASSTT. CIT V. RAJESH JHAVERI STOCK BROKERS ( P.) LTD. [2007] 291 ITR 5001 (SC), IT HAS BEEN RULED THUS : 'SECTION 147 AUTHORISES AND PERMITS THE ASSESSING O FFICER TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE WORD 'REASON' IN THE PHRASE 'REASON TO BELIEVE' WOULD MEAN CAUSE OR JUSTIFICATION. IF THE ASSESSING OFFICER HAS CAUSE OR JUSTIFICATION TO KNO W OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HA VE REASON TO BELIEVE THAT AN INCOME HAD ESCAPED ASSESSMENT. THE EXPRESSI ON CANNOT BE READ TO MEAN THAT THE ASSESSING OFFICER SHOULD HAVE FINA LLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. THE FUNCTION OF THE ASSESSING OFFICER IS TO ADMINISTER THE STATUTE WITH SOLICITUD E FOR THE PUBLIC EXCHEQUER WITH AN INBUILT IDEA OF FAIRNESS TO TAXPA YERS. AS OBSERVED BY THE SUPREME COURT IN CENTRAL PROVINCES MANGANESE OR E CO. LTD. V. ITO [1991] 191 ITR 662, FOR INITIATION OF ACTION UNDER SECTION 147(A) (AS THE PROVISION STOOD AT THE RELEVANT TIME) FULFILMENT OF THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIAL. AT THAT STA GE, THE FINAL OUTCOME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER WORDS, AT THE INITIATION STAGE, WHAT IS REQUIRED IS 'REASON TO BELIEVE', BUT NOT TH E ESTABLISHED FACT OF ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTI CE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REAS ONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THE MATERIA LS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN AT THAT STA GE. THIS IS SO BECAUSE THE FORMATION OF BELIEF BY THE ASSESSING OFFICER IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION. [EMPHASIS SUPPLIED] 27 ITA NO.407/AGRA/2012 A.Y. 2004-05 19. IN THIS CONTEXT, WE MAY REFER WITH PROFIT TO A DIVISION BENCH DECISION OF THIS COURT IN SFIL STOCK BROKING LTD.S CASE (SUPRA ) WHEREIN THE BENCH WAS DEALING WITH THE VALIDITY OF THE PROCEEDINGS UNDER SECTION 147 OF THE ACT. THE BENCH REPRODUCED THE INITIAL ISSUANCE OF NOTICE AND THEREAFTER REFERRED TO THE REASONS FOR ISSUE OF NOTICE UNDER SECTION 148 WHICH WAS PROVIDED TO THE ASSESSEE. THEREAFTER, THE BENCH REFERRED TO THE DEC ISIONS IN CIT V. ATUL JAIN [2008] 299 ITR 383 (DELHI), RAJESH JHAVERI STOCK B ROKERS (P.) LTD.S CASE (SUPRA), JAY BHARAT MARUTI LTD. V. CIT [2009] 180 T AXMAN 192 (DELHI) AND CIT V. BATRA BHATTA CO. [2008] 174 TAXMAN 444 (DEL HI) AND EVENTUALLY HELD THUS : '9. IN THE PRESENT CASE, WE FIND THAT THE FIRST SEN TENCE OF THE SO-CALLED REASONS RECORDED BY THE ASSESSING OFFICER IS MERE I NFORMATION RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME-TAX (INVESTIGATI ON). THE SECOND SENTENCE IS A DIRECTION GIVEN BY THE VERY SAME DEPU TY DIRECTOR OF INCOME-TAX (INVESTIGATION) TO ISSUE A NOTICE UNDER SECTION 148 AND THE THIRD SENTENCE AGAIN COMPRISES OF A DIRECTION GIVEN BY THE ADDITIONAL COMMISSIONER OF INCOME-TAX TO INITIATE PROCEEDINGS UNDER SECTION 148 IN RESPECT OF CASES PERTAINING TO THE RELEVANT WARD. T HESE THREE SENTENCES ARE FOLLOWED BY THE FOLLOWING SENTENCE, WHICH IS TH E 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 STOCK BR OKING LTD. ON THE BASIS OF REASONS RECORDED AS ABOVE.' 10. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSING OFFICER REFERRED TO THE INFORMATION AND THE TWO DIRECTIONS AS REASONS ON THE BASIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTICE UNDER SECTION 148. W E ARE AFRAID THAT THESE CANNOT BE THE REASONS FOR PROCEEDING UNDER SE CTION 147/148 OF THE SAID ACT. THE FIRST PART IS ONLY AN INFORMATION AND THE SECOND AND THE THIRD PARTS OF THE BEGINNING PARAGRAPH OF THE SO-CA LLED REASONS ARE MERE DIRECTIONS. FROM THE SO-CALLED REASONS, IT IS NOT A T ALL DISCERNIBLE AS TO WHETHER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIVED AT A BELIEF THAT, ON THE BASIS OF THE MATERIAL WHICH HE HAD BEFORE HIM, INCOME HAD ESCAPED ASSESSM ENT. CONSEQUENTLY, WE FIND THAT THE TRIBUNAL HAS ARRIVED AT THE CORREC T CONCLUSION ON FACTS. 28 ITA NO.407/AGRA/2012 A.Y. 2004-05 THE LAW IS WELL-SETTLED. THERE IS NO SUBSTANTIAL QU ESTION OF LAW WHICH ARISES FOR OUR CONSIDERATION.' [EMPHASIS SUPPLIED] 20. ON A PERUSAL OF THE AFORESAID DECISIONS, IT IS GRAPHICALLY CLEAR THAT ONCE THE INGREDIENTS OF SECTION 147 ARE FULFILLED, THE A SSESSING OFFICER IS COMPETENT IN LAW TO INITIATE THE PROCEEDINGS UNDER SECTION 147. TO PUT IT DIFFERENTLY, THE CONDITIONS PRECEDENT AS ENGRAFTED IN THE SAID PROVISION ARE TO BE SATISFIED. 21. AT THIS JUNCTURE, IT IS PROFITABLE TO REFER TO THE AUTHORITY IN GNK DRIVESHAFTS (INDIA) LTD. V. ITO [2002] 125 TAXMAN 9 63 (SC) WHEREIN THEIR LORDSHIPS OF THE APEX COURT HAVE HELD THUS : '5. WE SEE NO JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER UNDER CHALLENGE. HOWEVER, WE CLARIFY THAT WHEN A NOTICE U NDER SECTION 148 OF THE INCOME-TAX ACT IS ISSUED, THE PROPER COURSE OF ACTION FOR THE NOTICE IS TO FILE RETURN AND IF HE SO DESIRES, TO SEEK REASON S FOR ISSUING NOTICES. THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHI N A REASONABLE TIME. ON RECEIPT OF REASONS, THE NOTICE IS ENTITLED TO FI LE OBJECTIONS TO ISSUANCE OF NOTICE AND THE ASSESSING OFFICER IS BOUND TO DIS POSE OF THE SAME BY PASSING A SPEAKING ORDER. IN THE INSTANT CASE, AS T HE REASONS HAVE BEEN DISCLOSED IN THESE PROCEEDINGS, THE ASSESSING OFFIC ER HAS TO DISPOSE OF THE OBJECTIONS, IF FILED, BY PASSING A SPEAKING ORDER, BEFORE PROCEEDING WITH THE ASSESSMENT IN RESPECT OF THE ABOVESAID FIVE ASS ESSMENT YEARS.' 22. IN LOVELY EXPORTS (P.) LTD.S CASE (SUPRA), THE APEX COURT HELD THUS : '2. CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UN DISCLOSED INCOME UNDER SECTION 68 OF INCOME-TAX ACT, 1961? WE FIND N O MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT I F THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLE GED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE ASSESSIN G OFFICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIV IDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WI TH THE IMPUGNED JUDGMENT.' 29 ITA NO.407/AGRA/2012 A.Y. 2004-05 23. THE OBTAINING FACTUAL MATRIX HAS TO BE TESTED O N THE ANVIL OF THE AFORESAID PRONOUNCEMENT OF LAW. IN THE CASE AT HAND , AS IS EVINCIBLE, THE ASSESSING OFFICER WAS AWARE OF THE EXISTENCE OF FOU R COMPANIES WITH WHOM THE ASSESSEE HAD ENTERED INTO TRANSACTION. BOTH THE ORDERS CLEARLY EXPOSIT THAT THE ASSESSING OFFICER WAS MADE AWARE OF THE SI TUATION BY THE INVESTIGATION WING AND THERE IS NO MENTION THAT THE SE COMPANIES ARE FICTITIOUS COMPANIES. NEITHER THE REASONS IN THE IN ITIAL NOTICE NOR THE COMMUNICATION PROVIDING REASONS REMOTELY INDICATE I NDEPENDENT APPLICATION OF MIND. TRUE IT IS, AT THAT STAGE, IT IS NOT NECES SARY TO HAVE THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME, BUT WHAT IS NECESSARY IS THAT THERE IS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FO RMED THE REQUISITE BELIEF. TO ELABORATE, THE CONCLUSIVE PROOF IS NOT G ERMANE AT THIS STAGE BUT THE FORMATION OF BELIEF MUST BE ON THE BASE OR FOUNDATI ON OR PLATFORM OF PRUDENCE WHICH A REASONABLE PERSON IS REQUIRED TO A PPLY. AS IS MANIFEST FROM THE PERUSAL OF THE SUPPLY OF REASONS AND THE O RDER OF REJECTION OF OBJECTIONS, THE NAMES OF THE COMPANIES WERE AVAILAB LE WITH THE AUTHORITY. THEIR EXISTENCE IS NOT DISPUTED. WHAT IS MENTIONED IS THAT THESE COMPANIES WERE USED AS CONDUITS. IN THAT VIEW OF THE MATTER, THE PRINCIPLE LAID DOWN IN LOVELY EXPORTS (P.) LTD.S CASE (SUPRA) GETS SQUARE LY ATTRACTED. THE SAME HAS NOT BEEN REFERRED TO WHILE PASSING THE ORDER OF REJECTION. THE ASSESSEE IN HIS OBJECTIONS HAD CLEARLY STATED THAT THE COMPANIE S HAD BANK ACCOUNTS AND PAYMENTS WERE MADE TO THE ASSESSEE-COMPANY THROUGH BANKING CHANNEL. THE IDENTITY OF THE COMPANIES WAS NOT DISPUTED. UNDER T HESE CIRCUMSTANCES, IT WOULD NOT BE APPROPRIATE TO REQUIRE THE ASSESSEE TO GO THROUGH THE ENTIRE GAMUT OF PROCEEDINGS. IT IS TOTALLY UNWARRANTED. 24. RESULTANTLY, THE INITIATION OF PROCEEDINGS UNDE R SECTION 147 AND ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT ARE HEREBY Q UASHED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THERE SHALL BE NO ORDER AS TO COSTS COMMISSIONER OF INCOME-TAX VS. SFIL STOCK BROKING L TD. [2010] 325 ITR 285 (DELHI) - IN THIS CASE AFTER THE COMPLETION OF THE ASSESS EES ASSESSMENT THE DEPUTY DIRECTOR OF INCOME- TAX (INV.) INFORMED THE ASSESSI NG OFFICER OF THE ASSESSEE THAT DURING THE COURSE OF INVESTIGATION, ONE SG, PROPRIE TOR OF R.K., HAD STATED ON OATH THAT THE TRANSACTIONS THROUGH CERTAIN BANK ACCOUNT WERE ONLY PAPER TRANSACTIONS IN 30 ITA NO.407/AGRA/2012 A.Y. 2004-05 WHICH THE PARTY WAS INTENDING TO TAKE BILLS PAID IN CASH AND ISSUE CHEQUES/DRAFTS SHOWING THE SAID AMOUNTS AS SALE OF SHARES. IT WAS FURTHER INFORMED THAT THE ASSESSEE WAS NEITHER A SHARE BROKER NOR A MEMBER OF ANY STOCK EXCHANGE AND THAT IT WAS DOING THE WORK OF GIVING ENTRIES. FURTHER, INFO RMATION WAS GIVEN THAT THE ENTRY OF RS.20,70,000 IN ACCOUNT NO. 003097 DATED 28-2-19 98 AND 1-3-1998 WAS NOTHING BUT ENTRY TAKEN BY PAYING CASH. THEREAFTER, ON THE BASIS OF THE AFORESAID INFORMATION, A NOTICE UNDER SECTION 148 WAS ISSUED BY THE ASSESSING OFFICER TO THE ASSESSEE, WHICH WAS ALLEGEDLY THE BENEFICIARY OF TH E BOGUS CLAIM OF LONG-TERM CAPITAL GAIN SHOWN ON SALE/PURCHASE OF SHARES. ACCO RDINGLY, REASSESSMENT WAS COMPLETED THE COURT HELD THAT, IN THE PRESENT CASE, THE FIRST SENTENCE OF THE SO- CALLED REASONS RECORDED BY THE ASSESSING OFFICER WA S MERE INFORMATION RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME-TAX (INV.). THE SECOND SENTENCE WAS A DIRECTION GIVEN BY THE VERY SAME DEPUTY DIRECTOR OF INCOME-TAX (INV.) TO ISSUE A NOTICE UNDER SECTION 148 AND THE THIRD SENTENCE AGA IN COMPRISED A DIRECTION GIVEN BY THE ADDITIONAL COMMISSIONER OF INCOME-TAX TO INI TIATE PROCEEDINGS UNDER SECTION 148 IN RESPECT OF CASES PERTAINING TO THE R ELEVANT WARD. IT WAS CLEAR THAT THE ASSESSING OFFICER REFERRED TO THE INFORMATION AND T HE TWO DIRECTIONS AS REASONS ON THE BASIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTIC E UNDER SECTION 148. THESE COULD NOT BE THE REASONS FOR PROCEEDING UNDER SECTI ON 147/148. FROM THE SO-CALLED REASONS, IT WAS NOT AT ALL DISCERNIBLE AS TO WHETHE R THE ASSESSING OFFICER HAD 31 ITA NO.407/AGRA/2012 A.Y. 2004-05 APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENT LY ARRIVED AT A BELIEF THAT, ON THE BASIS OF THE MATERIAL WHICH HE HAD BEFORE HIM, INCOME HAD ESCAPED ASSESSMENT. THE COURT HELD THAT THEREFORE, THE REASSESSMENT WAS NOT VALID. 17. IN THE LIGHT OF ABOVE BACK GROUND OF DISCUS SIONS, WE NOTICED THAT ONE OF THE CONDITIONS WHICH MUST BE SATISFIED BEFORE THE A.O. CAN ASSUME JURISDICTION UNDER SECTION 147 OF THE ACT THAT, HE MUST HAVE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. IF THIS CONDITION IS NOT FULFILLED, THE NOTICE ISSUED BY THE A.O. WOULD BE WITHOUT JURISDICTION. THE IMP ORTANT WORDS UNDER SECTION 147 ARE HAS REASON TO BELIEVE AND THESE WORDS ARE STR ONGER THAN THE WORDS IS SATISFIED '. THE BELIEF ENTERTAINED BY THE A.O. MUS T NOT BE ARBITRARY OR IRRATIONAL. IT MUST BE REASONABLE OR IN OTHER WORDS IT MUST BE BAS ED ON REASONS WHICH ARE RELEVANT AND MATERIAL. THE COURT, OF COURSE, CANNO T INVESTIGATE INTO THE ADEQUACY OR SUFFICIENCY OF THE REASONS WHICH HAVE WEIGHED WITH THE A.O. IN COMING TO THE BELIEF, BUT THE COURT CAN CERTAINLY EXAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE A HEARING ON THE MATTERS IN REGARD TO WHICH HE IS REQUIRED TO ENTERTAIN THE BELIEF BEFORE HE CAN ISSUE NOTICE UNDER SECTION 148 . IF THERE IS NO RATIONAL AND INTELLIGIBLE NEXUS BETWEEN THE REASONS AND THE BELI EF, SO THAT, ON SUCH REASONS, NO ONE PROPERLY INSTRUCTED ON FACTS AND LAW COULD REAS ONABLY ENTERTAIN THE BELIEF, THE CONCLUSION WOULD BE INESCAPABLE THAT THE A.O. COULD NOT HAVE REASON TO BELIEVE 32 ITA NO.407/AGRA/2012 A.Y. 2004-05 THAT ANY PART OF THE INCOME OF THE ASSESSEE HAD ESC APED ASSESSMENT UNDER THAT CIRCUMSTANCES THE NOTICE ISSUED BY HIM WOULD BE LIA BLE TO BE STRUCK DOWN AS INVALID. 18. THE BASIS FOR INITIATING THE REASSESSMENT PR OCEEDINGS IS TO BE JUDGED SOLELY ON THE BASIS OF REASONS RECORDED BY THE ASSESSING O FFICER AND THE MATERIAL AND INFORMATION REFERRED TO BY HIM IN THE REASONS FOR I NITIATING SUCH ACTION. IT IS SETTLED LAW THAT ASSESSING OFFICER CANNOT INITIATE THE REAS SESSMENT PROCEEDINGS MERELY ON THE BASIS OF SUSPICION OR FOR THE PURPOSE OF MAKING ROVING AND FISHY INQUIRES. THE ASSESSING OFFICER CANNOT SUPPORT THE REOPENING OF T HE ASSESSMENT BY COLLECTING THE MATERIAL OR BY MAKING INQUIRY SUBSEQUENTLY AFTER TH E DATE OF INITIATION OF THE PROCEEDINGS. THUS, THE REOPENING OF THE ASSESSMENT IS TO BE SEEN ON THE DATE WHEN THE ASSESSING OFFICER INITIATED ACTION U/S 147 OF T HE ACT. 19. THE EXPRESSION REASON TO BELIEVE USED IN S ECTION 147 OF THE ACT HAS SPECIAL SIGNIFICANCE. IT DOES NOT MEAN REASON TO SUSPECT . IT IS REASONABLE BELIEF OF A HONEST AND REASONABLE PERSON BASED UPON REASONABLE GROUNDS. THE EXPRESSION USED IS NOT SATISFIED. THE REASON TO BELIEVE R EQUIRES HIGHER LEVEL OF EVIDENCE AND MATERIAL THAN THE REQUIREMENT OF SATISFACTION OF THE ASSESSING OFFICER WHICH 33 ITA NO.407/AGRA/2012 A.Y. 2004-05 ESSENTIALLY MEANS THE MATERIAL WHICH COMES TO THE N OTICE OF ASSESSING OFFICER MUST BE A DEFINITE, SPECIFIC AND DIRECT AND NOT UNSPECIF IC OR VAGUE. THIS ISSUE WAS CONSIDERED BY THE HONBLE SUPREME COURT IN THE CASE OF INCOME-TAX OFFICER, I WARD DISTICT VI CALCUTTA VS.. LAKHMANI MEWAL DASS, 103 ITR 437 WHERE THE APEX COURT OBSERVED THAT REASON TO BELIEVE DOES NOT ME AN REASON TO SUSPECT. THE REASONS FOR THE FORMATION OF THE BELIEF CONTEMPLATE D U/S 147 OF THE ACT NECESSARY FOR REOPENING OF AN ASSESSMENT MUST HAVE A RATIONAL CONNECTION OR RELEVANT BEARING ON THE FORMATION OF THE BELIEF. RATIONAL CONNECTIO N POSTULATES THAT THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMI NG TO THE NOTICE OF THE ITO AND THE FORMATION OF HIS BELIEF THAT THERE HAS BEEN ESC APEMENT OF INCOME OF THE ASSESSEE. THE APEX COURT FURTHER OBSERVED THAT IT W AS NOT EVERY MATERIAL, HOWSOEVER VAGUE AND INDEFINITE OR DISTANT, REMOTE A ND FAR FETCHED, WHICH WOULD WARRANT THE FORMATION OF THE BELIEF RELATING TO THE ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT. AGAIN THIS ISSUE WAS CONS IDERED BY THE HONBLE SUPREME COURT IN THE CASE OF GANGA SARAN & SONS (P. ) LTD. VS. ITO REPORTED IN 130 ITR 1, WHERE THE APEX COURT OBSERVED THAT EXPRE SSION REASON TO BELIEVE WAS STRONGER THAN THE WORDS SATISFIED. THE BELIEF ENT ERTAINED BY THE A.O. MUST NOT BE ARBITRARY OR IRRATIONAL. IT MUST BE REASONABLE OR IN OTHER WORDS, IT MUST BE BASED ON REASONS WHICH ARE RELEVANT AND MATERIAL. IF THERE IS NO RATIONAL AND INTELLIGIBLE 34 ITA NO.407/AGRA/2012 A.Y. 2004-05 NEXUS BETWEEN THE REASONS AND BELIEF, THE REOPENING OF THE ASSESSMENT WOULD BE WITHOUT JURISDICTION AND BAD IN LAW. 20. IN THE LIGHT OF ABOVE DISCUSSIONS, IF WE CO NSIDER THE FACTS OF THE CASE UNDER CONSIDERATION, WE NOTICED THAT REASONS RECORDED IN THE CASE UNDER CONSIDERATION AND REASONS RECODED IN THE CASE OF COMMISSIONER OF INCO ME-TAX VS. SFIL STOCK BROKING LTD. [2010] 325 ITR 285 (DELHI) ARE SIMILAR. IN THE CASE UNDER CONSIDERATION, INFORMATION HAS BEEN RECEIVED FROM ADIT (INV)-1, AG RA THAT M/S RASHI BUILDCON PVT. LTD., SARASWATPARA, FARAH, DIST. MATHURA HAS CERTAIN ACCOMMODATION ENTRIES FROM M/S AAYUSHI STOCK BROKERS (FORMERLY KNOWN AS C OSMOS FINANCIAL SERVICES PVT. LTD., 38-4B/IF, FRIENDS CENTRE, SANJAY PLACE, AGRA.M/S RASHI BUILDCON PVT. LTD., FARAH (PAN AAHCS0929E)) WAS EARLIER FILING IT S RETURN OF INCOME IN THE NAME OF M/S SAGAR SOPAS PVT. LTD., FIROZABAD BYE PA SS ROAD, AGRA WITH ITO 4(3), AGRA. AFTER CHANGE OF NAME FROM M/S SAGAR SOPAS PV T. LTD. TO M/S RASHI BUILDCON PVT., FARAH, THE COMPANY IS FILING RETURN OF INCOME WITH ITO 3(3), MATHURA. IT WAS FURTHER INFORMED THAT M/S RASHI BUI LDCON PVT. LTD., FARAH HAS RECEIVED THE ACCOMMODATION ENTRIES AMOUNTING TO RS. 38,00,000/- AS ABOVE IN THE MONTH OF OCTOBER, 03, I.E., PERTAINING TO ASST. YEA R 2004-05, WHICH APPEAR TO HAVE ESCAPED ASSESSMENT. IN VIEW OF THESE FACTS THE A.O . HAS REASON TO BELIEVE THAT INCOME TO THE TUNE OF ACCOMMODATION ENTRIES AMOUNTI NG TO RS.38,00,000/- HAS 35 ITA NO.407/AGRA/2012 A.Y. 2004-05 ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2004-05. THUS, IT IS CLEAR THAT THE ASSESSING OFFICER REFERRED TO THE INFORMATION AND T HE DIRECTIONS AS REASONS ON THE BASIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTICE UN DER SECTION 148. UNDER THE CIRCUMSTANCES, THESE COULD NOT BE THE REASONS FOR P ROCEEDING UNDER SECTION 147/148 OF THE ACT. FROM THE SO-CALLED REASONS, IT WAS NOT AT ALL DISCERNIBLE AS TO WHETHER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE I NFORMATION AND INDEPENDENTLY ARRIVED AT A BELIEF THAT, ON THE BASIS OF THE MATER IAL WHICH HE HAD BEFORE HIM, INCOME HAD ESCAPED ASSESSMENT. EVEN BEFORE US, THE REVENUE FAILED TO POINT OUT SUCH MATERIAL. AS DISCUSSED ABOVE THAT ONE OF THE C ONDITIONS WHICH MUST BE SATISFIED BEFORE THE A.O. CAN ASSUME JURISDICTION U NDER SECTION 147 OF THE ACT THAT, HE MUST HAVE REASON TO BELIEVE THAT THE INCOME OF T HE ASSESSEE HAS ESCAPED ASSESSMENT. IF THIS CONDITION IS NOT FULFILLED, TH E NOTICE ISSUED BY THE A.O. WOULD BE WITHOUT JURISDICTION. IN THE CASE UNDER CONSIDE RATION, THE A.O. ISSUED NOTICE UNDER SECTION 148 OF THE ACT WITHOUT JURISDICTION. IN THE LIGHT OF THE FACT, THE ORDER OF THE A.O. IS LIABLE TO BE QUASHED, WE DO ACCORDIN GLY BY ALLOWING GROUND OF APPEAL OF THE ASSESSEE ON THE ISSUE. 21. AS REGARDS MERIT OF THE CASE, WE FIND THAT UNDE R SIMILAR FACTS AND CIRCUMSTANCES THE I.T.A.T., AGRA BENCH HAS TAKEN A VIEW IN FAVOUR OF THE ASSESSEE IN THE CASE OF SHRI ASHOK KUMAR LAVANIYA, PROP. BAJ RANG AUTOMOBILES, AGRA IN 36 ITA NO.407/AGRA/2012 A.Y. 2004-05 ITA NO.112/AGR/2004 VIDE ORDER DATED 30.05.2008. T HE SAME HAS BEEN FOLLOWED BY I.T.A.T. AGRA BENCH IN CASE OF SHRI BAIJNATH AGA RWAL, PROP. M/S. BAIJNATH SCRAP CENTRE IN ITA NO.133/AGR/2005 VIDE ORDER DATE D 13.04.2010. IT HAS ALSO BEEN NOTICED THAT ON IDENTICAL SET OF FACTS THE I.T .A.T., ALLAHABAD BENCH IN ITA NOS.84 & 85/ALLD/2013 IN THE CASE OF SHRI ASHOK KUM AR ARORA VS. ITO VIDE ORDER DATED 13.05.2013 HAS DECIDED THE ISSUE AS UNDER :- 13. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE P ARTIES AND RECORDS PERUSED. THE IMPORTANT WORDS UNDER SECTION 147 ARE HAS REASON TO BELIEVE AND THESE WORDS ARE STRONGER THAN THE WORDS IS SAT ISFIED. THE BELIEF ENTERTAINED BY THE ITO MUST NOT BE ARBITRARY OR IRR ATIONAL. IT MUST BE REASONABLE OR IN OTHER WORDS IT MUST BE BASED ON RE ASONS WHICH ARE RELEVANT AND MATERIAL. THE COURT CANNOT OF COURSE INVESTIGA TE INTO THE ADEQUACY OR SUFFICIENCY OF THE REASONS WHICH HAVE WEIGHED WITH THE ITO IN COMING TO THE BELIEF, BUT THE COURT CAN CERTAINLY EXAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE A BEARING ON THE MATTERS IN REGARD TO WHIC H HE IS REQUIRED TO ENTERTAIN THE BELIEF BEFORE HE CAN ISSUE NOTICE UND ER SECTION 147 AS HELD IN THE CASE OF GANGA SARAN & SONS (P) LTD VS. ITO [198 1] 130 ITR 1 (SC), ITO VS. NAWAB MIR BARKAT ALI KHAN BAHADUR [1974] 97 ITR 239 (SC)/RAYMOND WOOLEN MILLS LTD. VS. ITO [1999] 236 ITR 34 (SC). 13.1 THE HONBLE SUPREME COURT IN THE CASE OF S. NA RAYANAPPA VS. CIT [1976] 63 ITR 219 (SC) HAS HELD THAT THE EXPRESSION REASON TO BELIEVE DOES NOT MEAN A PURELY SUBJECTIVE SATISFACTION ON THE PA RT OF THE ITO. THE BELIEF MUST BE HELD IN GOOD FAITH; IT CANNOT MERELY BE A P RETENCE. 13.2 THE HONBLE SUPREME COURT IN THE CASE OF SHEO NATH SINGH VS. AAC [1971] 82 ITR 147 (SC) HELD THAT THE WORDS REASON TO BELIEVE SUGGEST THAT THE BELIEF MUST BE THAT OF AN HONEST AND REASONABLE PERSON BASED UPON REASONABLE GROUNDS, AND THAT THE ITO MAY ACT ON DIR ECT OR CIRCUMSTANTIAL EVIDENCE BUT NOT ON MERE SUSPICION, GOSSIP OR RUMOU R. THE ITO WOULD BE ACTING WITHOUT JURISDICTION IF THE REASON FOR HIS B ELIEF THAT THE CONDITIONS ARE SATISFIED DOES NOT EXIST OR IS NOT MATERIAL OR RELE VANT TO THE BELIEF REQUIRED BY THE SECTION. 37 ITA NO.407/AGRA/2012 A.Y. 2004-05 13.3 ON PERUSAL OF REASONS RECORDED, WE FIND THAT T HE REASONS RECORDED ARE NOT IN ACCORDANCE WITH LAW AS IT WAS SIMPLY ON THE BASIS OF ASSUMPTION OF THE A.O. IN THE REASONS RECORDED, IT IS STATED THA T SHARE TRANSACTIONS ON WHICH LONG TERM CAPITAL GAIN HAS BEEN CLAIMED DO NO T APPEAR TO BE GENUINE. THIS SUPPORTS TO THE FACT THAT THE REOPE NING HAS BEEN MADE ON THE BASIS OF PRESUMPTION AND NOT ON REASONS TO BELIEVE, THUS, NO REASONS RECORDED ARE IN ACCORDANCE WITH LAW. THE REASONS D O NOT REFLECT THAT THE A.O. HAS REASON TO BELIEVE THAT THERE IS AN ESCAPEM ENT OF INCOME. ONCE IT IS FOUND THAT THE REASONS ARE NOT IN ACCORDANCE WITH L AW, THE REOPENING IS BAD IN LAW. WE HOLD ACCORDINGLY. 14. AS REGARDS THE MERIT OF THE CASE, WE FIND THAT THE CASE OF THE ASSESSEE IS COVERED BY VARIOUS ORDERS ON IDENTICAL SET OF FA CTS. IN THE CASE OF DALPAT SINGH CHAUDHARY VS. ACIT (SUPRA), THE I.T.A.T., JOD HPUR BENCH IN A CASE WHERE SHARES WERE SOLD THROUGH M/S. M.K.M. FINSEC P VT. LTD., THE I.T.A.T., JODHPUR BENCH HAS DECIDED THE ISSUE IN FAVOUR OF TH E ASSESSEE. THE RELEVANT FINDING IS REPRODUCED AS UNDER :- 11. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERE D THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND PE RUSING OTHER MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN HIS APPEAL. IT IS SEEN THAT ASSESSEE PURCHASED SHAR ES OF M/S ELITE CAPITAL & MANAGEMENT SERVICES (P) LTD., 61,70 0 SHARES FOR A CONSIDERATION OF RS.92,550. THESE SHARES WERE PURCHASED BETWEEN 10TH APRIL, 2000 TO 17TH MAY, 2000. THE PAY MENTS WERE MADE IN CASH, COPY OF LEDGER ACCOUNT IS PLACED AT P. 228. THE COPY OF CERTIFICATE CONFIRMING THE SALE OF SHAR ES TO ASSESSEE IS PLACED AT P. 229 OF THE PAPER BOOK. COPY OF ACCO UNT OF M/S ELITE CAPITAL & MANAGEMENT SERVICES (P) LTD. CERTIF YING THAT 61,700 SHARES HAVE BEEN DEMATED IN THE NAME OF THE ASSESSEE IS PLACED AT P. 320 OF THE PAPER BOOK. THEREAFTER THE ASSESSEE SOLD SHARES NUMBERING 20,000 ON 28TH AUG., 2001 THROUGH M/S MKM FINSE (P) LTD., COPY OF WHICH IS PLACED AT P. 2 31 OF THE PAPER BOOK. THEREAFTER ASSESSEE SOLD FURTHER 41,700 SHARES, COPY OF THE SAME IS PLACED AT P. 232. THESE SHARES WERE SOLD VIDE BILL DT. 24TH AUG., 2001. PAYMENTS HAVE BEEN R ECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THE CERTIFICATE FROM M/S STOCK HOLDING CORPORATION LTD. THROUGH WHOM THE SHARES AR E 38 ITA NO.407/AGRA/2012 A.Y. 2004-05 DELIVERED IS PLACED AT PP. 235 AND 236 OF THE PAPER BOOK. AFTER GOING THROUGH DETAILS, IT IS CLEARLY SEEN THAT ASSE SSEE PURCHASED SHARES IN EARLIER YEAR. THEY WERE SHOWN IN THE BALA NCE SHEET WHICH WAS FILED ALONG WITH THE RETURN OF INCOME. TH E PAYMENTS WERE MADE THROUGH BOOKS OF ACCOUNT WHICH HAS NOT BE EN DOUBTED. THE SHARES BELONG TO A LISTED COMPANY WHIC H IS ALSO NOT IN DOUBT. THE COMPANY ITSELF HAS ISSUED CERTIFI CATE THAT ALL THESE SHARES HAVE BEEN DEMATED, COPY OF THE SAME IS PLACED ON RECORD. ONCE THE PURCHASE OF SHARES IS NOT DOUBTED, THEN IN OUR CONSIDERED VIEW, THE SALE OF SAME SHARES SHOULD NOT HAVE BEEN DOUBTED. IF ASSESSEE HAS INVESTED HIS OWN MONEY UND ER THE GARB OF FICTITIOUS SALE OF SHARES THEN WHERE THE ACTUAL SHARES PURCHASED BY ASSESSEE WHICH WERE DULY DEMATED HAVE GONE. THIS FACT HAS NOT BEEN CONSIDERED EITHER BY AO OR B Y LEARNED CIT(A) WHO ORIGINALLY REJECTED THE CLAIM OF THE ASS ESSEE. WHEN THIS FACT WAS BROUGHT TO THE NOTICE OF LEARNED CIT( A) BY FILING MISCELLANEOUS APPLICATION UNDER SECTION 154 THAT TH E ASSESSEE HAS PURCHASED THE SHARES OF LISTED COMPANY AND THE AO HAS NOT MADE ANY ENQUIRY, RATHER HE HAS NOTED WRONG FACT, T HEN LEARNED CIT(A) REALIZED THIS MISTAKE AND RECTIFIED HIS ORDE R UNDER SECTION 154 BY ALLOWING THE CLAIM OF ASSESSEE. ONLY ON THE BASIS OF STATEMENT OF SHRI MAHESH BATRA, THE AO HAS DRAWN ADVERSE INFERENCE IN CASE OF ASSESSEE. IT MAY BE TRUE THAT SHRI MAHESH BATRA MAY HAVE INDULGED IN ISSUING ACCOMMODATION EN TRIES BUT IT CAN ALSO BE POSSIBLE THAT SHRI MAHESH BATRA MAY ALSO BE DOING GENUINE TRANSACTION. IT IS NOT A CASE THAT HE IS ONLY PROVIDING BOGUS ENTRIES. STATEMENT OF SHRI MAHESH B ATRA IS NOT AVAILABLE ON RECORD. THE LEARNED COUNSEL OF THE ASS ESSEE HAS STATED THAT THE STATEMENT OF SHRI MAHESH BATRA HAS NOT BEEN PROVIDED TO THEM. THE DEPARTMENT HAS NOT FILED COPY OF THE STATEMENT OF SHRI BATRA. THEREFORE, IN OUR VIEW, SI NCE THE PURCHASE OF SHARES IS GENUINE, THE SALE OF THE SAME SHARES SHOULD HAVE BEEN TREATED AS GENUINE. SIMILAR ISSUE CAME BEFORE THE VARIOUS BENCHES OF THE TRIBUNAL AND TIME AND AG AIN THE BENCHES HAVE DECIDED THAT WITHOUT BRINGING ANY COGE NT MATERIAL ON RECORD, THE CLAIM OF ASSESSEE CANNOT BE DENIED IN REGARD TO SALE OF SHARES. 39 ITA NO.407/AGRA/2012 A.Y. 2004-05 14.1 THE HONBLE DELHI HIGH COURT IN THE CASE OF CI T VS. VISHAL HOLDING & CAPITAL PVT. LTD., 200 TAXMAN 186 (DELHI) (MAG.), ON IDENTICAL SET OF FACTS HAS HELD AS UNDER :- 6. WE ARE OF THE VIEW THAT THE ASSESSEE HAD PRODU CED COPIES OF ACCOUNTS, BILLS AND CONTRACT NOTES ISSUED BY M/S . MKM FINSEC PVT. LTD. AND HAD BEEN MAINTAINING BOOKS OF ACCOUNT AS PER COMPANIES ACT. THE ASSESSEE HAD ALSO DEMONSTRAT ED THE PURCHASE AND SALE OF SHARES OVER A PERIOD OF TIME A S SEEN FROM THE BALANCE SHEET/S. IN OUR OPINION, THE AO HAS SIM PLY ACTED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WIN G WITHOUT VERIFYING THE DETAILS FURNISHED BY THE ASSESSEE. TH E ASSESSEE HAS ALSO PRODUCED BEST POSSIBLE EVIDENCE TO SUPPORT ITS CLAIM. CONSEQUENTLY THE ADDITION MADE BY THE AO CANNOT BE SUSTAINED. 14.2 HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CI T VS. SUDEEP GOENKA IN INCOME TAX APPEAL NO.468 OF 2009, JUDGMENT DATED 03.01.2013, HELD AS UNDER :- 7. WE HAVE CONSIDERED THE ARGUMENTS OF THE COUNSE L FOR THE PARTIES. THE CIT(A) AFTER CONSIDERING ENTIRE EVIDEN CE OF RECORD FOUND THAT PURCHASE AND SALE TRANSACTIONS WERE PROV ED. HE FURTHER FOUND THAT PAYMENT OF THE SALE PRICE WAS MA DE TO THE ASSESSEE THROUGH BANK CHANNEL AND NOT IN CASH AS SU CH THE TRANSACTIONS ARE ACTUAL TRANSACTIONS AND NOT A FICT ITIOUS ACCOMMODATION ENTRIES. THE SALE TRANSACTIONS CANNOT BE DISBELIEVED ONLY FOR THE REASON THAT THE ASSESSEE C OULD NOT GIVE THE IDENTITY OF THE PURCHASERS. ARGUMENTS OF THE SE NIOR STANDING COUNSEL IN THIS RESPECT IS NOT LIABLE TO BE ACCEPTE D. SIMILAR CONTROVERSY HAS BEEN RAISED IN THE CASE OF SHRI AKA SH GOENKA WHICH WAS DECIDED BY A COMMON JUDGMENT BY THE TRIBU NAL. THE REVENUE FILED INCOME TAX APPEAL (DEFECTIVE) NO. 261 OF 2009 IN THE CASE OF SHRI AKASH GOENKA WHICH HAS BEEN DIS MISSED BY THIS COURT BY JUDGMENT DATED 18.11.2010 AND THUS JU DGMENT OF THE TRIBUNAL HAS BEEN UPHELD. THE SENIOR STANDING C OUNSEL COULD NOT POINT OUT ANY DISTINGUISHING FEATURE FOR NOT FOLLOWING THE AFORESAID JUDGEMENT. 40 ITA NO.407/AGRA/2012 A.Y. 2004-05 14.3 THE I.T.A.T., AGRA BENCH IN THE CASE OF ITO VS . SHRI RAKESH KHETRAPAL IN ITA NO.226/AGRA/2010, ORDER DATED 18.01.2013, HA S DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT FINDING IS RE PRODUCED AS UNDER :- 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL ON RECORD. THE FACTS OF THE CASE OF THE AS SESSEE ARE SIMILAR TO THAT OF DEPARTMENTAL APPEAL IN THE CASE OF RAM PRAKASH GARG IN ITA NO. 237/2011 FOR THE ASSESSMENT YEAR 2001-02, IN WHICH ITAT, AGRA BENCH DISMISSED THE DEPARTMENTAL APPEAL VIDE ORDER OF THE EVEN DATE, HO LDING AS UNDER : 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL ON RECORD AND DO NOT FIND ANY JUSTIFICATIO N TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELET ING THE ADDITION. THE AO, ON THE FACTS OF THE CASE FOUND TH AT SIMILAR ISSUE HAVE BEEN CONSIDERED IN THE CASE OF H UF OF ASSESSEE AND OTHER FAMILY MEMBERS SHRI RAJESH KUMAR GARG AND SMT. SEEMA GARG WHO HAVE ALSO SHOWN LONG- TERM CAPITAL GAINS OF THE SIMILAR NATURE OF THE SAM E BROKER AND OF THE SAME SCRIP IN THE ASSESSMENT YEAR UNDER APPEAL, WHICH WERE FOUND TO BE BOGUS BY THE A O AND ADDITIONS HAVE BEEN CONFIRMED BY THE LD. CIT(A) AS WELL. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE FIL ED COPY OF THE TRIBUNAL ORDER IN THEIR CASES DATED 31.03.20 09 IN WHICH THE ITAT, AGRA BENCH DELETED THE SIMILAR ADDI TIONS AND NO RELIANCE WAS PLACED ON THE STATEMENT OF SHRI MUKESH GUPTA AND HIS WIFE. THE ORDER OF THE TRIBUNA L HAS BEEN CONFIRMED BY THE HONBLE ALLAHABAD HIGH COURT VIDE ORDER DATED 15.02.2011. IN THE AFORESAID DECISION, IT WAS FOUND THAT THOSE ASSESSEES HAD OBT AINED SHARES IN PREFERENTIAL ALLOTMENT DIRECTLY FROM THE COMPANIES AND THE PURCHASES DECLARED IN THE BALANCE SHEET OF EARLIER YEARS, WHICH WERE ACCEPTED BY THE DEPARTMENT. SHARES WERE SOLD TO THE REGISTERED STOC K BROKERS AND STOCK EXCHANGE. BROKERS HAVE CONFIRMED THAT MONEY WAS GIVEN THROUGH DRAFT. HONBLE ALLAHABAD HI GH COURT, THEREFORE, ON CONSIDERATION OF THESE RELEVAN T CONSIDERATIONS, CONFIRMED THE FINDINGS OF THE TRIBU NAL THAT THE SALES ARE NOT SHAM TRANSACTIONS. ACCORDING TO THE 41 ITA NO.407/AGRA/2012 A.Y. 2004-05 AO, THE FACTS OF THESE CASES ARE IDENTICAL TO THE C ASE OF THE ASSESSEE, THEREFORE, WHEN IN THE IDENTICAL CASE S OF THE FAMILY MEMBERS OF THE ASSESSEE, ADDITIONS HAVE BEEN DELETED BY THE TRIBUNAL AND THE ORDER OF THE TRIBUN AL HAVE BEEN CONFIRMED BY ALLAHABAD HIGH COURT, THEREFORE, ON SUCH REASON ITSELF, THE DEPARTMENTAL APPEAL IS LIABLE TO BE DISMISSED. FURTHER, THE ASSESSEE HA S FILED PROPER EVIDENCES BEFORE THE AUTHORITIES BELOW TO SH OW THAT SHARES OF M/S. B.T. TECHNET LTD. WERE ALLOTTED DIRECTLY BY THIS COMPANY @ 10/- PER SHARE AND CONSIDERATION WAS TRANSFERRED THROUGH BANKING CHANN EL. ALL THE ALLOTMENT LETTERS, DRAFTS, CERTIFICATES OF THE COMPANY ARE FILED IN THE PAPER BOO;. THE PROFILE OF M/S. B.T. TECHNET IS ALSO FILED IN THE PAPER BOOK TO SHO W THAT IT WAS A GENUINE COMPANY. THE SAME WERE SHOWN IN TH E BOOKS OF EARLIER YEARS. THEREFORE, THE PURCHASE OF SHARES AND SOURCE OF PURCHASE COULD NOT HAVE BEEN DISPUTED . SAME SHARES WERE SOLD TO THE BROKER, M/S. CMS SECURITIES LTD. DELHI AND ALL THE CONTRACT NOTES, S ALE CONSIDERATION THROUGH DRAFTS HAVE BEEN FILED IN THE PAPER BOOK TO SUPPORT THE CONTENTION OF THE ASSESSEE. THE SALE RATE OF RS.114/- PER SHARE IS ALSO SUPPORTED BY THE INFORMATION RECEIVED FROM M.P. STOCK EXCHANGE. WHATEVER STATEMENTS OF CMS SECURITIES LTD. THROUGH THEIR DIRECTORS WERE RECORDED WERE NEVER CONFRONTED TO THE ASSESSEE. THEREFORE, THE SAME CANNOT BE READ IN EVIDENCE, WHICH IS ALSO SUBSTANTIATED BY THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF KISHAN CHAND CHELARAM VS. CIT, 125 ITR 713. CONSIDERING THE TOTA LITY OF FACTS AND CIRCUMSTANCES, IN THE LIGHT OF THE DEC ISION OF THE JURISDICTIONAL ALLAHABAD HIGH COURT IN THE GROU P CASES ABOVE, WE DO NOT FIND ANY JUSTIFICATION TO IN TERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELETING THE AD DITION. THE ASSESSEE ON THE BASIS OF EVIDENCE AND MATERIAL ON RECORD HAS BEEN ABLE TO PROVE THAT HE HAS RECEIVED ENTIRE SALE CONSIDERATION OF SHARES THROUGH KNOWN SOURCES. THEREFORE, NO ADDITION U/S. 68 COULD BE MADE AGAINS T THE ASSESSEE. AS A RESULT, THE DEPARTMENTAL APPEAL FAIL S AND IS DISMISSED. 42 ITA NO.407/AGRA/2012 A.Y. 2004-05 4.1 CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF ABOVE ORDER OF THE TRIBUNAL AND OTHER DECISIONS REFERRED BY THE LD. COUNSEL FOR THE ASSESSEE, WE ARE OF THE VIEW THAT T HE DEPARTMENTAL APPEAL HAS NO MERIT AND IS LIABLE TO B E DISMISSED. THE ASSESSEE PURCHASED SHARES OF M/S. CAPITAL TRADE LINKS LTD. IN EARLIER YEARS DIRECTLY FROM THE COMPANY AND CONS IDERATION RECEIVED IS PROVED AND THE PURCHASES MADE IN EARLIE R YEAR HAVE NOT BEEN DISPUTED BY THE REVENUE AUTHORITIES. THE A SSESSEE SOLD SHARES THROUGH TWO BROKERS AND THEIR COPIES OF SALE BILLS AND CONTRACT NOTES ARE FILED AND SALE CONSIDERATION OF SHARE IS GIVEN TO THE ASSESSEE THROUGH BANKING CHANNEL AND THE RAT ES AT WHICH THE SHARES ARE TRANSFERRED ARE SIMILAR AS APPROVED BY M.P. STOCK EXCHANGE. THE LD. CIT(A) ASKED THE INCOME-TAX AUTHORITIES TO PRODUCE ALL RELEVANT EVIDENCES AND M ATERIAL BEFORE HIM TO PROVE THAT THE ASSESSEE HAS ACCEPTED BOGUS ACCOMMODATION ENTRY, BUT NO MATERIAL WAS PRODUCED B EFORE HIM IN THIS REGARD. THEREFORE, THE LD. CIT(A) ON PR OPER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTL Y DELETED THE ADDITION. FURTHER, WHATEVER MATERIAL WAS COLLECTED AT THE BACK OF THE ASSESSEE WAS NOT FORWARDED TO THE ASSESSEE. THEREFORE, SAME CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSE E. SINCE, IT IS DEPARTMENTAL APPEAL AND NO MATERIAL IS PRODUCED BEFORE US TO REBUT THE FINDINGS OF THE LD. CIT(A), THEREFORE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF TH E LD. CIT(A) IN DELETING THE ADDITION. IN THE RESULT, THE DEPARTMEN TAL APPEAL FAILS AND IS DISMISSED. 14.4 IN THE CASE UNDER CONSIDERATION, WE FIND THAT THE ASSESSEE HAS FURNISHED THE RELEVANT DETAILS LIKE CONTRACT NOTES, DELIVERY NOTES, SALE OF SHARES AND PURCHASE BILL ETC. AND IN THE LIGHT OF T HE FACT, WE FIND THAT THE CASES UNDER CONSIDERATION ARE SQUARELY COVERED BY T HE ABOVE ORDERS INCLUDING THE ORDER OF I.T.A.T., AGRA BENCH IN ITA NO.226/AGRA/2010 IN THE CASE OF ITO VS. SHRI RAKESH KHETRAPAL (SUPRA). THE JUDGEMENT IN THE CASE OF AREVA T&D, SA VS. ASSTT. DIRECTOR OF INCOME TAX & O THERS, 349 ITR 127 (DELHI) RELIED UPON BY THE LD. DEPARTMENTAL REPRESE NTATIVE IS DISTINGUISHABLE ON FACTS. WE FOLLOW THE ABOVE ORDE R OF I.T.A.T., AGRA BENCH AND OTHER ORDERS. THUS, ADDITION OF RS.9,36,250/- FOR A.Y. 2002-03 IN THE CASE OF SHRI ASHOK KUMAR ARORA IS DELETED. 43 ITA NO.407/AGRA/2012 A.Y. 2004-05 22. SINCE ON IDENTICAL FACTS THE ISSUE HAS BEEN DEC IDED IN FAVOR OF THE ASSESSEE, TO MAINTAIN CONSISTENCY, WE FOLLOW THE ABOVE ORDER OF I.T.A.T. AND IN VIEW OF THAT WE DELETE THE ADDITION OF RS.38,09,500/- MADE BY TH E A.O., BEING THE ADDITION OF RS.38,00,000/- ON ACCOUNT OF SHARES AND RS.9,500/- ON ACCOUNT OF ESTIMATED COMMISSION. IN VIEW OF PRINCIPLE OF CONSISTENCY W HICH WE HAVE FOLLOWED, THE DECISIONS CITED BY THE LD. D.R. AND REVENUE DOES NO T HELP THEM. 23. FURTHER, THE JUDGEMENTS RELIED UPON BY THE LD. DEPARTMENTAL REPRESENTATIVE ARE DISTINGUISHABLE ON FACTS AS THOSE JUDGEMENTS HA VE BEEN DECIDED BY THE COURT CONSIDERING THE FACTS OF RESPECTIVE CASES WHICH ARE NOT SIMILAR TO THE FACTS OF THE CASE UNDER CONSIDERATION. THE CASE UNDER CONSIDERA TION HAS BEEN DECIDED AFTER DETAILED DISCUSSIONS ON THE ISSUE AND AFTER CONSIDE RING THE FACTS OF THE CASE. 24. OTHER GROUNDS RELATING TO CHARGING OF INTEREST WHICH ARE CONSEQUENTIAL IN NATURE. 25. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER 44 ITA NO.407/AGRA/2012 A.Y. 2004-05 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