ITO, Kanpur V. Brijendra Prakash Rastogi, Kanpur

ITA 574/LKW/2010

• Counselvise Citation: 57423714 RSA 2010
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 01-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Value adopted by valuation officer; Question of law; Tangible material; Valuation report; Reason to believe; Reassessment proceedings
• Section: 80C; 133(6); 147; 131; 148; 154; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A : LUCKNOW BEFORE SHRI H. L. KARWA, HONBLE VICE PRESIDENT AND SHRI N. K. SAINI, ACCOUNTANT MEMBER I.T.A. NO.574/LKW/10 ASSESSMENT YEAR:2007-2008 INCOME TAX OFFICER-4(3), VS. SHRI BRIJENDRA PRA KASH RASTOGI, KANPUR. 124/A/565, GOVIND NAGAR, KANPUR. PAN:AAPPR9463B (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI PRAVEEN KUMAR, CIT, D. R. RESPONDENT BY: SHRI RAKESH GARG, ADVOCATE ORDER PER N. K. SAINI: THIS IS AN APPEAL FILED BY THE DEPARTMENT AGAINST T HE ORDER DATED 22/06/2010 OF CIT(A)-II, KANPUR RELEVANT TO ASSESSM ENT YEAR 2007-2008. IN THIS APPEAL THE DEPARTMENT HAS RAISED THE FOLLOWING GROU NDS: 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE CO MMISSIONER OF INCOME TAX (APPEALS)-II, KANPUR HAS ERRED IN QUA SHING THE INITIATION OF PROCEEDINGS U/S 147 OF THE I.T. A CT, 1961 WITHOUT APPRECIATING THE FACT THAT THE ASSESSING OF FICER AFTER PLACING ON RECORD THE SUFFICIENT MATERIAL FOR REASO N TO BELIEVE HAD DULY RECORDED THE REASONS THAT THE ASSESSEE HAD NOT DISCLOSED FULLY HIS INCOME AND HAS ESCAPED ASSESSME NT BEING UNEXPLAINED ASSESSMENT IN PROPERTY. 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE COM MISSIONER OF INCOME TAX (APPEALS)-II, KANPUR HAS ERRED IN LAW IN QUASHING THE INITIATION OF PROCEEDINGS U/S 147 OF T HE ACT IGNORING THE PROVISIONS LAID DOWN IN EXPLANATION 3 OF SECTION 147 OF THE I.T. ACT, 1961. 2 3. THAT THE ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS)-II, KANPUR BEING ERRONEOUS, IN LAW AND ON FACTS DESERVE S TO BE VACATED AND THAT THE ORDER OF THE ASSESSING OFFICER BE RESTORED; AND 4. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE AND/OR ADD ANY FRESH GROUND A S AND WHEN IT IS CONSIDERED NECESSARY TO DO SO. 2. THE ONLY GRIEVANCE OF THE DEPARTMENT IN THIS APP EAL RELATES TO THE ACTION OF THE LEARNED CIT (A) IN QUASHING THE INITIATION O F PROCEEDINGS U/S 147 OF THE I.T. ACT, 1961 (IN SHORT, THE ACT). 3. THE FACTS RELATED TO THIS CASE, IN BRIEF, ARE TH AT THE ASSESSEE FILED THE RETURN OF INCOME ON 04/10/2007 DECLARING AN INCOME OF ` 1,99,570/-. THE SAID RETURN WAS PROCESSED ON 30/09/2008 RESULTING INTO A REFUND OF ` 1,04,600/-, WHICH WAS NOT GRANTED TO THE ASSESSEE. LATER ON THE ASSE SSING OFFICER INITIATED PROCEEDINGS U/S 154 OF THE ACT AND THE ASSESSEE, IN COMPLIANCE TO THE SAID NOTICE, FILED THE REQUIRED DETAILS VIDE REPLY DATED 26/02/2009 WHEREIN THE DETAILS IN RESPECT OF THE LOANS TAKEN AND OF THE INVESTMENT S MADE IN THE PROPERTY WERE SUBMITTED. THE SAID DETAILS ALSO INCLUDED A SANCTI ON LETTER (OF LOAN) ISSUED BY THE ICICI BANK. ON PERUSAL OF THE CASE RECORDS, THE AS SESSING OFFICER DROPPED THE PROCEEDINGS U/S 154 OF THE ACT BY MAKING THE NOTING ON THE LETTER OF THE ASSESSEE ITSELF. SUBSEQUENTLY, THE ASSESSING OFFICER ISS UED NOTICE DATED 27/03/2009 U/S 148 OF THE ACT. IN RESPONSE TO THE SAID NOTICE, TH E ASSESSEE FILED A LETTER THAT THE TAX RETURN FILED BY HIM EARLIER MAY BE TREATED AS R ETURN FILED IN COMPLIANCE TO THE 3 SAID NOTICE. THE ASSESSEE ALSO CHALLENGED THE INIT IATION OF PROCEEDINGS U/S 147 OF THE ACT BY ISSUING THE NOTICE U/S 148 OF THE ACT . THE ASSESSING OFFICER WHILE INITIATING THE PROCEEDINGS U/S 147 HAS STATED THAT THE ASSESSEE MADE UNEXPLAINED INVESTMENTS IN THE PROPERTY TO THE TUNE OF ` 37,41,000/- BEING DIFFERENCE BETWEEN THE VALUATION OF THE PROPERTY AS TAKEN BY ICICI BANK AT ` 1,30,67,000/- AND DECLARED BY THE ASSESSEE IN THE B OOKS OF ACCOUNT AT ` 93,26,000/-. THE SUBMISSIONS OF THE ASSESSEE MENTI ONED BY THE ASSESSING OFFICER AT PAGE 2 OF THE ASSESSMENT ORDER DATED 24/ 12/2009 READ AS UNDER: THAT THE INVESTMENT IN CONSTRUCTION OF PROPERTY IS DULY RECORDED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE IN THE NORMAL COURSE OF ITS BUSINESS AND THE EXPENSES SO DEBITED TO CONSTRUCTION ACCOUNT ARE PROPERLY SUPPORTED BY BILLS AND VOUCHER S. IT WAS FURTHER STATED THAT MERELY THERE IS A DIFFERENCE IN THE VAL UATION DONE BY THE BANK FOR SANCTION OF LOAN AT MARKET VALUE DOES NOT MEAN UNDER ESTIMATION OF ANY INVESTMENT IN CONSTRUCTION. THE B ANK WAS APPROACHED FOR HOUSING LOAN AFTER DOING CONSTRUCTIO N OF THE PROPERTY AND BANKERS CONSIDERING THE MARKET VALUE S ANCTIONED THE LOAN. IT WAS ALSO STATED THAT THE MARKET VALUE DEPE NDS ON MANY FACTORS AS SUCH CANNOT BE TAKEN AS A RULE TO DETERM INING THE ACTUAL INVESTMENT IN CONSTRUCTION.' 3.1 THE ASSESSING OFFICER DID NOT FIND MERIT IN THE ABOVE SUBMISSIONS OF THE ASSESSEE BY STATING THAT HE HAS NOT SUBMITTED ANY C ONCRETE EVIDENCE SUCH AS VALUATION REPORT OF THE PROPERTY, THEREFORE, THE OB JECTION FILED BY THE ASSESSEE CHALLENGING THE VALIDITY OF INITIATION OF PROCEEDIN GS U/S 147 OF THE ACT WAS REJECTED. 4 4. THE ASSESSEE CARRIED THE MATTER TO LEARNED CIT(A ) AND THE SUBMISSIONS MADE BEFORE HIM, AS DISCUSSED IN PARA 5 OF THE IMPU GNED ORDER, ARE REPRODUCED VERBATIM AS UNDER: A PERUSAL OF THE COPY OF REASONS AND SATISFACTION RECORDED BY THE ASSESSING OFFICER FOR ISSUE OF NOTICE U/S.148 WOULD SHOW THAT SIMPLY BECAUSE HUGE AMOUNT OF REFUND WAS INVOLVED O N PROCESSING THE RETURN. NOTICE U/S.154 WAS ISSUED CALLING FOR D ETAILS WHICH AMOUNTS TO ROVING AND FISHING ENQUIRY AND AFTER REC EIVING INFORMATION FROM ASSESSEE UNDER SECTION 154 OF THE ACT CHOSE TO PROCEED AGAINST THE ASSESSEE U/S.148 OF THE INCOME TAX ACT. IT IS IMPORTANT AND PERTINENT TO NOTE THAT NOW WHERE PAPE R LESS RETURNS ARE FILED ALL DETAILS OF THE BALANCE SHEET ARE INCO RPORATED IN THE RETURN FORM ITSELF AS SUCH THE ASSESSEE CAN NOT BE HELD OF NOT DISCLOSING THE FULL AND TRUE PARTICULARS OF HIS INC OME AND INVESTMENT, IF THERE WAS ANY DOUBTS IN THE MIND OF THE ASSESSIN G OFFICER HE COULD HAVE VERIFIED THE CORRECTNESS OF CONTENTS OF THE RETURN THROUGH ENQUIRY U/S.133 AND COULD SCRUTINIZE THE RETURNS AN D MAKE THE ASSESSMENT. THE DETAILS COLLECTED IN PROCEEDINGS U/ S.154 CANNOT TANTAMOUNT TO INFORMATION WITHIN THE MEANING OF SEC TION 147 ON THE BASIS OF WHICH THE ASSESSING OFFICER COULD FORM A B ELIEF THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND T AKE RESORT OF PROVISIONS OF SECTION 147 EITHER FOR REOPENING O R REASSESSMENT OF A CASE. THAT IT IS NOW A SETTLE PRINCIPLE OF LAW THAT THE A SSESSING OFFICER CAN ISSUE A NOTICE U/S.147/148 OF THE ACT PROVIDED HE H AS SOME INFORMATION IN HIS POSSESSION ON THE BASIS OF WHICH HE COULD REASONABLE FORM BELIEF TO ARRIVE AT SOME SATISFACTI ON THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. IN THE PRESENT CASE NO SUCH INFORMATION WAS AVAILAB LE WITH THE ASSESSING OFFICER WHICH IS EVIDENT FROM THE REASONS AND SATISFACTION RECORDED BY HIM ON 27/03/2009. IN A RECENT CASE DECISION BY DELHI HIGH COURT IN TH E CASE OF CIT VS. BHATIA BHATTHA CO., 2008, REPORTED IN 220 CTR 531 I T IS HELD- 'FISHING ENQUIRY WERE BELIEF OF ASSESSING OFFICER T HAT CERTAIN ISSUE REQUIRES 'MUCH DEEPER SCRUTINY' IN THE ABSENC E OF ANY 5 MATERIAL OR REASON FOR SUCH BELIEF, IS NOT ENOUGH T O INVOKE S.147'. IN A GOOD NUMBER OF CASES IT HAS BEEN HELD BY THE C OURTS THAT WHERE THE ASSESSEE HAS DISCLOSED IN HIS ACCOUNTS TH AT A BUILDING WAS CONSTRUCTED, IT CAN NOT BE HELD THAT THERE WAS ANY FAILURE OF FULL AND TRUE DISCLOSURE OF INFORMATION NECESSARY FOR AS SESSMENT AND MERELY BECAUSE THE ASSESSING OFFICER FEELS THAT THE COST OF CONSTRUCTION IS MORE THAN THE AMOUNT DECLARED BY TH E ASSESSEE THERE CAN BE NO CASE OF ASSESSMENT U/S.147/148 OF T HE INCOME TAX ACT. IN SUCH A CASE IT WOULD AMOUNT TO CHANGE OF O PINION AND NO ACTION U/S.147 COULD BE TAKEN BY THE ASSESSING OFFI CER. THE APEX COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LT D. 228 CTR 488 HAVE HELD: HENCE, AFTER 1 ST APRIL 1989 ASSESSING OFFICER HAS POWER TO REOPEN THE ASSESSMENT UNDER SECTION 147 PROVIDED TH ERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT TH ERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT REASONS MUST H AVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. THAT THE ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF DIFFERENCE OF ` 82,10,052/- TO THE INCOME OF THE ASSESSEE BEING DIF FERENCE BETWEEN THE COST OF CONSTRUCTION AS DETERMINED BY T HE DVO AND DECLARED BY THE ASSESSEE APPELLANT, IT MAY BE SUBMI TTED HERE THAT IN VIEW OF VARIOUS DECISIONS OF DIFFERENT COURTS, I T IS NOW SETTLED THAT NO ADDITION ON THIS SCORE COULD BE MADE U/S.69 UNLE SS THE BOOKS OF ACCOUNTS ARE REJECTED BY THE ASSESSING OFFICER. SYN OPSIS OF CASES ENCLOSED SUPPORT THE CONTENTIONS OF THE ASSESSEE AP PELLANT. COPIES OF BILLS AND VOUCHERS FOR CONSTRUCTION ARE E NCLOSED ALONG WITH THE COPY OF BUILDING CONSTRUCTION ACCOUNT APPE ARING IN THE BOOKS OF THE ASSESSEE APPELLANT TO SHOW THAT THE EX PENSES DEBITED ARE PROPERLY SUPPORTED BY THE EVIDENCE TO WHICH NO WEIGHTAGE WAS GIVEN BY THE ASSESSING OFFICER. WE FURTHER ENCLOSE COMPARATIVE CHART FOR THE AREA A ND RATE ADOPTED BY THE DISTRICT VALUATION OFFICER AND THE APPROVED VALUER ALONG WITH TECHNICAL REMARKS IN SUPPORT OF THE RATES ADOPTED B Y THE APPROVED VALUER IN HIS VALUATION REPORT FILED WITH THE APPLI CATION U/S.46A. THE REMARKS/REASONS GIVEN BY THE APPROVED VALUER ARE SE LF EXPLANATORY TO SHOW THAT THE DVO REPORT SUFFER FROM MANY TECHNI CAL FLAWS AND CAN NOT BE TAKEN AS THE BASIS FOR VALUATION OF THE PROPERTY UNDER REFERENCE. 6 IN VIEW OF THE ABOVE NO ADDITION IS CALLED FOR ON T HIS SCORE AND LIABLE TO BE DELETED. FURTHER THE ASSESSING OFFICER HAS DISALLOWED THE IN TEREST PAID ON LOAN TAKEN BY THE ASSESSEE DURING THE YEAR UNDER CO NSIDERATION ON MISCONCEPTION OF FACTS THAT THE AMOUNT OF LOANS WER E UTILIZED FOR OTHER PURPOSES WITHOUT GIVING A SINGLE INSTANCE TO SUPPORT HIS FINDING AND THE DISALLOWANCE ON THIS SCORE IS NOT S USTAINABLE.' 4.1 THE ASSESSEE ALSO SUBMITTED BEFORE THE LEARNED CIT (A) THAT THE REASONS TO BELIEVE WAS NOT THE SAME THING AS REASON TO SUSPECT AND THAT THE ASSESSING OFFICERS BELIEF WAS UNSUPPORTED BY ANY E VIDENCE. THE RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF INDIAN OIL CORPORATION VS. ITO 159 ITR 956. IT WAS FURTHER ST ATED THAT THE ASSESSING OFFICER SHOULD HAVE REASONS TO BELIEVE THAT THE INC OME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND SUCH REASON TO BELIEVE MUST BE BASED ON SOME VALID MATERIAL, WHICH HAS NOT BEEN SATISFIED IN THE ASSES SEES CASE. THE RELIANCE WAS PLACED ON THE DECISION DATED 18/11/2009 OF ITAT , LUCKNOW BENCH IN THE CASE OF SHIVA EXPORTS IN I.T.A. NO.246/LUC/2009 FOR THE ASSESSMENT YEAR 2000-2001. 4.2 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE, OBSERVED THAT FOLLOWING REASONS WERE RECORDED BY TH E ASSESSING OFFICER WHILE ISSUING THE NOTICE U/S 148 OF THE ACT: ''THE ASSESSEE HAS FILED HIS RETURN OF INCOME ON 4. 10.2007 WHICH WAS PROCESSED U/S.143(1) ON 30.09.2008 RESULTING IN TO REFUND OF 7 ` 1,04,600/-. PERUSAL OF RETURN FILED FOR THE YEAR UN DER CONSIDERATION REVEALS THAT THE ASSESSEE HAS SHOWED INCOME FROM SA LARY, HOUSE PROPERTY AND OTHER SOURCES. SINCE A HUGE AMOUNT OF REFUND OF ` 1,04,600/- WAS INVOLVED, THE ASSESSEE WAS REQUIRED TO FURNISH THE COPY OF FORM NO.16, 16A, DETAILS OF DEDUCTIONS U/S. 80C AND 80-D, AND DETAILS OF DEDUCTIONS OF HOUSE PROPERTY INCOME. IN RESPONSE TO THE SAME NOTICE U/S.154, THE ASSESSEE HAS FILED THE DETAILS AS REQUIRED. WHILE EXPLAINING THE LOAN TAKEN, A DETAIL ED REPLY HAS BEEN FURNISHED. PERUSAL OF DETAILS FURNISHED SHOWED THAT THE ASSESSEE HAS PURCHASED A PROPERTY BEARING NO.1231183, FAZALG ANJ, KANPUR FOR A SUM OF ` 33,26,000/- ON 28.02.2005 AND A LOAN OF ` 58,00,000/- WAS TAKEN ON 23.8.2006 FROM ICICI BANK, AND ` 5,00,000/- FROM STANDARD CHARTERED BANK. THE VALUE OF PROPERTY SHOU LD HAVE BEEN SHOWN AT ` 93,26,000/-. HOWEVER, PERUSAL OF ICICI BANK LOAN STATEMENT REVEALS THAT THE VALUATION OF THE PROPERT Y HAS BEEN TAKEN AT ` 1,30,67,000/- WHILE SANCTIONING THE LOAN ON 29.8.20 06. THUS IT IS CLEAR THAT THE ASSESSEE HAS MADE UNEXPLAINED INVEST MENT IN THE SAID PROPERTY TO THE TUNE OF ` 37,41,000/-. I HAVE, THEREFORE, REASON TO BELIEVE THAT ON ACCOUNT OF FAILURE ON THE PART O F THE ASSESSEE TO DISCLOSE FULLY HIS INCOME, INCOME AMOUNTING TO ` 37,41,000/- HAS ESCAPED ASSESSMENT BEING UNEXPLAINED INVESTMENT IN THE PROPERTY FOR THE YEAR UNDER CONSIDERATION. 4.3 THE LEARNED CIT (A), ON THE BASIS OF ABOVE REAS ONS, CAME TO THE CONCLUSION THAT THE ONLY MATERIAL, WHICH WAS AVAILA BLE WITH THE ASSESSING OFFICER, WAS THE LETTER DATED 17/05/2008 FROM THE ICICI BANK , THE EXTRACT OF WHICH WERE AS UNDER: BRIJENDRA PRAKASH RASTOGI DATE:17/05/2008 XXXXXXXXXXXXXXXXXXXXXXX PAGE: 0001 XXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXX AGREEMENT NO. LBKAN00001388872 LOAN TYPE ICICI BANK-HOME LOAN PROPERTY VALUE 13,067,000.00 AG MT. DATE 19/08/2006 AMOUNT FINANCED 5,800,000.00 FREQU ENTLY MONTHLY TENURE (IN MONTH) 311 RESIDUAL VALUE 0.00 RATE TYPE FLOATING INTEREST RATE XXXXXXXXXXXXXXXXXXXXX 8 4.4 THE LEARNED CIT (A) FURTHER OBSERVED THAT THE ASSESSEE FILED HIS RETURN OF INCOME ALONG WITH THE TAX AUDIT REPORT ON 04/10/200 7 AND THERE WAS NO OTHER MATERIAL OR EVIDENCE ON RECORD SUGGESTING THAT THER E HAD BEEN INVESTMENT IN THE IMMOVABLE PROPERTY TO THE EXTENT OF NEAR THE AMOUNT AS MENTIONED BY THE BANK. ACCORDING TO HIM, THE REASSESSMENT PROCEEDINGS CANN OT BE INITIATED FOR THE PURPOSE OF MAKING FISHING AND ROVING ENQUIRIES. TH E RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: (I) INCOME TAX OFFICER VS. LAKHMANI MEWAL DAS 103 ITR 437 (SC) (II) MADHYA PRADESH INDL. CORPN. VS. ITO 57 ITR 6 37 (SC) 4.5 THE LEARNED CIT (A) CATEGORICALLY STATED THAT T HE ASSESSING OFFICER HAD REOPENED THE CASE FOR THE SOLE REASON THAT THE LETT ER FROM ICICI BANK (SANCTIONING THE LOAN AMOUNT) MENTIONS VALUE OF THE PROPERTY AT ` 1,30,67,000/- AND NOTHING HAD BEEN BROUGHT ON RECORD BY THE ASSES SING OFFICER TO DEMONSTRATE WHETHER THE VALUE SHOWN BY THE ICICI BANK ON ITS ST ATEMENT WAS ACTUAL COST OF THE PROPERTY OR ESTIMATED COST OF PROPERTY FOR THE PURPOSES OF CALCULATION OF LOAN OR THE PERCEIVED MARKET VALUE OF THE PROPERTY FOR C OLLATERAL SECURITY PURPOSES. THEREFORE, THE AMOUNT SHOWN AS VALUE OF THE PROPERT Y IN THE GIVEN STATEMENT OF THE ICICI BANK WAS ONLY A FIGURE HAVING NO INFORMAT ION VALUE IN TERMS OF SECTION 147 OF THE ACT. HE FURTHER OBSERVED THAT NO RESEA RCH HAD BEEN MADE NOR ANY PAPER WAS EXAMINED BY THE ASSESSING OFFICER BY WAY OF ANY INQUIRY AND THAT THE ASSESSEE WAS ALSO NOT EXAMINED U/S 131 OR 133(6) OF THE ACT TO ASCERTAIN THE 9 TRUTH WITH REGARD TO THE CONTENTS OF THE BANK LETTE RS. AS SUCH, THE LETTER ISSUED BY ICICI BANK AT BEST GIVES A KNOCK ON THE DOOR / AN O PPORTUNITY TO THE ASSESSING OFFICER TO DROWN HIMSELF DEEP INTO THE WATERS AND E XPLORE FURTHER EVENTUALITIES, WHICH HE OUGHT TO HAVE DONE BY GATHERING SOME COGEN T MATERIAL FORMING A LIVE LINK AND, THEREBY HOLDING A REASONABLE BELIEF OF UN DERSTATEMENT OF INVESTMENT, THEN ONLY HE WOULD HAVE BEEN FULLY JUSTIFIED IN TAK ING ACTION U/S 147 OF THE ACT. THE LEARNED CIT (A) ALSO OBSERVED THAT THE ASSESSIN G OFFICER HAD NOT EVEN CALLED FOR THE COPY OF THE LOAN APPLICATION FROM ICICI BAN K, MADE BY THE ASSESSEE THEREFORE, NO ACTION U/S 147 COULD HAVE BEEN TAKEN ON MERE SUSPICION OR SURMISES AND FOR THAT PURPOSES NOT EVEN FOR MAKING FISHING AND ROVING ENQUIRIES. ACCORDING TO HIM, THE ASSESSING OFFICER, WITHOUT AP PLICATION OF HIS MIND, BLINDLY RELIED ON A FIGURE OF VALUATION GIVEN BY SOME VALUE R NOT EVEN A D.V.O. AND HE HAS TAKEN THAT FIGURE PER-SE AS THE BASIS OF REOPENING WHICH IS NOT PERMISSIBLE IN LAW. ACCORDING TO THE LEARNED CIT (A), THE ASSESS ING OFFICER WAS OBLIGED IN LAW TO FIRSTLY PLACE ON RECORD ANY MATERIAL WHICH ENABL ED HIM TO HAVE REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAD ESCAPED ASS ESSMENT, AND ONLY THEREAFTER INITIATE PROCEEDINGS UNDER SECTION 147 O F THE ACT AND UNTIL AND UNLESS, THE AFORESAID BURDEN HAD BEEN DISCHARGED, THE ASSES SING OFFICER COULD NOT HAVE RESORTED TO THE PROVISIONS CONTAINED IN SECTION 147 OF THE ACT. HE, THEREFORE, HELD THAT THE ASSESSING OFFICER HAD PROCEEDED ON ME RE ASSUMPTIONS AND SURMISES WHICH IN LAW CANNOT BE MADE TO ASSUME THAT INCOME OF THE ASSESSEE 10 HAD ESCAPED ASSESSMENT. ACCORDINGLY, THE NOTICE I SSUED U/S 148 WAS HELD TO BE BAD IN LAW. NOW THE DEPARTMENT IS IN APPEAL. 5. THE LEARNED CIT, D. R. STRONGLY SUPPORTED THE OR DER OF THE ASSESSING OFFICER AND FURTHER SUBMITTED THAT THE ASSESSING OF FICER WAS HAVING MATERIAL IN HIS POSSESSION IN THE SHAPE OF THE LETTER FOR SANCT IONING THE LOAN TO THE ASSESSEE ISSUED BY THE ICICI BANK WHEREIN THE VALUE OF THE P ROPERTY WAS SHOWN AT HIGHER FIGURE THAN THE VALUE DISCLOSED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT. THEREFORE, THERE WAS ESCAPEMENT OF INCOME AND THE A CTION U/S 147 OF THE ACT WAS RIGHTLY TAKEN BY THE ASSESSING OFFICER. THE RE LIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF DIWAKAR ENGINEERS LTD. VS. INCOME TAX OFFICER [2010] 329 ITR 28 (DELHI). 6. IN HIS RIVAL SUBMISSIONS THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LEARNED CIT (A). IT W AS FURTHER SUBMITTED THAT THE ASSESSING OFFICER, WHILE INITIATING THE PROCEEDINGS U/S 147 OF THE ACT, NEITHER EXAMINED THE BOOKS OF ACCOUNT WHEREIN THE COST OF C ONSTRUCTION WAS DULY RECORDED NOR REFERRED THE MATTER TO THE D.V.O. BEFO RE INITIATING THE PROCEEDINGS U/S 147 OF THE ACT. HE FURTHER SUBMITTED THAT NOTH ING WAS IN THE POSSESSION OF THE ASSESSING OFFICER TO MAKE A BELIEF THAT THE ASS ESSEE INVESTED IN THE PROPERTY ANY AMOUNT HIGHER THAN THE FIGURE DISCLOSED IN THE BOOKS OF ACCOUNT AND MERELY RELIED THE LETTER OF ICICI BANK WHICH WAS ONLY FOR SANCTIONING THE LOAN, SO IT WAS 11 NOT AN INFORMATION. THEREFORE, THE ACTION TAKEN BY THE ASSESSING OFFICER U/S 147 BY ISSUING THE NOTICE U/S 148 OF THE ACT WAS NOT VA LID AND THE LEARNED CIT (A) RIGHTLY HELD THAT NO ACTION U/S 147 OF THE ACT COUL D HAVE BEEN TAKEN ON MERE SUSPICION OR SURMISES FOR THE PURPOSE OF MAKING FIS HING AND ROVING ENQUIRIES. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAR EFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT C ASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE MAINTAINED THE BOOKS OF ACCOUNT AND FU RNISHED THE AUDIT REPORT ALONG WITH THE RETURN OF INCOME FILED ON 04/10/2005 WHICH WAS PROCESSED U/S 143(1) OF THE ACT ON 30/09/2008. THEREAFTER, THE A SSESSING OFFICER INITIATED THE PROCEEDINGS U/S 154 OF THE ACT BUT NOTHING WAS POIN TED OUT DURING THE SAID ACTION THAT THE ASSESSEE HAD INVESTED IN THE PROPERTY MORE THAN WHAT WAS DECLARED IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER CATEGO RICALLY STATED IN THE REASONS RECORDED FOR INITIATING THE PROCEEDINGS U/S 147 OF THE ACT THAT PERUSAL OF THE ICICI BANK LOAN STATEMENT REVEALS THAT THE VALUATION OF T HE PROPERTY HAD BEEN TAKEN AT ` 1,30,67,000/- WHILE SANCTIONING THE LOAN ON 29/08/2 006. THE SAID LETTER WAS THE SOLE REASON FOR FORMING THE BELIEF. NOW QUESTION A RISES AS TO WHETHER THE SAID NOTING WITH RESPECT TO THE VALUE OF THE PROPERTY IN A LETTER GIVEN BY THE ICICI BANK COULD BE CONSIDERED AS INFORMATION/MATERIAL BASED O N WHICH THE ASSESSING OFFICER COULD HAVE FORMED THE BELIEF THAT THE INCOM E OF THE ASSESSEE HAS ESCAPED THE ASSESSMENT. IN THE INSTANT CASE, THE A SSESSING OFFICER DID NOT BRING ANYTHING ON RECORD TO POINT OUT WHETHER THE VALUE S HOWN BY THE ICICI BANK ON ITS 12 SANCTIONED LETTER DATED 29/068/2006 WAS ACTUALLY CO ST OF THE PROPERTY OR ESTIMATED COST OF THE PROPERTY FOR THE PURPOSE OF C ALCULATION OF LOAN OR IT WAS THE MARKET VALUE OF THE PROPERTY FOR THE PURPOSE OF COL LATERAL SECURITY, IN THE ABSENCE THEREOF THE AMOUNT SHOWN AS VALUE OF THE PROPERTY I N THE SAID LETTER OF THE ICICI BANK WAS ONLY A FIGURE HAVING NO INFORMATION VALUE IN TERMS OF SECTION 147 OF THE ACT. IN THE PRESENT CASE, THE ASSESSING OFFICER DI D NOT MAKE ANY ENQUIRY OR INVESTIGATION FOR COMING TO THE CONCLUSION THAT THE VALUE OF THE PROPERTY MENTIONED IN THE SANCTION LETTER BY THE ICICI BANK WAS THE INVESTMENT MADE BY THE ASSESSEE IN THE PROPERTY. THE ASSESSING OFFICE R NEITHER SUMMONED THE BANKING AUTHORITIES U/S 131 OF THE ACT NOR EXAMINED THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE WHEREIN THE INVESTMENT I N THE PROPERTY WAS DISCLOSED AND EVEN THE ASSESSING OFFICER, BEFORE IN ITIATING THE PROCEEDING U/S 147 OF THE ACT, DID NOT REFER THE MATTER TO THE D.V .O. TO COME TO THE CONCLUSION THAT THE VALUE DECLARED BY THE ASSESSEE IN THE BOOK S OF ACCOUNT WAS ON LOWER SIDE. THEREFORE, THE ACTION OF THE ASSESSING OFFIC ER WAS BASED MERELY ON SUSPICION AND SURMISES, WHICH IS NOT TENABLE IN THE EYES OF LAW. IN THE PRESENT CASE, THE ASSESSING OFFICER WAS REQUIRED TO PLACE O N RECORD ANY MATERIAL WHICH COULD ENABLE HIM TO HAVE REASON TO BELIEVE THAT THE ASSESSEE HAS ESCAPED THE ASSESSMENT AND ONLY THEREAFTER OUGHT TO HAVE INITIA TED THE PROCEEDINGS UNDER SECTION 147 OF THE ACT. THE ASSESSING OFFICER SIMP LY RELIED ON THE LETTER OF THE ICICI BANK (SANCTIONING THE LOAN AMOUNT). THE SAID LETTER CANNOT BE CONSIDERED AS INFORMATION PARTICULARLY WHEN THE ASSESSING OFFI CER HAD NOT BROUGHT ON RECORD 13 TO DEMONSTRATE WHETHER THE VALUE SHOWN BY THE BANK IN THE SAID LETTER WAS THE ACTUAL COST OF THE PROPERTY OR ESTIMATED COST FOR T HE PURPOSE OF CALCULATION OF LOAN OR PERCEIVED MARKET VALUE OF THE PROPERTY FOR COLLA TERAL SECURITY. THE ASSESSING OFFICER EVEN DID NOT EXAMINE THE ASSESSEE U/S 131 O R 133(6) OF THE ACT TO ASCERTAIN THE TRUTH WITH REGARD TO THE CONTENTS OF THE BANK LETTER. THEREFORE, THE RELIANCE PLACED BY THE ASSESSING OFFICER ON THE SAI D LETTER OF THE ICICI BANK WAS NOT SUFFICIENT TO MAKE A BELIEF THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT BEING UNEXPLAINED INVESTMENT IN THE PROP ERTY FOR THE YEAR UNDER CONSIDERATION. IN THE PRESENT CASE, THE REASON FOR FORMATION OF THE BELIEF WAS ONLY THE FIGURE MENTIONED IN THE LETTER OF THE ICIC I BANK FOR SANCTIONING THE LOAN AND THE ASSESSING OFFICER REFERRED TO THE SAID INFO RMATION WHILE RECORDING THE REASON ON THE BASIS OF WHICH HE WAS PROCEEDING TO I SSUE NOTICE U/S 148 OF THE ACT. IN OUR OPINION, THAT COULD NOT BE THE REASON FOR PROCEEDING U/S 147/148 OF THE ACT SINCE IT WAS ONLY AN INFORMATION AND WAS NO T AT ALL DISCERNIBLE AS TO WHETHER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIVED AT A BELIEF THAT, ON THE BASI S OF THE MATERIAL WHICH HE HAD BEFORE HIM, INCOME OF THE ASSESSEE HAD ESCAPED ASSE SSMENT. FOR THE AFORESAID VIEW WE ARE FORTIFIED BY THE RATIO LAID D OWN IN THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SFI L STOCK BROKING LTD. [2010] 325 ITR 285 (DELHI) WHEREIN IT HAS BEEN HELD: THAT THE FIRST SENTENCE OF THE REASONS RECORDED BY THE ASSESSING OFFICER WAS MERE INFORMATION RECEIVED FROM THE DEPU TY DIRECTOR OF 14 INCOME-TAX (INVESTIGATION). THE SECOND SENTENCE WAS A DIRECTION GIVEN BY THE SAME DEPUTY DIRECTOR OF INCOME-TAX (IN VESTIGATION) TO ISSUE A NOTICE UNDER SECTION 148 AND THE THIRD SENT ENCE AGAIN COMPRISED A DIRECTION GIVEN BY THE ADDITIONAL COMMI SSIONER OF INCOME-TAX TO INITIATE PROCEEDINGS UNDER SECTION 14 8 IN RESPECT OF CASES PERTAINING TO THE RELEVANT WARD. THE ASSESSIN G OFFICER REFERRED TO THE INFORMATION AND THE TWO DIRECTIONS AS REASONS ON THE BASIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTICE UN DER SECTION 148. THESE COULD NOT BE THE REASONS FOR PROCEEDING UNDER SECTION 147/148 OF THE ACT. AS THE FIRST PART WAS ONLY AN I NFORMATION AND THE SECOND AND THE THIRD PARTS OF THE REASONS WERE MERE DIRECTIONS, IT WAS NOT AT ALL DISCERNIBLE AS TO WHETHER THE ASSESS ING OFFICER HAD 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. THERE WAS NO SUBSTAN TIAL QUESTION OF LAW FOR CONSIDERATION. 8. CONSIDERING THE TOTALITY OF THE FACTS OF THE PRE SENT CASE, AS DISCUSSED HEREIN ABOVE, WE DO NOT SEE ANY VALID GROUND TO INT ERFERE WITH THE VIEW TAKEN BY THE LEARNED CIT (A) IN HOLDING THAT THE ISSUE OF NO TICE U/S 148 OF THE ACT WAS BAD IN LAW. ACCORDINGLY, WE DO NOT SEE ANY MERIT IN TH IS APPEAL OF THE DEPARTMENT. 9. IN THE RESULT, THE APPEAL IS DISMISSED. (THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28/0 4/2011) SD/. SD/. ( H. L. KARWA ) (N. K. SAINI) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 28/04/2011 *SINGH COPY FORWARDED TO THE: 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR