Sh. Nalnish Aggarwal, Kurukshetra V. ITO, Panchkula

ITA 593/CHANDI/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8514 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 01-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Income from undisclosed sources; Principle of natural justice; Reason to believe; Reassessment proceedings
• Section: 142(1); 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT ITA NO. 593/CHD/2015 ASSESSMENT YEAR: 2005-06 SH. NALNISH AGGARWAL, VS. THE ITO, WARD-1, PANCHKULA PANCHKULA PAN NO. AGNPA2333D (APPELLANT) (RESPONDENT) APPELLANT BY : SH. TEJ MOHAN SINGH RESPONDENT BY : SH. VIVEK NANGIA DATE OF HEARING : 18.12.2015 DATE OF PRONOUNCEMENT : 29.01.2016. ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), PANCHKULA DATED 24.3.2015 RELATING TO ASSESSMENT YE AR 2005-06. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED IN LAW IN UPHOLDING THE ISSUANCE OF NOTICE UN DER SECTION 148 OF THE ACT AND FRAMING OF ASSESSMENT THEREAFTER IN A MUCH AS THERE HAS BEEN NO ESCAPEMENT OF INCOME WARRANTIN G ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT AND AS SUCH THE ASSESSMENT FRAMED IS ILLEGAL, ARBITRARY AND UNJ USTIFIED. 2. THAT WITHOUT PREJUDICE TO THE ABOVE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ER RED IN UPHOLDING THE ADDITION OF RS. 11.50,000/- -ON ACCOU NT OF 2 ALLEGED INCOME FROM UNDISCLOSED SOURCES IN UTTER DI SREGARD OF THE EXPLANATIONS RENDERED WHICH IS ARBITRARY AND UN JUSTIFIED. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) AS WELL AS THE ASSESSING OFFICER HAVE RELIED UPON THE DOCUMENTS PROVIDED BY THE THIRD PARTY WITHOUT AFFORDING ANY O PPORTUNITY OF CROSS EXAMINATION WHICH IS AGAINST THE SETTLED P RINCIPLES OF NATURAL JUSTICE AND AS SUCH THE ADDITION MADE IS ARBITRARY AND UNJUSTIFIED. 4. THAT THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW A ND FACTS OF THE CASE AND IS. THUS, UNTENABLE. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS AN INDIVIDUAL AND THE ASSESSMENT YEAR INVOLVED IS 2005-06. THE AS SESSEE SUBMITTED HIS RETURN OF INCOME 28.4.2011 DECLARING NIL INCOME IN RESPONS E TO NOTICE U/S 148 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). ON THE BASIS OF INFORMATION RECEIVED FROM THE DY. DIRECTOR OF INCOME TAX (INV)-II, CHAND IGARH, THE ASSESSING OFFICER ISSUED NOTICE U/S 148 ON 28.3.2011. THE REASONS FOR ISSUING NOTICE U/S 148 OF THE ACT READS AS UNDER:- AS PER INFORMATION PASSED BY THE ACIT, CIRCLE 4(1) , CHANDIGARH VIDE HER OFFICE LETTER F. NO. ACIT/CIRCL E- 1(1)/CHD/2010-11/432 DATED 7.5.2010 THAT THE ASSESS EE HAS INVESTED A SUM OF RS. 20 LACS (RS. 6 LAC THROUGH CH EQUE & RS. 14 LAC IN CASH) WITH CHANDIGARH OVERSEAS PVT LTD ON 1.1.2005 FOR THE RIGHT TO GET THE ALLOTMENT OF RESI DENTIAL FLAT / COMMERCIAL BOOTH / SHOW ROOM. AS PER AST SYSTEM, THERE IS NO STATUS OF THE ASSESS EE FOR THE ASSESSMENT YEAR 2005-06. SINCE, ASSESSEE HAS NOT F ILED RETURN OF INCOME, HENCE, THE SOURCES OF INVESTMENT OF RS. 20 LAC HAS NOT VERIFIABLE THEREFORE,, UNEXPLAINED INVESTMENT H AS BEEN MADE BY THE ASSESSEE. 3 KEEPING IN VIEW THE ABOVE, I HAVE REASON TO BELIEVE THAT DUE TO FAILURE / OMISSION ON THE PART OF THE ASSESSEE T O FILE HIS RETURN AND ALL MATERIAL FACTS NECESSARY FOR THE ASS ESSMENT, AN INCOME TO THE TUNE OF RS. 20 LAC HAS ESCAPED ASSESS MENT FOR ASSESSMENT YEAR 2005-06 AS PER PROVISIONS OF SECTIO N 147(1) OF THE ACT. 4. THE ASSESSING OFFICER ISSUED STATUTORY NOTICES U /S 143(2) AND 142(1) WITH QUESTIONNAIRE. THE ASSESSING OFFICER REQUIRED THE A SSESSEE TO EXPLAIN THE SOURCE OF INVESTMENT OF RS. 20 LAKHS MADE IN M/S CHANDIGAR H OVERSEAS LTD, CHANDIGARH ON 1.1.2005 FOR RIGHT TO GET THE ALLOTME NT OF RESIDENTIAL FLAT, COMMERCIAL BOOTH / SHOW ROOM IN PROPOSED PROJECT F ASHION TECHNOLOGY PARK, MOHALI. IN RESPONSE TO THE ABOVE QUERY, THE ASSESS EE SUBMITTED A SHORT REPLY WHICH READS AS UNDER;- MY CASE FOR ASSESSMENT YEAR 2005-06 HAS BEEN REOP ENED ON THE BASIS OF ALLEGED INVESTMENT FOR RS. 20,00,000/ - IN CHANDIGARH OVERSEAS LTD. I ALONG MY FRIEND MR. BHUS HAN (THROUGH HIS WIFE MRS. GEETU RANI) INVESTED AT RS. 10,00,000/- (RS. 6,00,000 CHEQUE GIVEN FROM MY BA NK A/C AND RS. 4,00,000/- GIVEN BY MRS GEETU RANI). THE SAME AMOUNTS WERE REPAID TO US BY CHEQUES. THERE IS NO OTHER PAYMENTS FROM OVER SIDE. THE ASSESSING OFFICER ISSUED ANOTHER LETTER ON 15.1 2.2011 WHICH IS REPRODUCED BY THE ASSESSING OFFICER AT PAGE 3 OF THE ASSESSMEN T ORDER. VIDE THE SAID LETTER, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE SOURCE OF INVESTMENT OF RS. 10 LAKHS IN CASH MADE IN THE AFORESAID PROPERTY . IN RESPONSE TO THE ABOVE QUERY, THE ASSESSEE FILED A DETAILED REPLY ON 19.12 .2011 WHICH IS REPRODUCED AT PAGE 4 OF THE ASSESSMENT ORDER. IN THE SAID LETTER THE ASSESSEE HAS CATEGORICALLY STATED THAT HE ALONG WITH HIS FRIEND MR BHUSHAN THR OUGH HIS WIFE MRS. GEETU RANI) INVESTED RS. 10 LAKHS IN PROJECT LAUNCHED BY M/S CHANDIGARH OVERSEAS LTD 4 IN SAS NAGAR, SECTOR 90, MOHALI, RS. 6 LAKHS WAS G IVEN BY THE ASSESSEE VIDE CHEQUE NO.260257 DATED 4.1.2005 FROM HIS ACCOUNT WI TH BANK OF INDIA, PANCHKULA BRANCH AND RS. 4 LAKHS WAS GIVEN BY MRS G EETU RANI FROM HER ACCOUNT. THE ASSESSEE FURTHER STATED THAT THE AGREE MENT DATED 1.1.2005 IN WHICH NOWHERE IT WAS MENTIONED THAT ASSESSEES SHARE WAS 80%. HE FURTHER STATED THAT HE HAD ALSO SIGNED A FULL AND FINAL PAYMENT RECEI VED WHICH CLEARLY REVEALED THAT M/S CHANDIGARH OVERSEAS LTD HAS FINALLY SETTLE D THE ACCOUNT BY RETURNING RS. 6 LAKHS AND RS. 4 LAKHS BY CHEQUES AS PER AGREE MENT DATED 1.1.2005 AS FULL AND FINAL SETTLEMENT OF ACCOUNT IN PROJECT IN SAS NAGAR, SECTOR 90, MOHALI IN THE NAME AND STYLE KNOWLEDGE PARK IN FASHION TECHNO LOGY. THE ASSESSEE HAS CATEGORICALLY STATED IN HIS ABOVE REPLY THAT THERE WAS NO EVIDENCE TO SHOW THAT HE HAD GIVEN RS. 10 LAKHS IN CASH OR HE HAD RECEIVE D BACK RS. 10 LAKHS IN CASH. THE ASSESSEE FURTHER POINTED OUT THAT THE PAPERS SU BSEQUENTLY SIGNED AND GIVEN BY M/S CHANDIGARH OVERSEAS LTD WERE CONTRADICTORY I N THEMSELVES. THERE WAS RECEIPT OF RS. 25 LAKHS AS PER TERM AND CONDITIONS OF THE AGREEMENT WHICH INCLUDES RS. 15 LAKHS IN CASH, WHICH IS DATED 1.1 .2005 WHILE IN THE COPY OF THE ACCOUNT OF NALNISH AGGARWAL (ASSESSEE), CASH OF RS. 10 LAKHS IS SHOWN TO HAVE RECEIVED ON 7.12.2004. THE ASSESSING OFFICER DID N OT FIND ANY MERITS IN THE ABOVE REPLY OF THE ASSESSEE. THE ASSESSING OFFICER HAS STATED THAT IN AGREEMENT DATED 1.1.2005, THERE IS A MENTION OF A RECEIPT WHI CH READS AS UNDER:- RECEIPT RECEIVED A SUM OF RS. 25,00,000/- (RUPEES TWENTY FIVE LACS ONLY) AS DETAILED BELOW:- 6,00,000/- OF CHEQUE NO. 260257 DATED 01 JAN 2005 BOI, SECTOR 16, PANCHKULA 400000/- CHEQUE NO. 831602 DATED 01 JAN 2005 HDFC B ANK, 35-B, CHANDIGARH 15,00,000/- (RS. FIFTEEN LACS ONLY) CASH 25,00,000/- (RS. TWENTY FIV LAKH ONLY) 5 FROM SHRI RAJEEV KUMAR S/O LATE SHER CHAND MANUJA, R/O HOUSE NO. 3402, SECTOR 37-D, CHANDIGARH & SH. NALNISH AGGARWA L, S/O SH. NATHI RAM, RESIDENT OF HOUSE NO. 559, SECTOR 10,. PANCHKU LA, AS PER TERMS AND CONDITIONS OF THIS AGREEMENT IN THE PRESENCE OF WITNESSES. ACCORDING TO ASSESSING OFFICER AS PER THE CONFIRMAT IONS SUBMITTED BY M/S CHANDIGARH OVERSEAS PVT LTD, THE ASSESSEE HAD RECEI VED BACK RS. 16 LAKHS. THE ASSESSING OFFICER FURTHER POINTED OUT THAT AS PER T HE LETTER DATED 15.10.2008, SUBMITTED BY SUMEDHA CHAWLA, DIRECTOR CHANDIGARH OV ERSEAS PVT. LTD, IT WAS CLEARLY MENTIONED THAT 80% SHARE OF THE INVESTMENT IN THE PROPERTY IN QUESTION WAS MADE BY THE ASSESSEE AND OTHERS. ACCORDING TO A SSESSING OFFICER, SHRI NALNISH AGGARWAL (ASSESSEE) AND MRS GEETU RANI HAS INVESTED RS. 16 LAKHS AND RS. 4 LAKHS RESPECTIVELY. ACCORDINGLY, THE ASSESSIN G OFFICER TOOK THE VIEW THAT THE ASSESSEE HAD INVESTED A SUM OF RS. 16 LAKHS (RS . 10 LAKHS CASH AND RS. 6 LAKHS BY CHEQUE) AND SOURCE OF CASH INVESTMENT IN T HE PROPERTY AMOUNTING TO RS. 10 LAKHS REMAINED UNEXPLAINED. THE ASSESSING OFFICE R ALSO OBSERVED THAT THE ASSESSEE HAD EARNED PROFIT / INTEREST OF RS. 1,50,0 00/- ON THE AMOUNT OF INVESTMENT. ACCORDING TO HIM, THE ASSESSEE DID NOT DECLARE THE AMOUNT OF RS. 1,50,000/- IN HIS RETURN OF INCOME, THEREFORE, THE AMOUNT OF RS. 11,50,000/- WAS TREATED AS ASSESSEES INCOME FROM UNDISCLOSED SOURC ES AND THE ASSESSING OFFICER ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE US/ 69 OF THE ACT. 5. ON APPEAL, THE CIT(A) UPHELD THE ORDER OF THE AS SESSING OFFICER AND, HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 6. I HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND HAVE PERUSED THE MATERIALS AVAILABLE ON RECORD. SHRI TEJ MOHAN S INGH LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THERE IS A CONTRADICTION IN THE REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING OF THE ASSESSMENT. IN THE REASONS, IT HAS BEEN MENTIONED THAT RS. 20 LAKHS HAS BEEN INVESTED, RS. 6 LAKHS THROUGH CHEQUE AND 6 RS. 14 LAKHS IN CASH; WHEREAS RS. 10 LAKHS WAS INVE STED IN PROJECT LAUNCHED BY M/S CHANDIGARH OVERSEAS LTD THROUGH CHEQUES OF RS. 6 LAKHS AND RS. 4 LAKHS EACH, WHICH IS CLEAR FROM THE QUERY LETTER DATED 15 .12.2011 REPRODUCED ON PAGE 3 OF THE ASSESSMENT ORDER. ACCORDING TO LD. COUNSE L FOR THE ASSESSEE, IT CLEARLY SHOWS THAT THE ASSESSING OFFICER HAS REOPENED THE C ASE MERELY ON THE BASIS OF INFORMATION RECEIVED WITHOUT APPLYING HIS MIND TO T HE INFORMATION AND FORMING AN OPINION. HE FURTHER SUBMITTED THAT THERE HAD TO BE A NEXUS BETWEEN THE MATERIAL GIVEN TO THE ASSESSING OFFICER AND THE FOR MATION OF THE REASONS TO BELIEVE. A REOPENING OF THE ASSESSMENT U/S 147 OF THE ACT COULD NOT BE BASED MERELY ON THE SUSPICION. SHRI TEJ MOHAN SINGH, LD. COUNSEL FOR THE ASSESSEE RELIED ON THE JUDGEMENT OF THE HON'BLE SUPREME COUR T IN THE CASE OF ITO VS. LAKHMANI MEWAL DASS (1976) 103 ITR 437 (SC). IT IS OBSERVED THAT AN AGREEMENT DATED 1.1.2005 WAS ENTERED INTO BETWEEN M /S CHANDIGARH OVERSEAS LTD THROUGH ITS DIRECTOR SHRI SUMESH CHAWLA (IST PA RTY) AND SHRI RAJEEV KUMAR S/O LATE SHRI SHER CHAND MANUJA, # 3402/37-D, CHAND IGARH AND SHRI NALNISH AGAGRWAL S/O SH. NATHU RAM H.NO. 559, SECTOR 10, PA NCHKULA OF RS. 25 LAKHS. A COPY OF THE SAID AGREEMENT IS AVAILABLE AT PAGES 13 & 14 OF THE ASSESSEES PAPER BOOK. THE AGREEMENT READS AS UNDER:_ AGREEMENT THIS AGREEMENT IS MADE AT CHANDIGARH, ON THIS IST D AY OF JAN 2005 BETWEEN (1) M/S CHANDIGARH OVERSEAS PVT. LTD, SCO NO. 196-197, SECTOR 34-A, CHANDIGARH, THROUGH ITS DIRECTOR SH. SUMESH CHAWLA (HEREINAFTER REFERRED TO AS THE FIST PARTY) OF THE ONE PART OF THIS DEED. AND (2) SH. RAJEEV KUMAR, S/O LATE SH. SHER CHAND MANUJ A, R/O HOUSE NO. 3402, SECTOR 37-D, CHANDIGARH AND SHRI NA LNISH AGGARWAL, S/O SH. NATHI RAM, R/O HOUSE N. 559, SECT OR 10, 7 PANCHKULA (HEREINAFTER REFERRED TO AS THE SECOND PA RTY) OF THE OTHER PART OF THIS DEED. WHEREAS THE FIRST PARTY IS THE OWNER OF LAND MEASURING 16 ACRES IN SECTOR 90, SAS NAGAR, MOHALI, WITH FULL PROPRIETARY RIGHTS ON FREE HOLD BASIS. AND WHEREAS THE FIRST PARTY HAS LAUNCHED A PROJECT ON THE ABOVE SAID LAND MEASURING 16 ACRES IN SECTOR 90, SAS NAGA R, MOHALI UNDER THE NAME AND STYLE OF KNOWLEDGE PARK FOR FASH ION TECHNOLOGY WHICH IS APPROVED BY THE PUNJAB GOVERNM ENT. AND WHEREAS THE FIRST PARTY WILL ALLOT RESIDENTIAL FLATS, COMMERCIAL BOOTH /SHOWROOMS, AND INDUSTRIAL PLOT IN THE SAID PROJECT. AND WHEREAS THE SECOND PARTY IS INTERESTED TO INVES T IN THE ABOVE SAID PROJECT AND BOTH THE PARTIES HAVE AGREED WITH EACH OTHER ON THE FOLLOWING TERMS AND CONDITIONS:- NOW THIS DEED FURTHER WITNEETH AS FOLLOWS:- THAT THE SECOND PARTY HAS PAID A SUM OF RS. 25,00,0 00/- (RUPEES TWENTY FIVE LACS ONLY) TO THE FIRST PARTY AND THE F IRST PARTY HAS ACKNOWLEDGED HE RECEIPT IN THE PRESENCE OF WITNESSE S. THAT THE SECOND PARTY HAS RIGHT TO GET THE ALLOTMEN T OF RESIDENTIAL FLAT / COMMERCIAL BOOTH / SHOWROOM AND INDUSTRIAL P LOT IN THEIR NAMES OR IN THE NAMES OF ANY OTHER PERSONS /WHOMSOE VER, AS PER THEIR REQUIREMENTS. THAT THE SECOND PARTY HAS TO RIGHT TO GET ALLOTTED RESIDENTIAL FLAT ON COMMERCIAL BOOTH / SHOWROOM OR INDUSTRIAL PLOT A S PER THEIR REQUIREMENTS IN INDIVIDUALLY CATEGORY AND THE FIRST PARTY SHALL HAVE NO OBJECTION FOR THE SAME. THAT THE BOOKING AMOUNT FOR SINGLE UNIT HAS BEEN FI XED 25% OF THE TOTAL AMOUNT OF THE SINGLE UNIT. THAT THE FIRST PARTY WILL GIVE A REBATE OF 15% ON T HE TOTAL PRICE OF SINGLE UNIT TO THE SECOND PARTY THAT THE COMPLETION TIME OF THIS PROJECT HAS BEEN F IXED AT TWO TO SIX MONTHS FROM THE DATE OF SIGNING OF THIS AGREEME NT. 8 THAT AFTER LAUNCHING OF THIS PROJECT IF THE SECOND PARTY WANTED TO WITHDRAW THEMSELVES FROM THIS PROJECT THEN THE FIRS T PARTY WILL PAY THEM THEIR PRINCIPAL AMOUNT OF RS. 25,00,000/- (RS. TWENTY FIVE LACS ONLY) PLUS RS. 3,75,000/- (RS. THREE LACS SEVE NTY FIVE THOUSAND ONY) AS PROFIT. IN WITNESS WHEREOF BOTH THE PARTIES HAVE SET THEIR HANDS ON THIS DEED AT CHANDIGARH, ON THE DAY, MONTH AND YEAR MENTIONED ABOVE IN THE PRESENCE OF WITNESS WITNESS NO.1 SD/- (SUMESH CHAWLA) FIRST PARTY WITNESS NO.2 ..SD/- SECOND PARTY ACCORDING TO ASSESSING OFFICER, M/S CHANDIGARH OVER SEAS LTD HAD MENTIONED THAT SH. NALNISH AGGARWAL AND OTHERS HAD INVESTED A T RS. 20 LAKHS WHICH IS 80% SHARE AND SHRI RAJEEV KUMAR HAD INVESTED RS. 5 LAKH S WHICH IS 20% SHARE. ON A PERUSAL OF THE ABOVE AGREEMENT, IT IS CLEAR THAT NO WHERE IT IS MENTIONED THAT THE SHARE OF THE ASSESSEE WAS 80%. IT IS ALSO NOTICED THAT THE COMPANY HAD FURTHER SUBMITTED A STATEMENT IN WHICH ASSESSEE HAD RECEIV ED BACK AN AMOUNT OF RS. 6 LAKHS THROUGH CHEQUE AND ALSO RS. 4 LAKHS THROUGH C HEQUE FAVOURING SMT. GEETU RANI AND RS. 11,50,0000/- IN THE CASH WHICH INCLUDE D RS. 1,50,000/- INTEREST / PROFIT. THERE IS NO MATERIAL ON RECORD TO SHOW THA T THE ASSESSEE HAD INVESTED RS. 10 LAKHS IN CASH OR RECEIVED BACK RS. 10 LAKHS IN C ASH. THE ASSESSEE HAD SUBMITTED A COPY OF FULL AND FINAL SETTLEMENT RECEI PT (COPY OF THE SAME IS AVAILABLE AT PAGE 15 OF THE ASSESSEES PAPER BOOK), WHICH READS AS UNDER:- ANNEXURE B RECEIVED RS. 11,50,000/- (RS. ELEVEN LAKH FIFTY TH OUSAND ONLY) BACK FROM CHANDIGARH OVERSEAS PVT LTD SCO NO. 196-97, SECTOR 34, CHANDIGARH VIDE CHEQUE NO. 542529, AMT R S. 6,00,000/- (RS. SIX LAKHS ONLY) DRAWN FROM ANDHRA B ANK, SECTOR 9 34-A, RS. 4,00,000/- (RS. FOUR LAKHS ONLY) VIDE CHE QUE NO. 542520 DRAWN ON ANDHRA BANK, SECTOR 34 AND RS. 1,50 ,000/- (RS. ONE LAKH FIFTY THOUSAND ONLY) ON CASH AS PER A GREEMENT DATED IST JAN 2005 AS SHARE + INTEREST AS FULL AND FINAL SETTLEMENT OF PROJECT IN SAS NAGAR, SECTOR 90, MOHA LI UNDER THE NAME AND STYLE OF KNOWLEDGE PART FOR FASHION TECHNO LOGY, WHICH IS APPROVED BY THE PUNJAB GOVERNMENT. PURCHASER SIGNATURE SD/- SD/- WITNESS N0.1 NALNISH AGGARWAL 1160/40-B, CHANDIGARH 559, SECTOR 10, PANCHKULA THE ABOVE RECEIPT CLEARLY SHOWS THAT M/S CHANDIGARH OVERSEAS HAS FILED SETTLED ACCOUNT BY RETURNING OF RS. 6 LAKHS AND RS. 4 LAKHS BY CHEQUES AS PER AGREEMENT DATED 1.1.2005 AS FULL AN FINAL SETTLEMENT OF ACCOU NT OF PROJECT IN SAS NAGAR, SECTOR 90-, MOHALI UNDER THE NAME AND STYLE OF KNOW LEDGE PARK FOR FASHION TECHNOLOGY. THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HAS INVESTED RS. 10 LAKHS IN CASH OR HE HAS RECEIVED BA CK RS. 10 LAKHS IN CASH. IT APPEARS THAT ASSESSMENT HAS BEEN REOPENED U/S 147 O F THE ACT MERELY ON THE BASIS OF SELF SIGNED DOCUMENTS GIVEN BY M/S CHANDIG ARH OVERSEAS PVT LTD. SECTION 147 OF THE ACT, EMPOWERS THE ASSESSING OFFI CER TO ASSESS OR REASSESS SUCH INCOME CHARGEABLE TO TAX IF HE HAS REASONS TO BELIEVE THAT THE INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE WOR DS OF THE STATUTE IS REASON TO BELIEVE AND NOT THAT REASON TO SUSPECT. IN MY OPINION, THE INFORMATION GIVEN BY OTHER SOURCES CAN BE REASON FOR ISSUING NO TICE BUT THERE HAS TO BE SOME SUBSTANCE IN THAT INFORMATION. AT THIS STAGE, I MAY REFER TO THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V SMT. PARAMJIT KUAR (2009) 311 ITR 38(P&H), WHEREIN THE HON'BLE HIGH CO URT HAS OBSERVED AS UNDER:- 10 IT IS UNDISPUTED THAT THE ASSESSING OFFICER HAD I NITIATED REASSESSMENT PROCEEDINGS ON THE BASIS OF INFORMATIO N RECEIVED FROM THE SURVEY CIRCLE THAT THE ASSESSEE H AD GOT PREPARED A DEMAND DRAFT FOR A SUM OF RS. 83,040 WHI CH WAS NOT ACCOUNTED IN THE BOOKS OF ACCOUNT OF THE ASSESS EE. THE ASSESSING OFFICER HAD NOT EXAMINED AND CORROBORATED THE INFORMATION RECEIVED FROM THE SURVEY CIRCLE BEFORE RECORDING HIS OWN SATISFACTION OF ESCAPED INCOME AN D INITIATING REASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAD THUS ACTED ONLY ON THE BASIS OF SUSPICION AND I T CANNOT BE SAID THAT THE SAME WAS BASED ON THE BELIEF THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED INCOME. THE ASSESSING OFFICER HAS TO ACT ON THE BASIS OF ' REAS ONS TO BELIEVE' AND NOT ON ' REASONS TO SUSPECT' . THE TRI BUNAL HAD, THUS, RIGHTLY CONCLUDED THAT THE ASSESSING OFF ICER HAD FAILED TO INCORPORATE THE MATERIAL AND HIS SATISFAC TION FOR REOPENING THE ASSESSMENT AND, THEREFORE, THE ISSUAN CE OF NOTICE UNDER SECTION 148 OF THE ACT FOR REASSESSMEN T PROCEEDINGS WAS NOT VALID. 7. IN THE INSTANT CASE ALSO THE ASSESSING OFFICER H AS NOT EXAMINED AND CORROBORATED THE INFORMATION RECEIVED FROM ASST. C OMMISSIONER OF INCOME TAX , CIRCLE 4 (1), CHANDIGARH BEFORE RECORDING HIS OWN SATISFACTION OF ESCAPED INCOME AND INITIATED THE RE-ASSESSMENT PROCEEDINGS . THE FACTS OF THE PRESENT CASE CLEARLY DEMONSTRATE THAT THE ASSESSING OFFICER HAS ACTED ONLY ON THE BASIS OF SUSPICION AND IT CANNOT BE SAID THAT THE REASONS RECORDED WERE BASED ON BELIEF THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED INCOM E. IN MY CONSIDERED VIEW, IT WAS INCUMBENT UPON THE ASSESSING OFFICER BEFORE IS SUING NOTICE TO THE ASSESSEE TO RECORD HIS OWN SATISFACTION ON THE BASIS OF MAT ERIAL AND SHOULD NOT HAVE ACTED MERELY UPON THE INFORMATION RECEIVED FROM ASS TT. COMMISSIONER OF INCOME TAX, CIRCLE 4 (1), CHANDIGARH DATED 7.5.2010 TO THE EFFECT THAT THE ASSESSEE HAD INVESTED A SUM OF RS. 20 LAKHS THROUGH CHEQUES AND RS. 14 LAKHS IN 11 CASH THROUGH M/S CHANDIGARH OVERSEAS PVT LTD ON 1.1 .2005. THUS, CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT C ASE, I HOLD THAT THE ISSUANCE OF NOTICE FOR REOPENING OF THE ASSESSMENT WAS NOT VALI D. CONSEQUENTLY, I QUASH THE REASSESSMENT PROCEEDINGS. 8. SINCE I HAVE QUASHED THE REASSESSMENT PROCEEDING S, THEREFORE, I DO NOT THINK IT NECESSARY TO DECIDE THE GROUND OF APPEAL P ERTAINING TO THE MERITS OF THE CASE. 9. IN THE RESULT, THE APPEAL IS ALLOWED IN THE ABOV E TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 29.01.2016 SD/- (H.L.KARWA) VICE PRESIDENT DATED : 29 TH JANUARY, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR