Kum. Megha Khandelwal, Indore V. The I.T.O., Indore

ITA 62/IND/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2761 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 08-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR MITRA
• Keywords: Reopening of assessment; Capital asset; Gift; Proportionate interest; Question of law; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 14A; 147; 148; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.62/IND/2010 A.Y.2002-03 KUMARI MEGHA KHANDELWAL INDORE PAN ATJPK-3330L APPELLANT VS INCOME TAX OFFICER 5(3), INDORE RESPONDENT APPELLANT BY : SHRI PRAKASH JAIN RESPONDENT BY : SHRI PRADEEP KUMAR MITRA O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 30.11.2009 ON THE FOLLOWING GROUNDS :- 1. THAT IMPUGNED ORDER PASSED BY THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW AS WELL AS ON THE FACTS. IT IS BASED ON INCORRECT INTERPRETATION OF LAW AN D THE FACTS HAVE ALSO BEEN INCORRECTLY CONSTRUED. 2 2. THAT IMPUGNED ORDER PASSED BY THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE A. O. ACTION IN RESPECT OF REOPENING OF CASE U/S 147/148 OF TH E INCOME TAX ACT, WHICH IS ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. THE ORDER SO PASSED ON THE BASIS OF THE NOTICE IS SUED U/S 148, THEREFORE, REQUIRES TO BE QUASHED. 3. THAT IMPUGNED ORDER PASSED BY THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE A. O. ACTION IN RESPECT OF MAKING ADDITION U/S 68 OF RS. 4,0 0,000/- IN RESPECT OF GIFT RECEIVED THROUGH BANKING CHANNEL FROM HER MAUSI (MOTHERS REAL SISTER) WITHOUT APPRECIATING THE FACTS OF THE CASE AND SUBMISSION MADE BEFORE HIM. 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD SHR I PRAKASH JAIN, LD. COUNSEL FOR THE ASSESSEE AND SHRI P.K. MI TRA, LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE. MR. PRAKASH JA IN, THE LD. COUNSEL FOR THE ASSESSEE, DID NOT PRESS GROUND NOS. 1 AND 2, THEREFORE, BOTH THESE GROUNDS ARE DISMISSED AS NOT PRESSED. 3. THE ONLY GROUND PRESSED PERTAINS TO ADDITION OF RS.4 LACS MADE U/S 68 OF THE ACT IN RESPECT OF GIFT RECEIVED FROM HER MOUSI (MOTHERS REAL SISTER) THROUGH BANKING CHANNE L. AT THE OUTSET, IT WAS CLAIMED THAT THE IMPUGNED ISSUE IS C OVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF THE ASS ESSEE ITSELF (ITA NO. 61/IND/2010) ORDER DATED 25.2.2010. THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY THE REVENUE EXCEPT P LACING RELIANCE UPON THE IMPUGNED ORDER. 3 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. IN VIEW OF THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL DATED 25 TH FEBRUARY, 2010- :- THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED FIRST APPELLATE AUTHORITY, DATED 30.11.2009 ON THE FOLLOWING GROUNDS: 1. THAT IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS BAD IN LAW AS WELL AS ON THE FACTS. IT IS BASED ON INCORRE CT INTERPRETATION OF LAW AND THE FACTS HAVE ALSO BEEN INCORRECTLY CONSTRUED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN UPHOLDING THE A.O. ACTION IN RESPECT OF REOPENING O F CASE U/S 147/148 OF THE INCOME TAX ACT, WHICH IS ILLEGAL, BA D IN LAW AND WITHOUT JURISDICTION. THE ORDER SO PASSED ON TH E BASIS OF THE NOTICE ISSUED U/S 148, THEREFORE REQUIRES TO BE QUASHED. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN UPHOLDING THE A.O. ACTION IN RESPECT OF MAKING ADDI TION U/S 68 OF RS.3,46,135/- IN RESPECT OF GIFT RECEIVED THR OUGH BANKING CHANNEL FROM HER MAUSI (MOTHERS REAL SISTE R) WITHOUT APPRECIATING THE FACTS OF THE CASE AND SUBM ISSION MADE BEFORE HIM. 2. DURING THE HEARING OF THE APPEAL, THE FIRST GROU ND WAS ARGUED TO BE GENERAL IN NATURE, THEREFORE, REQUIRES NO DELIBERATION FROM MY SIDE. THE NEXT GROUND PERTAINS TO UPHOLDING THE REOPENING OF CASE U/S 147/148 OF THE ACT. THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE IS THAT THIS ISSUE IS COVERED BY THE DECISION IN ITO VS. SHRI PUNIT AG RAWAL (ITA NOS.197 & 198/IND/2007). IT WAS ALSO PLEADED THAT T HE LANGUAGE USED IN THE SEC. IS REASON TO BELIEVE AND NOT REASON TO SUSPECT. MY ATTENTION WAS ALSO INVITED TO THE RE ASONS RECORDED BY THE LD. ASSESSING OFFICER. ON THE OTHER HAND, THE LD. SR. DR STRONGLY DEFENDED THE REOPENING OF THE C ASE BY 4 CONTENDING THAT ONUS IS ON THE ASSESSEE AND SECONDL Y, THE ASSESSING OFFICER HAS EVERY RIGHT TO REOPEN THE ASS ESSMENT. I HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPR ESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON THE FILE. BEFORE COMING TO ANY CONCLUSION, I AM REPRODUCING H EREUNDER (PAGE 1 OF THE PAPER BOOK) THE REASONS RECORDED BY THE LD. ASSESSING OFFICER. REASON FOR ISSUE OF NOTICE U/S 148 OF THE I.T. ACT, 1961 17/06/2005 NAME OF THE ASSESSEE:- KU.MEGHA KHANDEL WAL 7/4, MAHESH NAGAR, INDORE ASSESSMENT YEAR : 2001-2002 THE ASSESSEE HAS FILED RETURN OF INCOME ON 31.3.20 03 FOR ASSESSMENT YEAR 2002-03, FROM THE PERUSAL OF CAPITAL ACCOUNT FOR ASSESSMENT YEAR 2001-02, FILED ALONGWITH RETURN OF I NCOME FOR ASSESSMENT YEAR 2002-03, IT IS SEEN THAT THE ASSESSE E HAS RECEIVED GIFT FROM NON-RESIDENT SMT. SARLA KANOONGO ON THREE DIFFERENT OCCASIONS AS UNDER: 1. NRE GIFT OF RS.1,46,000/- ON 4.10.2000 2. NRE GIFT OF RS.1,32,585/- ON 13.11.2000 3. NRE GIFT OF RS.67,550/- ON 13.10.2001 TOTAL: RS.3,46,135/- THE ASSESSEE HAS ALSO RECEIVED NRE GIFT FROM SAME SM T. SARLA KANOONGO ON THREE DIFFERENT OCCASIONS, AMOUNTING TO RS.4,00,000/- DURING THE ASSESSMENT YEAR 2002-03, THE RECEIPT OF THE GIFT SHOWS, THAT, IT IS NOT IN THE COURSE OF NORMAL HUMAN CONDU CT AND ASSESSEES OWN INCOME HAS BEEN BROUGHT BACK IN THE GARB OF GIF T, THEREFORE, I HAVE REASON TO BELIEVE INCOME OF RS.3,46,135/- HAS CHARGEABLE OF GIFT HAS ESCAPED ASSESSMENT. ACCORDINGLY NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, IS ISSUED. INDORE/DT.17.06.2005 SD/- ITO-5(3), INDORE THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT TH E AFORESAID AMOUNT OF GIFT, RECEIVED THROUGH BANKING CHANNEL WAS DULY SHOWN IN THE RETURN FILED ON 13.7.2005 FOR WHICH MY ATTENTION WAS INVITED TO PAGE 1 OF THE PAPER BOOK. THE ASSESSEE ALSO INVITED MY ATTENTION TO THE COPY OF T HE PASSPORT OF THE DONOR (PAGES 3 & 4 OF THE PAPER BOOK), DECLA RATION OF GIFT DEED (PAGES 5 TO 7 OF THE PAPER BOOK), COPY OF PASSBOOK OF THE ASSESSEE, LETTER FROM THE BANK WHEREIN IT HA S BEEN MENTIONED THAT THE IMPUGNED AMOUNT WAS RECEIVED THR OUGH BANKING CHANNEL, CREDITWORTHINESS OF THE DONOR (PAG ES 12 & 5 13 OF THE PAPER BOOK), LETTER ADDRESSED TO THE LD. CIT(A) (PAGES 14 & 15 OF THE PAPER BOOK), FORM NO.2D (COPY OF RETURN DATED 7.2.2005 (RECEIVED BY THE OFFICE OF TH E REVENUE ON 7.2.2005) CERTAIN PHOTOCOPIES OF THE PHOTOGRAPHS (PAGES 21 TO 24, 26 TO 29 OF THE PAPER BOOK), COPIES OF TH E TAX RETURN (PAGES 31 TO 48 OF THE PAPER BOOK), FINANCIAL STATE MENT OF DR. KANOONGO (HUSBAND OF THE DONOR) (PAGES 49 TO 54 OF THE PAPER BOOK), INCOME-TAX RETURNS OF THE DONOR (PAGES 56 TO 72) AND VARIOUS OTHER DOCUMENTS SHOWING THE FINANCIAL CAPACITY/STABILITY OF THE DONOR. IT WAS ALSO POINTE D OUT THAT THE DONOR IS THE REAL MAUSI (SISTER OF MOTHER) OF T HE DONEE. MY ATTENTION WAS ALSO INVITED TO THE LETTER OF GARN ER ASSOCIATES, CERTIFIED CHARTERED ACCOUNTANT, NORTH WOODHOUSE, 138, BROMHAM ROAD, BEDFORD, MK40 2QW ETC . THE LD. COUNSEL ALSO POINTED OUT THAT THE CASES REL IED UPON IN THE IMPUGNED ORDER ARE NOT APPLICABLE TO THE FACTS OF THE CASE. ON THE OTHER HAND, THE LD. SR. DR STRONGLY CO NTENDED THAT THE RELATION WITH THE DONOR, FINANCIAL CAPACIT Y OF THE DONOR HAS NOT BEEN PROVED BY THE ASSESSEE. A STRONG PLEA WAS RAISED THAT GIVING OF GIFT TO THE ASSESSEE IS AGAIN ST HUMAN PROBABILITIES, THEREFORE, THE IMPUGNED ORDER WAS DE FENDED. 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND ON PERUSAL OF REC ORD, I HAVE FOUND THAT WHEN THE REASONS WERE RECORDED BY THE AS SESSING OFFICER, THERE WAS NO MATERIAL AVAILABLE WITH HIM T O SUSPECT THE GENUINENESS OF GIFTS. IN THE REASONS RECORDED, IT HAS BEEN MENTIONED THAT IT IS AGAINST THE NORMAL HUMAN CONDU CT AND OWN INCOME OF THE ASSESSEE HAS BEEN BROUGHT BACK IN THE GARB OF GIFT. HOWEVER, I HAVE FOUND THAT NO SUCH MA TERIAL IS AVAILABLE WITH THE ASSESSING OFFICER TO SUSPECT THE GIFTS AND EVEN OTHERWISE, HUMAN PROBABILITIES ARE TO BE CONSI DERED IN THE ABSENCE OF DIRECT EVIDENCE. I AM OF THE CONSIDE RED OPINION THAT SUSPICION CANNOT TAKE THE SHAPE OF EVI DENCE, HOWEVER STRONG IT MAY BE. THE RECORD AVAILABLE IN T HE FILE CLEARLY SHOWS THAT THE AMOUNT OF GIFT WAS PAID THRO UGH BANKING CHANNEL AND IT IS NOT THE CASE THAT OWN MON EY OF THE ASSESSEE HAS BEEN ROUTED THROUGH THE ACCOUNT OF THE DONOR, THEREFORE, SIMPLY SUSPICION CANNOT STAND ON ITS OWN LEGS. IDENTICAL ISSUE HAS BEEN DELIBERATED UPON BY THE IN DORE BENCH IN THE CASE OF ITO VS. SHRI PUNIT AGRAWAL (SUPRA) W HEREIN ANOTHER DECISION IN THE CASE OF SHRI NITIN AGRAWAL (ITA NO.556/IND/2006 AND CO 99/IND/2006, ORDER DATED 22.5.2009), JAI BHARAT MARUTI LTD. VS. CIT (223 CTR 269) (DEL), RAJESH JHAVERI STOCK BROKERS P. LTD. (291 ITR 500) (SC), D.D. 6 MORE (82 ITR 540) (SC), SUMATI DAYAL (214 ITR 801) (SC) AND P. MOHAN KALA (291 ITR 278) (SC) HAVE ALREADY BEEN CON SIDERED. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HER EUNDER: THE DEPARTMENTAL APPEALS AS WELL AS THE CROSS OBJE CTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE DIFFERENT ORDERS OF THE LEARNE D COMMISSIONER OF INCOME- TAX (APPEALS)-II, INDORE, DATED 15.12.2006 & 20.12. 2006 FOR THE ABOVE ASSESSMENT YEARS RESPECTIVELY. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PA RTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND THE MATER IAL AVAILABLE ON RECORD. C.O. NOS. 27 & 28/IND/2007 3. THE ASSESSEE ON GROUND NO. 1 HAS CHALLENGED THE UPHOLDING OF THE ASSESSING OFFICERS ACTION IN RESPECT OF REOPENING OF THE CASE UNDER SECTION 147 OF THE ACT. 4. LD. COUNSEL FOR ASSESSEE SUBMITTED THAT ASSESSEE FILED RETURN FOR AY 2001-02 ON 31.10.2001 AND FOR AY 2002-03, RETURN WA S FILED ON 6.1.2003 IN WHICH GIFTS RECEIVED HAVE BEEN SHOWN. THE RETURNS W ERE PROCESSED U/S 143(1) OF THE IT ACT. THEREAFTER, THE AO ISSUED NOTICES U/ S 148 OF THE IT ACT AND THE AO VIDE SEPARATE ORDER REJECTED THE OBJECTIONS OF T HE ASSESSEE WITH REGARD TO THE INITIATION OF THE REASSESSMENT PROCEEDINGS. HE HAS SUBMITTED THAT AO HAS INITIATED REASSESSMENT PROCEEDINGS ON THE GROUNDS T HAT GIFTS ARE NOT RECEIVED IN NORMAL COURSE OF HUMAN CONDUCT IN BOTH THE YEARS AND THAT IN AY 2001-02, AO ALSO NOTED IN THE REASONS THAT ASSESSEE HAS CLAI MED DEDUCTION OF INTEREST OF RS.5,62,864/- ON THE LOANS WHICH IS NOT ALLOWABL E AS PER PROVISIONS OF SEC. 14A OF THE IT ACT. HE HAS SUBMITTED THAT THERE WAS NO MATERIAL OR EVIDENCE AVAILABLE BEFORE THE AO TO FORM HIS BELIEF THAT INC OME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. HE HAS SUBMITTED THAT AO WAS HA VING MERE REASON TO SUSPECT, THEREFORE, ON THAT BASIS, THE INITIATION OF REASSESSMENT PROCEEDINGS IS BAD IN LAW. HE HAS SUBMITTED THAT THE ISSUE IS S QUARELY COVERED IN FAVOUR OF ASSESSEE BY THE ORDER OF ITAT, INDORE BENCH IN THE CASE OF PRAVEEN JINDAL, 12 ITJ 227 AND ALSO SUBMITTED THAT IDENTICAL ISSUE WAS ALSO CONSIDERED BY DIVISION BENCH OF ITAT, INDORE B ENCH IN THE CASE OF ITO VS. SHRI NITIN AGRAWAL IN ITA NO.556/IND/2006 AND C O 99/IND/2006 AND VIDE ORDER DATED 22.5.2009, THE REASSESSMENT PROCEEDINGS WERE QUASHED BY ALLOWING THE CROSS-OBJECTION FILED BY THE ASSESSEE. COPY OF THE ORDER IS PLACED ON RECORD. HE HAS REFERRED TO PB/2 WHICH ARE THE RE ASONS FOR REOPENING THE ASSESSMENT AND ALSO RELIED UPON RECENT DECISION OF DELHI HIGH COURT IN THE CASE OF JAY BHARAT MARUTI LTD. VS. CIT, 223 CTR 269 , IN WHICH, INITIATION OF REASSESSMENT PROCEEDINGS ON THE SAME FACTS WAS HELD TO BE BAD IN LAW. LD. COUNSEL FOR ASSESSEE, THEREFORE, SUBMITTED THAT REA SSESSMENT PROCEEDINGS IN THESE CASES MAY BE QUASHED. 5. ON THE OTHER HAND, LD. DR REITERATED THE SUBMISS IONS MADE IN THE CASE OF SHRI NITIN AGRAWAL (SUPRA) AND FURTHER SUBMITTED THAT IN BOTH THE AYS, THE REASONS FOR REOPENING THE ASSESSMENTS IS SAME I.E. GIFTS NOT RECEIVED IN THE NORMAL COURSE OF HUMAN CONDUCT AS IS CONSIDERED IN THE CASE OF NITIN AGRAWAL (SUPRA). HOWEVER, HE HAS HIGHLIGHTED THAT IN AY 200 1-02, THE AO HAS FURTHER RECORDED REASONS FOR REOPENING THE ASSESSMENTS THAT CLAIM OF DEDUCTION OF INTEREST ON BORROWED LOANS IN A SUM OF RS.5,62,864/ - IS NOT ALLOWABLE DEDUCTION AS PER SEC. 14A OF THE IT ACT. HE HAS FUR THER SUBMITTED THAT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F RAJESH JHAVERI STOCK 7 BROKERS P. LTD., 291 ITR 500 IS NOT CONSIDERED IN T HE CASE OF SHRI NITIN AGRAWAL (SUPRA) ON THE PRINCIPLE THAT SINCE RETURN WAS ONLY PROCESSED U/S 143(1), THEREFORE, IT IS NOT AN ASSESSMENT, HENCE, THERE IS NO CHANGE OF OPINION. HE HAS SUBMITTED THAT SINCE RETURN WAS PRO CESSED U/S 143(1) ONLY, THEREFORE, AO DID NOT APPLY MIND WHILE PROCESSING T HE RETURN. HE HAS SUBMITTED THAT AO IS NOT BOUND BY TECHNICAL RULES A ND THE PREPONDERANCE OF PROBABILITY SHALL HAVE TO BE CONSIDERED WHILE CONSI DERING THE MATTER AND RELIED UPON DECISIONS OF HON'BLE SUPREME COURT IN T HE CASES OF D.D. MORE, 82 ITR 540, SUMATI DAYAL, 214 ITR 801 AND P. MOHAN KAL A, 291 ITR 278. HE HAS SUBMITTED THAT THE GIFTS FROM THE STRANGER ARE ARRANGED AFFAIRS ON WHICH BOGUS GIFTS HAVE BEEN RECEIVED AND SUBMITTED THAT T HIS BENCH HAS DECIDED THIS ISSUE IN FAVOUR OF THE DEPARTMENT IN THE CASES REPO RTED IN 10 ITJ 293 & 12 ITJ 107. HE HAS SUBMITTED THAT AT THE REOPENING STAGE, NO EVIDENCE WILL COME IN THE REASONS UNLESS THE AO WILL MAKE INVESTIGATION I NTO THE MATTER. HE HAS SUBMITTED THAT THE AO HAS TO TAKE PRIMA FACIE VIEW AT THE TIME OF REASSESSMENT PROCEEDINGS. HE HAS SUBMITTED THAT AO HAS RIGHTLY F ORMED HIS BELIEF THAT GIFTS ARE NOT RECEIVED IN NORMAL COURSE OF HUMAN CONDUCT AND THAT INTEREST ON LOANS WAS NOT ALLOWABLE DEDUCTION U/S 14A OF THE IT ACT. ON SPECIFIC QUERY BY THE BENCH, LD. DR ADMITTED THAT THERE WAS NO OTHER MATE RIAL OR EVIDENCE AVAILABLE ON RECORD WITH THE AO AT THE TIME OF RECORDING THE REASONS FOR REOPENING THE ASSESSMENTS EXCEPT THE RETURN OF INCOME AND THE PAP ERS FILED ALONG WITH RETURN OF INCOME FILED BY THE ASSESSEE. HE HAS SUBMITTED T HAT RETURN ITSELF IS AN INFORMATION FOR THE AO TO FORM HIS BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT. LD. DR, THEREFORE, SUBMITTED THAT THIS ISSUE MAY BE REAPPRECIATED AGAIN AND SUBMITTED THAT CROSS-OBJECTION OF THE ASS ESSEE ON THIS GROUND MAY BE DISMISSED. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIA L AVAILABLE ON RECORD. THE ASSESSEE HAS FILED COPY OF THE REASONS RECORDED BY THE AO FOR REOPENING THE ASSESSMENTS U/S 147/148 OF THE IT ACT . THE REASONS FOR REOPENING THE ASSESSMENTS AS RECORDED BY THE AO ARE REPRODUCED AS UNDER: AY 2001-02 IN THIS CASE RETURN OF INCOME FOR THE ABOVE ASSE SSMENT YEAR WAS FILED DISCLOSING TAXABLE INCOME OF RS.2,60 ,760/- & AGRICULTURAL INCOME AMOUNTING TO RS.50,800/- ON 31.10.2001. IN T HE CAPITAL ACCOUNT ACCOMPANYING THE RETURN, THE ASSESSEE HAS CREDITED AN AMOUNT OF RS.23,42,136/- UNDER THE HEAD NRI AND OTHER GIFT. THE GIFT SO CREDITED IS NOT RECEIVED IN THE NORM AL COURSE OF HUMAN CONDUCT AND THUS THE SAME IS THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. THEREFORE, I HAVE REASON TO BE LIEVE THAT AN AMOUNT OF RS.23,42,136/- CHARGEABLE TO TAX HAS ESCAPED ASSESS MENT. THE ASSESSEE HAS SHOWN UNSECURED LOANS AMOUNTING TO RS.2,01,62,968/- AS PER BALANCE-SHEET IN THE LIABIL ITY SIDE. IN THE ASSET SIDE, ON AMOUNT OF RS.1,98,47,000/- HAS BEEN SHOWN AS INVEST MENT IN EQUITY SHARE IN PATH (I) LTD. IN THE COMPUTATION OF INCOME, AN AMOU NT OF RS.5,62,864/- HAS BEEN CLAIMED AS INTEREST PAID ON LOANS. SUCH EXPEND ITURE IS NOT ALLOWABLE AS PER PROVISIONS OF SEC. 14A OF THE IT ACT, 1961. THE REFORE, I HAVE REASON TO BELIEVE THAT AN AMOUNT OF RS.5,62,864/- CHARGEABLE TO TAX HAS ALSO ESCAPED ASSESSMENT. I, THEREFORE, PROPOSE TO ASSESS ABOVE INCOME TOT ALING TO RS.29,05,000/- AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS 8 ESCAPED ASSESSMENT AND WHICH COMES TO MY NOTICE SUB SEQUENTLY IN THE COURSE OF PROCEEDINGS U/S 147 OF THE IT ACT, 1961. ISSUE NOTICE U/S 148 OF THE I.T. ACT, 1961. AY 2002-03 THE ASSESSEE-INDIVIDUAL HAS FILED RETURN OF INCO ME FOR THE ABOVE AY DECLARING TAXABLE INCOME AT (-) RS.986 0/- ON 06.01.2003 WHICH HAS BEEN PROCESSED U/S 143(1). ASSESSEE HAS ALSO FI LED CAPITAL ACCOUNT ALONG WITH THE RETURN FILED IN WHICH AN AMOUNT OF RS.33,4 6,285/- HAS BEEN CREDITED UNDER THE HEAD GIFT RECEIVED. THE GIFT AS ABOVE AMOUNTING TO RS.33,46,285/- CR EDITED IN THE CAPITAL ACCOUNT IS NOT RECEIVED IN THE NORMA L COURSE OF HUMAN CONDUCT AND THUS THE SAME IS THE INCOME OF THE ASSESSEE FRO M UNDISCLOSED SOURCES. THEREFORE, I HAVE REASON TO BELIEVE THAT AN AMOUNT OF RS.33,46,285/- CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. I, THEREFORE, PROPOSE TO ASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPE D ASSESSMENT AND WHICH COMES TO MY NOTICE SUBSEQUENTLY IN THE COURSE OF PR OCEEDINGS U/S 147 OF THE IT ACT, 1961. ISSUE NOTICE U/S 148 OF THE IT ACT, 1961. 7. LD. COUNSEL FOR ASSESSEE SUBMITTED THAT THE ISSU E IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF ITAT, INDORE BENCH IN THE CASE OF SHRI NITIN AGRAWAL (SUPRA). IN THIS CASE, THE FINDINGS GIVEN I N PARA 6 TO 11 ARE REPRODUCED AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL AVAILABLE ON RECORD. BOTH THE PARTIES FILED COPY OF REASONS R ECORDED BY THE ASSESSING OFFICER FOR REOPENING OF ASSESSMENT UNDER SECTION 1 47/148 OF THE ACT. THE REASONS FOR REOPENING OF ASSESSMENT AS RECORDED BY THE ASSESSING OFFICER ARE REPRODUCED AS UNDER :- THE ASSESSEE INDIVIDUAL HAS FILED RETURN OF INCOM E FOR THE ABOVE ASSESSMENT YEAR DECLARING TAXABLE INCOME AT RS.1,47 ,400/- ON 06.01.2003 WHICH HAS BEEN PROCESSED U/S 143(1). ASSESSEE HAS ALSO FILED CAPITAL ACCOUNT ALONG WITH THE RETURN FILED IN WHICH AN AMO UNT OF RS.63,91,543/- HAS BEEN CREDITED UNDER THE HEAD GIFT RECEIVED. THE GIFT AS ABOVE AMOUNTING TO RS.63,91,543/- CRED ITED IN THE CAPITAL ACCOUNT IS NOT RECEIVED IN THE NORMAL COURSE OF HUM AN CONDUCT AND THUS THE SAME IS THE INCOME OF THE ASSESSEE FROM UNDISCL OSED SOURCES. THEREFORE, I HAVE REASON TO BELIEVE THAT AN AMOUNT OF RS. 63,9 1,543/- CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. I, THEREFORE, PROPOSE TO ASSESS SUCH INCOME AND AL SO ANY OTHER INCOME CHARGEABLE TO TAX WHICH COMES TO MY NOTICE S UBSEQUENTLY IN THE COURSE OF PROCEEDINGS U/S 147 OF THE INCOME TAX ACT , 1961. IT IS AN ADMITTED FACT THAT THE ASSESSEE IN THE RET URN OF INCOME HAS DISCLOSED THE RECEIPT OF THE GIFTS. IT IS ALSO ADMITTED FACT THAT THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND THEREAFTER NO M ATERIAL OR INFORMATION WAS BROUGHT ON RECORD WHICH WOULD JUSTIFY THE REOPE NING OF ASSESSMENT IN THE MATTER. THE LEARNED DEPARTMENTAL REPRESENTATIV E ON SPECIFIC QUERY STATED THAT THE RETURN ITSELF IS INFORMATION FOR RE OPENING AN ASSESSMENT ON ACCOUNT OF ESCAPEMENT OF INCOME ON ACCOUNT OF GIFTS RECEIVED BY THE ASSESSEE. THE LEARNED DEPARTMENTAL REPRESENTATIVE D ID NOT POINT OUT IF ANY 9 OTHER MATERIAL OR INFORMATION WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER FOR REOPENING OF ASSESSMENT. 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS AND TH E MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THE ISSUE WAS CONSI DERED BY ITAT, INDORE BENCH, IN THE CASAE OF PRAVIN JINDAL (SUPRA) AND IN THE CASE OF SMT. SANTOSH AGRAWAL (SUPRA). THE FINDINGS RECORDED IN PARAS 5 AND 6 IN THE CASE OF SMT. SANTOSH AGRAWAL (SUPRA) IN WHICH ON ID ENTICAL FACTS THE REOPENING OF ASSESSMENT WAS QUASHED, ARE AS UNDER : - 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL AVAILABLE ON RECORD. THE LEARNED COUNSEL FOR THE AS SESSEE FILED COPY OF NOTICE UNDER SECTION 148 OF THE ACT AS WELL AS REAS ONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING OF ASSESSMENT. THE REASONS FOR REOPENING OF ASSESSMENT AS RECORDED BY THE ASSESSING OFFICER ARE REPRODUCED AS UNDER :- IN THIS CASE RETURN OF INCOME FOR THE ABOVE ASSE SSMENT YEAR WAS FILED DISCLOSING TAXABLE INCOME OF RS.84,980/- ON 31.10.2 001. IN THECAPITAL ACCOUNT ACCOMPANYING THE RETURN, THE ASSESSEE HAS C REDITED AN AMOUNT OF RS.37,50,000/- UNDER THE HEAD GIFT RECEIVED. THE GIFT SO CREDITED IS NOT RECEIVED IN THE NORMAL COURSE OF HUMAN CONDUCT AND THUS THE SAME IS THE INCOME OF THE ASSESSEE FRO M UNDISCLOSED SOURCES. THEREFORE, I HAVE REASON TO BELIEVE THAT AN AMOUNT OF RS.37,50,000/- CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. I, THERE FORE, PROPOSE TO ASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO MY NOTICE SUB SEQUENTLY IN THE COURSE OF PROCEEDINGS U/S 147 OF THE IT ACT, 1961. ISSUE NOTICE U/S 148 OF THE I.T. ACT, 1961. IT IS AN ADMITTED FACT THAT THE ASSESSEE IN THE RET URN OF INCOME HAS DISCLOSED THE GIFTS OF RS.37,50,000/-. THE RETURN WAS ALSO PR OCESSED UNDER SECTION 143(1) AND THEREAFTER NO MATERIAL OR INFORMATION WA S BROUGHT ON RECORD WHICH WOULD JUSTIFY THE REOPENING OF ASSESSMENT IN THE MATTER. ON CONSIDERATION OF THE RIVAL SUBMISSIONS AND THE MATE RIAL ON RECORD, WE ARE OF THE VIEW THAT THE ISSUE IS SQUARELY COVERED IN FAVO UR OF THE ASSESSEE BY THE ORDER OF THE ITAT, INDORE BENCH IN THE CASE OF PRAV EEN JINDAL (SUPRA) IN WHICH ON IDENTICAL FACTS THE REOPENING OF ASSESSMEN T WAS QUASHED. THE FINDINGS IN THIS CASE FROM PARAS 6 TO 10 ARE REPROD UCED:- 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND THE MATERIAL AVAILABLE ON RECORD. I.T.A.T. DELHI B BE NCH ( T.M.) IN THE CASE OF O.P.CHAWLA, (SUPRA) HELD AS UNDER :- EVEN THOUGH NO OPINION WAS FORMED BY THE ASSESSING OFFICER WHEN HE PROCESSED THE RETURN U/S 143(1)(A) AND THEREFORE, I T CANNOT BE A CASE OF A MERE CHANGE OF OPINION UNSUBSTANTIATED BY FRESH FAC TS OR CHANGE IN LAW COMING TO HIS NOTICE, STILL AN ATTEMPT TO PROBE THE RETURN FURTHER ON THE PART OF THE A.O. IS CERTAINLY NOT TAKEN IN BY THE EXPRES SION REASON TO BELIEVE. THE CONSEQUENCES OF CONDONING SUCH AN ATTEMPT WOULD BE GRAVE. IT IS NOT TO BE UNDERSTOOD AS HOLDING THAT DESPITE FRESH FACTS O R MATERIAL OR INFORMATION, OR A CHANGE IN THE LEGAL POSITION, THE A.O. CANNOT REOPEN THE ASSESSMENT WHERE THE RETURN HAD ONLY BEEN PROCESSED UNDER SECT ION 143(1)(A). THERE HAS TO BE A DISTINCTION BETWEEN CASES WHEREAFTER TH E PROCESSING OR ACCEPTANCE OF THE RETURN UNDER SECTION 143(1)(A) SO ME FRESH FACTS OR INFORMATION OR MATERIAL HAS COME TO THE POSSESSION OF THE A.O., OR THERE HAS BEEN A CHANGE IN THE LEGAL POSITION, AND CASES WHER E THERE IS NO SUCH 10 DEVELOPMENT. IN THE FORMER CLASS OF CASES THE NOTIC E FOR REOPENING THE ASSESSMENT WOULD BE VALID. BUT IN THE LATTER CLASS OF CASES, THE A.O. CANNOT ASSUME POWERS TO ISSUE THE NOTICE UNDER SECTION 148 FIRST AND THEN MAKE ENQUIRIES IN AN ATTEMPT TO UNEARTH ESCAPED INCOME. THIS WOULD PUT ASSESSEES TO UNWARRANTED HARDSHIP AND DISTURB THE F INALITY OF ASSESSMENTS WITHOUT ANY JUSTIFICATION. WHERE A RETURN HAS BEEN ACCEPTED/PROCESSED WITHOUT ENQUIRY UNDER SECTION. 143(1)(A) AND THEREA FTER THE A.O. COMES ACROSS EVIDENCE OR MATERIAL TO SHOW ESCAPEMENT OF I NCOME, HE MAY FORM THE REQUISITE BELIEF AND PROCEED TO ISSUE NOTICE U/S 14 8 AFTER RECORDING REASONS INDICATING THE NEXUS OR LIVE LINK OR RATIONAL CONNE CTION BETWEEN THE MATERIAL BEFORE HIM AND THE FORMATION OF THE BELIEF. IN SUCH A CASE, HE DOES HAVE REASON TO BELIEVE AND NOT MERELY REASON TO SUSPE CT. BUT IF HE HAS NO SUCH MATERIAL OR EVIDENCE, AND MERELY WANTS BY HIS IPSE DIXIT TO TAKE UP THE RETURN FOR FURTHER PROBE, IT WILL BE A CASE OF REA SON TO SUSPECT. IN ADDITION, IT WILL BE A CASE OF AN ARBITRARY EXERCISE OF THE P OWER TO REOPEN THE ASSESSMENT IF ONE LOOKS AT THE REASONS RECORDED BY THE ASSESSING OFFICER IN THE PRESENT CASE TO REOPEN THE ASSESSMENT THE ONLY REASON STATED THEREIN IS THAT THE BALANCE SHEET OF THE ASSESSEE REVEALS THA T THE ASSESSEE HAS RECEIVED A GIFT OF RS. 28,90,000 FOR WHICH NO DETAILS HAVE B EEN FILED. THERE IS NO REFERENCE TO ANY INVESTIGATION CARRIED OUT IN THE A SSESSEES OWN CASE OR IN THE CASE OF THE DONOR OR ANY OTHER EVIDENCE OR MATE RIAL COLLECTED AS A RESULT OF ANY INVESTIGATION CARRIED OUT BY ANY INVESTIGATI NG AGENCY INCLUDING THE IT DEPARTMENT IN ANY CASE WHICH COULD HAVE AFFORDED TH E REQUIRED NEXUS OR LIVE LINK OR RATIONAL CONNECTION WITH THE BELIEF TH AT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. THE A.O. HAS MERELY REFERR ED TO THE ABSENCE OF ANY DETAILS FILED WITH THE RETURN IN SUPPORT OF THE GIFTS. THE REASONS RECORDED IN THE PRESENT CASE BY THE ASSESSING OFFICER FOR RE OPENING THE ASSESSMENT ARE A MERE PRETENCE, AN EXCUSE TO ENQUIRE INTO THE GIFTS RECEIVED BY THE ASSESSEE, WITHOUT ANY MATERIAL OR EVIDENCE COMING I NTO HIS POSSESSION AFTER HE PROCESSED THE RETURN U/S 143(1)(A). THE A.O. DID NOT HAVE REASON TO BELIEVE THAT INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. CONSEQUENTLY, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE REOPENING OF THE ASSESSMENT WAS NOT VALID AND, THER EFORE, THE REASSESSMENT MADE WAS VOID AB INITIO AND BAD IN THE EYES OF LAW. . 7 CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE DECISION, I AM OF THE VIEW THAT REOPENING IS NOT JUSTIFIED IN T HE MATTER. THOUGH THERE IS NO DISPUTE THAT REOPENING COULD NOT BE QUASHED IN T HIS CASE ON ACCOUNT OF CHANGE OF OPINION BECAUSE NO OPINION WAS FORMED, WHILE PROCESSING THE RETURN U/S 143(1)(A) AS IS HELD BY THE LD.CIT(A). 8. IT IS NOT IN DISPUTE THAT THE ASSESSEE WHILE FILING THE ORIGINAL RETURN OF INCOME HAVE SHOWN IN THE CAPITAL ACCOUNT, THE GIFTS RECEIVED FROM FOUR PERSONS. THE AFORESAID RETURN WA S PROCESSED. THE A.O. WHILE RECORDING THE REASONS FOR REOPENING HAS MEREL Y MENTIONED THAT THE GIFTS ARE NOT RECEIVED IN THE NORMAL COURSE OF HUMA N CONDUCT. THE LD.CIT(A) NOTED THAT IT IS WELL KNOWN FACT THAT GIF TS CLAIMED TO BE RECEIVED WERE AN ARRANGED AFFAIRS. THE AFORESAID FACTS NOTED IN THE REASONS FOR REOPENING AN ORDER OF THE CIT(A) CLEARLY PROVE THAT THE ASSESSEE WHILE FILING THE RETURN HAS SHOWN THE GIFTS IN THE CAPITAL ACCOU NT AND BALANCE SHEET AND THAT THERE IS NO REFERENCE TO ANY INVESTIGATION CA RRIED OUT IN THE CASE OF THE ASSESSEE OR IN THE CASE OF THE DONOR. NO EVIDENCE O R MATERIAL IS BROUGHT ON 11 RECORD, WHICH COULD HAVE AFFORDED THE REQUIRED NEXU S ON LIVE LINK OR RATIONAL CONNECTION WITH THE BELIEF OF THE A.O. THA T INCOME CHARGEABLE TO TAX HAVE ESCAPED ASSESSMENT. THE A.O. HAS MERELY REFER RED TO THE HUMAN CONDUCT IN WHICH SUCH A GIFT COULD NOT HAVE BEEN RE CEIVED GENUINELY BY THE ASSESSEE. THE A.O., HAS, THUS, FORMED HIS OPINION O N VAGUE AND UNSUBSTANTIATED REASONS. THE BELIEF OF THE A.O. IS NOT, THUS, BASED UPON ANY INFORMATION, MATERIAL OR EVIDENCE. THE REASONS RECO RDED BY THE ASSESSING OFFICER WERE ONLY HIS SUSPICION AND PRETENCE. THE H ON'BLE SUPREME COURT IN THE CASE OF M.P. INDUSTRIES LIMITED VS. ITO, 57 ITR 637, HELD THAT NOTICE U/S 148 CANNOT BE ISSUED MERELY TO MAKE FISHING ENQ UIRY INTO THE RETURN. 9. THE REASONS RECORDED BY THE ASSESSING OFFICER ARE VAGUE, INDEFINITE AND ARE NOT BASED ON ANY INFORMAT ION OR MATERIAL. IT WAS ASSUMPTION OF THE A.O. THAT GIFTS ARE NOT RECEIVED IN THE NORMAL COURSE OF HUMAN CONDUCT. THE FINDINGS OF THE LD.CIT(A) ARE PE RVERSE IN THE SENSE THAT LD.CIT(A) ASSUMED THAT GIFTS SO RECEIVED WERE AN AR RANGED AFFAIRS, WHICH IS NOT BASED ON ANY EVIDENCE. THESE FACTS CLEARLY SHOW ED THAT THE A.O. WAS NOT JUSTIFIED IN REOPENING THE ASSESSMENT IN THE MATTER . THE REASONS RECORDED BY THE ASSESSING OFFICER FOR FORMING HIS BELIEF FOR RE OPENING ASSESSMENT U/S 147 WERE NOT BASED UPON ANY MATERIAL OR FACTS. THE BELIEF OF THE A.O. FOR INITIATING PROCEEDINGS U/S 147 HAD NO RATIONAL CONN ECTION WITH REASONS. THERE WERE NO MATERIAL WITH THE DEPARTMENT TO JUSTI FY THE INITIATION OF THE RE-ASSESSMENT PROCEEDINGS IN THIS CASE, BECAUSE IT SHOWED THAT THE A.O. HAD INITIATED RE-ASSESSMENT PROCEEDINGS WITHOUT APPLICA TION OF MIND. THEREFORE, IT WAS NOT FIT CASE TO SUSTAIN THE REASSESSMENT. TH E A.O., THEREFORE, DID NOT VALIDLY ASSUME JURISDICTION IN INITIATING PROCEEDIN GS U/S 147. I RELY UPON THE DECISION OF I.T.A.T., AMRITSAR BENCH (SPECIAL BENCH ) IN THE CASE OF DURGA PRASAD GOYAL VS. ITO, 98 ITD 227 (ASR) ( S. B.) IN WHICH EVEN GENERAL INFORMATION CONTAINED IN LETTER OF ASSISTANT COMMIS SIONER, INVESTIGATION CIRCLE, WAS NOT FOUND RELEVANT MATERIAL TO SUSTAIN INITIATION OF RE-ASSESSMENT PROCEEDINGS U/S 147 OF THE INCOME-TAX ACT, 1961, . THE PRESENT CASE IN APPEAL IS ON THE WORST FOOTING. THEREFORE, THE ORDE RS OF THE AUTHORITIES BELOW CANNOT BE SUSTAINED IN LAW. 10. CONSIDERING THE FACTS AND CIRCUMSTANCES NOTED A BOVE, WE ARE OF THE VIEW THAT AS THERE WAS NO INVESTIGATION OR EVIDENCE COLLECTED BY THE ASSESSING OFFICER HAVING A NEXUS OR LIVE LINK OR RA TIONAL CONNECTION BETWEEN THE MATERIAL BEFORE HIM AND THE FORMATION OF BELIEF TO ASSUME THERE WAS INCOME ESCAPING ASSESSMENT. THE REASONS RECORDED B Y THE ASSESSING OFFICER WERE MERELY REASONS TO SUSPECT. THEREFORE , THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN REOPENING THE ASSESSMENT IN T HE MATTER. I, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND Q UASH THE REASSESSMENT PROCEEDINGS. BY FOLLOWING THE SAME ORDER, WE ARE OF THE VIEW TH AT THE REOPENING OF ASSESSMENT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE IS NOT JUSTIFIED. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND QUASH THE REASSESSMENT PROCEEDINGS. 6. AS A RESULT, THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 8. HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT V. BATRA BHATTA COMPANY (SUPRA) NOTED THE REASONS RECORDED FOR REOP ENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOMETAX ACT WHICH READ A S UNDER :- 12 THE ASSESSEE FIRM HAS SOLD AN AGRICULTURAL LAND FOR RS.57,37,500 IN MARCH, 1996 AND CLAIMED EXEMPTION UNDER PROVISIONS OF S. 2(14). THE CLAIM OF ASSESSEE THAT THE LAND IS AGRICULTURAL AND HENCE NOT A CAPITAL ASSET REQUIRES MUCH DEEPER SCRUTINY. THE COST OF ACQUISI TION IS SHOWN AT RS.4,41,279/-. I HAVE REASON TO BELIEVE THAT THE IN COME FROM CAPITAL GAIN TO TUNE OF RS.52 LACS HAS ESCAPED ASSESSMENT FOR FINAN CIAL YEAR 95-96. ISSUE NOTICE UNDER S. 148. HON'BLE HIGH COURT OF DELHI CONSIDERING THE ABOVE R EASONS DISMISSED THE DEPARTMENTAL APPEAL AND HELD AS UNDER :- A READING OF THE REASONS RECORDED DOES NOT DISCLOS E THAT THE AO IN FACT HAD REASONS TO BELIEVE THAT ANY INCOME HAD ESCAPED ASSE SSMENT. IT IS NOT JUST THE BELIEF OF THE AO THAT IS MATERIAL, BUT SUCH A BELIE F MUST BE BASED ON CERTAIN REASONS. THE FIRST SENTENCE OF THE REASONS RECORDED IS MERELY A STATEMENT OF FACT THAT THE ASSESSEE FIRM SOLD AGRICULTURAL LAND FOR RS. 57,37,500 IN MARCH, 1996 AND CLAIMED EXEMPTION UNDER THE PROVISIONS OF S. 2(14). THE SECOND SENTENCE IS MERELY EXPLORATORY IN NATURE IN THE SEN SE THAT IT SAYS THAT THE CLAIM OF THE ASSESSEE THAT THE LAND IS AGRICULTURAL AND HENCE NOT A CAPITAL ASSET REQUIRES MUCH DEEPER SCRUTINY. THERE IS NO INDICATION AS TO ON WHAT INFORMATION OR ON WHAT MATERIAL THE AO HARBOURED TH E BELIEF THAT THE CLAIM OF THE ASSESSEE REQUIRED DEEPER SCRUTINY. IN FACT, AS RECORDED IN THE ORDER OF THE CIT(A), NO NEW MATERIAL IS ON RECORD AFTER THE FILING OF THE RETURN AND TILL THE ISSUANCE OF THE NOTICE UNDER S. 147. THE PROCEEDINGS UNDER S. 147 ARE NOT TO BE INVOKED AT THE MERE WHIM AND FANCY OF AN AO AND IT HAS TO BE SEEN IN EVERY CASE AS TO WHETHER THE INVOCATION IS ARBITRARY OR REASONABLE. MERELY BECAUSE THE AO FELT THAT THE ISSUE REQUIRED MUCH DEEPER SCRUTINY IS NOT GROUND ENOUGH FOR INVOKING S. 147. IT IS NOT B ELIEF PER SE THAT IS A PRE- CONDITION USED IN S. 147 BUT A BELIEF FOUNDED ON RE ASONS THE EXPRESSION USED IN SECTION 147 IS. IF THE AO HAS REASON TO BELIEV E AND NOT IF THE AO BELIEVES. THERE MUST BE SOME BASIS UPON WHICH THE BELIEF CAN BE BUILT. IT DOES NOT MATTER WHETHER THE BELIEF IS ULTIMATELY PR OVED RIGHT OR WRONG, BUT, THERE MUST BE SOME MATERIAL UPON WHICH SUCH A BELIE F CAN BE FOUNDED. IN THE PRESENT CASE, THE CIT(A) AS WELL AS THE TRIBUNA L HAVE FOUND AS A FACT THAT THERE WAS NO MATERIAL UPON WHICH THE AO COULD HAVE BASED HIS BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. THE CIT(A) AS WELL AS THE TRIBUNAL HAVE RETURNED THE CONCURRENT FINDING OF FACT THAT T HERE WAS NO MATERIAL BEFORE THE AO ON THE BASIS OF WHICH THE AO COULD HA VE MAINTAINED A BELIEF THAT THE AGRICULTURAL LAND SOLD BY THE ASSESSEE WAS A CAPITAL ASSET WITHIN THE MEANING OF S. 2(14). IN FACT, THE AO DID NOT EVEN HAVE SUCH A BELIEF. AND, AS THE EXPRESSION REQUIRES MUCH DEEPER SCRUTINY INDI CATES, THE AO WAS EMBARKING ON MERE EXPLORATION WITHOUT ANY BELIEF, M UCH LESS A BELIEF BASED ON REASON AND MATERIALS. CONSEQUENTLY, THERE IS NO ERROR IN THE DECISION OF THE TRIBUNAL. NO SUBSTANTIAL QUESTION OF LAW ARISE S FOR CONSIDERATION. THE DECISIONS CITED BY THE LEARNED DEPARTMENTAL REP RESENTATIVE NOTED ABOVE WOULD NOT SUPPORT THE CASE OF THE REVENUE IN ANY MA NNER. THE LEARNED DEPARTMENTAL REPRESENTATIVE HEAVILY RELIED UPON EXP LANATION 2(B) TO SECTION 147 OF THE ACT WHICH IS ALSO CONSIDERED BY THE HON'BLE HIGH COURT OF MADRAS IN THE CASE OF ITO V. K.M.PACHIAPPAN (SUP RA). HOWEVER, IN THE AFORESAID DECISION THE HON'BLE HIGH COURT OF MADRAS CONSIDERING THE PROVISIONS OF SECTION 147 NOTED THAT THE CONDITIONS PRECEDENT FOR PROCEEDINGS UNDER SECTION 147 ARE THAT THE ASSESSIN G OFFICER SHOULD HAVE 13 REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSES SMENT. IT IS NOT NECESSARY THAT THE ASSESSMENT SHOULD HAVE BEEN COMP LETED UNDER SECTION 143(3) OF THE ACT BEFORE IT COULD BE REOPENED. EXPL ANATION 2(B) TO SECTION 147 SPECIFICALLY PROVIDES THE CASES WHERE THE ASSES SING OFFICER NOTICED THAT THE ASSESSEE HAS UNDERSTATED THE INCOME IN THE RETU RN OF INCOME. THE WORD NOTICED USED IN EXPLANATION 2(B) OF SECTION 147 O F THE INCOMETAX ACT IS VITAL AND SIGNIFICANT IN THE SENSE THAT THERE SHOUL D BE SOME BASIS UPON WHICH THE BELIEF CAN BE BUILT BY THE ASSESSING OFFI CER. IT DOES NOT MATTER WHETHER THE BELIEF IS ULTIMATELY PROVED RIGHT OR WR ONG BUT THERE MUST BE SOME MATERIAL UPON WHICH SOME BELIEF CAN BE FOUNDED . IN THE PRESENT CASE, WE HAVE NOTICED AS A FACT THAT THERE WAS NO MATERIA L ON RECORD UPON WHICH THE ASSESSING OFFICER COULD HAVE BASED HIS BELIEF T HAT THE INCOME HAS ESCAPED ASSESSMENT. THE LEARNED DEPARTMENTAL REPRE SENTATIVE MERELY SUBMITTED THAT THE RETURN ITSELF IS AN INFORMATION FOR THE ASSESSING OFFICER TO FORM HIS BELIEF THAT THE INCOME HAS ESCAPED ASSESSM ENT. WE DO NOT AGREE WITH THE SUBMISSION OF THE LEARNED DEPARTMENTAL REP RESENTATIVE BECAUSE IN THE ABSENCE OF ANY MATERIAL OR INFORMATION ON RECOR D, THE ASSESSING OFFICER MERELY HAD REASON TO SUSPECT THAT THE GIFTS IN THE MATTER HAVE NOT BEEN RECEIVED IN THE NORMAL COURSE OF HUMAN CONDUCT. OTH ERWISE THERE WAS NO MATERIAL ON RECORD TO SUPPORT THE BELIEF OF THE ASS ESSING OFFICER. THUS, IT IS A CASE WHERE THERE WAS NO MATERIAL OR INFORMATION O R BASIS AVAILABLE TO THE ASSESSING OFFICER TO FORM HIS BELIEF THAT THE INCOM E CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT ON ACCOUNT OF GIFT. 9. HON'BLE HIGH COURT OF PUNJAB & HARYANA IN THE RE CENT DECISION IN THE CASE OF CIT V. SMT. PARAMJIT KAUR; 311 ITR 38 C ONSIDERING THE FACT THAT THE ASSESSING OFFICER HAD NOT EXAMINED THE INFORMAT ION RECEIVED FROM THE SURVEY, HELD THAT THE ASSESSING OFFICER HAD NOT EXAMINED THE IN FORMATION RECEIVED FROM THE SURVEY CIRCLE BEFORE RECORDING HIS OWN SATISFAC TION OF ESCAPED INCOME AND INITIATING REASSESSMENT PROCEEDINGS. THE ASSESS ING OFFICER HAD THUS ACTED ONLY ON THE BASIS OF SUSPICION AND IT COULD N OT BE SAID THAT IT WAS BASED ON BELIEF THAT THE INCOME CHARGEABLE TO TAX HAD ESC APED INCOME. THE ASSESSING OFFICER HAD TO ACT ON THE BASIS OF REASO NS TO BELIEVE AND NOT ON REASONS TO SUSPECT. THE TRIBUNAL RIGHTLY CONCLUDE D THAT THE ASSESSING OFFICER HAD FAILED TO INCORPORATE THE MATERIAL AND HIS SATISFACTION FOR REOPENING THE ASSESSMENT AND THEREFORE THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT FOR REASSESSMENT PROCEEDINGS WAS NOT VALID. 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRE D TO SEVERAL DECISIONS ABOVE BUT NONE OF THE DECISIONS S UPPORTS HIS CONTENTION BECAUSE THE ASSESSING OFFICER HAS FAILED TO BRING A NY MATERIAL ON RECORD THAT THE GIFTS ARE NOT RECEIVED IN THE NORMAL COURS E OF HUMAN CONDUCT. THE CASE OF THE ASSESSEE IS, THEREFORE, SQUARELY COVERE D IN HIS FAVOUR BY THE ORDER OF ITAT, INDORE BENCH, IN THE CASE OF SMT. SANTOSH AGRAWAL (SUPRA) AS WELL AS THE DECISION OF HON'BLE HIGH COURT OF DELHI IN T HE CASE OF BATRA BHATTA COMPANY (SUPRA). THUS, THERE IS NO NEED TO REAPPRE CIATE THE ISSUE AS ARGUED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. 11. CONSIDERING THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT THERE WAS NO JUSTIFICATION FOR THE ASSESSING OFFICER TO REOPE N THE ASSESSMENT IN THE 14 MATTER. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND QUASH THE REASSESSMENT PROCEEDINGS. 8. IN THE PRESENT CASE, WE HAVE NOTICED AS A MATTER OF FACTS THAT THERE WAS NO MATERIAL ON RECORD UPON WHICH THE AO COULD HAVE BASED HIS BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT. LD. DR ADMITTED THAT EXCEPT RETURN OF INCOME AND PAPERS FILED ALONG WITH THE RETURN OF INCOME, T HERE WAS NO OTHER INFORMATION OR MATERIAL AVAILABLE ON RECORD FOR THE AO TO FORM HIS BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. WE MAY NOTE THAT EAC H AND EVERY GIFT CANNOT BE TREATED AS BOGUS OR HAVE NOT BEEN RECEIVED IN TH E NORMAL COURSE OF HUMAN CONDUCT. THE FACTS OF EACH & EVERY CASE SHALL HAVE TO BE CONSIDERED ON THE BASIS OF THE INFORMATION, MATERIAL AND EVIDENCE AVA ILABLE ON RECORD. WE DONT AGREE WITH THE SUBMISSION OF LD. DR BECAUSE IN THE ABSENCE OF ANY MATERIAL OR INFORMATION ON RECORD, THE AO MERELY HAD REASON TO SUSPECT THAT THE GIFTS IN THE MATTER HAVE NOT BEEN RECEIVED IN THE NORMAL COU RSE OF HUMAN CONDUCT. OTHERWISE, THERE WAS NO MATERIAL ON RECORD TO SUPPO RT THE BELIEF OF THE AO. IT IS A CASE WHERE THERE WAS NO MATERIAL OR INFORMATIO N OR BASIS AVAILABLE TO THE AO TO FORM HIS BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT ON ACCOUNT OF GIFT. 9. WE MAY ALSO MENTION THAT HONBLE DELHI HIGH COUR T IN THE CASE OF JAY BHARAT MARUTI LTD. VS. CIT REPORTED IN 223 CTR 269 CONSIDERED THE SIMILAR ISSUE OF REOPENING OF ASSESSMENT AND NOTED THE FOLL OWING REASONS FOR REOPENING OF THE ASSESSMENT: DURING THE COURSE OF EXAMINATION OF EXCISE AND MODV AT ACCOUNT, IT WAS FOUND THAT IN ASSESSMENT YEAR 1993-94 THERE WAS CLO SING BALANCE OF RS.25 LACS IN MODVAT. THIS AMOUNT WAS CHARGED INTO P & L A/C. BY THIS METHOD, THE ASSESSEE REDUCED IT PROFIT IN THE ASSESSMENT YE AR 1993-94 BY RS.25 LACS. THE BALANCE IN THE MODVAT ACCOUNT AT THE END OF PRE VIOUS YEAR RELEVANT FOR ASSESSMENT YEAR 1993-94 SHOULD HAVE BEEN CARRIED FO RWARD AND SHOWN AS LOANS AND ADVANCES ON THE ASSET SIDE OF THE BALANCE -SHEET. I HAVE REASONS TO BELIEVE THAT THE ABOVE SAID INCOM E CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 1993-94 BY R EASONS OF THE FAILURE ON THE PART OF THE ASSESSEE FOR NOT DISCLOSING FULLY A ND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR ASSESSMENT YEAR 19 93-94. THIS CASE IS REOPENED UNDER S. 147 OF THE IT ACT. ISSUE NOTICE U NDER S. 148. HONBLE HIGH COURT CONSIDERING THE PRINCIPLE OF LA W DECIDED BY HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P. LTD. (SUPRA) HELD: IN THE INSTANT CASE IF THE TEST OF THE REASONABLE P ERSON IS APPLIED, IT IS CLEAR THAT NO REASONABLE PERSON COULD HAVE COME TO A CONC LUSION THAT THERE WAS RELEVANT MATERIAL AVAILABLE WITH THE AO TO HAVE REA SON TO BELIEVE THAT ASSESSEES INCOME CHARGEABLE TO TAX HAD ESCAPED ASS ESSMENT ONLY BY VIRTUE OF THE FACT THAT THE ASSESSEE HAD CHARGED TO ITS P & L A/C THE CREDIT BALANCE AVAILABLE IN ITS MODVAT ACCOUNT. IT IS RUDIMENTARY THAT MODVAT IS NOTHING BUT CREDIT OF DUTY PAID BY A PERSON ON INPUT USED B Y THE ASSESSEE FOR MANUFACTURE OF ITS FINAL PRODUCT. THE NOTICE UNDER S. 148(1) COULD NOT HAVE BEEN BASED ON A GROUND AS TENUOUS AS THE ONE DISCLO SED BY THE REVENUE. IF ONE WERE TO ACCEPT SUCH A GROUND AS THE ONE OBTAINI NG IN THE PRESENT CASE THEN IT WOULD VIRTUALLY AMOUNT TO GIVING POWER TO T HE AO TO REOPEN THE PROCEEDINGS AT HIS OWN WHIM AND FANCY. WHILE THERE IS WIDEST WIDTH AND AMPLITUDE TO THE AO TO INITIATE PROCEEDINGS UNDER S . 147 R.W.S. 148, THERE IS A 15 CAVEAT; WHICH IS AS TO HOW A REASONABLE MAN WOULD V IEW THE ARTICULATED REASONS [AS PRESCRIBED UNDER SUB-S. (2) OF S. 148] WHICH FORMED THE BASIS OF A NOTICE UNDER S. 148(1). THIS BY ITSELF WOULD SUFF ICE IN DECLARING THE PROCEEDINGS BAD IN LAW.-ASSTT. CIT VS. RAJESH JHAVE RI STOCK BROKERS (P) LTD. (2007) 210 CTR (SC) 30 : (2007) 291 ITR 500 (SC) RE LIED ON. THE ABOVE DECISIONS OF THE HONBLE DELHI HIGH COUR T CLEARLY SUPPORT THE FINDINGS GIVEN IN THE CASE OF SHRI NITIN AGRAWA L (SUPRA). 10. LD. DR ALSO SUBMITTED THAT IN AY 2001-02, THERE IS ONE MORE REASON FOR REOPENING OF ASSESSMENT I.E. INTEREST PAID ON L OANS IS NOT ALLOWABLE EXPENDITURE AS PER PROVISIONS OF SEC. 14A OF THE IT ACT AND THUS, AO HAD REASON TO BELIEVE THAT AN AMOUNT OF RS.5,62,864/- C HARGEABLE TO TAX HAS ALSO ESCAPED ASSESSMENT. WE FIND FROM THE IMPUGNED ORDER THAT ON THIS ISSUE, ASSESSEE SUBMITTED BEFORE LD. CIT(A) THAT ASSESSEE CLAIMED PROPORTIONATE INTEREST OF RS.7,01,156/- AGAINST THE INTEREST ON C APITAL AMOUNTING TO RS.6,76,894/- RECEIVED FROM THE FIRM AND PART OF TH E TOTAL INCOME AND RS.5,62,864/- AGAINST THE INTEREST INCOME OF RS.5,2 3,777/- EARNED FROM LOANS GIVEN TO OTHERS WHICH IS AGAIN PART OF TOTAL INCOME . IT WAS, THEREFORE, SUBMITTED THAT THE BIFURCATION OF SAID INTEREST PAI D IS MADE IN PROPORTION TO CAPITAL IN FIRM AND LOAN GIVEN TO OTHERS, THEREFORE , PROVISION U/S 14A IS NOT APPLICABLE. THE INTEREST CLAIMED IS HAVING DIRECT R ELATION WITH INTEREST EARNED. THE CAPITAL ACCOUNT AND BALANCE-SHEET WERE FILED AL ONG WITH THE RETURN OF INCOME CLEARLY DISCLOSED THE LOANS AND CAPITAL INVE STMENT IN THE FIRM, WHICH EARN INTEREST APART FROM THE SHARES OF PROFITS. THE LD. CIT(A) CONSIDERING THE SUBMISSION OF ASSESSEE AND MATERIAL ON RECORD AND C ONSIDERING APPELLATE ORDER OF LD. CIT(A) IN THE CASE OF SHRI NITIN AGRAW AL DIRECTED THE AO TO ALLOW CLAIM OF INTEREST AS CLAIMED IN THE ORIGINAL RETURN SUBJECT TO VERIFICATION OF THE NEXUS AS CLAIMED BY THE ASSESSEE. THE REVENUE DEPAR TMENT DID NOT CHALLENGE THE ABOVE FACTS AND THE DIRECTION OF THE LD. CIT(A) IN THE DEPARTMENTAL APPEAL IN ITA NO.197/IND/2007. HONBLE SUPREME COURT IN TH E CASE OF S.A. BUILDERS REPORTED IN 288 ITR PAGE 1 HELD THAT INTEREST PAID ON BORROWED CAPITAL IS ALLOWABLE DEDUCTION. HONBLE ALLAHABAD HIGH COURT IN THE CASE OF GORAWARA PLASTICS & GENERAL INDUSTRIES, 289 ITR 224 HELD THAT BORROWED FUNDS NOT UTILIZED FOR PURPOSE FOR WHICH IT WAS SAN CTIONED, BUT UTILIZED FOR BUSINESS PURPOSE. INTEREST ALLOWED DEDUCTION. IT W OULD, THEREFORE, CLEARLY PROVE THAT THE AO WITHOUT HAVING ANY INFORMATION OR MATERIAL ON RECORD MERELY HAD REASON TO SUSPECT THAT THE INTEREST PAID ON LOANS IS NOT ALLOWABLE DEDUCTION U/S 14A OF THE IT ACT. IN THIS CASE, IF T HE TEST OF THE REASONABLE PERSON IS APPLIED AS PER DECISION IN THE CASE OF JA Y BHARAT MARUTI LTD. (SUPRA), IT IS CLEAR THAT NO REASONABLE PERSON COUL D HAVE COME TO A CONCLUSION THAT THERE WAS RELEVANT MATERIAL AVAILABLE WITH THE AO TO HAVE REASON TO BELIEVE THAT ASSESSEES INCOME CHARGEABLE TO TAX HA D ESCAPED ASSESSMENT ONLY BY VIRTUE OF FACT THAT THE ASSESSEE HAD CLAIMED DED UCTION OF INTEREST PAID ON THE LOANS TO ITS PROFIT & LOSS ACCOUNT. THE NOTICE U/S 148 COULD NOT HAVE BEEN ISSUED ON SUCH RIDICULOUS REASONS. IF ONE WERE TO A CCEPT SUCH A REASON AS NOTED ABOVE IN THIS CASE THEN IT WOULD VIRTUALLY AM OUNT TO GIVING POWER TO THE AO TO REOPEN THE PROCEEDINGS AT HIS OWN WHIM AND FA NCY. HONBLE DELHI HIGH COURT IN THE CASE OF JAY BHARAT MARUTI LTD. (SUPRA) RELIED UPON DECISION IN THE CASE OF RAJESH JHAVERI STOCK BROKERS P. LTD. (S UPRA) IN FAVOUR OF ASSESSEE AS IS RELIED UPON BY THE LD. DR AGAINST THE PRESENT ASSESSEE. WE MAY ALSO NOTE THAT THE AFORESAID DECISION WAS NOT RELIED UPON IN THE CASE OF NITIN AGRAWAL 16 (SUPRA). HOWEVER, SUBMISSION WAS CONSIDERED THAT RE TURN WAS PROCESSED U/S 143(1), THEREFORE, IT WAS NOT A CASE OF CHANGE OF O PINION. LD. DR HAS REFERRED TO DECISIONS OF HON'BLE SUPREME COURT IN THE CASES OF D.D. MORE, SUMATI DAYAL & P. MOHAN KALA (SUPRA), BUT IN OUR HUMBLE OP INION, THESE DECISIONS HAVE BEEN QUOTED OUT OF CONTEXT BECAUSE THEY HAVE N O BEARING ON THE QUESTION OF REOPENING OF THE ASSESSMENT. IN THE CASE OF NITI N AGRAWAL (SUPRA), THESE DECISIONS WERE RELIED UPON BY LD. DR ON MERITS. HOW EVER, WHEN THE REASSESSMENT PROCEEDINGS WERE QUASHED AND DEPARTMEN TAL APPEALS WERE NOT DECIDED ON MERIT, THEREFORE, THERE WAS NO PURPOSE T O REFER THESE DECISIONS IN THE ORDER. 11. CONSIDERING THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED IN HIS FAVOUR BY T HE ORDER OF ITAT, INDORE BENCH IN THE CASE OF SHRI NITIN AGRAWAL (SUPRA), DE CISIONS OF HONBLE DELHI HIGH COURT IN THE CASE OF BATRA BHATTA CO. & JAY BH ARAT MARUTI LTD. (SUPRA) AS WELL AS DECISION OF HONBLE P & H HIGH COURT IN THE CASE OF SMT. PARAMJEET KAUR (SUPRA). THUS, THERE IS NO NEED TO R EAPPRECIATE THE ISSUE AS IS ARGUED BY LD. DR. IN VIEW OF THE ABOVE, WE ARE OF T HE VIEW THAT THERE WAS NO JUSTIFICATION FOR THE AO TO REOPEN THE ASSESSMENT I N THE MATTER. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BE LOW AND QUASH THE REASSESSMENT PROCEEDINGS IN BOTH THE AYS. AS A RESU LT, BOTH THE COS OF THE ASSESSEE ARE ALLOWED. ITA NO.197/IND/2007 & ITA NO.198/IND/2007 12. IN BOTH THE DEPARTMENTAL APPEALS, REVENUE HAS C HALLENGED DELETION OF ADDITION ON A/C OF NRI GIFT AND UNEXPLAINED LOANS U /S 68 OF THE IT ACT. SINCE THE REASSESSMENT PROCEEDINGS ARE QUASHED, THERE IS NO NEED TO CONSIDER THESE APPEALS ON MERITS IN WHICH LD. CIT(A) DELETED THE A DDITIONS. ONCE REASSESSMENT PROCEEDINGS ARE QUASHED, ALL ADDITIONS MADE THROUGH THE SAME REASSESSMENT ORDER STAND DELETED. IN THIS VIEW OF M ATTER, THE ISSUES WOULD BE OF ACADEMIC INTEREST IN NATURE, THEREFORE, THERE IS NO NEED TO DECIDE DEPARTMENTAL APPEALS ON MERITS. 13. IN VIEW OF THE ABOVE DISCUSSION, COS OF THE ASS ESSEE ARE ALLOWED AND DEPARTMENTAL APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.6.2009. 4. IN THE AFORESAID ORDER, THE HONBLE BENCH HAS AL READY CONSIDERED VARIOUS JUDICIAL PRONOUNCEMENTS AND THE FACTS ARE ALSO IDENTICAL. THE AFORESAID ORDER OF THE BENCH HA S ALSO ATTAINED FINALITY AS NO CONTRARY DECISION WAS BROUG HT TO MY NOTICE BY THE REVENUE EVIDENCING THAT EITHER THE FA CTS ARE CONTRARY OR THE AFORESAID DECISION HAS BEEN REVERSE D BY ANY HONBLE HIGHER FORUM/HONBLE COURT. EVEN THE DECISI ON OF ACIT VS. O.P. CHAWLA (2008) (8 SOT 242) (TM) (DEL), DURGA PRASAD GOEL VS. ITO (2006) (98 ITD 227) (ASR) (SB) FURTHER FORTIFY THE CASE OF THE ASSESSEE. IN THE PRESENT AP PEAL BEFORE ME, THERE IS NO MATERIAL WITH THE DEPARTMENT TO JUS TIFY THE INITIATION OF REASSESSMENT PROCEEDINGS, THEREFORE, I AM OF THE CONSIDERED OPINION THAT THE LD. ASSESSING OFFICER D ID NOT VALIDLY ASSUME JURISDICTION IN INITIATING PROCEEDIN GS U/S 17 147/148 OF THE ACT. THE DECISION OF THE INDORE BENC H IN PRAVIN JINDAL VS. ITO (2009) (12 ITJ 227) FURTHER F ORTIFIES THE CASE OF THE ASSESSEE BECAUSE THERE IS NO EVIDENCE O N RECORD TO PROVE ANY NEXUS BETWEEN THE REASONS AND BELIEF. A DETAILED DELIBERATION HAS BEEN MADE, THAT TOO ON ID ENTICAL FACTS IN THE CASE OF SHRI PUNIT AGRAWAL (SUPRA), TH E FACTS AND JUDICIAL PRONOUNCEMENTS CONTAINED THEREIN MAY BE RE AD AS PART AND PARCEL OF THIS ORDER AND NOT BEING REPEATE D FOR THE SAKE OF BREVITY, THEREFORE, I AM OF THE CONSIDERED OPINION THAT ONLY ON THE BASIS OF REASONS TO SUSPECT, NO RE OPENING IS JUSTIFIED ESPECIALLY WHEN THE CONDITIONS REQUIRED F OR MAKING GIFTS HAS BEEN DULY FULFILLED, CONSEQUENTLY, THIS G ROUND OF THE ASSESSEE IS ALLOWED. 5. ON MERIT, FOR MAKING ADDITION U/S 68 OF THE ACT, ADMITTEDLY, THE ONUS IS ON THE ASSESSEE TO PROVE TH E CAPACITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . IN THE PRESENT APPEAL, IF THE TOTALITY OF FACTS ARE ANALYS ED, THERE IS NO DISPUTE THAT THE DONOR IS A WOMAN OF MEANS(HAVIN G SUBSTANTIAL ASSET/INCOME), THE TRANSACTION IS THROU GH BANKING CHANNEL, DULY REFLECTED IN THE RESPECTIVE RETURNS, GIFT WAS DULY CONFIRMED BY DECLARATION OF GIFT AND OTHER DOC UMENTARY EVIDENCE, CERTIFICATE FROM THE BANK EVIDENCING THAT THE IMPUGNED AMOUNT WAS DULY TRANSFERRED FROM THE NRE A CCOUNT OF THE DONOR, THE CERTIFICATE ISSUED BY THE CHARTER ED ACCOUNTANT OF THE DONOR EVIDENCING THAT THERE IS SU BSTANTIAL ASSET/INCOME OF THE DONOR AS WELL AS THE HUSBAND OF THE DONOR, FURTHER FORTIFIES THE CAPACITY TO DONATE, CO NSEQUENTLY, ALL THESE DOCUMENTARY EVIDENCES CLEARLY PROVES THAT THE DONOR (ALONG WITH HER HUSBAND) ARE HAVING SUBSTANTI AL ASSETS/INCOME, THEREFORE, THE CAPACITY IS ALSO PROV ED. SINCE THE DONOR IS THE MAUSI OF THE DONEE, THEREFORE, IDENTITY/RELATION IS ALSO PROVED. IT IS PERTINENT T O MENTION HERE THAT ALL THESE DOCUMENTS (FILED THROUGH PAPER BOOK) HAVE NOT BEEN CONTROVERTED BY THE REVENUE. SINCE TH E TRANSACTION/GIFT IS THROUGH BANKING CHANNEL, DULY R EFLECTED IN THE RESPECTIVE RETURN, THEREFORE, THE GENUINENESS O F TRANSACTION IS ALSO NOT IN DISPUTE. A HARMONIOUS CONSTRUCTION OF SEC. 106 OF EVIDENCE A CT AND SEC. 68 OF THE I.T. ACT WILL BE THAT THOUGH APART F ROM THE ESTABLISHING THE IDENTITY OF THE CREDITOR, THE ASSE SSEE MUST ESTABLISH THE GENUINENESS OF TRANSACTION AS WELL AS THE CREDITWORTHINESS OF THE CREDITOR. IT IS NOT THE BUS INESS OF THE ASSESSEE TO FIND OUT THE SOURCE OF THE MONEY OF ITS CREDITOR. I AM AWARE THAT IF THE EXPLANATION OF THE ASSESSEE IS 18 UNSATISFACTORY, THE AMOUNT CAN BE TREATED AS INCOME OF THE ASSESSEE BUT SINCE THE IDENTITY OF THE CREDITOR, CREDITWORTHINESS, GENUINENESS OF THE TRANSACTION AN D ALSO THE RELATION WITH THE DONEE HAS BEEN DULY PROVED, THERE FORE, NO ADDITION CAN BE MADE U/S 68 OF THE ACT. EVEN OTHERW ISE, THE REVENUE HAS NOT PRODUCED ANY EVIDENCE SUBSTANTIATIN G THAT OWN MONEY OF THE DONEE HAS BEEN ROUTED THROUGH THE ACCOUNT OF THE DONOR, THEREFORE, ON MERIT ALSO, THE ASSESSEE IS HAVING A STRONG CASE. I AM AWARE THAT TRANSACTIO N BY CHEQUE IS ALWAYS MAY NOT BE SACROSANCT BUT THE TOTA LITY OF FACTS CANNOT BE IGNORED ESPECIALLY WHEN ALL THE THR EE INGREDIENTS OF SEC. 68 HAVE BEEN PROVED BY THE ASSE SSEE, THEREFORE, THE DECISIONS IN CIT VS. PADAM SINGH CHO UHAN (315 ITR 433) (RAJ), CIT VS. RAM DEV KUMAR CHITLANGIYA ( 315 ITR 435) (RAJ), ACIT VS. UJAGAR SINGH (121 TTJ 228)(DEL ), CIT VS. R.S. SIBBAL (269 ITR 429) (DEL), CIT VS. BATRA BHAT TA COMPANY (2008) (220 CTR 531) (DEL), (2009) (223 CTR 269) (D EL), FURTHER FORTIFY THE CASE OF THE ASSESSEE. IN THE CA SE OF SHRI PUNIT AGRAWAL (SUPRA), VARIOUS CASE-LAWS HAVE ALREA DY BEEN DISCUSSED, THEREFORE, THE SAME ARE NOT BEING REPEAT ED FOR THE SAKE OF BREVITY AND MAY BE READ AS PART AND PARCEL OF THIS ORDER. IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNC EMENTS, I AM OF THE CONSIDERED OPINION THAT NO ADDITION U/S 6 8 OF THE ACT IS JUSTIFIABLY MADE OUT, THEREFORE, THE IMPUGNE D ADDITION IS DELETED. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 5. IN THE AFORESAID APPEAL A PARTICULAR DECISION HA S BEEN ARRIVED AT BY THE BENCH THAT TOO ON IDENTICAL FACTS IN THE CASE O F THE ASSESSEE ITSELF FOR THE ASSESSMENT YEAR 2001-002. NO CONTRARY FACTS/DE CISION WERE BROUGHT TO OUR NOTICE BY THE REVENUE. AN ELABORATE DISCUSSION HAS BEEN MADE BY THE BENCH IN THE AFORESAID ORDER. THEREFORE , IT WILL BE A FUTILE EXERCISE TO REPEAT THE SAME INCLUDING VARIOUS JUDIC IAL PRONOUNCEMENTS CONTAINED IN THE AFORESAID ORDER. IN THE ABSENCE O F ANY CONTRARY DECISION, RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, THIS APPEAL OF THE ASSESSEE IS ALLOWED. 19 ORDER PRONOUNCED IN OPEN COURT IN THE PRESENCE OF LEARNED REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF THE HEARING ON 21 ST FEBRUARY, 2011. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21 ST FEBRUARY, 2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE DN/-