INCOME TAX OFFICER, WARD 2(5), KATRA V. SH. CHAIN SINGH, KATRA

ITA 635/ASR/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8386 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 05-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMAR PAL ME ENA LD
• Assessee Lawyers: JOGINDER SINGH LD
• Keywords: Reopening of assessment; Depreciation; Competent authority; Reason to believe
• Section: 147; 148; 6; 10; 2; 11; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUN AL AMRITSAR BENCH, AMRITSAR BEFORE SH. B.R. BASKARAN, ACCOUNTANT MEMBER AN D SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.635/ASR/2017 ASSESSMENT YEAR:2010-11 INCOME TAX OFFICER, WARD-2(5), KATRA VS. SH. CHAIN SINGH WARD NO.3, NANGAL ROAD KATRA [PAN:AILPS 9489E] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. AMAR P AL MEENA (LD. DR) RESPONDENT BY: SH. JOGINDER SINGH (LD. CA) DATE OF HEARING: 28.08.2019 DATE OF PRONOUNCEMENT: 09.10.2019 ORDER PER N.K. CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE REVENUE DEPARTMENT AGAINST THE ORDER DATED 28/06/2017 IMPUG NED HEREIN PASSED BY THE LD. CIT(A), J&K, JAMMU U/S. 250(6) OF IN COME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT). 2. THE BRIEF FACTS OF THE CASE ARE THAT IN THE INSTANT CA SE THE ASSESSING OFFICER INITIATED THE PROCEEDINGS U/S 147 OF THE ACT AND ISSUED A NOTICE U/S 148 OF THE ACT AND ULTIMATELY MADE CE RTAIN ADDITIONS AND COMPUTED TOTAL GROSS INCOME OF THE ASSESSEE AT RS.1,07,65,672/- THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER ON VARIOUS GROUNDS INCLUDING THE LEGAL ONE QUA REOPENING OF THE CASE AND ITA N0.635/ASR/ 2017 (A. Y: 2010-11) ITO VS. SH. CHAIN SI NGH, KATRA 2 THE LD. CIT(A) QUASHED THE PROCEEDINGS U/S 147/148 OF THE ACT BY HOLDING AS UNDER: FINDINGS: - I HAVE CONSIDERED THE FACTS OF THE CASE AS MENTIO NED IN THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY TH E APPELLANT STATED AS ABOVE. IT IS FOUND THAT THERE IS NO DISPU TE ON THIS FACT THAT THE ASSESSMENT IN THIS CASE WAS REOPENED U/S 147 OF THE INCOME TAX ACT ON THE BASIS OF THE INVESTIGATION REPORT RE CEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT. THIS HAS ALRE ADY BEEN ADMITTED BY THE AO IN HIS REPLY TO THE OBJECTIONS R AISED BY THE ASSESSEE IN THE BEGINNING OF THE ASSESSMENT PROCEED INGS. I HAVE ALSO EXAMINED THE REASONS RECORDED BY THE AO FOR THE REOPENING OF THE ASSESSMENT U/S 147 OF THE ACT THE COPY OF WHICH WAS SUPPLIED TO THE ASSESSEE BY THE AO ON 21.7.2016 AND ENCLOSED IN THE 'PAPER BOOK' ON PAGE-17 AND PAGE -19. IT IS ALSO FOUND FROM THE ASSESSMENT ORDER THAT THE AO, AFTER RECORDING T HE REASONS ON THE BASIS OF THE INVESTIGATION REPORT, HAD SOUGHT APPRO VAL OF THE PR. COMMISSIONER OF INCOME TAX, JAMMU BEFORE INITIATING THE REOPENING PROCEEDINGS U/S 147 OF THE ACT. IT MEANS THAT THE A O HAS NOT ACTED ON HIS OWN AND HAS REOPENED THE ASSESSMENT SIMPLY O N THE BASIS OF THE INVESTIGATION REPORT RECEIVED FROM THE INVESTIG ATION WING OF THE DEPARTMENT AND THE DIRECTION OBTAINED FROM PR. COMM ISSIONER OF INCOME TAX, JAMMU. ON THE BASIS OF THESE FACTS, IT CANNOT BE SAID THAT THE 'REASON TO BELIEVE' AS REQUIRED UNDER SECT ION 147 OF THE ACT WAS FORMED BY THE AO ON HIS OWN. IN THE PRESENT CAS E IT IS FOUND THAT THE AO HAS ACTED LIKE A POST OFFICE; RECEIVING THE INVESTIGATION REPORT PREPARED BY THE INVESTIGATION WING, FORWARDI NG IT TO THE PR. CIT FOR DIRECTION AND THEN ISSUED NOTICE U/S 148 OF THE ACT. THIS IS AGAINST THE REQUIREMENT OF LAW. SECTION 147 OF THE ACT REQUIRES THAT THERE HAS TO BE 'REASON TO BELIEVE' BEFORE INVOKING THIS PROVISION BUT IT IS FOUND THAT THE AO HAS NOT APPLIED HIS MIND BE FORE RECORDING THE 'REASON TO BELIEVE'. IF WE GO INTO THE JURISPRUDENC E OF THE INCOME TAX LAW, WE FIND THAT THIS PROVISION HAS BEEN ENSHRINED IN THE ACT TO ENSURE THAT THE ASSESSMENT SHOULD NOT BE REOPENED I N A CASUAL, ROUTINE AND MECHANICAL MANNER. THE REPORT OF THE IN VESTIGATION WING CAN BE A BEGINNING POINT BUT NOT THE END. WHEN THE AO RECORDS THE REASON IT IS EXPECTED FROM HIM THAT HE HAS APPLIED HIS MIND BEFORE INITIATING THE REOPENING PROCEEDINGS AND HE HAS NOT ACTED ON THE BASIS OF A REPORT WHICH HAS BEEN PREPARED BY A THIR D PARTY MAY BE AFTER THOROUGH INQUIRIES. THUS, IN VIEW OF THE FACT S SATED ABOVE IT IS ITA N0.635/ASR/ 2017 (A. Y: 2010-11) ITO VS. SH. CHAIN SI NGH, KATRA 3 CLEAR THAT IN THE PRESENT CASE THE AO HAS NOT APPLI ED HIS MIND AND SIMPLY ACTED IN A ROUTINE AND MECHANICAL MANNER. THIS IS FURTHER CORROBORATED BY THE FACT THAT THE A SSESSMENT WAS REOPENED BY THE AO U/S 147 OF THE ACT ON THE BA SIS OF THE REPORT PREPARED BY THE INVESTIGATION WING THAT THE ASSESSE E HAS SUPPRESSED THE ROOM RENT INCOME FOR THE YEAR AS THE INCOME REPORTED BY HIM FROM M/S THAKUR GUEST HOUSE WAS FOR 14 ROOMS ONLY WHEREAS SPOT ENQUIRIES CONDUCTED BY THEM CONFIRMED THAT M/S THAKUR GUEST HOUSE WAS HAVING 25 ROOMS. WHEN THE NO TICE U/S 148 OF THE ACT WAS SENT TO THE ASSESSEE, HE RAISED OBJE CTIONS AND REQUESTED THE AO TO DROP THE REOPENING PROCEEDINGS VIDE HIS LETTER DATED 27.7.2016 ENCLOSED WITH THE 'PAPER BOOK' ON P AGE-18 ON THE GROUND THAT THE ASSESSEE OWNED TWO GUEST HOUSES, NA MELY M/S THAKUR GUEST HOUSE AND M/S NEW THAKUR GUEST HOUSE. M/S THAKUR GUEST HOUSE HAS 25 ROOMS AND M/S NEW THAKUR GUEST HOUSE HAS 14 ROOMS AND THE ASSESSEE HAS SHOWN RECEI PTS AS PER THE ACTUAL BOOKING IN BOTH THE GUEST HOUSES AS PER REGULAR BOOKS OF ACCOUNT. THIS FACT WAS NOT DISPUTED BY THE AO ANYWH ERE IN THE ASSESSMENT ORDER. IT IS ALSO NOT FOUND IN THE ASSES SMENT ORDER THAT THE AO HAD CONDUCTED INDEPENDENT ENQUIRIES TO ASCER TAIN THIS FACT BEFORE ISSUING OF NOTICE U/S 148 OF THE ACT. THOUGH , THE AO DEPUTED HIS INSPECTOR TO CONDUCT SPOT ENQUIRIES DURING THE ASSESSMENT PROCEEDINGS TO ASCERTAIN THE ACTUAL TURNOVER OF THE ASSESSEE, THE SAME COULD HAVE BEEN CONDUCTED BEFORE THE REOPENING PROCEEDINGS TO REBUT ASSESSEE'S CLAIM. THIS SHOWS THAT THE AO D ID NOT ACT ON HIS OWN AND HAS SIMPLY INITIATED THE REOPENING PROCEEDI NGS ON THE BASIS OF WHAT WAS SENT TO HIM IN THE FORM OF INVESTIGATIO N REPORT. THIS IS AGAINST THE PROVISIONS OF LAW AS PROVIDED UNDER SEC TION 147 OF THE ACT WHERE THE POWER TO FORM BELIEF HAS BEEN GIVEN E XCLUSIVELY TO THE AO AND NOT TO ANYBODY ELSE. THE AO IS A QUASI-JUDIC IAL AUTHORITY AND IT IS EXPECTED THAT HE WILL ACT IN A JUDICIOUS MANN ER. NOW COMING TO THE LEGAL POSITION ON THIS ISSUE, THE APPELLANT HAS PLACED RELIANCE ON A NUMBER OF DECISIONS IN SUP PORT OF HIS CLAIM THAT ANY PROCEEDINGS INITIATED ON THE BASIS OF INVA LID 'REASONS TO BELIEVE' ARE ALSO INVALID. I HAVE CONSIDERED THE JU DICIAL DECISIONS CITED AS ABOVE AND FIND THAT THIS ASPECT HAS BEEN D EALT WITH IN DETAIL IN THE CASE OF PRASHANT S JOSHI (2010) 324 ITR 0154 , WHEREIN THE HON'BLE HIGH COURT OF BOMBAY HAS HELD THAT 'THE FIR ST PROVISO TO S. 147 HAS NO APPLICATION IN THE FACTS OF THIS CASE. T HE BASIC POSTULATE WHICH UNDERLINES S. 147 IS THE FORMATION OF THE BEL IEF BY THE AO THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ITA N0.635/ASR/ 2017 (A. Y: 2010-11) ITO VS. SH. CHAIN SI NGH, KATRA 4 ASSESSMENT YEAR. THE AO MUST HAVE REASON TO BELIEVE THAT SUCH IS THE CASE BEFORE HE PROCEEDS TO ISSUE A NOTICE UNDER S. 147. THE REASONS WHICH ARE RECORDED BY THE AO FOR REOPENING AN ASSESSMENT ARE THE ONLY REASONS WHICH CAN BE CONSIDERED WHEN T HE FORMATION OF THE BELIEF IS IMPUGNED. THE RECORDING OF REASONS DI STINGUISHES AN OBJECTIVE FROM A SUBJECTIVE EXERCISE OF POWER. THE REQUIREMENT OF RECORDING REASONS IS A CHECK AGAINST ARBITRARY EXER CISE OF POWER. FOR IT IS ON THE BASIS OF THE REASONS RECORDED AND ON T HOSE REASONS ALONE THAT THE VALIDITY OF THE ORDER REOPENING THE ASSESS MENT IS TO BE DECIDED. THE REASONS RECORDED WHILE REOPENING THE A SSESSMENT CANNOT BE ALLOWED TO GROW WITH AGE AND INGENUITY, B Y DEVISING NEW GROUNDS IN REPLIES AND AFFIDAVITS NOT ENVISAGED WHE N THE REASONS FOR REOPENING AN ASSESSMENT WERE RECORDED. THE PRINCIPL E OF LAW, THEREFORE, IS WELL-SETTLED THAT THE QUESTION AS TO WHETHER THERE WAS REASON TO BELIEVE, WITHIN THE MEANING OF S.147 THAT INCOME HAS ESCAPED ASSESSMENT, MUST BE DETERMINED WITH REFEREN CE TO THE REASONS RECORDED BY THE AO. THE REASONS WHICH ARE R ECORDED CANNOT BE SUPPLEMENTED BY AFFIDAVITS. THE IMPOSITION OF TH AT REQUIREMENT ENSURES AGAINST AN ARBITRARY EXERCISE OF POWERS UND ER S. 148. IN THE CASE OF ITO VS LAKHMANI MEWAL DAS (1976) 103 ITR 0437, HON'BLE SUPREME COURT HAS HELD THAT 'THE EXPR ESSION 'REASON TO BELIEVE' DOES NOT MEAN A PURELY SUBJECTIVE SATIS FACTION ON THE PART OF THE ITO. THE REASON MUST BE HELD IN GOOD FAITH. IT CANNOT BE MERELY PRETENCE. IT IS OPEN TO THE COURT TO EXAMINE WHETHE R THE REASONS FOR THE FORMATION OF THE BELIEF HAVE A RATIONAL CONNECT ION WITH OR A RELEVANT BEARING ON THE FORMATION OF THE BELIEF AND ARE NOT EXTRANEOUS OR IRRELEVANT FOR THE PURPOSE OF THE SEC TION. TO THIS LIMITED EXTENT, THE ACTION OF THE ITO IN STARTING PROCEEDIN GS IN RESPECT OF INCOME ESCAPING ASSESSMENT IS OPEN TO CHALLENGE IN A COURT OF LAW. IN THE CASE OF GKN DRIVESHAFT'S (INDIA) LTD (2003) 259 ITR 0019 THE HON'BLE SUPREME COURT HAS HELD THAT 'WHEN A NOTICE UNDER S. 148 IS ISSUED THE PROPER COURSE OF ACTION FOR THE NOTICE IS TO FILE RETURN AND IF HE SO DESIRES, TO SEEK REASONS FOR ISSUING NOTICES. THE AO IS BOUND TO FURNISH REA SONS WITHIN A REASONABLE TIME. ON RECEIPT OF REASONS, THE NOTIC EE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE A ND THE AO IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. IN THE INSTANT CASE, AS THE REASONS HAVE BEEN DISCLOSE D IN THESE PROCEEDINGS, THE AO HAS TO DISPOSE OF THE OBJECTION S, IF FILED, BY PASSING A SPEAKING ORDER BEFORE PROCEEDING WITH THE ASSESSMENT.' ITA N0.635/ASR/ 2017 (A. Y: 2010-11) ITO VS. SH. CHAIN SI NGH, KATRA 5 AFTER GOING THROUGH THE ABOVE DECISIONS, IT IS EVID ENT THAT ALL THESE DECISIONS SUPPORT THE APPELLANT'S POSITION TH AT THE ASSESSMENT IN THIS CASE COULD HAVE BEEN REOPENED ONLY ON THE B ASIS OF REASONS RECORDED BY THE AO ON HIS OWN AND NOT ON THE BASIS OF THE REPORT RECEIVED FROM THE INVESTIGATION WING AS HAS BEEN DO NE IN THE PRESENT CASE. SECONDLY, THE PURPOSE OF ISSUING NOTICE U/S 148 OF THE ACT IS THAT IN CASE SOME OBJECTIONS ARE RAISED AND FOUND T O BE CORRECT THE PROCEEDINGS U/S 147 MAY BE DROPPED BY THE AO. HOWEV ER, IN THIS CASE THE AO HAS NOT DISPOSED OF THE OBJECTIONS RAIS ED BY THE APPELLANT BY PASSING SPEAKING ORDER AND CONTINUED W ITH THE ASSESSMENT PROCEEDINGS. THIS IS AGAINST THE SPIRIT OF LAW. THUS, IN VIEW OF THE FACTS STATED ABOVE, IT IS FOUN D THAT THE ASSESSMENT WAS REOPENED IN THIS CASE IN A ROUTINE A ND MECHANICAL MANNER AND WITHOUT APPLICATION OF MIND ON THE PART OF THE AO. THE AO DID NOT CONDUCT INDEPENDENT INQUIRIES TO FORM HI S OWN BELIEF THAT INCOME HAD ESCAPED ASSESSMENT IN THE PRESENT CASE. ACCORDINGLY, IT IS HELD THAT THE REOPENING OF ASSESSMENT MADE IN TH IS CASE U/S 147 OF THE ACT IS NOT AS PER THE PROVISIONS OF THE ACT AND VOID AB INITIO. THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT IS, THEREFORE, QUASHED. SINCE, THE PROCEEDINGS UNDER SECTION 147 AND 148 OF THE ACT WERE HELD TO BE INVALID IN THE PRESENT CASE, THERE IS NO NEED TO GO INTO THE MERIT OF THE CASE. IN EFFECT, THE APPEAL IS ALLOWED. 3. BEING AGGRIEVED AGAINST THE IMPUGNED ORDER, THE REV ENUE DEPARTMENT PREFERRED THE INSTANT APPEAL. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. THE ISSUE INVOLVED IN THE INSTANT CASE RELATES TO THE REASONS RECORDED FOR THE REOPENING OF THE ASSESSMENT W HICH FOR THE SAKE OF BREVITY AND READY REFERENCE ARE REPRODUCED HEREIN BELOW. 'IT IS INTIMATED THAT INVESTIGATION WING OF THE DEPARTM ENT CONDUCTED ENQUIRIES IN YOUR CASE AND ON THE BASIS O F INVESTIGATION/DETAIL PROVIDED BY YOU TO THEM DURING THE COURSE OF ITA N0.635/ASR/ 2017 (A. Y: 2010-11) ITO VS. SH. CHAIN SI NGH, KATRA 6 ENQUIRY PROCEEDINGS AND ALSO FROM FILED ENQUIRIES C ONDUCTED BY THEM, CONCLUDED THAT YOU HAVE SUPPRESSED THE ROOM R ENT INCOME FOR THE YEAR. THE INCOME REPORTED BY YOU FROM M/S T HAKUR GUEST HOUSE WAS FOR 14 ROOMS ONLY WHEREAS SPOT ENQUIRIES CONDUCTED BY THEM CONFIRMED THAT M/S THAKUR GUEST HOUSE WAS HAVI NG 25 ROOMS. IN VIEW OF THIS PROVISION OF SECTION 147 WER E INVOKED IN YOUR CASE AFTER SEEKING APPROVAL FROM THE COMPETENT AUTH ORITY.' 4.1 THE LD. CIT(A) CATEGORICALLY HELD THAT THERE IS NO DISPUTE THAT THE ASSESSMENT IN THIS CASE WAS REOPENED U/S 147 OF THE ACT ON THE BASIS OF THE INVESTIGATION REPORT RECEIVED FROM THE INVESTIG ATION WING OF THE DEPARTMENT AND AFTER RECORDING THE REASONS ON THE B ASIS OF THE INVESTIGATION REPORT THE ASSESSING OFFICER HAD SOUG HT APPROVAL OF THE PR. COMMISSIONER OF INCOME TAX, JAMMU BEFORE INITIATING THE REOPENING PROCEEDINGS U/S 147 OF THE ACT. IT MEANS THAT THE A O HAS NOT ACTED ON HIS OWN AND HAS REOPENED THE ASSESSMENT SIMPLY ON THE B ASIS OF THE INVESTIGATION REPORT RECEIVED FROM THE INVESTIGATIO N WING OF THE DEPARTMENT AND THE DIRECTION OBTAINED FROM THE PR. CIT, JAMMU . THE LD. CIT(A) FURTHER OBSERVED THAT ON THE BASIS OF THESE FACTS, IT CANNOT BE SAID THAT THE REASONS TO BELIEVE AS REQUIRED U/S 147 OF THE ACT WAS FORMED BY THE AO ON HIS OWN . IN THE PRESENT CASE, THE ASSESSING OFFICER HAS ACTED LIKE A POST OFFICE RECEIVING THE INVESTI GATION REPORT PREPARED BY THE INVESTIGATION WING, FORWARDING IT TO THE PR. CI T FOR DIRECTION AND THEN ISSUED THE NOTICE U/S 148 OF THE ACT. THIS IS AGAIN ST THE REQUIREMENTS OF LAW. SEC. 147 OF THE ACT REQUIRES THAT THERE HAS TO BE REASONS TO BELIEVE BEFORE INVOKING THIS PROVISION BUT IT IS FOUND THAT THE AO HAS NOT APPLIED HIS MIND BEFORE RECORDING THE REASONS TO BELIEVE . FINALLY THE LD. CIT(A) CONCLUDED THAT THE ASSESSMENT IN THIS CASE COULD HAVE BEEN REOPENE D ONLY ON THE BASIS OF REASONS RECORDED BY THE AO ON HIS OWN AND NOT ON THE BASIS OF THE REPORT RECEIVED FROM THE INVESTIGA TION WING AS HAS BEEN DONE IN THE PRESENT CASE . SECONDLY, THE PURPOSE OF ISSUING NOTICE U/S 148 OF THE ACT IS THAT IN CASE SOME OBJECTIONS ARE RAIS ED AND FOUND TO BE CORRECT, THE PROCEEDINGS U/S 147 MAY BE DROPPED BY THE AO. HOWEVER, IN ITA N0.635/ASR/ 2017 (A. Y: 2010-11) ITO VS. SH. CHAIN SI NGH, KATRA 7 THIS CASE THE AO HAS NOT DISPOSED OF THE OBJECTIONS RAISED BY THE APPELLANT BY PASSING SPEAKING ORDER AND CONTINUED W ITH THE ASSESSMENT PROCEEDINGS. THIS IS AGAINST THE SPIRIT OF LAW. THE LD. CIT(A) FURTHER OBSERVED THAT THUS, IN VIEW OF THE FACTS STATED ABOVE, IT IS FOU ND THAT THE ASSESSMENT WAS REOPENED IN HIS CASE IN A ROUTINE A ND MECHANICAL MANNER AND WITHOUT APPLICATION OF MIND ON THE PART OF THE AO. THE AO DID NOT CONDUCT INDEPENDENT INQUIRIES TO FORM HIS OWN B ELIEF THAT INCOME HAD ESCAPED ASSESSMENT IN THE PRESENT CASE. ACCORDINGLY , IT IS HELD THAT THE REOPENING OF THE ASSESSMENT MADE IN THIS CASE U/S 1 47 OF THE ACT IS NOT AS PER THE PROVISIONS OF THE ACT AND VOID AB INITIO . THE NOTICE ISSUED U/S 147 OF THE ACT IS THEREFORE QUASHED . THE LD. CIT(A) FURTHER HELD THAT THE PROCEEDINGS U/S 147 & 148 OF THE ACT WERE HELD TO B E INVALID IN THE PRESENT CASE AND THERE IS NO NEED TO GO INTO THE ME RIT OF THE CASE . 4.2 LET US TO PERUSE THE RELEVANT PROVISIONS OF LAW: '147. IF THE AO HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY A. Y., HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 T O 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSME NT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE C OURSE OF PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE A.Y. CONCERNED (HEREAFTER IN T HIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS T HE RELEVANT ASSESSMENT YEAR). PROVIDED THAT WHERE AN ASSESSMENT UNDER SUBSECTION (3) OF SECTION 143 OR THIS SECTION HAS B EEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SH ALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR Y EARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON TH E PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB SECTION (1) O F SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY A LL ITA N0.635/ASR/ 2017 (A. Y: 2010-11) ITO VS. SH. CHAIN SI NGH, KATRA 8 MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THA T ASSESSMENT YEAR. EXPLANATION 1.- PRODUCTION BEFORE THE ASSESSING OF FICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE AO WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. EXPLANATION 2- FOR THE PURPOSES OF THIS SECTION, T HE FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT NAMELY:- (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME TAX. (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN. (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT- (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSED; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF UNDER THIS ACT; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE O R ANY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED.' THE LAW ON THE PROVISIONS OF SECTION 147 IS VERY CLEAR. SECTION 147 AUTHORIZES THE ASSESSING OFFICER TO ASSESS OR RE- ASSESS THE INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BEL IEVE THAT THE INCOME FOR ANY ASSESSMENT ORDER HAS ESCAPED ITA N0.635/ASR/ 2017 (A. Y: 2010-11) ITO VS. SH. CHAIN SI NGH, KATRA 9 ASSESSMENT AND HAS DULY RECORDED THE REASONS, HOWEVER AS IT WELL SETTLED THAT THE REASONS TO BELIEVE MUST BE BONA F IDE AND MUST BE BASED UPON RELEVANT MATERIAL ON WHICH A REASON ABLE PERSON COULD HAVE FORM THE REQUISITE BELIEF. 4.3 IN THE PRESENT CASE, WE FIND THAT THE FIRST FEW LINES O F THE SO-CALLED REASONS RECORDED BY THE ASSESSING OFFICER SPEAKS THA T ' IT IS INTIMATED THAT INVESTIGATION WING OF THE DEPA RTMENT CONDUCTED ENQUIRIES IN YOUR CASE AND ON THE BASIS OF INVESTIG ATION/DETAIL PROVIDED BY YOU TO THEM DURING THE COURSE OF ENQUIRY PROCEEDING S AND ALSO FROM FILED ENQUIRIES CONDUCTED BY THEM, CONCLUDED THAT YOU HAV E SUPPRESSED THE ROOM RENT INCOME FOR THE YEAR. THE INCOME REPORTED BY YOU FROM M/S THAKUR GUEST HOUSE WAS FOR 14 ROOMS ONLY WHEREAS SP OT ENQUIRIES CONDUCTED BY THEM CONFIRMED THAT M/S THAKUR GUEST H OUSE WAS HAVING 25 ROOMS. LAST PART SAYS THAT IN VIEW OF THIS PROVISION OF SECTION 147 WERE INVOKED IN YOUR CASE AFTER SEEKING APPROVAL FROM TH E COMPETENT AUTHORITY.' 4.4 THE FIRST PART IS ONLY INFORMATION AND THE LAST PART OF THE SO-CALLED REASONS IS MERE INVOKING OF PROVISIONS OF SECTION 147 OF THE ACT ON THE DIRECTIONS OF THE SUPERIOR AUTHORITY. F ROM THE SO- CALLED REASONS, IT IS NOT AT ALL DISCERNIBLE AS TO WHETHE R THE ASSESSING OFFICER HAD MADE ANY EXERCISE AND APPLIED HIS INDEPENDENT MIND TO THE INFORMATION AND INDEPENDENT LY ARRIVED AT A BELIEF THAT ON THE BASIS OF THE MATERIAL WHICH HE HAD BEFORE HIM, INCOME HAD ESCAPED ASSESSMENT. THE ASSESSING OFFICER SIMPLY RELIED UPON THE INVESTIGATION REPORT OF THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT, WHICH WAS SIMPLY FORWARDED TO THE ITO, WHO WHILE RECORDING REASONS FOR SELECTION ITA N0.635/ASR/ 2017 (A. Y: 2010-11) ITO VS. SH. CHAIN SI NGH, KATRA 10 OF THE CASE, NEITHER VERIFIED THE FACTS QUA INFORMATIO N NOR MADE ANY EFFORT TO FIND OUT THE VERACITY AND AUTHENTICITY OF INVESTIGATION REPORT AND ANY CORROBORATIVE EVIDENCE/M ATERIAL THERETO, BUT ONLY ACTED ON THE INVESTIGATION REPORT WHICH ACCORDING TO OUR MIND DOES NOT SOUND GOOD REASON FOR REO PENING OF THE CASE. IT IS CLEAR THAT THE ASSESSING OFFICER FAILED T O MAKE ANY EXERCISE FOR REOPENING OF THE CASE INDEPENDENTLY AN D WITH CORROBORATIVE MATERIAL. EVEN THE ASSESSING OFFICER HAS NOT MADE ANY EXERCISE TO GATHER ANY MATERIAL EVIDENCE ON RECORD. THE INITIATION OF REASSESSMENT ITSELF IS BASED UPON NO EVIDEN CE AND/OR UN-CORROBORATIVE MATERIAL, THEREFORE IN ANY SE NSE CANNOT SURVIVE, BECAUSE INITIATION OF THE PROCEEDING U/S 147 I TSELF IS A VAGUE AND BASED UPON NO SUBSTANTIVE REASONING AND/OR MA TERIAL AT ALL, HENCE IN OUR CONSIDERED OPINION, THE LD. CIT(A ) WAS ABSOLUTELY JUSTIFIED IN QUASHING THE REOPENING OF THE ASSESSMENT U/S 147 OF THE ACT, WHILE JUDICIOUSLY CONSIDERING AND APP RECIATING THE PECULIAR FACTS OF THE CASE. CONSEQUENTLY THE ORDER UNDER CHALLENGE LIABLE TO BE AFFIRMED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE DEPA RTMENT STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/1 0/2019. SD/- SD/- (B.R.BASKARAN) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JU DICIAL MEMBER DATED:09/10/2019. /PK/ PS. COPY FORWARDED TO: 1. THE APPELLANT ITA N0.635/ASR/ 2017 (A. Y: 2010-11) ITO VS. SH. CHAIN SI NGH, KATRA 11 2. THE RESPONDENT 3. THE CIT 4. THEN CIT(APPEALS) 5. SR DR, I.T.A.T. AMRITSAR 6. GUARD FILE TRUE COPY BY ORDER