Sh. Sukhwinder Singh, Nakodar V. The Income Tax Officer, Nakodar

ITA 644/ASR/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9901 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-09-2018
• Assessment Year: 2006-2007
• Appeal Filed On: 22-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Assessment record; Reason to believe; Reassessment proceedings
• Section: 147; 148; 139; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A. NO. 644/ASR/2016 AS SESSMENT YEAR: 2006-07 SUKHWINDER SINGH, S/O KARNAIL SINGH, MOHALLA GARHINNA, GTB NAGAR, NAKODAR [PAN: ASWPS 6786M] VS. INCOME TAX OFFICER, NAKODAR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. J. S. BHASIN (ADV.) RESPONDENT BY: SH. CHARAN DASS (D.R.) DATE OF HEARING: 27.09.2018 DATE OF PRONOUNCEMENT: 07.12.2018 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE ORD ER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, JALANDHAR ('CIT(A)' FOR SHORT) DATED 05.10.2016, DISMISSING THE ASSESSEES APPEAL CONTESTING HIS ASS ESSMENT U/S. 143(3) R/W S. 147 OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) DA TED 28.03.2014 FOR THE ASSESSMENT YEAR (AY) 2006-07. 2. THE FIRST ISSUE THAT ARISES IN THE INSTANT APPEA L, RAISING SEVERAL GROUNDS, IS THE MAINTAINABILITY OF THE ASSESSMENT, ALLEGED TO BE WI THOUT JURISDICTION, IN VIEW OF THE ABSENCE OF A REASON/S TO BELIEVE ESCAPEMENT OF INCO ME IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 644/ASR/2016 (AY 2006-07) SUKHWINDER SINGH V. ITO 2 3. THE BACKGROUND FACTS IN THIS REGARD ARE THAT THE ASSESSEE WAS, ON THE BASIS OF A REPORT BY THE INVESTIGATION WING OF THE REVENUE, FOUND TO HAVE SOLD SEVEN PROPERTIES DURING THE RELEVANT YEAR AS A GENERAL PO WER OF ATTORNEY HOLDER, I.E., AFTER ACQUIRING THE LAND VIDE GPA DATED 23/12/2004. HE WAS, FURTHER, SOUGHT TO BE QUESTIONED SEVERAL TIMES IN THIS REGARD BY THE SAID WING OF THE DEPARTMENT TO, HOWEVER, NO AVAIL. THE ASSESSEE, ACCORDINGLY, DETAI LING THE SAID TRANSACTIONS, WAS REQUIRED BY THE ASSESSING OFFICER (AO) TO SHOW IF T HE SHORT-TERM CAPITAL GAINS ARISING ON THE SAID SALE TRANSACTIONS, HAD BEEN DEC LARED BY HIM PER HIS RETURN OF INCOME FOR THE RELEVANT YEAR. NO REPLY BEING RECEIV ED, THE AO NOTING THE ASSESSEE TO BE IN JAIL, INFERRED THAT THE ASSESSEE HAD NOTHI NG TO SAY IN THE MATTER AND ISSUED NOTICE U/S. 148(1) QUA THE SAID CAPITAL GAINS. 4. THE SAME STANDS IMPUGNED ON TWO COUNTS, BOTH WIT H RESPECT TO THE REASON/S RECORDED, THE LATTER PART OF WHICH, I.E., AFTER LIS TING THE SALE OF PROPERTY BY THE ASSESSEE ON GPA BASIS, AT PARA 1, READS AS UNDER: 2. AS PER THE REPORT OF THE DDI(INV), THE ASSESSEE IS IN JAIL. HOWEVER, A REGISTERED LETTER WAS SENT TO THE ASSESSEE TO INTIMATE WHETHER HE HAS DEC LARED CAPITAL GAINS ON THE SALE OF THE ABOVE MENTIONED PROPERTIES. NEITHER ANYBODY ATTENDED ON T HE APPOINTED DATE AND TIME NOR FILED ANY REPLY. THIS SHOWS THAT THE ASSESSEE HAS NO EXPLANAT ION. AS THE TIME FOR TAKING ACTION U/S. 148 OF THE I. T. ACT, 1961 IN THIS CASE IS GOING TO EXP IRE ON 31-03-2013, THEREFORE, TO PROTECT THE INTEREST OF REVENUE, THIS CASE REQUIRES TO BE REOPE NED U/S. 148 TO BRING TO TAX THE CAPITAL GAINS. IT IS, THEREFORE, REQUESTED TO KINDLY ACCORD NECESSARY APPROVAL TO ISSUE NOTICE U/S. 148 OF THE I. T. ACT, 1961.' FIRSTLY, THAT THE SALE OF THE IMMOVABLE PROPERTY ON GPA BASIS COULD NOT POSSIBLY GIVE RISE TO ANY CAPITAL GAIN. SECOND, THE ASSESSEE WAS VIDE THE LETTER REFERRED TO BY THE AO (IN HIS REASONS) PROVIDED TIME UP TO 20.03.2 013 TO REPLY THERETO. HOWEVER, THE REASONS RECORDED BY HIM ARE ON 18.03.2013 . HOW COULD HE, BEFORE THE TIME ITA NO. 644/ASR/2016 (AY 2006-07) SUKHWINDER SINGH V. ITO 3 ALLOWED BY HIM TO THE ASSESSEE TO REPLY, COME TO TH E CONCLUSION THAT THE ASSESSEE HAD NOT DECLARED THE IMPUGNED CAPITAL GAINS PER HIS RETURN OF INCOME FOR THE YEAR ? THE AO IN HIS ORDER HAS SOUGHT TO JUSTIFY THE SAME ON THE BASIS THAT THE ASSESSEES RETURN OF INCOME, FILED ON 02.05.2006, DID NOT DISC LOSE THE SAID CAPITAL GAIN. THIS, THOUGH TRUE, IT WAS ASSEVERATED BY THE LD. COUNSEL, SH. BHASIN, IS, HOWEVER, A MISSTATEMENT. THIS IS AS THE AO WAS, AT THE TIME OF THE RECORDING THE REASON/S ON 18.03.2013, UNAWARE THAT THE ASSESSEE HAD INDEED FU RNISHED HIS RETURN OF INCOME FOR THE YEAR, AND TOWARD WHICH SH. BHASIN WOULD TAK E THE BENCH THROUGH PARA 3 OF THE ASSESSMENT ORDER WHEREAT THE AO RECORDS REQUIRI NG THE ASSESSEE TIME AND AGAIN TO FURNISH THE SAID RETURN OF INCOME, BEGINNING WIT H THE NOTICE U/S. 148(1) DATED 21/3/2013. HOW COULD HE, THEN, ARRIVE AT A REASON T O BELIEVE ESCAPEMENT OF THE IMPUGNED CAPITAL GAIN, DE HORS THE INFORMATION QUA THE SAID RETURN, I.E., AS ON 18.03.2013? NOT ONLY THAT, WHERE IS THE QUESTION OR THE NEED FOR ASKING THE ASSESSEE IF HE HAD RETURNED THE CAPITAL GAIN/S IF T HE AO WAS EITHER AWARE OF THE ASSESSEE HAVING FILED THE RETURN OF INCOME OR HAD, RESULTANTLY, VERIFIED THERE-FROM, WITH THE FACT OF THE MATTER BEING THAT THE ASSESSEE HAD NOT RETURNED THE SAME AS THE LAND/S UNDER REFERENCE WERE, AS NOTED BY THE AO HIM SELF, SOLD ON POA BASIS? IT WAS ONLY ON THE ASSESSEE STATING THAT THE RETURN FILED ON 02.05.2006 BE TREATED AS A RETURN IN RESPONSE TO NOTICE U/S. 148(1), FURNISHIN G ALONG WITH A COPY OF THE SAID RETURN (FILED BEFORE THE JURISDICTIONAL AO, I.E., I TO, NAKODAR), THAT THE AO BECAME AWARE OF THE ASSESSEE HAVING FILED THE RETURN U/S. 139 AND, FURTHER, THAT NO CAPITAL GAIN QUA THE STATED TRANSACTION/S, CLAIMED TO BE YIELDING I NCOME TO THE ASSESSEE, HAD NOT BEEN DISCLOSED TO THE DEPARTMENT. A COMPILA TION OF DECISIONS WAS ADDUCED BY SH. BHASIN, STATING OF HIM PLACING SPECIFIC RELI ANCE ON THE DECISIONS IN CIT V. PARAMJIT KAUR [2009] 311 ITR 38 (P&H); HINDUSTAN LEVER LTD. V. RB WADKAR [2004] 268 ITR 332 (BOM); AND PR. CIT V. RMG POLYVINYL (I) LTD . [2017] 396 ITR 5 (DEL) . ITA NO. 644/ASR/2016 (AY 2006-07) SUKHWINDER SINGH V. ITO 4 THE LD. DEPARTMENTAL REPRESENTATIVE (DR) WAS VEHEME NT IN HIS OBJECTIONS. TAKING THE BENCH THROUGH THE PROPOSAL SUBMITTED BY THE AO TO THE JT. CIT, PHAGWARA RANGE, PHAGWARA FOR APPROVAL, DATED 18.03. 2013, COPY OF WHICH STANDS PLACED ON RECORD, THE REASON/S CANNOT BE REGARDED A S LIMITED TO THAT STATED IN THE ANNEXURE TO THE SAID PROPOSAL (REPRODUCED SUPRA), I .E., AT PARA 11 THEREOF, WHICH REQUIRES OF THE AO TO STATE HIS REASON/S FOR BELIEF , BUT WOULD ALSO INCLUDE WHAT THE AO WRITES IN CONTINUATION, I.E., BELOW PARA 11, AS WELL, BEING A PART OF THE RELEVANT PARA (11) OF THE PROPOSAL FORM. THE SAME READS AS U NDER: I HAVE INDEPENDENTLY EXAMINED THE ASSESSMENT AND T HE OTHER RELATED RECORDS OF THE ASSESSEE AND AFTER INDEPENDENT VERIFICATION THESE RECORDS WI TH REFERENCE TO THE ABOVE ISSUE, I HAVE REASON TO BELIEVE THAT THE INCOME TO THE TUNE OF RS .36,26,500 HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1 961. THE SAME CLEARLY SHOWS THAT THE AO HAD PERUSED THE ASSESSMENT RECORD AS WELL, AND WHICH INCLUDED THE SAID RETURN, I.E., BEFORE TH E FINALIZING HIS REASON/S. WHEN THE AO STATES THAT HE HAS, IN ARRIVING AT HIS REASO N/S AS TO ESCAPEMENT OF INCOME, PERUSED THE ASSESSMENT RECORD, WHICH CONTAINS THE A SSESSEES RETURN, HE HAS ABUNDANTLY CLARIFIED THAT THE SAME (THE SAID RETURN ) HAS ALSO BEEN TAKEN INTO ACCOUNT BY THE AO. THE REASONS AS RECORDED BY HIM ARE TO RE AD IN A WHOLESOME AND NOT IN A FRAGMENTED MANNER. IT WAS, UNDER THE CIRCUMSTANCES, IN FACT NOT NECESSARY FOR THE AO TO HAVE ISSUED HIS ENQUIRY LETTER TO THE ASSESSE E, WHO HAD IN FACT NOT COOPERATED IN THE PROCEEDINGS BEFORE THE INVESTIGATION AUTHORI TIES AS WELL. HE WOULD THEN READ OUT FROM THE INVESTIGATION REPORT, WHICH CLEARLY ST ATED THAT THE ASSESSEE (A SPO, DRAWING A MONTHLY SALARY OF RS.2600/-, HAD NO MEANS TO ENTER INTO THE STATED TRANSACTIONS). TO CONSIDER THE REVENUES CONCERN AS LIMITED ONLY TO ASSESSMENT OF THE CAPITAL GAINS, WOULD AGAIN BE TAKING A MYOPIC V IEW OF THE MATTER. THE APEX COURT IN RAYMOND WOOLEN MILLS LTD. V. ITO [1999] 236 ITR 34 (SC) HAD ABUNDANTLY CLARIFIED IN THE MATTER OF THE SCOPE OF THE REASONS, TAKING ME THROUGH THE FOLLOWING PARA CONTAINING THE GIST OF THE DECIS ION: ITA NO. 644/ASR/2016 (AY 2006-07) SUKHWINDER SINGH V. ITO 5 3. IN THIS CASE, WE DO NOT HAVE TO GIVE A FINAL DE CISION AS TO WHETHER THERE IS SUPPRESSION OF MATERIAL FACTS BY THE ASSESSEE OR NO T. WE HAVE ONLY TO SEE WHETHER THERE WAS PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE. THE SUFFICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT A THING TO BE CONSIDERED AT THIS STAGE. WE ARE OF THE VIEW THAT T HE COURT CANNOT STRIKE DOWN THE REOPENING OF THE CASE IN THE FACTS OF THIS CASE. IT WILL BE OPEN TO THE ASSESSEE TO PROVE THAT THE ASSUMPTION OF FACTS MADE IN THE NOTICE WAS ERRONEOUS. THE ASSESSEE MAY ALSO PROVE THAT NO NEW FACTS CAME TO THE KNOWLEDGE OF TH E INCOME-TAX OFFICER AFTER COMPLETION OF THE ASSESSMENT PROCEEDING. WE ARE NOT EXPRESSING ANY OPINION ON THE MERITS OF THE CASE. THE QUESTIONS OF FACT AND LAW A RE LEFT OPEN TO BE INVESTIGATED AND DECIDED BY THE ASSESSING AUTHORITY. THE APPELLANT W ILL BE ENTITLED TO TAKE ALL THE POINTS BEFORE THE ASSESSING AUTHORITY. THE APPEALS ARE DISMISSED. THERE WILL BE NO ORDER AS TO COSTS. AS SUCH, HE WOULD CONTINUE, ALSO CITING DECISIONS I N ITO V. LAKHMANI MEWAL DAS [1976] 103 ITR 437 (SC) AND GREAT ARTS (P.) LTD. V. ITO [2002] 257 ITR 639 (DEL), NEITHER THE SUFFICIENCY NOR THE ACCURACY OF THE REASON/S RECORDED COULD BE EXAMINED AT THE STAGE OF THE REOPENING. IT WAS OPEN FOR THE ASSESSES TO STATE HIS CLAIM ON MERITS, INCLUDING THE CORRECTNESS OF THE R EASON/S RECORDED, IN THE ASSESSMENT PROCEEDINGS. ON BEING QUESTIONED IF THE ASSESSMENT RECORD, CALLE D FOR BY THE BENCH, CONTAINED THE ASSESSEES RETURN, HE W OULD, HOWEVER, FAIRLY CONCEDE TO IT BEING NOT SO . 5. I HAVE HEARD THE PARTIES, AND PERUSED THE MATERI AL ON RECORD. A LIVE, DIRECT AND RATIONAL NEXUS BETWEEN THE REA SON/S RECORDED AND THE BELIEF AS TO THE ESCAPEMENT OF INCOME, IS A SETTLED PROPOSITION OF LAW ON WHICH THERE IS NO, NOR POSSIBLY COULD BE, ANY DISPUTE. TH ERE IS NO MENTION OF THE ASSESSEES RETURN IN THE REASON/S RECORDED WHICH ARE UNDISPUTEDLY ON 18/3/2103, MUCH LESS OF ITS CONTENTS. HAD THAT BEEN THE CASE, IT SHOULD HAVE FOUND MENTION IN THE REASON/S RECORDED IN-AS-MUCH AS, CLEARLY, THE I MPUGNED INCOME WAS NOT RETURNED BY THE ASSESSEE, GIVING RISE TO THE REASON /S TO BELIEVE AS TO ITS ESCAPEMENT FROM ASSESSMENT. THIS IS PARTICULARLY SO IN THE INS TANT CASE AS THE REOPENING IS INITIATED BEYOND FOUR YEARS FROM THE END OF THE REL EVANT ASSESSMENT YEAR, SO THAT THE ITA NO. 644/ASR/2016 (AY 2006-07) SUKHWINDER SINGH V. ITO 6 ADDITIONAL REQUISITES OF FIRST PROVISO TO S. 147 WOULD HAVE TO BE FULFILLED. HOW, IN THE ABSENCE OF INFORMATION AS TO THE FURNISHING OF THE RETURN FOR THE RELEVANT YEAR BY THE ASSESSEE, COULD IT BE SAID THAT HE HAD FAILED T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT? THERE WAS IN THAT CASE IN FACT NO NEED TO ENQUIRE ABOUT THE RETURNING BY HIM OF CAPITAL GA INS ON THE SAID SALE (OF LAND) FROM THE ASSESSEE, AS DONE BY THE AO. WHETHER THE A SSESSEE TRANSFERRING LAND ON GPA BASIS DOES INDEED AMOUNT TO A TRANSFER U/S. 2(4 7) OF THE ACT, EXIGIBLE TO ANY CAPITAL GAINS TAX, IS A MATTER SUBSEQUENT. THIS COU LD BE EXPLAINED IN ASSESSMENT PROCEEDINGS, GIVING FULL FACTS, EVEN, IF BY TAKING PRELIMINARY OBJECTIONS, REQUIRING THEIR DISPOSAL PRIOR TO PROCEEDING FURTHER IN THE M ATTER, IN TERMS OF GKN DRIVESHAFT (INDIA) LTD. V. ITO [2003] 259 ITR 19 (SC). THE AO, HOWEVER, ALSO STATING OF HAVING PERUSED THE ASSESSMENT RECORD, WHICH OUGHT TO COMPRISE THE ASSESSEES RETURN, ADMI TTEDLY NOT DISCLOSING THE IMPUGNED INCOME, AND OF THE SAME HAVING BEEN TAKEN INTO ACCOUNT IN ARRIVING AT HIS REASON/S TO BELIEVE, THE ASSESSMENT RECORD WAS ALSO PERUSED DURING HEARING TO FIND IT AS NOT CONTAINING THE ASSESSEES RETURN BUT ONLY A COPY THEREOF FILED BY THE ASSESSEE DURING THE REASSESSMENT PROCEEDINGS. WHAT, THEN, IS THE BASIS FOR THE AO TO RECORD OR CONSIDER IMPUGNED INCOME AS HAVING ESC APED ASSESSMENT ? THIS ALSO EXPLAINS HIS QUESTIONING THE ASSESSEE IN THE MATTER . AGAIN, WITHOUT DOUBT, A NON RESPONSE BY THE ASSESSEE, WHO HAD ALSO NOT COOPERAT ED DURING INVESTIGATION, WOULD ENTITLE THE AO TO DRAW AN ADVERSE INFERENCE, I.E., OF THE SAID CAPITAL GAIN AS BEING NOT RETURNED, VALIDATING THE FORMATION OF BELIEF AS TO ESCAPEMENT OF THE RELEVANT INCOME. HOWEVER, SUCH AN INFERENCE COULD ONLY BE DR AWN ON THE NON-RECEIPT OF THE REPLY, FOR WHICH THE AO HIMSELF HAS ALLOWED TIME TO THE ASSESSEE UP TO 20.03.2013 . THERE IS, THEREFORE NO BASIS, PRIOR THERETO, FOR SU CH INFERENCE, EXCEPT A STRONG SUSPICION THAT THE ASSESSEE, EVEN OTHERWISE IN JAIL , SHALL NOT RESPOND OR COULD HAVE NOT FILED THE RETURN OF INCOME AND, IN ANY CASE, WO ULD NOT HAVE RETURNED THE SAID ITA NO. 644/ASR/2016 (AY 2006-07) SUKHWINDER SINGH V. ITO 7 INCOME. ALL THIS FALLS IN THE REALM OF ANTICIPATION , AND IS NOT GROUNDED ON FACTS OR A LEGAL INFERENCE ARISING FROM THE ASSESSEES CONDU CT. A PROPER INFERENCE AS TO THE ASSESSEE HAVING NOT RETURNED THE IMPUGNED INCOME CO ULD ONLY FOLLOW AFTER THE TIME ALLOWED TO HIM TO RESPOND HAD LAPSED. TRUE, IT COUL D BE THAT THE AO HAD, IN THE INTERIM, RECEIVED INFORMATION, AS FROM THE REGISTER ED OWNER OF THE PROPERTIES UNDER REFERENCE, HAVING A BEARING ON THE AOS BELIEF. HOW EVER, THE SAME SHOULD, IN THAT CASE, FIND MENTION IN HIS REASON/S RECORDED, AND CA NNOT BE A MATTER OF PRESUMPTION. IN FACT, THE TIME ALLOWED TO THE SAID OWNER/S TO RE SPOND, ALSO SOUGHT SIMULTANEOUSLY BY THE AO, WAS UP TO 20.03.2013. THERE WAS, THUS, A S ON 18.03.2013, NOTHING ON RECORD TO FORM A BELIEF, I.E., WHICH WOULD TRANSFOR M THE AOS SUSPICION INTO A LEGALLY SUSTAINABLE BELIEF. AT THIS STAGE, IT MAY BE RELEVANT TO VISIT THE RE ASON/S THAT INFORM THE ORDER BY THE AO AND THE LD. CIT(A), BOTH READ OUT DURING HEA RING, REJECTING THE ASSESSEES CLAIM/S, SO AS TO EXAMINE THEM FOR THEIR VALIDITY. THE AO, AS AFORE-NOTED, SEEKS TO JUSTIFY HIS REASON/S ON THE BASIS OF THE ASSESSEES RETURN FILED ON 02.05.2006. NOT ONLY DOES THE SAME, I.E., RETURN FILED ON 02.05.200 6, DOES NOT FIND MENTION IN THE REASON/S RECORDED, THE SAME, AS FOUND DURING HEARIN G, IS NOT A PART OF THE ASSESSMENT RECORD, AND TOWARD WHICH EVEN THE ORDER- SHEET ENTRIES WERE EXAMINED DURING HEARING TO FIND NO MENTION THEREOF THEREIN. CLEARLY, THEREFORE, IT IS IMPROPER FOR THE REVENUE TO DRAW SUPPORT FROM THE ASSESSEES RETURN U/S. 139 IN JUSTIFYING THE FORMATION OF BELIEF BY THE AO. THE LD. CIT(A), HAS CONFIRMED THE REASON/S RECORDED ON THE SAME BASIS, I.E., THAT THE REVENUE HAD DEFINITE AND SPECIFIC INFORMATION WITH IT OF THE ASSESSEE HAVING ACQUIRED PROPERTIES ON GPA BASIS WHICH HE HAD SOLD DURING THE YEAR, AND NOT DISCLOSED THE SAME PER HIS RETURN OF INCOME FOR THE YEAR FURNISHED ON 02/5/2006. THE SAME, AS WELL AS THE REVENUES RELIANCE ON THE DECISION IN RAYMOND WOOLEN MILLS LTD. (SUPRA), WITH THE LD. CIT(A) ALSO ITA NO. 644/ASR/2016 (AY 2006-07) SUKHWINDER SINGH V. ITO 8 HAVING IN FACT REFERRED TO QUITE A FEW DECISION BY THE APEX COURT SETTLING THE LAW IN THE MATTER, IS SOUGHT TO BE ADDRESSED HERE-IN-BELOW . WITHOUT DOUBT, WHAT IS REQUIRED, AS NEATLY SUMMED U P BY THE APEX COURT IN RAYMOND WOOLEN MILLS LTD. (SUPRA), IS A HONEST BELIEF, EVEN IF PRIMA FACIE , AS TO THE ESCAPEMENT OF INCOME ON THE BASIS OF THE MATERI AL OR INFORMATION WITH THE AO. THE REASON/S SHOULD EMANATE DIRECTLY FROM THE SAID MATERIAL OR INFORMATION, IN THE ABSENCE OF WHICH IT IS ONLY A REASON TO SUSPECT, BA SED ON CIRCUMSTANTIAL AND OTHER SURROUNDING CIRCUMSTANCES, EVEN AS ADVERTED TO BY T HE LD. DR. FURTHER, THE REASON/S, WHERE RECORDED ON 20.03.2013, WOULD BE A VALID REASON/S AS, BY THAT DATE IT WAS PERMISSIBLE FOR THE AO TO DRAW AN ADVERSE IN FERENCE, I.E., THAT THE ASSESSEE HAD NOTHING TO SAY IN THE MATTER AND, ACCORDINGLY, HAD NOT DISCLOSED THE INCOME BY WAY OF CAPITAL GAINS PER HIS RETURN OF INCOME, IF A NY, FURNISHED, AS IN FACT, HE HAD NOT. ON 18.03.2013, IT WAS AT BEST A STRONG REASON TO SUSPECT. THE LD. DR ARGUED THAT THE ENQUIRY LETTER BY THE AO TO THE ASSESSEE S HOULD NOT UNDERMINE THE REVENUES CASE, I.E., OUGHT NOT TO OPERATE TO THE R EVENUES PREJUDICE, OVERLOOKING THE FACT THAT THE REVENUE HAD MATERIAL TO ENTERTAIN A BELIEF OF INCOME ARISING BY WAY OF CAPITAL GAINS TO THE ASSESSEE WHICH HE HAD N OT DISCLOSED TO THE DEPARTMENT. SO, HOWEVER, THE QUESTION IS WHAT IS THERE FOR THE REVENUE TO STATE THAT THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME FOR THE YEAR OR, FOR THAT MATTER, FILED HIS RETURN WITHOUT DISCLOSING THE SAID INCOME, AS, IN EITHER C ASE, IT WOULD BE A VALID BASIS FOR THE BELIEF AS TO ESCAPEMENT OF INCOME, ALSO MEETING THE REQUIREMENT OF THE FIRST PROVISO TO S.147. AS AFORE-NOTED, NOT ONLY IS THERE NO MEN TION OF THE RETURN IN THE REASONS RECORDED, THE SAME IS NOT ON THE ASSESSMENT RECORD, WITH IN FACT THE AO ENQUIRING THE ASSESSEE ABOUT IT. RATHER, THE VERY F ACT THAT THE REVENUE JUSTIFIES ITS ACTION U/S. 148 ON THE BASIS OF THE ASSESSEES RETU RN FILED ON 02.05.2016 BRINGS OUT ITS RELEVANCE TO THE FORMATION OF BELIEF AS WELL A S FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE RE VENUE CANNOT, AS EXPLAINED IN ITA NO. 644/ASR/2016 (AY 2006-07) SUKHWINDER SINGH V. ITO 9 VIPIN KHANNA V. CIT [2002] 255 ITR 220 (P&H), INVOKE SECTION 148 TO EN ABLE VERIFICATION, FOR WHICH THE PROPER COURSE IS THE RE COURSE TO NOTICE U/S. 142(1); SEC. 143(2) OR, AS THE CASE MAY BE, SEC. 144. FURTHER, S USPICION, HOWEVER, STRONG, CANNOT BE A SUBSTITUTE FOR BELIEF, AS EXPLAINED IN PARAMJIT KAUR (SUPRA). 6. FOR THE REASONS AFORE-STATED, IN MY VIEW, THE RE ASON/S RECORDED U/S. 148(2) ON 18.03.2013 CANNOT BE REGARDED AS VALID REASON/S JUSTIFYING THE ISSUE OF NOTICE U/S. 148(1) ON 18.03.2013 WHICH, THEREFORE, CANNOT BE REGARDED AS VALID NOTICE IN LAW. THE IMPUGNED ASSESSMENT IS, ACCORDINGLY, WITHO UT JURISDICTION. IN THIS VIEW OF THE MATTER, IT IS NOT NECESSARY TO TRAVEL TO THE OT HER GROUNDS, WHICH ARE ON THE MERITS OF THE QUANTUM ADDITIONS. I DECIDE ACCORDINGLY. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN CO URT ON DECEMBER 07, 2018 SD/- (SANJAY ARORA) ACCOUNTANT MEMBER DATE: 07.12.2018 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: SUKHWINDER SINGH, S/O KARNAI L SINGH, MOHALLA GARHINNA, GTB NAGAR, NAKODAR (2) THE RESPONDENT: INCOME TAX OFFICER, NAKODAR (3) THE CIT(APPEALS)-2, JALANDHAR (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER