Mrs. Surinder Mohini Bawa, Kapurthala V. The Income Tax Officer, Kapurthala

ITA 649/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0560 (ITAT-AMRITSAR)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 17-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKER
• Assessee Lawyers: J S BHASIN
• Keywords: Unexplained cash credit; Gift; Business income; Initiation of penalty proceedings; Tangible material; Capital receipt; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. (CAMP AT JALANDHAR) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.649(ASR)/2015 ASSESSMENT YEAR:2005-06 PAN: AAOPB0256B MRS. SURINDER MOHINI BAWA, VS. INCOME TAX OFFICER, KAPURTHALA. KAPURTHALA-1, (APPELLANT) (RESPONDENT) APPELLANT BY: SH.J.S. BHASIN, ADVOCATE RESPONDENT BY: SH. BHAWANI SHANKER, DR DATE OF HEARING: 27/06/2016 DATE OF PRONOUNCEMENT: 11/07/2016 ORDER PER A.D. JAIN, JM: THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2005-06, AGAINST THE ORDER DATED 23.11.2015, PASSED BY THE LD. CIT(A)-2, JALAHDHAR. THE ASSESSEE HAS RAISED THE FOLLOWING GR OUNDS OF APPEAL: 1. THAT THE DL. CIT(A) HAS GROSSLY ERRED IN LAW AS ALSO ON FACTS, IN UPHOLDING THE VALIDITY OF PROCEEDINGS INITIATED BY THE ITO U/S 147/148. 2. THAT THE LD. CIT(A) ALSO ERRED IN UPHOLDING THE PROCEEDINGS U/S 147/148, WHEN THE REASON FOR REOPENING DID NOT SURVIVE AND THE ADDITION CAME TO BE MADE ON A TOTALLY DIFFE RENT ISSUE. 3. THAT IN THE GIVEN FACTS OF THE CASE, THE LD. CIT (A) FURTHER FELL INTO ERROR IN CONFIRMING THE ADDITION OF RS.6,86,99 5/- MADE ITA NO.649(ASR)/2015 A.Y. 2005-06 2 BY THE ITO TOWARDS UNEXPLAINED CREDIT IN BANK ACCOU NT OF THE ASSESSEE. 4. THAT THE LD. CIT(A) WAS NOT JUSTIFIED, WHILE RE- COMPUTING THE LONG TERM CAPITAL GAIN ON SALE OF FLAT, IN DISALLOW ING THE ASSESSEES FOLLOWING CLAIMS: A) RS.10,000/- TOWARDS EXPENSES ON TRANSFER. B) RS.52560/- + RS.4431/- RS.300233/- AS FURTHER INDEXED, TOWARDS IMPROVEMENT OF FLAT. 5. THAT THE LD. CIT(A) WAS WHOLLY UNJUSTIFIED IN DIREC TING THE ITO TO REOPEN THE CASE FOR AY 2004-05, OF HIS OWN, TO ASSESS THE CAPITAL GAIN ON PROTECTIVE BASIS. 6. THAT BY ANY RECKONING, THE LD. CIT(A) WAS NOT COMPE TENT TO ISSUE SUCH DIRECTIONS, TO REOPEN THE CASE FOR ANOTH ER YEAR, AFTER HIMSELF HAVING HELD THAT THE CAPITAL GAIN WAS TAXABLE IN THIS YEAR. SUCH DIRECTIONS ARE WHOLLY, ILLEGAL, ARB ITRARY AND UNCALLED FOR. 7. THAT THE INITIATION OF PENALTY PROCEEDINGS BY THE L D. CIT(A), FOR THE ALLEGED CONCEALMENT OF LONG TERM CAPITAL GA IN, IS ILLEGAL MORE SO, WHEN HE HIMSELF, PLACED IN DOUBT B Y DIRECTING ITS ASSESSMENT IN AY 2004-05. 2. THE FACTS AS CULLED OUT FROM THE RECORDS ARE THA T THE ASSESSEE, WHO EARNED BUSINESS INCOME BEING INTEREST AS A PARTNER IN THE PARTNERSHIP FIRMS, NAMELY, M/S. BAWA MURAYAMA AND M/S. BAWA MAC LERAN AND HAD ALSO EARNED INCOME BY WAY OF SHORT TERM CAPITAL GAI NS FROM THE SALE AND PURCHASE OF MUTUAL FUNDS/SECURITIES AND INCOME FROM OTHER SOURCES (INTEREST ON SAVING BANK ACCOUNTS AND FDRS), HAD FI LED HER ORIGINAL RETURN OF INCOME ON 31.03.2006 DECLARING NET TAXABL E INCOME OF RS.6,97,855/-. THE AO OBSERVED THAT AS PER AIR INFO RMATION, THE ASSESSEE HAD MADE HUGE INVESTMENT TO THE EXTENT OF RS.1,09,49,156/- IN THE PURCHASE OF MUTUAL FUNDS/SECURITIES OF DIFFEREN T COMPANIES WHICH ITA NO.649(ASR)/2015 A.Y. 2005-06 3 WERE NOT FOUND TO BE DISCLOSED IN THE RETURN OF IN COME FILED WITH THE DEPARTMENT. THE AO, THEREFORE, FORMED A BELIEF THAT THE INCOME OF RS.1,09,49,156/- HAD ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L THE MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT IN THE A.Y. 2005-06 AN D REOPENED THE ASSESSMENT U/S 147 OF THE ACT BY ISSUE OF NOTICE U/ S 148 OF THE ACT ON 30.03.2012. IN RESPONSE TO THE NOTICE U/S 148, THE ASSESSEE SUBMITTED THAT THE RETURN ORIGINALLY FILED ON 31.03.2006 MAY BE TREATED AS HER RETURN. 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSEE WAS ASKED BY THE ASSESSING OFFICER TO EXPLAIN THE SOURC E OF INVESTMENT IN THE MUTUAL FUNDS/ SECURITIES TO THE EXTENT OF RS. 1,09, 49,156/- MADE BY HER DURING THE YEAR UNDER CONSIDERATION. AS THE INVESTM ENT IN MUTUAL FUNDS/ SECURITIES WERE ROUTED THROUGH BANK ACCOUNT( S) OF THE ASSESSEE MAINTAINED BY HER WITH VARIOUS BANKS, THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WAS ALSO ASKED BY THE ASSES SING OFFICER TO EXPLAIN THE SOURCES OF VARIOUS CREDIT ENTRIES IN VA RIOUS BANK ACCOUNTS MAINTAINED BY THE ASSESSEE. IN RESPONSE THERETO, TH E ASSESSEE, VIDE HER LETTER DATED 17.08.2012, SUBMITTED THAT AS ALREADY EXPLAINED, THE ASSESSEE HAD MADE INVESTMENTS IN DIFFERENT MUTUAL F UNDS/RELIEF BONDS AND SECURITIES, ETC., THROUGH M/S HSBC SECURITIES, WHO ACTED AS PORTFOLIO MANAGER FOR THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT ALL THE PURCHASE TRANSACTIONS WERE ROUTED THROUGH THE SAVINGS BANK A CCOUNT MAINTAINED ITA NO.649(ASR)/2015 A.Y. 2005-06 4 BY HER WITH M/S HONGKONG AND SHANGHAI BANKING CORPO RATION LIMITED, WHICH IS A DECLARED BANK ACCOUNT OF THE ASSESSEE. I T WAS FURTHER SUBMITTED THAT FOR ALL THE TRANSACTIONS ENTERED INT O BY THE HSBC SECURITIES, THEY HAD BEEN REGULARLY SUPPLYING MONTH LY TRANSACTIONS STATEMENTS ALONGSIDE MONTHLY PORTFOLIO SUMMARY OF S UCH HOLDING. IT WAS FURTHER CLARIFIED THAT IN ADDITION TO FRESH INVESTM ENTS MADE THROUGH THE BANK, AT TIMES, THE TRANSACTIONS ARE MADE BY WAY OF SWITCH OUT/SWITCH IN BY THE PORTFOLIO MANAGER, OF THE EXISTING SECURITIE S FROM ONE HEAD TO THE OTHER, AND ALSO BY RE-INVESTMENT OF DIVIDEND WITHOU T INVOLVING FRESH FLOW OF FUNDS FROM THE BANK ACCOUNT OF THE ASSESSEE. THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE HAD ALREADY DECLARED TH E SHORT TERM CAPITAL GAIN/LOSS IN HER RETURN OF INCOME ON MUTUAL FUNDS/S ECURITIES WHICH HAD BEEN SOLD DURING THE YEAR UNDER CONSIDERATION. TO S UPPORT HER CONTENTION, THE ASSESSEE ALSO FURNISHED A COPY OF R ETURN FOR THE YEAR UNDER CONSIDERATION, FILED BY HER ON 31.03.2006 ALO NG WITH COMPUTATION OF INCOME CHART, IN WHICH, DETAILS OF SHORT TERM CA PITAL GAIN/LOSS WERE DISCLOSED. AS THE INVESTMENT IN MUTUAL FUNDS/SECURI TIES WAS ROUTED THROUGH BANK ACCOUNT(S), THE ASSESSEE WAS ASKED BY THE ASSESSING OFFICER TO EXPLAIN THE SOURCES OF VARIOUS CREDIT EN TRIES IN HER VARIOUS BANK ACCOUNTS MAINTAINED BY THE ASSESSEE WITH VARIO US BANKS. IN RESPONSE THERETO, THE ASSESSEE, VIDE REPLY DATED 03 .01.2013, HAD INFORMED THAT THE FOLLOWING BANK ACCOUNTS WERE BEIN G MAINTAINED BY HER IN DIFFERENT BANKS:- ITA NO.649(ASR)/2015 A.Y. 2005-06 5 A) ACCOUNT NO. 051-199974-006 & 129-015301-06 WITH HSBC, LUDHIANA/DELHI B). ACCOUNT NO. 3125 WITH PUNJAB & SIND BANK, KAPU RTHALA C) ACCOUNT NO. 15186 WITH PUNJAB & SIND BANK, KAPU RTHALA D) ACCOUNT WITH ALLAHABAD BANK, MAI HIRAN GATE, JA LANDHAR E) ACCOUNT NO. 12578 WITH CANARA BANK, KAPURTHALA IN ADDITION TO THIS, THE ASSESSEE FILED INFORMATION WITH REGARD TO SOURCE OF SOME DEPOSITS, AS UNDER: 1. GIFT FROM MR. PARTAP LALWANI DT. 12.04.2004 RS.43,28,000/- 2. GIFT FROM MR. GULU LALWANI DT. 02.04.2004 RS. 1,00,000/- 3. GIFT FROM MR. GULU LALWANI DT. 02.07.2004 RS. 1,00,000/- 4. GIFT FROM MR. GULU LALWANI DT. 04.10.2004 RS. 1,00,000/- 5. GIFT FROM MR. GULU LALWANI DT.03.01.2005 RS. 1,00,000/- 6. GIFT FROM MR. GULU LALWANI DT. 02.04.2004 RS.25,000/- IT WAS FURTHER INFORMED THAT FOR THE REMAINING CRED ITS, EFFORTS WERE AFOOT TO LOCATE THE NECESSARY CONFIRMATION/EVIDENCE, AND WOULD BE FILED IN DUE COURSE. IT WAS FURTHER SUBMITTED THAT A HUGE TIME G AP OF ABOUT EIGHT YEARS, BESIDES THE ILL HEALTH AND OLD AGE OF THE AS SESSEE WERE THE MAJOR FACTORS AT PLAY WHICH WERE CAUSING DELAY IN FILING THE NECESSARY EVIDENCE. THE ASSESSEE FURTHER EXPLAINED THE DEPOSITS OF RS.2 6,00,000/- ON 08.09.2004, RS.22,00,000/- ON 09.12.2004, RS.20,00, 000/- ON 10.02.2005 AND RS. 18,95,000/- ON 31.03.2005 IN HER BANK ACCOUNT NO. 15186 WITH PUNJAB & SIND BANK, KAPURTHALA, VIDE HER REPLY DATED 28.01.2013. VIDE REPLY DATED 15.03.2013, THE ASSESS EE EXPLAINED SOME ITA NO.649(ASR)/2015 A.Y. 2005-06 6 DEPOSITS OF RS.51,00,000/- ON 05.06.2004 IN SAVING BANK ACCOUNT NO. 18148 WITH P & SB, RS.53,865/- ON 10.08.2004 IN SAV ING BANK ACCOUNT WITH P&SB, RS.50,000/-EACH IN HSBC ACCOUNT ON 15.04 .2004, 09.06.2004, 30.06.2004, 02.08.2004, 19.08.2004, 03. 09.2004, 07.10.2004, 05.11.2004, 09.03.2005, RS.1,50,000/- O N 05.01.2005 AND RS.72,100/- ON 29.03.2005. HOWEVER, THERE WERE STIL L SOME MORE DEPOSITS WHICH REQUIRE EXPLANATION OF THE ASSESSEE WITH REGARD TO SOURCE OF CREDIT. THE ASSESSEE EXPLAINED CREDITS OF RS. 10 ,03,679/- ON 17.01.2005 IN P&SB A/C NO. 15186 AND RS.1,50,000/- ON 05.04.2004 AND RS.4,68,500/- ON 27.12.2004/- IN HSBC A/C, VIDE HER REPLY DATED 28.03.2013 AND REQUESTED FOR MORE TIME TO EXPLAIN T HE REMAINING CREDITS. HOWEVER, FURTHER TIME WAS DENIED BY THE ASSESSING O FFICER, AS THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS TO BE CO MPLETED BY HIM ON OR BEFORE 31.03.2013. MOREOVER, 28.03.2013 WAS THE LAS T WORKING DAY OF THE F.Y. 2012-13 AND THE ASSESSMENT WAS TO BE COMPLETED ON 28.03.2013 ITSELF. AFTER CONSIDERING ALL THE REPLIES, THE ASSE SSING OFFICER FOUND THAT THE ASSESSEE HAD FAILED TO FILE ANY EXPLANATION WIT H REGARD TO FOLLOWING CREDITS, INSPITE OF VARIOUS OPPORTUNITIES PROVIDED TO HER:- SR..NO. BANK NAME WITH ACCOUNT NO. DATE AMOUNT 1. HSBC 129-015301-006 27.05.2004 RS.22,000/- 2. HSBC 051-199974-006 27.05.2004 RS.5,95,272/ - 3. HSBC 051-199974-006 07.07.2004 RS.8,00,000/ - ITA NO.649(ASR)/2015 A.Y. 2005-06 7 4. HSBC 129-015301-006 12.07.2004 RS.4,49,300/ - 5. HSBC 129-015301-006 12.07.2004 RS.9,00,000/ - 6. HSBC 129-015301-006 28.07.2004 RS.25,000/- 7. HSBC 051-199974-006 25.01.2005 RS.25,000/- HSBC 129-015301-006 09.02.2005 RS. 19,723/- TOTAL: RS.28,36,295/- AS THE ASSESSEE FAILED TO FILE ANY EXPLANATION WITH REGARD TO THE SOURCE OF THE ABOVE DEPOSITS AND ASKED MORE TIME TO EXPLAIN T HESE DEPOSITS, WHICH WAS DENIED, THE ASSESSING OFFICER TREATED THESE DEP OSITS FROM UNEXPLAINED SOURCES AND MADE AN ADDITION OF RS.28,3 6,295/- TO THE RETURNED INCOME OF THE ASSESSEE. APART FROM THIS, U NDISCLOSED INTEREST INCOME OF RS.3,679/- ON FDR OF RS. 10,00,000/- WAS ALSO ADDED TO THE RETURNED INCOME OF THE ASSESSEE. THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS ULTIMATELY COMPLETED BY THE ASSESSING OFFICER VIDE ORDER PASSED UNDER SECTION 143(3) OF THE ACT, DATED 28.03 .2013, AT AN ASSESSED INCOME OF RS.35,37,829/-, WHICH INCLUDED ADDITIONS OF RS.28,36,295/- ON ACCOUNT OF UNEXPLAINED CREDITS IN THE BANK ACCOU NTS OF THE ASSESSEE AND RS.3,679/- ON ACCOUNT OF UNDISCLOSED INTEREST I NCOME ON FDRS. 3. ON APPEAL, THE LD. CIT(A) DISMISSED THE APPEAL O F THE ASSESSEE. 4. NOW, AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THIS BENCH. ITA NO.649(ASR)/2015 A.Y. 2005-06 8 5. APROPOS GROUNDS NO. 1 & 2, THE ASSESSEE HAS CONT ENDED THAT THE INVOCATION OF THE JURISDICTION U/S 148 ON THE BASIS OF AIR INFORMATION WAS VEHEMENTLY CONTESTED BEFORE THE ID. CIT(A); THA T A BARE PERUSAL OF THE REASONS RECORDED BEARS OUT BEYOND DOUBT THAT THE V ERY BASIS OF INITIATION OF THE REASSESSMENT PROCEEDINGS WAS AIR THE INFORM ATION POSSESSED BY AO, SHOWING VARIOUS ENTRIES AMOUNTING TO RS.1,09,49 ,156/- RELATING TO INVESTMENT IN MUTUAL FUNDS, ETC., THE SOURCE OF WHI CH WAS NOT EXPLAINED IN THE RETURN OF INCOME FILED, WHICH PIECE OF INFOR MATION, QUA THE RETURN FILED, AS SUCH WAS ENOUGH FOR THE AO, TO REACH A SA TISFACTION IN TERMS OF SECTION 147, THAT THE SAID INCOME HAD ESCAPED ASSES SMENT; THAT THE ASSESSEE HAD THROWN A SERIOUS CHALLENGE TO THIS TYP E OF REOPENING, MERELY BASED ON AIR INFORMATION, BEFORE THE ID. CIT(A), BY FILING DETAILED WRITTEN SUBMISSIONS THAT THE ASSUMPTION OF JURISDICTION ON THE BASIS OF AIR INFORMATION WAS ILLEGAL, INASMUCH AS IT WAS SIMPLY IN THE DOMAIN OF SUSPICION AND FOR VERIFICATION OF THE SOURCE OF INV ESTMENT MADE IN MUTUAL FUND; THAT SECTION 148 DOES NOT PERMIT VERIFICATION , AS THE SAME FALLS IN THE DOMAIN OF SECTION 143(2), AFTER THE RETURN IS F ILED; THAT A NUMBER OF JUDICIAL PRONOUNCEMENTS WERE RELIED ON TO BRING HOM E THE POINT THAT PROCEEDINGS U/S 148 COULD NOT BE INVOKED ON AIR BAS IS, SIMPLY FOR VERIFICATION OF THE SOURCE OF INVESTMENTS MADE, BUT THE ID. CIT(A), IN PARA 5.2, PAGE 10 OF HIS ORDER, HAS JUST BRUSHED ASIDE A LL THE CONTENTIONS OF THE ASSESSEE IN A MOST SUMMARY AND CASUAL MANNER BY SAYING THAT THE AO HAD A PRIMA FACIE BELIEF, AS NO SOURCE OF INVEST MENT IN MUTUAL ITA NO.649(ASR)/2015 A.Y. 2005-06 9 FUND/SECURITY WAS AVAILABLE IN THE RETURN FILED BY ASSESSEE AND ALSO NO BALANCE SHEET WAS ANNEXED ALONGWITH THE RETURN FILE D ; THAT I T IS AN UNDISPUTED FACT ON RECORD THAT BUT FOR THE AIR INFO RMATION, THERE WAS NO OTHER MATERIAL WITH THE AO TO REACH THE REQUISITE S ATISFACTION U/S 148(2); THAT IN THE REASONS RECORDED, THE AO HAS NOTED THAT ENTRIES OF RS.1,09,49,156/- WERE DISCLOSED AS PER THE AIR INFO RMATION THAT THEN, BY REFERRING TO THE RETURN FILED, SHE SAID THAT THE SOURCE OF INVESTMENT IN SHARES/MUTUAL FUNDS WERE NOT DISCLOSED IN THE RETUR N FILED; THAT THIS PURPORTEDLY LEAD HER TO BELIEVE THAT THE SAID INCOM E OF RS.1,09,49,156/- HAD ESCAPED ASSESSMENT; THAT THE ABOVE REASONS ARE NO REASONS IN THE EYE OF LAW, INASMUCH AS THE SAME ARE MOST SPECULATI VE AND VAGUE IN NATURE; THAT THE SOURCE OF INVESTMENT, YET TO BE VE RIFIED AND EXPLAINED, CANNOT BE HELD AS INCOME ESCAPING ASSESSMENT FOR TH E PURPOSE OF SECTION 148.; THAT OBVIOUSLY, FOR SUCH VERIFICATION, THE LE GISLATURE HAS EMPOWERED THE AO TO ASSUME NORMAL JURISDICTION UNDER SECTION 143(2), AFTER THE RETURN IS FILED.; THAT IT IS ONLY DURING SUCH ASSES SMENT PROCEEDINGS, THAT THE SOURCE CAN BE QUESTIONED, AND DEEMED TO BE INCO ME U/S.68/69, IF NO SATISFACTORY EXPLANATION IS OFFERED BY ASSESSEE; TH AT IN THE ABSENCE OF VERIFICATION/EXPLANATION OF THE ASSESSEE IN THE COU RSE OF ASSESSMENT PROCEEDINGS, IT IS PREMATURE TO ASSUME THE SAME AS 'INCOME', MUCH LESS FOR SECTION 148; THAT NEEDLESS TO MENTION, SUCH INV ESTMENT COULD BE FROM TAX FREE INCOME LIKE AGRICULTURE INCOME, GIFTS, LOA NS, CAPITAL RECEIPTS, ETC., AS SUCH, IT MAY NOT CONSTITUTE INCOME AT ALL; AND T HAT THEREFORE, THE AIR ITA NO.649(ASR)/2015 A.Y. 2005-06 10 INFORMATION IS NO TANGIBLE MATERIAL TO EMPOWER THE AO TO REACH THE REQUISITE SATISFACTION AS ENVISAGED U/S 147/148. 6. THE LD. DR, ON THE OTHER HAND, RELIED ON THE IMP UGNED ORDER. 7. WE HAVE HEARD THE RIVAL CONTENTIONS IN THE LIGHT O F THE MATERIAL AVAILABLE ON RECORD. THE AO HAS RECORDED THE FOLLOW ING REASONS WHILE REOPENING THE CASE: REASONS FOR THE BELIEF AIR INFORMATION HAS DISCLOSED VARIOUS ENTRIES AMOUN TING TO RS.1,09,49,156/- IN THE CASE OF MS. SURINDER MOHINI R/O 1- GURU KIRPA, JALANDHAR ROAD, KAPURTHALA. THE ASSESSEE FILED HER INCOME TAX RETURN FOR THE F. Y. 2004- 05 RELEVANT TO A.Y. 2005-06 FOR A NET TAXABLE INCOM E OF RS.6,97,855/-. THE DETAILS OF WHICH IS GIVEN AS UND ER: I) SHARE IN FIRM 57040 II) SHORT TERM CAPITAL GAIN 208357 III) INTEREST INCOME 444458 GROSS TOTAL INCOME 709855 LESS REBATE U/S 80-B 12000 NET TAXABLE INCOME 697855 THE SAID RETURN WAS PROCESSED U/S 143910 BY ACIT, C IRCLE- IV, JALANDHAR POSITION OF STOCK HOLDINGS ACCOUNTS, TRADING ACCOUN TS OF SHARES & MUTUAL FUNDS & SOURCE OF INVESTMENTS THERE OF HAS NOT BEEN EXPLAINED IN THE RETURN OF INCOME COMPLETE LY. I HAVE, THEREFORE, REASON TO BELIEF THAT INCOME OF RS.1,09,49,156/- ON ACCOUNT OF SOURCE OF DEPOSITS I N MUTUAL FUNDS AS ABOVE HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ITA NO.649(ASR)/2015 A.Y. 2005-06 11 ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR THE ACCOUNT YEAR RELEVANT TO THE ASSESSMENT YEAR 2005-0 6. SD/- (S.LATA KHURANA) I.T.O-II, KAPURTHALA A PERUSAL OF THE REASONS RECORDED SHOWS THAT THE VE RY BASIS OF INITIATION OF REASSESSMENT PROCEEDINGS WAS AIR INFORMATION POS SESSED BY AO, SHOWING VARIOUS ENTRIES AMOUNTING TO RS.1,09,49,156 /- RELATING TO INVESTMENT IN MUTUAL FUND ETC. IN OUR CONSIDERED OP INION, THE ASSUMPTION OF JURISDICTION U/S 147/148 ON THE BASIS OF AIR INFORMATION WAS ILLEGAL INASMUCH AS IT WAS SIMPLIFY IN THE DOMA IN OF SUSPICION AND FOR VERIFICATION OF THE SOURCE OF INVESTMENT MADE I N MUTUAL FUNDS, WHICH IS IMPERMISSIBLE U/S 148. SECTION 148 DOES NOT PERM IT VERIFICATION, AS RIGHTLY CONTENDED, AS THE SAME FALLS IN THE DOMAIN OF SECTION 143(2), AFTER THE RETURN IS FILED. IT IS AN UNDISPUTED FACT ON TH E RECORD, THAT BUT FOR THE AIR INFORMATION, THERE WAS NO OTHER MATERIAL WITH T HE AO TO REACH THE REQUISITE SATISFACTION U/S 148(2). IN THE REASONS R ECORDED, THE AO HAS NOTED THAT ENTRIES OF RS.1,09,49,156/- WERE DISCLOS ED AS PER THE AIR INFORMATION. THEN BY REFERRING TO THE RETURN FILED, SHE SAID THAT THE SOURCE OF INVESTMENT IN SHARES/MUTUAL FUNDS WERE NO T DISCLOSED IN THE RETURN FILED. THIS PURPORTEDLY LEAD HER TO BELIEVE THAT THE SAID INCOME OF RS.1,09,49,156/- HAD ESCAPED ASSESSMENT. ITA NO.649(ASR)/2015 A.Y. 2005-06 12 8. THE ABOVE REASONS ARE NO REASONS IN THE EYES OF LAW, INASMUCH AS THE SOURCE OF INVESTMENT IS YET TO BE VERIFIED AND EXPLAINED, AND IT CANNOT BE HELD AS INCOME ESCAPING ASSESSMENT FOR THE PURPO SES OF SECTION 148. FOR SUCH A VERIFICATION, THE AO IS TO ASSUME NORMA L JURISDICTION UNDER SECTION 143(2), AFTER THE RETURN IS FILED. IT IS ON LY DURING SUCH REGULAR ASSESSMENT PROCEEDINGS, THAT THE SOURCE CAN BE QUES TIONED, AND DEEMED TO BE INCOME U/S.68/69, IN CASE NO SATISFACTORY EXP LANATION IS OFFERED BY ASSESSEE. IN THE ABSENCE OF VERIFICATION/EXPLANATIO N OF THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT IS PREMATU RE TO ASSUME THE SAME AS 'INCOME', MUCH LESS FOR THE PURPOSES OF SEC TION 148. THEREFORE, THE AIR INFORMATION IS NO TANGIBLE MATERIAL TO EMPO WER THE AO TO REACH THE REQUISITE SATISFACTION AS ENVISAGED U/S 147/148 . 9. IN THIS REGARD, IN SH. ASHWANI KUMAR VS. ITO, THE AMRITSAR BENCH OF THE TRIBUNAL, VIDE ORDER DATED 23.02.2016 (SMC) (COPY PLACED ON RECORD), PASSED IN ITA NO.129/ASR/2015, HAS HELD T HE REASONS RECORDED U/S 148, BASED ON THE VAGUE INFORMATION, BACKED BY THE AIR, TO BE INVALID, BEING NOT SUFFICIENT TO LEND THE REQUISITE BELIEF OF ESCAPEMENT OF INCOME. 10. VIR BAHADUR SINGH VS. ITO, RENDERED BY THE DELHI BENCH OF THE TRIBUNAL, VIDE ORDER DATED 19.02.2016 IN ITA NO.7/D EL/2013, IS ALSO TO THE SAME EFFECT. ITA NO.649(ASR)/2015 A.Y. 2005-06 13 11. IN VIEW OF THE ABOVE, WE FIND THAT IN THE PRESE NT CASE, THE REASONS RECORDED U/S 148, BEING VAGUE, ARE NOT VALID IN THE EYE OF LAW. ACCORDINGLY, ALL THE PROCEEDINGS PURSUANT THERETO, CULMINATING IN THE IMPUGNED ORDER, ARE ALSO QUASHED. 13. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/0 7/ 2016. SD/- SD/ (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 11/07/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: MRS. SURINDER MOHINI BAWA, KAPURTHALA . 2. THE ITO, KAPURTHALA-II 3. THE CIT(A), JLR 4. THE CIT, JLR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.