MADAN MOHAN TIWARI, NEW DELHI V. ITO, WARD- 29(3), NEW DELHI

ITA 6925/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3895 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 01-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV PUNDIR
• Assessee Lawyers: MADAN MOHAN TIWARI SELF
• Keywords: Reopening of assessment; Business income; Depreciation; Principle of natural justice; Tangible material; Difference of opinion; Non passing of speaking order; Tax effect; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 142(1); 133A; 191; 48; 13; 153; 22; 147; 131; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI E BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.6925/DEL/2018 ASSESSMENT YEAR : 2008-09 MADAN MOHAN TIWARI, J-145, KALKAJI, NEW DELHI-110019 VS INCOME TAX OFFICER, WARD-29(3), ROOM NO.1015, 10 TH FLOOR, BLOCK-E2, DR. S.P. MUKHARJEE CIVIC CENTRE, MINTO ROAD, NEW DELHI-110002 PAN-AEQPT1251F APPELLANT RESPONDENT APPELLANT BY SH. MADAN MOHAN TIWARI, SELF ASSESSEE RESPONDENT BY SH. GAURAV PUNDIR , SR. DR DATE OF HEARING 29 .09.2021 DATE OF PRONOUNCEMENT 06 . 10 .2021 ORDER PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 08.10.2018 OF THE LD. COMMI SSIONER OF INCOME TAX (APPEALS)-31, NEW DELHI, (HEREINAFTER RE FERRED TO CIT(A)) FOR THE ASSESSMENT YEAR 2008-09. THE ASS ESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- ITA NO. 6925/DEL/2018 2 | P A GE 1. CHALLENGE TO ASSESSMENT U/S. 147 OF I.T. ACT 1 961 -- TAX EFFECT- RS,37,08,964/- 1.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATIN G THAT ASSESSMENT ORDER WAS VOID, INVALID, NON EST AS AO HAD FORMED BELIEF OF INCOME ESCAPEMENT WITHOUT APPLICATION OF MIND. 1.2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATIN G THAT ASSESSMENT ORDER WAS VOID, INVALID, NON EST AS AO HA D NO EVIDENCE OF NOT FINDING ITR IN HIS COMPUTER SYSTEM. 1.3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATIN G THAT ASSESSMENT ORDER WAS VOID, INVALID, NON EST AS DELHI HC ORDER IN SONIA GANDHI VS ACIT DATED 10.09.2018 WAS NOT APP LICABLE IN PRESENT CASE AS ASSESSING OFFICER HAD NO GERMANE MATERIAL TO THE ISSUE AND HENCE HE WAS REQUIRED TO DO FURTHER IN VESTIGATION UPON RECEIPT OF SURVEY REPORT. 2. CHALLENGE TO NON DISPATCH OF S.143(2) NOTICE. TA X EFFECT RS.6579,313/-. 2.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATIN G THAT ASSESSMENT ORDER WAS VOID, INVALID, NON EST AS THE S.143(2) NOTICE WAS NEVER DISPATCHED BY ASSESSING OFFICER. 2.2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATIN G THAT RELEVANT MATER WAS WHETHER SPEED POST RECEIPT DATED 25.07.2013 WAS FORGED OR NOT AND NOT FORENSIC EXAMINATION. 3. CHALLENGE TO DISPOSAL OF OBJECTION TO ISSUANCE O F S.148 NOTICE BY NON SPEAKING ORDER.-TAX EFFECT- RS/65,79,313/- 3.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATI NG THAT SINCE FACTUAL ERROR OF NON FILING OF ITR DATED 12.10.2010 WAS NOT ADDRESSED IN ASSESSING OFFICER LETTER DATED 30.12.2013 REJECTING ASSESSEE OBJECTION TO ISSUANCE OF S.148 NOTICE DATED 05.02.2013 MERELY COMPREHENSIVENESS OF ASSESSING OFFICER DISPOSAL LETTER DOES NOT MAKE IT SPEAKING ORDER. ITA NO. 6925/DEL/2018 3 | P A GE 4. CHALLENGE TO ASSESSMENT BEING ONLY CHANGE OF OPINION-TAX EFFECT RS.65,79,313/- 4.1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATIN G THAT ASSESSMENT ORDER WAS VOID, INVALID, NON EST AS ASSESS MENT WAS MERELY CHANGE OF OPINION. 5. CHALLENGE TO ASSESSMENT BEING MADE DURING PENDEN CY OF EARLIER ASSESSMENT PROCEEDINGS. -TAX EFFECT- RS.65,79,313/- 5.1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATIN G THAT ASSESSMENT ORDER WAS VOID, INVALID, NON EST AS ASSES SING OFFICER COULD NOT HAVE DONE ASSESSMENT PROCEEDINGS WH EN ASSESSMENT PROCEEDINGS WERE ALREADY PENDING IN AN EA RLIER PROCEEDING CHALLENGED. 6. CHALLENGE TO VIOLATION OF NATURAL JUSTICE.-TAX E FFECT RS.65,79,313/- 6.1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATIN G THAT ASSESSMENT ORDER WAS INVALID DUE TO VIOLATION OF NAT URAL JUSTICE CAUSED BY ASSESSING OFFICER BY NOT GIVING COPY OF SU RVEY REPORT EVEN WHEN DEMANDED BY ASSESSEE DURING COURSE OF ASSE SSMENT PROCEEDINGS, NOT GIVING COPY OF BANK STATEMENTS COL LECTED BY HIM THROUGH S.131 NOTICES AND NOT GIVING SHOW CAUSE NOTI CE FOR PROPOSED ADDITIONS. 6.2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATIN G THAT ASSESSMENT ORDER WAS INVALID DUE TO VIOLATION OF CON TINUING WITH ASSESSMENT BEFORE DISPOSAL OF OBJECTION TO ISSUANCE OF S.148 NOTICE. 6.3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATIN G THAT ASSESSING OFFICER COULD NOT HAVE DECIDED THAT INCOME WAS FROM PROFESSION AND NOT BUSINESS INCOME WITHOUT PROVIDIN G OPPORTUNITY TO APPELLANT TO PROVE THAT APPELLANT WA S NOT CARRYING ON BUSINESS BUT WAS CARRYING ON PROFESSION OF ENGIN EERING. 6.4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATIN G THAT ASSESSING OFFICER COULD NOT HAVE PROCEEDED WITH ASSESS MENT WITHOUT WAITING FOR 30 DAYS AFTER PASSING ORDER OF REJECTION TO ITA NO. 6925/DEL/2018 4 | P A GE OBJECTIONS MADE BY ASSESSEE FOR S.148 ISSUANCE. 7. CHALLENGE TO ASSESSMENT ORDER FRAMED ON REASONS OTHER THAN THOSE ON WHICH BELIEF FOR ESCAPEMENT OF INCOME WAS FORMED. -TAX EFFECT- RS. 65,79,313/- 7.1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATIN G THAT ASSESSMENT ORDER HAS NOT BEEN FRAMED ON REASONS FORMI NG BELIEF OF INCOME ESCAPEMENT. 8. CHALLENGE TO NO ADDITION MADE ON REASONS ON WHIC H BELIEF FOR ESCAPEMENT OF INCOME WAS FORMED. -TAX EF FECT- RS. 65,79,313/- 8.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT NO ADDITION HAS BEEN MADE ON REASONS FORMING BELIEF OF INCOME ESCAPEMENT. 9. CHALLENGE TO YEAR OF TAXATION.-TAX EFFECT- RS.65,79,313/-. 9.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT ONCE ASSESSEE IS ENTITLED TO FILE RETURN UNDER PRESUMPTIV E TAXATION I.E. S.44AD BOOKS OF ACCOUNT ARE NOT REQUIRED TO BE MAINT AINED OR PROVIDED TO ASSESSING OFFICER FOR CLAIMING INCOME ON MERCANTILE BASIS, ON PERCENTAGE CONTRACT COMPLETION METHOD. 9.2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATIN G THAT BIFURCATION OF RECEIPTS CANNOT BE SAID TO BE PRIMA FACIE ARBITRARY WITHOUT APPRECIATING THE FACT THAT BIFURC ATION HAD BEEN DONE AS PER MERCANTILE ACCOUNTING SYSTEM O F ACCOUNTING. 9.3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATIN G THAT ASSESSING OFFICER COULD NOT HAVE MADE ADDITION WITHOUT SEEKING REASONS FOR DIFFERENCE IN RECEIPTS AS PER F ORM NO.S26AS (AT RS.1,76,11,272/-) AND AS SHOWN BY THE APPELLANT AT RS.37,80,885/-. 10. CHALLENGE TO MAKING ASSESSMENT ORDER NOT AS PER PROVISIONS OF S.143(3)-TAX EFFECT-RS.65,79,313/-. 10.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPREC IATING THAT AO HAD CLAIMED IN HIS ORDER THAT S.148 NOTICE WAS IS SUED ON ITA NO. 6925/DEL/2018 5 | P A GE 30.03.2013 WHILE FACTUALLY IT WAS 05.02.2013 MADE ASSESSMENT ORDER INVALID. 10.2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT USE OF FORGED SPEED POST RECEIPT DATED 25.07.2013 MADE ASSESSMENT ORDER INVALID. 2. A PERUSAL OF THE ABOVE GROUNDS OF APPEAL WOULD SHOW THAT THE ASSESSEE APART FROM CONTESTING THE ADDITIO N MADE BY THE LOWER AUTHORITIES ON MERITS HAS ALSO TAKEN LEGAL GR OUND RELATING TO THE VALIDITY OF THE REOPENING OF THE ASSESSMENT U/S 147 R.W.S. 148 OF THE ACT STATING THAT THE ASSESSING OFFICER DID N OT HAVE A VALID REASON TO ASSUME JURISDICTION TO REASSESS THE INCOM E OF THE ASSESSEE U/S 147 OF THE ACT. 3. THE ASSESSEE AT THE OUTSET HAS BROUGHT OUR ATTE NTION TO THE REASONS RECORDED BY THE ASSESSING OFFICER FOR R EOPENING OF THE ASSESSMENT DATED 05.02.2013. A COPY OF WHICH HAS REP RODUCED BY THE LD. CIT(A) IN PAGE 92 OF THE IMPUGNED ORDER AND FOR THE SAKE OF READY REFERENCE REPRODUCED UNDER:- THE REASONS RECORDED BY THE ASSESSING OFFICER DATE D 05.02.2013 ARE AS FOLLOWS M.M. TIWARY, 1451, KALKAJI, NEW DELHI A SURVEY WAS CONDUCTED IN THIS CASE ON 23/04/2012 BY INVESTIGATION WING, DELHI WHEREIN IT IS ITA NO. 6925/DEL/2018 6 | P A GE STATED THAT SHRI M. M. TIWARY PROP. OF M/S M.M. ENGINEERING SERVICES HAS RECEIVED RS.1.00 CRORE IN F.Y.2007-08 ON GOING THROUGH THE AST SYSTEM IT IS FOUND THAT ASSESSEE HAS NOT FILED RETURN FOR A.Y. 2008-09 AND ON EXAMINING 26AS, IT IS FOUND THAT ASSESSEE HAS TOTAL RECEIPT OF RS.1,76,11,272/- DURING THE YEAR. FURTH ER, IT IS STATED IN THE SURVEY REPORT THAT DURING THE SURVEY PROCEEDINGS U/S 133A, IT WAS FOUND THAT SHRI MADAN MOHAN TIWARY AND HIS FAMILY MEMBERS ARE MAINTAINING 61 BANK ACCOUNT IN VARIOUS BANKS AND WERE HAVING 39 DEBIT CARDS. THEREFORE ON THE BASIS OF THE FACTS NARRATED ABOVE, I HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSE SSEE AMOUNTING TO RS.1,76,11,272/- HAS ESCAPED ASSESSMEN T IN THE HANDS OF THE ASSESSEE FOR WHICH THE ASSESSME NT OF THE ASSESSEE NEEDS TO BE REOPENED UNDER SECTION 147/148 OF THE I.T. ACT, 1961. SD/- (M.L. GUPTA) INCOME TAX OFFICER, WARD 22(1),NEW DELHI 4. A PERUSAL OF THE ABOVE REASONS RECORDED WOULD SH OW THAT THE ASSESSING OFFICER HAD GOT INFORMATION THRO UGH INVESTIGATION WING THAT THE ASSESSEE HAS RECEIVED R S.1.60 CRORE FROM M/S M. M. ENGINEERING SERVICES. FURTHER, THE ASSESSING OFFICER AFTER GOING THROUGH THE AST SYSTEM NOTED TH AT THE ASSESSEE HAD NOT FILED RETURN OF THE INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. AY 2008-09. FURTHER, FROM THE ITA NO. 6925/DEL/2018 7 | P A GE EXAMINING OF THE FORM NO.26AS , THE ASSESSING OFFIC ER NOTICED THAT THE TOTAL RECEIPTS OF THE ASSESSEE DURING THE YEAR WAS OF RS.1,76,11,272/-. ON THIS BASIS OF THESE REASONS, THE ASSESSING OFFICER FORMED BELIEF THAT THE INCOME AMOUNTING TO RS.1,76,11,272/- OF THE ASSESSEE HAD ESCAPED ASSESS MENT. HE, THEREFORE, ISSUED NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO THE ACT) TO THE ASSESSEE . ON RECEIPT OF THE NOTICE, THE ASSESSEE FILED HIS OBJECTION AGAINST TH E AFORESAID REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPE NING OF THE ASSESSMENT. THE CONTENTS OF THE SAID OBJECTIONS 30. 12.2013, THE SAKE OF READY REFERENCE ARE REPRODUCED UNDER:- DATE: 25/07/2013 THE INCOME TAX OFFICER WARD 22(1) NEW DELHI SUB OBJECTIONS TO THE ISSUE OF NOTICE U/S 147/148 O F THE INCOME- TAX ACT, 1961 IN THE CASE OF SHRI MADAN MOHAN TIWAR I FOR ASSESSMENT YEAR 2308-09 SIR IN CONNECTION WITH THE ABOVE IT IS SUBMITTED AS FOL LOWS - (1) THE ORIGINAL RETURN IN THE ABOVE CASE FOR ASSESSMEN T YEAR 2008-09 WAS FILED DECLARING THEREIN AN INCOME OJF R S. 2,80,070/- IN RESPONSE TO NOTICE U/S 142 OF THE INCOME TAX ACT, 1 961 VIDE REPLY DATED 12.10.2010. (2) SUBSEQUENTLY, NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 WAS ISSUED TO THE ASSESSEE. ITA NO. 6925/DEL/2018 8 | P A GE (3) IN RESPONSE TO THE ABOVE NOTICE, REPLY/LETTER WAS F ILED ON BEHALF OF THE ASSESSEE IN YOUR HONOURS OFFICE ON 1 2-03-2013 STATING THERE IN THAT THE RETURN FILED BY THE ASSES SEE IN RESPONSE TO NOTICE U/S 142 OF THE INCOME TAX 1961 VIDE REPLY DA TED 12 10.2010 MAY KINDLY BE TREATED AS A RETURN FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE INCOME-TAX ACT. 1961 SIMULTANEOUSLY, A R EQUEST WAS, ALSO MADE FOR FURNISHING THE ASSESSEE WITH A COPY O F THE REASONS RECORDED FOR RECOURSE TO THE REASSESSMENT PROVISION S U/S148 OF THE INCOME-TAX ACT. 1961. (4) THE ASSESSEE HAVE BEEN SUPPLIED WITH THE COPY OF TH E REASONS RECORDED FOR RESORTING TO THE PROVISIONS U/S 148 OF THE INCOME-TAX ACT, 1961 WHICH READ AS FOLLOWS - A SURVEY WAS CONDUCTED IN THIS CASE ON 23/04/2012 BY INVESTIGATION WING, DELHI WHEREIN IT IS STATED THAT SHRI M. M. TIWARY PROP, OF M/S. M.M, ENGINEERING SERVICES HAS RECEIVED RS. 1.60 CRORE IN F.Y. 2007-0 8. ON GOING THROUGH THE AST SYSTEM IT IS FOUND THAT AS SESSEE HAS NOT FILED RETURN FOR A.Y, 2008-09 AND ON EXAMINING 26AS IT IS FOUND THAT ASSESSEE HAS TOTAL RECEIPT OF RS. 1,76,11,272/ - DURING THE YEAR. FURTHER IT IS STATED IN THE SURVEY REPORT THA T DURING THE SURVEY PROCEEDINGS U/S 133A IT WAS FOUND THAT SHRI MADAN M OHAN TIWARY AND HIS FAMILY MEMBERS ARE MAINTAINING 61 BANK ACCO UNTS IN VARIOUS BANKS AND WERE HAVING 39 DEBIT CARDS. THEREFORE, ON THE BASIS OF THE FACTS NARRATED ABOVE , I HAVE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE AMOUNTIN G TO RS. 1,76,11,272/- HAS ESCAPED ASSESSMENT IN THE HANDS O F THE ASSESSEE FOR WHICH THE ASSESSMENT OF THE ASSESSEE N EEDS TO BE REOPENED UNDER SECTION 147/148 OF THE I.T. ACT, 196 1. (5) IN THIS CONNECTION, THE ASSESSEE HEREBY RECORDS ITS PRELIMINARY OBJECTIONS TO THE ISSUE OF NOTICE U/S 1 48 AND RESORT TO THE REASSESSMENT PROVISIONS INCORPORATED U/S 147/14 8 OF THE INCOME-TAX ACT,. 1961 AS FOLLOWS;- (I) BEFORE PROCEEDING FURTHER IT WOULD BE PERTINENT TO REPRODUCE THE PROVISIONS RELATING TO REASSESSMENT OF ESCAPED INCO ME AS INCORPORATED IN S 147 OF THE INCOME-TAX ACT, 1961 T HE RELEVANT PARTS OF WHICH READ AS FOLLOWS.- : INCOME ESCAPING ASSESSMENT 147. IF THE ASSESSING' OFFICER HAS REASON TO BELIEV E THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER I NCOME ITA NO. 6925/DEL/2018 9 | P A GE CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PRO CEEDINGS UNDER THIS SECTION, OR RECOMPUTED THE LOSS OR THE DEPRECI ATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE AS SESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTION S 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR); PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF' SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE R ELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT A SSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASS ESSMENT 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 R ESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. (II) THE ABOVE PROVISIONS MAKE IT CLEAR THAT AN ASSESSIN G OFFICER IF HE HAS REASON TO BELIEVE THAT ANY INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, MAY ,' SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, - ASSESS OR REASSESS SUCH INCOME; AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT; AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURS E OF THE PROCEEDINGS UNDER SECTION 147; OR RE COMPUTE THE LOSS THE DEPRECIATION ALLOWANCE; OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE FOR THE RELEVANT ASSESSMENT YEAR. (III) FURTHER THE EXPLANATION 2 TO SECTION 147 (NOT REPRODUCED SUPRA) CLARIFIES THAT, FOR THE PURPOSES OF SECTION 147, TH E FOLLOWING ARE ALSO TO BE DEEMED TO BE CASES WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT:- ITA NO. 6925/DEL/2018 10 | P A GE 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 AMOUN T WHICH IS NOT CHARGEABLE TO INCOME-TAX. WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN DONE AND IT IS NOTICED B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME, OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN; WHERE AN ASSESSMENT HAS BEEN MADE, BUT INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSED; O R INCOME CHARGEABLE TO TAX HAS BEEN ASSESSED AT TOO L OW A RATE; OR INCOME CHARGEABLE TO TAX HAS BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF UNDER THE INCOME-TAX ACT, 1961 OR EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY OTH ER ALLOWANCE HAS BEEN COMPUTED UNDER THE ACT. (IV) THUS S. 147 OF THE INCOME-TAX ACT, 1961 AUTHOR ISES AND PERMITS AH ASSESSING OFFICER TO (RE)ASSESS INCOME C HARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT THE SAID INCOM E FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE EXPRESS ION ESCAPED ASSESSMENT CLEARLY CONNOTES A VERY BASIC POSTULATE THAT THE INCOME FOR A PARTICULAR ASSESSMENT YEAR WE NT UNNOTICED BY THE ASSESSING OFFICER AND BECAUSE IF NOT BEING NOTI CED BY HIM FOR ANY REASON, IT ESCAPED ASSESSMENT. ACCORDINGLY THER E SHOULD BE A COMPLETE AND DIRECT CONCLUSION AS TO INCOME ESCAPIN G ASSESSMENT SO AS TO RESORT TO THE REASSESSMENT PROVISIONS. (V) SECTION 148 TO 151 SET OUT THE FRAME WORK, PRO CEDURE AND THE CONDITIONS -GOVERNING THE REASSESSMENT PROVISIONS I NCORPORATED IN SECTION 147. THE SAID SECTIONS SUCCESSIVELY DEAL WI TH:- ITA NO. 6925/DEL/2018 11 | P A GE (A) FORM OF NOTICE AND RECORDING OF REASONS FOR ISSUE ( S. 148); (B) TIME LIMIT FOR ISSUE (S, 149); (C) (C) ENLARGEMENT OF TIME LIMIT IN CERTAIN CASES AND RESTRICTION THEREON(SECTION 150); (D) (D) SANCTION TO BE OBTAINED FOR ISSUE OF NOTICE (S. 151); (VI) THE RELEVANT PARTS OF SECTION 148 RELATING TO ISSUE OF NOTICE AND RECORDING OF REASONS FOR THE SAME READ AS FOLLOWS'- ISSUE OF NOTICE WHERE INCOME HAS ESCAPED ASSESSMENT 148 - (1) BEFORE MAKING THE ASSESSMENT, REASSESSMENT OR RE-CO MPUTATION UNDER SECTION 147, THE ASSESSING OFFICER SHALL SERV E ON THE ASSESSEE A NOTICE REQUIRING HIM TO FURNISH WITHIN S UCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, A RETURN OF HIS INC OME OR THE INCOME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSES SABLE UNDER THIS ACT DURING THE PREVIOUS YEAR CORRESPONDING TO THE R ELEVANT ASSESSMENT YEAR, IN THE PRESCRIBED FORM AND VERIFIE D IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PART ICULARS AS MAY BE PRESCRIBED; AND THE PROVISIONS OF THIS ACT SHALL , SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETU RN REQUIRED TO BE FURNISHED UNDER SECTION 139 (VII) THE ABOVE STATUTORY FRAMEWORK MAKES IT CLEAR THAT THE ISSUE OF A NOTICE UNDER SECTION 148 SEEKING ACTION UNDER SECTION 147 IS DEPENDENT ON RECORDING OF A SATISFACTION AS TO ESCA PEMENT OF INCOME AS A THRESHOLD' REQUIREMENT. ACCORDINGLY, SE CTIONS 147 AND 148 ARE TO BE CONSIDERED AS TWIN SECTIONS AND WHERE ACTION IS INVALID UNDER SECTION 147, NOTICE UNDER SECTION 148 BECOMES INVALID IN CONSEQUENCE. THE CONDITIONS SPECIFIED IN THE SECTION FOR INITIATING REASSESSMENT PROCEEDINGS ARE OVERRIDING CONDITIONS, THE FULFILLMENT OF ALL OF WHICH ALONE WOULD CONFER JURI SDICTION-ON AN ASSESSING OFFICER TO MAKE A RE- ASSESSMENT. (VIII) FOR RESTORING TO REASSESSMENT THE MOST NOTED REQUIREMENT IS THAT THE ASSESSING OFFICER SHOULD HAVE REASON TO BE LIEVE THAT INCOME CHARGEABLE FOR THE RELEVANT ASSESSMENT YEAR HAS ESCAPED ASSESSMENT.. MAKES IT CLEAR THAT WHILE THE ASSES SING OFFICER IN INITIATING RE-ASSESSMENT PROCEEDINGS ARE VERY WIDE, AT THE SAME TIME THEY ARE NOT ALL-ENCOMPASSING IN NATURE. THESE POWERS ARE VITALLY CONTROLLED BY THE WORDS REASON REASON REASON REASON TO BELIEVE TO BELIEVE TO BELIEVE TO BELIEVE EMPLOYED BY THE SECTION, THE REASONS FOR FORMATION OF BELIEF FOR RE OPENING AN ASSESSMENT MUST HAVE A RATIONAL CONNECTION OR RELEV ANT BEARING ON THE FORMATION OF THE BELIEF. THE EXISTENCE OR OTHER WISE OF SUCH A BELIEF, ON THE PART OF THE ASSESSING OFFICER, IS HO T A MERE QUESTION OF LIMITATION BUT THE VERY FOUNDATION OF HIS JURISDICT ION. THESE WORDS ITA NO. 6925/DEL/2018 12 | P A GE IMPORT THE PRESENCE OF THE FOLLOWING FOUR ESSENTIAL INGREDIENTS. I. SOME MATERIAL OR MATERIALS AND NOT MERE FANCY, IMAG INATION, SPECULATION, SUSPICION; II. A NEXUS BETWEEN SUCH MATERIAL AND THE BELIEF OF ESC APEMENT OF INCOME FROM ASSESSMENT; III. AN APPLICATION OF MIND BY THE ASSESSING OFFICER TO SUCH MATERIAL; AND IV. AN INFERENCE BASED ON REASON DRAWN TENTATIVELY BY T HE OFFICER THAT INCOME HAS ESCAPED ASSESSMENT. (IX) THE ENTIRE GAMUT OF THE SCOPE AND EXTENT OF TH E RE- ASSESSMENT PROVISIONS ALSO ENGAGED THE ATTENTION OF THE HDNBLE SUPREME COURT IN THE BASE OF M/S PLARASHURAM POTTERY WORKS CO LTD V ITO F(1977) 106 ITR 1 (SC)] WHEREIN THE FOLLOWING REMARKS WERE MADE IT HAS BEEN SAID THAT THE TAXES ARE THE PRICE THAT WE PAY FOR CIVILIZATION. IF SO, IT IS ESSENTIAL THAT THOSE WHO ARE ENTRUSTED WITH THE TASK OF CALCULATING AND REALIZING THAT PRICE SH OULD FAMILIARIZE THEMSELVES WITH THE RELEVANT PROVISIONS AND BECOME WELL-VERSED WITH THE LAW ON THE SUBJECT. ANY REMISSNESS ON THEI R PART CAN ONLY BE AT THE COST OF THE NATIONAL EXCHEQUER AND MUST N ECESSARILY RESULT IN LOSS OF REVENUE. AT THE SAME TIME, WE HAVE TO BEAR IN MIND THAT POLICY OF LAW IS THAT THERE MUST BE A POINT OF FINA LITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTI VATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICIAL CONTROVERSIES AS I T MUST IN OTHER SPHERES OF HUMAN ACTIVITY. THE ESSENTIAL PRINCIPLE AS TO THE RULE OF FINALITY OF AN ASSESSMENT IS THAT THE ASSESSING OFFICER CANNOT CHANGE HIS MOOD A ND TRY TO REOPEN A CLOSED STATE OF AFFAIRS. BUT IF IT IS A CA SE WHERE THE REOPENING IS SOUGHT IN CONSEQUENCE OF SOME DEFAULT ON THE PART OF THE ASSESSEE OR IN CONSEQUENCE OF INFORMATION IN PO SSESSION OF THE OFFICER WHICH LEADS TO A REASONABLE BELIEF THAT THE RE HAS BEEN AN ESCAPEMENT AND IF THAT INFORMATION IS NOT THE PRODU CT OF A CHANGE OF MOOD BUT IS ATTRIBUTABLE TO CONCRETE MATERIAL NO TICED BY HIM, THEN THE ABOVE PRINCIPLE MAY NOT APPLY. (X) IN THE INSTANT CASE A REVIEW OF THE REASONS REC ORDED FOR RESORTING TO ASSESSMENT PROCEEDINGS AND CONSEQUENT ISSUE OF ITA NO. 6925/DEL/2018 13 | P A GE NOTICE U/S 148 WOULD MAKE IT CLEAR THAT BASIS FOR T HE FORMATION OF THE OPINION THAT INCOME HAS ESCAPED ASSESSMENT IS T HE SURVEY CARRIED OUT BY' INVESTIGATION WING IN THIS CONNECTI ON IT IS SUBMITTED THAT THERE IS NO TANGIBLE EVIDENCE TO LEAD TO THE C ONCLUSION THAT THE ASSESSEE'S INCOME HAS 'ESCAPED ASSESSMENT' SO AS TO CALL FOR REASSESSMENT PROCEEDINGS. IN THIS CONNECTION, IT I S SUBMITTED THAT THE NOTICE U/S 142(1) OF THE INCOME-TAX ACT, 1961 W AS ISSUED ON 13-09-2010 TO THE ASSESSEE IN RESPONSE TO WHICH A R ETURN OF INCOME ALONG WITH COMPUTATION OF INCOME, BALANCE SH EET AND INCOME AND EXPENDITURE ACCOUNT WAS DULY FILED ON 12 -10-2010. AS SUCH THERE IS NO TANGIBLE EVIDENCE OF ESCAPEMENT OF INCOME TO WARRANT A REVISIT OF THE ASSESSMENT AND RESORTING T O ASSESSMENT PROCEEDINGS U/S 147/148 OF THE INCOME TAX ACT, 1961 AND ACCORDINGLY THE BASIS OF RECORDING OF REASON TO BE LIEVE AS TO ESCAPEMENT OF INCOME DOES NOT EXIST IN THE INSTANT CASE. (XI) IN THE LIGHT OF THESE FACTS, IT IS CLEAR THAT ISSUE OF NOTICE U/S 148 IS ONLY BASED ON A CHANGE OF OPINION AND THE REASONS TO BELIEVE FOR THE CONCLUSION AS TO ESCAPEMENT OF INCO ME ARE ONLY CONJECTURAL AND TANGIBLE AND CONCRETE WHICH ARE THE TOUCHSTONES AGAINST WHICH ANY ACTION HAS TO BE JUDGED. ACCORDI NGLY, IT IS HUMBLY SUBMITTED THAT THE ACTION OF ISSUES OF NOTIC E U/S 148 IS VOID, AB-INITIO AND DESERVES TO BE FILED AND NOT DE ALT WITH FURTHER AT THIS STAGE ITSELF, (XII) THE ABOVE VIEW IS ALSO REINFORCED WITH REFERE NCE TO THE FOLLOWING JUDICIAL DECISIONS:- REASON TO BELIEF A SALUTARY SAFEGUARD REASON TO BELIEVE' IS A COMMON FEATURE IN TAXING S TATUTES, IT HAS BEEN CONSIDERED TO BE THE MOST SALUTARY SAFEGUARD O N THE EXERCISE OF POWER BY THE OFFICER CONCERNED. IT IS MADE OF TW O WORDS REASON AND TO BELIEVE. THE WORD REASON MEANS CAUSE OR JUSTIFICATION AND THE WORD BELIEVE' MEANS TO ACCEPT AS TRUE OR T O HAVE FAITH IN IT. BEFORE THE OFFICER HAS FAITH OR ACCEPTS A FACT TO EXIST THERE MUST BE A JUSTIFICATION FOR IT. THE BELIEF MAY NOT BE OP EN TO SCRUTINY AS IT IS THE FINAL CONCLUSION ARRIVED AT BY THE OFFICER C ONCERNED, AS A RESULT OF MENTAL EXERCISE MADE BY HIM ON THE INFORM ATION RECEIVED. BUT, THE REASON DUE TO WHICH THE DECISION IS REACHE D CAN ALWAYS BE EXAMINED. WHEN IT IS SAID THAT REASON TO BELIEVE IS NOT OPEN TO SCRUTINY WHAT IS MEANT IS THAT THE SATISFACTION ARR IVED AT BY THE OFFICER CONCERNED IS IMMUNE FROM CHALLENGE .BUT WH ERE THE SATISFACTION IS NOT BASED ON ANY MATERIAL OR IT CAN NOT WITHSTAND THE TEST OF REASON, WHICH IS AN INTEGRAL PART OF IT, TH EN IT FALLS THROUGH AND THE COURT IS EMPOWERED TO STRIKE IT DOWN. BELIE F MAY BE ITA NO. 6925/DEL/2018 14 | P A GE SUBJECTIVE BUT REASON IS OBJECTIVE. ' GANGS PRASAD MAHESHWARI & OTHERS VS CLT - [(1983) 1 39 ITR 1043 (ALL.)] MAHESH KUMAR AGRAWAL V. DCIT - [(2003) 180 GTR 517 (CAL.)] NO REASON TO BELIEVE ON SUSPICION, GOSSIP OR RUMOR THERE CAN BE NO MANNER OF DOUBT THAT THE WORDS REA SON TO BELIEVE' SUGGEST THAT THE BELIEF MUST BE- THAT OF AN HONEST AND REASONABLE PERSON BASED UPON REASONABLE GROUNDS AND THAT THE A SSESSING OFFICER MAY ACT ON DIRECT OR CIRCUMSTANTIAL EVIDENC E BUT NOT ON MERE SUSPICION, GOSSIP OR RUMOR. THE ASSESSING OFFICER W OULD BE ACTING WITHOUT JURISDICTION IF THE REASON FOR HIS BELIEF T HAT THE CONDITIONS ARE SATISFIED DOES NOT EXIST OR IS NOT MATERIAL OR RELEVANT TO THE BELIEF REQUIRED BY THE SECTION. THE COURT CAN ALWAY S EXAMINE THIS ASPECT THOUGH THE DECLARATION OR SUFFICIENCY OF THE REASONS FOR THE BELIEF CANNOT BE INVESTIGATED BY THE COURT, (SHEO N ATH SINGH V. ACIT CENTRAL, CALCUTTA - [(1971) 82 ITR 147 (SC)] BELIEF IN GOOD FAITH AND NOT PRETENCE THE WORD 'REASON TO BELIEVE MEANS THAT A. REASONAB LE MAN, UNDER THE CIRCUMSTANCES, WOULD FORM A BELIEF WHICH WILL IMPEL HIM TO TAKE ACTION UNDER THE LAW. THE FORMATION OF OPIN ION HAS TO BE IN GOOD FAITH AND NOT ON MERE PRETENCE. AJIT JAIN V. UNION OF INDIA AND OTHERS [(2000) 242 ITR 302 (DELHI)] REASON TO BELIEVE MUST BE ON SUBSTANTIAL OR TANGIB LE MATERIAL THE CAREFUL SELECTION OF THESE WORDS BY THE STATUTE AND THE DRASTIC NATURE OF THE POWERS NECESSARILY POINT TO A JUDICIA L APPLICATION OF THE MIND TO SOME SUBSTANTIAL MATERIAL BY THE OFFICE R ACTING WITH A SENSE OF RESPONSIBILITY. IT WOULD ALSO POSTULATE THAT INFORMATION IN POSSESS ION OF THE AD IS NOT A MERE CANARD OR AN UNVERIFIED PIECE OF G OSSIP BUT INFORMATION WHICH, IN THE CIRCUMSTANCES, MAY BE REG ARDED AS FAIRLY RELIABLE. ITA NO. 6925/DEL/2018 15 | P A GE C VENKATA REDDY VS ITO [(1967) 66 ITR 212 (MYSORE)] TANGIBLE MATERIAL THE EXISTENCE OF TANGIBLE MATERIAL FOR FORMATION OF OPINION, IS A P RE- REQUISITE L.R GUPTA VS UNION OF INDIA AND OTHERS - [(1992) 19 4 ITR 32 (DEL)] BELIEF INDUCED BY REASON AND NOT MERE BELIEF IN EXISTENCE OF REASONS THE EXPRESSION 'REASON TO BELIEVE' PREDICATES THAT THE ASSESSING OFFICER HOLDS THE BELIEF INDUCED BY THE EXISTENCE O F REASONS FOR HOLDING SUCH BELIEF. IT CONTEMPLATES EXISTENCE OF. REASONS ON WHICH THE BELIEF IS FOUNDED, AND NOT MERELY A BELIEF IN THE EXISTENCE OF REASONS IND BELIEF. CALCUTTA DISCOUNT GO. LTD. V. AO [(1961) 41 ITR 1 91 (SC)] : BHADARMAL HAZARIMAL V. 1.T.0 - [(1975) 100 ITR 159 (GAU)] IN VIEW OF THE ABOVE, IT IS CLEAR THAT THERE IS NO GROUND TO CONCLUDE THAT INCOME HAS ESCAPED ASSESSMENT IN THE CASE OF T HE ASSESSEE AND, ACCORDINGLY, IT IS PRAYED THAT THE NOTICE IN Q UESTION MAY KINDLY BE FILED. THANKING YOU, YOURS FAITHFULLY, MADAN MOHAN TIWARI 5. A PERUSAL OF THE AFORESAID OBJECTIONS WOULD SHOW THAT THE ASSESSEE INTER-ALIA HAD BROUGHT TO THE KNOWLEDGE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAD DULY FILED THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. FURTHER, T HE ASSESSEE ITA NO. 6925/DEL/2018 16 | P A GE HAD DULY PLEADED THAT THE AFORESAID AMOUNT OF RS.1, 76,11,272/- WAS NOT INCOME OF THE ASSESSEE RATHER THE SAME WAS CO NTRACTUAL RECEIPTS AND THAT THE ASSESSEE HAD RETURNED THE INC OME IN HIS RETURN OF INCOME. HOWEVER, THE ASSESSING OFFICER D ISMISSED THE OBJECTIONS OF THE ASSESSEE BY OBSERVING AS UNDER:- OFFICE OF THE INCONRE TAX OFFICER, WARD-22(1) ROOM NO. 1015, E-2 BLOCK, PRATYAKSH KAR BHAWAN CIVI C CENTRE, J.L. NEHRU MARG, NEW DELHI. ****** F.NO. ITO/W-22FL)/SCRUTINY/2012-13/1048 DATED:30.12 .2013 TO, SHRI MADAN MOHAN TIWARI PROP. M/S M.M. ENGINEERING. J-145, KALKAJI, NEW DELHI - 110019. SIR, SUB: PROCEEDINGS U/S 148 OF THE I.T. ACT, 1961 IN T HE CASE OF SHRI MADAN MOHAN TIWARI FOR THE A.Y. 2008-09 - OBJECTION TO THE ISSUE OF NOTICE U/S 147/148 OF THE I.T.ACT, 1961 - REG. PLEASE REFER TO YOU LETTER DATED 25.07.2013 RAISING OBJECTIONS AGAINST INITIATION OF REASSESSMENT PROCEEDINGS U/S 148 OF THE I.T. ACT FOR THE A.Y. 2008-09. 2. IN THIS CONNECTION, IT IS INFORMED THAT THE NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 WAS ISSUED ON THE BASIS OF THE INFORMATION RECEIVED BY THE ASSESSING OFFICER. ON THE BASIS OF THE SAID INFORMATION THE THEN AO HAD THE REASON TO BELIEVE THAT INCOME T O THE TUNE OF RS.1,76,11,272/- CHARGEABLE TO TAX HAD ESCAPED ASSE SSMENT FOR THE A.Y. 2008-09 AND REQUIRED TO BE REASSESSED. THE REA SONS FOR REOPENING OF ASSESSMENT WERE DULY RECORDED AND AFTER OBTAININ G THE APPROVAL OF THE THEN ADDL. CIT, RANGE-22. , NEW DELHI IN TERMS OF SECTION 151 OF INCOME TAX ACT, 1961. SUBSEQUENTLY, A NOTICE U/S 14 8 DATED 05.02.2013 WAS ISSUED AND SERVED TO YOU. 3. THE ASSESSEE VIDE LETTER DATED 25.07.2013 HAS RAIS ED THE FOLLOWING OBJECTIONS REGARDING RE-OPENING OF ASSESSMENT U/S 1 48 OF THE I.T. ACT, 1961. 3.1 IN THE BEGINNING THE ASSESSEE HAS GIVEN BRIEF OF HI S CASE THAT THE RETURN WAS FILED IN RESPONSE TO NOTICE U/S 142 VIDE REPLY DATED ITA NO. 6925/DEL/2018 17 | P A GE 12.10.2010 AND THEREAFTER NOTICE U/S 148 WAS ISSUED . THE ASSESSEE HAS REQUESTED REASON RECORDED FOR RECOURSE TO THE A SSESSMENT PROVISIONS U/S 148 OF I.T.ACT, 1961. THE ASSESSEE H AS REPRODUCED THE PROVISIONS RELATING TO REASSESSMENT OF ESCAPED INCO ME AS INCORPORATED IN S. 147 AND MENTIONED THE RELEVANT PARTS IN HIS L ETTER. THE ASSESSEE HAS ALSO MENTIONED THE FRAME WORK OF SECTION 148 TO 151 OF THE I.T.ACT, 1961. 3.2. THE ASSESSEE HAS FURTHER STATED THAT IN THE IN STANT CASE A REVIEW OF THE REASONS RECORDED FOR RESORTING TO ASSESSMENT PROCEEDINGS AND CONSEQUENT ISSUE OF NOTICE U/S 148 WOULD MAKE IT CL EAR THAT BASIS FOR THE FORMATION OF THE OPINION THAT INCOME HAS ESCAPE D ASSESSMENT IS THE SURVEY CARRIED OUT BY INVESTIGATION WING. IN TH IS CONNECTION IT IS SUBMITTED THAT THERE IS NO TANGIBLE EVIDENCE TO LEA D TO THE CONCLUSION THAT THE ASSESSEES INCOME HAS ESCAPED ASSESSMENT SO AS TO CALL FOR REASSESSMENT PROCEEDINGS. IN THIS CONNECTION, IT IS SUBMITTED THAT THE NOTICE U/S 142(1) OF THE INCOME TAX ACT, 1961 WAS I SSUED ON 13.09.2010 TO THE ASSESSEE IN RESPONSE TO WHICH A R ETURN OF INCOME ALONG WITH COMPUTATION OF INCOME, BALANCE SHEET AND INCOME AND EXPENDITURE ACCOUNT WAS DULY FILED ON 12.10.2010. A S SUCH THERE IS NO TANGIBLE EVIDENCE OF ESCAPEMENT OF INCOME TO WARRAN T A REVISIT OF THE ASSESSMENT AND RESORTING TO ASSESSMENT PROCEEDINGS U/S 147/148 OF THE INCOME TAX ACT, 1961 AND ACCORDINGLY THE BASIS OF RECORDING OF REASON TO BELIEVE AS TO ESCAPEMENT OF INCOME DOES NOT EXIST IN THE INSTANT CASE. 3.3. IN THE LIGHT OF THESE FACTS, IT IS CLEAR THAT ISSUE OF NOTICE U/S 148 IS ONLY BASED ON A CHANGE OF OPINION AND TH E REASONS TO BELIEVE FOR THE CONCLUSION AS TO ESCAPEMENT OF INCO ME ARE ONLY CONJECTURAL AND NOT TANGIBLE AND CONCRETE WHICH ARE THE TOUCHSTONES AGAINST WHICH ANY SUCH ACTION HAS TO BE JUDGED. ACCORDINGLY, IT IS HUMBLY SUBMITTED THAT THE ACTION OF ISSUES OF NOTICE U/S 148 IS VOID, AB-INITIO AND DESERVES TO B E FILED AND NOT DEALT WITH FURTHER AT THIS STAGE ITSELF. IN SUPPORT OF HIS CONTENTION ON REASON TO BELIEVE ASSESSEE HAS GIVEN REFERENCES TO THE FOLLOWING JUDICIAL DECISIONS: A. GANGA PRASAD MAHESHWARI & OTHERS VS CIT [(1983) 13 9 ITR 1043 (ALL.)] B. MAHES KUMAR AGRAWAL V DCIT-[(2003) 180 CTR 517 (CAL .)] C. SHEO NATH SINGH V ACIT CENTRAL, CALCUTTA [(1971) 8 2 ITR 147( D. SC)] E. AJIT JAIN V. UNION OF INDIA AND OTHERS [(1992) 242 ITR 302 (DELHI)] F. C. VENTAKATA REDDY VS ITO [(1967) 66 ITR 212 (MYSOR E)] ITA NO. 6925/DEL/2018 18 | P A GE G. L. R. GUPTA VS UNION OF INDIA AND OTHERS [(1992) 1 94 ITR 32 (DEL)] & H. CALCUTTA DISCOUNT CO. LTD. VS ASSESSING OFFICER-[(1 961) 41 ITR 191 (SC)] I. BHADARMAL HAZARIMAL V ITO-[(1975) 100 ITR 159 (GAU) ] 3.4. IN VIEW OF THE ABOVE, THE ASSESSEE HAS STATED T HAT IT IS CLEAR THAT THERE IS NO GROUND TO CONCLUDE THA T INCOME HAS ESCAPED ASSESSMENT IN THE CASE OF ASSESSEE AND ACCORDINGLY, IT IS PRAYED THAT THE NOTICE IN QUESTI ON MAY KINDLY BE FILED. 3.5. IN 'NUTSHELL', THE ASSESSEE BEGS TO SUBMIT THA T LOOKING TO THE OVERALL FACTS AND CIRCUMSTANCES OF T HE CASE, THERE WAS NO OCCASION OR JUSTIFICATION, EITHER FACTU AL OR LEGAL, TO INITIATE SUCH REASSESSMENT PROCEEDINGS AN D THE SAME ARE NOT VALID IN THE EYES OF LAW AND SAME DESE RVE TO BE TERMINATED AT THIS STAGE ITSELF. 4. FROM THE ASSESSEES OBJECTIONS THE FOLLOWING MAIN ISS UES ARISES: A) THE REASON FOR RE-OPENING REASSESSMENT U/S 148 OF T HE I.T. ACT, 1961 FOR THE ESCAPEMENT OF INCOME, ARE ER RONEOUS AND UNTENABLE AND NOTHING BUT THE MERE BELIEF WITHOU T ANY AUTHENTIC MATERIAL AND COPY OF DOCUMENTS. B) THE INFORMATION PROVIDED BY THE DIRECTORATE OF INCO ME TAX (INVESTIGATION) THROUGH SURVEY ON 23/04/2012 OR OTHERS IS NOT SUFFICIENT TO RE-OPEN THE ASSESSMENT WHEN THE ASSESSING OFFICER DOES NOT HAVE THE VALID PROOF IN ADVANCE. C) ON GOING THROUGH THE AST SYSTEM IT IS FOUND THAT ASSESSEE HAS NOT FILED RETURN FOR A.Y. 2008-09 AND O N EXAMINING 26AS IT IS FOUND THAT ASSESSEE HAS TOTAL RECEIPT OF RS.1,76,11,272/- IS NOT SUFFICIENT REASON RELATI NG TO REASSESSMENT OF ESCAPED INCOME. 5 COMING TO THE OBJECTION AS MENTIONED ABOVE, IT IS BROUGHT TO YOUR NOTICE THAT IT HAS ALREADY BEEN MENTIONED T HAT THE RELEVANT ASSESSMENT IN YOUR CASE WAS REOPENED ON THE BASIS OF INFORMATION/SURVEY REPORT RECEIVED FROM THE INCO ME TAX OFFICER, WARD-1(2), HYDERABAD DURING CAMP AT NEW DEL HI ITA NO. 6925/DEL/2018 19 | P A GE VIDE HIS LETTER F.NO. ITO-WARD- 1 (2)/HYD/SURVEY REPORT/2012-13 DATED 24.04.2012. 5.1 IN THIS CASE, THE ASSESSEE HAS FILED HIS RETURN OF INCOME IN RESPONSE TO NOTICE ISSUED U/S 142(1) IN RESPECT OF A.Y. 2008-09 DECLARING TOTAL INCOME OF RS 2,80,070/-. 5.2 AS PER THE INFORMATION PROVIDED BY THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-1' HYDERABAD, THA T M/S AIR LIQUIDE ENGINEERING INDIA PVT LTD PAID RS.1 .60 CRORES IN FY 2007-08, RS.40 LAKHS IN FY 08-09 AND RS.32,23,100/- IN FY 09-10 TO M/S M.M. ENGINEERING IN DIA PVT LTD (PROPRIETARY CONCERN OF SRI M.M. TIWARI, J-1 45, KALKAJI, DELHI) AS REPRESENTATION AND CONSULTANCY F EES. M/S AIR LIQUIDE ENGINEERING INDIA PVT LTD FILED AN APPL ICATION BEFORE THE HONBLE SETTLEMENT COMMISSION, CHENNAI B ENCH AND THE HONBLE COMMISSION PERMIT ENQUIRY IN CONNE CTION WITH THE TRANSACTIONS WITH M/S M.M. ENGINEERING ENTERPRISES. AS PART OF THE ENQUIRY, SRI M.M. TIWARI WAS SUMMONED U/S 131 5.3 BY THE UNDERSIGNED TO PRODUCE BOOKS OF ACCOUNTS ETC . AND GIVE EVIDENCE. HOWEVER, SRI M.M. TIWARI DID NOT B OTHER TO APPEAR IN RESPONSE TO THE SUMMONS NOR DID HE FIL E ANY EVIDENCE. TO UNDERSTAND THE CORRECT FACTS, INVESTIG ATION WING, DELHI WAS REQUESTED TO CONDUCT A SURVEY. 5.4 A SURVEY U/S 133A WAS CONDUCTED BY UNIT-IV, DIRECTORATE OF INVESTIGATION, NEW DELHI. DURING SURV EY IT WAS REVEALED THAT SRI M.M. TIWARI, IS NOT MAINTAINING BOOKS OF ACCOUNTS AND COULD NOT FURNISH ANY EVIDENCE RELA TED TO HIS INCOME AND EXPENDITURE. HE DID NOT PRODUCE EVEN COPIES OF RETURNS OF INCOME FOR VERIFICATION. H SIM PLY STATED THAT ALL THE INFORMATION IS AVAILABLE WITH INCOME TA X DEPARTMENT. IT IS ALSO NOTICED THAT HE AND HIS FAMI LY MEMBERS ARE MAINTAINING 61 BANK ACCOUNTS AT VARIOUS BANKS IN NEW DELHI AND PATNA AND THAT THEY ARE MAINTAINING 31 DEBIT/CREDIT CARDS. WIFE OF SH M.M. TIWARI ALSO OWNS TWO FLATS. 5.5 PRELIMINARY ENQUIRIES INDICATES THAT SRI M.M. TIWAR I IS RECEIVING SUBSTANTIAL AMOUNTS FROM COMPANIES LIKE M /S AIR LIQUIDEE ENGINEERING (I) PVT. LTD. AS CONSULTANCY A ND REPRESENTATION FEES. ITA NO. 6925/DEL/2018 20 | P A GE 5.6 THESE INFORMATIONS ARE ENOUGH TO FORM A BELIEF THA T INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 6. FOR SUPPORTING THE REOPENING OF ASSESSMENT U/S 148 RELIANCE HAS BEEN PLACED ON THE FOLLOWING CASE LAWS: I ASST. CIT VS RAJESH JHAVERI STOCK BROKERS PVT. LTD (2007)(SC)291 ITR 500 IT IS IMPORTANT THAT THE AO HAS CAUSE FOR JUSTIFICA TION TO KNOW OR SUPPOSE THE INCOME HAD ESCAPED ASSESSMENT . IT CAN BE SAID TO HAVE REASON TO BELIEF THAT INCOME HA D ESCAPED ASSESSMENT. THE EXPRESSION CANNOT BE READ T O MEAN THAT THE AO SHOULD HAVE FINALLY ASCERTAINED TH E FACTS BY LEGAL EVIDENCE OR CONCLUSION. REASON TO BELIEVE HAS BEEN INTERPRETED AND THE APEX COURT HELD THAT WHAT IS REQ UIRED IS REASON TO BELIEVE AND NOT THE ESTABLISHED FACT OF E SCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTICE, THE ONL Y QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE ESCAPEMENT OF INCOME IS NOT THE CONCERN AT THAT STAGE. II CALCUTTA DISCOUNT CO. LTD VS ITO 236 ITR 34 IT WAS HELD THAT IT WAS THE DUTY OF THE ASSESSEE TO DISCLOSE ALL FACTS WHICH HAD A BEARING ON THE QUEST ION, WHAT INFERENCES SHOULD BE DRAWN FROM THE FACTS SO DISCLOS ED WAS A MATTER TO BE EXAMINED BY THE ITO. THE COURT FURTH ER HELD THAT THE ITO COULD ISSUE A NOTICE FOR REOPENING THE ASSESSMENT IF HE HAD REASON TO BELIEVE THAT THE INC OME, PROFIT FOR GAINS HAS BEEN UNDER ASSESSED AND SUCH U NDER ASSESSMENT WAS DUE TO NON DISCLOSURE OF MATERIAL FAC TS BY THE ASSESSEE. THE ADEQUACY OR OTHERWISE OF THE GROUN DS OF SUCH BELIEF WAS NOT OPEN TO INVESTIGATION BY THE COU RTS. III CALCUTTA DISCOUNT CO. LTD VS ITO 236 ITR 34 WHERE THE COURT HELD THAT IF NO CONSCIOUS CONSIDERATION OF THE MATERIAL AVAILABLE ON RECORD I S MADE AND A MISTAKE HAS BEEN COMMITTED, IT WILL NOT PREVEN T THE COMPETENT OFFICER TO EXERCISE THE POWER U/S 147 - APPLICATION OF MIND OR NOT. 7. INITIATION OF THE PROCEEDINGS U/S 148 OF THE ACT, IS WHOLLY LEGAL AS ALL THE STATUTORY CONDITIONS LAID DOWN FOR REOPENING OF ASSESSMENT WERE COMPLIED WITH AS FOLLOWS: ITA NO. 6925/DEL/2018 21 | P A GE A) THERE WAS INFORMATION IN THE POSSESSION OF THE AO TO FORM REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. B) REASON WERE DULY RECORDED VIDE ORDER SHEET ENTRY DAT ED 05.02.2013 C) APPROVAL OF ADDL. COMMISSIONER OF INCOME TAX WAS OBTAINED. D) NOTICE U/S 148 DATED 05.02.2013 WAS ISSUED AND SERVED. AS WELL AS THE ASSESSMENT WAS REOPENED ON VALID REASONS AFTER DUE APPLICATION OF MIND AS BEFORE REO PENING OF ASSESSMENT ALL THE RELEVANT MATERIAL PERTAINING TO THE RELEVANT ASSESSMENT YEAR WAS GONE THROUGH. 8. AS FAR MAKING AVAILABLE THE DETAILS AND RESULT OF ENQUIRES CONDUCTED BY THE INVESTIGATION WING IS CONC ERNED, THE SAME HAS ALREADY BEEN BRIEFED AND CONTAINED IN THE REASONS RECORDED AND PROVIDED TO THE ASSESSEE. AT T HIS STAGE, THE FULL DISCLOSURE OF DETAILS AND RESULT OF ENQUIRIES ARE NOT REQUIRED TO BE MADE AVAILABLE. HOWEVER DURIN G THE COURSE TO ASSESSMENT PROCEEDING, THE PRINCIPLE OF N ATURAL JUSTICE SHALL BE DULY FOLLOWED. 9. IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED VIEW THA T THERE IS NO MERIT IN THE VARIOUS ARGUMENT PUT FORWAR D BY YOU AGAINST THE REOPENING OF ASSESSMENT. ACCORDINGL Y, I INTENT TO PROCEED, FURTHER WITH THE REASSESSMENT PRO VIDING. 10. YOU ARE FURTHER REQUESTED TO PROVIDE CERTAIN INFORMATION / EXPLANATIONS IN RESPECT OF THE POINTS AS UNDER: A) YOUR EDUCATION QUALIFICATION 85 SOURCE OF INCOME. B) COPY OF AUDIT REPORT OR STATEMENT FOR THE AY 2008-09 . C) STATE OF AFFAIRS FOR THE LAST TWO ASSESSMENT YEARS ( I.E 2006-07 & 2007-08) ALONG WITH COPY OF RETUM(S) AND COMPUTATION OF INCOME. C) PLEASE PROVIDE COPY OF AGREEMENT TO WHOM SERVICES/CONSULTANCY GIVEN. D) STATEMENT OF ALL BANK ACCOUNTS IN YOUR NAME OR IN WHICH YOU ARE A JOINT HOLDER. E) DETAILS OF ALL CREDIT / DEBIT CARDS HELD BY YOU AS ITA NO. 6925/DEL/2018 22 | P A GE INDIVIDUAL OR JOINTLY. F) ALL BOOKS OF ACCOUNTS AND BILLS/VOUCHERS OF EXPENDI TURE. 11. THIS MAY ALSO BE TREATED AS NOTICE U/S 142(1) OF INCOME TAX ACT 1961. COMPLIANCE TO THIS NOTICE IS T O MADE BEFORE THE UNDERSIGNED ON OR BEFORE 06.01.2014 AT 11:30A.M. EITHER IN PERSON OR THROUGH AN AUTHORIZED REPRESENTATIVE. FAILURE TO COMPLIANCE, WILL BE TREATE D AS YOU HAVE NOTHING TO SUBMIT/EXPLAIN AGAINST AS ABOVE AND THE MATTER BE DISPOSED OFF ON THE MERITS AND FACTS AVAI LABLE ON RECORD. 6. A PERUSAL OF THE ABOVE DECISION OF THE ASSESSIN G OFFICER WOULD SHOW THAT THE ASSESSING OFFICER DID NOT DEAL WIT H OBJECTION OF THE ASSESSEE THAT ASSESSEE HAD DULY FILED HIS RE TURN OF INCOME AND FURTHER THAT THAT THE ENTIRE AMOUNT OF RECEIPT NOTED BY THE ASSESSING OFFICER FROM FORM NO.26AS WAS NOT INCOME OF THE ASSESSEE RATHER THE SAME WAS CONTRACTUAL RECEIPT OUT OF WHICH THE ASSESSEE HAS RETURNED THE TAXABLE INCOME IN THE INC OME TAX RETURN. THE ASSESSEE HAD CONTENDED THAT INFORMATION ON THE BASIS OF WHICH, THE ASSESSING OFFICER HAD REOPENED THE ASS ESSMENT WAS WRONG AND THAT THE TRUE FACTS WERE BROUGHT TO THE KN OWLEDGE OF THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFI CER TOTALLY IGNORED THE ABOVE FACTUAL POSITION AND PROCEEDED TO FRAME THE RE- ASSESSMENT WHICH WAS BAD IN LAW. 7. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THE ASSESSEE HAD NOT SHOWN ALL THE RECEIPTS OF RS.1,76,1 1,272/- IN ITA NO. 6925/DEL/2018 23 | P A GE THE RETURN OF INCOME. SHE HAS FURTHER SUBMITTED THA T IT HAS BEEN NOTED BY THE LD. CIT(A) THAT THE BEHAVIOR OF THE AS SESSEE DURING THE SURVEY PROCEEDINGS WAS NOT COOPERATIVE DUE TO WHI CH THE ASSESSING OFFICER COULD NOT GET THE CORRECT INFORMA TION ABOUT THE FILING OF THE RETURN. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND HAV E ALSO GONE THROUGH THE RECORD. WE FIND THAT THE ASSESSING OFFICER HAD FORMED THE BELIEF THAT THE INCOME OF THE ASSESSEE H AD ESCAPED ASSESSMENT ON THE BASIS OF INFORMATION THAT THE ASS ESSEE HAD TOTAL RECEIPT OF ABOUT RS.1.76 CRORES AS PER FORM N O.26AS AND FURTHER THAT THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. HOWEVER, ON THE RECEIP T OF NOTICE U/S 148 OF THE ACT, THE ASSESSEE FILED OBJECTIONS A GAINST THE REOPENING OF THE ASSESSMENT STATING THEREIN THAT TH E INFORMATION ON THE BASIS OF WHICH THE ASSESSING OFFICER HAD FORM BELIEF OF ESCAPEMENT OF INCOME WAS, IN FACT, A WRONG INFORMATIO N. IN FACT, THE ASSESSEE HAD DULY FILED HIS RETURN OF INCOME AN D FURTHER ALL THE RECEIPTS COULD NOT BE CONSTRUED AS THE INCOME O F THE ASSESSEE. IN OUR VIEW, AS PER THE ABOVE FACTUAL POSITION, WHEN IT HAS BEEN BROUGHT TO THE KNOWLEDGE OF THE ASSESSING OFFICER TH AT THE ITA NO. 6925/DEL/2018 24 | P A GE INFORMATION ON THE BASIS OF WHICH HE (ASSESSING OFFI CER) HAD FORMED BELIEF OF ESCAPEMENT OF INCOME WAS IN FACT A WRONG INFORMATION, THEN THE VERY BELIEF OF THE ASSESSING OFFICER OF ESCAPEMENT OF INCOME OF THE ASSESSEE ON THE BASIS O F SUCH INFORMATION ALSO CEASED TO EXIST. THE ASSESSING OF FICER, UNDER THE CIRCUMSTANCES, SHOULD HAVE APPLIED HIS MIND AFRESH TO THE FRESH INFORMATION BROUGHT TO HIS KNOWLEDGE. IF AFTER DULY CONSIDERING THE RECORDS INCLUDING THE ITR OF THE ASSESSEE, THE ASSESSING OFFICER WOULD HAVE BEEN STILL OF THE VIEW THAT THERE WAS REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT, THEN UNDER THOSE CIRCUMSTANCES, THE ASSESSING OFFIC ER WAS SUPPOSED TO RECORD FRESH REASONS TO BELIEVE THAT TH E INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT, WHEREUPON, THE ASSE SSEE SHOULD HAVE BEEN GIVEN AN OPPORTUNITY TO FILE HIS O BJECTIONS AND THE ASSESSING OFFICER WAS ACCORDINGLY SUPPOSED TO P ROCEED IN ACCORDANCE WITH LAW. HOWEVER, IN THIS CASE, DESPIT E, IT WAS BROUGHT TO THE KNOWLEDGE OF THE ASSESSING OFFICER TH AT THE INFORMATION ON THE BASIS OF WHICH HE HAS FORMED BELI EF OF ESCAPEMENT OF INCOME OF THE ASSESSEE, WAS WRONG, STI LL THE ASSESSING OFFICER PROCEEDED TO FRAME THE ASSESSMENT ON THE BASIS ITA NO. 6925/DEL/2018 25 | P A GE OF THE AFORESAID WRONG INFORMATION WHICH WAS BASIS FOR FORMATION OF HIS BELIEF. UNDER THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS PROCEEDED IN ACCORDANCE WI TH LAW. FRAMING OF THE ASSESSMENT ON THE BASIS OF INFORMATI ON, WHICH WAS WRONG INFORMATION TO THE VERY KNOWLEDGE OF THE ASS ESSING OFFICER, IN OUR VIEW, CANNOT BE HELD TO BE JUSTIFIED , NOR THE SAME CAN BE SAID TO BE AN INFORMATION TO FORM THE BELIEF THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THE REASSESSMENT FRAMED ON THE BASIS OF SUCH WRONG INFOR MATION AND WRONG BELIEF IS NOT SUSTAINABLE IN THE EYES OF LAW AN D THE SAME IS HEREBY QUASHED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ST ANDS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 06/ 10/2021. SD/- SD/- (R.K.PANDA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI; DATED: 06 / 10 /2021 . F{X~{T F{X~{T F{X~{T F{X~{T ITA NO. 6925/DEL/2018 26 | P A GE COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI