Appeal details
Counselvise Citation
[2021] 107 COUNSELVISE.COM (IT) 4561 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 5 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
29-09-2021
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
16-09-2021
Assessment Year
2008-2009
Appeal Filed On
29-04-2019
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER IT A NO . 910/ BANG / 2019 ASSESSMENT YEAR : 2008 - 09 THE INCOME TAX OFFICER, WARD 3(2)(3), BANGALORE. VS. SRI MADE GOWDA THIBBE GOWDA, NO.290, BEML LAYOUT CROSS, 1 ST PHASE, V STAGE, RAJARAJESHWARINAGAR, BANGALORE 560 098. P AN: AEJPG 5365D APPELLANT RESPONDENT CO NO.51/BANG/2019 [IN IT A NO . 910/ BANG / 2019 ] ASSESSMENT YEAR : 2008 - 09 SRI MADE GOWDA THIBBE GOWDA, BANGALORE 560 098. PAN: AEJPG 5365D VS. THE INCOME TAX OFFICER, WARD 3(2)(3), BANGALORE. CROSS OBJECTOR RESPONDENT / APPELLANT IN APPEAL REVENUE BY : SHRI PRIYADARSHI MISHRA, JT. C IT(DR)(ITAT ), BENGALURU. A SSESSEE BY : SHRI H. GURUSWAMY, ITP & S HRI RAVI KIRAN, CA DATE OF HEARING : 16 . 0 9 .2021 DATE OF PRONOUNCEMENT : 29 .0 9 .202 1 ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 2 OF 38 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THE APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS)-13, BENGALURU, DATED 9.10.2018 FOR THE ASSESSMENT YEAR 2008-09. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LEARNED CIT(A) IS OPPOSED TO L AW AND FACTS OF THE CASE. 2. THE LD.CIT(A) ERRED IN STATING THAT THE ASSESSI NG OFFICER HAS RELIED UPON ONLY THE INFORMATION RECEIVED FROM THE INVESTIGATION WING WITHOUT ANY SUPPORTING MATERIAL TO ESTABLISH THE FACT THAT THE ADVANCE OF RS.2,55,00,0 00/- WAS IN THE NATURE OF COMMISSION/BROKERAGE OR FACILITATION FEE. 3. THE LD CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE STATEMENT RECORDED U/S 131(1A) ON 1902-2013, THE A SSESSEE HIMSELF HAS ADMITTED ON OATH BEFORE MADE BY THE AO IN RESPECT OF THAT HE HAS RECEIVED RS. 2,55,00,000/- F ROM SHRI.G.KRISHNA AND AGREED TO REVISE THE RETURN OF I NCOME FOR THE AY 2008-09 BY DECLARING NET TAXABLE INCOME OF RS.1,93,13,449/- 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD CIT(A) ERRED IN ALLOWING THE RELIEF CLAIMED BY THE ASSESSEE, AS THE ASSESSEE HAS NOT PRODUCED ANY MATERIAL EVIDE NCES TO PROVE THAT THE AMOUNT OF RS.2,55,00,000/- WAS RECEI VED FOR DEVELOPMENT WORK. 5. THE LD.CIT(A) ERRED IN LAW IN DELETING THE ADDIT IONS MADE BY THE AO WITHOUT APPRECIATING THE FACT THAT DURING TH E ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED IRRE LEVANT ORDER SHEET IN CITY CIVIL COURT TO SHOW THAT THE LA ND WAS UNDER LITIGATION BECAUSE OF WHICH DEVELOPMENT WORK WAS NOT COMPLETED AND THE AO HAS BROUGHT EXHAUSTIVELY IN TH E ASSESSMENT ORDER THAT NEITHER THE MAIN ASSESSEE'S N AME SHRI. ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 3 OF 38 K.G.KRISHNA NOR M/S ASTHITHVA GROUP IS MENTIONED IN THE DOCUMENT SUBMITTED BY THE ASSESSEE. 6. THE LD.CIT(A) ERRED IN LAW WITHOUT APPRECIATING THE FACT THAT IN THE BALANCE SHEET ATTACHED TO RETURN OF INCOME F ILED ON 17-11-2015 IN RESPONSE TO NOTICE U/S 148 FOR AY 200 8-09, THE ASSESSEE HAS SHOWN RS. 2,55,00,000/- AS ADVANCE RECEIVED TOWARDS DEVAGIRI PROJECT. HOWEVER, IN THE RETURN OF INCOME FILED ON 29-09-2011 FOR THE AY 2011-12, THE ASSESSE E HAS NOT SHOWN ANY ADVANCE RECEIVED AMOUNT IN THE BALANCE SH EET AND NO MENTION OF ANY LAND UNDER DISPUTE IS MADE DURING THE ASSESSMENT PROCEEDINGS FOR THE AY 2011-12. 7. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT(A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND TH AT OF THE ASSESSING OFFICER MAY BE RESTORED. 8. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND / OR DELETE ANY OF THE GROUNDS MENTIONED ABOVE. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE IN 1. VIEW OF THE FACTUAL DEFECT AS REGARDS THE DATE OF COMMUNICATION OF THE ORDER APPEALED AGAINST MENTIONED AS 17-03-2016 AS AGAINST 09-10-2018. 2. THE ACTUAL DATE OF COMMUNICATION HAS NOT BEEN MENTI ONED IN THE APPEAL MEMORANDUM AS REGARDS THE APPLICABILITY OF LIMITATI ON OF TIME SINCE THE APPEAL WAS FILED AFTER 201 DAYS FROM THE DATE OF AP PELLATE ORDER WITHOUT FILING ANY APPLICATION FOR CONDONATION OF DELAY IF ANY. 3. THE GROUND NO. 2 OF THE REVENUE'S APPEAL IS LIABLE TO BE DISMISSED SINCE THE LD. CIT(A) WAS JUSTIFIED TO HOLD THAT THE AO DID NO T HAVE ANY INFORMATION EXCEPT INFORMATION RECEIVED FROM THE INVESTIGATION WING. 4. THE GROUND NO.3 OF THE REVENUE'S APPEAL IS LI ABLE TO BE DISMISSED SINCE THE STATEMENT RECORDED U/S. 131(1A) ON 19-02- 2013 WAS NOT MAINTAINABLE IN LAW AND THE SAME WAS AGAINST TO THE INSTRUCTIONS OF THE CBDT. ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 4 OF 38 5. THE GROUND NO.4 OF THE REVENUE'S APPEAL IS NOT M AINTAINABLE SINCE THE LD. CIT(A) HAS SATISFIED AS TO THE EVIDENCE PRODUCED AS REGARDS RECEIPT O F RS.2,50,00,000/- WAS RELATED TO CONTRACTUAL DEVELOP MENT WORK. 6. THE GROUND NO.5 OF THE REVENUE'S APPEAL IS NOT MAIN TAINABLE SINCE THE LD. CIT(A) HAS SATISFIED ABOUT THE EVIDENCE PRODUCED R ELATING TO THE PAYMENT MADE BY SRI. K.G. KRISHNA ON THE ADVICE OF FORMER OWNERS OF THE LAND M/S. ASTHITHVA GROUP. 7. THE GROUND NO.6 OF THE REVENUE'S APPEAL IS NOT MAIN TAINABLE SINCE THE LD. C IT(A) HAS PASSED THE APPELLATE ORDER ON MERITS OF T HE CASE CONSIDERING THE TOTALITY OF THE CIRCUMSTANCES. 8. WITHOUT PREJUDICE TO THE ABOVE GROUNDS THE RESPONDE NT SUBMITS THAT PRIMA- FACIE THE ASSESSMENT ORDER DTD:11-08-2016 PASSED U/S. 143(3) R.W.S 147 WAS WITHOUT JURISDICTION SINCE THE RESPONDENT'S CASE WAS A SEARCH RELATED CASE OF SRI . K.G. KRISHNA AS SUCH THE ASSESSMENT OUGHT TO HAVE BEEN M ADE U/ S. 153C R.W.S 153A OF THE ACT. 9. THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEND AN D DELETE ANY OF THE GROUNDS AT THE TIME OF HEARING. 4. THE FACTS OF THE CASE ARE THAT THERE WAS A SEARC H U/S. 132 OF THE INCOME-TAX ACT, 1961 [THE ACT] CONDUCTED ON 15.1 1.2012 IN THE CASE OF SRI K.G. KRISHNA AND OTHERS. IN THE COURSE OF SEAR CH, IT WAS FOUND THAT K G KRISHNA HAD PURCHASED LAND ABOUT 180 ACRES SITUATED AT LAKSHMIPURA VILLAGE, DEVANAHALLI TALUK, BANGALORE. IT WAS ALSO OBSERVED BY THE SEARCH TEAM THAT THE PURCHASER OF LAND MR. K.G. KRISHNA AP ART FROM SALE CONSIDERATION PAID TO THE VENDOR, HAS ALSO PAID SOM E AMOUNT AS FACILITATION FEE, COMPENSATION, BROKERAGE AND COMMISSION TO VARI OUS PERSONNEL INCLUDING THE PRESENT ASSESSEE, WHO WAS FOUND TO BE ONE OF THE FACILITATOR IN THE LAND TRANSACTION AND THEREBY THE PRESENT ASS ESSEE RECEIVED RS.2.55 CRORES DURING THE PREVIOUS YEAR RELEVANT TO AY 2008 -09. RECEIPT OF THE SAID AMOUNT WAS ADMITTED BY THE ASSESSEE VIDE LETTE R DATED 19.2.2013 ADDRESSED TO DDIT(INV), UNIT 1(2), BANGALORE AND AS SESSEE HAS CONFIRMED THE SAME IN A SWORN STATEMENT RECORDED U/S. 131(1A) DATED 19.2.2013 RECORDED BY DDIT(INV),UNIT 1(2), BANGALORE. IT WAS ALSO NOTED BY THE AO THAT ASSESSEE HAS FAILED TO FILE RETURN OF INCOME F OR THE AY 2008-09 AND TO ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 5 OF 38 EXAMINE THE INCOME CHARGEABLE TO TAX THAT HAS ESCAP ED ASSESSMENT, THE CASE WAS REOPENED U/S. 147 OF THE ACT AFTER OBTAINI NG NECESSARY APPROVAL FROM THE JCIT, RANGE 2, BANGALORE. 5. THEREAFTER NOTICE US/. 148 WAS ISSUED TO ASSESSE E ON 14.11.2014 AND SERVED ON ASSESSEE ON 20.11.2014. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE HAS FILED RETURN OF INCOME ON 17.11.20 15 DECLARING INCOME OF RS.12,01,470. THE AO HAS STATED THAT THE ASSESSEE HAS CONFIRMED RECEIPT OF RS.2.55 CRORES FROM K.G. KRISHNA TOWARDS FACILIT ATOR FEE AND HAS CLAIMED EXPENDITURE OF RS.61,86,551 AND THE ASSESSEE WAS AS KED TO PROVIDE DOCUMENTS IN SUPPORT OF SUCH EXPENSES CLAIMED BY TH E ASSESSEE. 6. HOWEVER, THE ASSESSEE WHILE FILING THE RETURN OF INCOME HAS NOT SHOWN THIS RECEIPT OF RS.2.55 CRORES AS INCOME OF A SSESSEE, INSTEAD IT WAS SHOWN IN THE BALANCE SHEET AS ADVANCE RECEIVED FROM DEVAGIRI PROJECT WHICH IS A LIABILITY IN THE BALANCE SHEET. THE AO TREATED THIS AMOUNT OF RS.2.55 CRORES AS INCOME OF THE ASSESSEE SINCE THE ASSESSEE HAS NOT PRODUCED ANY MATERIAL EVIDENCE TO PROVE THAT RS.2.5 5 CRORES WAS RECEIVED FOR DEVELOPMENT WORK AS ADVANCE. FURTHER, IN THE O RIGINAL RETURN FILED ON 29.9.2011 FOR THE AY 2011-12, THE ASSESSEE HAS NOT SHOWN ANY ADVANCE RECEIVED IN ITS BALANCE SHEET AND NO MENTION OF ANY LAND UNDER DISPUTE WAS MADE DURING THE ASSESSMENT PROCEEDINGS FOR THE AY 2 011-12. AGAINST THIS, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS) . 7. THE CIT(APPEALS) OBSERVED THAT THE AO HAS MENTIO NED THAT THE INFORMATION WAS RECEIVED FROM DDIT (INV)UNIT 1(2), BANGALORE AND UPON SUCH INFORMATION, THE AO FORMED BELIEF THAT THE AMO UNT OF RS.2.55 CRORES SAID TO HAVE BEEN PAID BY K.G. KRISHNA TO ASSESSEE ESCAPED INCOME CHARGEABLE TO TAX FOR THE AY 2008-09. THE AO IS E NTITLED TO INITIATE REASSESSMENT PROCEEDINGS U/S. 148 IRRESPECTIVE SOUR CE OF INFORMATION. THE ONLY REQUIREMENT OF LAW IS THAT WHETHER THERE WAS S UFFICIENT MATERIAL ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 6 OF 38 EVIDENCE FOR THE AO FOR FORMATION OF THE BELIEF AS TO THE ESCAPEMENT OF INCOME CHARGEABLE TO TAX. IN THIS CASE, IT IS UNDI SPUTED FACT THAT INFORMATION GATHERED IN THE COURSE OF SEARCH CONDUCTED IN THE C ASE OF K.G. KRISHNA WAS FORWARDED TO AO FOR NECESSARY ACTION IN THE MAT TER IN ACCORDANCE WITH LAW. THUS THE AO ON THE BASIS OF INFORMATION RECEI VED BY HIM FROM DDIT (INV)UNIT 1(2), BANGALORE, HAS INITIATED REASSESSME NT PROCEEDINGS BY ISSUE OF NOTICE U/S. 148, AFTER FORMATION OF BELIEF THAT INCOME CHARGEABLE TO TAX ESCAPED ASSESSMENT. THEREFORE HE CONFIRMED THE REO PENING OF ASSESSMENT. 8. THE ASSESSEE ALSO CHALLENGED BEFORE THE CIT(APPE ALS) THAT ASSESSMENT SHOULD HAVE BEEN COMPLETED U/S. 153C R.W .S. 153A OF THE ACT. IN THIS CASE ASSESSMENT WAS COMPLETED U/S. 147 R.W. S. 153C WHICH IS BAD IN LAW. THE CIT(APPEALS) OBSERVED THAT ASSESSMENT WAS REOPENED ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH WAS NOT BELONGING TO THE ASSESSEE, AS SUCH HE CONFIRMED THE REOPENING OF ASSESSMENT U/S. 147 OF THE ACT. 9. REGARDING THE MERITS OF THE ADDITION OF RS.2.55 CRORES, THE CIT(APPEALS) OBSERVED THAT THE AO HAS RELIED ONLY O N THE INFORMATION RECEIVED FROM INVESTIGATION WING RS.2.55 CRORES WIT HOUT ANY CONCLUSIVE EVIDENCE AND FURTHER IN THE ASSESSMENT ORDER THE AO HAS PLACED RELIANCE ON THE STATEMENT OF ASSESSEE RECORDED ON 19.12.201 3 WITHOUT ANY MATERIAL EVIDENCE TO SHOW RECEIPT OF RS.2.55 CRORES WAS IN T HE NATURE OF INCOME CHARGEABLE TO TAX. ACCORDING TO THE CIT(A), THE ST ATEMENT OF ASSESSEE ITSELF WAS NOT SUFFICIENT AND MORE SO SUCH A STATEM ENT WAS RECORDED AGAINST THE CBDT INSTRUCTION THAT SUCH TEAM WAS NOT ENTITLED TO SEEK ANY DISCLOSURE IN THE GUISE OF VOLUNTARY DISCLOSURE WIT HOUT ANY SUPPORTING MATERIAL EVIDENCE. HE WAS OF THE OPINION THAT THE AMOUNT OF RS.2.55 CRORES WAS RECEIVED AS ADVANCE FOR EXECUTION OF DEVELOPMEN T WORK OF LAND ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 7 OF 38 MEASURING ABOUT 180 ACRES PURCHASED BY THE BUYER, K .G. KRISHNA. THE ASSESSEE CLAIMED EXPENSES OF RS.75,78,255 BEING TH E EXPENSES INCURRED IN THE EXECUTION OF DEVELOPMENT WORK ALONE, BUT THE AO HAD MISUNDERSTOOD SUCH EXPENSES. ACCORDING TO THE CIT(A), THE SAID A MOUNT OF RS.2.55 CRORES WAS RECEIVED BY THE ASSESSEE ON VARIOUS DATE S AND IT IS ONLY AN ADVANCE FOR EXECUTING THE DEVELOPMENT WORK OF AND A S PER MUTUAL AGREEMENT BETWEEN THE PARTIES, THEREFORE IT CANNOT BE ASSESSED IN THE HANDS OF ASSESSEE. FURTHER IT WAS OBSERVED THAT TH E STATEMENT RECORDED BY THE DDIT (INV)UNIT 1(2), BANGALORE, IS CONTRARY TO THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF CIT V. KHADER KHAN, 352 ITR 480 (SC) AND IT CANNOT BE THE BASIS FOR SUCH ADDITION. HE ALSO OBS ERVED THAT THE SEARCH TEAM HAS NOT INITIATED ANY PROCEEDINGS EVEN ON THE STATEMENT RECORDED BY THEM FOR A PERIOD OF TWO YEARS AND LATER ENQUIRY WA S FORWARDED TO AO OF PRESENT ASSESSEE, WHO HAS PASSED THE ASSESSMENT ON THE BASIS OF PRESUMPTION THAT AN AMOUNT OF RS.2.55 CRORES REPRES ENTED INCOME OF ASSESSEE BEING FACILITATION FEE FOR WHICH NO EVIDEN CE WAS MENTIONED IN THE ASSESSMENT ORDER. THE DEVELOPMENT WORK WAS COMMENC ED BY THE ASSESSEE AND A SUM OF RS.75,78,255 WAS INCURRED AS PER THE DETAILS MENTIONED IN THE ASSESSMENT ORDER ITSELF WHICH FACT ESTABLISHED THAT THERE WAS AN AGREEMENT FOR DEVELOPMENT WORK BETWEEN THE A SSESSEE AND ASTITVA GROUP OF CONCERNS ON WHOSE INSTRUCTIONS THE ULTIMATE BUYER OF THE LAND K.G. KRISHNA HAS MADE THE PAYMENT. IT WAS FUR THER OBSERVED THAT THE DEVELOPMENT WORK COULD NOT BE DONE IN VIEW OF PENDI NG LITIGATION IN OS NO.198/2009 WHICH WAS PENDING BEFORE THE CITY CIVIL COURT. THE SUBJECT MATTER OF SUIT WAS IN RESPECT OF OWNERSHIP OF PROPE RTY. THE ASSESSEE WAS NOT MADE A NECESSARY PART TO THE SUIT SINCE HE WAS NOT HAVING ANY OWNERSHIP RIGHTS OVER THE DISPUTED LAND. THE ASSES SEE WAS ONLY CONCERNED WITH THE DEVELOPMENT WORK AS A CONTRACTOR . THEREFORE, HE OBSERVED THAT THE ASSESSEE WAS NOT A NECESSARY PART Y TO LITIGATION. ACCORDING TO THE CIT(A), THE AMOUNT OF RS.2.55 CROR ES IS ADVANCE RECEIVED ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 8 OF 38 FOR DEVAGIRI PROJECT FROM THE ULTIMATE BUYER K.G. K RISHNA. IT HAS BEEN SHOWN AS RECEIVABLE ADVANCE IN THE ASSESSEES BALAN CE SHEET FILED WITH THE AUTHORITIES. ACCORDINGLY, HE DELETED THE ADDITION. AGAINST THESE FINDINGS, THE REVENUE IS IN APPEAL BEFORE US AND THE ASSESSEE HAS FILED CROSS OBJECTIONS AGAINST THE REOPENING OF ASSESSMENT. REVENUES APPEAL (ITA NO.910/BANG/2019) 10. ALL THE GROUNDS IN THE REVENUES APPEAL IS WITH REGARD TO DELETION OF ADDITION MADE BY THE AO IN RESPECT OF RECEIPT OF RS .2.55 CRORES BY THE ASSESSEE FROM K.G. KRISHNA AS FACILITATION FEE / CO MMISSION / BROKERAGE. 11. THE LD. DR SUBMITTED THAT THE ASSESSEE RECEIVED THE SUM FROM K.G. KRISHNA WHO WAS THE PURCHASER OF THE PROPERTY ON BE HALF OF WHOM THE ASSESSEE RENDERED VARIOUS SERVICES TO VARIOUS PROPE RTIES IN AND AROUND BANGALORE AND RECEIVED RS.2.55 CRORES AS BROKERAGE/ COMMISSION WHICH WAS NOT DISCLOSED TO THE DEPARTMENT. THIS INFORMAT ION CAME TO THE KNOWLEDGE OF THE DEPARTMENT IN THE COURSE OF SEARCH ACTION ON K.G. KRISHNA ON 5.11.2012 ON INFORMATION FROM DDIT(INV), UNIT 1(2), BANGALORE. THIS INFORMATION WAS PASSED TO THE AO OF ASSESSEE A ND CONSEQUENT ASSESSMENT ORDER WAS PASSED ON THE APPROVAL OF JT.C IT, RANGE 2, BANGALORE. THE ASSESSEE FILED LETTER DATED 19.2.20 13 ABOUT THE RECEIPT OF THE AMOUNT ADDRESSED TO DDIT(INV), UNIT 1(2), BANGA LORE AND CONFIRMED THE SAME BY SWORN STATEMENT RECORDED U/S. 131(1A) O N 19.2.2013 AND HE DREW OUR ATTENTION TO THE CONTENTS OF THE SAME. AC CORDING TO THE LD. DR, EVEN WHEN THE THERE IS SUCH A SUBSTANTIAL EVIDENCE, THE CIT(APPEALS) COULD NOT HAVE DELETED THE ADDITION OBSERVING THAT THE SA ME WAS DISCLOSED TO THE DEPARTMENT IN THE BALANCE SHEET. HE SUBMITTED THAT IT WAS NOT DISCLOSED IN THE ORIGINAL BALANCE SHEET AND IT WAS ONLY REFLECTE D IN THE REVISED BALANCE SHEET ATTACHED TO THE REVISED RETURN OF INCOME. AS SUCH, ADDITION HAS TO BE SUSTAINED. ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 9 OF 38 12. ON THE OTHER HAND, THE LD. AR RELIED ON THE ORD ER OF THE CIT(APPEALS). 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE LD. AR SUBMITTED THAT THERE IS NO MATERIAL IN T HE HANDS OF AO OTHER THAN THE STATEMENT OF ASSESSEE RECORDED ON 19.2.2013 AND ACCORDING TO HIM, IT WAS ONLY ADVANCE RECEIVED BY THE ASSESSEE FROM K.G. KRISHNA TOWARDS DEVAGIRI PROJECT. IT WAS DULY REFLECTED IN THE BAL ANCE SHEET AND IT CANNOT BE CONSIDERED AS INCOME OF ASSESSEE. FURTHER IT WAS S UBMITTED THAT THE AO FORMED THE OPINION ON THE BASIS OF ASSUMPTION THAT ADVANCE MADE OF RS.2.55 CRORES REPRESENTED FACILITATION FEE FOR WHI CH NO EVIDENCE IS MENTIONED IN THE ASSESSMENT ORDER. THE ASSESSEE HA S ACTUALLY INCURRED AN AMOUNT OF RS.75,78,255 TOWARDS DEVELOPMENT WORK WHICH COULD NOT BE DONE IN VIEW OF PENDING LITIGATION IN OS NO.198/200 9 BEFORE THE CITY CIVIL COURT IN THE ASSESSMENT YEAR UNDER CONSIDERATION. FURTHER, THERE WAS AN AGREEMENT OF DEVELOPMENT WORK BETWEEN THE ASSESSEE AND ASTITVA GROUP OF CONCERNS, ON WHOSE INSTRUCTIONS, THE ULTIMATE BU YER OF THE LAND, K.G. KRISHNA HAS MADE THESE PAYMENTS. AS RIGHTLY POINTE D OUT BY THE ASSESSEE, THE DEVELOPMENT WORK COULD NOT BE DONE IN VIEW OF T HE PENDING LITIGATION BEFORE THE CITY CIVIL COURT IN OS 198/2009. THE TR ANSACTION TOOK PLACE IN THE FY 2007-08 AND THE SAID SUIT WAS IN RESPECT OF OWNERSHIP OF THE PROPERTY AND THE ASSESSEE IS HAVING NO OWNERSHIP RI GHTS OVER THE DISPUTED LAND, BUT HE WAS ONLY CONCERNED WITH THE DEVELOPMEN T WORK AS A CONTRACTOR. ACCORDINGLY, THE ASSESSEE WAS NOT A PA RTY TO THE LITIGATION. THE AMOUNT SO RECEIVED OF RS.2.55 CORES IS ONLY FOR CAR RYING OUT THE DEVELOPMENT WORK IN TERMS OF THE AGREEMENT BETWEEN THE PARTIES AND IT WAS DULY SHOWN IN THE BALANCE SHEET FILED WITH THE AUTHORITIES, AS SUCH IT CANNOT BE CONSIDERED AS COMMISSION OR BROKERAGE PAI D TO ASSESSEE. IT WAS RECEIVED BY THE ASSESSEE AS AN AGENT TO CARRY O UT THE WORK ENTRUSTED TO THE ASSESSEE BY ASTITVA GROUP OF COMPANIES AND I T CANNOT BE TAXED IN ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 10 OF 38 THE HANDS OF ASSESSEE AS INCOME. BEING SO, THE CIT (APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION ON THIS COUNT. CROSS OBJECTION (CO NO.19/BANG/2019) 14. NOW WE TAKE UP THE CROSS OBJECTIONS OF THE ASSE SSEE WHICH GOES TO THE ROOT OF THE MATTER. GROUND NO.1 IS WITH REGARD TO MAINTAINABILITY OF THE REVENUES APPEAL AS REGARDS COMMUNICATION OF THE OR DER APPEALED AGAINST MENTIONED AS 17.3.2016 AS AGAINST 9.10.2018. THIS WAS ONLY A TYPOGRAPHICAL ERROR MENTIONED IN COL. 36. IT WAS C LARIFIED AT THE TIME OF HEARING THAT THE ACTUAL DATE OF COMMUNICATION OF TH E ORDER APPEALED AGAINST WAS SERVED TO THE CONCERNED REVENUE AUTHORI TIES ONLY ON 9.10.2018. AS SUCH, THIS GROUND OF THE CO IS DISMI SSED. 15. GROUND NO.2 OF THE CO IS AS REGARDS DELAY IN FI LING THE REVENUES APPEAL. SINCE THE DATE OF COMMUNICATION OF THE ORD ER APPEALED AGAINST WAS ON 9.10.2018, THERE WAS NO DELAY IN FILING THE REVENUES APPEAL. HENCE, THIS GROUND IS ALSO DISMISSED. 16. GROUND NO.3 OF THE CO IS THAT THE AO DID NOT HA VE ANY INFORMATION, EXCEPT INFORMATION RECEIVED FROM THE INVESTIGATION WING FOR REOPENING THE ASSESSMENT. 17. WE HAVE HEARD BOTH THE PARTIES ON THE ISSUE. A T THE TIME OF REOPENING THE ASSESSMENT, THERE IS NO NECESSITY OF HAVING CONCLUSIVE EVIDENCE REGARDING THE ESCAPEMENT OF INCOME AND IF THE AO IS HAVING ONLY PRIMA FACIE MATERIAL TO SUGGEST ESCAPEMENT OF INCOME, HE CAN RE OPEN AND CONCLUDE THE ASSESSMENT BY ISSUE OF NOTICE U/S. 148 . IN THIS CASE, THERE WAS INFORMATION AVAILABLE WITH THE AO WHICH WAS FOR WARDED BY THE SEARCH TEAM ON CONDUCTING THE SEARCH IN THE CASE OF K.G. K RISHNA. THAT INFORMATION SUGGESTED THAT K.G. KRISHNA HAS PAID A SUM OF RS.2.55 CRORES AS FACILITATION FEE. ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 11 OF 38 18. IT WAS FURTHER SUBMITTED THAT VIDE LETTER DATE D 26.09.2014 THE ACIT, CIRCLE-2(1), BANGALORE HAS COMMUNICATED THE RECORDE D REASONS. SECTION 147 OF THE ACT STATES THAT IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSE SSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME. , HENCE THE BASIC REQUIREMENT FOR INITIATING PROCEEDINGS U/S. 147 IS THAT THE AO SHOU LD HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT . 19. THE LD. AR SUBMITTED THAT A PERUSAL OF THE REAS ONS RECORDED DO NOT STATE WHAT IS THE AMOUNT OF INCOME CHARGEABLE TO TA X THAT AS ESCAPED ASSESSMENT IN MY HANDS. ACCORDING TO THE AO, BASED ON THE INFORMATION RECEIVED BY THE DEPARTMENT, THE ASSESSEE RECEIVED R S.2.55 CRORES AS FACILITATION FEE. THE SAME HAS NOT BEEN ADMITTED AS INCOME IN THE RETURN OF INCOME FILED BEFORE THE TAX AUTHORITIES. HENCE INCO ME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE AY 2008-09. THE ASSESSE E DID NOT ADMIT OF THE ALLEGED AMOUNT AS INCOME. IT WAS SUBMITTED THAT THE ALLEGED INFORMATION DID NOT MEET WITH THE REQUIREMENTS OF S ECTION 147 COMPLIANCE WITH WHICH IS NECESSARY FOR ASSUMING JURISDICTION U NDER THE SAID SECTION. 20. IT WAS FURTHER SUBMITTED THAT A PERUSAL OF THE ABOVE REASONS RECORDED WOULD SHOW THAT THE AMOUNT OF INCOME THAT IS CHARGEABLE TO TAX THAT HAS ESCAPED ASSESSMENT HAS NOT BEEN QUANTIFIED . IN SUCH A SCENARIO, IT SHOULD BE ASCERTAINED AS TO HOW MUCH OF THE TRAN SACTIONS PERTAIN TO THE ASSESSEE AS HIS INCOME. MOREOVER, MERELY ENTERING INTO TRANSACTIONS WOULD NOT MEAN THAT INCOME IS EARNED. THE REASONS RECORDED DO NOT STATE WHETHER THE TRANSACTIONS ARE INCOME BEARING TRANSAC TIONS OR NOT. 21. THE LD. AR SUBMITTED THAT THE EXPRESSION REASO N TO BELIEVE CANNOT BE A MERE CONJECTURE OR SURMISE. THE REASON FOR FO RMATION OF BELIEF FOR INITIATING ASSESSMENT U/S 147 MUST HAVE A RATIONAL CONNECTION OR RELEVANT ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 12 OF 38 BEARING ON THE FORMATION OF BELIEF. THE EXISTENCE OR OTHERWISE OF SUCH A BELIEF ON THE PART OF THE AO, IS THE VERY FOUNDATIO N FOR HIM TO ASSUME JURISDICTION U/S 147. IN THE PRESENT CASE, IT IS E STABLISHED THAT THE AO DID NOT HAVE ANY REASON TO BELIEVE AS JUDICIALLY INTE RPRETED BY VARIOUS COURTS. SO THE INITIATION OF PROCEEDINGS U/S 147 IS BAD IN LAW. 22. THE HONBLE SUPREME COURT IN SHEO NATH SINGH V. APP ELLATE ASSTT. CIT [1971] 82 ITR 147 (SC) OBSERVED AS UNDER :- 'THERE CAN BE NO MANNER OF DOUBT THAT THE WORDS 'RE ASON TO BELIEVE' SUGGEST THAT THE BELIEF MUST BE THAT OF AN HONEST AND REASONABLE PERSON BASED UPON REASONABLE GROUNDS AND THAT THE INCOME-TAX OFFICER MAY ACT ON DIRECT OR CIRCUMSTANC ES EVIDENCE BUT NOT ON MERE SUSPICION, GOSSIP OR RUMOUR. THE IN COME-TAX OFFICER WOULD BE ACTING WITHOUT JURISDICTION IF THE REASON FOR HIS BELIEF THAT THE CONDITIONS ARE SATISFIED DOES NOT E XIST OR IS NOT MATERIAL OR RELEVANT TO THE BELIEF REQUIRED BY THE SECTION. THE COURT CAN ALWAYS EXAMINE THIS ASPECT THOUGH THE DEC LARATION OR SUFFICIENCY OF THE REASONS FOR THE BELIEF CANNOT BE INVESTIGATED BY THE COURT.' 23. A THREE-JUDGE BENCH OF THE SUPREME COURT IN S. NARAYANAPPA V. CIT [1967] 63 ITR 219 HELD AS UNDER:- 'AGAIN THE EXPRESSION 'REASON TO BELIEVE' IN SECTIO N 34 OF THE INCOME-TAX ACT DOES NOT MEAN A PURELY SUBJECTIVE SA TISFACTION ON THE PART OF THE INCOME-TAX OFFICER. THE BELIEF MUST BE HELD IN GOOD FAITH: IT CANNOT BE MERELY A PRETENCE. TO PUT IT DIFFERENT, IT IS OPEN TO THE COURT TO EXAMINE THE QUESTION WHETHER T HE REASONS FOR THE BELIEF HAVE A RATIONAL CONNECTION OR A RELEVANT BEARING TO THE FORMATION OF THE BELIEF AND ARE NOT EXTRANEOUS OR I RRELEVANT TO THE PURPOSE OF THE SECTION. TO THIS LIMITED EXTENT, THE ACTION OF THE INCOME-TAX OFFICER IN STARTING PROCEEDINGS UNDER SE CTION 34 OF THE ACT IS OPEN TO CHALLENGE IN A COURT OF LAW (SEE CALCUTTA DISCOUNT CO. LTD. V. INCOME-TAX OFFICER, COMPANIES DISTRICT 1, CALCUTTA).' ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 13 OF 38 24. IN GANGA SARAN & SONS (P.) LTD. V. INCOME-TAX O FFICER [1981] 130 ITR 1 (SC), THE HONBLE SUPREME COURT OBSERVED AS U NDER:- THE IMPORTANT WORDS IN SECTION 147(A) ARE HAS REA SON TO BELIEF AND THESE WORDS ARE STRONG THAN THE WORDS IS SATIS FIED. THE BELIEF ENTERTAINED BY THE INCOME-TAX OFFICER MUST N OT BE ARBITRARY OR IRRATIONAL. IT MUST BE REASONABLE OR IN OTHER WO RDS, IT MUST BE BASED ON REASONS, WHICH ARE RELEVANT AND MATERIAL. THE COURT OF COURSE, CANNOT INVESTIGATE INTO THE ADEQUACY OR SUF FICIENCY OF THE REASONS WHICH HAVE WEIGHED WITH THE INCOME-TAX OFFI CER IN COMING TO THE BELIEF, BUT THE COURT CAN CERTAINLY E XAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE A BEARING ON THE MATTERS IN REGARD TO WHICH HE IS REQUIRED TO ENTERTAIN THE BEL IEF BEFORE HE CAN ISSUE NOTICE UNDER SECTION 147(A). IF THERE IS NO R ATIONAL AND INTELLIGIBLE NEXUS BETWEEN THE REASONS AND THE BELI EF, SO THAT, ON SUCH REASONS, NO ONE PROPERLY INSTRUCTED ON FACT AN D LAW COULD REASONABLY ENTERTAIN THE BELIEF, THE CONCLUSION WOU LD BE INESCAPABLE THAT THE INCOME-TAX OFFICER COULD NOT H AVE REASON TO BELIEVE THAT ANY PART OF THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND SUCH ESCAPEMENT WAS BY REASON OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND THE NOTICE ISSUED BY HIM WOULD B E LIABLE TO BE STRUCK DOWN AS INVALID. 25. THE HONBLE GAUHATI HIGH COURT IN ASSAM CO. LTD . V. UNION OF INDIA [2006] 150 TAXMAN 571 [GAU.] HELD AS UNDER:- THE LITMUS TEST AS IS DECIPHERABLE FROM THE CONSIS TENT JUDICIAL PRONOUNCEMENTS ON THIS FACET OF THE LIS, THEREFORE, IS THE EXISTENCE, RELEVANCE AND RATIONALE OF THE REASON ON WHICH THE ASSESSING OFFICER PROCEEDS TO ACT UNDER SECTION 147 AND THE BEARING IT HAS ON THE PROCESS OF FORMATION OF THE B ELIEF THAT INCOME HAS ESCAPED ASSESSMENT. IF EITHER OF THESE TWO ESSENTIALS IS ABSENT, THE PROPOSED ACTION WOULD BE EX FACIE UN AUTHORIZED. NOT ONLY THE REASON HAS TO BE ONE, WHICH IS RELEVAN T AND RECOGNIZED IN LAW, THE SAME HAS TO HAVE A RATIONAL AND LOGICAL LINK WITH THE BELIEF THAT THERE HAS BEEN AN ESCAPEMENT O F TAXABLE INCOME. THE BELIEF HAS TO HAVE ITS ROOTS IN THE RE ASONS AND OBVIOUSLY HAS TO BE GENUINE AND BONA FIDE AND NOT M ERELY A PRETENCE. THE SUBJECTIVE SATISFACTION METAMORPHING INTO THE ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 14 OF 38 BELIEF HAS TO BE GUIDED BY OBJECTIVITY BASED ON EXI STING RELEVANT REASONS ACKNOWLEDGED AND RECOGNIZED BY LAW. A TANG IBLE AND BONA FIDE LEGAL NECESSITY TO SCUTTLE TAX AVOIDANCE IS THE ESSENCE OF THE POWER AND NO ROVING ENQUIRY ON VAGUE-HUNCHES OR INDETERMINATE AND IMPERTINENT CONSIDERATION IS ENVI SAGED. 26. THE ENTIRE LAW AS TO WHAT WOULD CONSTITUTE 'REA SON TO BELIEVE' WAS SUMMED UP BY THE HONBLE SUPREME COURT IN ITO V LAK HMANI MEWAL DAS [1976] 103 ITR 437. THE FOLLOWING PRINCIPLES WERE LAID DOWN:- (A) THE POWERS OF THE ASSESSING OFFICER TO REOPEN A N ASSESSMENT, THOUGH WIDE, ARE NOT PLENARY. (B) THE WORDS OF THE STATUTE ARE 'REASON TO BELIEVE ' AND NOT 'REASON TO SUSPECT'. (C) THE REOPENING OF AN ASSESSMENT AFTER THE LAPSE OF MANY YEARS IS A SERIOUS MATTER. SINCE THE FINALITY OF A JUDICI AL OR QUASI- JUDICIAL PROCEEDINGS ARE SOUGHT TO BE DISTURBED, IT IS ESSENTIAL THAT BEFORE TAKING ACTION TO REOPEN THE ASSESSMENT, THE REQUIREMENTS OF THE LAW SHOULD BE SATISFIED. (D) THE REASONS TO BELIEVE MUST HAVE A MATERIAL BEA RING ON THE QUESTION ON ESCAPEMENT OF INCOME. IT DOES NOT MEAN A PURELY SUBJECTIVE SATISFACTION OF THE ASSESSING AUTHORITY; THE REASON BE HELD IN GOOD FAITH AND CANNOT MERELY BE A PRETEN CE. 27. THE LD. AR SUBMITTED THAT THE REASONS TO BELIEV E MUST HAVE A RATIONAL CONNECTION WITH OR RELEVANT BEARING ON THE FORMATION OF THE BELIEF. RATIONAL CONNECTION POSTULATES THAT THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF THE AO AND THE FORMATION IS BELIEF REGARDING ESCAPEMENT OF INCOME. THE FACT THA T THE WORDS 'DEFINITE INFORMATION' WHICH WERE THERE IN SECTION 34 OF THE ACT OF 1922 BEFORE 1948, ARE NOT THERE IN SECTION 147 OF THE 1961 ACT WOULD NOT LEAD TO THE CONCLUSION THAT ACTION CAN NOW BE TAKEN FOR REOPENI NG AN ASSESSMENT EVEN IF THE INFORMATION IS WHOLLY VAGUE, INDEFINITE, FAR -FETCHED OR REMOTE. FROM ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 15 OF 38 PERUSAL OF THE REASONS RECORDED, HE SUBMITTED THAT THE REASONS RECORDED CANNOT LEAD ONE TO FORM A BELIEF THAT INCOME CHARGE ABLE TO TAX HAS ESCAPED ASSESSMENT. THE OBSERVATIONS OF THE HONBLE SUPREM E COURT IN INCOME- TAX OFFICER V. LAKHMANI MEWAL DAS [1976] 103 ITR 43 7 (SC) ON THIS PROPOSITION ARE REPRODUCED BELOW:- AS STATED EARLIER, THE REASONS FOR THE FORMATION O F THE BELIEF MUST HAVE A RATIONAL CONNECTION WITH OR RELEVANT BEARING ON THE FORMATION OF THE BELIEF. RATIONAL CONNECTION POSTUL ATES THAT THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MAT ERIAL COMING TO THE NOTICE OF THE INCOME-TAX OFFICER AND THE FOR MATION OF HIS BELIEF THAT THERE HAS BEEN ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT IN THE PARTICULAR YEAR BEC AUSE OF HIS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FA CTS. IT IS NO DOUBT TRUE THAT THE COURT CANNOT GO INTO THE SUFFICIENCY OR ADEQUACY OF THE MATERIAL AND SUBSTITUTE ITS OWN OPINION FOR THA T OF THE INCOME- TAX OFFICER ON THE POINT AS TO WHETHER ACTION SHOUL D BE INITIATED FOR REOPENING ASSESSMENT. AT THE SAME TIME WE HAVE TO BEAR IN MIND THAT IT IS NOT ANY AND EVERY MATERIAL, HOWSOEV ER VAGUE AND INDEFINITE OR DISTANT, REMOTE AND FARFETCHED, WHICH WOULD WARRANT THE FORMATION OF THE BELIEF RELATING TO ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT. THE FACT THAT THE WORDS 'DEFINITE INFORMATION' WHICH WERE THERE IN SECTION 34 OF THE ACT OF 1922, AT ONE TIME BEFORE ITS AMENDMENT IN 1948, ARE NOT T HERE IN SECTION 147 OF THE ACT OF 1961, WOULD NOT LEAD TO THE CONCL USION THAT ACTION CAN NOW BE TAKEN FOR REOPENING ASSESSMENT EV EN IF THE INFORMATION IS WHOLLY VAGUE, INDEFINITE, FAR-FETCHE D AND REMOTE. THE REASON FOR THE FORMATION OF THE BELIEF MUST BE HELD IN GOOD FAITH AND SHOULD NOT BE A MERE PRETENCE.. 28. IN COMMISSIONER OF INCOME-TAX V. DAULAT RAM RAW ATMULL [1973] 87 ITR 349 (SC), THE HONBLE SUPREME COURT HELD AS UND ER: THERE SHOULD, IN OUR OPINION, BE SOME DIRECT NEXUS BETWEEN THE CONCLUSION OF FACT ARRIVED AT BY THE AUTHORITY CONC ERNED AND THE PRIMARY FACTS UPON WHICH THAT CONCLUSION IS BASED. THE USE OF EXTRANEOUS AND IRRELEVANT MATERIAL IN ARRIVING AT T HAT CONCLUSION WOULD VITIATE THE CONCLUSION OF FACT BECAUSE IT IS DIFFICULT TO ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 16 OF 38 PREDICATE AS TO WHAT EXTENT THE EXTRANEOUS AND IRRE LEVANT MATERIAL HAS INFLUENCED THE AUTHORITY IN ARRIVING AT THE CON CLUSION OF FACT. 29. A CONSTITUTION BENCH OF THE HONBLE SUPREME COU RT IN M. CT. MUTHIAH V. CIT AIR 1956 SC 269, CONSIDERED THE EXPR ESSIONS 'REASON TO BELIEVE' AND DISTINGUISHED THE SAME FROM 'REASON TO SUSPECT' COMPARING THE PROVISIONS WITH THE UN-AMENDED PROVISIONS OF SE CTION 34(1) OF THE INCOME-TAX ACT, 1922 AND HELD THAT AFTER AMENDMENT, THE EXPRESSIONS 'REASON TO BELIEVE' HAD TO BE BASED AS A CONSEQUENC E OF 'DEFINITE INFORMATION' WHICH CAME INTO POSSESSION OF THE REVE NUE. HOWEVER, THERE MUST BE SOME MATERIAL IN POSSESSION OF THE REVENUE ON THE BASIS OF WHICH AN OBJECTIVE OPINION CAN BE FORMED THAT THE PERSON CONCERNED HAS UNDISCLOSED AMOUNT FOR THE PURPOSE OF THE ACT. 30. IT IS SUBMITTED THAT THERE IS NO NEXUS BETWEEN THE MATERIAL COMING TO THE NOTICE OF THE AO AND THE FORMATION OF HIS BELIE F THAT THERE HAS BEEN ESCAPEMENT OF INCOME. THE ASSESSEE HAS RECEIVED TH AT AMOUNT ONLY AS AN AGENT. HENCE, THE VERY BASIS FOR ASSUMING JURISD ICTION IS NOT FACTUALLY CORRECT, NO REASONABLE BELIEF CAN BE FORMED BASED O N SUCH INCORRECT FACTS. 31. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT THE AO SHOULD HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT. THE LEARNED ASSESSING OFFICER HAS TO D ETERMINE INCOME CHARGEABLE TO TAX. THIS PRESUPPOSES THAT THE MATE RIAL BASED ON WHICH HE FORMS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT SHOULD ENABLE COMPUTATION OF INCOME THAT HAS ESCAPED ASSESSMENT. THE AO HAS NOT STATED AS TO HOW THE EN TRIES IN THE SEARCHED PERSON REPRESENT INCOME OF ASSESSEE. UNDER SUCH CI RCUMSTANCES, IT CANNOT BE ALLEGED THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 32. IT HAS NOT BEEN STATED AS TO WHAT IS THE MATERIAL T HAT IS AVAILABLE BASED ON WHICH THE PRESENT AO I.E., ITO, WARD 3(2)( 3) HAS REASON TO ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 17 OF 38 BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT IF THE ITO, WARD 3(2)(3) DID NOT HAVE A COPY OF THE SEIZED MATE RIAL, IT IS NOT UNDERSTOOD AS TO WHAT MATERIAL WAS IN THE POSSESSION OF THE DE PARTMENT FOR INITIATING ASSESSMENT U/S 147. HENCE, INITIATION OF ASSESSMEN T U/S 147 WITHOUT TANGIBLE MATERIAL IN POSSESSION IS LIABLE TO BE QUA SHED. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS:- IN COMMISSIONER OF INCOME-TAX-V V. ORIENT CRAFT LTD . [2013] 29 TAXMANN.COM 392 (DELHI), THE HONBLE DELHI HIGH COU RT HELD AS UNDER:- WE THINK THAT THE POINT TAKEN ON BEHALF OF THE ASS ESSEE THAT EVEN AN ASSESSMENT MADE UNDER SECTION 143(1) OF THE ACT CAN BE REOPENED UNDER SECTION 147 ONLY SUBJECT TO FULFI LLMENT OF THE CONDITIONS PRECEDENT, WHICH INCLUDE THE CONDITI ON THAT THE ASSESSING OFFICER MUST HAVE 'REASON TO BELIEVE' THA T INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, IS SOUND. IT IS TRUE THAT NO ASSESSMENT ORDER IS PASSED WHEN THE RETURN IS MERELY PROCESSED UNDER SECTION 143(1) AND AN INTIMATION TO THAT EFFECT IS SENT TO THE ASSESSEE. HOWEVER, IT HAS BEEN RECOG NISED BY THE SUPREME COURT ITSELF IN ASSTT. CIT V. RAJESH JHAVER I STOCK BROKERS (P). LTD. [2007] 291 ITR 500/ 161 TAXMAN 31 6, A DECISION THAT WAS RELIED UPON BY THE REVENUE, THAT EVEN WHERE PROCEEDINGS UNDER SECTION 147 ARE SOUGHT TO BE TAKE N WITH REFERENCE TO AN INTIMATION FRAMED EARLIER UNDER SEC TION 143(1), THE INGREDIENTS OF SECTION 147 HAVE TO BE FULFILLED ; THE INGREDIENT IS THAT THERE SHOULD EXIST 'REASON TO BE LIEVE' THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. TH IS JUDGMENT, CONTRARY TO WHAT THE REVENUE WOULD HAVE U S BELIEVE, DOES NOT GIVE A CARTE BLANCHE TO THE ASSES SING OFFICER TO DISTURB THE FINALITY OF THE INTIMATION UNDER SEC TION 143(1) AT HIS WHIMS AND CAPRICE; HE MUST HAVE REASON TO BELIE VE WITHIN THE MEANING OF THE SECTION. ..THERE IS NOTHING IN THE LANGUAGE OF SECTION 1 47 TO UNSHACKLE THE ASSESSING OFFICER FROM THE NEED TO SH OW 'REASON TO BELIEVE'. THE FACT THAT THE INTIMATION ISSUED UNDER SECTION 143(1) ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 18 OF 38 CANNOT BE EQUATED TO AN 'ASSESSMENT', A POSITION WH ICH HAS BEEN ELABORATED BY THE SUPREME COURT IN THE JUDGMENT CIT ED ABOVE, CANNOT IN OUR OPINION LEAD TO THE CONCLUSION THAT T HE REQUIREMENTS OF SECTION 147 CAN BE DISPENSED WITH WHEN THE FINAL ITY OF AN INTIMATION UNDER SECTION 143(1) IS SOUGHT TO BE DIS TURBED. WE ARE AT PAINS TO POINT OUT THIS POSITION, WHICH SEEMS FA IRLY OBVIOUS TO US, BECAUSE OF THE ARGUMENT FREQUENTLY ADVANCED BEF ORE US ON BEHALF OF THE REVENUE IN OTHER CASES AS WELL, UNDER THE MISCONCEPTION, IF WE MAY SAY SO WITH RESPECT, THAT AN INTIMATION UNDER SECTION 143(1) CAN BE DISTURBED ON ANY GROUND WHICH APPEALS TO THE ASSESSING OFFICER. THE CONSEQUENCE O F COUNTENANCING SUCH AN ARGUMENT COULD BE GRAVE. THE EXPRESSION 'REASON TO BELIEVE' HAS COME TO ATTAIN A CERTAIN SI GNIFICATION AND CONTENT, NOURISHED OVER A LONG PERIOD OF YEARS BY J UDICIAL REFINEMENT PAINSTAKINGLY EMBARKED UPON BY GREAT JUD GES IN THE PAST. THE EXPRESSION HAS BEEN JUDICIALLY INTERPRETE D IN A PARTICULAR MANNER. WHEN SECTION 147 WAS RECAST WITH EFFECT FRO M 1 ST APRIL, 1989, THE LEGISLATURE SOUGHT TO REPLACE THE EXPRESS ION 'REASON TO BELIEVE' WITH THE EXPRESSION 'FOR REASONS TO BE REC ORDED BY HIM IN WRITING'. BUT THERE WERE REPRESENTATIONS AGAINST THE PROPOSAL AND BOWING TO THEM THE ORIGINAL EXPRESSION WAS REST ORED. THIS ASPECT OF THE MATTER HAS BEEN BROUGHT OUT BY THE SU PREME COURT IN KELVINATOR OF INDIA LTD. (SUPRA) HAVING REGARD TO THE JUDICIAL INTERPRETATION PLACED UPON THE EXPRESSION 'REASON TO BELIEVE', AND THE CONTINUED U SE OF THAT EXPRESSION RIGHT FROM 1948 TILL DATE, THE LD. AR SU BMITTED THAT THE MEANING OF THE EXPRESSION HAS TO BE UNDERSTOOD IN E XACTLY THE SAME MANNER IN WHICH IT HAS BEEN UNDERSTOOD BY THE COURTS. THE ASSUMPTION OF THE REVENUE THAT SOMEHOW THE WORDS 'R EASON TO BELIEVE' HAVE TO BE UNDERSTOOD IN A LIBERAL MANNER WHERE THE FINALITY OF AN INTIMATION U/S. 143(1) IS SOUGHT TO BE DISTURBED IS ERRONEOUS AND MISCONCEIVED. AS POINTED OUT EARLIER, THERE IS NO WARRANT FOR SUCH AN ASSUMPTION BECAUSE OF THE LANGU AGE EMPLOYED IN SECTION 147; IT MAKES NO DISTINCTION BE TWEEN AN ORDER PASSED UNDER SECTION 143(3) AND THE INTIMATIO N ISSUED UNDER SECTION 143(1). THEREFORE IT IS NOT PERMISSIBLE TO ADOPT DIFFERENT STANDARDS WHILE INTERPRETING THE WORDS 'REASON TO B ELIEVE' VIS-A- VIS SECTION 143(1) AND SECTION 143(3). WE ARE UNABL E TO APPRECIATE WHAT PERMITS THE REVENUE TO ASSUME THAT SOMEHOW THE SAME RIGOROUS STANDARDS WHICH ARE APPLICABLE IN THE INTERPRETATION ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 19 OF 38 OF THE EXPRESSION WHEN IT IS APPLIED TO THE REOPENI NG OF AN ASSESSMENT EARLIER MADE U/S. 143(3) CANNOT APPLY WH ERE ONLY AN INTIMATION WAS ISSUED EARLIER U/S. 143(1). IT WOULD IN EFFECT PLACE AN ASSESSEE IN WHOSE CASE THE RETURN WAS PROCESSED U/S. 143(1) IN A MORE VULNERABLE POSITION THAN AN ASSESSEE IN WHOS E CASE THERE WAS A FULL-FLEDGED SCRUTINY ASSESSMENT MADE UNDER S ECTION 143(3). WHETHER THE RETURN IS PUT TO SCRUTINY OR IS ACCEPTED WITHOUT DEMUR IS NOT A MATTER WHICH IS WITHIN THE C ONTROL OF ASSESSEE; HE HAS NO CHOICE IN THE MATTER. THE OTHER CONSEQUENCE, WHICH IS SOMEWHAT GRAVER, WOULD BE THAT THE ENTIRE RIGOROUS PROCEDURE INVOLVED IN REOPENING AN ASSESSMENT AND T HE BURDEN OF PROVING VALID REASONS TO BELIEVE COULD BE CIRCUMVEN TED BY FIRST ACCEPTING THE RETURN UNDER SECTION 143(1) AND THERE AFTER ISSUE NOTICES TO REOPEN THE ASSESSMENT. AN INTERPRETATION WHICH MAKES A DISTINCTION BETWEEN THE MEANING AND CONTENT OF TH E EXPRESSION 'REASON TO BELIEVE' IN CASES WHERE ASSESSMENTS WERE FRAMED EARLIER UNDER SECTION 143(3) AND CASES WHERE MERE I NTIMATIONS WERE ISSUED EARLIER UNDER SECTION 143(1) MAY WELL L EAD TO SUCH AN UNINTENDED MISCHIEF. IT WOULD BE DISCRIMINATORY TOO . AN INTERPRETATION THAT LEADS TO ABSURD RESULTS OR MISC HIEF IS TO BE ESCHEWED. IN OTHER WORDS, THE EXPRESSION 'REASON TO BEL IEVE' CANNOT HAVE TWO DIFFERENT STANDARDS OR SETS OF MEAN ING, ONE APPLICABLE WHERE THE ASSESSMENT WAS EARLIER MADE UN DER SECTION 143(3) AND ANOTHER APPLICABLE WHERE AN INTIMATION W AS EARLIER ISSUED UNDER SECTION 143(1). IT FOLLOWS THAT IT IS OPEN TO THE ASSESSEE TO CONTEND THAT NOTWITHSTANDING THAT THE A RGUMENT OF 'CHANGE OF OPINION' IS NOT AVAILABLE TO HIM, IT WOU LD STILL BE OPEN TO HIM TO CONTEST THE REOPENING ON THE GROUND THAT THERE WAS EITHER NO REASON TO BELIEVE OR THAT THE ALLEGED REA SON TO BELIEVE IS NOT RELEVANT FOR THE FORMATION OF THE BELIEF THAT I NCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN DOING SO, IT IS FURTHER OPEN TO THE ASSESSEE TO CHALLENGE THE REASO NS RECORDED UNDER SECTION 148(2) ON THE GROUND THAT THEY DO NOT MEET THE STANDARDS SET IN THE VARIOUS JUDICIAL PRONOUNCEMENT S. 33. THE LD. AR SUBMITTED THAT IN THE PRESENT CASE T HE REASONS DISCLOSE THAT THE AO REACHED THE BELIEF THAT THERE WAS ESCAP EMENT OF INCOME AFTER HE ACCEPTED THE RETURN U/S. 143(1) WITHOUT SCRUTINY , AND NOTHING MORE. THIS ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 20 OF 38 IS NOTHING BUT A REVIEW OF THE EARLIER PROCEEDINGS AND AN ABUSE OF POWER BY THE AO, BOTH STRONGLY DEPRECATED BY THE SUPREME COU RT IN KELVINATOR OF INDIA LTD. 321 ITR 561 (SC). THE REASONS RECORDED B Y THE AO IN THE PRESENT CASE CONFIRMS THE APPREHENSION ABOUT THE HA RM THAT A LESS STRICT INTERPRETATION OF THE WORDS 'REASON TO BELIEVE' VIS -A-VIS AN INTIMATION ISSUED U/S. 143(1) CAN CAUSE TO THE TAX REGIME. THERE IS N O WHISPER IN THE REASONS RECORDED, OF ANY TANGIBLE MATERIAL WHICH CAME TO TH E POSSESSION OF THE AO SUBSEQUENT TO THE ISSUE OF THE INTIMATION. IT REFLE CTS AN ARBITRARY EXERCISE OF THE POWER CONFERRED UNDER SECTION 147. 34. IN PRASHANT S. JOSHI V. INCOME-TAX OFFICER, WAR D 19(2)(4) [2010] 189 TAXMAN 1 (BOM.), THE HONBLE BOMBAY HIGH COURT HELD AS UNDER:- FOR ALL THESE REASONS, IT IS EVIDENT THAT THERE W AS ABSOLUTELY NO BASIS FOR THE FIRST RESPONDENT TO FORM A BELIEF THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF THE SUBSTANTIVE PROVISIONS OF SECTION 147. EXPLANAT ION (2) TO SECTION 147 CREATES A DEEMING FICTION OF CASES WHER E INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. CLAUSE (B ) DEALS WITH A SITUATION 'WHERE A RETURN OF INCOME HAS BEEN FURNIS HED 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.' FOR THE PURPOSE OF CLAUSE (B) TO EXPLANATI ON (2), THE ASSESSING OFFICER MUST NOTICE THAT THE ASSESSEE HAS UNDERSTATED HIS INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION , ALLOWANCE OR RELIEF IN THE RETURN. THE TAKING OF SUCH NOTICE MUS T BE CONSISTENT WITH THE PROVISIONS OF THE APPLICABLE LAW. THE ACT OF TAKING NOTICE CANNOT BE AT THE ARBITRARY WHIM OR CAPRICE OF THE A SSESSING OFFICER AND MUST BE BASED ON A REASONABLE FOUNDATIO N. THE SUFFICIENCY OF THE EVIDENCE OR MATERIAL IS NOT OPEN TO SCRUTINY BY THE COURT BUT THE EXISTENCE OF THE BELIEF IS THE SI NE QUA NON FOR A VALID EXERCISE OF POWER. IN THE PRESENT CASE, HAVIN G REGARD TO THE LAW LAID DOWN BY THE SUPREME COURT IT WAS IMPOSSIBL E FOR ANY PRUDENT PERSON TO FORM A REASONABLE BELIEF THAT THE INCOME HAD ESCAPED ASSESSMENT. THE REASONS WHICH HAVE BEEN REC ORDED COULD NEVER HAVE LED A PRUDENT PERSON TO FORM AN OPINION THAT INCOME ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 21 OF 38 HAD ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTIO N 147. IN THESE CIRCUMSTANCES, THE PETITION SHALL HAVE TO BE ALLOWED BY SETTING ASIDE THE NOTICE UNDER SECTION 148. 35. IN THE ABOVE CASE, NO ASSESSMENT HAD BEEN CARRI ED OUT U/S 143(3) OR 144 OF THE ACT. ONLY INTIMATION U/S 143(1) HAD BEEN ISSUED AS IN THE PRESENT CASE. 36. THE HONBLE TRIBUNAL IN GREY WORLDWIDE (INDIA) PRIVATE LIMITED VS. ASST COMMISSIONER OF INCOME TAX 2011-TIOL-291-ITAT- MUM HELD AS UNDER:- 13. THE EXPRESSION REASON TO BELIEVE' STILL CONTI NUES TO BE PART OF MAIN SECTION 147. THERE IS NO DISTINCTION AT AL L BETWEEN THE ASSESSMENT DEEMED TO BE COMPLETED UNDER SECTION 143 (1) AND THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE IN COME TAX ACT. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF P RASHANT S. JOSHI VS. ITO 324 ITR 154(BOM) = (2010-TIOL-146-HC- MUM- IT) AFTER CONSIDERING THE DECISION OF THE HON'BLE S UPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS PVT. LT D. 291 ITR 500 (SC) = (2007-TIOL-95-SC-IT) HAS HELD THAT EVEN WHEN AN INTIMATION IS ISSUED U/S. 143(1) OF THE ACT, THE VA LIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS HAS TO SATIS FY THE TEST OF EXISTENCE OF REASON TO BELIEVE THAT INCOME CHARGE ABLE TO TAX HAS ESCAPED ASSESSMENT. THE LAW REGARDING EXISTENCE OF REASON TO BELIEVE IS BY NOW WELL SETTLED. BELIEF OF THE ASSES SING OFFICER SHOULD NOT BE ARBITRARY OR IRRATIONAL, BUT BASED ON RELEVANT AND SPECIFIC INFORMATION OR MATERIAL. IN THIS CONTEXT, IT IS ALSO IMPORTANT TO NOTE THAT THERE SHOULD BE A DIRECT NEX US OR LIVE-LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF THE AS SESSING OFFICER AND THE FORMATION OF HIS BELIEF THAT THERE HAS BEEN ESCAPEMENT OF INCOME OF THE ASSESSEE. THE IMPORTANT WORDS UNDER SECTION 147 ARE HAS REASON TO BELIEVE AND T HESE WORDS ARE STRONGER THAN THE WORDS IS SATISFIED. THE BELIEF ENTERTAINED BY THE ASSESSING OFFICER MUST NOT BE ARBITRARY OR IRRA TIONAL. IT MUST BE REASONABLE OR IN OTHER WORDS, IT MUST BE BASED O N REASONS, WHICH ARE RELEVANT AND MATERIAL. IN THIS CONTEXT IT MAY ALSO BE NOTED THAT THE COURTS HAVE GOT POWERS TO EXAMINE WH ETHER THE REASONS ARE RELEVANT AND HAVE A BEARING ON THE MATT ER, IN REGARD TO WHICH, THE ASSESSING OFFICER IS REQUIRED TO ENTERTA IN THE BELIEF, ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 22 OF 38 BEFORE HE ISSUES NOTICE UNDER SECTION 147. BESIDES, THE EXPRESSION REASON TO BELIEVE DOES NOT MEAN A PURELY SUBJECTI VE SATISFACTION ON THE PART OF THE ASSESSING OFFICER. THE BELIEF MU ST BE HELD IN GOOD FAITH, IT CANNOT MERELY BE PRETENCE. IN ADDITI ON, SUSPICION, GOSSIP OR RUMOUR WOULD NOT FORM THE BASIS FOR SUCH BELIEF. 37. IN RAMBAGH PALACE HOTELS PVT LTD VS DCIT 2013-T IOL-45-HC-DEL- IT, THE HONBLE DELHI HIGH COURT HELD AS UNDER:- EVEN SO, IT IS NECESSARY THAT THE ASSESSING OFFICE R MUST HAVE REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. THERE MUST BE TANGIBLE MATERIAL BEFORE HIM ON THE BASIS OF WHICH HE COULD FORM THE BELIEF, BONA FIDE AND IN GOOD FAITH, THAT THERE WAS ESCAPEMENT OF INCOME. THE MAT ERIAL MUST HAVE A LIVE LINK OR NEXUS WITH THE FORMATION OF THE BELIEF. THE BELIEF CANNOT BE A MERE PRETENCE. THESE ARE THE MOS T BASIC AND INDISPENSABLE REQUIREMENTS FOR THE VALIDITY OF THE NOTICE UNDER SECTION 148 38. THE THIRD MEMBER IN M/S. TELCO DADAJEE DHACKJEE LTD. VS. THE DCIT, CIRCLE 2(3) 2012-TIOL-532-ITAT-MUM-TM HELD AS UNDER:- SECTION 147 APPLIES BOTH TO SECTION 143(1) AS WELL AS SECTION 143(3) AND, THEREFORE, EXCEPT TO THE EXTENT THAT TH E REASSESSMENT NOTICE ISSUED UNDER SECTION 148 IN A CASE WHERE THE ORIGINAL ASSESSMENT WAS MADE UNDER SECTION 143(1) CANNOT BE CHALLENGED ON THE GROUND OF A MERE CHANGE OF OPINION, STILL IT IS OPEN TO AN ASSESSEE TO CHALLENGE THE NOTICE ON THE GROUND THAT THERE IS NO REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE REASON TO BELIEVE MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF THAT INCOME CHARGEABLE TO T AX HAD ESCAPED ASSESSMENT WHEN THE RETURN WAS PROCESSED AND ACCEPT ED UNDER SECTION 143(1). TO HOLD THAT IN EVERY CASE WHERE A RETURN WAS PROCESSED AND ACCEPTED UNDER SECTION 143(1) THE ASS ESSING OFFICER WILL BE FREE TO REOPEN THE SAME UNDER SECTI ON 148 EVEN IN THE ABSENCE OF A LIVE LINK BETWEEN THE REASONS RECO RDED AND THE FORMATION OF BELIEF WOULD BE TO MAKE THE CONDITIONS OF SECTION 147 AND SECTION 148 OTIOSE AS REGARDS NOTICES REOPE NING ISSUED IN ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 23 OF 38 CASES WHERE THE RETURN WAS ORIGINALLY PROCESSED UND ER SECTION 143(1). THERE IS NO EXCLUSION IN SECTION 147 TO TH E EFFECT THAT WHERE THE RETURN WAS EARLIER PROCESSED UNDER SECTIO N 143(1) IT IS NOT NECESSARY FOR THE ASSESSING OFFICER TO HOLD OR ENTERTAIN A BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED AS SESSMENT FOR THE REASONS RECORDED BY HIM. THEREFORE, THE CONDIT ION THAT THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE AND T HE FURTHER CONDITION THAT THOSE REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF IS APPLICABLE EQUALLY TO CA SES WHERE THE RETURN WAS PROCESSED UNDER SECTION 143(1) AS ALSO T O CASES WHERE THE RETURN WAS EXAMINED AND AN ASSESSMENT WAS MADE BY A SPEAKING ORDER UNDER SECTION 143(3). THE ONLY DIST INCTION RECOGNIZED IN SECTION 147 BETWEEN THE TWO IS WHERE IT IS PROVIDED BY THE PROVISO THAT WHERE THE EARLIER ASSESSMENT WA S MADE UNDER SECTION 143(3), NO ACTION FOR REOPENING THE ASSESSM ENT CAN BE TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE END O F THE RELEVANT ASSESSMENT YEAR UNLESS INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BECAUSE OF THE FAILURE ON THE PART OF TH E ASSESSEE TO FILE A RETURN OR TO DISCLOSE FULLY AND TRULY ALL MA TERIAL FACTS NECESSARY FOR THE ASSESSMENT. SUCH AN EXCEPTION HAS NOT BEEN PROVIDED FOR IN A CASE WHERE THE RETURN HAS BEEN PR OCESSED UNDER SECTION 143(1) IN WHICH CASE THE PROVISO WILL HAVE NO APPLICATION. IF IT IS CORRECT THAT AN INTIMATION UNDER SECTION 1 43(1) AS WELL AS AN ASSESSMENT ORDER UNDER SECTION 143(3) ARE BOTH A MENABLE TO SECTION 147, IT SHOULD ALSO BE CONCEDED THAT EVEN I N A CASE WHERE THE ORIGINAL RETURN WAS MERELY PROCESSED UNDER SECT ION 143(1) THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. HE ALSO HAS TO RECORD REASONS UNDER SECTION 148(2) FOR REOPENING THE EARL IER ASSESSMENT MADE UNDER SECTION 143(1). ALL THAT HAS BEEN EXCLU DED IS THAT THE ASSESSEE, IN WHOSE CASE THE RETURN WAS FIRST PROCES SED UNDER SECTION 143(1), CANNOT CHALLENGE THE NOTICE OF REOP ENING ON THE GROUND THAT IT IS PROMPTED BY A MERE CHANGE OF OPIN ION. ONLY TO THIS LIMITED EXTENT THERE IS A DISABILITY ON THE PA RT OF THE ASSESSEE TO CHALLENGE THE NOTICE OF REOPENING IN A CASE WHER E HIS RETURN WAS EARLIER PROCESSED UNDER SECTION 143(1) OF THE A CT. ..THE NOTICE OF REOPENING ISSUED IN A CASE WHE RE THE RETURN WAS FIRST PROCESSED UNDER SECTION 143(1) IS OPEN TO CHALLENGE ON ALL GROUNDS AVAILABLE TO THE ASSESSEE, INCLUDING THE GROUND THAT THERE WAS NO REASON TO BELIEVE THAT INC OME ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 24 OF 38 CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT OR THAT TH E MATERIALS BEFORE THE ASSESSING OFFICER HAD NO LIVE LINK OR NE XUS WITH THE FORMATION OF SUCH BELIEF OR THAT THE REASONS ARE BA SED ON GOSSIP OR RUMOUR OR WERE A MERE PRETENCE. THIS IS MADE CLEAR BY THE OBSERVATIONS OF THE COURT AT PAGE 512 OF THE REPORT WHERE IT WAS HELD THAT SO LONG AS THE INGREDIENTS OF SECTION 14 7 ARE FULFILLED THE ASSESSING OFFICER CAN REOPEN THE PROCEEDINGS EV EN WHERE INTIMATION UNDER SECTION 143(1) HAD BEEN ISSUED. T HUS FULFILLMENT OF THE CONDITIONS OF SECTION 147, INCLU DING THE ONE THAT THERE SHOULD BE REASON TO BELIEVE, IS ESSENTIAL F OR THE VALIDITY OF THE NOTICE UNDER SECTION 148. IT IS WHILE EXPOUNDI NG THE WORDS REASON TO BELIEVE THAT THE SUPREME COURT IN THE L ATER JUDGMENT IN CIT VS. KELVINATOR OF INDIA LTD. (SUPRA) HELD TH AT THERE SHOULD BE TANGIBLE MATERIAL TO COME TO THE CONCLUSION TH AT INCOME HAD ESCAPED ASSESSMENT. THUS, IN MY HUMBLE UNDERSTANDI NG OF BOTH THE JUDGMENTS, WHILE RESORTING TO SECTION 147 EVEN IN A CASE WHERE ONLY AN INTIMATION HAD BEEN ISSUED UNDER SECT ION 143(1)(A) IT IS ESSENTIAL THAT THE ASSESSING OFFICER SHOULD H AVE BEFORE HIM TANGIBLE MATERIAL JUSTIFYING HIS REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. 39. RELIANCE IS ALSO PLACED ON FOLLOWING DECISIONS WHEREIN IT HAS BEEN HELD THAT THE PROCEEDINGS INITIATED UNDER SECTION 1 47 ARE LIABLE TO BE QUASHED ON THE GROUND THAT THERE WAS NO TANGIBLE MA TERIAL BEFORE THE ASSESSING OFFICER, EVEN THOUGH NO ASSESSMENT U/S 14 3(3) OR 144 HAD BEEN MADE BEFORE. INDIVEST PTE. LTD., SINGAPORE V. ADDITIONAL DIRECTO R OF INCOME- TAX-3(1), MUMBAI [2012] 206 TAXMAN 351 (BOM.) INDUCTOTHERM (INDIA) PVT. LTD VS. DCIT (GUJ.) 2012- TIOL-667- HC-AHM-IT 40. IT IS TO BE NOTED THAT THE REASON TO BELIEVE CONTEMPLATED IN SECTION 147 SHOULD BE THAT OF THE ASSESSING OFFICER. THE A O HAS TO APPLY HIS MIND ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 25 OF 38 INDEPENDENTLY TO THE MATERIAL BASED ON WHICH THE BE LIEF IS SOUGHT TO BE FORMED. IF BASED UPON HIS EXAMINATION, HE HAS REAS ON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, TH EN HE CAN INITIATE PROCEEDINGS U/S 147. THE AO CANNOT MERELY RELY ON THE REPORT OF SOME OTHER INCOME-TAX AUTHORITY AND ISSUE NOTICE U/S 148 THAT HE HAS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT. HENCE, THE INITIATION OF PROCEEDINGS U/S 147 IS NOT VALID. 41. THE TRIBUNAL IN ASSISTANT COMMISSIONER OF INCO ME-TAX, VAPI CIRCLE V. RESHAM PETROTECH LTD. [2012] 136 ITD 185 (AHD.) HELD AS UNDER: THE ITO HIMSELF SHOULD FORM THE REASONABLE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT AND THEN ONLY HE CAN REOPEN AN ASSESSMENT. REASSESSMENT PROCEEDINGS INITIATED ON T HE DIRECTIONS GIVEN BY THE CIT WOULD BE INVALID [CIT V. T. R. RAJ KUMARI [1973] 96 ITR 78 (MAD.): TC 51R 430].THE REQUISITE BELIEF U/S. 147 MUST BE THAT OF THE ITO CONCERNED AND NOT OF AN Y OTHER OFFICER. IF THE ITO DOES NOT FORM, HIS OWN BELIEF B UT MERELY ACT AT THE BEHEST OF ANY SUPERIOR AUTHORITY, IT MUST BE HE LD THAT THE ASSUMPTION OF JURISDICTION UNDER SECTION 148 WAS BA D FOR NON- SATISFACTION OF THE CONDITIONS PRECEDENT [SHEO NARA IN JASWAL & ORS. V. ITO & ORS. [1989] 176 ITR 352 (PAT.); TC 51 R 432.. SEE ALSO VISHAL SWAMP AGRAWILLA V. ITO [1976] CTR (CAL. ) 296: TC 51R 432A AND CHUNNILAL ONKARMAL (PVT) LTD., (1983) 349 ITR 380 (MP): TC 51R 435]'.. THE REASONS FOR REOPENING MUST BE RECORDED BY JURIS DICTIONAL AO BECAUSE HE IS KEEPING ALL RELEVANT AND PRIMARY RECO RD. THE BASIC REQUIREMENT OF SECTION 147 OF THE ACT IS THAT THE A O HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT. SUCH BELIEF MUST BE THE BELIEF OF JURIS DICTIONAL AO AND NOT ANY OTHER AO OR AUTHORITY OF THE DEPARTMENT . THEREFORE, IT IS WELL SETTLED THAT THE AO'S JURISDICTION TO REOPE N AN ASSESSMENT U/S. 147 DEPENDS UPON THE ISSUANCE OF A VALID NOTIC E. IF THE NOTICE ISSUED BY HIM IS INVALID FOR ANY REASON THE ENTIRE PROCEEDINGS TAKEN BY HIM WOULD BECOME VOID FOR WANT OF JURISDIC TION. ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 26 OF 38 42. THE TRIBUNAL IN ASSISTANT COMMISSIONER OF INCO ME-TAX V. RADHESHYAM MOHANLAL MAHESHWARI [2011] 12 ITR(TRIB.) 429 (AHD.) HELD AS UNDER:- REOPENING OF THE ASSESSMENT UNDER SECTION 147 OF T HE INCOME-TAX ACT AS PER ITS PLAIN LANGUAGE PROVIDED IN THE ACT P ROVIDES PREROGATIVE TO THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT AN Y INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR. EVEN IF THE LEARNED COMMISSIONER OF INCOME-TA X (APPEALS) HAS ISSUED A DIRECTION IN THE APPELLATE ORDER DATED DECEMBER 11, 2003 TO REOPEN THE ASSESSMENTS, IT IS THE PREROGATI VE OF THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT BY SATIS FYING THE REQUIREMENTS OF THE LAW AS MENTIONED ABOVE AND SHAL L HAVE TO RECORD IN WRITING, THE REASONS TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR. HOWEVER, THE REASONS RECORDED BY THE ASSESSI NG OFFICER IN ALL THE ABOVE CASES DO NOT FIND MENTION SUCH FACTS AND THE SATISFACTION OF THE ASSESSING OFFICER FOR ESCAPEMEN T OF INCOME. IN THE ABSENCE OF THE FULFILMENT OF THE REQUIREMENT S OF SECTION 147 OF THE INCOME-TAX ACT FOR INITIATION OF THE REA SSESSMENT PROCEEDINGS IN THE ABOVE CASES, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER INSTEAD OF COMPLYING WITH THE REQ UIREMENTS OF LAW MERELY WAS SWAYED BY THE DIRECTION OF THE LEARN ED COMMISSIONER OF INCOME-TAX (APPEALS) IN THE APPELLA TE ORDER DATED DECEMBER 11, 2003. CONSIDERING THE ABOVE DISC USSIONS, WE ARE OF THE VIEW THAT THESE ARE NOT THE FIT CASES FO R INITIATION OF THE REASSESSMENT PROCEEDINGS BECAUSE THE ASSESSING OFFI CER FAILED TO MAKE OUT A CASE WITHIN THE FOUR CORNERS OF THE PROV ISIONS OF SECTION 147 OF THE INCOME-TAX ACT. 43. THE HONBLE DELHI HIGH COURT IN COMMISSIONER OF INCOME-TAX V. SPL'S SIDDHARTHA LTD. [2012] 345 ITR 223 (DELHI) HE LD AS UNDER:- 8. THUS, IF AUTHORITY IS GIVEN EXPRESSLY BY AFFIRM ATIVE WORDS UPON A DEFINED CONDITION, THE EXPRESSION OF THAT CO NDITION EXCLUDES THE DOING OF THE ACT AUTHORISED UNDER OTHE R ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 27 OF 38 CIRCUMSTANCES THAN THOSE AS DEFINED. IT IS ALSO EST ABLISHED PRINCIPLE OF LAW THAT IF A PARTICULAR AUTHORITY HAS BEEN DESIGNATED TO RECORD HIS/HER SATISFACTION ON ANY PARTICULAR IS SUE, THEN IT IS THAT AUTHORITY ALONE WHO SHOULD APPLY HIS/HER INDEPENDEN T MIND TO RECORD HIS/HER SATISFACTION AND FURTHER MANDATORY C ONDITION IS THAT THE SATISFACTION RECORDED SHOULD BE 'INDEPENDENT' A ND NOT 'BORROWED' OR 'DICTATED' SATISFACTION. LAW IN THIS REGARD IS NOW SELL-SETTLED. IN SHEO NARAIN JAISWAL V. ITO [1989] 176 ITR 352/ 45 TAXMAN 213 (PAT.), IT WAS HELD: 'WHERE THE ASSESSING OFFICER DOES NOT HIMSELF EXERC ISE HIS JURISDICTION UNDER SECTION 147 BUT MERELY ACTS AT T HE BEHEST OF ANY SUPERIOR AUTHORITY, IT MUST BE HELD T HAT ASSUMPTION OF JURISDICTION WAS BAD FOR NON-SATISFAC TION OF THE CONDITION PRECEDENT.' 44. THE APEX COURT IN THE CASE OF ANIRUDHSINHJI KAR ANSINHJI JADEJA V. STATE OF GUJARAT [1995] 5 SCC 302 HAS HELD THAT IF A STATUTORY AUTHORITY HAS BEEN VESTED WITH JURISDICTION, HE HAS TO EXERCISE I T ACCORDING TO ITS OWN DISCRETION. IF DISCRETION IS EXERCISED UNDER THE DI RECTION OR IN COMPLIANCE WITH SOME HIGHER AUTHORITIES INSTRUCTION, THEN IT W ILL BE A CASE OF FAILURE TO EXERCISE DISCRETION ALTOGETHER. 45. THE HONBLE DELHI HIGH COURT IN MRS.VINITA JAIN V. ITO 158 TAXMAN MAGAZINE 167 HELD THAT WHERE ASSESSING OFFICER REOPENED ASSESSEE S ASSESSMENT MERELY BECAUSE DDIT (INV.) BELIEVED THAT TRANSACTION OF CAPITAL GAINS SHOWN BY ASSESSEE WAS BOGUS AND NO SEPARATE R EASON DISCLOSING SATISFACTION OF ASSESSING OFFICER FOR FORMATION OF BELIEF THAT INCOME OF ASSESSEE HAD ESCAPED ASSESSMENT HAD BEEN RECORDED, NOTICE ISSUED UNDER SECTION 148 WAS TO BE QUASHED AND ASSESSMENT MADE IN PURSUANCE THEREOF WAS TO BE ANNULLED. 46. THE HONBLE SUPREME COURT IN ACIT V. DHARIYA CO NSTRUCTION CO. [2010] 328 ITR 515 (SC) HELD THAT THE OPINION OF TH E DVO PER SE IS NOT AN ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 28 OF 38 INFORMATION FOR THE PURPOSES OF REOPENING ASSESSMEN T UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961. IT WAS HELD THAT THE ASSE SSING OFFICER HAS TO APPLY HIS MIND TO THE INFORMATION, IF ANY, COLLECTE D AND MUST FORM A BELIEF THEREON AND WITHOUT THE SAME, THE DEPARTMENT WAS NO T ENTITLED TO REOPEN THE ASSESSMENT. 47. THE HONBLE RAJASTHAN HIGH COURT IN CIT V. SHRE E RAJASTHAN SYNTEX LTD. [2009] 313 ITR 231 (RAJ) HELD THAT IT HAS BEEN VERY INTELLIGIBLY PROJECTED THAT THE FACTUM OF THE ASSESSING OFFICER AT MUMBAI HAVING ALLOWED DEPRECIATION ALLOWANCE TO THE LESSEE DID CONSTITUTE A FACT WHICH CAME TO THE NOTICE OF THE ASSESSING OFFICER HERE AND THAT FURNI SHED REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE CHARGEABLE TO TAX H AD ESCAPED ASSESSMENT BUT THEN IF PROPERLY APPRECIATED ALL THA T IT COMES TO IS THAT A SET OF LEASE DEEDS HAD BEEN APPRECIATED BY THE ASSESSIN G OFFICER OF THE LESSEE AT MUMBAI, WHO AFTER APPRECIATING THEM ALLOW ED DEPRECIATION AND THE ASSESSING OFFICER HERE CAME TO THE CONCLUSION T HAT THE ASSESSEE CONTINUES TO BE THE OWNER OF THE ASSETS AND IS ENTI TLED TO DEPRECIATION ALLOWANCE, WHILE THE ASSESSING OFFICER AT MUMBAI FO RMED AN OPINION FROM THE SAME SET OF LEASE DEEDS THAT THE LESSEE SHOULD BE TAKEN TO BE THE OWNER AND HAS RIGHT TO DEPRECIATION. THUS, THE NET RESULT WHICH COMES TO IS THAT SIMPLY BECAUSE AFTER THE ASSESSING OFFICER HER E HAD FORMED A PARTICULAR OPINION ON A PARTICULAR SET OF DOCUMENTS SIMPLY BECAUSE THE ASSESSING OFFICER AT MUMBAI HAD FORMED A DIFFERENT OPINION ON THE SAME SET OF DOCUMENTS THE ACTION WAS SOUGHT TO BE INITIA TED HERE FOR REASSESSMENT WHICH, IN OUR VIEW, HAS RIGHTLY BEEN F OUND BY THE LEARNED TRIBUNAL THAT IT WAS A BORROWED SATISFACTION UNDE R THE OPINION OF THE ASSESSING OFFICER AT MUMBAI AND HAS RIGHTLY BEEN FO UND TO BE NOT SUFFICIENT TO CONFER POWER ON THE ASSESSING OFFICER TO INITIAT E REASSESSMENT PROCEEDINGS. ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 29 OF 38 48. THE DEPARTMENTS SPECIAL LEAVE PETITION AGAINST THE JUDGMENT OF THE RAJASTHAN HIGH COURT REPORTED IN 313 ITR 231 (SUPRA ) WHEREBY THE HIGH COURT HELD THAT INITIATION OF REASSESSMENT PROCEEDI NGS BASED UPON THE OPINION OF THE ASSESSING OFFICER OF THE LESSOR AT M UMBAI WAS BORROWED SATISFACTION AND WAS NOT SUFFICIENT REASON TO BELI EVE THAT INCOME HAD ESCAPED ASSESSMENT PROCEEDINGS UNDER SECTION 147 HA S BEEN DISMISSED. [CIT V. SHREE RAJASTHAN SYNTEX LTD. [2009] 313 ITR (STATUTES) 27] 49. THE HONBLE MUMBAI HIGH COURT IN ICICI HOME FIN ANCE CO LTD VS ACIT, MUMBAI 2012-TIOL-590-HC-MUM-IT HELD AS UNDER: - THE BELIEF U/S 147 THAT INCOME HAS ESCAPED ASSESSM ENT HAS TO BE THE REASONABLE BELIEF OF THE AO HIMSELF AND CANNOT BE AN OPINION AND/OR BELIEF OF SOME OTHER AUTHORITY. THE AO CANNO T BLINDLY FOLLOW THE OPINION OF AN AUDIT AUTHORITY FOR THE PU RPOSE OF ARRIVING AT A BELIEF THAT INCOME HAS ESCAPED ASSESS MENT. ON FACTS, THE RECORDED REASONS ARE IDENTICAL TO THE OBJECTION OF THE AUDIT AUTHORITY. THE REASONS DO NOT RELY UPON ANY TANGIBL E MATERIAL IN THE AUDIT REPORT BUT MERELY UPON AN OPINION AND THE EXISTING MATERIAL ALREADY ON RECORD. THIS ITSELF INDICATES T HAT THERE WAS NO INDEPENDENT APPLICATION OF MIND BY THE AO BEFORE HE ISSUED THE S. 148 NOTICE (INDIA EASTERN NEWSPAPER SOCIETY 119 ITR 996 (SC) FOLLOWED). 50. THE BANGALORE TRIBUNAL IN M/S GMR HOLDINGS PVT LTD VS DCIT, BANGALORE 2012-TIOL-114-ITAT-BANG HELD THAT ISSUE O F NOTICE U/S. 148 OF THE ACT ONLY AFTER THE AUDIT PARTY RAISED CERTAIN O BJECTIONS IS INVALID. 51. THE LD. AR SUBMITTED THAT IN THE PRESENT CASE, THE REASONS RECORDED DO NOT SHOW AS TO HOW THE AO HAS COME TO THE CONCLU SION THAT INCOME CHARGEABLE TO TAX HAS EXCEEDED RS. 1 LAC MERELY BAS ED ON CERTAIN INFORMATION COLLECTED FROM SEARCH TEAM. THE AO CON SIDERED THE INFORMATION GATHERED FROM SEARCH TEAM ITSELF TO REP RESENT THE INCOME ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 30 OF 38 CHARGEABLE TO TAX THAT HAS ESCAPED ASSESSMENT. IN OUR OPINION, THE REASONS RECORDED MUST DISCLOSE THE PROCESS OF REASO NING BY WHICH THE AO HOLDS THAT HE HAS REASON TO BELIEVE THAT INCOME CHA RGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE AO IN THE PRESENT CASE HAS RECORDED HIS CONCLUSION ITSELF AS REASON. 52. IN THE CASE OF VXL INDIA LTD. V. ASST. CIT [199 5] 215 ITR 295 THE GUJARAT HIGH COURT HAS HELD AS UNDER:- IN A CASE WHERE THE ASSESSING OFFICER HOLDS THE O PINION THAT BECAUSE OF EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE THE INCOME HAS ESCAPED ASSESSMENT, THE REASONS RECORDED BY THE ASSESSING OFFICER MUST DISCLOSE BY WHAT PROCESS OF REASONING HE HOLDS SUCH BELIEF THAT EXCESSIVE LOSS OR DEPRECIATION ALLOWANC E HAS BEEN COMPUTED IN THE ORIGINAL ASSESSMENT. MERELY SAYING THAT EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE HAS BEEN C OMPUTED WITHOUT DISCLOSING REASONS WHICH LED THE ASSESSING AUTHORITY TO HOLD SUCH BELIEF, IN OUR OPINION, DOES NOT CONFER J URISDICTION ON THE ASSESSING OFFICER TO TAKE ACTION UNDER SECTIONS 147 AND 148 OF THE ACT. 53. IN CIT VS ICICI BANK LTD 2012-TIOL-512-HC-MUM-I T, THE HONBLE MUMBAI HIGH COURT HELD AS UNDER:- AS DISCLOSED IN THE REASONS RECORDED WHILE ISSUING NOTICE UNDER SECTION 148 OF THE ACT, IN THE PRESENT CASE, THE IM PUGNED NOTICE WAS BASED ON THE GROUND THAT THE INCOME EARNED FROM THE NON FUND BASED ACTIVITIES OF THE RESPONDENT HAD BEEN IN CLUDED IN THE FUND BASED INCOME SO AS TO CLAIM EXCESS DEDUCTION U NDER SECTION 36(1)(VIII) OF THE SAID ACT. THE REASONS ONLY PROVI DE A CONCLUSION AND GIVE NO MATERIAL PARTICULARS OF INFORMATION OBT AINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESS MENT YEAR 1998-99 THEREFORE THE REASONS RECORDED DO NOT INDIC ATE ANY TANGIBLE MATERIAL WHICH HAS LED TO A REASONABLE BEL IEF THAT INCOME HAS ESCAPED ASSESSMENT. AS HELD BY THIS COURT IN TH E MATTER OF ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 31 OF 38 HINDUSTAN LEVER LTD. V. R.B. WADKAR 268 ITR 332 = ( 2004- TIOL-72-HC-MUM-IT), THE REASONS FOR REOPENING AS RE CORDED MUST BE CLEAR AND NOT SUFFER FROM ANY VAGUENESS SO TO KEEP THE ASSESSEE GUESSING FOR THE REASONS. IT IS THE REASON S WHICH PROVIDE THE LINK BETWEEN THE EVIDENCE AND THE CONCLUSION. I N THIS CASE THE REASONS AS RECORDED DO SUFFER FROM THE VICE OF VAGU ENESS. 54. AS PER REASONS RECORDED, THE ASSESSEE HAS RECEI VED COMMISSION FROM K.G. KRISHNA AND IT WAS NOT DISCLOSED TO THE D EPARTMENT. HOWEVER, IT IT IS NOT SURE THAT IT WAS INCOME WHICH ESCAPED ASS ESSMENT. THE AO ALSO HAS NOT MENTIONED IN THE AFORESAID REASONS THAT HE WAS SATISFIED THAT THE ABOVE INCOME ESCAPED ASSESSMENT. HE SIMPLY RELIED ON THE INFORMATION RECEIVED IN HIS POSSESSION TO COME TO THE CONCLUSIO N THAT THIS INCOME HAS ESCAPED ASSESSMENT. 55. FROM THE PROVISIONS OF SECTION 147, IT IS CLEAR THAT THE AO MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. HOWEVER, IT CANNOT BE SAID THAT IF THE RE IS ANY RECEIPT WHICH IS SUFFICIENT TO BELIEVE THAT INCOME TO THAT EXTENT ES CAPED ASSESSMENT BECAUSE THERE MAY BE SO MANY REASONS FOR RECEIVING SUCH AMOUNT AND IT IS NOT NECESSARY THAT ONLY ON RECEIPT, IT CAN BE PRESU MED THAT INCOME TO THAT EXTENT ESCAPED ASSESSMENT. THERE SHOULD BE CONCRET E FINDING BEFORE COMING TO THE CONCLUSION THAT ANY INCOME ESCAPED AS SESSMENT AND MERELY ON THE BASIS OF INFORMATION PROVIDED BY ANY OTHER W ING OF THE DEPARTMENT, THE AO CANNOT BELIEVE THAT THERE WAS INCOME WHICH H AS ESCAPED ASSESSMENT. 56. IN THE PRESENT CASE, THE AO SIMPLY RELIED UPON THE INFORMATION RECEIVED BY HIM AND STATED THAT INCOME HAS ESCAPED ASSESSMENT WHICH HAS NOT BEEN DISCLOSED BY THE ASSESSEE AND IT IS TH E INCOME WHICH ESCAPED ASSESSMENT IN THE HANDS OF ASSESSEE. IT CL EARLY SHOWS THAT AO ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 32 OF 38 SIMPLY ACTED UPON THE INFORMATION AND DID NOT APPLY HIS OWN MIND TO THE INFORMATION TO ARRIVE AT A BELIEF INDEPENDENTLY THA T ON THE BASIS OF MATERIAL BEFORE HIM TO COME TO THE CONCLUSION THAT INCOME HA S ESCAPED ASSESSMENT. 57. IT WAS ONLY A DOUBT, BUT NOT A REASON TO BELIEV E MEANING THEREBY THAT, EVEN IF THERE WAS SOME MATERIAL IN RESPECT OF SOURCE OF RECEIPT, IT WAS NOT SUFFICIENT FOR ARRIVING AT THE CONCLUSION THAT THE RECEIPT REPRESENTED UNEXPLAINED INCOME OF THE ASSESSEE. IN OTHER WORDS , THE AO HAS JUST SUSPICION IN HIS MIND AND IT IS TRITE LAW THAT AN A SSESSMENT CANNOT BE REOPENED MERELY ON THE BASIS OF SUSPICION AND INITI ATION OF REASSESSMENT PROCEEDINGS U/S. 148 OF THE ACT ON THE BASIS OF THI S ASPECT WAS INVALID IN THE EYE OF LAW. 58. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTAN CES OF THE CASE AND ALSO BY FOLLOWING THE PRECEDENTS DISCUSSED ABOVE, W E ARE OF THE CONSIDERED OPINION THAT THE AO REOPENED THE ASSESSM ENT MERELY ON SUSPICION AND SURMISE, WITHOUT THERE BEING ANY POSI TIVE MATERIAL IN HIS POSSESSION TO PROVE THAT THE ASSESSEE IS THE OWNER OF THE BANK ACCOUNT OR HAVING BENEFICIAL INTEREST IN THIS BANK ACCOUNT. T HEREFORE, WE ARE OF THE OPINION THAT THE REOPENING OF ASSESSMENTS ARE BAD I N LAW, WHICH CANNOT BE SUSTAINED. ACCORDINGLY, WE QUASH THE REASSESSMENT. 59. BEING SO, THERE IS ERROR IN REOPENING THE ASSES SMENT. THUS, THIS OBJECTION OF THE ASSESSEE IS ALLOWED. 60. THE ASSESSEE ALSO ARGUED ON THE LIMITATION OF I SSUE OF NOTICE U/S. 148 OF THE ACT AS WELL AS ON MERITS OF THE CASE. A S WE HAVE QUASHED THE REASSESSMENT ITSELF, WE ARE NOT GOING INTO THE SAME . ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 33 OF 38 61. GROUND NOS.4 TO 7 OF THE CO DO NO NOT REQUIRE A NY ADJUDICATION IN VIEW OF OUR FINDINGS IN THE REVENUES APPEAL. 62. BY GROUND NO.8 OF THE CO, THE ASSESSEE CHALLENG ES THE REOPENING OF ASSESSMENT ON THE REASON THAT ASSESSMENT WAS REO PENED CONSEQUENT TO SEARCH ACTION IN THE CASE OF K.G. KRISHNA K.G. K RISHNA U/S. 148, IT SHOULD BE REOPENED U/S. 153C OF THE ACT. IT WAS SUBMITTED BY THE LD. AR THAT ASSESSMENT WAS REOPENED ON THE BASIS OF INFORMATION OBTAINED FROM DDIT (INV)UNIT 1(2), BANGALORE. THE AO DID NOT HAVE ANY MATERIAL TO FORM A REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX ESC APED ASSESSMENT, EXCEPT THE INFORMATION ADMITTEDLY RECEIVED BY HIM F ROM THE INVESTIGATION TEAM. SINCE THE INFORMATION WITH REGARD TO PAYMENT OF RS.2.55 CRORES TO THE ASSESSEE CAME TO THE KNOWLEDGE OF THE PRESENT A O IN THE COURSE OF SEARCH ACTION IN THE CASE OF K.G. KRISHNA, THE ASSE SSMENT SHOULD HAVE BEEN FRAMED U/S. 153C R.W.S. 153A OF THE ACT. THOU GH INFORMATION WAS GATHERED DURING THE COURSE OF SEARCH ACTION, THE AS SESSMENT FRAMED U/S. 148 IS BAD IN LAW. THE PROVISIONS OF SECTION 148/ 147 CANNOT BE INVOKED IN CASE OF SEARCH RELATED ASSESSMENTS. THEREFORE, ISS UE OF NOTICE U/S. 148 OF THE ACT WAS INVALID AND BAD IN LAW. 63. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT TH E ASSESSMENT U/S. 153C R.W.S. 153A CAN BE INVOKED ONLY WHEN DOCUMENTS FOUND DURING THE COURSE OF SEARCH ACTION U/S. 132 BELONG OR PERTAIN OR RELATE TO ASSESSEE. ACCORDING TO HIM, SEARCH ACTION TOOK PLACE ON 5.11. 2012 WHICH IS PRIOR TO 1.6.2015. THE PROVISIONS OF SECTION 153C SUGGEST T HAT IN CASE OF SEARCH ACTION CARRIED OUT 132 OF THE ACT, IF ANY MONEY, BU LLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DO CUMENTS SEIZED, REQUISITIONED BELONGS OR RELATING TO A PERSON OTH ER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE AO OF SEARCHE D PERSON WHILE PASSING THE ASSESSMENT ORDER U/S. 153A OR PRIOR TO THAT, RE CORD A SATISFACTION ABOUT ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 34 OF 38 THOSE DOCUMENTS AND IF THOSE DOCUMENTS DISCLOSE UND ISCLOSED INCOME OF THE PERSON, OTHER THAN THE SEARCHED PERSON, HE WILL TRANSMIT THOSE DOCUMENTS ALONG WITH THE SATISFACTION NOTE TO THE A O HAVING JURISDICTION OVER THAT SUCH OTHER PERSON. JURISDICTION U/S. 153 C OF THE ACT PRIOR TO 1.6.2015 CAN BE INVOKED ONLY IF THE MATERIAL SEIZED DURING THE COURSE OF SEARCH IN THE CASE OF THIRD PERSON BELONGS TO SOME OTHER PERSON OTHER THAN THE SEARCHED PERSON. HOWEVER, AFTER 1.6.2015, THE LEGISLATURE HAS CATEGORIZED TWO SITUATIONS. AS FAR AS RECOVERY OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING SEIZED OR REQUISITIONED BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON, THEN SECTI ON 153C WOULD BE JUSTIFIED. HOWEVER, WITH REGARD TO RECOVERY OF BOO KS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED, THEN IF THEY PER TAIN TO OTHER PERSON OR INFORMATION CONTAINED THEREIN RELATE TO PERSON OTHE R THAN THE SEARCHED PERSON, THEN ACTION U/S. 153C COULD BE TAKEN. THE SCOPE OF SECTION 153C AFTER 1.6.2015 HAD BEEN WIDENED VIZ., IF A PERSON A T WHOSE PREMISES SEARCH WAS CARRIED OUT, MAINTAINING CERTAIN DETAILS IN HIS REGULAR DAY TO DAY BUSINESS THAT CONTAINS CERTAIN INFORMATION EXHIBITI NG UNDISCLOSED INCOME OF THE PERSON OTHER THAN THE SEARCHED PERSON, THEN ACT ION U/S. 153C COULD BE JUSTIFIED. BUT PRIOR TO 1.6.2015, DOCUMENTS WHICH BELONG TO PERSON OTHER THAN THE SEARCHED PERSON. THERE IS CLEAR DISTINCTI ON BETWEEN BOTH THE CONDITIONS. SUBSEQUENT TO 1.6.2015, THE INFORMATIO N EMBEDDED IN THE DOCUMENT IS SUFFICIENT FOR TAKING ACTION U/S. 153C. BUT PRIOR TO 1.6.2015, ACTION U/S. 153C COULD BE TAKEN IF DOCUMENT BELONGE D TO A PERSON OTHER THAN THE SEARCHED PERSON FOUND DURING THE COURSE OF SEARCH. 64. WE HAVE HEARD BOTH THE PARTIES. IN THIS CASE, ASSESSMENT WAS REOPENED CONSEQUENT TO INFORMATION RECEIVED FROM DD IT (INV)UNIT 1(2), BANGALORE, ABOUT THE ASSESSEE UPON A SEARCH CONDUCT ED U/S. 132 OF THE ACT IN THE CASE OF K.G. KRISHNA. THE INFORMATION R ECEIVED WAS SAID TO BE THAT THE PURCHASER OF LANDS K.G. KRISHNA HAS APART FROM THE SALE ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 35 OF 38 CONSIDERATION PAID TO THE LAND OWNER, A SUM OF RS.2 .55 CRORES WAS PAID TO THE ASSESSEE IN FY 2007-08 RELEVANT TO AY 2008-09. SINCE THE ASSESSEE WAS SAID TO BE FACILITATOR OF THE LAND TRANSACTION, THE ASSESSEE ALSO CONFIRMED THE SAME VIDE LETTER DATED 19.2.2013 ADDR ESSED TO THE DDIT (INV)UNIT 1(2), BANGALORE. FURTHER IN THE SWORN STA TEMENT SAID TO HAVE BEEN RECORDED U/S. 131(1A) OF THE ACT ON 19.2.2013. SIN CE THE ASSESSEE HAS FILED RETURN OF INCOME FOR THE AY 2008-09, THEREFOR E TO EXAMINE THE ESCAPEMENT OF INCOME CHARGEABLE TO TAX, THE CASE OF ASSESSEE WAS REOPENED U/S. 147 AND ACCORDINGLY NOTICE U/S. 148 W AS ISSUED TO ASSESSEE ON 14.11.2014 AND SERVED ON 20.11.2014. 65. NOW THE QUESTION BEFORE US IS WHETHER THE AO WA S JUSTIFIED IN REOPENING THE ASSESSMENT ON THE BASIS OF THE ABOVE INFORMATION. ACCORDING TO THE ASSESSEE, ASSESSMENT SHOULD HAVE B EEN REOPENED U/S. 153C OF THE ACT INSTEAD OF 148. IN OUR OPINION, TH E FIRST AND FOREMOST CONDITION FOR INITIATING OF THE PROCEEDINGS U/S. 15 3 OF THE ACT IS FOR THE AO OF THE SEARCHED PERSON TO BE SATISFIED THAT ASSETS OR DOCUMENTS SEIZED BELONGING TO ASSESSEE BEING A PERSON OTHER THAN THE SEARCHED PERSON, THE AO OF ASSESSEE RECEIVING THE DOCUMENTS OR ASSETS SE IZED, WOULD HAVE JURISDICTION TO COMMENCE PROCEEDINGS U/S. 153C. TH E AO OF SEARCHED PERSON IS NOT REQUIRED TO EXAMINE WHETHER THE ASSET S OR DOCUMENTS SEIZED REFLECT UNDISCLOSED INCOME. ALL THAT IS REQUIRED F OR HIM TO SATISFY HIMSELF IS THAT THE ASSETS OR DOCUMENTS DO NOT BELONG TO THE S EARCHED PERSON, BUT BELONG TO ANOTHER PERSON. THEREAFTER THE AO HAS TO TRANSFER THE SEIZED ASSETS OR DOCUMENTS TO THE AO HAVING JURISDICTION O F THE ASSESSEE TO WHOM SUCH ASSETS OR DOCUMENTS BELONG. AS PER SECTION 15 3C, ONCE THE AO OF A PERSON OTHER THAN THE ONE SEARCHED, HAS RECEIVED AS SETS OR DOCUMENTS, HE HAS TO ISSUE NOTICE TO THE ASSESSEE TO ASSESS OR RE ASSESS INCOME OF SUCH PERSON I.E., OTHER THAN THE PERSON SEARCHED IN ACCO RDANCE WITH THE PROVISIONS OF SECTION 153A. ON THIS POINT, IT IS AP PROPRIATE TO MENTION THE ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 36 OF 38 RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF PEPSI BEVERAGES P. LTD., 367 ITR 112 (DEL) WHEREIN IT WAS EXPLAINED THAT UNDER SECTION 153C OF THE ACT, A NOTICE UNDER THAT SECTI ON COULD BE ISSUED ONLY AFTER TWO CONDITIONS HAVE BEEN MET. FIRST OF ALL, THE AO OF THE SEARCHED PERSON WOULD HAVE TO ARRIVE AT A SATISFACTION THAT DOCUMENT OR ASSET SEIZED DOES NOT BELONG TO A PERSON SEARCHED, BUT TO SOME O THER PERSON, AND SECONDLY, THE SEIZED DOCUMENTS OR ASSETS ARE HANDED OVER TO THE AO HAVING JURISDICTION OVER THAT PERSON, I.E., PERSON OTHER THAN THE ONE SEARCHED AND TO WHOM THE SEIZED DOCUMENT OR ASSETS ARE SAID TO BELONG. 66. IN THE PRESENT CASE, THE BASIS FOR REOPENING TH E ASSESSMENT WAS INFORMATION RECEIVED FROM DDIT (INV)UNIT 1(2), BANG ALORE, ABOUT THE PAYMENT OF RS.2.55 CRORES TO THE ASSESSEE BY K.G. K RISHNA WHO WAS SEARCHED U/S. 132 OF THE ACT. THE SEARCH TEAM HAD NOT FOUND ANY ASSETS OR DOCUMENTS SEIZED BELONGING TO THE PRESENT ASSESSEE. SINCE THERE WAS NO UNEARTHING OF DOCUMENT OR ASSETS DURING THE COURSE OF SEARCH U/S. 132 BELONGING TO THE PRESENT ASSESSEE, CONSEQUENT TO SE ARCH ACTION IN THE CASE OF K.G. KRISHNA. BEING SO, AS PER THE PROVISIONS O F SECTION 153C AS IT STOOD ON 1.6.2015, THE ASSESSEES CASE CANNOT BE REOPENED U/S. 153C OF THE ACT AND ON THE BASIS OF INFORMATION GATHERED THROUGH DD IT (INV)UNIT 1(2), BANGALORE, THE ASSESSMENT OF PRESENT ASSESSEE COULD BE REOPENED ONLY U/S. 147/148 OF THE ACT AND THIS IS SUBJECT TO OUR FINDINGS IN GROUND NO.3 IN CO. THIS GROUND OF OBJECTION BY THE ASSESSEE IS DI SMISSED. 67. THE NEXT ARGUMENT OF THE LD. AR OF THE ASSESSEE IS THAT NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE AFTER 4 YEARS AND NO APPROVAL WAS OBTAINED FROM THE CCIT AS REQUIRED U/S. 151 OF THE ACT, INSTEAD APPROVAL FOR REOPENING OF ASSESSMENT WAS OBTAINED FROM JCIT, RAN GE 2, BANGALORE WHICH IS BAD IN LAW. FOR THIS PURPOSE, HE RELIED O N THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF CIT V. MOTOR INDUSTRIES CO. LTD., ITA NO.1410 OF ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 37 OF 38 2006 DATED 5.4.2013, ASHOK KUMAR GARD V. ITO, ITA N O.1151/BANG/2019 AND ACIT V. SRINIVAS RAO HOSKOTE, ITA NO.1154 & 1155/BA NG/2015. 68. THE LD. DR SUPPORTED THE ORDER OF THE CIT(APPEA LS) ON THIS ISSUE AND RELIED ON THE FOLLOWING JUDGMENTS:- I) CIT V. LATE SHRI RAJPAL BHATIA & OTHERS IN ITA NO.2 76/2009 DATED 29.11.2010 (DELHI HIGH COURT). II) SHAILESH S. PATEL IN ITA NO.3063/AHD/2016 DATED 31. 8.2018. 69. WE HAVE CAREFULLY GONE THROUGH THE ABOVE ARGUME NT OF THE LD. AR. THE ARGUMENT OF THE LD. AR IS TOTALLY MISCONCEIVED. FOR UNDERSTANDING, WE WILL REPRODUCE THE RELEVANT PROVISIONS OF SECTION 1 51 OF THE ACT, WHICH IS AS FOLLOWS:- 151. (1) IN A CASE WHERE AN ASSESSMENT UNDER SUB-S ECTION (3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RE LEVANT ASSESSMENT YEAR, NO NOTICE SHALL BE ISSUED UNDER SE CTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF ASSI STANT COMMISSIONER OR DEPUTY COMMISSIONER, UNLESS THE JOI NT COMMISSIONER IS SATISFIED ON THE REASONS RECORDED B Y SUCH ASSESSING OFFICER THAT IT IS A FIT CASE FOR THE ISS UE OF SUCH NOTICE : PROVIDED THAT, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE I SSUED UNLESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED , ON THE REASONS RECORDED BY THE ASSESSING OFFICER AFORESAID , THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. (2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB-S ECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSE SSING OFFICER, WHO IS BELOW THE RANK OF JOINT COMMISSIONER, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE JOINT COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR T HE ISSUE OF SUCH NOTICE. ITA NO.910/BANG/2019 & CO NO.51/BANG/2019 PAGE 38 OF 38 70. IN THE INSTANT CASE, THOUGH THE ASSESSMENT WAS REOPENED AFTER 4 YEARS, THERE WAS NO ASSESSMENT U/S. 143(3) OF THE A CT. AS SEEN FROM THE PROVISIONS OF SECTION 151(2), JT. COMMISSIONER IS T HE COMPETENT AUTHORITY TO APPROVE THE REOPENING OF ASSESSMENT AND THERE IS NO NECESSITY OF APPROVAL OF COMMISSIONER OF INCOME TAX TO REOPEN TH E ASSESSMENT. THE ASSESSEE IS RELYING ON PROVISO TO SECTION 151(1) OF THE ACT, WHICH IS ONLY APPLICABLE TO ASSESSMENT TO BE REOPENED AFTER FOUR YEARS IN CASE ORIGINAL ASSESSMENTS WERE COMPLETED U/S. 143(3) OF THE ACT. BEING SO, THIS ARGUMENT OF THE ASSESSEE IS ALSO DISMISSED. 71. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND CO OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF SEPTEMBER, 2021. SD/- SD/- ( N V VASUDEV AN ) ( CHANDRA POOJARI ) VICE PRESIDENT ACCOUNTANT MEMBER BANGALORE, DATED, THE 29 TH SEPTEMBER, 2021. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.
