2011 (7) TMI 1329 - ITAT AGRA

"Reason to Believe" - Assessment/ Re-Assessment of Income u/s 147 - AO initiated proceedings u/s 147, as he believed that assessee did not co-operate with the department and not submitted any return in reply to notice u/s. 148 - CIT(A) held the reasons recorded for initiating proceedings u/s 147 are not valid

HELD THAT:- We noted that the apex court in the case of INCOME-TAX OFFICER VERSUS PURUSHOTTAM DAS BANGUR AND ANOTHER [1997 (1) TMI 477 - SUPREME COURT] has settled the law on the issue in question, that at the time of initiation of the proceedings u/s. 147, the AO should have the material relevant to the assessee. The information received from the Investigation Wing is also material if it contains the information regarding the assessee. The Assessing Officer at the time of recording of the reasons/formation of belief is not supposed to counter the evidence or material collected by him with the assessee. Even the source of the material cannot be asked by the assessee.

If the material or the information belongs to the assessee, in our opinion, the Assessing Officer has a bona fide belief to record the reasons. The court cannot look into the sufficiency of the material held by the Assessing Officer for the formation of the belief. Once the proceedings are initiated, the onus is on the Assessing Officer to prove that the assessee has escaped the income and for that he has to give the hearing to the assessee and give all the material and evidence collected by him so that the assessee may contradict the same. If the Assessing Officer does not have the material, the reasons cannot be regarded to be bona fide and the initiation of the proceedings can be quashed. If the initiation is valid and subsequently, the assessee proves that there is no escapement of income, the assessment so framed could be quashed/cancelled.

We noted that in the decisions relied on by the learned AR, the decision of the Hon’ble Supreme Court, which has settled the position of law has not been discussed. The law pronounced by the Supreme Court is the law of land and is binding on all the courts what to talk of this Bench of the Tribunal. We, therefore, set aside the order of the CIT(A) on this issue as, in our opinion, the Assessing Officer has bona fide reason to believe that the income has escaped in the case of the assessee - Decision against Assessee.

Unexplained Cash Credits u/s 68 - Assessee expressed his inability to produce the brokers - AO treated the amount received by the assessee from brokers credited in Saving Account as unexplained. - HELD THAT:- We noted that the issue on merits is covered in the case of BAIJNATH AGARWAL VERSUS ACIT [2010 (2) TMI 892 - ITAT, AGRA], where it was held that "The transaction was treated as non genuine as the assessee could not produce the broker. This in my opinion cannot be the ground to hold the transaction to be a non-genuine transaction. The assessee has given the address of the broker and proved the identity of the broker, even the bank account of the broker is also on record of the department".

Respectfully following the decision, we confirm the order of the CIT(A) i.e such amount does not come u/s Sec. 68 - Decision in favour of Assessee.