TMI Blog2008 (8) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... th Mr Paras Chaudhary For the Respondent : Mr S.R. Wadhwa JUDGEMENT BADAR DURREZ AHMED, J This appeal has been filed by the revenue in respect of the assessment year 1996-97 against the decision of the tribunal in ITA 1186/Del/2003 dated 23.02.2007. 2. The facts are few. The assessee had sold agricultural land at Rs 57,37,500/-in March, 1996 and in its return had claimed exemption under the provisions of Section 2 (14) of the Income-tax Act, 1961 (hereinafter referred to as 'the said Act'). The assessee's claim was that the agricultural land sold by it was not a capital asset. Consequently, no capital gains accrued at the hands of the assessee and he was not required to pay any tax thereon. 3. Although, it appears t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) observed that the "reasons to believe" should not be arbitrary or irrational, but must be based upon relevant and material facts. The Commissioner of Income-tax (Appeals) also observed that by saying that the issue "requires much deeper scrutiny", no belief could be said to have been formed entitling the issuance of a notice under Section 148 in order to initiate re-assessment proceedings. He also observed that in the present case the purpose behind the issuance of the notice under Section 148 appeared to be to reopen the assessment when, in the original return filed by the assessee, all the material facts had already been mentioned and no new facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tribunal concluded that a mere desire for making a further enquiry does not confer jurisdiction upon the Assessing Officer for re-assessment. Consequently, the tribunal, after considering various decisions, including the decision of the Supreme Court in the case of Chhugamal Rajpal v. S.P. Chaliha and Others: 79 ITR 603 (SC), dismissed the appeal of the revenue and affirmed the order passed by the Commissioner of Income-tax (Appeals) saying that the initiation of the proceedings under Section 147 and issuance of notice under Section 148 were without jurisdiction and were illegal. The assessment framed by the Assessing Officer on 31.03.2002 was also annulled. 6. Having considered the arguments advanced by the counsel for the parties an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the present case. In the case before the Supreme Court, the purported reasons recorded for reopening the assessment were inter alia:-"It appears that these persons are name-lenders and the transactions are bogus. Hence, proper investigation regarding these loans is necessary." The Supreme Court did not find that these were sufficient reasons for reopening the assessment. With regard to the sentence "hence, proper investigation regarding these loans is necessary", the Supreme Court observed that this conclusion that there is a case for investigation as to the truth of the alleged transactions is not the same thing as saying that there are reasons to issue a notice under Section 148. The Supreme Court further observed as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission to disclose fully and truly all material facts necessary for his assessment for the accounting year in question, income chargeable to tax has escaped assessment for that year; nor could it be said that he, as a consequence of information in his possession, had reasons to believe that the income chargeable to tax has escaped assessment for that year. We are not satisfied that the ITO had any material before him which could satisfy the requirements of either cl.(a) or cl. (b) of s. 147. Therefore, he could not have issued a notice under s. 148." 7. We feel that the observations of the Supreme Court in the aforesaid decision clearly apply to the case at hand. Merely because the Assessing Officer felt that the issue required 'much d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings, observed that- "we have only to see whether there was prima facie some material on the basis of which the Department could reopen the case". Lastly, in Rajesh Jhaveri (supra), the issue raised before the Supreme Court was whether failure to take steps under Section 143 (3) of the said Act would render the Assessing Officer powerless to initiate re-assessment proceedings in cases where intimations under Section 143 (1) had been issued. The Supreme Court held that so long as the ingredients of Section 147 are fulfilled, the Assessing Officer would be within his rights to initiate "re-assessment" proceedings irrespective of whether steps for a regular assessment under Section 143 (3) had been taken or not. While so deciding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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