TMI Blog2004 (12) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... income earning activities (b) The CIT(A) could not go into the sufficiency or correctness of the reasons recorded at the stage of initiation of proceedings under section 147 as held by the Hon'ble Supreme Court in Raymond Woollen Mills Ltd v. ITO [1999] 236 ITR 34. (c) As held by the Hon'ble Gujarat High Court in the case of Praful Chunilal Patel v. M.J. Makwana, Asstt. CIT [1999] 236 ITR 832, at page 842, the CIT(A) could not substantiate his standard of sufficient reason or his opinion for the Assessing Officer's unless it was shown that the material relied upon by the Assessing Officer was wholly irrelevant. In the present case, there were two relevant facts viz, (I) the assessee continued his income earning activities and (II) had not filed return of income.' 3. The brief facts of the case are that the assessee had filed last return of income for the assessment year 1991-92 showing income of Rs. 24,120 and this return was accepted under section 143(1)(a) on 28-1-1992. No subsequent returns of income were filed. The Assessing Officer had not taken any action for assessing income of the assessee for the assessment years 1992-93 to 1995-96. On 12-5-2000, the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' has to be understood in contradistinction to suspicion or opinion. Belief indicates something concrete or reliable. He relied upon the following case laws:- 1. Gangasharan Sons (P.) Ltd. v. ITO [1981] 130 ITR 1 (SC) 2. ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) The belief of the Assessing Officer should be as to escapement of income and the belief should not be a product of imagination or speculation. There must be reasons to induce the belief. He relied upon the case laws T.S.PL.P. Chidambaram Chettiar v. CIT [1966] 62 ITR 774, 779 (Mad.) and CIT v. T.S.PL.P. Chidambaram Chettiar [1971] 80 ITR 467 (SC). The reopening should not be for mere investigating/finding out probability of escaped income. He relied upon the decision of Hon'ble Apex Court in the case of Chhugamal Rajpat v. S.P. Chaliha [1971] 79 ITR 603. 7. Further, the belief must be of an honest and reasonable person based upon reasonable grounds. The Officer may act on direct or circumstantial evidence but his belief must not be based on mere suspicion gossip or rumour. The Assessing Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand." 10. The Assessing Officer must have the reasons to believe that the assessee was having taxable income and he is to see whether that income exceeded the maximum not chargeable to tax. Even to satisfy the requirement as per decision in the case of Raymond Woollen Mills Ltd., the Assessing Officer must have prima facie some material. He further submitted that last return of income available on record was for the assessment yearl991-92 and that too at Rs. 24,120 only (below the taxable limit) and was accepted as such by the Department. No returns were filed for assessment years 1992-93 to 1995-96 nor any action was taken by the Assessing Officer, which clearly suggest that the assessee was not having any taxable income even in the year under consideration in absence of any direct contrary evidence. The ld. AR relied upon the following case laws: 1. Jay Gopal Mehra v. ITO [1969] 74 ITR 594 (Punj. Har.) 2. Manik Chand Nahata v. ITO [1970] 78 ITR 204 (Cal.) 3. J.P. Jani, ITO v. Induprasad Devshanker Bhatt [1969] 72 ITR 595 (SC). The Assessing Officer had not referred to any transaction of finance brokerage nor any income arising therefrom for the simple reason that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer recorded the similar reasons. He noticed that Shri Satya Naryan Parwal is involved in the business of finance broker and earning of taxable income but he did not file the return of income for all these years. The facts already narrated are that as per last return for assessment year 1991-92 which was filed showing income of Rs. 24,120 and accepted under section 143(1)(a) of the Act on 28-1-1992. The income for the assessment year 1991-92 was below taxable limit. The assessee had not filed any return of income for assessment years 1992-93 to 1995-96 for which revenue had not taken action. Even for all these years, the assessee had filed returns of income which were below exemption limit as under:- ------------------------------------------------------------------ Assessment year Exempt limit (Rs.) Returned filed income (Rs.) ------------------------------------------------------------------ 1996-97 40,000.00 32,300.00 1997-98 40,000.00 35,780.00 1998-99 40,000.00 39,260.00 ------------------------------------------------------------------ The Assessing Officer di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that income chargeable to tax has escaped assessment. Secondly, we have already mentioned that the Assessing Officer had no specific information/material in his possession to arrive at the conclusion that assessee had any taxable income during the years under appeal. We are also of the opinion that it was necessary for the Assessing Officer to quantify the escaped assessment at the stage of recording of reasons in order to know that assessee enjoyed taxable income. The Assessing Officer did not mention the amount of income escaped for initiation of proceedings under section 147 of the Act. Section 149 of the Act makes it clear and obligatory on the part of the Assessing Officer to mention specific income escaped and the time limits for issue of notice under section 148 of the Act. The l. AR for this purpose placed reliance on the decision of ITAT, Jodhpur Bench in the case of Uttamchand Nahar v. ITO Tax World XXVIII p. 435. 12. The Revenue's contention is that the ld. CIT(A) cannot go into the sufficiency or correctness of the reasons recorded at the stage of initiation of proceedings under section 147 as held in the case of Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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