TMI Blog2003 (7) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... after claiming 1/5th as deduction, the remaining amount of rent was shown as income from property. For asst. yr. 1996-97, the assessee changed its stand and started showing the rental income under the head "Business". Both the assessments appeared to have been completed. In asst. yr. 1997-98, there was objection raised by the internal audit party to the effect that the entire receipt of the assessee was from rent and the same was assessable under the head "Income from house property". It appears from record that on the basis of objection of the internal audit party, the AO issued a notice under s. 154 of the Act to rectify the alleged mistake. The assessee raised objection to the effect that the issue was debatable and was outside the purvi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected himself for assessment before the concerned AO. This plea was also rejected. The last plea of the assessee that income was from business and not from the house property was also repelled on the basis of case law discussed in the order, which is for both the assessment years recorded by CIT(A)-II, Kanpur, dt. 8th March, 2002, which is assailed by the assessee through these two appeals. The assessee raised several pleas against the impugned order of the CIT(A) and during the course of hearing, an application was also moved raising the following additional ground : "The initiation of proceedings under s. 147/148 of the IT Act, 1961, by the AO and wrongly confirmed by the CIT(A) is illegal, bad in law and void ab initio as the only basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 89. The same view was taken by Hon ble Madras High Court in the case of CIT vs. Lucas TVS Ltd. (1999) 155 CTR (Mad) 160 : (1998) 234 ITR 296 (Mad), in which it was also laid down that opinion of the audit party regarding application or interpretation of law does not constitute information. The decision of Hon ble Madras High Court stands confirmed by Hon ble Supreme Court of India in the case of CIT vs. Lucas TVS Ltd. (2001) 168 CTR (SC) 311. 6. The learned counsel also referred to the decision of Gujarat High Court in the case of Adani Exports vs. Dy. CIT (1999) 153 CTR (Guj) 308 : (1999) 240 ITR 224 (Guj), in which asst. yr. 1993-94 was involved and their Lordships have laid down that it is the satisfaction of the AO for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment for any assessment year, he may, subject to the provisions of ss. 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 course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in ss. 148 to 153 referred to as the relevant assessment year): Provided that where an assessment xxx xxx xxx 10. The above provision came into operation from 1st April, 1989. Initially, the words used by the legislature under the above referred to section were like this: "Sec. 147 If the AO for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xistence of such belief on the ground that what has been stated is not the correct state of affairs existing on record. In the face of the record the burden lies on the petitioner who challenges it. If the petitioner is able to demonstrate that in fact the AO did not have any reason to believe or did not hold such belief in good faith or the belief which is projected on paper is not belief held by him in fact, the exercise of authority conferred on such person would be ultra vires the provisions of law and would be an abuse of such authority. That part alone of the note of an audit party which mentions the law which escaped the notice of the ITO constitutes "information" within the meaning of s. 147(b) of the IT Act, 1961, the part which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO formed the opinion, while even the amended provision of s. 147 requires that the AO has to satisfy himself. In the absence of any material from the Department, we are constrained to believe that it was objection of the internal audit party, which was the basis for the AO to record the reasons for reopening and as laid down in the cases referred to by the learned counsel for the assessee, the information in the shape of audit objection of internal audit party cannot be sufficient as it is not the personal satisfaction of the AO for the purpose of reopening, but the basis of belief is on the basis of objection of internal audit party. In the absence of any reason to believe by the AO, reopening is not justified and it is settled propos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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