TMI Blog2007 (7) TMI 376X X X X Extracts X X X X X X X X Extracts X X X X ..... huge investments in the purchase of shares and other movable and immovable assets and those transactions have not been recorded in the books of account therefore, the Assessing Officer has reason to believe that the assessee’s income assessable to tax had escaped assessment, is not sufficient for reopening the assessment. - Thus, in our opinion, the Tribunal was fully justified while coming to the conclusion that the Assessing Officer was not justified in reopening the assessment of the assessee under section 147/148 - 386 of 2007 - - - Dated:- 18-7-2007 - SATISH KUMAR MITTAL and AUGUSTINE GEORGE MASIH JJ. Rajesh Sethi for the appellant. Ms. Radhika Suri for the respondent. JUDGMENT The judgment of the court was delivered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p of cases as well as the residential premises of its partners and other family members. During the course of search a large number of books of account documents, share certificates, etc., were found and seized. Examination of the seized records reveals that the assessee has made huge investments in the purchase of shares as well as other movable/ immovable assets. The entire transactions do not appear to have been recorded in the books of account. Therefore, I have reason to believe that the assessee's income assessable to tax has escaped assessment. Issue notice under section 148 of the Income-tax Act." 3. In pursuance of the said notice, the aforesaid reassessment-order was passed by the Assessing Officer. 4. Feeling aggrieved agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified the shares. Therefore, the Assessing Officer was not justified in calling upon the assessee to furnish information not connected with the reasons, on the basis of which reassessment notice had been served on the assessee. As per the ratio laid down by the hon'ble Supreme Court in the case of CIT v. Sun Engineering Works P. Ltd. [1992] 198 ITR 297 the proceedings under section 147 were opened only qua items of under assessment. The finality of assessment proceedings on other issue remained undisturbed. In the instant case, the Assessing Officer, nowhere stated that the-investment in the jewellery was under assessed. Therefore, the proceedings under section 147 of the Income-tax Act initiated by the Assessing Officer were not justif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntimation under section 143(1)(a) of the Act as when the notice under section 148 of the Act was issued, the Assessing Officer was having all the relevant information with him, but instead of issuing the notice under section 143(2) of the Act and allowing those proceedings to become final, he exercised the power under section 147 of the Act without there being any justification. Learned counsel submitted that the only condition precedent for proceeding under section 147 of the Act is that the Assessing Officer should have reason to believe that the income had escaped assessment. Nothing more is required. Learned counsel further submitted that the Tribunal has further gone wrong while observing that the Assessing Officer in the reasons recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel submitted that recording of the valid reasons for reopening of the assessment under section 147 of the Act is mandatory. While referring to the decision of the Supreme Court in ITO v. Lakhmani Mewal Das [1976] 103 ITR 437, learned counsel submitted that the reasons for the formation of the belief contemplated, by section 147(a) of the Act for reopening of an assessment must have a rational connection or relevant bearing on the formation of the belief. She submitted that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 95, and was processed under sec lion 143(1) (a) of the Act on March 4, 1998. In spite of that, the Assessing Officer while recording the reasons for issuing notice under section 148 of the Act has not specifically mentioned the items of jewellery and the particulars of shares which in his opinion had escaped assessment. Merely recording the reason that examination of the seized records revealed that the assessee has made huge investments in the purchase of shares and other movable and immovable assets and those transactions have not been recorded in the books of account therefore, the Assessing Officer has reason to believe that the assessee's income assessable to tax had escaped assessment, is not sufficient for reopening the assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
