TMI Blog2007 (5) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is not applicable w.e.f. 1-4-1989. (3)That the order of Ld. Commissioner of Income-tax (Appeals), Bareilly being erroneous may be cancelled and the order of Assessing Officer be restored. (4)Any other ground of appeal which may be taken at the time of hearing." 3. Rival contentions have been heard and records perused. Since the common grounds have been involved in all the years, we have heard all the appeals together and now for the sake of convenience and brevity we are disposing all the appeals by this consolidated order. Facts in I.T.A. No. 4843/Delhi/05 for the assessment year 1999-2000, are that notice under section 148 of the Act was issued after recording following reasons: "Assessee filed return of income showing net income of Rs. 1,95,587 on 9-6-1999. A survey was conducted under section 133A of the Income-tax Act, 1961 on 12-3-2003 in the business premises of the firm/s US Oxygen (M/s. US and Sons) and M/s. US Foods (P.) Ltd., Gajraula where the assessee is a partner. Certain books of account found and impounded and also some discrepancies are found. Further during the course of assessment proceeding for the assessment year 2001-02 in the case of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey was conducted under section 133A of the IT Act on 12-3-2003 in the business premises of the firm/s US Oxygen (M/s. US and Sons) and M/s. US Foods (P.) Ltd., Gajraula where the assessee is a partner/director, books of account found and impounded. On verification certain discrepancies were noticed in the books of account as discussed in survey report. Further during the course of assessment proceedings under section 143(3) for the assessment year 2001-02 in the case of the assessee it is found that the assessee is disclosing income from brokerage of mint business whereas it is not actually done by him as the assessee failed to produce the books of account for verification during the course of assessment proceedings for the assessment year 2001-02 in the circumstances the expenses claimed at Rs. 39,858 in the P L account are bogus. Therefore, I have reason to believe that income chargeable to tax has escaped assessment to the extent of as discussed above. Issue notice under section 148 of the Income-tax Act, 1961 for the assessment year 2002-03." 7. While framing the assessment under section 143(3)/147 of the Act, for the assessment year 2002-03, as against income of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer is required to substantiate the additions proposed in the reasons. In the instant case, as per learned DR the assessee could not produce the books of account to substantiate the actual conduct of business of mint brokerage, and the expenditure incurred for earning the said income. He further contended that the amount of gift taken by the assessee could not be substantiated, as the Assessing Officer had found that persons who had given the gift were not having capacity to gift the impugned amount. During the course of hearing, the learned AR submitted that in case of other persons of the same group, wherein reassessments were initiated, was quashed by the CIT (Appeals) and the Tribunal vide its order dated 16-2-2006 had confirmed the action of the CIT (Appeals) in case of I.T.A. Nos. 4842 and 4848/Delhi/05, in case of Smt. Jafri Begum Smt. Husna Banu. 11. We have carefully gone through the orders of the ITAT wherein action of the CIT (Appeals) was upheld by observing that there was no escapement of any income chargeable to tax where notice under section 148 was issued. The Tribunal also found that income from "bag bahar" was exempt therefore even if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of the gift can be added to the income of the assessee. In the instant case, we found that as against the detailed finding recorded by the Assessing Officer, the same has not been controverted by the CIT (Appeals) and he has deleted the addition merely on the plea that reopening was not valid. We found that originally the returns were processed under section 148(1) and only after recording sufficient reasons the reopening was made, and thereafter during the course of proceedings under section 143(3)/147 of the Act, the assessee was given full opportunity to substantiate its claim. The decision relied by the CIT(A) for quashing the reopening of the assessment was based on the provisions prevailing prior to its amendment w.e.f. 1988-89. The basic two issues which falls for our consideration are ( i ) validity of re-opening under section 147 and ( ii ) the merit of addition made. As per provisions of section 147 prevailing during the assessment years under consideration, if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may subject to provisions of sections 148 to 153, assess or reassess such income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd truly all material facts. Reasons which may weigh with the Assessing Officer may be the result of his own investigation and may also come from any source that he considers reliable. Forming of this belief is an administrative decision to be arrived at in judicial manner. The Assessing Officer is required to act fairly and judiciously. His belief must have substance and must not a shadow. There is no dispute to the well-settled legal proposition that such belief should be bona fide and should not be based on vague, arbitrary and non-specific information. 16. Undisputedly, in the present case returns filed for all the assessment years 1999-2000, 2000-01 and 2002-03 were processed under section 143(1)( a ), and no scrutiny assessment was framed thereon. The case laws relied on by the ld. AR during the course of hearing before us relates to pre-amended provisions of section 147 or assessment completed under section 143(1) as they stood prior to amendment w.e.f. 1989-90. As and when we say that issue under consideration is squarely covered by the proposition laid down in particular decision of Tribunal, High Court or Supreme Court, we have to see that not only facts and circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice under section 143(2) was required to be issued to the assessee requiring him to produce evidence in support of his return. After considering the material and evidence produced and after making necessary inquiries, the officer had power to make assessment under section 143(3). 19. With effect from 1st April, 1989, the provisions underwent substantial and material changes. A new scheme was introduced and the new substituted section 143(1) prior to subsequent substitution with effect from 1st June, 1999 in clause ( a ), a provision was made that where a return was filed under section 139 or in response to a notice under section 142(1) and any tax or refund was found due on the basis of such return after adjustment of tax deducted at source, any advance tax or any amount paid otherwise by way of tax or interest, an intimation was to be sent under section 143(1)( a ), without prejudice to the provisions of section 143(2) to the assessee specifying the sum so payable and such intimation was deemed to be a notice of demand issued under section 156. The first proviso to section 143(1)( a ) allowed the department to make certain adjustments in the income or loss declared in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether or not any adjustments had been made under the first proviso to section 143(1) and notwithstanding that no tax or interest was found due from the assessee concerned. Between 1st April, 1998 to 31st March, 1999, sending of an intimation under section 143(1)( a ) was mandatory. 22. Thus, legislative intent is very clear from the use of the word intimation as substituted for assessment , the Assessing Officer is free to make any addition after grant of opportunity to the assessee. By making adjustments under the first proviso to section 143(1)( a ), no addition which is impermissible by the information in the return could be made by the Assessing Officer. Reason is that under section 143(1)( a ) no opportunity is granted to the assessee and the Assessing Officer proceeds on his opinion on the basis of the return filed by the assessee. The very fact that no opportunity of hearing being given under section 143(1)( a ) indicates that the Assessing Officer has to proceed accepting the return and making the permissible adjustments only. 23. As a result of insertion of Explanation to section 143 by the Finance Act (No. 2) of 1991 with effect from 1-10-1991 and subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount indicated to be payable by the intimation became permissible and nothing more can be inferred from the deeming section. Thus during the relevant assessment years 1999-2000, 2000-01 and 2002-03 under consideration, when the returns were processed under section 143(1), there being no assessment as such, there is no room to contend that there was change of opinion. Thus the case law relied on by ld. AR are not applicable to the facts and circumstances of the instant case where only intimations were issued under section 143(1) and after survey sufficient reasons were there to believe that there is escapement of income. Gujarat High Court in the case of S.R. Koshti v. CIT [2005] 276 ITR 165 dealing with the assessment year 2001-02, has categorically held that intimation under section 143(1) is not an order of assessment . At the stage of issue of notice under section 148, the Assessing Officer does not have to come to any conclusive finding on fact which gave him reason to believe that income has escaped assessment. The decision to initiate proceedings need not be preceded by a quasi-judicial enquiry; it can be the result of official, the Assessing Officer s own investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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