TMI Blog2010 (1) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... hout any jurisdiction. In the present case, the AO not having compiled with the mandatory requirement of recording the reasons before issue of notice under s. 148 as such the reassessment is invalid. - ITA No. 630/Hyd/2007; - - - Dated:- 29-1-2010 - N.R.S. Ganesaa, Chandra Poojari, JJ. K.C. Devadas for the Applicant E.S. Nageswara Prasad for the Respondent ORDER Chandra Poojari, Accountant Member:- 1. This appeal preferred by the assessee is directed against the order passed by the CIT(A), Guntur, dt. 29th March, 2007 and pertains to the asst. yr. 2000-01. 2. The first ground in this appeal is with regard to reopening of the assessment. 2.1 The second ground is with reference to the addition of Rs. 7,03,231 which also formed part of the opening capital as on 1st April, 1999. 3. Brief facts of the case are that the assessee filed return of income for the asst. yr. 2000-01 declaring income at Rs. 92,190 besides net agricultural income of Rs. 20,000 on 11th Sept., 2003. The assessing authority issued notice under s. 148, dt. 29th March, 2005. In response to this notice, assessee filed return on 30th March, 2005 stating that the return file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT for approval to issue a notice under s. 148 of the IT Act, wherein the AO stated that the assessee filed its return of income for the asst. yr. 2000-01 on 11th Aug., 2008 which is a belated return. Moreover, the assessee has not shown any income from the crushers. Hence, he proposed to issue a notice under s. 148. The learned Authorised Representative submitted that the Addl. CIT has given approval for reopening of the assessment by just writing as follows:- "Yes, approved for 148" 5.4 He submitted that the above noting clearly shows that there is no application of mind either by the AO or by the Addl. CIT. He submitted that the lower authorities have not been able to drew inference regarding escapement of income while at the time of issuing notice under s. 148. Thus, he submitted that issue of notice under s. 148 is without forming a belief that income escaped from" assessment. He relied on the judgment of Supreme Court in the case of Associated Stone Industries (Kotah) Ltd. vs. CIT (1997) 138 CTR (SC) 260 : (1997) 224 ITR 560 (SC). Without prejudice to the above argument, he submitted that though the assessment was reopened for the purpose of treating the income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 999-2000 in the statement prepared at p. 11 of the assessment order. The AO had also not included deposits of Rs. 87,109, Rs. 39,213, Rs. 14,710 received in the accounting years relevant to asst. yrs. 1997-98, 1999-2000 and 2000-01, respectively, from the Government contract works. He further submitted that there was no deficit as worked out by the AO after considering opening cash balance of Rs. 1,29,221, refund of Rs. 21,506 and deposits realized from the Government Department amounting to Rs. 1,28,541. Thus, the total receipts which are not considered by the AO work out to Rs. 2,79,268 and therefore against the deficit of Rs. 2,77,475 as worked out by the AO finally he worked out surplus amount of Rs. 1,793 (Rs. 2,79,268 - Rs. 2,77,475). 5.6 He submitted that in response to summons, some of the family members of the deceased have furnished confirmatory letters to the AO by courier which the AO had ignored. 5.7 He further submitted that in the year under appeal from 30 debtors along with principal amount of Rs. 5,20,000 and interest of Rs. 38,000 was realized and the interest was disclosed under the head 'Other sources of income'. 5.8 He further submitted that all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e treated as that filed in response to notice under s. 148 of the Act dt. 29th March, 2005 received by me on 30th March, 2005." 6.2 He further submitted that the AO issued notice under s. 143(2) on 10th Oct., 2005 for the asst. yr. 2000-01 for completion of assessment proceedings. The AO processed return of income under s. 143(1) on 28th March, 2006 and no intimation was issued to the assessee as no demand or refund was payable. Since no return of income was pending for completion of assessment therefore, the submission of the assessee that the AO issued notice under s. 148 in spite of pendency of return is not found to be correct. 6.3 He further submitted that the return of income for asst. yr. 2000-01 was to be filed by the assessee on or before 31st July, 2000 whereas, he filed return of income belatedly on 11th Sept., 2003. The date of filing mentioned in the note sheet for obtaining approval as on 11th Aug., 2002 is appeared to be not correct and the correct date of filing of return is 11th Sept., 2003. In the reasons recorded for issue of notice under s. 148, the first reason mentioned that the return of income filed for asst. yrs. 2000-01 is a belated return. Second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -disclosure of income from the crusher. The Departmental Representative further submitted that there is no proper format for recording the reasons as such the assessee is not justified in stating that there are no reasons recorded properly. The assessee accordingly, in the course of assessment proceedings, responded to the AO on the queries and after taking into account explanation of the assessee, the AO completed the assessment. 6.8 He submitted that there was no violation of natural justice in respect of intimation of reasons recorded for issue of notice under s. 148. 6.9 He further submitted that the assessment order passed under s. 143(3) r/w s. 147 on 31st March, 2006 is not on the belated and invalid return and the argument of the assessee is not tenable and acceptable in view of the fact that the AO passed order under s. 143(3) r/w s. 147 on 31st March, 2006 on the valid return filed on 31st March, 2005 by submitting letter dt. 30th March, 2005 in response to notice under s. 148 by the assessee disclosing the same income and particulars as disclosed in the belated return on 11th Sept., 2003. Thus, the assessment made under s. 143(3) r/w s. 147 was on the valid retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are unable to appreciate how the AO holds the opinion that the assessee has any income from the crusher unit. The reasons recorded by the AO do not disclose by what process of reasoning he holds such a belief that crusher unit of the assessee has not earned income from it. Merely saying that the assessee belatedly filed the return of income for the asst. yr. 2000-01 on 11th Aug., 2002 and he has not shown any income from the crusher unit cannot be considered to be the reason for reopening of the assessment. The AO is required to disclose the reason which led him to hold such a belief otherwise it does not confirm (sic-confer) jurisdiction on the AO to take action under ss. 147 and 148. The AO is required to record the reason for the formation of his belief to reopen the assessment before initiating the proceedings under s. 148. In the absence of the recorded reasons the conclusion is inescapable that exercise of power under s. 148 is without any jurisdiction. When the reasons for issue of notice under s. 148 were not recorded the assessment in pursuance of the impugned notice under s. 148 would be void and non est Sec. 148(2) is mandatory in nature and failure of the AO, to produce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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