TMI Blog2013 (2) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... 7is allowed in the terms indicated above - in favour of assessee. - IT APPEAL NOS. 53 & 54 (KOL.) OF 2010 - - - Dated:- 28-12-2012 - PRAMOD KUMAR AND MAHAVIR SINGH, JJ. A.K. Tibrewal for the Appellant. R.P. Nag for the Respondent. ORDER Pramod Kumar, Accountant Member - This is second round of proceedings, in these cases, before this Tribunal. Originally, all these appeals, along with revenue's appeal for the assessment year 2006-07 i.e. ITA No. 119/Kol/2010, were disposed of vide order dated 24th February, 2012 by a bench consisting of brothers Shri N Vijaykumaran, Judicial Member (as he then was), and Shri C D Rao, Accountant Member (as he then was). However, aggrieved by the order so passed by the Tribunal, assessee carried the matter in further appeal before the Hon'ble Calcutta High Court, and Their Lordships were pleased to remit the matter back to this Tribunal vide judgment dated 1st August, 2012 wherein Their Lordships have, inter alia, observed as follows: "After going through the impugned judgment and order of the learned Tribunal, we have noticed that the learned Tribunal has not decided the question of jurisdiction at all. There was no di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21 of the paper-book: 12.2.2008 The assessee (has) shown professional income in the P L account Rs. 16,74,352 but on verification of TDS certificates, it is seen that on Rs. 18,63,234. TDS deducted for Rs. 96,861. Hence, the discrepancy may be verified. This is a fit case for reopen(ing) the assessment under section 147. Issue notice under section 148. Sd/xx (illegible) Certified to be true copy Sd/xx (illegible) Income Tax Officer Ward 54(4), Kolkata 6. Vide letter dated 27th February, 2008 also, a copy of which was placed before us at page 19 of the paper-book, the Assessing Officer has advised the assessee the reasons of reopening the assessment as follows: "In response to your letter dated 22.2.2008, this is to inform you that the revenue audit has pointed out that your professional income shown, and totalling of TDS certificate, differs. Hence, re-opening of your assessment for the assessment year 2005-06" 7. In substance thus, it is an undisputed position that the assessment has been reopened on the ground that the discrepancy between professional income declared by the assessee and the professional income as per tax deduction at source certificates is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded that " In such a case [i.e. when the reopening is within four years and the income tax return is processed under section 143(1)] as well, the touchstone to be applied is as to whether there was reason to believe that income had escaped assessment". It is thus clear that even when the original assessment is under section 143(1) and even when reassessment proceedings are initiated within a period of four years, it is still necessary that there should be reasons to believe that income had escaped assessment and such reasons are subject to judicial scrutiny. No doubt that at the stage of initiating reassessment proceedings, it is not necessary to establish that there has been an escapement of income, but essentially there have to be valid reasons to believe that income has escaped assessment and these reasons, on stand-alone basis, must be considered appropriate for arriving at the conclusion arrived at by the Officer recording the reasons. The mere fact that the assessment has been completed under section 143(1) per se cannot be a good ground to reopen the assessment, without satisfying the conditions precedent for invoking section 147 i.e. reasons for forming opinion that inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence .". When we examine the facts of this case in the light of the above legal position that there is nothing in the reasons to indicate that there is an escapement of income, but, at the most, need to verify that the reasons of discrepancy between income from profession as per return of income vis- -vis as per the certificates of tax deduction at source. A variation in these two figures does not necessarily lead to escapement of income, because, for example, when income is booked on mercantile basis, the aggregate of such amounts, on which taxes have been deducted at source during the relevant previous year, will not necessarily tally with the income figure. There is thus no cause and effect relationship between the aggregate of payments, in respect of which taxes have been deducted at source, being more than relevant income having been booked in the profit loss account, and the income escaping assessment. In other words, just because the aggregate of such payments is more than income booked in the profit and loss account, as is the situation in the case before us, there is no valid reason to indicate that income has escaped assessment. All that the Assessing Officer records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding, never be a reason good enough to believe, even if it is a good reason to suspect so, that income has escaped assessment, and therefore, a reason good enough to invoke the reassessment proceedings. An Assessing Officer may have a hunch that here is a case in which some income may have escaped assessment but that hunch or suspicion, howsoever legitimate, cannot be a reason to "believe" that income has escaped assessment. The condition precedent for invoking section 147 is, thus, far from satisfied. In this view of the matter, in our considered view, the very initiation of reassessment proceedings on the facts of this case was devoid of legally sustainable merits. We, therefore, quash the reassessment proceedings. As the reassessment proceeding itself is quashed, we see no need to deal with the matter on merits and dismiss the related grievances, raised by the assessee on merits of the case, as infructuous. 12. In the result, the appeal for the assessment year 2005-06 is allowed in the terms indicated above. 13. That takes us to the assessee's appeal for the assessment year 2006-07 i.e. ITA No. 54/Kol/2012. 14. This appeal is directed against the order dated 12th January, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment that "the discrepancy may be verified". The short question that we are required to adjudicate is whether, on these undisputed material facts, the initiation of reassessment proceedings can be held to be legally sustainable. 18. We have heard the rival contentions, perused the material on record, and duly considered factual matrix of the case as also the applicable legal position. 19. We have noted in the present year, the professional receipts as per the profit and loss account were far more than aggregate of professional receipts as per tax deduction at source certificates. In this view of the matter, it is difficult to understand as to how can anyone form belief, or even a suspicion, that an income has escaped assessment. The income which is offered to tax is clearly more than the income as per the tax deduction at source certificates. It is, therefore, a clear case of non-application on this aspect of the matter and, in any case, the reassessment proceedings have been initiated on the short ground of need for verification of which, as we have noted earlier in this order, cannot be a legally sustainable reason for reopening a completed assessment even under section 1 ..... 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