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TMI Blog2014 (4) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is chargeable to tax has escaped assessment. The Assessing Officer recorded the reasons for reopening the case in the notice issued under section 148 of the Act. The reasons recorded by the Assessing Officer are quoted herein under:- "1. The assessee filed return for A.Y. 06-07 on 14.03.2007 declaring total income at NIL. Net receipt from operation has been shown at NIL. No scrutiny assessment has been made for A.Y. 06-07. During the relevant year share capital increases from 4782000 (as at 31.03.2005) to 58,82,000/- included share capital of Rs.25 lacs & share application of Rs.33.82 lacs Secured loans increases from Rs.1,23,54,001/- to Rs.2,78,21,882/- i.e. increase of Rs.1,54,67,871/- Investment in building, increase from Rs.7,09,770/- to 1,50,99,423/- source of which remained unexplained. Other current assets increases from Rs.2,14,645/- to 24,10,521/- i.e. increase of Rs.21,95,876/-. The source of these share application money source of collaterals which have been hypothecated by assessee for raising secured loan of Rs.1,54,67,871/- & source of work- in-progress & other current assets are remained unexplained". 2."During the assessment proceedings for A.Y. 2008-09 then t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puty Commissioner of Income Tax considered the petitioner's objection but ultimately rejected it on the ground that the assessee had not maintained complete details in respect of his accounts of cost of construction and has under estimated the investment in construction of the hospital building and the income chargeable to tax in respect of source of investments has indicative of escaped assessment. Learned counsel for the petitioner submits that petitioner filed its return of income for the assessment year 2005-06, 2006-07, 2007-08 and 2008-09 regularly and Books of Accounts have always been accepted with minor disallowance for assessment year 2008-09. For the assessment year 2006-07, since the hospital was under construction, the return filed by the petitioner had shown the income "Nil" and the return was proposed under section 143(1) of the Act. The details of balance sheet, profit and loss accounts including the investment made were duly incorporated in the return. It is stated by him that for the assessment year 2008-09 assessment order under section 143(3) of the Act has been passed on the basis of the figures of the loss disclosed by the petitioner without rejecting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner showed the complete books of accounts from which it emerges that there is an unexplained income which amounts to escape assessment for the assessment year 2006-07 and this was the foundation of reason to belief of the assessing officer, and this material fact had not been examined by the department in any assessment year. Thus, he submits that primafacie there is a material on the basis of which the Assessing Officer has reason to reopen the proceeding. Learned counsel for both the parties cited some decisions in their supports which are quoted as under:- Cases cited by the leaned counsel for the petitioner. 1.Commissioner of Income Tax-V Vs. Orient Craft Ltd. [2013] 29 taxmann.com 392 (Delhi). "In this case the Delhi High Court have discussed the significance of the source "reason to believe" in the light of the decisions of the Hon'ble Supreme Court rendered in the case of CIT Vs. Kelvinator of India Ltd. [2010 ]320 ITR 561/187 Taxman 312. as well as on the basis of another case of the Hon'ble Supreme Court i.e. Assistant CIT Vs. Rajesh Jhaveri Stock Brokers (P). Ltd. [2007] 291 ITR 500/161 Taxman 316 in which Hon'ble Supreme Court held that even proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 are satisfied. It is open to the Assessing Officer to invoke the jurisdiction under section 147, notwithstanding the fact that there are other remedies open to him under the Act. It cannot, therefore, be accepted that the reassessment under section 147 is vitiated because the Assessing Officer failed to invoke his power to correct the assessment already completed under section 143(1) by issuing a notice under section 143(2) of the Act." 2.Phool Chand Bajrang Lal and another Vs. Income Tax Officer and another [1993] Volume 203ITR Pg. 456 (SC). In this case Income Tax Officer, Azamgarh subsequent to the completion of original assessment proceeding on making an enquiry from jurisdictional Income Tax Officer at Calcutta learnt that the Calcutta Company from whom the assessee claimed to have borrowed the loan of Rs.50,000/- in cash had not really lent any money, but only its name to cover up a bogus transaction was mentioned and after recording his satisfaction as required by the provisions of section 147 of the Act proposed to reopen the assessment proceedings, the Hon'ble Supreme Court held as under:- "From a combined review of the judgments of this Court, it follows that an I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rror and did not appreciate the import of that judgment correctly." 3.Pradeep Kumar Har Saran Lal Vs. Assessing Officer [1997] Volume 229 ITR Pg. 46, Alld High Court. In this case the question for consideration was "whether any assessment was made under section 143(1) (a) and whether the intimation sent to the petitioner by the Assessing Officer could be expressed with character of assessment. In this case the Hon'ble Supreme Court held as under:- " There is much difference difference between an assessment and the intimation as contemplated by section 143(1)(a) and if it were not so, then Parliament would not have used the word intimation as a substitute for assessment. While making assessment, the Assessing Officer is free to make any addition, subject to course of giving an opportunity of being heard. By making adjustment under the proviso to section 143(1) (a), no addition not permitted by the information given in the return, can be made by the Assessing Officer. The reason is that under section 143(1) (a), no hearing is given to the assessee and the Assessing Officer proceeds on his own on the basis of the return, filed by an assessee. Otherwise also, no addition on enha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with effect from 1st Aprail, 1989, as also sections 148 and 152 are substantially different from the previsions as they stood prior to such substitution. Under the old provisions of section 147, separate clause (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied firstly the AO must have reason to believe that income profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either (I) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the AO could have jurisdiction to issue notice under section 148 r/ws. 147(a). But under the substituted section 147 existence of only the first condition suffices. In other words if the AO for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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