TMI Blog2015 (10) TMI 2383X X X X Extracts X X X X X X X X Extracts X X X X ..... erified by the ED, also required to be assessed by the AO by examining the returns filed to discern whether the said transaction was duly disclosed by the Assessee. It is the treatment of the entries in the books of accounts in the returns filed by the Assessee that would be determinative of whether in fact there was any concealment of relevant information or whether any income had in fact escaped assessment. With the AO in either of these cases not having adopted that approach, it could not be said that the jurisdictional requirement of the AO having to form reasons to believe on the basis of some tangible material that income had escaped assessment was fulfilled.Consequently, the Court finds no error having been committed by the ITAT in the impugned orders in coming to the conclusion that the reopening of the assessments was bad in law. - Decided in favour of assessee. - ITA 292/2015, ITA 299/2015 - - - Dated:- 20-10-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the Appellant : Mr. Kamal Sawhney, Senior Standing Counsel For the Respondent : Mr. Ajay Vohra, Senior Advocate with Ms. Roopali Gupta and Ms. Mehak Gupta, Advocates. ORDER Dr. S. Muralidhar, J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstantiate the source of this cash receive. In view of the fact that no satisfactory explanation has been furnished by the assessee regarding the source of the cash deposits of ₹ 3.23 Crore, I have therefore reason to believe that the money U/S 68 of the IT Act, 1961, has escaped assessment. 5. On the above basis notice was issued by the AO to Indo Arab, on 27th March, 2009, asking it to file its return of income. The Assessee by letter dated 23rd July, 2009 stated that the original return filed by it may be treated as return under Section 148 of the Act. Inter alia the explanation given by the Assessee for the cash deposits found in its account was that they were counter sales of airline business of around ₹ 18 crore during the AY 2002-2003 out of which a large percentage was in cash. Therefore the cash was shown as such in the books which was a normal trade practice. It stated that Indo Arab was the General Sales Agent (GSA) for Saudi-Arabian Airlines both for passenger and cargo. Indo Arab was issuing tickets to various travel agents and also selling air tickets. It had also issued tickets to pilgrims undertaking Umrah/Haj and collected payments from them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of these payments were mentioned in the books of accounts as if paid by Cheque, in reality he had withdrawn the cash trough self/bearer cheques entire amount was paid in cash to one party Sh. Dharam. This is indicative of the fact that Sh. Chetan Gupta had cash transaction with some parties on a regular basis whose identity cannot be established. 8. Pursuant to the notice issued to it under Section 148 of the Act on 27th March, 2009, RL Travels filed a letter dated 23rd July, 2009 stating that the return originally filed by it may be treated as the return under Section 148 of the Act. 9. In response to a questionnaire issued to it by the AO, RL Travels explained that it was a GSA for Asiana Airlines and Oman Air for passenger and cargo. It too contended that inter alia air tickets were being sold in cash/cheque which were duly accounted for in the books of accounts and bank accounts. RL Travels also relied upon the tax audit report given by its CA under Section 44AB of the Act which inter alia stated that its balance sheet and profit and loss account give a true and fair view of the statement of affairs. It was further stated that all the debtors and creditors were du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsequently, the reopening of assessment could not be said to be on the basis of a change of opinion. Relying on the decisions in Signature Hotels (P) Ltd. v. Income Tax Officer (2012) 20 taxmann.com 797 (Del) and Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd.(2007) 291 ITR 500 he submitted that there was no reason for the AO to make a detailed investigation and come to a definite opinion on the basis of the information provided by the ED that the income of the Assessee had escaped assessment. As long as there was information received from a governmental agency it constituted a valid and tangible material on the basis of which AO could form a tentative or prima facie belief regarding escapement of income. He sought to further make a distinction between the cases of the two Assessees. In the case of RL Travels, he pointed out that there was additional information regarding the cash transactions entered into by the Assessee with the parties whose identities could not be established. 15. Mr. Ajay Vohra, learned Senior Counsel appearing for the Assessees submitted that there had to be a nexus between the material given to the AO and the formation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old provisions of section 147, separate clauses (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 Assessing Officer 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 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 Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a). But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is, however, to be noted that both the conditions must be fulfilled if the case falls within the ambit of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at somehow the same rigorous standards which are applicable in the interpretation of the expression when it is applied to the reopening of an assessment earlier made under Section 143(3) cannot apply where only an intimation was issued earlier under Section 143(1). It would in effect place an assessee in whose case the return was processed under Section 143(1) in a more vulnerable position than an assessee in whose case there was a full-fledged scrutiny assessment made under Section 143(3). Whether the return is put to scrutiny or is accepted without demur is not a matter which is within the control of assessee; he has no choice in the matter. The other consequence, which is somewhat graver, would be that the entire rigorous procedure involved in reopening an assessment and the burden of proving valid reasons to believe could be circumvented by first accepting the return under Section 143(1) and thereafter issue notices to reopen the assessment. An interpretation which makes a distinction between the meaning and content of the expression reason to believe in cases where assessments were framed earlier under Section 143(3) and cases where mere intimations were issued earlier under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 1, on which considerable reliance was placed by Mr. Kamal Sawhney, is distinguishable on facts. The nature of the information provided by the governmental agency in that case did not itself refer to any amounts or entries in the books of accounts of the Assessee. In the present case, however, the information received from the ED makes a reference to what was found in the books of accounts of the Assessee. 22. The next question that had to be examined by the AO was whether what was disclosed in the books of accounts was also disclosed in the returns filed by the Assessees. If it was not disclosed, then possibly the AO could have reasons to believe that the cash deposits reflected in the books of accounts may have escaped assessment. However, no effort appears to have been made by the AO to examine the returns filed by the Assessee in either of these cases. 23. As far as RL Travels is concerned, the further information concerning payments made to third parties, which were unable to be verified by the ED, also required to be assessed by the AO by examining the returns filed to discern whether the said transaction was duly disclosed by the Assessee. It is the treatment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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