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TMI Blog2015 (12) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... t thereto, a notice under Section 148 of the Act was issued on 28.09.2006, for which reasons had been recorded by the Assessing Officer on 15.09.2006. I n response to the said notice, the assessee-appellant requested the Assessing Officer to treat the return filed on 21.03.2005 under Section 139 of the Act, to be the return filed by the assessee in response to the notice under Section 148 of the Act. He further stated that the investment for purchase of the property was from the funds of HUF. However, after holding that the notice under Section 148 of the Act was validly iss ued, the Assessing Officer made certain additions of inc ome under Section 69 of the Act. Challenging the said order, the appellant filed an appeal before the Commission er of Income-Tax (Appeals), which was partly allowed on merits, but the reopening under Sections 148/147 of the Act was held to be valid. Challenging the sam e, the revenue filed an appeal before the Tribunal, in which the assessee filed cross-objections and challenged the reopening of the case under Section 147/148 of the Act. After holding that the reopening of assessment was valid, the Tribunal partly allowed the appeal and made certain addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... believe' for the such reopening. His submission, thus, is that without there being any live link or close nexus between the material before the Assessing Officer and the belief which h e has with regard to escapement of income of the assessee , the reopening of an already concluded assessment cannot be made on the basis of surmises and conjecture. 7. On the other hand, Sri E.I.Sanmathi, learned counsel for the respondent-Revenue has submitted that, in the facts of the present case, reading of the first paragraph of the reasons recorded on 15.09.2006, along with its second and third paragraphs, would make it clear that there was a vast gap between the income of the assessee in the year in question, and the investment made by the assessee by way of purchase of the property. It is contended that from the same it can be clearly gathered that there was escapement of income chargeable to tax, and would be the reason for which reopening had been made. He thus submitted that, in the facts of this case, there was sufficient reason for the Assessing Officer to believe that there had been escapement of income of the assessee for the relevant assessment year and, as such, the reopening of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax had escaped assessment within the meaning of Section 14 7 of the Act. While forming such opinion, in the first paragraph the Assessing Officer has given details of the income of the assessee for the relevant assessment year, in which he had made a purchase of a residential house for Rs. 10 lacs. 11. In response to the summons issued, the assessee had informed that the source of investment was from the HUF funds. The Assessing Officer does not state that such explanation was not correct, nor does he give reasons for not accepting such explanation given by the assessee in response to the summons issued. As such, it cannot be inferred, that what has been stated in the first paragraph of the reasons recorded on 15.09.2006 can be correlated with the third paragraph, because in the second as well as in the third paragraphs the main thrust is that further investigation was required. 12. Section 147/148 of the Act is not meant for reopening an already concluded assessment by first issuing notice and then proceeding to investigate and find out if there was any lacuna in the accounts. If such further investigation, by reopening a conclude d assessment, is permitted, it would give ris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions are bogus. Hence, prop er investigation regarding these loans is necessary. he names of some of the persons from whom money is alleged to have taken on loan on Hundis are: 1. Seth Bhagwan Singh Sricharan. 2. Lakha Singh Lal Singh. 3. Radhakissen Shyam Sunder. The amount of escapement involved amounts to Rs. 100,000/-. Sd/- S. P. Chaliha, 30- 4-66. Income-tax Officer, A-Ward, Muzaffarpur." On considering the aforesaid report/reasons, the Supreme Court was of the view that the Income Tax Officer did not set out any reason for coming to the conclusion that it was a fit case for issuance of notice under Section 148 of the Act and further held that "in his report he vaguely refers to certain communications received by him from the C.I.T., Bihar and Orissa. He does not mention the facts contained in those communications. All that he says is that from those communications "it appears that these persons (alleged creditors) are name lenders and the transactions are bogus". He has not even come to a prima facie conclusion that the transactions to which he referred are not genuine transactions. He appears to have had only a vague feeling that they may be bogus tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the assessee in the assessment year, and the investment made by him for the purchase of residential property, it cannot be concluded that the difference would automatically be the income which had escaped assessment. 19. The submission of learned counsel for the respondent-Revenue, that reading of the first paragraph of the reasons recorded along with the third paragraph, would amount to the Assessing Officer concluding that the difference between the purchase price of the property and income of the assessee in that year was the reason for which re-assessment notice was given , is not worthy of acceptance. Definite and specific reasons have to be recorded by the Assessing Officer before the issuance of notice under Section 148 of the Act, as reply has to be given by the assessee to such reasons which are recorded in the notice. Nothing can be left for the party to conjecture and then presume that such could be a reason for the Assessing Officer to believe that there has been escapement of income from assessment to tax. 20. The submission of Sri E.I.Sanmathi, learned counsel for the respondent-Revenue is that the difference between the investment made by the asses s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and have a bearing on the matters in regard to which he is required to entertain the belief before he can issue notice under s.147(a). If there is no rational and intelligible nexus between the reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could reasonably entertain the belief, the conclusion would be inescapable that the Income Tax Officer could not have reason to believe that any part of the income of the assessee had escaped assessment and such escapement was by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts and the notice issued by him would be liable to be struck down as invalid." 22. In the present case, we find that the belief entertained by the Assessing Officer was arbitrary and irrational, as the same is neither reasonable nor i s based on any relevant material, having a bearing on the matter in regard to which the Assessing Officer has entertained the belief. . Learned counsel for the respondent-Revenue has also placed reliance on the Judgment of the Del hi High Court in the case of Rajat Export Import India Pvt. Ltd. -vs- Income Tax Officer (2012) 341 ITR 135. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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