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TMI Blog2015 (12) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... owed income from salary, business and other sources during AY in question. The Assessee had also done export business. 4. The return was picked up for scrutiny, and enquiries were raised by the Assessing Officer ('AO') during the course of the assessment proceedings. Specific to the case on hand, the AO called for details of the foreign donors of gifts which were disclosed by the Assessee. Specific queries were raised by the AO about the donors of the gifts and whether such gifts had been received in the past as well. On 1st December 1995 a reply was furnished by the Assessee in which it was inter alia stated in para 5 as under: "5. Details and confirmation of the foreign gifts of Rs. 5,65,000 received by the Assessee during the AY 1994-95 from the donors from their concerned Non-resident external account is hereby enclosed along with certificate from the bank maintaining the non-resident external account of the respective donors." 5. A further reply was submitted by the Assessee pursuant to the hearing on 25th January 1996. In this reply he stated, with particular reference to the donors of the gifts, as under: "1. The donors are family friends for the last several years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by his letter dated 3rd January 2000, filed before the AO on 3rd January 2001, had submitted that the original return filed on 14th November 1994 should be treated as his return in response to the aforementioned notice. 9. At this stage it is necessary to examine the reasons for reopening of the proceedings under Section 147/148 of the Act. Two broad grounds were urged. One ground was the underestimation of investment in the construction of factory and shop in around two locations and the second ground was the receipt of foreign gifts. After considering the Assessee's explanation, that the properties in question were built in 1981 and 1988 respectively, and not during the AY in question, the AO dropped this point and made no addition on this account in the assessment. As far as the foreign gift in the sum of Rs. 5,65,000, the AO came to the conclusion that the Assessee failed to establish the genuineness of the NRI gifts and that of his relationship with the donor. Accordingly, the said amount was treated as the concealed income of the Assessee in the re-assessment order dated 29th March 2001 and was added back to the total income of the Assessee. 10. In the appeal filed before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . "As the inquiries were pending and the assessment was getting time barred, the AO completed the assessment without reaching any conclusion on this point. He left an office note in the assessment order to reopen the case on receiving any adverse information from the FTD." The ITAT also noted that the Assessee had challenged the reopening of the assessment inter alia on the ground that "no adverse material or new information was received from the FTD up to the time of the reopening the Income Tax assessment." 13. The ITAT concurred with the CIT (A) and concluded that: "nothing prevented the Assessing Officer in the initial assessment from perusing the evidence which had been placed before him and his initial duty was to peruse such evidence and come to the conclusion whether onus which lay on the Assessee had been discharged or not. This exercise does not seem to have been carried out. The other course, which was open to the Assessing Officer was to have accepted the Assessee's stand and not making an addition and vis-a-vis the office not any adverse material coming to his possession later on could have been the basis for reopening. The third course, which was open to the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reign Tax Division) Branch the assessment shall be reopened". In other words, the reopening of the assessment was made contingent upon some material being received from the FTD. It is not denied by the Revenue that till date no such adverse material qua the Assessee has been received from the FTD. 18. In the absence of any material, as anticipated by the AO in the office note, it is difficult to appreciate on what basis the AO could form the "reasons to believe", that for the AY in question any income has escaped assessment. What seems to have been overlooked by the CIT (A) as well as the ITAT is that the original assessment was framed after detailed questionnaires were sent to the Assessee and replies furnished by him thereto giving the details of all the donors as well as their affidavits. These were examined by the AO. The mere fact that the AO may not have mentioned in the assessment order that the above exercise was undertaken need not mean that he did not pay attention to the materials before him. There was no warrant for the ITAT to have drawn such presumption. In fact the affidavits of the donors coupled with the confirmation letters of the Bank, as noted hereinabove, were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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