TMI Blog2004 (9) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the Assessing Officer under section 147 of the Act. 3. Briefly, the facts of the case are that the assessee is a company incorporated under the Companies Act and carries on the business of Land Development and acting as promoters of properties. During the year, the appellant was engaged in schemes known as Malviya Palli Money Monta A-1 and Saraswatipuram schemes. The return of income filed by the assessee was processed under section 143(1)(a) of the Act. However, during the course of assessment proceedings for assessment year 1995-96, the Assessing Officer felt that the assessee has not declared the true cost of construction of the above projects. He, therefore, made a reference to the Valuation Officer under section 131(1)(d) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who upheld the assumption of jurisdiction under section 147 of the Act. The finding of the ld. CIT(A) has been challenged before us. The assessee had also made his arguments on merits, but the same also did not find favour with the ld. CIT(A), who confirmed the additions even on merits. 5. It is argued by the learned counsel for the assessee that accounts of the assessee were subjected to audit and no ad hoc additions could be made in the re-assessment order. It was also pleaded that for assuming jurisdiction under section 147 of the Act, there should be cogent material for formation of belief that income chargeable to tax has escaped assessment. In the instant case, though there is no material except the valuation report, it is almost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions. The facts have been mentioned above. Section 147 of the Act which has been invoked by the Assessing Officer reads as under: If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or re-assess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and quality of the reasons recorded have been the subject-matter of judicial considerations. The reasons recorded for the sake of formalities to do so will not satisfy the requirement of law. The reason should be exhaustive and should adequately justify the re-opening of assessment. This view is supported by the decision reported in 198 ITR 520 (Kerala), 196 ITR 562 (Alld.). The perusal of the reasons recorded as mentioned earlier, will clearly indicate that nowhere the Assessing Officer has satisfied the condition of reason to believe. Thus, in absence of this mandatory condition, the initiation of re-assessment proceedings itself was illegal. 9. The same view was taken by the Hon'ble Calcutta High Court in the case of Shri Bhibu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed provisions of section 148, the Assessing Officer could bring to tax certain other income also which come to his notice during the course of re-assessment proceedings. This only means that even if in the reasons recorded, the Assessing Officer has not taken that issue, he could make addition if something comes to his knowledge during the course of re-assessment proceedings. But the mandatory provision that the Assessing Officer should have reason to believe that any income chargeable to tax has escaped assessment still existed. 11. Section 147 which has been reproduced earlier provides that while making reassessment, the Assessing Officer will first assess or re-assess such income and such income was directly related with the words & ..... X X X X Extracts X X X X X X X X Extracts X X X X
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