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Smt. Rajni W/o Shri Yatender and Smt. Madhu W/o Shri Vijay Parkash Versus ITO Ward-2 Rewari.

Validity of reopening of assessment - reasons to believe - unexplained investment - AIR communication relied upon - Held that:- A perusal of the reasons extracted would indicate that the ld. AO has basically not made reference to any material possessed by him except the AIR communicated to him. It is pertinent to observe that he has not analysed the information in right perspective and he sought to reopen by conceiving a fact that the assessee failed to respond to the query raised about this inv .....

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conclusion, but, the formation of a prima facie opinion should also depict escapement of income. It is also pertinent to observe that when all these pleas were raised before the first appellate authority, then, the ld. first appellate authority has not dealt with a single proposition and rather dealt with the issue in an altogether different manner whether notice u/s 148 was served or not, copy of reasoning was provided or not, the procedure contemplated through the decision of the Hon’ble Supr .....

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A) dated 06.01.2016 passed for Assessment Year 2007-08. Since identical issues are involved in both these appeals, I dispose of these appeals by this consolidated order for the sake of convenience. ITA No.854/Del/2016 2. Though the assessee has taken nine grounds of appeal, but, in brief, the grievance of the assessee revolves around three issues, namely, a) that ld.CIT(A) has erred in confirming the reopening of assessment; b) that the ld.CIT(A) has erred in confirming the addition of ₹ 2 .....

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has harboured a plea that income to this extent has escaped assessment and, therefore, he recorded reasons for reopening of the assessment. The reasons for reopening are available at page 1 of the paper book. They read as under:- Name and address of the assessee RAJNI W/O YATENDER VILL KANHARWAS DISTT REWARI Asstt. Year 2007-08 Date 13.03.2012 As per AIR information for F.Y. 2006-07 received in this office, the assessee has purchased immovable property of ₹ 5555000/-. The assessee was aske .....

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the notice of the undersigned has escaped assessment within the meaning of section 147 of the I.T. Act, 1961. Issue notice u/s 148 of the I.T. Act, 1961 for the assessment year 2007 -08. Sd/- (O.P. Poonia) Income Tax. Officer Ward-2, Rewari 4. On the strength of the above reasons, the AO issued notice u/s 148 of the Income-tax Act, 1961 (for short the Act ) and, after hearing the assessee, has passed the assessment order on 29.01.2013. He made an addition of ₹ 27,77,500/- which is equival .....

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omehow has not gone through the alleged written submissions and upheld the reopening of assessment by recording the following finding:- 4.5 I have carefully considered the facts of the case. The AO had received specific information regarding the investment made by the appellant in immoveable property. There was no ambiguity regarding the information received. In fact the factual accuracy of the information was also accepted by the appellant. The AO was therefore fully justified in issuing notice .....

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3237 dated 26/03/2012. Thereafter, Notices u/s 142(3) were issued. In response to these notices return declaring income of ₹ 1,18,500/- including agricultural income of ₹ 44,500/- was filed on 30/11/2012. It has been clearly recorded in the assessment order that copy of reasons recorded was duly given to the appellant. Further, there is no evidence of any objections having been raised by the appellant against issue of notice u/s 148. No such evidence was furnished during the course .....

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ssee on 23rd January, 2012. This letter was not replied to by the assessee. He pointed out that though as per law the assessee was not supposed to reply this letter because no assessment proceedings were pending before the AO, but, the assessee has given the reply to this letter. Her reply is available on page 89 of the paper book. She has annexed her bank account along with the bank account of her husband. She has also disclosed the details of the alleged investment along with the copy of the s .....

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actually incorrect. For buttressing this contention, the ld. counsel for the assessee has relied upon the order of ITAT in the case of Raj Kumar Dugar (HUF) vs ITO in ITA No.35/Del/2005. He placed on record a copy of this order. The ITAT has observed that if the AO has conceived the facts erroneously, then, reopening would not be justifiable. 7. In this next fold of submissions, he contended that the AO has nowhere alleged that income has escaped assessment. The operating portion of the alleged .....

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d that the ITAT Amritsar Bench in the case Amrik Singh vs ITO reported in 159 ITD 329 has examined the procedure, i.e., whether the Income-tax Act authorize an AO to conduct an enquiry without pendency of an assessment proceedings. The Tribunal in that background has considered the scope of section 131 and 133(6) along with other procedural aspect. On an analysis of the detailed scheme of the Income-tax Act, the Tribunal has arrived at a conclusion that nowhere in the Act the AO has been empower .....

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stage, I deem it appropriate to take note of the discussion made by the Tribunal in the case of Amrik Singh (supra). The discussion from para No.33 to 38 read as under:- 33. Then, the above position is also evident from the fact that whereas section 131(1) does not expressly lay down (though it has been judicially interpreted to have such an effect only, as considered hereinabove) that some proceedings must be pending before the Income Tax Authorities mentioned therein, section 131(1A), which c .....

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1(1A) is reproduced hereunder: "Section 131(1A): If the Principal Director General or Director General or Principal Director or Director or Joint Director or Assistant Director or Deputy Director, or the authorised officer referred to in sub-section (1) of section 132 before he takes action under clauses (i) to (v) of that sub-section, has reason to suspect that any income has been concealed, or is likely to be concealed, by any person or class of persons, within his jurisdiction, then, for .....

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31(1), i.e., the powers regarding discovery, production of evidence, etc., inspite of the fact that no proceedings are pending before such Authority. 35. The position u/s 131(2), which relates to inquiry or investigation concerning agreement with a foreign country or specified territory and adoption by Central Government, of agreements between specified associations for double taxation relief, is exactly similar to that of matters concerning section 131(1A). Under section 131(2) also, the Assess .....

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lf, to exercise the powers conferred under subsection (1) on the income-tax authorities referred to in that subsection, notwithstanding that no proceedings with respect to such person or class of persons are pending before it or any other income tax authority." 36. It is thus seen that whereas both sections 131(1A) and 131(2) deal with the situation where the powers u/s 131(1) can be exercised inspite of absence of pendency of proceedings and specific mention of such enablement is made by t .....

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ds with utmost care and where the language employed in a provision is clear and unambiguous, there is no scope of interpretation thereof. So, once enablement of exercise, by Income Tax Authorities, of power of a Civil Court while trying a suit, where no Assessment year : 2006-07 proceedings are pending, is not envisaged by the provisions of section 131(1), no such enablement can be read into the section, particularly in view of the existence of such enablement by the express language contained i .....

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such person are pending before him or before any other Income Tax Authority; that it is thus, obvious, that whereas an officer mentioned in section 131(1) can exercise powers thereunder only if a proceeding is pending before him, the officer mentioned in section 131(1A)can exercise such powers notwithstanding that no such proceedings are pending before him, or before any other officer. 38. For the above reasons, since in the present case, no proceeding was pending before the ITO when he issued .....

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ns it has been held that mere investment either for purchase of a property or deposits in the bank would not ipso facto be construed as escapement of income. The investment might have been from different source. That would not lead to an automatic conclusion that such investment was escapement of income. In the present case, according to the ld. counsel for the assessee, the AO has conceived that since the assessee has made investment in purchase of agricultural land, therefore, it is escapement .....

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t cash deposits aggregating to ₹ 10,24,100 have been made in the bank account of the assessee, but the mere fact that these deposits have been made in a bank account does not indicate that these deposits constitute an income which has escaped assessment. The reasons recorded for reopening the assessment do not make out a case that the assessee was engaged in some business and the income from such a business has not been returned by the assessee. As we donot have the liberty to examine thes .....

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ed that an income of ₹ 10,24,100 has escaped assessment of income because the assessee has ₹ 10,24,100 in his bank account but then such an opinion proceeds on the fallacious assumption that the bank deposits constitute undisclosed income, and overlooks the fact that the sources of deposit need not necessarily be income of the assessee. Of course, it may be desirable, from the point of view of revenue authorities, to examine the matter in detail, but then reassessment proceedings can .....

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mation Report Wing exhibiting the fact that the assessee has made investment in agricultural land. The source of such investment deserves to be enquired because the assessee is not a regular incometax assessee. Therefore, the AO has rightly recorded the reasons on the strength of the information possessed by him and rightly issued a notice. The first appellate authority has concurred with the conclusion drawn by the AO on the issue of reopening. 12. With the assistance of the ld. representatives .....

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hibiting the facts that income has escaped assessment. A perusal of the reasons extracted above would indicate that the ld. AO has basically not made reference to any material possessed by him except the AIR communicated to him. It is pertinent to observe that he has not analysed the information in right perspective and he sought to reopen by conceiving a fact that the assessee failed to respond to the query raised about this investment. As noticed in the submissions of ld. counsel for the asses .....

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n, nothing will remain with the AO except the information transmitted by AIR Wing. Apart from the above, it is to be seen that in the reasons the AO has nowhere alleged escapement of income. The thrust of the reasoning would show that he want to make an enquiry about the investment. No doubt, for reopening of an assessment, he has to just form a prima facie opinion and not to arrive at a firm conclusion, but, the formation of a prima facie opinion should also depict escapement of income. It is a .....

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