TMI Blog2016 (2) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... ined to hold that the AO issued notice u/s 148 of Act on the wrong and invalid assumption of Jurisdictional and all subsequent proceedings is pursuance thereto can t be held as sustainable and valid hence, the same deserve to be quashed and we quash the same. It is ordered accordingly. Accordingly, legal ground no. 1 2 of the assessee are allowed. - ITA No. 7/Del./2013 - - - Dated:- 19-2-2016 - SRI G.D. AGARWAL, VICE PRESIDENT AND SRI C. M. GARG, JUDICIAL MEMBER For The Assessee : Sh. P. C. Yadav, J. M For The Revenue : Sh. Anima Barnwal, Sr. DR ORDER PER C.M.Garg, J.M. This appeal has been preferred by the assessee against the order of the CIT(A)-XXVI, New Delhi dated 26.10.2012 passed in first appeal no. 254/2009- 10 for AY 2005-06. 2. The grounds raised by the assessee read as under : 1. That the order of the Learned Commissioner of Income-Tax (Appeals) is against facts and law. 2. That the learned Commissioner of Income-tax (Appeals) is not justified in confirming the action of re-opening of assessment under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transaction Date Txn. Code Transaction amount 31.3.2015 Credit Card ₹ 2,47,468/- Since the expenditure of ₹ 2,47,468/- incurred by the assessee through credit card remained unexplained, I have, therefore, reasons to believe that income to the tune of ₹ 2,47,468 has escaped assessment because the assessee has failed to disclose full and true particulars of his income. Issue notice u/s 148 of the I.T.Act, 1961. Sd/- ( RANJIT ISSAR) INCOME TAX OFFICER WARD 33(4), NEW DELHI 6. From the reasons recorded it is apparent that the AO proceeded to initiate proceedings and to issue notice u/s 147/148 of the act on the basis of AIR information and without verifying the same from the relevant assessment record of the assessee wherein the assessee filed copies of the letters submitted to the DCIT, Banglore on 8.10.2007 in reply to notice u/s 142(1) of the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Ashian Needles Pvt. Ltd. ) 9. The Court at the outset proposes to recapitulate the jurisdictional requirement for reopening of the assessment under Section 147/148 of the Act by referring to two decisions of the Supreme Court. In Chhugamal Rajpal v. SP Chaliha (1971) 79 ITR 603 , the Supreme Court was dealing with a case where the AO had received certain communications from the Commissioner of Income Tax showing that the alleged creditors of the Assessee were namelenders and the transactions are bogus. The AO came to the conclusion that there were reasons to believe that income of the Assessee had escaped assessment. The Supreme Court disagreed and observed that the AO had not even come to a prima facie conclusion that the transactions to which he referred were not genuine transactions. He appeared to have had only a vague felling that they may be ' bogus transactions'. It was further explained by the Supreme Court that: Before issuing a notice under S. 148, the ITO must have either reasons to believe that by reason of the omission or failure on the part of the assessee to make a return under S. 139 for any assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il 1989 required the AO to have a reason to believe that (a) the income of the Assessee has escaped assessment and (b) that such escapement is by reason of omission or failure on the part of the Assessee to file a return or to disclose fully and truly all material facts necessary for his assessment for that year. After the Amendment, only one singular requirement is to be fulfilled under Section 147(a) and that is, that the AO has reason to believe that income of an Assessee has escaped assessment. However, the proviso to Section 147 of the Act provides a complete bar for reopening an assessment, which has been made under Section 143(3) of the Act, after the expiry of four years. However, this proscription is not applicable where the income of an Assessee has escaped assessment on account of failure on the part of the Assessee to make a return or to disclose fully and truly all material facts necessary for his assessment. Thus, in order to reopen an assessment which is beyond the period of four years from the end of the relevant assessment year, the condition that there has been a failure on the part of the Assessee to truly and fully disclose all material facts must be concluded w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the Assessee has escaped assessment. Unless that basic jurisdictional requirement is satisfied a post mortem exercise of analysing materials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity . 8. At this stage, we also find it appropriate to consider preposition laid down by Hon ble High Court of Delhi in the case of CIT vs. Orient Craft Ltd. reported as 354 ITR 536 (Del), as relied by the ld. AR, wherein it was held thus : The argument of the revenue thatg an intimation cannot be equated to an assessment, relying upon certain observations of the Supreme Court in Rajesh Jhaveri (Supra) would also appear to be self-defeating, because if an Intimation is not an assessment then it can never be subjected to section 147 proceedings, for, that section covers only an assessment and we wond ..... X X X X Extracts X X X X X X X X Extracts X X X X
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