TMI Blog2019 (9) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... o as to form requisite satisfaction that any income has escaped assessment and that the reasons recorded in the case in hands are no reasons in the eye of lawas being completely barren and bald in nature. The content of reasons does not reveal that the AO has done some exercise by way of any enquiry having been conducted by him before arriving at the satisfaction for escapement of income. Reasons are his conclusions, leaving the reader to guess for the material on basis of which the belief of escapement is founded. In fact, the aforesaid reasons are instead of being reasons to believe are reasons to suspect. Mental exercise must be self-evident from the reasons recorded. Reasons must be self-speaking and self-defending. The purported reasons do not show any such exercise by the learned Assessing officer and hence we have no hesitation in holding that the learned Assessing officer has exceed his authority in wrongly acquiring the jurisdiction in the matter. - Decided in favour of assessee - ITA No.393/Agra/2018 And ITA No.394/Agra/2018 - - - Dated:- 22-3-2019 - SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER, AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER For Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er considering the replies by the assessee notice under section 148 was issued. He also rejected the contention of the assessee that investment in property cannot be compared with cash deposit and therefore, cases relied upon by the assessee were found to be not applicable. He thus, sustained reopening confirmed the addition. 6. Being aggrieved, assessee has come in appeal raising the following grounds: 1. BECAUSE , upon due consideration of facts and in the overall circumstances of the case appellant denies its liability to be assessed in terms of Notice dated 26.03.2015 said to be issued under section 148 of the Act . 2. BECAUSE , the purported Reasons are no Reasons in the eyes of Law. The so called Reasons do not show any intelligible nexus to show that Investment as made by the assessee represents her Income which too is liable for Income Tax and had escaped Assessment warranting recourse to Notice under section 148 of the Act. 3. BEACUSE, alleged non-compliance, partial compliance or even unsatisfactory compliance to Letter dated 19.01.2015 as was issued by the Ld Addl. CIT, and 18.03. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deserves to be quashed. 9. BECAUSE, the assessment order to the extent making addition is bad in law and against the facts of the case. 10. BECAUSE, assessee denies its liability against Interest charged under section 234A based on incorrect assumption of facts and Interest under section 234B and 234C is incorrectly charged. 11. The appellant craves leave to add, alter or vary the grounds of appeal before or at the time of hearing. 7. The learned A.R of the assessee ShriAnuragSinha, Advocate submitted that the purported reasons are no reasons in the eye of Law. No persons properly instructed on facts or in law, on the basis of reasons, as recorded in these cases could have arrived at satisfaction for escapement of income. According to the learned Counsel the purported reasons are barren and bald and conclusion without any process of reasoning showing application of mind. The socalled reasons, thus, do not show any intelligible nexus to show that Investment as made by the assessee represents Income which too is liable for Income Tax and had escaped Assessment warranting recourse to Notice under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of notice under section 148 of the Act before the authorities below therefore, it cannot be allowed to raise this objection at this belated stage and thereby taking the revenue by surprise. For this he placed reliance to Hon ble Supreme Court Judgment in the case of GKN Driveshafts (India) Ltd. v. ITO (2002) 125 Taxman 963(S.C) and CIT vs. Safetag International India Pvt. Ltd. ITA No. 355, 412 of 2010 ( Delhi High Court) . He thereafter, submitted that the proceedings are validly initiated on the basis of credible report indicating suspicious transaction and therefore, the learned Assessing officer was well within his jurisdiction to issue notice under section 148 of the Act. He further submitted that no return of income was filed and therefore, this being a case of deemed escapement of income under clause (a) to section 147 of the Act, the learned Assessing officer was well within his right to issue notice under section 148 of the Act. Reliance was placed to Hon ble Jurisdictional High Court Judgment in the case of M/s GinniFilaments vs. CIT, Agra in Writ Tax No. 1402 of 2014. 10. We have considered rival submissions, material on records and the case laws relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther, it has been held that the plea with regard to the jurisdiction of the Officer goes into the root of the matter, therefore, even if not raised at the first instance before the Assessing Authority, it can be raised before the Appellate Authority at a later stage. In this view of the matter, we are of the opinion that the Tribunal has erred in not allowing the additional ground challenging the validity of the assessment order on the basis of illegal initiations of the proceedings under Section 148 of the Act. 13. In the case of Km.Teena Gupta Vs. CIT (2017) 4 TMI 114 (All.) the Hon ble Allahabad High Court set-aside the order passed by the ITAT wherein the ITAT refused to entertain the ground regarding the validity of re-assessment proceedings on the ground that assessee having raised no objection against validity of re-assessment proceedings itself, it had conceded the same and the assessee did not have any grievance at that time. Upon appeal by the assessee before the Hon ble Allahabad High Court, the Hon ble High Court held that it is settled law that the reassessment notice is a jurisdictional notice and it is equally settled law that ground of lack of jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice under section 148 of the Act assessee has to furnish return of income and seek reasons recorded and thereafter file objection . Thus, as per his submission since assessee did not file return of income in compliance to notice under section 148 of the Act and also has not filed objection he is precluded from challenging the validity of reasons at this belated stage. We are afraid to approve this submission too. In the case of GKN Driveshafts (India) Ltd. (supra) the Hon ble Supreme Court has only provided step wise procedure and nowhere it has been held that if objections are not filed before learned Assessing officer such objection cannot be taken up at any further stage or the legal right of assessee would stands waived. It would be reading or making us to read something which is not there in the Judgment of the Hon ble Supreme Court. No inference against the assesse is possible as far as substantive right is concerned. Thus, the reliance is misplaced. 16. We are alive of the settled position in law that the question of Jurisdiction is not a matter of acquiescence. The proprietary of notice under section 148, based upon reasons recorded is not dependent upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is referred in the reasons recorded. This argument has judicial approval of law, in view of settled position requiring that for adjudicating the proprietary of re-assessment proceedings it is the recorded reasons of the ITO, which can only be considered and looked into. Reference in this regard can be usefully made to the decision of Hon ble Allahabad High Court in the case of JamunaLalKabra vs. ITO reported in (1968) 69 ITR 461 (All.) wherein the Hon ble High Court has held that subsequent reference to other material cannot justify reopening of assessment as assumption of jurisdiction to reopen the assessment can be examined only on the basis of material mentioned in the reasons so recorded. In the case of CIT vs. Agarwalla Brothers reported in (1991) 189 ITR 784 (Pat) the Hon ble Patna High Court has held that the relevancy of the reasons recorded can be tested only by reference to the reasons recorded under section 148(2) and the ITO is not authorized to refer to any other reasons even if it can be otherwise inferred or gathered from the records . On the similar lines the Hon ble Bombay High Court in the case of Hindustan Lever Ltd. Vs. R.B. Wadkar reported in (2004) 268 ITR 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchased a property, deed of which was furnished by the assessee before the learned Additional CIT as admitted in Letter dated 19.01.2015 issued by him and from which the detail mentioned in first part of reasons recorded are imported. 22. The last part of reasons recorded mentions the fact that assesse had not filed return of income, which according to learned D.R was itself sufficient ground for issuing notice under section 148 of the Act as this is a case of deemed escapement in view of clause (a) of section 147 of the Act. 23. The learnedAR contended that such an argument as raised by learned Sr. D.R is in the teeth of judgment of Hon ble Bombay High Court in the case of Ingram Micro (India) Exports (P) Limited Vs DCIT (2017) 178 taxman.com140 (Bom.) wherein the Hon ble High Court while dealing with the argument of the revenue that the assessee therein had not filed return of income thus there is a deemed reasons to believe in view of Explanation 2(a) that income chargeable to tax has escaped assessment. The Hon ble High Court rejecting such a contention held that Explanation 2(a) to apply, the income chargeable to tax which is deemed to have esc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 5,38,860/- invested in the purchase of land by ShriChunniLal, Assistant Regional Transport Officer, 18, Civil Lines, Faizabad in assessment year 1999-2000, has escaped income-tax assessment. Since return of income for the said year has not been filed by' the assessee. Therefore, keeping in view Explanation 2(a) of section 147 of the Income-tax Act, notice under section 148 is being issued. 25.1 Based on the above reproduced Reasons challenge was made by the assessee regarding the validity of re-opening. The ITAT while quashing Notice under section 148 held as under: From the above provisions, it is clear that the Assessing Officer must have reason to believe that any income chargeable to tax has escaped assessment. However, it cannot be said that if there is any investment it is sufficient to believe that the income to that extent escaped assessment because there may be so many sources for making investment and it is not necessary that only on the basis of investment it can be presumed that the income to that extent escaped assessment. There should be a concrete finding before coming to the conclusion that any income has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Assessing officer with jurisdiction to issue notice under section 148 of the Act. The distinction noted by the learned CIT (A) is unconvincing and without any basis merely to circumvent and overcome the binding force of the referred decisions. ITAT, Delhi in the case of BirBahadur Singh Sijwali vs. ITO ( 2015) 68 SOT 197 (Delhi Trib) wherein it was held that: 8.Let us, in the light of this legal position, revert to the facts of the case before us. All that the reasons recorded for reopening indicate is that 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 do not have the liberty to examine these reasons on the basis of any other material or fact, other than the facts set out in the reasons so recorded, it is not open to us to deal with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n nature. The content of reasons does not revealthat the AO has done some exercise by way of any enquiry having been conducted by him before arriving at the satisfaction for escapement of income. Reasons are his conclusions, leaving the reader to guess for the material on basis of which the belief of escapement is founded. In fact, the aforesaid reasonsare instead of being reasons to believe are reasons to suspect. The investment need not necessarily come from the income. It might be out of income exempt from tax, past savings, loans, gifts, liquidation of investment or sale of another property etc. Notice under section 148 cannot be issued for verification of information, but here the jurisdictional satisfaction of the essential requirement has to be shown that there has to be reason to believe that there was income chargeable to tax. The reasons recorded by the learned Assessing officer should speak his mind and the basis for coming to conclusion that investment had been sourced from income, which should have been disclosed and had not been shown therefore, there was escapement of income. There must be direct nexus between the material and belief of escapement. This mental exerci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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