TMI Blog2016 (8) TMI 1472X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. By way of this appeal, the assessee appellant has challenged correctness of the order dated 6th November, 2015 passed by the learned CIT(A) in the matter of assessment under section 144 r.w.s. 147 of the Income Tax Act, 1961, for the assessment year 2006-07. 2. To adjudicate on this appeal, only a few material facts need to be taken note of. It is a case of reopened assessment. Vide note dated 14th Mach 2013, the Assessing Officer reopened the assessment for the following reasons:- As per the record available with this office, the above-named person has not filed her return of income (ROI) for A.Y.2006-07 and the assessee has deposited cash of ₹ 12,76,000/- in saving bank account of The Karnataka Bank Ltd,, Surat. In the light of above-stated material facts available with this office, I have reason to believe that the income chargeable to tax has escaped assessment. I am, therefore satisfied that this is a fit case for re-opening u/s. 147 of the IT Act, 1961 for assessment year 2006-07. 3. The reasons so recorded were not supplied to the assessee at any stage. It was during the course of proceedings before the Tribunal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue at this stage, on the ground that the same has not been raised before the authorities below. Learned Departmental Representative, in all fairness, did not raise this technicality either. We, therefore, proceed to examine this issue on merits. 5. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 6. A plain look at the reasons for reopening the assessment, as produced before us, show that these reasons were recorded after the notice was served on 14th September 2009 as a mention about the fact of service of notice is set out in the recorded reasons itself. It is only elementary that the reasons are to be recorded before issuance of notice, and in the absence of any reasons for reopening having been recorded prior to reopening of assessment, the reassessment proceedings fail for this short reason alone. Hon ble Bombay High Court, in the case of Prashant S. Joshi vs. ITO [(2010) 230 CTR (Bom) 232.] has observed: The AO must have reasons to believe that such is the case (i.e. any income chargeable to tax has escaped assessment for a particular year) before he p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een carried out, which, if made, could have led to detection to an income escaping assessment, cannot be reason enough to hold the view that income has escaped assessment. It is also important to bear in mind the subtle but important distinction between factors which indicate an income escaping the assessments and the factors which indicate a legitimate suspicion about income escaping the assessment. The former category consists of the facts which, if established to be correct, will have a cause and effect relationship with the income escaping the assessment. The latter category consists of the facts, which, if established to be correct, could legitimately lead to further inquiries which may lead to detection of an income which has escaped assessment. There has to be some kind of a cause and effect relationship between reasons recorded and the income escaping assessment. While dealing with this aspect of the matter, it is useful to bear in mind the following observations made by Hon ble Supreme Court in the case of ITO Vs Lakhmani Mewal Das [(1976) 103 ITR 437], the reasons for the formation of the belief must have rational connection with or relevant bearing on the form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of view of revenue authorities, to examine the matter in detail, but then reassessment proceedings cannot be resorted to only to examine the facts of a case, no matter how desirable that be, unless there is a reason to believe, rather than suspect, that an income has escaped assessment. 9. Learned Departmental Representative has referred to a number of judicial precedents in support of her stand that even deposits in the bank account, as having come to the notice of the Assessing Officer through AIR, can be reason enough for holding the belief that income has escaped assessment. She has relied upon the decisions in the cases of CIT Vs Nova Promoters Finlease Pvt Ltd [(2012)342 ITR 169] but then none of the questions before Hon ble High Court had anything to do with reopening of assessment and this decision can not, therefore, be taken as an authority on the legal issue which did not even come up for specific adjudication before Their Lordships. As for her reliance on Hon ble Supreme Court s judgment in the case of Phool Chand Bajrang Lal Vs ITO [(1993) 203 ITR 456], that was case in which Their Lordships concluded that the AO rightly initiated the reassessment proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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