TMI Blog2020 (1) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... r inquiry only.Therefore, it is clear that there is no independent application of mind by AO. If the AO decides to reopen the assessment, he has to satisfy the condition precedent to assume jurisdiction. In the assessee`s case the information was received by ITO ward 6(3), and even if the information given by theITO ward 6(3), is adverse against the assessee, at the most it may trigger reason to suspect ; then AO has to make reasonable enquiry and collect material which would make him believe that there is in fact an escapement of income. Without doing so, the jurisdictional fact necessary to usurp jurisdiction to reopen the regular assessment cannot be made by the AO. Reasons recorded by the Assessing Officer are only reason to suspect and the AO has acted based on the information received by him from another Income Tax Officer which is for the purpose to conduct further inquiry only. The reasons recorded by AO to reopen has to be evaluated on a stand-alone basis and no addition/extrapolation can be made or assumed while adjudicating the legal issue of AO s usurpation of jurisdiction u/s. 147. The information given by another Income Tax Officer, based on appraisal report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-08 was to the tune of ₹ 760/- only. The assessing officer noticed that the information to whom shares of the assessee company were allotted during the F.Y. 2007-08 had not been furnished by the assessee. Since the assessee company did not respond the notice u/s 142(1) of the Act, therefore the necessary verification of share premium could not be done. The assessee`s case was re-opened on the basis of deposit of a cheque of ₹ 20 lakh at the bank account of assessee company at ABN Bank, Kolkata by M/s Neelkanth Fiscal Services. Since the assessee company did not furnish the information before the AO during the reassessment proceedings therefore, the Assessing Officer left with no other option but to treat ₹ 20 lakh as unexplained cash credit under section 68 of the Act. 4. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the addition made by theAssessing Officer.Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. 6. The ld. Counsel for the assessee submitted before the Bench that reasons recorded by the assessing officer is b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No.660/Kol/2011 (referred to page 10 para 11) iii).Shri Raj Kumar Goel Vs. ITO ITA No.1028/Kol/2017 (referred to page 5-8 para 11) (iv).Classic Flour Food Processing Pvt. Ltd. Vs. CIT ITA Nos. 764 to 766/Kol/2014 (page 7 para 12 to 16) v).PCIT Vs. Shodiman Investments (P) Ltd. (2018) 93 taxmann.com 153 (Bom) page 4 para 12 to 14) vi).KSS Petron Pvt. Ltd. Vs. ACIT ITA No. 224/Mum/2014 (referred to page 3 para 8- 11) vii).PCIT Vs. Tupperware India Pvt. Ltd. (2016) 236 Taxman 494 (referred to page 3 para 6 and 9) viii).DCIT Vs. National Bank for Agriculture and Rural Development ITA No.4964/Mum/2014 (referred to page 10- 13 para 12) 8. We note that the coordinate bench of this Tribunal in ITA No. 660/Kol/2011 for AY 2002-03 in the case of DCIT Vs. Great Wall Marketing (P) Ltd. vide order dated 03.02.2016 has held as under: 9. We have given a careful consideration of the submissions made by the learned counsel for the assessee. It is clear from the reasons recorded by the AO that the AO acted only on the basis of a letter received from Investigation Wing, New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e an Assessment Order bad as held by this Court in CIT v. Videsh Sanchar Nigam Ltd. [2012] 21 taxmann.com 53, 340 ITR 66. In fact, partial furnishing of reasons will also necessarily meet the same fate i.e. render the Assessment Order on re- opening notice bad. Therefore, on the aboveground itself, the question as proposed does not give rise to any substantial question of law as it is covered by the decision of this Court in Videsh Sanchar Nigam Ltd. s case (supra) against the Revenue in the present facts. 10. Besides, the submissions made on behalf of the Revenue that in view of the decision of the Apex Court in Rajesh Jhaveri Stock Brokers (P) Ltd.'s, case (supra), the Assessing Officer is entitled to re-open the Assessment for whatever reasons and the same cannot be subjected to jurisdictional review, is preposterous. First of all, taking out a word or sentence from the entire judgment, divorced from the context and relying upon it, is not permissible (see CIT v. Sun Engg. Works (P) Ltd. [l992] 64 Taxman 442/198 ITR 297 (SC). It may be useful to reproduce the context in which the sentence in Rajesh Jhaveri Stock Brokers (P) Ltd. 's case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argeable, to tax has escaped, assessment This material which, forms the basis, is not restricted, but the material must lead to the formation of reason to believe that income chargeable to tax has escaped Assessment Mere obtaining, of material by itself does not result in reason to believe that income has escaped assessment. In fact, this would be evident from the fact that in para 16 of the decision in Rajesh Jhaveri Stock Brokers (P) Ltd. 's, case (supra), it is observed that the word 'reason' in the 'reason to believe' would mean cause or justification. Therefore, it can only be the basis of forming the belief. However, the belief must be independently formed in the context of the material obtained that there is an escapement of income. Otherwise, no meaning is being given to the words 'to believe' as found in Section 147 of the Act. Therefore, the words 'whatever reasons' in Rajesh Jhaveri Stock Brokers (P) Ltd.'s, case (supra), only means whatever the material, the reasons recorded must indicate the reasons to believe that income has, escaped assessment. This is so as reasons as recorded alone give the Assessing Officer power to re-open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion received by him from the DDIT (Inv.). The Assessing Officer has merely issued a re-opening notice on the basis of intimation regarding re-opening notice from the DDIT (Inv.) This is clearly in breach of the settled position in law that re- opening notice has to be issued by the Assessing Office on his own satisfaction and not on borrowed satisfaction. 15. Therefore, in the above facts, the view taken by the impugned order of the Tribunal cannot be found fault with. This view of the Tribunal is in accordance with the settled position in law. 16. Therefore, the question; as framed does not give rise to any substantial question of law. Thus, not entertained. 10. Having taken into consideration the aforesaid judicial precedents and other case laws cited before us by both the parties, in order to appreciate the legal ground raised before us, we need to look into the reasons recorded by the AO before proposing to reopen the assessment, which is reproduced as under. It was informed by ITO, Wd. 6(3), Kolkata that during the scrutiny assessment of M/s. Neelkant Fiscal Services P, Ltd, P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the second para of the reasons recorded by AO, which is reproduced below( to the extent applicable for our discussion) for ready reference: On the basis of appraisal report [Badalia Group of cases, Sri M. M. Daga and I. C. Baid were involved with Badalia Group], assessment was completed by ACIT. CC.XXVII and information was passed on to ITO, Wd. 6(3), Kolkata. He then passed on his findings as stated above for further enquiry at this end. It is clearly evident from the reasons recorded by the Assessing Officer that there was actually no reason for him to have formed a belief about the escapement of any income of the assessee from the assessment, but the assessment was reopened by him to verify or to conduct further enquiry or to examine certain particulars furnished by the assessee in the return of income.Therefore, it is abundantly clear from the reasons recorded that these are based on appraisal report to conduct further inquiry only.Therefore, it is clear that there is no independent application of mind by AO. If the AO decides to reopen the assessment, he has to satisfy the condition precedent to assume jurisdiction. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns to believe is not synonymous to reason to suspect . Reason to suspect based on an information can trigger an enquiry to find out whether there is any substance or material to substantiate that there is merit in the information adducedby another Income Tax Officer, based on appraisal report of Badalia Group cases, and thereafter the AO has to take an independent decision to re-open or not. And the AO should not act on dictate of any other authority (like in this case an another Income Tax Officer, based on appraisal report of Badalia Group cases), because then it would be borrowed satisfaction. In such a scenario, when the AO was in receipt of the information from another Income Tax Officer, based on appraisal report of Badalia Group cases, he ought to have made enquiries to unravel the truth. It has to be remembered that information is not synonymous to truth. The AO failed to quantify the escapement of income in the reasons recorded. As stated earlier, we note that AO simply on the basis of the information by another Income Tax Officer, which is based on appraisal report of Badalia Group cases, has formed an erroneous conclusion that there is an escapement of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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