TMI Blog2015 (2) TMI 1334X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd. (supra). Even otherwise, in the case in hand, the issue upon which the reopening was done and the issue on which the addition was made were diagonally opposite to each other. The reopening was done on the suspicion of bogus billing allegedly arranged from Suryodaya Company i.e. the issue of bogus expenditure, which otherwise was proved to be wrong, however the addition has been made in respect of Share application money received i.e. in respect of unexplained cash credits. We annul the reopening of assessment u/s.147 of the Act. - Decided in favour of assessee. - ITA No.2636/Mum/2013 - - - Dated:- 6-2-2015 - SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER For the Assessee : Shri Prakash Jotwani (AR) For the Revenue : Shri Pavan Kumar Beerla (DR) ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order of the Commissioner of Income Tax (Appeals) [hereinafter referred to as CIT(A)] dated 01.02.2013. The assessee has taken the following grounds of appeal: 1. The learned CIT(A) erred in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment was done u/s. 143(3) wherein all these contentions were accepted. 3. In appeal before the CIT(A), it was again contended that there was no tangible material before the AO to reopen asst. It was further contended that Parag Mehta's statement cannot be relied upon as evidence to reopen its case. Further that the details of allotment of shares, like application for allotment of shares, Company Board Resolution, return of allotment filed with ROC, Secretarial compliance for increase in authorized capital, payment of fees for increase in share capital which all were filed with AO by letter dt. 12.12.11 proved the genuineness of shares capital and hence reopening made was not justified. Balance sheets of assessee till 31.3.11 were also filed to show that Suryodaya was still existing as a shareholder and Balance Sheet of Suryodaya was also filed to show that they had recorded investment made in shares of Lark. 4. The Ld. CIT(A), however, upheld the reopening by holding that the AO had information that the assessee had received accommodation bills of ₹ 5 crores from Suryodaya and hence income had escaped assessment. On merits the CIT(A) observed that assessee did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the limitation period of 12 months from the end of the month in which return is furnished as per the proviso to clause (ii) of section 143(2) [as was existing at the time of relevant assessment year]. Once the limitation period as prescribed vide proviso to clause (ii) of sub section (2) of section 143 is expired, it is not open to the AO to assess the income u/s. 143(3) of the Act and the return filed by the assessee u/s. 139 is deemed to be accepted, which however, can be re-opened u/s. 147 of the Act subject to the fulfillment of ingredients of section 147 and within the time period as prescribed u/s. 149 of the Act. So under such circumstances if the return is processed u/s. 143(1) and not u/s. 143(3) and after the prescribed period of limitation, the same cannot be assessed u/s. 143(3) though it may be interpreted as mere intimation assessment or otherwise, but the same shall be deemed to be accepted by the AO. Admittedly, in the case in hand, the return was processed u/s. 143(1) of the Act but the same had attained finality due to the expiry of limitation period of twelve months from the end of the month in which the return was filed. Hence, the assessment is deemed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner of doubt that the words reason to believe suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income-tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income-tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. The court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the court. The entire law as to what would constitute reason to believe had summed up by Supreme Court in Income Tax Officer v Lakhmani Mewaldas (1976) 103 ITR 437. 9. Now coming to the facts of the case, as observed above in the case in hand the AO suspected that the assessee had received accommodation bills of ₹ 5 crores from Suryodaya and therefore he formed the belief that income of the assessee had escaped assessment. However, a perusal of the assessment order reveals that the assessee after getting the copy of the reasons recorded for the reopening on 08.12. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of CIT vs. Jet Airways (I) ltd. (2011) 239 CTR (Bom) 183, has categorically held that the AO may assess or reassess the income in respect of any issue which comes to his notice subsequently in the course of the proceedings though the reasons for such issue were not included in the notice, however, if after issuing a notice under section 148, the AO accepted the contention of the assessee and holds that the income about which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. Similar view has been taken by the Hon'ble Rajasthan High Court in the case of CIT vs. Shri Ram Singh , (2008) 217 CTR (Raj.) 345. We agree with the submissions made by learned AR to the effect that when the reopening of the assessment itself was not valid and even the reasons for which reopening was made have been proved to be wrong, then in that event, any decision/addition made on the basis of said reassessment is unsustainable and becomes void. Reliance can also be placed in this respect on another authority of Hon'ble Madras High Court styled as Ace Investment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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