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TMI Blog2012 (4) TMI 817X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.148 by taking following grounds, which are verbatim in all the appeals: "1. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in dismissing the appeal. "2. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in dismissing the appeal without appreciating fully and properly the facts of the case. "3. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in upholding the validity of the proceedings initiated by issuance of notice u/s.148 of the I.T. Act." 2. The facts are common in all these appeals and which are revealed from the record as under. The Addl. DIT (Inv.) Unit-V, Mumbai sent information to the A.O. that all these assesses have claimed to have received about 27 gifts from different NRIs in the F.Ys. 1998-99 to 2004-05, aggregating about ₹ 30 lakhs, ranging from ₹ 50,000/- to ₹ 3 lakhs. It appears that there was survey action u/s.133A in the business premises of M/s. Stephen Optical Industries, M/s. Unity Opticians and M/s. Optico Enterprises in which all these assesses are partners. The A.O. has given the details of the gifts received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... German Remedy Ltd. vs. Dy.CIT -285 ITR 26 (Bom) 6. He submits that the Tribunal has already considered the legality of the notices issued under sec. 148 by the A.O. in respect of two assesses i.e. Shri Pranlal P. Damani and Shri Alkesh P. Damani. In those cases, on the identical set of facts and on the identical reasons the A.O. has initiated the proceedings u/s.147 and issued the notices u/s.148. The Ld. Counsel filed the copies of the Tribunal order in the following cases, which are placed on record: (i) ITO, Mumbai vs. Pranlal P. Damani in ITA No.3747/M/2010 vide order dated 28.04.2011 and (ii) ITO, Mumbai vs. Alkesh P. Damani in ITA No.3748/Mum/2010 He pleaded for quashing notices issued u/s.148. Per contra the Ld. D.R. placed his heavy reliance on the decision of the Hon'ble Supreme Court in the case of ACIT vs. Rajesh Jhaveri Stock Brokers P. Ltd. 291 ITR 500. He submits that at the time of initiation proceedings u/s.147, it is not necessary for the A.O. that the A.O. should have very strong legal evidence and at the said stage the final outcome of the proceedings is not relevant. 7. I have heard the rival submissions of the parties and perused the records. The Ld. D.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 143(2) of the Act would suffice. The assessment cannot be re-opened for scrutining the same. There should be positive indication in the reasons recorded that the Assessing Officer had reason to believe that income chargeable to tax has escaped assessment. In this case, no such recording is there. This ground is, thus, decided in favour of the assessee and the order of the Commissioner (Appeals) is hereby upheld on this ground. "11. Since we have decided the issue of re-opening in favour of the assessee, the other issues raised by the Revenue become academic in nature, which need no separate adjudication by us." 8. The said order is followed in the case of another assessee i.e. Shri Alkesh P. Damani. 9. Let us see that how the reasons are recorded by the A.O., which are almost identical in all these cases. In the case of Jayesh P. Damani in ITA No.49/M/2012 the A.O. has furnished the reasons filed his letter dated 21.10.2008 (Page No.7 of the compilation), which reads as under: "No.ITO-16(1)(2)/Scrutiny/148/2008-09 Dated: 21.10.2008. Jayesh P Damani HUF, 44, Vijay Chambers, Tribhuvan Rd., Mumbai -7 Sir, Sub: Reason recorded for re-opening of assessment u/s.147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fts' needs verification. Lastly, he observed that he has proposed to take those cases for scrutiny u/s.148. Overall reading of the reasons showed that the A.O. himself is not sure whether there is any escapement of income and reasons only shows his 'opinion' and 'belief'. Moreover, there is no positive reasoning that any income has escaped assessment or there is any understatement of income by these assesses. Though A.O. has made reference to the share transactions of all these assessees to save flying reference in the assessment order, there is no further discussion or any finding on said issue. The A.O. has only discussed the issue in respect of the gifts claimed to have been received by these assessees. 11. In the case of Prashant S. Joshi (supra) the Hon'ble jurisdictional High Court has held as under: "9. Section 147 provides that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may subject to the provisions of Sections 148 to 163, assess or reassess such income and also any other income chargeable to tax, which has escaped assessment and which comes to his notice subsequently in the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court held that there being no assessment under section 143(1)(a), the question of a change of opinion, as contended did not arise. The judgment of the Supreme also emphasises what is meant by the expression "reason to believe" and the nature of the belief that is to be formed by the Assessing Officer that the income for any assessment year has escaped assessment. The Supreme Court held that at the stage of the issuance of a notice under section 148, the Assessing Officer must have reason to believe that income has escaped assessment and at that stage an established fact that income has escaped assessment is not required. The Supreme Court held thus :- "Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income and as basic mandate of sec.147 has not been fulfilled the proceedings initiated by the A.O. u/s.147 are bad in law and quash all notices issued under sec. 148 of the Act in all these cases. In consequence, all the assessment orders passed by the A.O., which are subject matter of all these appeals before him are cancelled. 13. So far as ITA No.147/M/2012 and 48/M/2012, there are one more strong reason to cancel all the assessments u/s.143 r.w.s.147. In both these assessment orders the A.O. initiated the proceedings u/s.147 beyond the period of the four years from the end of the respective assessment orders. In both these cases the additions made by the A.O. are ₹ 80,000/- and ₹ 50,000/- respectively. As per the provisions of sec.149(1)(b,) the A.O. has jurisdiction to issue notice u/s.148 beyond the period of four years only if the alleged escapement income is more than ₹ 1 lakh. Hence, otherwise also, in the above two cases, the notices were issued by the A.O. are bad in law and accordingly this issue is also answered in favour of the assessee and against the revenue. I do not consider it necessary to go into the merits of all these cases. 14. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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