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TMI Blog1992 (1) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessment year 1977-78 was completed on 10-2-1986. The ITO has further mentioned in the order as under :- " From the facts as established during the course of wealth-tax assessments for the assessment year 1977-78, it was discovered that in the Financial year relevant to the assessment year 1977-78, the assessee was owner of money, bullion, jewellery and other valuable articles and the assessee failed to establish the sources of acquisition and further failed to offer any satisfactory explanation about the nature and source of acquisition of the money, bullion and other valuable articles. The full facts are contained in the wealth-tax assessment order for the Asst. year 1977-78 and the same appears as Annexure-A to this assessment order and will form a part and parcel of this assessment order. " Shri Gargieya argued that from these observations of the ITO it was clear that the basis of initiation of proceedings under section 148/147(a) of the I. T. Act was the facts and informations collected in the wealth-tax proceedings for this assessment year. The learned counsel pointed out that both income-tax and wealth-tax returns for this year were filed on 20-9-1985 although t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts from there. He explained that the assessee had filed returns of wealth-tax showing her assets which was revised to show diamonds and other precious stones also but all the assets were claimed exempt under section 5(1)(xxxiii) of the W. T. Act. He pointed out that even in the wealth-tax assessment dated 10-2-1986, the Wealth-tax Officer has mentioned in para 11 of that order that he would conclude that the assessee had no evidence regarding the source of acquisition of the cash, gold-ornaments, jewellery, precious stones, diamonds and that the claim of exemption under section 5(1)(xxxiii) had not been proved by any evidence and that the Affidavit of the assessee filed under letter dated 3-1-1986 was being rejected as the same could not be relied upon in the absence of any verification. He submitted that the ITO completed the income-tax assessment on 17-3-1986 on an income of Rs. 2,26,800, as against Rs. 2,52,256 being wealth assessed under the wealth-tax assessment, only by accepting Rs. 25,500 as probably being received by the assessee at the time of her marriage. He again pointed out that these facts would show that prior to what is stated in para 11 of the Wealth-tax Order, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had asked for time vide her letter dated 17-3-1986. 6. The learned counsel further argued that it was incorrect on the part of ITO to say that no explanation was filed as contemplated under section 69A. The learned counsel asserted that the assessee had filed an Affidavit affirming that these assets were received by her at the time of her marriage. He explained that it could be gathered that assessee was married at the age of about 27 years and it was not correct to presume that she could not have had any savings or personal assets till the age of 27. The learned counsel conceded that although the assessee could not be produced for cross-examination on her affidavit, but claimed that even if the affidavits were to be rejected, some material should have been brought on record by the ITO to indicate that it could not be believed. The learned counsel further argued that in the first appeal Affidavits of assessee's husband and father-in-law had been filed. The learned CIT(A) has mentioned that he had not admitted the Affidavits and yet he dealt with the contents of those Affidavits in the appellate order, which, according to the learned counsel, was not permissible. 7. Finally, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant for assessment year 1977-78 and hence the proceedings were not taken for the assessment year 1986-87 or for all the years. On an enquiry from the Bench the learned Departmental Representative conceded that the return of income was filed in pursuance to notice under section 148 and was not a voluntary return. He further submitted that assessee's conduct in the wealth-tax proceedings showed that assessee had raised no such objection and had accepted the wealth-tax assessment and hence it was not proper for the assessee to raise objection on this point in income-tax assessment. 10. As regards the argument of the learned Authorised Representative that there was a confusion regarding the figure of Rs. 25,000 being cash with the assessee, he explained that this point had been considered by the ld. CIT(A) and hence it could not be said that there was any confusion. 11. We have carefully considered the arguments advanced from both the sides and the material on record including the photocopies of order-sheet entry in the income-tax proceedings. We find that the first order-sheet entry is dated 27-2-1982 and reads as under :--- " 27-2-1982. As per local enquiry assessee has taxabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons for the belief and the formation of the belief, there does not appear to be any material on record to show that there was any ground with the ITO to believe that there had been any taxable income which had escaped assessment. Even if it is accepted that the ITO did collect some material which could have led him to believe that assessee's income which can be assessed under section 69 or section 69A of the Income-tax Act, had escaped assessment, that material came in ITO's possession much later during the wealth-tax proceedings and hence we agree with the learned counsel for the assessee that as on 27-2-1982 when the ITO recorded his reasons for initiating proceedings under section 148 and issued the notice under section 148, he had no basis whatsoever to have a reason to believe that income liable to tax had escaped assessment. In these circumstances, the notice under section 148 was issued without proper jurisdiction and hence the proceedings initiated and based on that notice cannot be upheld and are quashed. 12. So far as the objection of the learned Departmental Representative that the assessee has not raised any objection in the Grounds of Appeal in this regard, we may ..... X X X X Extracts X X X X X X X X Extracts X X X X
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