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TMI Blog1991 (8) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts as established during the course of wealth-tax assessment for the asst. yr. 1977-78, it was discovered that in the financial year relevant to the asst. yr. 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. yr. 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 s. 148/147(a) of the IT 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 20th Sept., 1985 although the notices under ss. 17 and 148 of the WT and IT Acts were issued on 27th Feb., 1982 as already mentioned. This means that at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5(1)(xxxiii) of the WT Act. He pointed out that even in the wealth-tax assessment dt. 10th Feb., 1986, the WTO 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 case, gold ornaments, jewellery, precious stones, diamonds and that the claim of exemption under s. 5(1)(xxxiii) had not been proved by any evidence and that the affidavit of the assessee field under letter dt. 3rd Jan., 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 17th March, 1986 on an income of Rs. 2,26,800, as against Rs. 2,26,256 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, there was nothing to show with the Assessing Officer that the assessee was in possession of any money, jewellery, etc. on 27th Feb., 1982 when the reasons were recorded for reopening the assessment and notice under s. 148 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 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) had mentioned that he had not admitted the affidavits in the appellate order, which according to the learned counsel, was not permissible. 7. Finally, the learned counsel claimed that even the figure of Rs. 25,000 being cash had been considered twice by the WTO because at one place the assessee had mentioned the figure as Rs. 25,000 and in the revised return she had mentioned the figure of cash as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o notice under s. 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 learned 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 photo copies of order sheet entry in the income-tax proceedings. We find that the first order sheet entry is dt. 27th Feb., 1982 and reads as under: "27th Feb., 1982. As per local enquiry assessee has taxable income, no return has been filed so far for the asst. yr. 1977-78. No notice under s. 148/139(2) was issued. Issue notice under s. 148 to assess the taxable income which has escaped. Sd. ITO" The next entry is dt. 23rd Sept., 1983 to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h could have led him to believe that assessee's income which can be assessed under s. 69 or s. 69A of the IT 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 27th Feb., 1982 when the ITO recorded his reasons for initiating proceedings under s. 148 and issued the notice under s. 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 s. 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 observe that his objection is not correct because in the Grounds of Appeal the assessee has mentioned as under: "The reopening of the assessment itself is bad in law." and in view of the detailed arguments and case law cited by the learned counsel for the assessee, it cannot be said that the assessee has not objected t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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