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TMI Blog2006 (3) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the notice under section 148 having been issued without there being any mention of the status of the assessee-appellant is erroneous, and opposed to legal provisions of the Act. The status in which the notice was issued ought to have been stated in the notice. 4. That without prejudice to the above, the assessee had no income in his individual status except the salary as a Member of the Rajya Sabha during the year under appeal while the other source of income is from ancestral agricultural lands held as Karta of his HUF comprising of his wife and a son. Thus, there being no individual taxable income of his, the impugned assessment in the individual status is null and void. 5. That half share in the property rented out of Punjab & Sind Bank, Dabwali is the property of the HUF constructed on a plot owned by the HUF with the agricultural income derived from the ancestral lands of the HUF and as such, the rental income from this property has been wrongly assessed in the hands of the assessee-individual. 6. That merely because a part of the amount spent in the construction of the property was raised by way of loan from the bank to whom the property has been rented out, does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows :-- "149(1) : No notice under section 148 shall be issued for the relevant assessment year-- (a )In a case where an assessment under sub-section (3)( iii) of section 143 or section 147 has been made for such assessment year,-- (i )If 4 years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause (ii) or sub-clause (iii); (ii)If 4 years, but not more than 7 years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to Rs. 50,000 or more for that year; (iii)If 7 years, but not more than 10 years, have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to Rs. 1 lakh or more for that year; (b)In any other case-- (i )If 4 years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause (ii) or sub-clause (iii); (ii)If 4 years, but not more than 7 years have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to or i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be seen is the amount computed as per the provisions of the Act. In the present case, before the issuance of the notice, the assessee had already filed a return showing rental income and claiming interest. With regard to the notice dated 30-8-1998, under section 148 of the Act, the return was filed on 10-7-1998, for assessment year 1993-94 pages 209 and 210 of the Assessee's Paper Book ('APB', for short). The net income here is of Rs. 23,092. This amount is less than the statutory amount of Rs. 25,000. So, this return/information was available with the Assessing Officer at the time of issuance of the notice. It stands acknowledged by the Assessing Officer that the reasons are common for assessment years 1991-92 and 1993-94. Notices were issued for both the assessment years 1990-91 and 1993-94, both on 30-3-1998. The notice with regard to assessment year 1990-91 is contained at page 199 of the APB. In this notice, no status of the assessee has been indicated. So for assessment year 1990-91, the assessee filed the return in the status of an individual and for assessment year 1993-94, as an HUF. The return for assessment year 1990-91 is at pages 201 and 202. Therefore, it was befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f return of income for assessment year 1990-91. The Assessing Officer accepted that the reasons were common for assessment years 1991-92 and 1993-94. For the first time, the information from the bank was good, but not so for the other two years. The Assessing Officer had before him the notice dated 30-3-1998 for assessment year 1990-91 (APB page 199), the notice dated 30-3-1998 for assessment year 1993-94 (APB page 208), the HUF return (APB pages 209 and 210), notice under section 142(1), for assessment year 1990-91, dated 15-3-1999 (APB page 200) and the notice dated 15-3-1999, for assessment year 1993-94 (APB page 211). Then, assessment orders under section 143(3) of the Act stood passed for assessment years 1990-91 and 1993-94 (APB pages 206 and 214 respectively). Here, no income from rent was added, in the status of the assessee as an individual, where the Department accepted that it was not there - that it need not be there. 5.5 The learned counsel for the assessee has placed reliance on Sheo Nath Singh v. AAC [1971] 82 ITR 147 (SC) to state as to what the expression "reason to believe" means. It is submitted that the Assessing Officer is not to act on mere suspicion, gossip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided in favour of the assessee, the remaining issues involved herein need not be gone into. For this, reliance has been placed on the Special Bench decision of the Tribunal in the case of Rahul Kumar Bajaj v. ITO [1999] 69 ITD 1 (Nag.). 6. In response, the learned DR, other than putting forward his arguments, has also placed written submissions on record. It is contended that apropos the proposition that the action of the Assessing Officer was bad in law in so far as the income chargeable to tax have escaped assessment was less than Rs. 25,000, the limit laid down in section 149(1)(b) of the Act, for the relevant assessment year, the position is that the assessee did not of his own file the return of income for assessment year 1991-92. As per the information available with the Assessing Officer, the assessee received Rs. 40,158 as 50% share of rental income received. It was, therefore, that the notice under section 148 of the Act was issued. During the relevant previous year, the maximum amount not chargeable to tax was Rs. 22,000. The amount of deduction allowable under section 24(1)(i) towards repairs was 1/6th of the annual value. Other deductions under section 24(1) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amination he is of the view on having discovered it to be so, that taxable income has escaped assessment, it is this which would amount to the Assessing Officer having formed "reason to believe" that such income had, in fact, escaped assessment. Such justification for the Assessing Officer's belief is not to be judged from the exacting standards of proof as required for arriving at a final conclusion. 6.3 The learned DR has placed reliance on the following case laws :-- 1.Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC); 2.Indo-Aden Salt Mfg. & Trading Co. (P.) Ltd. v. CIT [1986] 159 ITR 624 (SC). 3.Grover Nursing Home v. ITO [2001] 248 ITR 493 (Punj. & Har.) 4.Praful Chunilal Patel: Vasant Chunilal Patel v. M.J. Makwana, Asstt. CIT [1999] 236 ITR 832 , 840-41 (Guj.); 5.Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456 (SC); 6.Rattan Gupta v. Union of India [1998] 234 ITR 220 (Delhi) and 7.CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1 (Delhi) (FB) 7. A written replication has also been filed on behalf of the assessee. Here, it has been submitted, firstly, as per the Department, if the income under the head 'House property' was to be computed, accounting for only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt not chargeable to tax, stand belied as baseless. 7.1 It is argued that this mandated by the provisions of section 149(1) that income chargeable to tax which has escaped assessment should "amount to or is likely to amount to" the stipulated figure. This, on the face of it, indicates an application of mind at the hands of the Assessing Officer. The examination of the validity or otherwise of assumption of jurisdiction by the Assessing Officer is to be done from the reasons recorded, and nothing more. Satisfaction to reassess should be amply visible from the reasons themselves, shorn of anything supplementing them. As such, the amount of the income chargeable to tax should be indicated in the reasons themselves, as has been held by the Hon'ble Madhya Pradesh High Court in the case of Arjun Singh v. Asstt. Director of Income-tax (Inv.) [2000] 246 ITR 363. The jurisdiction otherwise inavailable cannot be assumed illegally by mentioning such figure incorrectly. 7.2 Then, it is submitted, the word "likely" as occurring in section 149(1) indicates that it is essential to give the basis and that a mere assertion, unconnected with material, is entirely uncalled for and unacceptable. Pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 149. Though the assessee has contended that the expression "amount to or is likely to amount to" indicates application of mind, nothing turns on this in favour of the assessee. "Likely to amount to" here indicates a further stage at which the final conclusion would be arrived at. Again, an illustration would not be out of place. An Assessing Officer may form a prima facie belief that the assessee has suppressed sales of say Rs. 3 lakhs. This prima facie belief itself will entitle the Assessing Officer to reopen the assessment. It is quite common that in most of such cases, only g.p. would be added. But to issue notice under section 148, the Assessing Officer need not compute the g.p. as it would depend on several variable factors. It may also happen that the transactions of suppressed sales may result into a loss, but that would not make the reopening of the assessment invalid. If the argument of the learned counsel were to be accepted, perhaps it would render the entire provisions relating to reopening of assessments otiose. One cannot lose sight of the basic principle behind the provisions of section 147 that they are meant for the benefit of the revenue and not the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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