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TMI Blog2015 (11) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Appeals) erred on facts and in law in upholding the validity of proceedings under section 147 without appreciating that the subsequent notice dated 25.04.2011 issued under section 148 of the Act for initiation of reassessment proceedings was barred by limitation and was, thus, void-ab-initio. 1.3 That the Commissioner of Income Tax (Appeals) erred on facts and in law in upholding the action of the assessing officer in initiating proceedings under section 147 of the Act without forming "reason to believe" that income of the appellant had escaped assessment and without satisfying other conditions precedent for initiating proceedings under that section. 2. That the Commissioner of Income Tax (Appeals) erred on facts and in law in alleging that the appellant surreptitiously filed additional evidences without moving necessary application for admission of the same in terms of Rule 46A of the Income tax Rules, 1962. 2.1 That the Commissioner of Income Tax (Appeals) erred on facts and in law in not appreciating that no additional evidences/documents were filed by the appellant in as much as all evidences/documents were duly submitted before the assessing officer. 3. That the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant and material. iii) The 'reason to believe' does not mean 'reason to suspect'. The expression 'reason to believe' in section 147 does not mean purely subjective satisfaction on the part of the Assessing Officer. The belief must be held in good faith; it cannot be merely a pretence. There must be a rational connection between the reasons for the belief and the relevant material. iv) The belief of the Officer should not be a product of imagination or speculation. There must be reason to induce the belief. The belief must be of an honest and reasonable person based upon reasonable grounds. v) The officer may act on direct or circumstantial evidence; but his belief must not be based on mere suspicion, gossip or rumor. vi) The belief that is required for reopening of assessment is that of the Assessing Officer. The sufficiency of reasons for the belief cannot be investigated by the Court. vii) At the time of issuing of reassessment notice, it is not necessary for the Assessing Officer to come to a conclusive finding that the income escaped assessment. Such belief obviously at that stage is a tentative belief on the material before him to be examined and scrutinized o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as issued. The ld. CIT(A) forwarded the submissions of the assessee to the AO for his comments on the claim of the assessee that no notice u/s 143(2) of the Act had been served in this case. The AO vide his remand report dated 10.12.2012 stated as under: "Kindly refer to your letter No. CIT(A)-19/Veena Enterprises/2012-13/651 dated 16.11.2012 on the above mentioned subject called for comments in the case. As per Income Tax 46(A): (1) The appellant shall not be entitled to produce before the CIT(A), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer except in the following circumstances, namely:- (a) Where the AO has refused to admit evidence which ought to have been admitted: or (b) Where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the AO; or (c) Where the appellant was prevented by sufficient cause from producing before the AO any evidence which is relevant to any ground of appeal; or (d) Where the AO has made the order appealed against without giving sufficient opportunity to the appellant to adduce e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued on 17.08.2011 by speed post (copy of the notice and the speed post receipt is enclosed). In this regard, the assessee never complied with notice u/s 148 either by responding to it or by filing a return of Income. Further, also in terms of section 292BB the order is passed according to the intent and purpose of the I.T. Act, 1961. Hence the notice u/s 143(2) was rightly not issued and notice u/s 142(1) was issued as mentioned above. In light of the above, you are requested to kindly reject the so called additional evidence filed and confirmed the addition made in the assessment order (The copy of the order sheet is enclosed)." 9. The AO also submitted as under: "2.3 With regard to the assessee's submission that his address has been changed from Barakhamba Road, New Delhi to the address mentioned by him. A query from the PAN Directory shows still the address at Barakhamba Road, New Delhi and even the return filed for A.Y. 2004-05 bears the address of Barakhamba Road, New Delhi. Hence, the AO had rightly issued the notice at the Barakhamba Road, New Delhi Address. Further, the assessee filed letter dated 28.11.2011 in this office on 13.12.2011 that his address as furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 622 (Del) * G. Holdings (P.) Ltd. Vs ITO (2012) 207 Taxman 117 (Del) 13. As regards to the objection of the assessee that no notice u/s 143(2) of the Act had been served. The ld. CIT(A) observed that since the assessee had not filed return in response to the notice u/s 148 of the Act, so it was not necessary to issue a notice u/s 143(2) of the Act. The ld. CIT(A) also observed that the AO duly issued the notice u/s 142(1) of the Act. The reliance was placed on the judgment of the Hon'ble Punjab & Haryana High Court in the case of CIT Vs Ram Narayan Bansal (2011) 202 Taxmann 213. 14. Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the order u/s 143(1) of the Act was passed by the AO on 21.12.2004 and the notice u/s 148 was claimed to be issued on 29.03.2011 at a wrong address which remained unserved, was beyond a period of six years. Therefore, reopening was not valid without serving the notice. It was further stated that change in the address of the assessee was in the knowledge of the department because the addressee of the assessee was changed in the PAN. A reference was m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs DCIT, ITA No. 4613/Mum/2005 (TM) (Mum) order dated 12.05.2010 16. It was further submitted that all the information were furnished by the assessee to the AO. Therefore, the reassessment framed was only a change of opinion. 17. In his rival submissions the ld. DR strongly supported the order of the authorities below and reiterated the observations made in the impugned order and the assessment order dated 29.12.2011. It was further submitted that the assessee did not inform about the change in address and the notice u/s 148 of the Act was issued at the address mentioned in the return of income furnished by the assessee. It was further stated that as per the provisions of Section 148 of the Act, the only requirement is to issue the notice and not the service of notice. It was also stated that after issuing the notice u/s 148 of the Act, the assessee was required to file the return which is mandatory as per the explanation appended to section 148 of the Act. It was further stated that issuance of notice u/s 143(2) of the Act is required only when return of income is filed but in this case the assessee did not file any return in response to the notice u/s 148 of the Act. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or was not served upon him in time. However, the proviso states that the principle of estoppels incorporated in the main section would not apply, if the assessee has raised objection in reply to the notice before completion of assessment or reassessment." 19. In the present case also the AO was required to serve the notice u/s 143(2) of the Act before passing the assessment order u/s 147 of the Act within stipulated time limit but no such notice has been issued to the assessee. Therefore, the reassessment framed vide order dated 29.12.2011 was not valid. Moreover, from the reasons recorded, copy of which is placed at page no. 30 of the assessee's paper book. It is clear that the AO himself admitted that the assessee had claimed and was allowed an expenditure of Rs. 87,69,732/- on account of site expenses in the profit and loss account which were of capital in nature. So, no new material came in possession of the AO for issuing the notice u/s 148 of the Act. On a similar issue the Hon'ble Jurisdictional High Court in the case of CIT Vs Orient Craft Ltd. (supra) held as under: "The expression "reason to believe" cannot have two different standards or sets of meaning, one applica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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