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TMI Blog2015 (12) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... t the purchase of property in his return of income, it cannot be said that the assessee had concealed any income, even though when there is no dispute about the fact that he had disclosed his agricultural as well as non-agricultural income during the assessment year in question, and there is no finding as to income from which other source had been concealed by the assessee. Learned counsel for the respondent-Revenue has also submitted, that since there was investigation required with regard to the investment made by the assessee for purchase of property for the assessment year in question, and time for issuance of notice under Section 143(2) of the Act had expired, issuance of notice under Section 148 of the Act was necessitated. In our view, the same cannot be a ground for initiating proceedings under Section 148 of the Act. It was for the Assessing Officer to take proper steps earlier by issuing notice under Section 143(2), and if the law does not now permit issuance of any such notice, then invoking some other provision, which would not be applicable, is not the correct mode. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. This appeal was ADMITTED by a Division Bench of this Court, on the following questions of law: "1)Whether on the facts and circumstances of the case the Reassessment made u/s 147 of the Act 1961 on 10.12.2007 for the Asst. year 2004-2005 was valid when the original Return of income involuntarily filed on 21.3.2007 remained undisposed of, when the proceedings u/s 147 were initiated on 27.9.2006? 2) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in travelling beyond what was actually recorded by the AO as reasons for issue of the notice u/s 148, when the AO had categorically admitted in the assessment order u/s 147 that notice under Section 148 was issued for reopening the assessment in order to verify the source of investment? 3) Whether on the facts and in the circumstances of the case in law, the Tribunal was right in foreclosing consideration of the actual reasons recorded by the AO, instead of exercising its power under Section 255(6), as the reasons recorded go to the root of jurisdiction?" . 4. We have heard Sri G.Venkatesh along with Sri K.S.Hanumantha Rao, Advocate, learned counsel f or the appellant; as well as Sri E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal) for issuance of notice under Section 148 of the Act: "The assessee has filed R/I for A.Y.2004-05 on 21.3.05 declaring Taxable income of ₹ 75,397/- and Agricultural income of ₹ 50,000/-. The assessee has purchased a residential house for ₹ 10,00,000/- consideration and in addition he has spent ₹ 10,270/- towards registration of the document on 25.7.2003. To examine the sources of investment, summons were issued. The assessee by mistake had stated that the date of purchase was in the year 2004-05. As such, notice u/s 143(2) was issued for scrutinizing the documents. The assessee produced copy of Registered Deed, where in it was noticed that date of purchase is 25.7.2003. This transaction relates to Asst. Year 2004-05. Hence asst. for 2005-06 is completed accepting R/I after verifying the details and documents produced. This transaction relates to Asst. Year 2004-05. The assessee has produced self prepared statements to show that the investments is out of HUF funds. As further investigation are required, proceedings have to commence for A.Y.2004-05. Considering the details filed by the assessee I have reason for believe that sources of invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieve' that income assessable to tax h s escaped assessment for the year in question. The purpose of the said section is not to reopen the assessment for the purpose of investigation, and then find out the grounds or reasons for reassessment. 14. The Apex Court, in Chhugamal Rajpal -vs- S.P.Chaliha [(1971) 79 ITR 603], considered a case where notice under Section 148 was issued after recording the reasons in the form of a report of th e Income-Tax Officer, which is reproduced below: "Report in Connection with the starting of proceeding" under Section 147 of the Income-tax Act, 1951 . Name of District Ward of Circle A Ward, Muzaffarpur G. I.R. No. 303-C. 1. Name and address of the assessee S. Chugamal Rajpal, Muzaffarpur. 2. Status R.F. 3. Assessment year for which notice under s. 148 is proposed to be issued 1960-61 4. Whether it is a new case or one in which re-assessment (or recomputation) has to be made. Re-assessment 5. If a case of reassessment (or recomputation) the income (or loss or depreciation allowance) originally assessed/determined. ₹ 73,604/- 6. Whether the case falls under cl. (a) or (b) of s. 147 147(a) 7. Brief reasons for starting p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r words his conclusion is that there is a case f or investigating as to the truth of the alleged transactions. That is not the same thing as saying that there are reasons to issue notice under s.148. Before issuing a notice under s.148, the Income-tax Officer must have either reasons to believe that by reason of the omission or failure on the part of these assessee to make a ret urn under s.139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year or alternatively notwithstanding that there has been no omission or failure as mentioned above on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year." 16. The facts of the aforesaid case are quite similar to the one on hand. In the present case also the reason for reopening is for further investigation to find out the source of investment for the purchase of the property, which is not permissible in law. 17. Further in the case of Income-Tax Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the savings in the past years, as well as the savings from the year in question. It could also be from gifts or loans taken from friends and relatives. It was only if there was any definite information that the asessee had some additional income, which was not disclosed by him and was invested in purchase of property, then alone the no tice under Section 148 of the Act could have been issued , and that also after recording the basis on which the Assessing Officer had formed his opinion that he had 'reason to believe' that any such income had escape d assessment. The same is totally lacking in the present case. 21. The Apex Court in the case of Ganga Saran and Sons P. Ltd. -vs- ITO (1981) 130 ITR 1 has interpreted the scope of Section 147 of the Act for the purpose of reopening of assessment. The relevant paragraph of the aforesaid judgment of the Supreme Court is reproduced below: "It is well settled as a result of several decisions of this court that two distinct conditions must be satisfied before the Income Tax Officer can assume jurisdiction to issue notice under s.147(a) First, he must have reason to believe that the income of the assessee has escaped assessment and, seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sum of ₹ 3 lacs chargeable to tax had esc aped assessment, which was to be brought to tax under Section 147/148 of the Act and thus, notice under Section 148 of the Act was issued. In our view, the facts of the present case are totally different, and as such the ratio of the judgment in the case of Rajat Export Import India Pvt. Ltd. (supra) would not apply to the facts of the present case. 24. In the present case, there is no allegation of the assessee not having made full and final disclosure in his return of income for the relevant assessment year. Much emphasis has been laid on the fact that disclosure of the purchase of the property was not made in his return of income for the relevant assessment year. On being asked, Sri E.I.Sanmathi, learned counsel for the respondent-Revenue, could not place before the Court any provision of law which required the assessee, in the assessment year 2004-05, to disclose about the fact of having made the actual investment in his return of income. In the absence of any legal obligation on the assessee to disclose about the purchase of property in his return of income, it cannot be said that the assessee had concealed any income, even th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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