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TMI Blog2011 (6) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... filed and he is resorting to section 148 and worthy CIT(A) has erred in confirming the same in favour of A.O. 4. Without prejudice to my above grounds of appeal, worthy CIT(A) has erred in confirming the illegality of the A.O. that he has illegally travelled beyond the scope of section 148, which is illegal as decided by the various High Courts and approved by the Hon'ble Supreme Court. 5. That the worthy CIT(A) has erred in law and on facts in confirming the addition of ₹ 29,41,852/- out of capital accretion. 6. That the worthy CIT(A) has erred in law and on facts in confirming in disallowing 50% of sundry creditors amounting to ₹ 11,25,000/-. 7. That the worthy CIT(A) has erred in law and on facts in confirming in applying a rate of 8% and making an addition of ₹ 4,12,640/- as business income. 8. That the worthy CIT(A) has erred in law and on facts in confirming an addition of ₹ 78,145/- as non agriculture income. 9. That the appellant craves leave to add, amend or withdraw any grounds of appeal before or at the time of hearing of appeal." 3. Vide ground Nos.1 to 4 of the appeal, the assessee has challenged the validity of the reopening under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A), the assessee raised the following additional grounds of appeal:- "1. That the reassessment order passed by the ld. A.O. is illegal and is devoid of any force of law in as much as the reassessment proceedings had been set in motion while the original return filed was still lying pending for disposal. 2. That the reasons recorded by the ld. A.O. are without application of mind in as much as he states that no return of income has been filed and he is resorting to section 148. 3. Without prejudice to my above grounds of appeal, he has illegally traveled beyond the scope of section 148, which is illegal as decided by the various High Courts and approved by the Hon'ble Supreme Court." 4.1 The learned CIT(A) dismissed the additional grounds of appeal of the assessee, observing as under:- "The additional ground No.(i) & (ii), relate to the proceedings u/s.147/148. First of all the appellant's contention that the return filed by the appellant was pending for disposal at the time of initiation of re-assessment proceedings is factually incorrect since the return filed by the appellant was already disposed of vide TMS No.3168 dated 2-6-2005. Moreover, the notice u/s.148 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gospel truth without conducting his independent enquiries to verify the correctness of report about the assessee. Shri R.C. Khanna, C.A., the learned counsel for the assessee, also submitted that the reassessment proceedings are for the benefit of the Revenue and great onus is cast upon the Revenue in respect of reassessment proceedings beginning with the recording of reasons, obtaining of sanction from higher authorities where need be and above all to confine himself to the scope of reassessment proceedings as spelled out by him in the reasons recoded. Shri R.C. Khanna, C.A., the learned counsel for the assessee, also pointed out that the A.O. has specified that the proceedings are in respect of one FDR of ₹ 5 lacs and interest thereon amounting to ₹ 6832/-. However, the perusal of reassessment order will reveal that he has not made any addition in the reassessment order pertaining to this FDR but he travelled to other issues, which were beyond the scope of section 148, therefore, all the additions made are illegal as per the decision of the Hon'ble Punjab and Haryana High Court in the case of Vipan Khanna Vs. C.I.T. (2002) 255 ITR 220 (P&H), which was decided by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of C.I.T. Vs. SFIL Stock Broking Ltd. (2010) 325 ITR 285 (Del.). In view of the above, Shri R.C. Khanna, C.A., the learned counsel for the assessee, submitted that the reassessment order as well as the order of the CIT(A) upholding the reassessment proceedings as valid, may be quashed. 6. Shri Tarsem Lal, the learned D.R., while appearing for the Revenue, strongly supported the order of the A.O. and submitted that the A.O. was having material in his possession in the shape of letter received from the Vigilance Department, on the basis of which, the A.O. did form a belief and, therefore, the order of the CIT(A) may be upheld. 7. We have considered the rival submissions and have also gone through the material available on record. In the instant case, the A.O. initiated the proceedings under section 147/148 of the Act by recording the following reasons:- "Office of the Income tax Officer, Ward 3, Srinagar. 1. Name of the assessee Shri Mohd. Yousuf Wani 2. Address of the assessee Shopian, Kashmir 3. Status Individual 4. Assessment year 2004-05. Reasons for initiation of proceeding under section 148 of the Income tax Act, 1961. In this case inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee on 1-11-2004 declaring income of ₹ 1,44,800/- and agricultural income of ₹ 1,95,000/-. Subsequently, the notice under section 148 of the Act was issued to the assessee. In response to that, the assessee submitted that the return already filed on 1-11-2004 be treated as filed in response to notice under section 148 of the Act. In our view, the A.O. has casually recorded the reasons. In fact, he has not cared to see the return of income of the assessee, which was filed well within time for the year under consideration. This fact alone shows non-application of mind by the A.O. We also find that the A.O. even did not examine the assessee under section 131 or 133(6) of the Act to ascertain the truth with regard to the contents of the letter sent by the Vigilance Department. It is also worthwhile to mention here that the perusal of the assessment order will reveal that the A.O. has not made any addition in the reassessment order pertaining to the FDRs mentioned in the so-called reasons recorded but he has travelled to other issues. This fact alone shows that the so-called reasons recorded by the A.O. were made without application of mind by the A.O. In our considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation in my possession to issue notice under section 148 in the case of M/s.SFIL Stock Broking Ltd. on the basis of reasons recorded as above." From the above, it is clear that the Assessing Officer referred to the information and the two directions as "reasons" on the basis of which he was proceeding to issue notice under section 148. We are afraid that these cannot be the reasons for proceeding under section 147/148 of the said Act. The first part is only an information and the second and the third parts of the beginning paragraph of the so-called reasons are mere directions. From the so-called reasons, it is not at all discernible as to whether the Assessing Officer had applied his mind to the information and independently arrived at a belief that, on the basis of the material which he had before him, income had escaped assessment. Consequently, we find that the Tribunal has arrived at the correct conclusion on the facts. The law is well settled. There is no substantial question of law which arises for our consideration. The appeal is dismissed." From the above, it is clear that the Hon'ble Delhi High Court has also considered the decision of the Hon'ble Supreme Court rend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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