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TMI Blog2017 (6) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial available before him at the time of recording of reasons, the initiation of proceedings u/s. 147 is invalid and without jurisdiction, hence, deserves to be annulled.- Decided in favour of assessee. Refund of excess appeal fees paid by the assessee at the time of filing of appeal before the CIT(A) - Held that:- As per section 246A of the Act, any appeal filed by the assessee should be accompanied by appeal fees of Rs. .1000/-. Undisputedly, the assessee has paid appeal fees of Rs. .10,000/- while filing the appeals before the CIT(A) challenging the assessment orders. The CIT(A) has not disputed the aforesaid factual position. Therefore, when there is no dispute to the fact that the assessee has paid appeal fees in excess of what it was required to pay under the statutory provisions, such excess appeal fees has to be refunded to the assessee. We direct the AO to verify this aspect and refund the excess appeal fees paid by the assessee following due process of law.- Decided in favour of assessee. - ITA No. 04, 05, 06/Mum/2009, ITA No. 843/Mum/2010 - - - Dated:- 9-5-2017 - Shri G S Pannu, AM And Shri Saktijit Dey, JM Appellant By : Shri Nitesh Joshi, AR Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission/brokerage payment to M/s. Narotam Agencies on merits also. 3. The learned AR drawing our attention to the reasons to believe recorded by the AO for reopening the assessment as communicated to the assessee, a copy of which is at page 53 of the paper-book, submitted that in the reasons recorded the AO has referred to information received from another Officer to form his belief that commission paid to the proprietor of M/s. Narotam Agencies is bogus. He submitted, at the time of recording of reason for re-opening assessment, the AO had no tangible material before him to form such belief. The learned AR submitted, inspite of specific request of the assessee, the AO has not confronted the material/information on the basis of which he formed the belief. The learned AR submitted, since there is no tangible material before the AO at the time of recording reasons for reopening assessment, the belief formed has no nexus with the material on record, therefore, the assumption of jurisdiction u/s. 147 is invalid. The learned AR submitted, even, as on date the department has failed to bring on record any material to demonstrate the nature of information/material available before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned in detail what is the nature of information/material available before him for formation of belief that there is escapement of income. Therefore, in course of appellate proceedings before this forum the learned DR was directed to call for the assessment records pertaining to the aforesaid assessment years and bring to the notice of the Bench the material/information available before the AO at the time of recording of reasons. To the aforesaid specific query raised by the Bench, the best the department could come up with is a letter dated 10.12.2010 written by the ITO Business Ward IX(3), Chennai to Dy CIT 2(1), Aaykar Bhavan, Mumbai. The content of the said letter, a copy of which is at page 3 of the department s paper book reads as under: Sir, Sub: Information called for in the case of Sri D D Vyas, Prop. Shree Narotham Agencies, No.13, Errabalu Street, Chennai-1 assessment years 1998-99 to 2001-02 reg. Ref : Dy. Commissioner s letter in No DCIT /Information/10-11 dt. 11.11.2010. Please refer to your letter cited. Three statements were recorded from Sri D D Vyas i.e. on 23.12.2003; 29.12.2003 05.01.2004. Copy of the above three statements r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons and the belief, the inevitable conclusion is, the AO could not have reason to believe that any part of income of the assessee had escaped assessment. The reasons are the live link between the material placed on record and the conclusion reached by the authority in respect of an issue. In absence of tangible material before the AO demonstrating escapement of income, belief cannot be formed in vacuum. The Hon ble Supreme Court in the case of Chhugamal Rajpal vs. S P Chaliha (supra), while dealing with a case of reassessment u/s. 147 of the Act on more or less identical facts and situation held as under: In the report the Income-tax Officer does not set out any reason for coming to the conclusion that this is a fit case to issue notice under section 148. The material that he had before him for issuing notice under section 148 is not mentioned in the report. In his report he vaguely refers to certain communications received by him from the Commissioner of Income-tax, Bihar and Orissa. He does not mention the facts contained in those communications. All that he says is that from those communications it appears that these persons (alleged creditors) are name-lenders and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued a notice under section 148. Further, the report submitted by him under section 151(2) does not mention any reason for coming to the conclusion that it is a fit case for the issue of a notice under section 148. We are also of the opinion that the Commissioner has mechanically accorded permission. He did not himself record that he was satisfied that this was a fit case for the issue of a notice under section 148. To question No. 8 in the report which reads Whether the Commissioner is satisfied that it is a fit case for the issue of notice under section 148 , he just noted the word Yes and affixed his signature thereunder. We are of the opinion that if only he had read the report carefully, he could never have come to the conclusion on the material before him that this is a fit case to issue notice under section 148. The important safeguards provided in sections 147 and 151 were lightly treated by the Income-tax Officer as well as by the Commissioner. Both of them appear to have taken the duty imposed on them under these provisions as of little importance. They have substituted the form for the substance. In the result this appeal is allowed, the order of the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon reasonable grounds and that the Income-tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income-tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. The court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the court. There is no material or fact which has been stated in the reasons for starting proceedings in the present case on which any belief could be founded of the nature contemplated by section 34(IA). The so-called reasons are stated to be beliefs thus leading to an obvious self-contradiction. We are satisfied that the requirements of section 34(IA) were not satisfied and, therefore, the notices which had been issued were wholly illegal and invalid. In the result, the appeal is allowed and the judgment of the High Court is set aside. The writ petition succeeds to the extent that the impugned notices shall stand quashed. The assessee shall be entitled to his costs. Applying the principle l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserving that section 246A does not contain any provision for refund of excess appeal fees. He also observed, u/s. 251(1) the CIT(A) has no power to grant refund of excess appeal fees. Accordingly, he rejected the ground raised by the assessee. 9. The learned AR reiterating the stand taken before the CIT(A) submitted that appeal fees paid in excess by ignorance should be refunded to the assessee . In this context, he relied upon the decision of Hon ble Bombay High Court in the case of Ranchodlal Maneklal vs. Maneklal Pranjivan Das AIR 1953 (Bom) 436. 10. We have considered the submissions of the parties and perused the material on record. As per section 246A of the Act, any appeal filed by the assessee should be accompanied by appeal fees of Rs. .1000/-. Undisputedly, the assessee has paid appeal fees of Rs. .10,000/- while filing the appeals before the CIT(A) challenging the assessment orders. The CIT(A) has not disputed the aforesaid factual position. Therefore, when there is no dispute to the fact that the assessee has paid appeal fees in excess of what it was required to pay under the statutory provisions, such excess appeal fees has to be refunded to the assessee. We dir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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