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TMI Blog2015 (10) TMI 2749X X X X Extracts X X X X X X X X Extracts X X X X ..... edings under section 147 of the Act were initiated by issue of notice under section 148 of the Act. In response to the notice, the assessee filed return as was originally filed. The reasons for reopening recorded by the Assessing Officer read as under : "The assessee-firm is running a Diagnostic Centre under the name and style of M/s. Alpha Radiological Centre (P.) Ltd. 1, Jagdish Ashram Road, Patiala and filed return declaring nil income on August 21, 2004 for the assessment year 2004-05. The return was processed under section 143(1)(a). During the course of survey under section 133A conducted in this case on March 25 to 26, 2010, suppression of receipts were found on the basis of following discrep ancies : 'A Kacha register maintained by the receptionist was found in which a list of patients visited on the day of survey only was available. Earlier days' such lists were found destroyed. In this register, the amount of fee charged has been shown at one-tenth of the actual fee received by ignoring zero digit as verified from the referred test slips found from the business premises as also admitted by the reception ist. However, the receptionist further added that the aver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration, i.e., the assessment year 2003-04 work out to Rs. 56,81,220. I have, therefore, reasons to believe that income of Rs. 56,81,220 has escaped assessment for the assessment year 2003-04." 4. On the basis of the abovesaid reasons, the proceedings under section148 of the Act were initiated. The assessee raised objection against the reopening and also made its submissions on the merits of the case. Rejecting all the contentions of the assessee, the Assessing Officer concluded that the assessee had shown gross receipts of Rs. 33,36,590 during the relevant assessment year. By applying a ratio of 63 per cent., the suppression of receipts works out to Rs. 56,81,220. However, taking lenient view he estimated the receipts by applying 50 per cent. and hence, estimated the gross receipts at Rs. 33,36,590. Further, disallowance of Rs. 1,54,731 was made on account of expenses and depreciation on car and scooter claimed by the assessee. In this way, the assessment at an income of Rs. 15,65,660 was made. 5. The assessee went in appeal before the learned Commissioner of Income-tax (Appeals), whereby detailed submissions were made against the reopening under section 148 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement of Shri Kapil Kumar. Reliance was placed on the judgment of the hon'ble Supreme Court in the case of CIT v. S. Khader Khan Son [2013] 352 ITR 480 (SC), whereby the hon'ble apex court dismissed the appeal of the Department and confirmed the decision of the hon'ble Madras High Court in the case of CIT v. S. Khader Khan Son [2008] 300 ITR 157 (Mad) in which it has been held that the statement recorded at the time of survey does not have any evidentiary value and as such, cannot be made the basis for addition. Thus, on the basis of statement so recorded, no addition can be sustained. There cannot be valid reopening of the case on the basis of such statement. Reliance was also placed on a number of other judgments, particularly in the case of Ramkrishna Ramnath v. ITO [1970] 77 ITR 995 (Bom) and India Finance and Construction Co. P. Ltd. v. B. N. Panda, Deputy CIT [1993] 200 ITR 710 (Bom) for the proposition that the material found for one year cannot be the basis of reopening the case in any other year. Even otherwise, it was submitted that the financial year ending 2001-02 was the first year of the company and how could the Assessing Officer relate such alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on if he has sufficient material before him. It is also settled law that the Assessing Officer cannot form belief on the basis of his whim and fancy and the existence of material must be real. Further, there must be nexus between the material and escapement of income. After observing that the basis of reopening is the survey conducted in a later year that too around six years after the end of the relevant assessment year, we find that the reliance placed by learned counsel for the assessee on two judgments of the hon'ble Bombay High Court is not out of place. 11. In the case of Ramkrishna Ramnath v. ITO [1970] 77 ITR 995 (Bom) relating to the assessment year 1960-61, certain material was found in the assessment year 1961-62 which formed the basis of reopening by the Assessing Officer. After considering the provisions of the Act and submissions of learned counsel for the assessee the hon'ble Bombay High Court held in very clear terms that the information on which the notice under section 147 of the Act is issued, must relate to the assessment year to which that notice relate. Though, of course, it might very well have been obtained at any time subsequent thereto and may hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per law. While forming this opinion we are also guided by the judgment of the hon'ble jurisdictional Punjab and Haryana High Court in the case of Jai Gopal Mehra v. ITO [1969] 74 ITR 594 (P&H). The hon'ble court held as under (page 601) : "If the belief requisite under that provision is formed on various grounds some of which are relevant, the assessment proceedings for the accounting period to which the relevant non-disclosure relates can validly be reopened by the competent Income-tax Officer. A notice under section 34 would be valid only if the facts or figures on the non-disclosure of which the requisite belief is based : (i) either admittedly relate to the assessee concerned or are at least alleged to relate to him ; and (ii) the non-disclosed facts or figures have relevance to the income of the accounting period in respect of which the assessment proceedings are sought to be reopened." 15. In view of the above, the reassessment proceedings under section 147 of the Act initiated by the Assessing Officer by issue of notice under section 148 of the Act are not valid in the present case. Therefore, notice under section 148 of the Act and proceedings under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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