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TMI Blog2019 (2) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... thout jurisdiction. In this view of the matter, it is not necessary to travel to the other grounds, which are on the merits of the quantum additions.- Decided in favour of assessee. - I.T.A. No. 644/Asr/2016 - - - Dated:- 7-12-2018 - Sh. Sanjay Arora, Accountant Member For the Appellant : Sh. J. S. Bhasin (Adv.) For the Respondent : Sh. Charan Dass (D.R.) ORDER PER SANJAY ARORA, AM: This is an Appeal by the Assessee agitating the Order by the Commissioner of Income Tax (Appeals)-2, Jalandhar ('CIT(A)' for short) dated 05.10.2016, dismissing the assessee s appeal contesting his assessment u/s. 143(3) r/w s. 147 of the Income Tax Act, 1961 ('the Act' hereinafter) dated 28.03.2014 for the Assessment Year (AY) 2006-07. 2. The first issue that arises in the instant appeal, raising several grounds, is the maintainability of the assessment, alleged to be without jurisdiction, in view of the absence of a reason/s to believe escapement of income in the facts and circumstances of the case. 3. The background facts in this regard are that the assessee was, on the basis of a report by the Investigation Wing of the Revenue, found to have sold se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of the recording the reason/s on 18.03.2013, unaware that the assessee had indeed furnished his return of income for the year, and toward which Sh. Bhasin would take the Bench through para 3 of the assessment order whereat the AO records requiring the assessee time and again to furnish the said return of income, beginning with the notice u/s. 148(1) dated 21/3/2013. How could he, then, arrive at a reason to believe escapement of the impugned capital gain, de hors the information qua the said return, i.e., as on 18.03.2013? Not only that, where is the question or the need for asking the assessee if he had returned the capital gain/s if the AO was either aware of the assessee having filed the return of income or had, resultantly, verified there-from, with the fact of the matter being that the assessee had not returned the same as the land/s under reference were, as noted by the AO himself, sold on PoA basis? It was only on the assessee stating that the return filed on 02.05.2006 be treated as a return in response to notice u/s. 148(1), furnishing along with a copy of the said return (filed before the jurisdictional AO, i.e., ITO, Nakodar), that the AO became aware of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concern as limited only to assessment of the capital gains, would again be taking a myopic view of the matter. The Apex Court in Raymond Woolen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC) had abundantly clarified in the matter of the scope of the reasons, taking me through the following para containing the gist of the decision: 3. In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 19 (SC). The AO, however, also stating of having perused the assessment record, which ought to comprise the assessee s return, admittedly not disclosing the impugned income, and of the same having been taken into account in arriving at his reason/s to believe, the assessment record was also perused during hearing to find it as not containing the assessee s return but only a copy thereof filed by the assessee during the reassessment proceedings. What, then, is the basis for the AO to record or consider impugned income as having escaped assessment ? This also explains his questioning the assessee in the matter. Again, without doubt, a non response by the assessee, who had also not cooperated during investigation, would entitle the AO to draw an adverse inference, i.e., of the said capital gain as being not returned, validating the formation of belief as to escapement of the relevant income. However, such an inference could only be drawn on the non-receipt of the reply, for which the AO himself has allowed time to the assessee up to 20.03.2013. There is, therefore no basis, prior thereto, for such inference, except a strong suspicion that the assessee, even otherwise in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex Court in Raymond Woolen Mills Ltd. (supra), is a honest belief, even if prima facie , as to the escapement of income on the basis of the material or information with the AO. The reason/s should emanate directly from the said material or information, in the absence of which it is only a reason to suspect, based on circumstantial and other surrounding circumstances, even as adverted to by the ld. DR. Further, the reason/s, where recorded on 20.03.2013, would be a valid reason/s as, by that date it was permissible for the AO to draw an adverse inference, i.e., that the assessee had nothing to say in the matter and, accordingly, had not disclosed the income by way of capital gains per his return of income, if any, furnished, as in fact, he had not. On 18.03.2013, it was at best a strong reason to suspect. The ld. DR argued that the enquiry letter by the AO to the assessee should not undermine the Revenue s case, i.e., ought not to operate to the Revenue s prejudice, overlooking the fact that the Revenue had material to entertain a belief of income arising by way of capital gains to the assessee which he had not disclosed to the Department. So, however, the question is what ..... X X X X Extracts X X X X X X X X Extracts X X X X
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