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TMI Blog2016 (4) TMI 1395X X X X Extracts X X X X X X X X Extracts X X X X ..... belief, whether the material would conclusively approve the escapement is not the concerned, at the time of reopening of the assessment. AO has not required to establish by conclusive evidence that the issue raised in reopening assessment would be calculated with the addition of income in reassessment order. Issue of notice u/s.148 of the Act, for the purpose of reopening of assessment u/s.147 of the Act is based on material available before the Assessing Officer in respect of undisclosed bank account in foreign countries so as to believe that the income was escaped from the assessment, while framing the original assessment. Hence, reopening of assessment is valid. - Decided against assessee. - ITA Nos. 1302 And 1303/Mds/15 - - - Dated:- 27-4-2016 - Shri Chandra Poojari, Accountant Member And Shri Duvvuru Rl Reddy, Judicial Member Appellant by: Shri S. Sridhar, Advocate Respondent by: Shri A.B.Koli, JCIT ORDER Chandra Poojari, These appeals by the assessee are directed against the common order of the Commissioner of Income-tax(Appeals) dated 31.3.2015. 2. The facts of the case are that the assessee who traded in shares and mutual funds filed re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposited into the a/c of HSBC bank Switzerland in BUP_SIFIC_PER_ID5090165807,PER_ID 108183, PER_NO 165807. Client Name Xenios Foundation Code: 5091365665 where you are the beneficiary. Please furnish the details regarding source of income and whether the same was offered to tax. 2. Details of t-t/s. Xenios Foundation and M/s. Dayanand837 (client ID 5091352245) 2.4 The reply filed by the assessee in response to the above summons is reproduced hereunder: 1. As regards the details contained in item no.1 of your summons, I would like to state that I am not aware of any of these details except that I have an Account under client IDNo.1365665 in the name of Xenios Foundation. 2. As regards the details contained item No.2 of your summons, I am not aware of any of the details contained therein, 3. I am advised that any amount Lying to my credit prior to the Assessment Year 2006-07 are not liable for tax. The account No, 11235875 is there even prior to 2006. The balance in the said account was approximately $ 287000 even prior to 2006. These amounts were deposited by transfer from my father's account in 2002, No further amounts were deposited by me in the said account a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the said bank account either in the return of income . 3.1 The primary requisite for reopening of the assessment, on a plain reading of the relevant provisions of the Act as well as, as held in several decisions, is the satisfaction of the assessing officer that a specific income has escaped assessment and a finding to that effect has to be recorded before the issue of a notice u/s 148. This finding is conspicuously absent in the reasons for reopening furnished to the appellant by the assessing officer in the letter dated 18/02/2013. Even the letter dated 28/03/2013 disposing off the objections of the assessee does not contain any details about income escaping assessment. The assessee by his letter dated 15/02/2013 requested for the reasons to be furnished and on 23/03/2013 filed the objections for the reopening and in the said letter has expressly stated that the assessee's participation in the reopening proceedings is without prejudice to section 292BB of the Income Tax Act and the assessee also expressly reiterated his right to contest the validity of the reopening. Hence the assessing officer rejecting the objections on the assumption of jurisdiction to reopen on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement read as a whole would show that the assessee has only stated that he might consider offering the balance as on date as income of the current financial year subject to certain conditions and also a categorical assertion that no deposits are made in the said account after 2006. 3.7 The ld. AR contended that the Assessing Officer therefore ought to have looked at the origin of the various credits found in the alleged bank account. It is common knowledge that banks abroad invest the amounts lying in the bank account in various units, mutual funds, etc. and every time such mutual funds matured, these are credited back to the bank account. The socalled credits found in the bank account are nothing but such maturity proceeds and in any case the Assessing Officer has not even attempted to find out the source and the details of the various credits mentioned by him. 3.8 According to the ld.AR, any addition made to the returned income on the basis of the finding that such income belongs to the assessee would require strict proof to be furnished by the department. Rules of evidence require the department to conclusively prove that the income belongs to the assessee or the credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O on materials which were already on record Held, yes Whether therefore, there was no infirmity in impugned notice Held, yes ii) ITO v. Purushottam Das Bangur And Another (224 ITR 362)(SC), wherein it was held as under : Section 147(b) of the Income-tax Act, 1961 - Reassessment - Information - Assessment year 196970 - Assessee claimed that he had incurred capital loss on sale of shares held in a company - Loss was claimed on basis of official quotation at Calcutta Stock Exchange and same was allowed in original assessment - Subsequently, ITO received letter from Directorate of Investigation giving detailed particulars collected from Bombay Stock Exchange which revealed earning of share and price of share increased during period in question and quotation appearing at Calcutta Stock Exchange was as a result of manipulated transaction - Very next day of receipt of letter, ITO issued notice under section 147(b) - Whether information contained in letter of Directorate of Investigation could be said to be definite information and ITO could act upon for taking action under section 147(b) - Held, yes - Whether on basis of facts and information contained in letter of Directora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction of him as held by the Supreme Court in the case of Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC). Further, it was held what is to be seen whether there was prima facie some material on the basis of which the department can reopen the case. The sufficiency or correctness of the material is not to be considered at this stage. 6. The scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied: firstly the Assessing Officer must have reason to believe that income, profits or gains chargeable to income tax have escaped assessment, and sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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