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TMI Blog2012 (4) TMI 817X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds, which are verbatim in all the appeals: 1. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in dismissing the appeal. 2. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in dismissing the appeal without appreciating fully and properly the facts of the case. 3. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in upholding the validity of the proceedings initiated by issuance of notice u/s.148 of the I.T. Act. 2. The facts are common in all these appeals and which are revealed from the record as under. The Addl. DIT (Inv.) Unit-V, Mumbai sent information to the A.O. that all these assesses have claimed to have received about 27 gifts from different NRIs in the F.Ys. 1998-99 to 2004-05, aggregating about ₹ 30 lakhs, ranging from ₹ 50,000/- to ₹ 3 lakhs. It appears that there was survey action u/s.133A in the business premises of M/s. Stephen Optical Industries, M/s. Unity Opticians and M/s. Optico Enterprises in which all these assesses are partners. The A.O. has given the details of the gifts received by these assesses in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich have been received from the family relations who are NRIs as shown in the above table. 4. The first issue for examination is whether the A.O. has legally assumed the jurisdiction u/s.147 and issued the notices u/s.148 of the Act in all these cases. The Ld. Counsel for the assessees vehemently argues that as per the reasons recorded by the A.O. even there is no whisper in the said reasons that any income has escaped assessment or income is understated. He submits that the A.O. has expressed his intention to verify the genuineness of all these gifts as well as the long-term capital gain claimed by the assessees on the sale of the shares. He submits that all these assessees are family members save: (i) Alkesh P. Damani, HUF (ii) Jayesh P. Damani, HUF 5. He submits that the law is well settled that the A.O. must has reason to believe and that should reflect from the reasons recorded and only his intention to do something is not sufficient. He relied on the following precedents: (i) Prashant S. Joshi vs. ITO -189 Taxman 1(Bom); (ii) German Remedy Ltd. vs. Dy.CIT -285 ITR 26 (Bom) 6. He submits that the Tribunal has already considered the legality of the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has declared long term capital gain on sale of shares and claimed exemption under section 34F of the Act, for acquisition of flat in lieu of 5long term capital gain. It is also seen that the assessee s investments were multiplied by 22 times within a span of 1 years. Hence, the transactions of long term capital gain required to be scrutinized in the hands of the assessee. Though the intention of the Assessing Officer might have been that he had a reason to belief that income chargeable to tax has escaped assessment, the same has not manifested itself in the reasons of reopening. The first part of the reasons are only factual recording that there was a survey and it was found that the assessee had declared long term capital gain and claimed exemption under section 54F. The second factual recording is that the assessee s investments have multiplied by 22 times within a span of 1 years. Thereafter, only recording is that the long term capital gains are required to be scrutinised in the hands of the assessee. For scrutiny, notice under section 143(2) of the Act would suffice. The assessment cannot be re-opened for scrutining the same. There should be positive indicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rification of the above points, these cases are proposed to be taken up for scrutiny u/s.148 of the I.T. Act, 1961. Thanking you, Yours faithfully, Sd/- [AMRUT T. PATIL] INCOME-TAX OFFICER-16(1)(2) MUMBAI 10. In the case of other assessee also the reasons recorded by the A.O. are verbatim. As per the reasons recorded by the A.O., in the first paragraph, the A.O. has noted that there was survey action u/s.133A in the business premises of M/s. United Optiations and M/s. Optico Enterprises. In the second paragraph the A.O. has observed that the assessee declared long-term capital gain on the sale of the shares and claimed exemption u/s.54F of the Act showing the acquisition of the flat. The investment of the assessee was multiplied by 22 times within the span of 18 months(1 year) and, hence, transactions of long-term capital gain declared by assessees required to be scrutinised in the hands of the assessee. In the third paragraph the A.O. observed in respect of the gifts from various persons in the A.Y. 2000-01 to 2005-06 the genuineness of all these gifts needs verification. Lastly, he observed that he has proposed to take those cases for scrutiny u/s.148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income has escaped assessment, must be determined with reference to the reasons recorded by the Assessing Officer. The reasons which are recorded cannot be supplemented by affidavits. The imposition of that requirement ensures against an arbitrary exercise of powers under section 148. Their Lordship has also explained the decision of the Hon ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers P. Ltd. (supra). The relevant paragraph of the judgment is as under: 16. Counsel for the revenue submitted before the Court that in the present case, no assessment has taken place and at the stage of section 143(1), there is only an intimation. Reliance is sought to be placed on the judgment of the Supreme Court in Assistant Commissioner of Income Tax V/s. Rajesh Jhaveri Stock Brokers P. Ltd.8 The judgment of the Supreme Court in Rajesh Jhaveri has noticed the difference between the expression `intimation' and `assessment' and the Supreme Court held that in the scheme of things an intimation under section 143(1)(a) cannot be treated as an order of assessment. The Supreme Court held that there being no assessment under section 143(1)(a), the question of a change of opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had escaped assessment. As per mandate of sec.147, as held by their Lordships, the reasons which are recorded by the A.O. for reopening an assessment are the only reasons which are to be considered when the formation of the belief is to be gathered. 12. In the present case, as discussed hereinabove, the A.O. only desires to verify the genuineness of the gifts , which as per all these assessees they have already disclosed same while filing their regular returns of income. It is well settled principle of law that though the A.O. has power to initiate the proceedings u/s.147 but that should be only based on his belief and the belief must be formed on the reasons recorded by him. Apart from that, I find that this issue has already been considered by the Tribunal in the cases of Shri Pranlal P. Damani and Shri Alkesh P. Damani and in those cases also the reasons recorded by the A.O. are identical. I, therefore, hold that from reasons recorded by A.O. formation of belief, is absent that there was any escapement of income or under statement of income and as basic mandate of sec.147 has not been fulfilled the proceedings initiated by the A.O. u/s.147 are bad in law and quash al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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