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TMI Blog2023 (10) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment order has accepted contents of the TEP as gospel truth, and has not subjected it to the usual rigoor of putting the material to the petitioner and eliciting his answers with regard to the same. The timeline alluded to hereinabove by us would show that the objection to the reopening were rejected on 13.10.2016 by the AO, who then within 10 to 12 days i.e., 25.10.2016, proceeded to pass the impugned assessment order. Substantial part of the addition is based on the complaint made by Mr S.K. Srivastava. Admittedly, this material was not put to the petitioner. The petitioner/assessee had no opportunity therefore to rebut the material and place his version before the AO. The objection taken by the petitioner that there ought to have been a hiatus of four (4) weeks between the date when the objection preferred by him were rejected and the assessment order was passed does not seem to have been appreciated by the AO. AO seems to have proceeded on the basis that at the relevant point in time, the judgments which, in essence, expanded the scope of principle enunciated in GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] did not pertain to the jurisdictional Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the petitioner/assessee: (i) First, the investment made in mutual funds and the interest earned thereupon had escaped assessment. (ii) Second, capital gains on investment made in a Joint Development Agreement (JDA) with Odyssa Homes and Commercial Pvt. Ltd. [in short, Odyssa ] escaped assessment as no RoI had been filed by the petitioner/assessee. 3. The record shows that the petitioner/assessee was furnished with an extract of the reasons to believe recorded by the Assessing Officer (AO) which form the basis for triggering reassessment proceedings. The reasons to believe recorded by the AO reads as follows: 1. As per individual transaction statement (ITS) for F.Y 2008-09 (A. Y 2009-10), as per CIB information, assessee Sh. Pradyot Kumar Misra has made an investment of Rs. 6,00,000/- in purchase of Mutual funds and as per 26AS information total amount credited to the account of the said assessee is Rs. 68,344/-. On perusal of record and ITD system, it is found that no return for A.Y 2009-10 of the said assessee has been found/entered and as such the amount of Rs. 6,68,344/- is deemed income escaped of assessment u/s 147 explanation 2(a) of I.T. Act, 1961, si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been served the copy of the original reasons to believe framed in the matter. Furthermore, it is submitted that petitioner/assessee has also not been served with the copy of the approval obtained from the specified authority under Section 151 of the Act. 7. More importantly, it is emphasised that the AO violated the established right of the petitioner/assessee to take recourse to an appropriate legal remedy after the order dated 13.10.2016 was passed, whereby his objections to reassessment proceedings were rejected by passing the assessment order post-haste on 25.10.2016. 7.1 In support of this plea, reliance is placed, inter alia, on the following judgments: (i) Allana Cold Storage Ltd. v. ITO, 287 ITR 1 (Bom.) (ii) Asian Paints Limited v. DCIT, 296 ITR 90 (Bom.) (iii) Samsung India Electronics Pvt. Ltd. v. CIT, 362 ITR 460 (Del.) 8. Furthermore, it is contended that the entire reassessment proceedings are based on a tax evasion petition [in short, TEP ] filed by one Mr S.K. Srivastava, who at the relevant point in time was working with the revenue in a senior position. 8.1 In this context, our attention has been drawn to the objections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by making an addition of Rs. 2.75 crores vide assessment order dated 29.03.2016 u/s 143(3)/148/147 of I.T. Act, 1961. The said complaint/tax evasion petition which was submitted by Captain Jay Narayan Prasad Nishad, Hon'ble Member of Parliament on 21.03.2013 also mentioned that Rs. 50 lacs were paid by Sh. P.K. Mishra and Sri Timmy Khnna to Ms. Ashima Neb during A.Y. 2010-11. As the assessee has not cross-examined Sh. S.K. Srivastava, witness of the revenue, despite repeated opportunities, nor has he denied any of the averments of the witness of the revenue on affidavit, the same is therefore, held against the assessee as evidence and the same is admitted as admissible evidence. Thus, an addition of Rs. 10 lakhs per month is being made to the income of the assessee as stated by the complainant/witness of the revenue in his statement recorded on oath. Penalty proceedings u/s 271(1)(c) for concealment of income are being initiated separately. (Addition of Rs. 1,20,00,000/-) 9. Besides this, our attention is also drawn to paragraph 28 of the assessment order concerning AY 2009-10, which is indicative of the fact that a substantial addition amounting to Rs. 1,20,00,000/- is ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n does not relate to the year under consideration, the question of reporting the said transactions during the year under consideration, therefore, does not arise. The same is also evident from the notice dated 20.06.2016 issued to the assessee under section 142(1) of the Act wherein the assessee has been directed to file, inter-alia, details of investment made in mutual fund (as tabulated in the notice) and any capital gain/dividend income earned thereon. On perusal of the information tabulated in the aforesaid notice, it is apparent from the column designated as transaction date that the aforesaid transaction of purchase of mutual fund has been effected on 08.08.2007, as already explained supra. Without prejudice, it is further submitted that no income has been earned by the assessee on the investments so made, either in the preceding year or during the relevant assessment year under consideration. That apart, it is pertinent to mention here that the aforesaid Fund is a growth fund on which, it is submitted that no income could be earned until the same has been redeemed by the assessee. Accordingly, since no redemption has been made by the assessee during the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of the proceedings, the AO obtained material which formed correctly, in his view, the basis for passing the impugned assessment order. Therefore, the contention of Mr Agarwal is that no interference is called for with the impugned assessment order by this court while exercising jurisdiction under Article 226. 13. Having heard the learned counsel for the parties, we are in agreement with Mr Agarwal to the extent that while exercising power under Article 226 of the Constitution, the court would neither examine the merits of the case not enter the quagmire concerning the inadequacy of the material available to the AO while triggering reassessment proceedings. 13.1 That said, what we are concerned with and we must say deeply, is the manner in which the AO has proceeded in the matter. 14. Mr Agarwal cannot but accept the position that the reassessment proceedings were triggered against the petitioner/assessee on account of the TEP filed by Mr S.K. Srivastava. Mr S.K. Srivastava, as noticed above, was holding a senior position at the relevant point in time in the revenue. 15. The AO in framing the assessment order has accepted contents of the TEP as gospel truth, and ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut according to us that by itself would not be a sufficient cause to side step to principle of hiatus which was declared by the other High Courts, and judgments of those High Courts were concededly cited before the AO. 19. Merely because the judgment in Samsung India Electronics case was not cited before the AO would not absolve him from adhering to the principles which was enunciated by other constitutional courts i.e., the Bombay High Court in Allana Cold Storage Ltd. s case and Asian Paints Limited s case, as long as there was no conflicting judgement of the jurisdictional court, i.e., this court. 20. We may note that in fact this very principle has also been enunciated by the Gujarat High Court in Garden Finance Ltd. v. ACIT, 268 ITR 48 (Guj.). 21. We are informed by the counsel for the petitioner that there is no reason to disbelieve that this judgment was cited before the AO. This is evident upon perusal of page 294 of the case file. 22. What is also concerning is that the respondent/revenue had triggered an enquiry conducted by the Vigilance Team against Mr S.K. Srivastava, which, amongst others, included the petitioner/assessee. Clearly, there was ever ..... 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