PRAFULLA JAGDISHCHANDRA SEDANI,JAMNAGAR vs. ITO WARD 1(3), JAMANAGR

Since, the issues involved in all these assessee`s appeals and cross- objections are common and identical, therefore, these appeals and cross- objections have been clubbed and heard together and are being disposed of by way of this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No.647/Rjt/2025, for assessment year (AY) 2013-14, and Revenue’s CO.No. 03/RJT/2026, for assessment year 2013–14, have been taken into consideration for deciding the above appeals en masse.

The grounds of appeal raised by the assessee, in lead case in ITA No. 647/Rjt/2025 are as follows: “1. Learned A.O. erred in providing incorrect reasons for re-opening of assessment. Hence, the re-opening of assessment is invalid. Hon'ble CIT(A) erred in confirming the same with his observations that the assessee had stated that new reasons provided were correct which was not in reality. 2. Re-opening of assessment u/s 147 is not valid as the same is based on "Reason to Suspect & not "Reason to believe". Hon'ble CIT(A) erred in confirming the reassessment. 3. Re-opening of assessment u/s 147 is not valid as the procedure for obtaining approval of Hon. PCIT is not properly followed. Hon'ble CIT(A) erred in confirming the reassessment by not providing the requisite details with documentary evidences. 4. Ld assessing officer erred in law in re-opening the assessment under clause (b) of explanation 2 to section 147, as the same is not applicable in the case of assessee. Hon'ble CIT(A) erred in confirming the same. 5. Learned assessing officer erred in law as well as on facts on making addition u/s 68 of the Act while the same was proposed to made u/s 69A in the draft assessment order. Hence, addition u/s. 68 is not correct and Hon'ble CIT(A) erred in confirming the addition made by Ld. assessing officer. 6. Learned assessing officer erred in law as well as on facts on making addition of Rs.41,000/- u/s. 68, as unexplained credit with respect to the unsecured loan obtained from assessee's daughter on the basis of suspicion and surmises. Hon'ble CIT(A) erred in confirming the addition made by Ld assessing officer. 7. Hon'ble CIT(A) has erred in just relying upon the investigation report of ACB, Jamnagar and Asst. order and it is well established law that no addition can be made on the basis preliminary investigation/charge sheet filed by ACB, especially in light of the fact that investigation on this issue is still underway and the assessee has not been implicated by the court of law. Appellant craves leave to add, amend or withdraw any ground of appeal.” 4. Cross objection filed by the Revenue in CO.No. 03/RJT/2026, for assessment year 2013–14, (as a lead case) are as follows: (i) The Hon'ble ITAT has to consider while disposing the appeal, the appeal involved issue which are inseparably linked with pending criminal proceedings under the Prevention of corruption Act in the case of husband of the assessee. As long as the criminal proceedings involving determination of facts relating to unaccounted income illegal gratification are pending, parallel final adjudication of income tax appeals on identical factual issues may lead to serious and practical complications. (ii) The Hon'ble ITAT has to consider while disposing the appeal, the appeal may be kept pending appropriate protective directions sought till conclusion of criminal trial, so as to avoid conflicting findings.

At the outset, learned Counsel for the assessee, informs the Bench that assessee does not wish to press ground Nos.4 and 5, therefore, I dismiss ground Nos.4 and 5, as not pressed.

The relevant material facts, as culled out from the material on record, are as follows. The assessee is an individual and assessed to tax under the PAN:AZAPS7092M and has filed his return of income for the assessment year (AY) 2013-14, on 13.11.2013, declaring total income of Rs.3,93,400/-. The information was received that Shri Jagdish V. Sedani was working as Dy. Executive Engineer, in-charge town planning officer, Jamnagar Municipal Corporation. A FIR was lodged by ACB, Jamnagar, against Sh. Jagdish V. Sedani. As per FIR, Jagdish V. Sedani invested Rs. 24,09,807/-, which was earned by illegal means. Further Sh. Jagdish V. Sedani could not produce documentary evidences regarding moveable and immovable properties held by him and his family members. The assessee was family member of Sh. Jagdish V. Sedani. The assessee credited amount of Rs.3,22,934/- in the bank account. The assessing officer issued notice u/s 148 dated 31.03.2021. In response to that the assessee filed objection against reopening of the assessment vide letter dated 08.11.2021 and the same was disposed of by the assessing officer. The assessing officer issued notice u/s 143(2) of the Act, on 22.06.2021. The assessing officer issued a show cause notice on 10.03.2022. In response to such notices, the assessee filed replies on 28.02.2022 and 14.03.2022. During the assessment proceeding the assessing officer noted that a Tax Evasion Petition (TEP) was received in the office of ADIT (Inv.), Jamnagar along with a copy of FIR lodged by ACB, Jamnagar on 04.02.2006 in the case of Sh. Jagdish V. Sedani. He was dismissed from the service on 11.04.2016, on the charge of corruption. As per the report of ACB, Sh. Jagdish V. Sedani invested Rs.24,09,807/- beyond his capacity. Enquiry was conducted to examine allegation mentioned in the TEP by issuing summons dated 04.08.2016, 24.08.2016, 29.08.2016 and 11.12.2020 to Sh. Jagdish V. Sedani. In response to that Sh. Jagdish V. Sedani did not file any response. However, vide letter dated 29.08.2016, he submitted copies of ITRs and bank details of family members. A summons was issued to Branch Manager, HDFC Bank and Bank of Baroda, the Nawanagar Co. Op. Ltd. (TNC Bank Ltd.), IDBI Bank and Union Bank of India, Jamnagar to provide bank statements. In response to that the banks provided the details of bank accounts. From the bank details, the assessing officer noted that in financial year (F.Y.) 2012-13 there was credit of Rs.2,81,934/- in HDFC Bank account No.01771530008797 and Rs.41,000/- in the bank account no. 0040000100002511 in the TNC Bank Ltd. In F.Y. 2013-14, there was credit of Rs.16,86,930/- in HDFC Bank No.0427104000051129 with IDBI Bank Ltd. In F.Y. 2014-15, there was credit of Rs.63,19,234/- in HDFC bank account No. 01771530008797 and Rs.12,685/- with IDBI Bank account no. 0427104000051129. The assessee filed return of income of Rs.3,93,396/-, Rs.14,77,492/-, Rs.8,40,030/- and Rs.5,45,270/- for A.Y. relevant to F.Y. 2012-13, 2013-14, 2014-15 and 2015-16. On a query raised by the assessing officer regarding source of credit entries of Rs.41,000/- bank account with TNC Bank Ltd., the assessee submitted that the source of credit was loan received from Kundan Sedani, Daughter. However, the assessing officer was not convinced with the reply of the assessee. The assessing officer noted that the investigation report of ACB Jamnagar and investment carried out by the Income-Tax department revealed that Sh. Jagdish V. Sedani made undisclosed investment, loans, movable and immovable property etc. In absence of any documentary evidences regarding source of credit entry of Rs.41,000/- in the bank account No.2511 with The Nawanagar Bank Ltd., the assessing officer made addition of Rs.41,000/-as unexplained money u/s 68 of the Act.

Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before learned CIT(A), who has confirmed the action of the assessing officer. During the appellate proceedings, the assessee has challenged the reopening of assessment under section 147 of the Act and assessee has also challenged the addition made by the assessing officer, on merit.

The findings of the Ld. CIT(A) on technical issue, under section 147 of the Act are as follows: During the appellate proceedings, the assessee has challenged the reopening of assessment under section 147 of the Act, stating that reopening of assessment under section 147 of the Act is bad in law. The assessee has submitted before learned CIT(A) that in the reasons recorded, the assessment year, date of filing, acknowledgment no. and returned income were wrongly mentioned by the assessing officer. Further, as mentioned in the reasons for reopening of the assessment, (i) the assessee did not deposit cash in the HDFC bank and Bank of Baroda, (ii) no RTGS transaction was carried out from Artham Developers, (iii) no HDFC life policy was purchased and (iv) there was no bank account in the name of minor. Vide letter dated 29.12.2021, the assessing officer provided new reasons recorded for reopening of the assessment. The assessee submitted that reopening of assessment is invalid, if reason recorded are based on factual error and for this argument the assessee relied upon the decision in the case of Sagar Enterprises v. ACIT (2002) 527 (Guj.) and Ankita Choksey vs. ITO (2019) 411 ITR 207 (Bom). The assessee further submitted that in the new reasons recorded for the reopening of the assessment, the assessing officer mentioned that Sh. Jagdish V. Sedani invested Rs.24,09,807/- beyond his capacity, which was earned by illegal means. Further, Sh. Jagdish V. Sedani failed to explain cash/other credits in the bank account of his and his family members. On the basis of that the assessing officer suspects escapement of the income by the assessee. The assessee submitted that the reason for formation of belief must have rational connection with the relevant bearing on the formation of belief. The words of statute are "reason to believe and not "reason to suspect. For this the assessee relied upon the decision in the case of Vijay Ramanlal Sanghvi [2023] 146 taxmann.com 55 (Gujarat), Harikishan Sunderlal Virmani vs. DCIT [2017]] 88 taxmann.com 548 (Gujarat), PCIT vs. RMG Polyvinyl (1) Ltd [2017] 83 taxmann.com (Delhi) and CIT (Jabalpur) vs. S. Goyanka Lime & Cemical Ltd [2015] 64 taxmann.com 313 (SC). The assessee also submitted that the case of the assessee was reopened on the basis information received from ADIT (Inv.), Jamnagar in the case of Sh. Jagdish V. Sedani. Therefore, clause (ca) of explanation 2 to section 147 was applicable whereas the assessing officer reopened the assessment under clause (b) of explanation 2 to section 147 of the Act. Thus, reopening of assessment was incorrect.However, learned CIT(A) rejected the above contention of the assessee and held that reasons of reopening were recorded by the assessing officer as per the provisions of the Act. Therefore, the reopening of the assessment by the assessing officer was upheld as valid by ld.CIT(A).

On merit, the assessee submitted before the learned CIT(A) that assessee, during the assessment proceedings against the Show Cause Notice dated 24.03.2022, submitted its reply on 26.03.2022, wherein the assessee stated to be received Rs.41,000/- from Ms. Kunjan Jagdish Sedani and submitted copy of income tax return (ITR) bank statement, and computation of total income etc. to establish creditworthiness and genuineness of unsecured loan, therefore, no addition should be made in the hands of the assessee. However, Ld. CIT(A) rejected the above contention of the assessee and confirmed the addition made by the Assessing Officer.

Aggrieved by the order of the CIT(A), the assessee is in further appeal before this Tribunal.

On technical issue Ld. counsel for the assessee submitted that the reasons recorded by the Assessing Officer is bad in law on several counts for that Ld. Counsel relied on the submission made before Ld. CIT(A) on technical issue. Apart from this Ld. Counsel submitted that approval u/s 151 of the Act, in all the assessment year is unsigned i.e. not signed by Ld. PCIT, hence the reassessment proceedings initiated by AO, may be quashed in all the assessment year.

On the other hand, Ld. DR for the revenue submitted that assessing officer has followed the proper procedure and provisions of section 147 of the Act, while recording reasons for reopening of the assessment under section 147 of the Act. The Ld. DR further pointed out that reasons were recorded based on the credible information. Therefore, reasons recorded by the assessing officer are in accordance with the provisions of section 147 of the Act.

On merit, Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

I have heard, both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Since the assessee has challenged the reopening of assessment under section 147 of the Act, therefore, it is necessary to examine the reasons recorded by the assessing officer. Old reasons recorded by the assessing officer, are reproduced below:

I have gone through the above, old reasons recorded by the assessing officer and supplied to the assessee. I note that in the old reasons recorded by the Assessing Officer, the first defect is that there is no approval from Principal Commissioner of Income Tax. Therefore, without approval of the Principal Commissioner of Income Tax, the reasons recorded by the assessing officer are bad in law. The second defect is that at Sr. No.6, the quantum of income which has escaped assessment, in front of this column, there is no amount, it means the quantum of income which has escaped assessment is nil/zero. Therefore, when the quantum of income which has escaped assessment is nil or zero, then there would not be any income which has escaped from assessment and hence reassessment proceedings should not be initiated against the assessee. The third defect, At Sr. No.11, which states whether the Principal Commissioner of Income Tax is satisfied on the reasons recorded by the AO that it is a fit case for the issue of notice u/s 148” in front of the said column No.11, there is no any comments of the Principal Commissioner of Income tax. There is no any signature of the Principal Commissioner of Income Tax. Therefore, it means, the Principal Commissioner of Income tax has not given any permission to the Assessing Officer to reopen the assessment, hence the reasons recorded by the Assessing Officer are bad in law and it is without permission of the Principal Commissioner of Income Tax. That is, the Principal Commissioner of Income Tax has neither made any comments stating that it is a fit case for reopening the assessment, not the Principal Commissioner of Income tax made the signature on such document, hence, there is no formal permission by the Principal Commissioner of Income Tax, to reopen the assessment. The fourth major defect, which I have noted in the reasons recorded, which is dated 26th March 2021, where I find that there is no signature of the Assessing Officer on the reasons recorded by him. The fifth major defect is that approval obtained by the Assessing Officer from Principal Commissioner of Income Tax as per the provision of section 151 of the Act is not signed i.e. it is neither signed digitally nor signed manually. Therefore, on account of these reasons, there is no tangible material in the hands of the assessee, to record the reasons and the reasons so recorded by the Assessing Officer is without authority of law, without permission of Principal Commissioner of Income Tax. Hence, such reasons are not considered valid reasons for reopening u/s 147 of the Act, and therefore, should be quashed.

I also find merit in the submissions of learned Counsel for the assessee to the effect that there is no application of mind in the reasons recorded and there was gross negligence on the part of the assessing officer while recording the reasons. The facts and figures narrated in the reasons recorded are entirely wrong. In the above reasons recorded, the assessment year, date of filing, acknowledgment number and returned income were wrongly mentioned by the assessing officer. Further, following information mentioned in the reasons recorded are wrong, such as: (i) the assessee did not deposit cash in the HDFC bank and Bank of Baroda, whereas reasons recorded says that assessee deposited cash. (ii) no RTGS transaction was carried out from Artham Developers, (iii) no HDFC life policy was purchased and (iv) there was no bank account in the name of minor. Therefore, I find that entire reasons recorded are based on guess work, surmise and conjuncture, and there is no any real information mentioned in the reasons recorded, as noted above. Hence, I find that there is no tangible material in the hands of the assessing officer to record the reasons and there is complete non-application of mind on the part of the assessing officer.

New reasons recorded by the assessing officer, are reproduced below:

I have gone through the above, new reasons recorded by the assessing officer and supplied to the assessee, later on. I note that when the assessing officer, after getting the reply of the assessee, got feeling that old reasons recorded by him were wrong and were not in accordance with the provisions of the Act, therefore, the assessing officer recorded the new reasons of reopening, which were supplied to the assessee later on. The assessing officer stated that old reasons recorded by him should be ignored by the assessee and the assessee should consider only the new reasons recorded by him. In the new reasons recorded by the Assessing Officer, I have noted that Assessing Officer has not took the permission from the Principal Commissioner of Income Tax, for issue of notice u/s 148 of the Act. At Sr. No.11 of the form for reopening, the approval of the Principal Commissioner of Income Tax is not there, and there is no comments and no signature of the Principal Commissioner of Income Tax. Hence, the Principal Commissioner of Income Tax has not given his permission or formal permission by making comments in front of column No.11 of the form. There is no signature of the Principal Commissioner of Income Tax for the approval u/s 151 of the Act, hence the approval is defective. Besides, I note that there is no provision under the Income Tax Act especially u/s 147 of the Act to record the reasons twice by the Assessing Officer, if the reasons recorded by the Assessing Officer, on first occasion were wrong. The assessing officer, when he came to know his non- application of mind and mistake in the reasons recorded, then the Assessing Officer recorded the new reasons again, which is not permitted as per the provisions of section 147 of the Act. Such provisions are not available u/s 147 of the Act. When a particular thing is to be done in a particular way then that thing should be done in that particular way only and other mode is not permitted. The scheme of section 147 of the Act for Reopening of Assessment states that Assessing Officer may record the reasons stating that income has escaped assessment and after taking the permission from the higher authority he may issue the notice to the assessee u/s 148 of the Act. However, section 147 of the Act does not say about recording of new reasons of reopening of assessment on the same issue and in the same assessment year, for same assessee, after cancellation of the old reasons. Neither the assessing officer nor the ld. PCIT has power to cancel the old reasons recorded by the assessing officer in the assessee’s case, as there is no provision under section 147 of the Act to cancel the reasons recorded, which were already supplied to the assessee. Hence, based on this factual position, entire reassessment proceedings should be quashed. Hence, the new reasons recorded by the Assessing Officer and supplied to the assessee are not valid in the eye of law. However, I also find that in new reasons recorded by the Assessing Officer there are lot of mistakes and irregularity viz: first of all, the Assessing Officer did not take the approval from the Principal Commissioner of Income Tax( ld.PCIT). The ld. PCIT also did not make any comment on reopening of assessment and moreover, the Principal Commissioner of Income Tax did not sign the approval u/s 151 of the Act, hence the new approval taken by the Assessing Officer and new reasons recorded by the Assessing Officer are also bad in law.

I note that by way of letter dated 29.12.2021, the assessing officer provided new reasons recorded for reopening of the assessment, to the assessee. The assessee submitted that reopening of assessment is invalid, if reason recorded are based on factual error and for this argument, ld. counsel for the assessee relied upon the decision in the case of Sagar Enterprises v. ACIT (2002) 527 (Guj.) and Ankita Choksey vs. ITO (2019) 411 ITR 207 (Bom). The assessee further submitted that in the new reasons recorded for the reopening of the assessment, the assessing officer mentioned that Sh.

I rely on the following decisions in which it was held that re-opening of assessment is not valid if the reasons recorded are based on factual error: (i) Sagar Enterprises v. ACIT (2002) 257 ITR 335 (Guj.) “Notice under section 148 issued on the ground of incorrect fact that the assessee had not filed its return could not be sustained even on the basis of alternative reason since it could not be said with certainty as to which factor weighed with the concerned officer when he issued the impugned notice and when the respondent authority was himself unsure as to the year of taxability of the income which is stated to be undisclosed income.” (ii) Ankita Choksey vs. ITO [2019] 411 ITR 207 (Bom) “Further, the reasons to believe that income chargeable to tax has escaped assessment must be on correct facts. If the facts, as recorded in the reasons are not correct and the assessee points this out in its objections, the order on the objections must deal with it and prima facie, establish that the facts 19 stated by the Assessing Officer in the reasons as recorded are correct. Without dealing with the assertion of the assessee that the correct facts are not as recorded in the reasons, it would be safe to draw an adverse inference against the Revenue. The condition precedent of reason to believe that income chargeable to tax had escaped assessment on correct facts, must be satisfied by the Assessing Officer so as to have the jurisdiction to issue the reopening notice. Held, allowing the petition that the Assessing Officer had proceeded on fundamentally wrong facts and come to the conclusion that income chargeable to tax had escaped assessment. When this was pointed out by the assessee, the Assessing Officer in his order rejecting the objections raised by the assessee did not consider the factual position asserted by her. Thus, it could be concluded that the Department did not dispute the facts stated by the assessee. The notice issued under section 148 was without jurisdiction and therefore, quashed and set aside. 21. Hence, I find that assessing officer himself was not clear about the correct reasons for reopening and had provided the reasons to the assessee which were vague and not relevant to the case of assessee. Therefore,reopening of assessment is invalid, as the reasons for re-opening had factual errors and they were general and vague in nature. Therefore, the reassessment order framed by the assessing officer should be quashed on this score also.

I also find that assessing officer has recorded the reasons based on “suspect” and the reasons so recorded are not based on tangible material, that is, “reason to believe”. In the new reason for re-opening provided by assessing officer, it is mentioned that the in the case of Shri Jagdish V. Sedani FIR lodged by ACB Jamnagar. The ACB Jamnagar reported that Shri Jagdish V. Sedani has invested Rs.24,09,807/- beyond his capacity which he has earned by illegal means. Further, it is also mentioned that Mr. Jagdish Sedani failed to explain the cash / other credits in his bank accounts and assessee is a family members of Shri Jagdish V. Sedani. Hence, on the basis of above, assessing officer suspected the escapement of income in case of assessee also and no other tangible material was available with assessing officer for re-opening of assessment. Therefore, I note that contention of assessing officer is not sufficient to prove "Reason to believe" in case of assessee, as the assessing officer is not sure about the escapement of income. The assessing officer only wanted to make roving enquiry by suspecting the entire amount credited in bank account as escaped income. From reading of Section 147 of the Act prior to amendment made by Finance Act 2021, it is clear that the provisions of the section require that before re-opening of assessment in respect of any assessment year, Assessing Officer must have "reason to believe" that the income chargeable to tax has escaped the assessment. The primary condition is the formation of belief by the Assessing Officer that income chargeable to tax has escaped assessment. The assessing officer cannot merely act mechanically on the information received and issue a notice for reopening but would have to form an opinion and must have reasons for forming such opinion. The reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year. The words of the statute are "reason to believe" and not "reason to suspect". The relevant legal provisions in this regard convey the need for a definite conclusion as to "reason to believe" as opposed to "reason to suspect" which would mean that the belief arrived at must be that of an honest and reasonable person based upon reasonable grounds and not based on mere presumption or suspicion. The receipt of some information or data may trigger a "reason to suspect" which cannot by itself without any further enquiry or application of mind with the "reason to believe". For this the reliance has been also placed on following decisions:

At this juncture, it would be relevant to examine the conditions laid down in section 147 of the Act, which are as follows: “If the A.O. has reason to believe that any income chargeable to tax has escaped assessment for any assessment year.” - There must be material for the belief. - Circumstances must exist and cannot be deemed to exist for arriving at an opinion; - Reasons to believe must be honest and not based on suspicion, gossip, rumour or conjecture; - Reasons referred to must disclose the process of reasoning by which the AO holds “reasons to believe” and change of opinion does not confer jurisdiction to reassess; - There must be nexus between material and belief; and - Reasons recorded must show application of mind by the AO.

Therefore, I note that reasons must have a live link with the formation of the belief. This is supported by Circular No.549 dated 31.10.1989 which clarified that the words “reason to believe” did not mean a change of opinion. The Hon’ble Supreme Court in ITO vs Lakhmani Mewal Das [1976]103 ITR 437 has lucidly explained the power of assessing officer to bring to tax income escaping assessment u/s.147 of the Act. The Hon’ble Court first held that the section provides that there must exist “reasons to believe “and not “reasons to suspect”. The following were the relevant observations: “The fact that the words "definite information" which were there in section 34 of the Act of 1922, at one time before its amendment in 1948, are not there in section 147 of the Act of 1961, would not lead to the conclusion that action can now be taken for reopening assessment even if the information is wholly vague, indefinite, far-fetched and remote. The reason for the formation of the belief must be held in good faith and should not be a mere pretence. The powers of the Income-tax Officer to reopen assessment, though wide, are not plenary. The words of the statute are "reason to believe" and not "reason to suspect". The reopening of the assessment after the lapse of many years is a serious matter. The Act, no doubt, contemplates the reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. The underlying reason for that is that instances of concealed income or other income escaping assessment in a large number of cases come to the notice of the income-tax authorities after the assessment has been completed.”

The purpose behind the relevant provisions imposing condition precedent for initiating reassessment proceedings is to ensure finality of proceedings. The Act also provides that such reason must be recorded in writing before issue of notice of reassessment so as to judge the existence of such belief before initiating reassessment proceedings by issue of notice u/s.148 of the Act. The above requirements are meant to ensure that powers to initiate reassessment proceedings are not exercised in an arbitrary manner. The Courts have analysed and explained in several cases as to what could be the valid reason to believe escapement of income, which would enable the Assessing Officer to successfully reopen the assessment. It has been held that the words ‘reason to believe’ are stronger than the words ‘reason to suspect’ or ‘reason to doubt’. It requires more than merely ‘satisfaction’ of the Assessing Officer. The belief entertained by the Assessing Officer must not be arbitrary or irrational. The expression ‘reason to believe’ does not mean purely subjective satisfaction of the Assessing Officer. The belief must be held in good faith. It cannot be merely pretence. Again, the belief must be of an honest and reasonable person based upon reasonable grounds. The Assessing Officer would be acting without jurisdiction, if the reasons for his belief are not material or relevant. There should be nexus between the information coming into possession of the AO and his belief on the basis of such information that income of the Assessee chargeable to tax has escaped assessment.

In view of the reasons set out above, as also bearing in mind entirety of the case, I am of the considered view that the reasons recorded by the Assessing Officer, as set out earlier, were not sufficient reasons for reopening the assessment proceedings, and without taking approval from the learned PCIT, the reassessment proceedings cannot be initiated by the assessing officer. I, therefore, quash the reassessment proceedings. As the reassessment itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous.

Since, I have adjudicated the technical issue (reopening of assessment under section 147 of the Act is bad in law), by taking the lead case in assessee’s appeal in ITA No.647/RJT/2025, for assessment year 2013–14. The facts and issues involved in all other appeals of the assessee on technical issue 26 are analogous to assessee’s appeal in ITA No.647/RJT/2025, for assessment year 2013–14.Accordingly, my observations made in ITA No.647/RJT/2025, for assessment year 2013–14, shall apply mutatis mutandis to the aforesaid other appeals of the assessee viz. ITA No.648/Rjt/2025, ITA No.649/Rjt/2025, ITA No.650/Rjt/2025. For the parity of reasons, I allow the abovementioned other appeals of the assessee in terms of directions noted in ITA No.647/RJT/2025, for assessment year 2013–14.

In the result, all appeals filed by the assessee, are allowed.

Coming to the cross objections filed by the revenue, I note that ld. DR for the revenue, argued that the Tribunal has to consider while disposing the appeal, as the appeal involved issue which are inseparably linked with pending criminal proceedings under the Prevention of Corruption Act in the case of husband of the assessee therefore till the conclusion of criminal trial, in case of assessee’s husband, the Tribunal should not adjudicate these appeals. On the other hand, learned Counsel for the assessee submitted that no any criminal proceeding is going on, against the assessee under consideration. The assessee under consideration is a separate unit of assessment, on which no criminal proceeding is going on. Hence the Tribunal may adjudicate the issue in accordance with law, in the assessee’s case.

I have heard, both the parties and carefully gone through the submission put forth on behalf of the assessee. I note that no any criminal proceeding is going on against the assessee under consideration. Besides, the adjudication has been done by me in the assessee’s case under consideration, on the legal issue, and such legal issue, may be raised by the assessee at any point of time. That is, when legal issue/technical issue is in favour of assessee, then it does not have any impact on criminal proceedings. Moreover, all the cross objections filed by the revenue are barred by limitation by 27 days and the revenue has not filed the petition for condonation of delay, requesting the bench to condone the delay. Therefore, these cross objections cannot be admitted for adjudication. Based on these facts and circumstances, I dismiss all the cross objections filed by the revenue.

In the result, all cross objections filed by the revenue, are dismissed.

In the combined result, the appeals filed by the assessee in ITA Nos.647 to 650/Rjt/2025 are allowed, whereas the cross-objections filed by the revenue in CO Nos.03 to 06/Rjt/2025 are dismissed.