AJIT KUMAR JAIN,BHOPAL vs. THE ITO 1(1), BHOPAL

Grounds raised by the Assessee reads as follows: “1.That the Ld. CIT(A) erred in not holding that the order of assessment passed by the AO was bad in law and same deserved to be annulled. 2.That the Ld. CIT(A) ought to have held that the Ld. AO erred in reopening the assessment u/s 147 that the action of the AO in re-

Apropos to ground no.1 & 2 the ld. AR submitted that the Ld. AO has initiated reassessment proceedings u/s 147 of the Act and has also issued notice u/s 148 of the Act by recording a satisfaction note but without application of mind and without having valid reason to believe that income has escaped assessment for relevant assessment year 2006-07. Ld. AR drew our attention towards paper book pages 7,8 & 9 and submitted that from the material seized during search and seizure operation of People’s Group thereby no mentioning of any donation received from the assessee. He further submitted that from the copy of the statement, recorded statement of assessee’s wife recorded by the Ld. AO.

It is also clear that in question no.10 the Ld. AO himself noted that before the name of your daughter nil cash amount has been shown and wife of assessee has also replied that no cash amount has been given to the college as donation or capital fees. Therefore, Ld. AO proceeded to initiate reassessment proceedings without having any incriminating facts or material in his hands and without application of mind, therefore, initiation of reassessment proceedings u/s 147 of

Replying to the above Ld. Sr. DR vehemently supported the initiation of reassessment proceedings and submitted that during search and seizure operation of People’s Group some incriminating documents were found and seized from Mr. Vijay Varigya and out of those documents and facts of giving cash donation/capital fees was revealed which was given by the number of parents including the assessee. Therefore, the Ld. AO had reasoned to believe that the amount of cash donation/capital fees given by the assessee to People’s Group to secure the admission in the MBBS course was escaped assessment and therefore, initiation of reassessment proceedings, issuance of notice u/s 148 of the Act and consequent assessment order dated 17.1.2014 has been made after assuming valid jurisdiction, therefore, legal ground 1 & 2 may kindly be dismissed.

On careful consideration of rival submissions first of all we note that the Ld. AO recorded following reasons before issuing notice u/s 148 of the Act. “ Reasons to reopen the case u/s 147 of the I.T. Act, 1961

Further from copy of the statement of assessee’s wife Smt. Raj Jain available at page no.13 to 16 of assessee’s paper book, we further note that the ld. AO raised question no.10 which as replied by Smt. Raj Jain by stating that they have not paid any cash amount. For the sake of completeness question no.10 asked by Assessing officer and answer to the same given by the asessee’s wife is being reproduced as follows:

Even from the page no.7,8 & 9 a list to be found and seized from Mr. Vijayvargiya during the search and seizure operation of People’s Group at serial no.52 against Richa Jain i.e. Daughter of assessee nil amount has been mentioned and thus, we safely presume that allegation of the Ld. AO in the satisfaction note regarding escapement of assessment becomes baseless. In view of above noted facts we compel to hold that the ld. AO proceeded to initiate reassessment proceedings without application of mind to the material received from the Investigation Wing and without having reason to believe that income as escaped assessment for A.Y. 2006-07. Therefore, we incline to hold that the initiation of reassessment proceedings u/s 147 of the Act, notice u/s 148 of the Act and impugned reassessment order dated 17.1.2014 passed u/s 147 r.w.s. 143(3) of the Act is bad in law being initiated and passed without assuming valid reason as per mandate of section 147 and 148 of the Act. Accordingly, impugned notice u/s 148 and impugned reassessment order are hereby quashed. Ground no. 1 & 2 of the assessee are allowed.

Since by the earlier part of this order, we have allowed legal ground no.1 & 2 of the assessee and have quashed notice u/s 148 of the Act and reassessment order dated 17.01.2014 (supra), therefore, other grounds of assessee on merits are not being adjudicated.

In the result, the appeal of the Assessee is allowed. Order was pronounced in the open court on 10 .11.2022.