Ashok Kumar Goel vs Assessing Officer.
1995 Latest Caselaw 88 Del

ORDER

N.D. RAGHAVAN, J.M. :

This is an appeal of the assessee challenging the order dt. 30th Dec., 1993, of the CIT(A) as erroneous on facts and in law.

2. The facts of the case are briefly these : The assessee, a resident, having the status of individual and following the mercantile system, the accounting period ending with 31st March, 1988, for the asst. yr. 1988-89, filed his return on 29th Sept., 1988, declaring a total income of Rs. 33,500. The assessment was completed under S. 143(1)(a) of the Act. While making the assessment it was detected that the assessee received compensation amounting to Rs. 1,37,270, Rs. 39,853 and Rs. 40,98,650 during the accounting period relevant to the assessment year in question. This was received in respect of land measuring 21 bighas and 10 biswas situated in village Bhalepur Khadar. The compensation of Rs. 1,37,270 and Rs. 39,853 was received by the assessee as per the order of the Commissioner (L&D). The compensation of Rs. 40,98,650 was received by the assessee as per the order of the Addl. District Judge in case No. 302 of 1983. Hence, the Assessing Officer observed that he had reasons to believe that on account of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of income of Rs. 1,37,270 and Rs. 40,98,650, being the assessee having declared the compensation at Rs. 39,853 in his return filed on 29th Sept., 1988, chargeable to tax has escaped assessment for the assessment year in question. Accordingly a notice under S. 148 of the Act was issued to the assessee on 13th Feb., 1991. The assessee submitted in his letter dt. 28th July, 1992, that as he has complied with the terms of notice under S. 148, the proceedings have become quasi judicial and requested that he might be intimated the reasons recorded for initiation of proceedings and materials relied upon to enable him to place further details or materials on record which might safeguard his interest from any further prejudice. It is stated in the order of assessment that the assessee was accordingly informed the reasons for issue of such notice under S. 148 of the Act and that in response thereto the assessee filed his reply dt. 4th Aug., 1992, the relevant portions of which are extracted in the order of assessment at pages 2 and 3 as below :

(a) Whether or not the notice issued under S. 148 is justified;

(b) whether or not the assessee has acquired title to receive payment of enhanced compensation ?

(c) Whether or not the Assessing Officer has jurisdiction to assess the entire/escaped income which has subsequently come to the notice during the reassessment proceedings ?

3. All these issues were answered in affirmative by the Assessing Officer after duly considering the submissions made by the assessee before him and computed the total income at Rs. 32,01,820 under S. 143(3) of the Act after duly taking into consideration the income already assessed under S. 143(1)(a) of the Act at Rs. 33,500, the total compensation received at Rs. 42,69,420 including the additional compensation received after deducting the cost of purchase there from and the relevant deductions further at Rs. 5,000 and Rs. 10,56,105. On appeal, the CIT(A) confirmed the assessment order for the reasons stated in the order impugned before us in the second appeal by the assessee.

4. The learned counsel for the assessee submitted that : Computation of income for the assessment year in question, the capital account as on 31st March, 1988 and the acknowledgement of return for the year in question, contained at pages 1 to 3 of the paper book may be seen, besides at page 4 of the assessment order. The reply of the assessee dt. 3rd June, 1991, to the Assessing Officer contained at page 6 of the paper book may also be seen besides the notice dt. 21st Jan., 1992, from the Assessing Officer, as furnished at page 7 of the paper book, the one dt. 21st May, 1992, at page 8 of the paper book, the letter dt. 3rd Feb., 1992, to the Assessing Officer at page 9 of the paper book and the notice dt. 24th June, 1992, from the Assessing Officer contained at page 10 of the paper book. Copy of the letter dt. 28th July, 1992, is a letter to the Assessing Officer contained at page 11 of the paper book. Page 12 of the paper book is said to be contained with the reasons for initiating proceedings under S. 148 of the Act. The order sheet entry made by the Assessing Officer is contained at pages 62 to 64 of the paper book (in manuscript and which is also typed for clarity). It is clear in the instant case that no reasons has been recorded by the Assessing Officer for reopening the assessment, which he is bound to furnish being obligatory as per law. Reliance is also placed on the decision in the case of New Bank of India vs. ITO, cited infra. At no stage the assessee has been confronted with the reasons recorded by the Assessing Officer. The paper contained in the paper book would reveal, namely at page 12 of the paper book, which is supposed to be the reasons for initiating the proceedings under S. 148, that is also, as is seen, not signed by the Assessing Officer. In this connection reliance is also placed on the decision in the case of Chhugamal Rajpal vs. S.P. Chaliha & Ors., cited infra. It would be, therefore, crystal clear that reasons have to be necessarily recorded before initiating the proceedings under S. 148 of the Act and that too only in the file in which the proceedings have been initiated. Further, there is also no allegation made by the Assessing Officer any where to the effect that the assessee has failed to furnish the particulars fully and correctly. In this connection reliance is also placed on the decisions in the cases of Calcutta Discount Co. Ltd. vs. ITO as well as of India Oil Corpn. vs. ITO, both cited infra. The return contains two pages and the question in this regard is as to whether the disclosure made by the assessee contains primary facts as well as fully and truly. After the proceedings were initiated, the return was filed by the assessee and the Assessing Officer also wanted to drop the proceedings, as is revealed by the copy of the order sheet entry at page 63 of the paper book. The copy of the indemnity bond in favor of CIT/ITO is also furnished at page 33 of the paper book, being executed on 31st Dec., 1992. Page 62 of the paper book would clearly reveal that the word "if approved" as well as "with Dy. CITs approval" have been interpolated in the order sheet endorsement dt. 31st Dec., 1992, as an after thought. The proceedings are not tenable in law having the assessee been called upon to execute the undertaking. That apart no part of the compensation received by the assessee could be taxed in his hands. The right of the assessee was inchoate in view of the decision rendered by the Honble Supreme Court, the reason being that if an appeal is filed against that order then it loses its finality. Reliance is placed on the decision in the case of J.K. Synthetics Ltd. vs. ITO and of AIR 1944 Del 88. Though the assessee received money by withdrawals, his title of the aforesaid amount was inchoate with reference to S. 45(5). Mere payment to a person who does not have vested right, cannot make him liable to be taxed under capital gains. The relevant orders of the CIT as well as the Tribunal are placed on record which are in favor of the assessee, and contained at page 79 of the paper book in the case of Smt. Madhu Jain (Delhi Bench). Hence, it must be in the nature and character of income and mere receipt is not sufficient. Reliance is also placed on the decisions in the case of Jehangir P. Vazirdar vs. ITO, CIT vs. Hindustan Housing & Land Development Trust Ltd. and E.D. Sassoon & Co. Ltd. vs. CIT, all cited infra. Considering these decisions the earlier order of the Tribunal in the case of Shanti Prasad Jain & Ors. of the Delhi Bench, cited infra and copy filed, is also in favor of the assessee. Pages 50 to 59 of the paper book containing CIT(A)s order in the case of K.K. Kochar for the asst. yr. 1988-89 may also be seen, besides pages 65 to 72 of the paper book containing copy of the letters dt. 8th July, 1993 and 23rd July, 1993 of the assessee to the CIT(A). The decision in the case of Rama Bai vs. CIT, citied infra, is also referred to in the said assessees letters at page 71 of the paper book. It is not only the case of enhancement but also calculation itself is wrong. The decision in the case of CIT vs. Anand Prasad & Ors., cited infra, is also relied upon. In case calculation of capital gain is taxable, it is a long-term asset and further that interest on capital gains does not arise.

5. On the other hand, the learned representative for Revenue countered that : When the assessee purchased it was a notified land subject to acquisition. It is incorrect to say that no reason was recorded by the Assessing Officer for reopening, i.e., for initiating proceedings under S. 148. On 29th Sept., 1989, for the asst. yr. 1988-89 the assessee declared income at Rs. 40,500 and there is a specific column in the return as Annexure E which has not been filled up by the assessee. Computation of income and statement of affairs are unsigned. Page 2 of the paper book which is the capital account furnished as on 31st March, 1988 of the assessee, may be seen, in which the assessee has of course furnished the note. This return was pressed while computing under S. 143 of the Act. The statement of affair cannot be said disclosing fully and truly all the material facts. There is no mention as to whether additional compensation was received. The material fact or date of receipt has also not been disclosed. Page 2 of the return admittedly is a relevant document. There is no provision of law which is relevant for reopening prior to the amendment which is w.e.f. 1st April, 1989, with reference to Ss. 147 to 152 of the Act. A perusal of the Commentary on the Treatise of the Income-tax by Sampath Iyangar in Vth Vol. in the latest Edn. at page 4287 may be had to show that the amendments are retrospective and that S. 147(a) and (b) were not there and this aspect of the submission that Ss. 147(a) and (b) are not applicable is an alternative submission. It is also not shown as to when the disbursement was made. The break-up of total amount received by the assessee was subsequently obtained by the Assessing Officer on the basis of which order under S. 154 was passed by him and the copy of the same is filed as additional evidence which is relevant for determining the quantum of income and it is not detrimental to the assessee if that is now filed and there is nothing new in it. Regarding capital gains, provisions were earlier incorporated w.e.f. 1947-48 and it was made applicable during 1st April, 1948 to 31st March, 1956. The decision in the case of CIT vs. Hindustan Housing & Land Development Trust Ltd. cited infra, pertaining to the asst. yr. 1956-57 may be seen. It could be capital or revenue receipt on account of compensation and in the latter case the head of the income is "business". If there is capital receipt, then it is as per capital gain provisions under the Act. Sec. 155(7A) as well as S. 45(5) of the Act may be seen. Clause (a) is with reference to enhancement and cl. (b) is a deeming provision. Accrual, etc., is embodied in the word "received". Accrual is always near transfer. Received cannot be construed as accruable or arisen, etc. It was a revenue receipt in this case and the accrual or arisen will apply. These are the aspects which the Revenue wishes to focus. In respect of the decisions relied upon by the assessee in the cases of Hindustan Housing & Development Trust Ltd. and J.K. Synthetics Ltd., cited infra, the award of additional compensation was enhanced by the Addl. District Judge in connection with which pages 8 to 25 of the paper book may be seen, particularly at paras 6 and 7 thereof in pages 21 and 22 of the paper book. Just because the State has filed the appeal, it cannot be said that the dispute is substantial. Pages 39 to page 42 of the paper book may also be seen which is the petition filed before the High Court by the Union of India, particularly at item No. 4 in page 40 thereof. Sec. 45(5) refers to receipt and not what ultimately became receivable. Reliance is also placed on the decision in the case of CIT vs. Oriental Rubber Works, cited infra. The additional compensation awarded by the Addl. District Judge is also withdrawn unconditionally. The right in appeal is only inchoate and not for the award and the right of the Union to get the money is only inchoate and not of the assessee. There are conflicting decisions of the Tribunal on the point. The decision in the case of Harish Chandra & Ors. vs. CIT, cited infra, is also relied upon. The instant case is more akin to the case of Shah Vrajlal Madhavji vs. CIT cited infra. Reliance is also had on the decision in the case of CIT vs. Rohtak Textile Mills Ltd., cited infra. The decision relied upon by the assessee contained at pages 79 and 80 of the paper book in the case of Smt. Madhu Jain is not applicable to the instant case. The decision in the case of Devendra Prakash Jain of the Delhi Bench of the Tribunal contained at page 47 of the paper book, particularly at page 14 thereof, relied upon by the assessee, is also distinguishable. In regard to the quantum, solarium also form part of compensation. Reliance is also placed on the decision in the case of CIT vs. Smt. M. Subaida Beevi, cited infra. Interest is to be taxed as per the method of accounting followed by the assessee. Reliance is placed on the decisions in the case of CIT vs. T.N.K. Govindarajulu Chetty, Peter John. vs. CIT and CIT vs. O.T. Rahman, all cited infra.

6. On the other hand, the learned counsel for the assessee issued rejoinder by emphasising that : The paper filed by the Revenue stating it to be the break-up of total amount received by the assessee, subsequently obtained by the Assessing Officer on the basis of which order under S. 154 was passed and praying it to be treated as additional evidence for determining the quantum of income cannot and should not be admitted as so since they are not referred to by the CIT(A) or by the Assessing Officer in their order impugned. In this connection reliance is also placed on the decision in the case of M.B. Abdulla vs. CIT, cited infra. If it is accepted and admitted at this stage by the Tribunal then it would amount to a fresh evidence and argument anew which cannot be admitted as per law. The order of the Addl. District Judge contained at pages 18 to 25 of the paper book may be seen. It is reiterated that the reasons recorded by the Assessing Officer, which are not existing in the instant case alone has to be taken into account. The decision in the case of Panchanan Hati vs. CIT and Jamna Lal Kabra vs. ITO, cited infra, are relied upon. As has already been sufficiently urged, there is no reason or material in any of the papers filed by the Department. The assessee must succeed on this score itself. Reliance is also placed on the decision in the case of ITO vs. Lakhmani Mewal Das, cited infra. There is also no allegation by the authorities below that the assessee had not disclosed primary facts. It can also be clearly seen that S. 45(5) of the Act has two limbs.

7. Rival submissions heard and relevant orders read including the concerned pages of the paper book as well as the case laws relied upon by the parties respectively. In effect, to sum up, we may say that the stand of the assessee is as follows : The CIT(A) erred both in law and on facts in upholding the action of the Assessing Officer in completing the reassessment by taking recourse to S. 147/148 of the Act. The findings recorded by the CIT(A), according to the assessee, are based on misconception of facts and misinterpretation of the relevant provisions of law and thus the same are untenable. While upholding that the reassessment proceedings under S. 148 as having been validly initiated the CIT(A) has failed to appreciate, according to the assessee, that the entire information relating to the receipt of enhanced compensation was furnished by the assessee in the documents accompanying the return of income and the reassessment proceedings originally initiated were dropped by the Assessing Officer vide order sheet entry dt. 31st Dec., 1992. The finding that the proceedings have not been dropped by the Assessing Officer has been arrived at on complete misconception of facts, as urged by the assessee. The proceedings initiated stood dropped, the assessee reiterated, and as such the assessment could not have been validly completed on the basis of such a notice. The interpretation placed by the CIT(A) on S. 45(5), the assessee emphasised, is totally incorrect. The land in question which had been acquired by the assessee since was an agricultural land as such the compensation received was not taxable under the Act, according to the assessee. The amount of compensation received was not at all taxable as it was outside the purview of the taxing provisions, the assessee argued. The Assessing Officer has erred in bringing to tax a sum of Rs. 31,68,315 allegedly accruing to the assessee as a result of acquisition of land by way of capital gain, the assessee pleaded. It was also urged that the CIT(A) further erred in enhancing the income of the assessee by Rs. 40,000, which is totally untenable in law, inasmuch as, it was made on an improper interpretation of S. 45(5) of the Act which is wholly inapplicable in respect of transfer of agricultural land as provided under S. 47(viii). The amount of compensation of Rs. 42,35,920 received by the assessee, according to him, represented the disputed amount of additional compensation over which the assessee could not be said to have acquired an absolute right, his right being only inchoate, as such the same could not have been brought to tax in the year under consideration in view of the decision in the case of Hindustan Housing & Land Development Trust Ltd. cited infra, and that the submissions made and case laws relied upon by the assessee have all been arbitrarily rejected, according to the aggrieved before us. The decision in the case of Hindustan Housing & Land Development Trust Ltd. is inapplicable in view of the amended provision of S. 45(5) w.e.f. 1st April, 1988, is totally misplaced and has been arrived at on misinterpretation of relevant provision of law, the assessee urged. Hence, the compensation received was not liable for assessment as also proceedings as initiated under S. 148 of the Act since were dropped the assessment made was not proper and thus was invalid, the assessee pleaded. The initiation of proceedings under S. 147/148 were also not in accordance with law, it was urged by the assessee.

8. The case laws relied upon by the assessee are as below :

(a) New Bank of India vs. ITO ;

(b) Chhugamal Rajpal vs. S.P. Chaliha & Ors. ;

(c) Calcutta Discount Co. Ltd. vs. ITO (1961) 41 ITR 191 (SC);

(d) Indian Oil Corpn. vs. ITO ;

(e) J.K. Synthetics Ltd. vs. ITO

(f) J.K. Synthetics Ltd. vs. ITO (supra);

(g) AIR 1944 (Del) 88;

(h) Smt. Madhu Jain vs. ITO (1993) Case Digest/ITAT 113 (dt. 18th Jan., 1992) (Del);

(i) Asstt. CIT vs. Devinder Prakash Jain ITA No. 2647 (Asst. yr. 1974-75 decided on 16th Aug., 1991 by Delhi Bench of the Tribunal.;

(j) Jehangir P. Vazifdar vs. ITO (1992) 42 ITD 67 (Bom);

(k) CIT vs. Hindustan Housing & Land Development Trust Ltd. ;

(l) E.D. Sassoon & Co. Ltd. vs. CIT ;

(m) Rama Bai vs. CIT ;

(n) CIT vs. Anand Prasad & Ors.

(o) M.B. Abdulla vs. CIT ;

(p) Panchanan Hati vs. CIT ;

(q) Jamna Lal Kabra vs. ITO ; and

(r) ITO vs. Lakhmani Mewal Das

9. On the other hand, the case laws relied upon by the Revenue are these :

(a) CIT vs. Oriental Rubber Works ;

(b) Harish Chandra & Ors. vs. CIT (1985) 154 ITR 478 (Del)

(c) Shah Vrajlal Madhavji vs. CIT

(d) CIT vs. Rohtak Textile Mills Ltd. (1982) 138 ITR 195 (Del)

(e) CIT vs. Smt. M. Subaida Beevi

(f) CIT vs. T.N.K. Govindarajula Chetty ;

(g) Peter John vs. CIT ;

(h) CIT vs. O.T. Rehman .

10. We have in detail gone through the records available before us in the light of the vehement respective submissions made by both the parties before us and also with the aid of case laws respectively relied upon by them. After a careful analysis of the issue in question and due deliberation over the different aspects of the issues highlighted by both the parties respectively we are of the considered opinion that on the facts and circumstances of the case there is considerable substance in the submissions made on behalf of the assessee, in fact, on the main legal point itself. If a careful perusal of the assessment order in question is had it would be clearly seen without any ambiguity that there is no mention therein or any of the circumstances that led to reopening of the assessment and further as to whether such reopening of the assessment was under S. 147(a) or (b) of the Act. That apart, we also do not find that any reason for reopening of the assessment was at all recorded, summarised or at least extracted in the assessment order except baldly stating that the assessee was accordingly informed about the reasons for issuance of notice under S. 148 of the Act. That apart the Assessing Officer as well as the CIT(A) clearly admitted that the note has been given by the assessee in the return and that the disclosure made in the note by the assessee cannot be said as having no material facts. In the middle of page 3 of the assessment order the Assessing Officer states that with regard to the issue of notice under S. 148 it is amply clear that the assessee had not filed its accurate particulars of its income and that the income received by way of compensation had escaped assessment. The word "accurate" used therein by the Assessing Officer is not mentioned in the relevant section but only the words "material facts". Further, neither it is alleged nor is it attributed by the Department that the note is not fully and truly disclosing but the assessee has given a sketchy account of the amount in the suspense account and in our opinion such comment of the Assessing Officer has no meaning at all. If a perusal of page 12 of the paper book is had it could be clearly seen without any ambiguity or doubt that the information furnished therein are not at all reasons for initiating proceedings under S. 148 even though it is captioned so. It simply states to the extent as to why capital gains may not be charged on the compensation of Rs. 40,98,650 received from the Addl. District Judge, Delhi order No. 302 of 1983 dt. 21st Jan., 1980. By no stretch of imagination this could be co-related with the caption given to it, i.e., to say as reasons for initiating proceedings under S. 148. It simply states to explain. It does not even say as to who has to explain, rather as to whether the Assessing Officer himself. That apart above, the said contents recorded as seen therein the date of 28th July, 1992 is mentioned and below it 4th Aug., 1992 is mentioned. No signature is also affixed thereunder by the officer concerned. Even if it is assumed at the peak of imagination to be the reason really recorded on 28th July, 1992 how the notice pursuant thereto could have been issued on 13th Feb., 1991 that is seventeen months earlier thereof under S. 148 and this question obviously arises if a perusal of page 5 of the paper book is had. If the notice under S. 148 of the IT Act would have been issued on 13th Feb., 1991 as furnished at page 5 of the paper book the reasons for reopening the assessment should have been recorded prior to the date of 13th Feb., 1991 and certainly not thereafter and in that event no material or paper has been shown before us stating it to be the reasons recorded prior to 13th Feb., 1991. In fact recording of reasons under S. 148 of the IT Act is the sine qua non for issue of notice and completion of assessment under S. 147 of the Act. In this connection the decision relied upon by the assessee in the case of Chhugamal Rajpal vs. S.P. Chaliha & Ors. (supra) rendered by the Honble Supreme Court, is worthwhile to be noted, the relevant portion thereof is extracted herein :

"Held, (i) that the ITO had not even come to a prima facie conclusion that the loan transactions to which he referred were not genuine transactions : he appeared to have only a vague feeling that they might be bogus transactions. Such a conclusion did not fulfill the requirements of S. 15(2). Under that section he had to give reasons for issuing a notice under S. 148. He should have some prima facie grounds before him for taking action under S. 148. His conclusion that there was a case for investigating the truth of the alleged transaction was not the same thing as saying that there were reasons for the issue of the notice. The CIT had mechanically accorded permission. The important safeguards provided in Ss. 147 and 151 were lightly treated by the officer and the CIT. The ITO could not have had reason to believe that income had escaped assessment by reason of the appellant-firms failure to disclose material facts and if the CIT had read the report carefully he could not have come to the conclusion that this was a fit case for issuing a notice under S. 148. The notice issued under S. 148 was therefore, invalid."

10.1 In this connection the decision in the case of Indian Oil Corpn. vs. ITO (supra) is also worthwhile to be noted wherein the Honble Supreme Court has dealt with the decisions in the case of Hazi Amir Mohd. Mir Ahmed vs. CIT in which case at page 634 thereof referring to the Calcutta Discount Cos case (supra), the learned Judge drew a distinction between primary facts and inferential facts and held that the duty of the assessee extended only to disclose the primary facts fully and truly. This view was also reiterated by the Honble Supreme Court in ITO vs. Lakhmani Mewal Das (supra) and observed that it was the duty of the assessee to disclose fully and truly all primary facts and further that before action is taken under S. 147(a) there must be a reason to believe that there was failure or omission on the part of the assessee to disclose fully and truly all primary facts. In this connection the observations of the Honble Supreme Court in the case of Sheo Nath Singh vs. AAC (1972) 82 ITR 147 (SC) has also been referred to in the decision of the case in Hazi Amir Mohd. Mir Ahmed, cited supra. Therefore, in the instant case, in our opinion, the primary facts have been disclosed by the assessee in the return itself under the brief note furnished by him. Therefore, the obligation on the part of the assessee to disclose facts which are true and material that are primary and necessary have been discharged by the assessee. At any rate it cannot be said that the assessee has given only sketchy account and not any material facts.

10.2 We may also further add that in view of the specific provisions of S. 148(2) of the IT Act, 1961, providing that the Assessing Officer shall before issuing any notice under this section record his reasons for doing so, it is imperative for the Assessing Officer to record his reasons for initiating reassessment proceedings as required by the aforesaid S. 148(2) of the Act. There are copious case laws on this point and the position under the 1922 Act that it was not necessary for the Assessing Officer to record his reasons for issuing notice of reassessment, has been reversed. Further, keeping in view the provisions of S. 151 regarding the necessity for obtaining sanction from higher authority, it is necessary that the reasons recorded by the Assessing Officer must state the alleged non-disclosure, etc., on the part of the assessee and also that such non-disclosure has led to escapement of assessable income. In the instant case evidently as has been already discussed, no reason has been recorded, as obviously self explanatory from page 12 of the paper book. That apart as has been submitted by the assessee if a perusal of page 62 of the paper book is had, it will be noticed that the Assessing Officer has clearly mentioned that the assessee has not suppressed the fact and shown the amount as liability in the capital account and because of the fact that the absolute title of the acquired amount would be finalised after the decision of the Court and till that time he has filed an undertaking if the decision came in his favor he would declare this amount as capital gain and would pay tax in due course. Further, as it was reiterated by the assessee before us, the said order sheet endorsement dt. 31st Dec., 1992 concludes by saying that under the circumstances, proceedings initiated under S. 148 of the Act may be dropped at this stage and that further action may be taken in the year as and when the case is decided finally by the higher Court of law accordingly. It was also submitted by the assessee before us that the words "Dy. CITs approval" as well as "if approved" have been inserted into it perhaps as an afterthought on account of change of mind and such impression is also strengthened from the placement or the positioning of the said words as well as the impression of the ink with which the aforesaid quoted words are introduced being evidently different from the rest of the lines in the order sheet endorsement flowing fluently and differently from that of the aforesaid quoted words. It was further submitted that assuming that the aforesaid words were not introduced as an afterthought, it is not known as to whether the Assessing Officer sought any approval from the Dy. CIT and also granted accordingly or not and further that there is also no provision under the Act which authorised the Assessing Officer to seek approval of his proposal of dropping the proceedings initiated under S. 148 where he is otherwise satisfied that the assessee had disclosed all the material facts necessary for the purpose of making assessment. These submissions made on behalf of the assessee, cannot be lightly brushed aside.

10.3 Be that as it may, as has already been discussed above, the ratio decidendi in the case of Jamna Lal Kabra vs. ITO (supra) also comes to the rescue of the assessee and it is also worthwhile to extract the relevant portion thereof hereunder :

"Held. (1) the recording of reasons before issuing a notice under S. 148 is mandatory and prerequisite to the assumption of jurisdiction by the officer for initiating proceedings for assessing or reassessing income which has escaped assessment;

(2) the reasons are of particular significance when action is taken under S. 147(a) because they indicate the reasons which the officer had in mind for believing that income had escaped assessment by reason of one or other default of the assessee specified therein;

(3) in order to justify action under S. 147(a), it is not open to the officer to refer to reasons other than those recorded by him pursuant to S. 148(2);

(4) in the instant case there is nothing in the reasons so recorded by the officer attracting the terms in which S. 147(a) is set out so far as the petitioner is concerned; and

(5) hence, the notice under S. 148 and the proceedings taken pursuant thereto have to be quashed."

10.4 In this view of the matter, as pointed above, on the facts and circumstances of the case, in the light of the case laws discussed, we find that the reopening of the assessment made has no valid basis. Being so, there is no necessity for us now to dwell upon the alternative submissions made by both the parties on the merits of the other aspects of the issues raised before us.

11. In the result, the appeal of the assessee is allowed accordingly, as above.