Sca/16304/2019 Of Nisharahemad Vajirkhan Pathan v. The Income Tax Officer

C/SCA/16304/2019 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/SPECIAL CIVIL APPLICATION NO. 16304 of 2019 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE J.B.PARDIWALA Sd/- andHONOURABLE MR. JUSTICE ILESH J. VORA Sd/- ==========================================================1 Whether Reporters of Local Papers may be allowed to Yessee the judgment ?2 To be referred to the Reporter or not ?Yes3 Whether their Lordships wish to see the fair copy of the Nojudgment ?4 Whether this case involves a substantial question of law Noas to the interpretation of the Constitution of India or any order made thereunder ?==========================================================NISHARAHEMAD VAJIRKHAN PATHAN VersusTHE INCOME TAX OFFICER ==========================================================Appearance:MR. TUSHAR HEMANI, LD. SR. COUNSEL WITH MS VAIBHAVI K PARIKH(3238) for the Petitioner(s) No. 1MRS MAUNA M BHATT(174) for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALAandHONOURABLE MR. JUSTICE ILESH J. VORA Date : 18/01/2021 ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1.By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs; “(A) quash and set aside the impugned notice at Annexure-A to this petition; (B)pending the admission, hearing and final disposal of this petition, to stay the implementation and operation of the notice at Annexure-A to this petition and stay the further proceedings for the Assessment Year 2012-13; (C )any other and further relief deemed just and proper be granted in the interest of justice; (D)to provide for the cost of this petition.” 2.For the sake of convenience, the following details may be stated as under; 3.It appears from the materials on record that the writ applicant is one of the partners in a partnership firm running in the name and style of “M/s. Shree Khodiyar Developers”. The said partnership firm purchased two immovable properties (Block Nos.533 and 534 respectively, situated at Moje Palaswada, Dabhoi, District: Baroda) vide the sale deeds dated 30[th]May, 2011 for the total sale consideration of Rs.30,01,548/- and Rs.53,25,452/- respectively. The writ applicant herein is a signatory to the said conveyance deed in his capacity as a partner of the firm. 4.It is not in dispute that the sale consideration for the purchase of the two immovable properties, referred to above, was paid from the account of the partnership firm. 5.It appears that the partnership firm had not filed its return of income for the A.Y.2012-13. 6.The Income Tax Department thought fit to issue notice under Section 148 of the Act, 1961 to the writ applicant in his individual capacity proposing to reopen the assessment for the A.Y.2012-13 on the ground that the income chargeable to tax for the relevant year had escaped assessment within the meaning of Section 147 of the Act, 1961. The following reasons came to be assigned for the reopening of the assessment. “1.Brief details of the Assessee: Assessee is an individual and he has filed the return for the year under consideration declaring total income at Rs.3,64,000/- on 19.03.2013 vide acknowledgment no.580507250190313. 2.Brief details of information collected/receivedby the AO: In this case the information was received from the ITO Ward-1(2)(4), Vadodara vide letter No. BRD/ITO/Wd.1(2)(4) Inf./2018-19 dated 18.02.2019 that assessee along with five others, has purchased two immovable property situated at Block No.533 and 534, Moje Palaswada, Dabhoi, Dist. Baroda for a consideration of Rs.30,01,548/- and Rs.53,25,452/- respectively. “1.Brief details of the Assessee: Assessee is an individual and he has filed the return for the year under consideration declaring total income at Rs.3,64,000/- on 19.03.2013 vide acknowledgment no.580507250190313. 2.Brief details of information collected/receivedby the AO: In this case the information was received from the ITO Ward-1(2)(4), Vadodara vide letter No. BRD/ITO/Wd.1(2)(4) Inf./2018-19 dated 18.02.2019 that assessee along with five others, has purchased two immovable property situated at Block No.533 and 534, Moje Palaswada, Dabhoi, Dist. Baroda for a consideration of Rs.30,01,548/- and Rs.53,25,452/- respectively. 3.Analysis of information collected/received. It is seen that assessee has purchased two properties valuing Rs.88,13,060/- including registration and stamp charges in which his share is 1/6[th] (Rs.14,68,843). 4.Enquiries made by the AO as sequel toinformation collected/received: The ITO, Ward-1(2)(4), Vadodara vide above mentioned letter forwarded the information and the addition made by the AO in case of one of the co-owner of the property is confirmed by the CIT (A) with a direction to ensure that assessment of unexplained investment in the hands of the other partners of the firm. Under these circumstances, there is no need to conduct separate enquiry for satisfaction of reason of escapement of income. 5.Findings of AO: From the above facts available, it appears that assessee has made investment in the property to the tune of Rs.14,68,843/- as unexplained investment. 6.Basis of forming reason to believe and detailsof escapement of income: Therefore, from the above facts I have reason to believe that entries to the extent of Rs.14,68,843/- has escaped assessment and I am satisfied that this is a fit case for reopening the assessment u/s.147 for A.Y.2012-13. 7.No information about any asset outside India. 8.Applicability of the provision of section 147/151 to the facts of the case. In this case return of income was filed for the year under consideration but no assessment was made and the only requirement to initiate proceeding u/s.147 is reason to believe which has been recorded above.(refer paragraph 6). It is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration but no assessment at stipulated u/s.2(40) of the Act was made and the return of income was only processed u/s.143(1) of the Act. In view of the above, the provisions of clause (b) of Explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. This case is within four years from the end of the assessment year under consideration. Hence, necessary sanction to issue the notice u/s. 148 has been obtained separately from joint commissioner of income tax as per the provisions of section 151 of the Act. Or In this case more than four years have lapsed from the end of assessment year under consideration. Hence, necessary sanction to issue notice u/s. 148 has been obtained separately from Principle Commissioner of Income Tax as per the provisions of section 151 of the Act.” 7.The writ applicant responded to the above referred notice by filing his objections as under:- “A.I have received letter dated 19.06.2019 stating reasons for reopening of the assessment for A.Y.2012-13 as under: “Reason for reopening of assessment in case of Shri Nishar Ahemad Vazirkhan Pathan for A.Y.2012-13 u/s.147 of the Act. 1.Brief details of the assessee: Assessee is an individual and he has filed the return for the year under consideration declaring total income of Rs.3,64,000/- on 19.03.2013 vide acknowledgment no.580507250190313. 2.Brief details of information collected/received by the AO: 7.The writ applicant responded to the above referred notice by filing his objections as under:- “A.I have received letter dated 19.06.2019 stating reasons for reopening of the assessment for A.Y.2012-13 as under: “Reason for reopening of assessment in case of Shri Nishar Ahemad Vazirkhan Pathan for A.Y.2012-13 u/s.147 of the Act. 1.Brief details of the assessee: Assessee is an individual and he has filed the return for the year under consideration declaring total income of Rs.3,64,000/- on 19.03.2013 vide acknowledgment no.580507250190313. 2.Brief details of information collected/received by the AO: In this case the information was received from the ITO Ward-1(2)(4), Vadodara vide letter no.BRD/ITO/Wd. 1(2)(4) Inf./2018-19 dated 18.02.2019 that assessee along with five others, has purchased two immovable properties situated at Block No.533 and 534, Moje Palaswada, Dabhoi, Dist. Baroda for a consideration of Rs.30,01,548/- and Rs.53,25,452/- respectively. 4.Analysis of information collected/received. It is seen that assessee has purchased two properties valuing Rs.88,13,060/- including registration and stamp charges in which his share is 1/6[th] (Rs.14,68,843). 5.Enquiries made by the AO as sequel toinformation collected/received: The ITO, Ward-1(2)(4), Vadodara vide above mentioned letter forwarded the information and the addition made by the AO in case of one of the co-owner of the property is confirmed by the CIT (A) with a direction to ensure that assessment of unexplained investment in the hands of the other partners of the firm. Under these circumstances, there is no need to conduct separate enquiry for satisfaction of reason of escapement of income. 6.Findings of AO: From the above facts available, it appears that assessee has made investment in the property to the tune of Rs.14,68,843/- as unexplained investment. 7.Basis of forming reason to believe and detailsof escapement of income: Therefore, from the above facts I have reason to believe that entries to the extent of Rs.14,68,843/- has escaped assessment and I am satisfied that this is a fit case for reopening the assessment u/s.147 for A.Y.2012-13. B.On perusal of the above and without prejudice to the above and under protest, please note our following objections: a.The reason for reopening inter-alia stated vide para 2 that “Brief details of information collected/received by the AO; in this case the information was received from the ITO Ward-1(2)(4), Vadodara vide letter No.BRD/ITO/Wd. 1(2)(4) inf./2018-19 dated 18.02.2019 that assessee along with five others, has purchased two immovable property situated at Block No.533 and 534 Moje Palaswada, Dabhoi, Dist: Baroda for a consideration of Rs.30,01,548/- and Rs.53,25,452/- respectively”. In this respect, I would like to inform you that I have not purchased the immovable property bearing Block No.534/1 moje Palaswada for total purchase consideration of Rs.53,25,452/- and Block No.533 Moje Palaswada for total purchase consideration of Rs.30,01,548/- vide registered sale deed no.1169 of 2011 and 1170 of 2011 respectively dated 30.05.2011 but the immovable property have been purchased by the M/s.Shree Khodiyar Developers. The purchase consideration was paid by the firm M/s. Shree Khodiyar Developers. Copy of the sale deeds and bank statements of M/s. Shree Khodiyar Developers are hereby enclosed for your verification. Itseemsthatthewronginformationis collected/gathered. The property subject matter of the reopening was not purchased by me at all. The reason for reopening of the assessment itself is on wrong premise and fact and it is completely base on wrong reason, so reasons lacks validity. When the notice itself is thus, defective, it would have no effect of reopening on the assessment. Itseemsthatthewronginformationis collected/gathered. The property subject matter of the reopening was not purchased by me at all. The reason for reopening of the assessment itself is on wrong premise and fact and it is completely base on wrong reason, so reasons lacks validity. When the notice itself is thus, defective, it would have no effect of reopening on the assessment. b.The reason for reopening inter-alia stated vide para 4 that “enquiries made by the AO as sequel to information collected/received. The ITO , Ward-1(2)(4), Vadodara vide above mentioned letter forwarded the information and the addition made by the AO in case of one of the co-owner of the property is confirmed by the CIT(A) with a direction to ensure that assessment of unexplained investment in the hands of the other partners of the firm. Under these circumstances there is no need to conduct separate enquiry for satisfaction of reason of escapement of income. I would like to state that the addition made by the other AO and confirmed by the CIT(A) in case of other co-owner of the property, is not relevant. It cannot be the base for not making separate inquiry for the satisfaction of reason for reopening on the basis of escapement of income. Because in case of the other co-owner Shri Hasitkumar Bhatt case while making inquiry about the source of the investment in the subject matter immovable property situated at Block No.534/1 moje Palaswada for total purchase consideration of Rs.53,25,452/- and Block No.533 moje Palaswada for total purchase consideration of Rs.30,01,548/- vide registered sale deed no.1169 of 2011 and 1170 of 2011 respectively dated 30.05.2011, the Income Tax Officer has appreciated the fact that the immovable property was purchased by M/s. Shri Khodiyar Developers. He has concluded the matter at inquiry level and has not initiated proceeding u/s.147 r.w.s. 148 of the Act. Copy of the inquiry letter and copy of reply is herewith enclosed. Hence AO is required to inquire the matter independently of information received and to satisfy himself about reason for reopening. Hence, the reopening of the assessment under Section 147 of the Act stating that “there is no need to conduct separate enquiry for satisfaction of reason of escapement of income” is bad in law. The reasons to believe must have a material bearing on the question on escapement of income. It does not mean a purely subjective satisfaction of the assessing authority; the reason be held in good faith and cannot merely be a pretence. Thus the reason recorded is totally erroneous and invalid reason and is not in terms of Section 147 of the Act. c. I have filed my return of income for the A.Y. 2012-13 dated 19.03.2013 vide E-filing Acknowledgment Number 580507250190313 disclosing fully and truly all material facts necessary for his assessment. I have also suo motu informed the Income Tax Officer, Ward-2, Mehsana that the immovable property of the subject matter was not purchased by me but it is purchased by the M/s. Shree Khodiyar Developers vide letter dated 19.03.2019. Copy of the acknowledged letter is enclosed herewith. It seems that no cognizance has been taken of the letter submitted by me. When return has been filed disclosing fully and truly all material facts and letter explaining the things has already submitted. I am totally surprised to receive notice u/s.148 on the basis of purchase of immovable property. The reopening of an assessment after the lapse of many year is a serious matter. I can't see any genuine reason to reopen the assessment after so long duration has been lapsed that too on the basis of untrue reason. The reopening of the assessment is without the authority permitted u/s.147 of the Act. It seems that no cognizance has been taken of the letter submitted by me. When return has been filed disclosing fully and truly all material facts and letter explaining the things has already submitted. I am totally surprised to receive notice u/s.148 on the basis of purchase of immovable property. The reopening of an assessment after the lapse of many year is a serious matter. I can't see any genuine reason to reopen the assessment after so long duration has been lapsed that too on the basis of untrue reason. The reopening of the assessment is without the authority permitted u/s.147 of the Act. d. I have filed his return of income for the A.Y.2012-13 dated 19.03.2013 vde E-filing Acknowledgement Number 580507250190313 disclosing fully and truly all material facts necessary for my assessment. An intimation u/s.143(1) has been issued stating NIL Income Tax demand amount. Hence first accepting the return under Section 143(1) and thereafter issue notice to reopen the assessment is mere change of opinion. There shall not be any distinction between cases where assessments were framed earlier under Section 143(3) and cases where mere intimations were issued earlier under section 143(1). Otherwise an assessee in whose case the return was processed under section 143(1) would be in a more vulnerable position than an assessee in whose case there was a full-fledged scrutiny assessment made under section 143(3). Whether the return is put to scrutiny or is accepted without demur is not a matter which is within the control of assessee, he has no choice in the matter. Thus change of opinion is not permissible u/s.147 of the Act. C.In the case of GKN Driveshafts Ltd (259 ITR 19), the Hon. Supreme Court made remarks, when a notice u/s.148 of the Income Tax Act is issued, the proper course of action for the notice is to file return and if he so desires, to seek reasons for issuing notices. The AO is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the AO is bound to dispose of the same by passing a speaking order.” 8.The objections, referred to above, came to be overruled vide the order dated 3[rd] July, 2019 as under:- “2.1 In this connection, with the objection raised in the para (B)(a) of letter dated 03.07.2019, assessee have stated that the property was purchased by M/s. Shree Khodiyar Developers (Firm) and not by me. It is seen that all the partners have signed the registered deed. Further in this matter the copy of reason was provide in which it was clearly mentioned that CIT(A) vide order dated 25.10.2017 have confirmed the addition of Rs.14,68,843/- in hand of one of the partners of Firm of ShreeKhodiyarDevelopers(ShriManish Rameshwarprasad Guar). As the assessee Shri Manish Rameshwarprasad Gaur has not contended in front of the Ld. CIT(A), the genuineness of addition is confirmed. Further in the para (b.1.) of the assessment order of the said assessee, the AO has mentioned that Firm has not submitted its return of income for the year under consideration, so the investment remain unexplained. In this case the reopening is as per the provisions of the I.T. Act, 1961 is applicable. 2.2Para (B)(b) the assessee has raised issued of to inquire the matter independently of information received and to satisfy himself. In this it is to state that the information was already made available to the office and in return no any capital gain was disclosed for the A.Y.2012-13. 2.3In relation to para B(c) it is to state that as per the I.T. Act, 1961 the cases can be reopened for not more six years, have elapsed from the end of the relevant assessment year. Therefore, it is stated that the case is reopened as per the provisions of the I.T. Act, 1961 and it is within the time allowed. 2.2Para (B)(b) the assessee has raised issued of to inquire the matter independently of information received and to satisfy himself. In this it is to state that the information was already made available to the office and in return no any capital gain was disclosed for the A.Y.2012-13. 2.3In relation to para B(c) it is to state that as per the I.T. Act, 1961 the cases can be reopened for not more six years, have elapsed from the end of the relevant assessment year. Therefore, it is stated that the case is reopened as per the provisions of the I.T. Act, 1961 and it is within the time allowed. 2.4In relation to Para B(d) of the letter dated 03.07.2019, it is to state that in this case the law is enforceable as per the provisions of the I.T. Act, 1961. Further, in this matter it is to state that material is available on which the addition is made and in this there is no any change of opinion as no any assessment was made previously for the A.Y.2012-13. 3.Disposal of objection: I have given due consideration to the submission of the assessee. However, the same is not acceptable therefore being disposed of by way of passing a speaking order on the basis of the above facts. Further it is to also to state that in place of the partner Shri Manish Rameshwarprasad Gaur has option to approach Hon'ble ITAT against addition made by the Ld. CIT (A). Once one of the partner addition is confirmed by the Ld. CIT(A), and the partner has no objection, the same rule is applicable to all the partners. On this basis and other facts the objection raised by the assessee is disposed of. 4.Reason to believe:- The belief that the AO was not arbitrary or irrational. The belief that income has escaped assessment was based on reasons which were relevant and material also available on the records. There exists a rational and intelligible nexus between the reasons and belief therefore. There was independent formation of opinion by the AO as per the IT Act, 1961 that income has escaped assessment as the addition is confirmed in case of one of the partner. Therefore, the notice of reopening is sustainable. 5.To conclude, it is emphasized that the reopening in the case of the assessee is valid in the light of the facts and the established law. The procedural requirements such as proper recording of reasons, service of notices and forwarding of reasons, have been met. In addition, the matters raised by the assessee have been dealt with in an elaborate manner. It is requested that the assessee/its AR to to co-operate in the re-assessment proceedings. The above order is passed in view of the observation of the Hon'ble Supreme Court in the case of GKN Diveshafts (India) Ltd. vs. ITO and others (259 ITR 19) (SC).” 9.Being dissatisfied with the aforesaid action, the writ applicant is here before this Court with the present writ application. -Submissions on behalf of the writ applicant: 10.Mr. Tushar Hemani, the learned senior counsel assisted by Ms. Vaibhavi Parikh, the learned counsel appearing for the writ applicant submitted that the Department seeks to reopen the assessment broadly on the ground that in the case of one of the partners of the partnership firm, the investments were found to be not satisfactorily explained. The writ applicant, being a co-partner, has also not been able to explain the investments during the year under consideration. It is submitted that the notice under Section 148 is not sustainable in law as the properties in question were purchased by the partnership firm wherein the writ applicant is one of the partners. The writ applicant, in his individual capacity, is not the purchaser of the two immovable properties. 10.Mr. Tushar Hemani, the learned senior counsel assisted by Ms. Vaibhavi Parikh, the learned counsel appearing for the writ applicant submitted that the Department seeks to reopen the assessment broadly on the ground that in the case of one of the partners of the partnership firm, the investments were found to be not satisfactorily explained. The writ applicant, being a co-partner, has also not been able to explain the investments during the year under consideration. It is submitted that the notice under Section 148 is not sustainable in law as the properties in question were purchased by the partnership firm wherein the writ applicant is one of the partners. The writ applicant, in his individual capacity, is not the purchaser of the two immovable properties. 11.It is argued that the condition precedent for resorting to reopening is that there must be “escapement of income chargeable to tax”. In the absence of escapement of any income chargeable to tax, it is not open for the Department to reopen the case of the assessee. 12. The learned senior counsel would submit that the Department has failed to appreciate the following:- “The writ applicant has not purchased the properties in question. Rather, such properties were purchased by the partnership firm namely M/s. Khodiyar Developers”, wherein the writ applicant is a partner. This fact was conveyed to the respondent immediately upon receipt of the reasons for reopening. Even payment has been made by the said firm through the banking channel. The writ applicant was a signatory to the said conveyance deeds in the capacity of partner of the said firm. Thus, the properties in question were purchased by firm wherein writ applicant is a partner and not by the writ applicant.” 13.It is argued that it is the partnership firm which derived lawful title over the properties in question. In such circumstances, no addition can be made in respect of the alleged unexplained investment in the hands of the writ applicant. 14.It is argued that merely because in the hands of one of the partners, the investment is treated as unexplained, would not necessarily mean that such investment should also be treated as unexplained in the hands of the writ applicant. The Department seeks to reopen the assessment merely on the ground that certain investment made by some other person has remained unexplained. 15.In the last, Mr. Hemani submitted that even otherwise there cannot be any “reason to believe” for the following reasons:- “Investments in question were made by the partnership firm and not by the writ applicant. Such investments were made through banking channel. The mere fact that certain investment has been made by an assessee cannot be a ground so as to have reason to believe that income chargeable to tax has escaped assessment in the hands of such assessee. If such a stand of the Department is entertained, then it would result into a very dangerous proposition whereby in each and every case where some investment is made, the case of such assessee shall be reopened merely on the alleged count that such investments are unexplained. That has never been the intention of the Legislature.” 16.In such circumstances, referred to above, Mr. Hemani prays that there being merit in his writ application, the same may be allowed and the impugned notice may be quashed and set aside. -Submissions on behalf of the Revenue: The mere fact that certain investment has been made by an assessee cannot be a ground so as to have reason to believe that income chargeable to tax has escaped assessment in the hands of such assessee. If such a stand of the Department is entertained, then it would result into a very dangerous proposition whereby in each and every case where some investment is made, the case of such assessee shall be reopened merely on the alleged count that such investments are unexplained. That has never been the intention of the Legislature.” 16.In such circumstances, referred to above, Mr. Hemani prays that there being merit in his writ application, the same may be allowed and the impugned notice may be quashed and set aside. -Submissions on behalf of the Revenue: 17.Ms. Mauna Bhatt, the learned senior standing counsel appearing for the Revenue has vehemently opposed this writ application. She would submit that the writ application has been preferred at a premature stage inasmuch as only a notice under Section 148 read with section 147 of the Act has been issued. It is argued that in the event if the final assessment order is passed, then the assessee can always prefer an appeal against such order before the CIT (A) and, thereafter, before the Appellate Tribunal. Ms. Bhatt took the Court through the averments made in the affidavit-in-reply upon which due reliance has been placed on behalf of the Revenue. “4.The facts are that in this case an information was received from the ITO, Ward (1)(2)(4), Vadodara vide letter dated 18.2.2019; in relation to the properties purchased by the six co-owners i.e. Shri Nisharahmed Vajir Pathan, Shri Manish R. Gaur, Shri Manoj H. Patel, Shri Manish Mulchand Patel, Shri Hashitkumar D. Bhatt and Shri Ganpat Amrutlal Patel at Block Nos.533, 534 mouje Palaswada, Dabhoi, Dist: Vadodara of Rs.39,01,548/- and Rs.53,25,452/- respectively. The assessee had also paid stamp duty and registration charges of Rs.4,86,060/-. 5.It is submitted that the case of one of the partner Shri Manish Rameshbhai Gaur was selected under the CASS for A.Y.2012-13 and addition of Rs.14,68,843/- was made for unexplained investment of the said properties, During assessment proceedings of Shri Manish Gaur, it was contended by him before the AO that the properties belong to a firm however Shri Manishbhai Gaur failed to prove that properties were purchased by firm viz. M/s. Shri Khodiyar Developers bearing PAN No. . 6.It is submitted that as observed in the assessment order in the case of Shri Manish Gaur, the firm viz. Shri Khodiyar Developers has not filed its return of income for the year under consideration. In the said assessment order, AO had further observed that firm is represented by the partners and firm has not filed its return of income for the year under consideration and therefore, investment in purchase of land is treated as unexplained. As the assessee viz. Manish Gaur failed to prove the purchase of properties in question by the firm the share of the property was equally divided and Rs.14,68,843/- (1/6[th] of Rs.88,13,060/- total of the amount paid as mentioned has been added to the total income for A.Y.2012-13 in case of Shri Manish R. Gaur. Thereafter, Shri Manish Gaur filed an appeal before the CIT (2), Vadodara but he did not appear and CIT(A)(2), Vadodara framed assessment under order dated 25.10.2017. In the order dated 25.10.2017 it has been observed by CIT(A) that the AO shall ensure assessment of unexplained investment in the hands of the other partners of the firm. 7.It is submitted that order of CIT(A) being tangible material in the hands of the AO of the petitioner-assessee, the AO verified the details and reopened the assessment, which is valid and legal. 7.It is submitted that order of CIT(A) being tangible material in the hands of the AO of the petitioner-assessee, the AO verified the details and reopened the assessment, which is valid and legal. 8.It is further submitted that the contention of the petitioner that firm has purchased the property is not correct. As observed in case of Mahesh Gaur no evidence was placed on record to justify the ownership by the firm. Moreover, the firm has not filed the return of income for A.Y.2012-13 and therefore, the investment could not be verified in hands of the firm. In this event merely when there is no return of income by the firm nor any evidence suggesting investment made by the firm i.e. M/s.Shri Khodiyar Developers, it is clear that investment has been made by the respective co-owners from their unexplained income. 9.It is submitted that in this case original assessment was framed under Section 143(1), therefore, there was no opinion formed at the original assessment stage. Even the information received which was the tangible material was not available at the time of original assessment. 10.It is submitted that the contention of the petitioner that there is no escapement of income chargeable to tax since the property in question were purchased by partnership firm wherein the petitioner is partner is without any basis. As the firm has not filed its return of income, there is no evidence to show that the property was purchased by firm. Moreover, the order of CIT(A) in the case of co-owner is the tangible material in the hands of AO to form a reasonable belief that income chargeable to tax has escaped assessment. 11.The contention of the petitioner that there is no reason to believe that income chargeable to tax has escaped assessment is not correct. As stated in the earlier para, assessment framed in case of one of the co-owners which has been upheld by the order of CIT(A) supported by the fact that no return has been filed by the partnership firm, is the tangible material to form belief that income chargeable to tax has escaped assessment. 12.It is submitted that the contention of the petitioner that reopening is based on the borrower satisfaction is not correct. As stated earlier, it is reiterated that AO based on the information received verified the details. Even in the order of the CIT(A) it has been directed to verify the details in the case of co owners. There is no evidence to support that the purchase was made by the partnership firm. Therefore, the belief formed by the AO is based on the information available on record and sufficient to form a belief that income chargeable to tax has escaped assessment. It is further submitted that at this stage A.O. Is not required to conclusively prove the escapement of income. In the present case there is tangible material available in the hands of the AO to form a belief that income chargeable to tax has escaped assessment and therefore, notice under Section 148 is legal and valid notice.” 18.On 7[th] January, 2021, this Court passed the following order:- “This matter was heard yesterday and was adjourned to come up today to enable Ms. Bhatt, the learned Senior Standing Counsel appearing for the Revenue to take appropriate instructions with regard to the other partners of the partnership namely M/s. Shree Khodiyar Developers. Ms. Bhatt has been able to collect the necessary information and would like to place it on record by way of an additional affidavit. Post this matter on 18th January 201 on top of the Board. By that time, the additional affidavit shall be placed on the record of the case.” 19.Pursuant to the aforesaid order passed by this Court dated 7[th] January, 2021, an additional affidavit-in-reply has been filed on behalf of the Revenue stating as under:- “This matter was heard yesterday and was adjourned to come up today to enable Ms. Bhatt, the learned Senior Standing Counsel appearing for the Revenue to take appropriate instructions with regard to the other partners of the partnership namely M/s. Shree Khodiyar Developers. Ms. Bhatt has been able to collect the necessary information and would like to place it on record by way of an additional affidavit. Post this matter on 18th January 201 on top of the Board. By that time, the additional affidavit shall be placed on the record of the case.” 19.Pursuant to the aforesaid order passed by this Court dated 7[th] January, 2021, an additional affidavit-in-reply has been filed on behalf of the Revenue stating as under:- “1.This additional affidavit is filed to place further information/documents on record. It is submitted that as stated in the affidavit dated 24.11.2019, income chargeable to tax has escaped assessment and therefore, notice under Section 148 was issued for A.Y.2012-13. The assessee had purchased two properties valuing Rs.88,13,060/- where his share is 1/6[th] in the property. Though purchased, the said property was not shown in the return of income filed. The objection of the assessee that the property was purchased by firm and not by partners was considered in the order disposing of objections, therefore, investment remained unexplained. Thus, there is no illegality in issuing notice to the assessee. 2.It is submitted that M/s. Khodiyar Developers is partnership firm consisting of five partners. Out of these ive partners in case of partner of M/s.Shri Manish Rameshwarprasad Gaur and Shri Ganpatbhai Amthabhai Patel reassessment proceedings were initiated. The additions u/s.69 of the Act were made as unexplained investment in both the cases and CIT(A) has confirmed the addition made by the AO. In other three partners reassessment proceedings were not initiated. Details of assessment proceedings in relation to all five partners of M/s.Khodiyar Developers is annexed hereto and marked as Annexure-R.1. 3.It is submitted that income chargeable to tax has escaped assessment. No scrutiny was done at the original assessment stage. Moreover in absence of return filed by the firm, verification was not done at the original assessment stage. Therefore, if the Hon'ble Court is of the opinion that the notice under Section 148 ought to have been issued to the firm and not to the partners then it is submission of the respondent that in view of Section 150 o the Act, findings/directions may be issued so that appropriate proceedings under the provisions of the Act can be initiated against the firm. 4.In view of the above, there is no illegality in initiation of the proceedings u/s.148 of the Act.” 20.Ms. Bhatt vehemently submitted that the Department could be said to be justified in reopening the assessment of the writ applicant for the relevant year as the partnership firm had failed to file its return of income. The Department wants to understand the source of funds pumped in by the writ applicant in the partnership firm. It has not been explained by the writ applicant in his return of income for the relevant year. It is pointed out that the assessment was under Section 143(1) of the Act and not Section 143(3) of the Act. 21.In the last, Ms. Bhatt submitted that if this Court is inclined to hold that the reopening is not sustainable in law, then the Department may be permitted to invoke Section 150 of the Act for the purpose of proceeding against the partnership firm. 22.In such circumstances, referred to above, Ms. Bhatt prays that there being no merit in this writ application, the same may be rejected. 23.Having heard the learned counsel appearing for the parties and having gone through the materials on record, the following two questions fall for our consideration; 21.In the last, Ms. Bhatt submitted that if this Court is inclined to hold that the reopening is not sustainable in law, then the Department may be permitted to invoke Section 150 of the Act for the purpose of proceeding against the partnership firm. 22.In such circumstances, referred to above, Ms. Bhatt prays that there being no merit in this writ application, the same may be rejected. 23.Having heard the learned counsel appearing for the parties and having gone through the materials on record, the following two questions fall for our consideration; (I)Whether the impugned notice of reassessment issued under Section 148 of the Act is sustainable in law on the reasons as assigned by the Department? and (ii)Whether Section 150 of the Act has any applicability so far as the present case is concerned?. In other words, whether by virtue of Section 150 of the Act, the Department can now proceed against the partnership firm? 24.The following principles of law are discernible from the various decisions of the Supreme Court and the High Courts so far as reopening of the assessment under Section 147 of the Act is concerned. (i)The Court should be guided by the reasons recorded for the reassessment and not by the reasons or explanation given by the Assessing Officer at a later stage in respect of the notice of reassessment. To put it in other words, having regard to the entire scheme and the purpose of the Act, the validity of the assumption of jurisdiction under Section 147 can be tested only by reference to the reasons recorded under Section 148(2) of the Act and the Assessing Officer is not authorized to refer to any other reason even if it can be otherwise inferred or gathered from the records. The Assessing Officer is confined to the recorded reasons to support the assumption of jurisdiction. He cannot record only some of the reasons and keep the others upto his sleeves to be disclosed before the Court if his action is ever challenged in a court of law. (ii)At the time of the commencement of the reassessment proceedings, the Assessing Officer has to see whether there is prima facie material, on the basis of which, the department would be justified in reopening the case. The sufficiency or correctness of the material is not a thing to be considered at that stage. (iii)The validity of the reopening of the assessment shall have to be determined with reference to the reasons recorded for reopening of the assessment. (iv)The basic requirement of law for reopening and assessment is application of mind by the Assessing Officer, to the materials produced prior to the reopening of the assessment, to conclude that he has reason to believe that income has escaped assessment. Unless that basic jurisdictional requirement is satisfied-a postmortem exercise of analysing the materials produced subsequent to the reopening will not make an inherently defective reassessment order valid. (v)The crucial link between the information made available to the Assessing Officer and the formation of the belief should be present. The reasons must be self evident, they must speak for themselves. (vi)The tangible material which forms the basis for the belief that income has escaped assessment must be evident from a reading of the reasons. The entire material need not be set out. To put it in other words, something therein, which is critical to the formation of the belief must be referred to. Otherwise, the link would go missing. (vii)The reopening of assessment under Section 147 is a potent power and should not be lightly exercised. It certainly cannot be invoked casually or mechanically. (v)The crucial link between the information made available to the Assessing Officer and the formation of the belief should be present. The reasons must be self evident, they must speak for themselves. (vi)The tangible material which forms the basis for the belief that income has escaped assessment must be evident from a reading of the reasons. The entire material need not be set out. To put it in other words, something therein, which is critical to the formation of the belief must be referred to. Otherwise, the link would go missing. (vii)The reopening of assessment under Section 147 is a potent power and should not be lightly exercised. It certainly cannot be invoked casually or mechanically. (viii) If the original assessment is processed under Section 143(1) of the Act and not Section 143(3) of the Act, the proviso to Section 147 will not apply. In other words, although the reopening may be after the expiry of four years from the end of the relevant assessment year, yet it would not be necessary for the Assessing Officer to show that there was any failure to disclose fully or truly all the material facts necessary for the assessment. (ix)In order to assume jurisdiction under Section 147 where assessment has been made under sub-section (3) of section 143, two conditions are required to be satisfied; (i)The Assessing Officer must have reason to believe that the income chargeable to tax has escaped assessment; (ii)Such escapement occurred by reason of failure on the part of the assessee either (a) to make a return of income under section 139 or in response to the notice issued under sub-section (1) of Section 142 or Section 148 or (b) to disclose fully and truly all the material facts necessary for his assessment for that purpose. (x)The Assessing Officer, being a quasi judicial authority is expected to arrive at a subjective satisfaction independently on an objective criteria. (xi)While the report of the Investigation Wing might constitute the material, on the basis of which, the Assessing Officer forms the reasons to believe, the process of arriving at such satisfaction should not be a mere repetition of the report of the investigation. The reasons to believe must demonstrate some link between the tangible material and the formation of the belief or the reason to believe that the income has escaped assessment. (xii)Merely because certain materials which is otherwise tangible and enables the Assessing Officer to form a belief that the income chargeable to tax has escaped assessment, formed part of the original assessment record, per se would not bar the Assessing Officer from reopening the assessment on the basis of such material. The expression “tangible material” d