"Court Quashes Reassessment Notice Due to Lack of Jurisdictional Basis"

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Case Name:

Arun Gupta Vs. Union of India and Others (High Court of Allahabad)

Civil Misc. Writ Petition (Tax) No. 2062 of 2008

Date: 4th February 2015

Key Takeaways:

• Jurisdictional Requirement: A notice under Section 148 (of Income Tax Act, 1961) must have a jurisdictional basis under Section 147 (of Income Tax Act, 1961). Without it, the notice is invalid.
• Change of Opinion: Reassessment cannot be initiated on a mere change of opinion or without new tangible material.
• Disclosure Duty: The assessee must disclose all primary facts, but once done, they are not required to assist further in the assessment process.
• Legal Precedents: The case reaffirms principles from past judgments like “Commissioner of Income Tax v. Kelvinator of India Ltd” and “Calcutta Discount Co. Ltd v. Income Tax Officer.”

Issue

Did the Income Tax Department have the jurisdiction to issue a reassessment notice under Section 148 (of Income Tax Act, 1961) without new tangible material?

Facts

Arun Gupta, an individual assessee, filed his income tax returns showing losses due to interest payments on negative capital balances in partnership firms. The original assessments were completed without issues. However, a reassessment notice was issued later, claiming a diversion of business funds for non-business purposes. Gupta challenged this notice, arguing it was based on existing information and not new material.

Arguments

• Petitioner’s Argument: Gupta argued that the reassessment was based on the same information already available during the original assessment, with no new material justifying the reopening.
• Department’s Argument: The department claimed that the interest payments to family-run partnership firms warranted a reassessment to investigate potential tax evasion under Section 40-A(2)(b) (of Income Tax Act, 1961).

Key Legal Precedents

• Commissioner of Income Tax v. Kelvinator of India Ltd: Section 147 (of Income Tax Act, 1961) does not allow reassessment on a mere change of opinion.
• Calcutta Discount Co. Ltd v. Income Tax Officer: The duty of disclosing primary facts lies with the assessee, but once disclosed, no further assistance is required.

Judgement

The court quashed the reassessment notice, ruling that it was issued without a proper jurisdictional foundation under Section 147 (of Income Tax Act, 1961). The court emphasized that the reasons to believe must be based on new, tangible material, not merely a change of opinion or existing information.

FAQs

Q1: What does this judgment mean for taxpayers?

A1: It reinforces that reassessment notices must be based on new material, not just a change of opinion, protecting taxpayers from arbitrary reassessments.

Q2: Can the Income Tax Department appeal this decision?

A2: Yes, the department can appeal to a higher court if they believe there are grounds to challenge the decision.

Q3: What should taxpayers do if they receive a similar notice?

A3: They should verify if the notice is based on new material and consult a tax professional for advice on challenging it if necessary.

This breakdown should help you understand the court’s decision and its implications. If you have more questions, feel free to ask!Sure, let’s break down the judgment from the connected documents in a clear and conversational manner.

In this group of petitions, the petitioner has challenged the notice issued under Section 148 (of Income Tax Act, 1961) (hereinafter referred to as the “Act”). For facility, the facts of Writ Petition No.2062 of 2008, Arun Gupta vs. Union of India and others is being taken into consideration.

The petitioner is an individual assessee and derives his income from salary, house property, capital gains, interest, etc. The petitioner is a partner in

various registered partnership firms such as Commercial Instalments, Chandra Brothers, Commercial Body Builders, Kailash Traders and Kailash Auto Centres. In the partnership deed there is a specific clause for payment of interest @ 12% p.a. whether the firm is earning profit or loss in that year.

That is to say, in the event, there was a profit, the

partners were entitled to receive interest on that capital

@ 12% p.a. and, in the case of a negative capital

balance, partners were to pay interest to the firm @

12% on such negative balance.

For the assessment year 2000-01, the petitioner

filed his return of income showing a loss of

Rs.28,20,280/-. According to the petitioner, the loss

was on account of the fact that the capital balance in

various partnership firms became negative and the

petitioner was obliged to pay interest @ 12% p.a. on

such negative capital balance. The above return for the

assessment year 2001-02 was taken up for scrutiny

and a notice under Section 143(2) (of Income Tax Act, 1961) and under Section

142 of the Act was issued along with the questionnaire

and the petitioner was required to reply to the show

cause notice as well as to the questionnaire. One of the

questions raised was that the petitioner had paid more

interest than earned during the relevant year. The

petitioner submitted his reply and explained the

reasons for making the payment of interest to various

partnership firm owing to the fact that his various

partnership firms were reflecting a negative balance

and that under the partnership deed there was a

contractual obligation to pay interest to the respective

partnership firm. The explanation was found to be

satisfactory and the return was accepted and

completed without any addition by the Income Tax

authorities for the assessment years 2001-02. Similar

losses was reflected in the assessment year 2002-03 to

2005-06 which were completed under Section 143(1) (of Income Tax Act, 1961)

of the Act wherein similar payment of interest was

made by the petitioner to the partnership firm.

For the assessment year 2006-07, the petitioner

filed his return declaring a loss at Rs.84,807/-. The

petitioner, in the computation of income, disclosed the

net business loss of Rs.11,84,807/- indicating that the

petitioner had paid interest amounting to

Rs.31,68,547/- whereas he had earned interest

amounting to Rs.2,53,913/- resulting in a net loss at

Rs.29,14,634/-. The petitioner, in computation of

income, accordingly, declared a net business loss at

Rs.11,84,807/- after setting off the loss against the

income earned under other heads. This assessment was

computed under Section 143(1) (of Income Tax Act, 1961) by an

assessment order dated 31.7.2006. Thereafter,

reassessment proceedings were initiated, under

Section 147 (of Income Tax Act, 1961) for the assessment year 2006-

07, by issuance of a notice dated 17.12.2007 under

Section 148 (of Income Tax Act, 1961).

Upon receipt of the notice, the petitioner filed his

reply informing the assessing authority that the

original return may be treated as the return in

response to the notice dated 17.12.2007. The petitioner

also prayed that a copy of reasons to believe may

also be supplied, which was duly communicated to

the petitioner. Upon receipt of the reasons to

believe the petitioner filed his objection praying

that the re-assessment proceeding should be dropped.

The assessing authority, by his order dated

20.10.2008, rejected the petitioner objection and

proceeded to reassess the petitioner for the assessment

year 2006-07. The petitioner, being aggrieved, has

filed the present writ petition praying for the quashing

of the re-assessment proceeding initiated by the

assessing authority for the assessment year 2006-07

pursuant to the notice dated 17.12.2007.

The relevant portion of the reasons recorded by

the assessing officer is as under:-

“Since the interest received is much less than

interest paid resulting substantial business loss, it

transpires that it is a case of diversion of business

funds for non-business purpose.”

The assessing officer rejected the objections of

the petitioner, on the ground, that the interest paid to

the partnership firm are controlled and run by the

family members/relatives of the petitioner and that

such business entities are covered by the provisions of

Section 40-A(2)(b) (of Income Tax Act, 1961) and, therefore, it is

essential that a detailed investigation is to be made to

ascertain the justifiability and reasonableness of such

transaction, specially where exorbitant amount of

interest was paid to the family concerned.

In the counter affidavit, similar plea has been

raised by the Income Tax Department, namely, that the

partnership entity are controlled and run by the family

members/relatives of the petitioner and that such

partnership firms are covered by the provisions

contained under Section 40-A(2)(b) (of Income Tax Act, 1961). It was

also submitted that paying exorbitant amount of

interest to the partnership firm, which was running

continuously in losses requires thorough investigation

as no prudent businessman would like to be a loss

sharing partner of such firm continuously for a long

period of time.

In the light of these facts, we have heard Sri

S.D.Singh, the learned senior counsel assisted by Sri

A.P.Singh, for the petitioner and Sri Bharatji Agarwal,

the learned senior counsel assisted by Sri Ashok

Kumar, the learned counsel for the Income Tax

Department.

The learned senior counsel for the petitioner

submitted that even though the original assessment has

been made under Section 143(1) (of Income Tax Act, 1961), in order to

initiate reassessment proceeding, it is necessary for the

assessing officer to have received some tangible

material or information subsequent to the completion

of the original assessment proceedings in order to

claim jurisdiction to re-assess the petitioner. The

learned senior counsel contended that, in the instant

case, no information or tangible material had been

received by the assessing officer after completion of

the original assessment under Section 143(1) (of Income Tax Act, 1961) of the

Act and, consequently, the entire exercise of initiating

the proceedings under Section 148 (of Income Tax Act, 1961) was

wholly illegal and without jurisdiction. The learned

senior counsel contended that the reasons to believe

recorded by the assessing officer only refers to the

facts which were already existing on the original

assessment record and which was brought on record

by the petitioner himself by filing his return and

consequently, on the same information and evidence

which has already been brought on record no re-

assessment proceedings could be initiated. The learned

counsel submitted that in the absence of any material,

which has a live nexus, the entire exercise of initiating

re-assessment proceeding was wholly illegal and was

liable to be quashed.

On the other hand, Sri Bharatji Agarwal, the

learned senior counsel for the department submitted

that the assessing officer has wide powers to reassess

if it has reason to believe that the income had escaped

assessment. The learned senior counsel submitted that

the assessing officer had a reasonable ground to

believe that exorbitant amount of interest was being

paid to the family concern and that interest paid was

far more than interest earned by the petitioner and that

this ground was, by itself, sufficient to reopen the

assessment proceedings. The learned senior counsel

submitted that the reasons disclosed by the assessing

officer justified his action in issuing a notice under

Section 148 (of Income Tax Act, 1961). The learned senior counsel

further contended that the payment of exorbitant

amount of interest to firms which were being run and

managed by the family members and relatives of the

petitioner was hit by Section 40-A(2) (of Income Tax Act, 1961)(b ) of the Act,

which required investigation to ascertain the

justifiability and reasonableness of such transaction

and consequently, on this ground also the notice to re-

assess the income was justified. The learned senior

counsel further contended that the petitioner has an

alternative remedy to contest the matter before the

assessing officer and, if aggrieved, by the assessment

order had a right to file an appeal and thereafter a

second appeal and consequently, the remedy to file a

writ petition under Article 226 was not an efficacious

remedy. In support of his submission, the learned

senior counsel relied upon a decision of the Supreme

Court in Commissioner of Income-Tax and others

vs. Chhabil Dass Agarwal, [2013]357 ITR 357 (SC)

wherein the Supreme Court held that the writ petition

should not have been entertained questioning the

correctness of the reassessment order and the notice

issued under Section 148 (of Income Tax Act, 1961).

Taking the plea of alternative remedy, we find

that reliance by the department in the case of Chhabil

Dass Agarwal (supra) is distinguishable and not

applicable to the present case. In the said case, against

the reassessment order, the writ petition was filed for

its quashing. In that scenario, the Supreme Court held

that the writ court should not ordinarily entertain a

writ petition questioning the veracity of the re-

assessment order passed under Section 148 (of Income Tax Act, 1961),

especially when an equal, efficacious, alternative

remedy was available to the assessee under the Act.

In the instant case, the petitioner has challenged

the validity of the notice issued under Section 148 (of Income Tax Act, 1961) of

the Act. No re-assessment order has been passed as

yet. The question whether the assessing authority had

the jurisdiction to issue a re-assessment notice is a

jurisdictional issue which can be entertained and tested

in a writ jurisdiction. We also found that the writ

petition was entertained in the year 2008 and affidavits

have been exchanged and, consequently, at this belated

stage, it would not be appropriate to relegate the

petitioner to avail the alternative remedy. We are of the

opinion that the writ petition is to be decided on

merits. The preliminary objection raised by Sri

Bharatji Agarwal is rejected.

A perusal of the provisions of Sections 147 and

148 of the Act indicates that the Assessing Officer has

wide powers to reopen the assessment if he has

reasons to believe that the income chargeable to tax

has escaped assessment. However, this wide power is

circumscribed and does not give jurisdiction to the

Assessing Officer to reopen a completed assessment

on a mere change of opinion. The reasons to believe is

not based nor can it be an outcome of a change of

opinion. Further, the proviso indicates that if more

than four years have elapsed from the end of the

relevant assessment year, in addition to the satisfaction

of the Assessing Officer that he has reasons to believe,

must also indicate that the assessee had failed to

disclose fully and truly all material facts necessary for

his assessment for that assessment year.

The words "reasons to believe", "change of

opinion", "failure to disclose fully and truly material

facts" and "material facts" have been a subject of

interpretation by various High Courts and also by the

Supreme Court of India.

In Ganga Saran & Sons P. Ltd. Vs. Income-Tax

Officer and others, 1981 Vol.130 ITR 1, the Supreme

Court held :

"It is well settled as a result of several decisions of this

Court that two distinct conditions must be satisfied

before the Income Tax Officer can assume jurisdiction to

issue notice under section 147(a) (of Income Tax Act, 1961). First, he must have

reason to believe that the income of the assessee has

escaped assessment and secondly, he must have reason to

believe that such escapement is by reason of the

omission or failure on the part of the assessee to disclose

fully and truly all material facts necessary for his

assessment. If either of these conditions is not fulfilled,

the notice issued by the Income Tax Officer would be

without jurisdiction. The important words under section

147 (a) are "has reason to believe" and these words are

stronger than the words "is satisfied". The belief

entertained by the Income Tax Officer must not be

arbitrary or irrational. It must be reasonable or in other

words it must be based on reasons which are relevant and

material. The Court, of course, cannot investigate into

the adequacy or sufficiency of the reasons which have

weighed with the Income Tax Officer in coming to the

belief, but the Court can certainly examine whether the

reasons are relevant and have a bearing on the matters in

regard to which he is required to entertain the belief

before he can issue notice under section 147(a) (of Income Tax Act, 1961). It there

is no rational and intelligible nexus between the reasons

and the belief, so that, on such reasons, no one properly

instructed on facts and law could reasonably entertain the

belief, the conclusion would be inescapable that the

Income Tax Officer could not have reason to believe that

any part of the income of the assessee had escaped

assessment and such escapement was by reason of the

omission or failure on the part of the assessee to disclose

fully and truly all material facts and the notice issued by

him would be liable to he struck down as invalid."

In Sheo Nath Singh Vs. Appellate Assistant

Commissioner of Income-Tax (Central), Calcutta

and others, 82 ITR 147, the Supreme Court held :-

"In our judgment, the law laid down by this court in the

above case is fully applicable to the facts of the present

case. There can be no manner of doubt that the words

"reason to believe" suggest that the belief must be that of

an honest and reasonable person based upon reasonable

grounds and that the Income-tax Officer may act on

direct or circumstantial evidence but not on mere

suspicion, gossip or rumour. The Income-tax Officer

would be acting without jurisdiction if the reason for his

belief that the conditions are satisfied does not exist or is

not material or relevant to the belief required by the

section. The court can always examine this aspect though

the declaration or sufficiency of the reasons for the belief

cannot be investigated by the court."

In Calcutta Discount Co. Ltd. Vs. Income-Tax

Officer, Companies District I, Calcutta and another, 41

ITR 191, the Supreme Court held :

"The position, therefore, is that if there were in fact some

reasonable grounds for thinking that there had been any

non-disclosure as regards any primary fact, which could

have a material bearing on the question of "under

assessment", that would be sufficient to give jurisdiction

to the Income-tax Officer to issue the notices under

section 34 (of Income Tax Act, 1961). Whether these grounds were adequate or not

for arriving at the conclusion that there was a non-

disclosure of material facts would not be open for the

court's investigation. In other words, all that is necessary

to give this special jurisdiction is that the Income-tax

Officer had when he assumed jurisdiction some prima

facie grounds for thinking that there had been some non-

disclosure of material facts."

From a perusal of the aforesaid, it is clear that

where a notice is issued within four years from the end

of the relevant assessment year, the jurisdiction of the

Assessing Officer is conferred where he has reasons to

believe that income chargeable to income tax on

escaped assessment.

It is settled law that the Assessing Officer having

reasons to believe that there had been some omission

or failure to disclose fully or truly all material facts

necessary for the assessment must be based on some

material facts which according to the Assessing

Officer is based on some reasonable belief and which

would have a material bearing on the question of

under assessment. If there is no material for the

formation of any belief or where the purported belief

was nothing but a mere change of opinion, in that

case, the Assessing Officer would have no jurisdiction

to initiate proceedings u/s 147 (of Income Tax Act, 1961) and 148 of the Act. The

Assessing Officer has the power to reopen the

assessment where he has reasons to believe that

income chargeable to tax has escaped assessment but

such re-assessment cannot be initiated on a mere

change of opinion to merely re-examine an issue on

the basis of information or material which was already

available to the Assessing Officer at the time of the

completion of the original assessment. Consequently,

before taking any action, the Assessing officer is

required to substantiate his satisfaction in the reasons

recorded by him.

On the question of relevancy of material facts

which is concomitant for the issuance of a notice u/s

147 and 148 of the Act, the Supreme Court in

Calcutta Discount Co. Ltd. Vs. Income Tax Officer

and another, 41 ITR 191, held that the duty of

disclosing the primary facts relevant to the decision of

the question before the Assessing Authority lies on the

assessee and it is the onerous duty of the assessee to

disclose truly and fully all the primary facts. The

Supreme Court held that once all the primary facts

have been disclosed, the assessee was not required to

provide any further assistance by way of disclosure to

the Assessing Officer. The Supreme Court held :

"Does the duty, however, extend beyond the full and

truthful disclosure of all primary facts ? In our opinion,

the answer to this question must be in the negative. Once

all the primary facts are before the assessing authority, he

requires no further assistance by way of disclosure. It is

for him to decide what inferences of facts can be

reasonably drawn and what legal inferences have

ultimately to be drawn. It is not for somebody else far

less the assessee to tell the assessing authority what

inferences-whether of facts or law should be drawn.

Indeed, when it is remembered that people often differ as

regards what inferences should be drawn from given

facts, it will be meaningless to demand that the assessee

must disclose what inferences-whether of facts or law-he

would draw from the primary facts."

In Commissioner of Income Tax Vs. Kelvinator

of India Ltd., 256 ITR 1, the Full Bench of the Delhi

High Court held that Section 147 (of Income Tax Act, 1961) did not

confer any power upon the Assessing Officer to

initiate reassessment proceedings on a mere change of

opinion. In the said case, the assessee in his revised

return of income had withdrawn the disallowance in

respect of expenses on rent and depreciation of the

guest house on the ground that since rent and

depreciation were allowable u/S 30 (of Income Tax Act, 1961) and 32 of the Act,

the same cannot be disallowed u/S 37(4) (of Income Tax Act, 1961).

The Assessing Officer accepted the contention of the

assessee in the original assessment order and accepted

the withdrawal of the disallowance of guest house

expenditure as submitted by the assessee in his revised

return of income. Subsequently, a notice u/s 148 (of Income Tax Act, 1961) of the

Act was issued on the ground that the tax audit report

was not noticed by the Assessing Officer while passing

the original assessment order. The Full Bench of the

Delhi High Court held :-

"We are unable to agree with the submission of Mr. Jolly

to the effect that the impugned order of reassessment

cannot be faulted as the same was based on information

derived from the tax audit report. The tax audit report

had already been submitted by the assessee. It is one

thing to say that the assessing officer had received

information from an audit report which was not before

the Income Tax Officer, but it is another thing to say that

such information can be derived by the material which

had been supplied by the assessed himself.

We also cannot accept submission of Mr. Jolly to the

effect that only because in the assessment order, detailed

reasons have not been recorded on analysis of the

materials on the record by itself may justify the assessing

officer to initiate a proceeding under section 147 (of Income Tax Act, 1961) of the

Act. The said submission is fallacious. An order of

assessment can be passed either in terms of sub-section

(1) of section 143 (of Income Tax Act, 1961) or sub-section (3) of section 143 (of Income Tax Act, 1961).

When a regular order of assessment is passed in terms of

the said sub-section (3) of section 143 (of Income Tax Act, 1961) a presumption can

be raised that such an order has been passed on

application of mind. It is well known that a presumption

can also be raised to the effect that in terms of clause (e)

of section 114 of the Indian Evidence Act the judicial and

official acts have been regularly performed. If it be held

that an order which has been passed purportedly without

application of mind would itself confer jurisdiction upon

the assessing officer to reopen the proceeding without

anything further, the same would amount to giving

premium to an authority exercising quasi judicial

function to take benefit of its own wrong."

The aforesaid decision was affirmed by the

Supreme Court in Commissioner of Income Tax Vs.

Kelvinator of India Ltd., 320 ITR 561 wherein the

Supreme Court held that the "reason to believe"

indicated in the notice u/s 148 (of Income Tax Act, 1961) that there was no

tangible material to come to a conclusion that there

was a escapement of income from the assessment.

In the light of the aforesaid, it is well settled that

if a notice under Section 148 (of Income Tax Act, 1961) has been

issued without the jurisdictional foundation under

Section 147 (of Income Tax Act, 1961) being available to the assessing

officer, the notice and subsequent proceedings would

be without jurisdiction and would be liable to be

quashed in a writ jurisdiction. If reason to belief is

available the Writ Court will not exercise its power of

judicial review to go into the sufficiency or adequacy

of the material available.

A Division Bench of this Court in M/s Rathi

Industries Ltd. vs. State of U.P. and another,

2014(7)ADJ 602 (DB) has held:-

The question, whether the assessing officer had reasons

to believe is a question of jurisdiction, which can be

considered and investigated by a Court under Article 226

of the Constitution of India. The words "has reasons to

believe" must not be arbitrary or irrational but must be

based on reasons which are relevant and germane to the

issue. The expression "reasons to believe" is not a

subjective satisfaction on the part of the assessing officer.

The belief has to be in good faith and must have a

rational connection with the issue involved and should

not be based on extraneous or irrelevant consideration.

The formation of the required opinion and belief by the

assessing officer is a condition precedent. Without such

formation, the assessing officer will have no jurisdiction

to initiate proceedings under Section 21 (of Income Tax Act, 1961). The

aforesaid view was also held by a Division Bench of this

Court after considering various judgements of the

Supreme Court in M/s S. K. Traders, Modi Nagar,

Ghaziabad vs. Additional Commissioner, Grade-I, Trade

Tax, Zone Ghaziabad and another, 2008 UPTC 392.”

and again held-

“There is no quarrel with the aforesaid proposition. The

reason to belief must be based on some rational basis for

the Assessing Officer to form a belief that the whole or

part of the turnover of a dealer has for any reasons

escaped assessment to tax. Such reason or belief must be

germane to the formation of the belief regarding the fact

that some turnover had escaped assessment of tax. The

reasons or the grounds to come to such a conclusion

must have a nexus with the formation to such belief,

which must be based on certain material.”

In the light of the aforesaid decision, we find that

in the instant case the reasons recorded by the

assessing officer justifying initiation of re-assessment

proceeding is that the petitioner has received less

amount of interest and had paid more amount of

interest resulting in substantial business loss and

therefore, it transpires that it is a case of diversion of

business fund for non-business purpose.

In our opinion, there is no sufficiency or

adequacy of material available with the assessing

officer. This information or material was already

available in the computation of income filed by the

petitioner in his return. Nothing new has been received

by way of information or otherwise by the assessing

officer. The present case is not a case of testing the

sufficiency of material available, but is a case of

absence of material, as held by the Supreme Court in

Ganga Saran case (supra). There is no direct nexus or

live link between the material coming to the notice of

the assessing officer and the formation of his belief

that there had been escapement of income of the

assessee from the assessment in the particular year in

question. In our view, there is no rational and tangible

nexus between the reason and the belief and the

conclusion is inescapable, namely, that in the absence

of material the assessing officer had no jurisdiction to

initiate the proceedings under Sections 147 (of Income Tax Act, 1961)/148 of the

Act. The reasons to believe recorded by the assessing

officer refers to the facts which were already on the

file.

In M/s Vikrant Tyres Limited Vs. State of U.P.

and others, 2005 UPTC 501, a Division Bench of this

Court held:-

"14. Re-assessment on the same material by same

authority, if permitted, for no valid reason, will open

flood gate for arbitrary action exposing one to unending

process, permitting uncertainty, re-opening of closed

chapters without assigning good reason, depending upon

whims of individuals and in the end precipitating

anomalous situations.

15. It, therefore, naturally follows that there has to

be some valid ground viz. Some relevant document or

material having escaped notice or there has been wrong

calculation due to human error bona fide committed, or

ignorance of correct and complete facts due to mistake or

ignorance of fraud/mis-representation (but not mere

change of opinion on same material)."

The contention of the Department that the

partners' entities are controlled and run by the family

members/relatives of the petitioner and that such

partnership firms are covered by the provisions

contained under Section 40-A(2)(b) (of Income Tax Act, 1961) and,

therefore, reassessment proceedings are justified, is

patently erroneous.

We are of the opinion, that such ground is not

existing in the reasons to believe. This ground was

taken by the department while rejecting the objection

of the petitioner. Such fresh ground which was not part

of the reasons to believe cannot form the basis to

initiate the re-assessment proceedings under Sections

147/148 of the Act. Further, there is no material on

record to indicate that the partnership entities are

controlled and run by the family members or relatives

of the petitioner. In the absence of cogent evidence

being brought on record, such ground cannot be taken

as a reason to reinitiate reassessment proceedings.

In view of the aforesaid, we are of the opinion

that there was no fresh material before the assessing

officer to form a belief that income had escaped

assessment. In the absence of material, we are of the

opinion that the assessing officer had no jurisdiction to

initiate the proceeding for re-assessment.

Consequently, the impugned notice dated

17.12.2007 issued under Section 148 (of Income Tax Act, 1961), for the assessment year 2006-07 is quashed.

The writ petition is allowed.

Dated: 4.2.2015.

AKJ.

(Dr. Satish Chandra, J.) (Tarun Agarwala, J.)