The A.O. initiated reassessment proceedings and recorded reasons based on the information received from Investigation Wing of the Department. According to the information, a survey conducted by the sales tax department showed that the assessee suppresses his turnover by maintaining a duplicate set of books. The A.O. and CIT(A) made additions u/s. 69C on account of suppressed sales. On appeal to the Tribunal, the assessee raised additional grounds on the jurisdiction to reopen the case.

The Tribunal on considered the proceedings before the sales tax and income tax department noted that the authorities of both the departments had abrogated various stands based on the survey report. The A.O. failed to consider the subsequent sales tax proceedings before the High Court and the Appellant Authority.  The Tribunal held that the reasons recorded cannot be said to form a belief of escapement of income, as the information so received was neither well found, nor the A.O. made any efforts to make any verification or application of his mind.

Further, the Tribunal noted that no notice was issued u/s. 143(2) nor was there any evidence of any dispatch, which was a sine qua non for making an assessment.  Failure to issue notice u/s. 143(2) that is mandatory in the reassessment proceedings renders the reassessment proceedings invalid.  (AY. 2005-06)