M.S. Sanklecha, J. - This Petition under Article 226 of the Constitution of India, challenges three notices all dated 23rd September, 1997, issued under Section 148 of IncomeTax Act, 1961 (the Act). The three impugned notices all dated 23rd September, 1997, seek to re-open the Assessment for the Assessment Years 1989-90, 1990-91 and 1991-92 each respectively.

2. The petition was admitted on 25 August 1999 by this Court. At the time of admission, interim stay was granted in respect of all the three impugned notices dated 23 September 1997 till the disposal of this petition.

3. The bare facts relevant for the disposal of this petition are that the Petitioner at the relevant time was carrying on business as Finance and Estate Broker in the name and style of M/s. Amarlal & Company. For the Assessment Year 1989-90, the Petitioner had filed its return of income on 5th January, 1990 declaring an income of Rs.1.92 lakhs. For the Assessment Year 1990-91, the Petitioner had filed its return of income on 23rd August, 1990, declaring an income of Rs.1.47 lakhs and for Assessment Year 1991-92, the Petitioner had filed its return of income on 31st August, 1991, declaring an amount of Rs.40.99 lakhs.

4. For the Assessment Years, 1989-90 and 1990-91, the assessment proceedings were completed by intimation under Section 143(1)(a) of the Act on 9th February, 1990 and 6th March, 1991 respectively. While for the Assessment Year 1991-92, the Assessing Officer completed regular assessment by order dated 31st March, 1992 under Section 143(3) of the Act.

5. In the meantime, on 21/22nd September, 1990, search proceedings were initiated against the Petitioner. Consequent to the search proceedings, two re-opening notices under Section 148 of the Act was issued for the Assessment Years 1989-90 and 1990-91. The Assessing Officer, thereafter by two orders dated 31st March, 1995 passed under Section 148 read with Section 143(3) of the Act, determined the Petitioner's income at Rs.4.65 lakhs for the Assessment Years 1989-90 and Rs.11.89 lakhs for the Assessment Year 1990-91. This was by relying upon entries in six diaries (A1 to A6) which were seized by the department during the course of the search. So far as the Assessment Year 1991-92 is concerned, the Assessing Officer completed the Assessment on 31st March, 1994 by an order passed under Section 143(3) of the Act again amongst other things by placing reliance upon the six diaries (A1 to A6) seized during the search proceedings in the year 1990-91.

6. Thereafter, the Assessing Officer issued the impugned notices on 23rd September, 1997 to the Petitioner, seeking to re-open the assessment for the Assessment Years 1989-90, 1990-91 and 1991-92. The reasons recorded in support of the impugned notices by the Assessing Officer for all the three years are, identical, according to counsel for both sides. Therefore, for the sake of convenience, the reasons recorded for the Assessment Year 1991-92 are reproduced as under:—

SHRI AMARNAGPAL

A.Y. 1991-92

REASON FOR REOPENING UNDER SECTION 147

The assessee is a financer, a finance broker, estate agent and property dealer. An action u/s. 132 was taken on him on 21-9-90 and books of accounts were seized. It is noted that he received estate brokerage, finance charges (interest and brokerage) as given below. He also invested in properties mentioned below. The figures in diaries A/6 and A/1 are written by omitting three zeros and wherever he has made '=' mark, those figures are written by omitting two zeros.

A. Estate Brokerage : In diary A/6 it is written that the assessee received following brokerage/profit in estate dealings:

In diary A/1 following profit/brokerage is written which is not incorporated in A/6 diary :—

18.4.90 2,21,000 Murari shop Khar (Total 4,51,000 - 2,30,000 = 2,21,000 profit)

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Total 11,60,500

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The above income was not shown by the assessee to his return nor assessed. This income of Rs. 11,60,500/- has escaped assessment.

B. The assessee is also buying and selling properties. The details of such dealings are also noted in reasons recorded for A.Y. 1989-90. During the year the receipts from property dealings noted in A/6 diaries are:

There are following receipt entries which are noted in A/1 diary which do not appear in A/6.

Total receipts for properties Rs.1,16,78,515/-. The profit on these sales is estimated @ 15% at Rs. 17,51,777/-. The assessee has not shown this profit and hence it has escaped assessment.

C. The assessee has invested the following amounts in immovable properties as noted in diary A-1 as under:—

These investments are from 1.4.90 till 21.9.90 (date of search). The assessee could not explain the source of these investments However, if the credit is given for sale proceeds of Rs. 1,16,78,515/- as par para (B), the net investment remains unexplained is Rs. 1,40,98,985/- which has escaped assessment.

D. The assessee is a financer. He has not explained the source of finance made. The new amounts given during the year to various parties upto 21.9.90 as per diary A/3 are Rs.3,29,85,000/-. The assessee has not explained, the source of the money advanced to various persons mentioned in A/3 diary. I am therefore of the opinion that this amount of Rs. 3,29,85,000/-is the income of the assessee u/s. 69/69B which has escaped assessment.

E. As per A/I diary the assessee paid Rs. 60,000 on 20.4.90 for membership of club for four persons. The source is not explained Similarly he paid Rs. 5,000/- to Shri Ranan as deposit for Toyota Car on 13.6.90. The source is not explained and also paid Rs. 4,35,000/- to purchase 29 bearer bonds @ 15000 per bond on 9.4.90 to Sri Projects. The source of Rs. 4,35,000/- is not explained.

Thus the amount of Rs. (60,000 + 5000 + 4,35,000) Rs. 5,00,000/- is the income of the assessee u/s. 69/69A/69B which has escaped assessment.

F. The assessee vide letter dt. 5.2.94 has admitted that cash amount of Rs.31 lacs deposited in the bank are unaccounted and covered by declaration u/s. 132(4). This amount has escaped assessment.

Thus consideration A, B, C, D, E & F above, the following income has escaped assessment within sub-clause (i) of clause (c) of explanation 2 of Sec. 147.

7. The impugned notices dated 23 September 1997 were challenged in this Court by filing this petition on the ground that the same are without jurisdiction and therefore bad in law.

8. The Respondent-Revenue, has opposed this petition by filing an affidavit in reply dated 12th March, 1988 of one Mr. K. K. Deb Burman, the Commissioner of IncomeTax, Central-I, - wherein it is contended that during the assessment proceedings under Section 148 read with Section 143(3) of the Act for Assessment Years 1989-90 and 1990-91 and during assessment proceedings under Section 143 (3) of the Act for the Assessment Year 1991-92 the Petitioner had misled the Assessing officer in respect of the entries found in the six seized diaries(A-1 to A-6) to conclude that he is only a finance and estate broker and not a financer in his own right. Besides, the affidavit also states that the Petitioner's decoding of the seized diaries (A-1 to A-6), during the regular assessment proceedings was incorrect. This on the basis of the examination of the seized diaries (A-1 to A-6).

9. Mr. Joshi, learned Counsel appearing for the Petitioner submits that the reasons as recorded for issuing the impugned notice do not even remotely indicate that the Petitioner had misled the department to reach the conclusion that he is a finance broker and not a financer. Similarly, it is submitted that the reasons as recorded do not even allege remotely that the petitioner had not decoded the entries in the diaries during the earlier/regular Assessment proceedings. These allegations are found only in the above Affidavit in reply filed by the Revenue to the Petition. It is submitted that such improvement of reasons by affidavit is not permissible as held by this Court in Hindustan Lever Ltd., v. R.B. Wadekar [2004] 268 ITR 332 [LQ/BomHC/2004/310] /137 Taxman 479 [LQ/BomHC/2004/310] . Therefore it is submitted that in the absence of reasons being supplemented, the impugned notices for reopening are a clear case of change of opinion on the same facts.

10. On the other hand, Mr. Mohanty, learned Counsel appearing for the Respondent-Revenue places reliance upon the Affidavit dated 12th March, 1988 of one Mr. K. K. Deb Burman, the Commissioner of IncomeTax, Central-I, to contend that the Petitioner had misled the Assessing officer in respect of the entries found in the six seized diaries (A-1 to A-6) to conclude that he is not a financer. Besides, as stated in the affidavit the Petitioner's decoding of the seized diaries (A-1 to A-6) was incorrect. The learned Counsel further states that merely because the necessary evidence in the form of seized dairies were before the Assessing officer during the earlier Assessment proceedings, it would not follow that that there has been a full and true disclosure of all material facts necessary for assessments. It is submitted that it was the obligation of the petitioner to invite the attention of the Assessing Officer to specific material evidence in the seized dairies. In support attention is invited to Explanation II to Section 147 of the Act and the decision of this Court in Zohar Siraj Lokhandwala v. M. G. Kamat Asstt. CIT [1994] 210 ITR 956 [LQ/BomHC/1994/155] /77 Taxman 302. Further, reliance is placed upon the decision of the Calcutta High Court in CIT v. Eureka Stock & Share Broking Services Ltd. [2016] 74 taxmann.com 114 to contend that where an assessee has misrepresented facts which led the Assessing Officer to take a view divorced from the actual facts, then it is open to the Assessing Officer to issue a re-opening notice as done in the present facts. Thus it was submitted that the petition should be dismissed and the petitioner would have more than sufficient opportunity to explain the facts before the authorities under the Act in the reassessment proceedings.

11. It is a settled position in law that a re-opening of assessment has to be done only by the Assessing Officer based on his reasonable belief that income chargeable to tax has escaped assessment. This satisfaction of the Assessing officer has to be disclosed /made explicit in the reasons recorded and the same cannot be a subject of speculation and /or drawing inferences. This is so conclusively stated this Court in Hindustan Lever Ltd., (supra) as under:

".... the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to drawn based on reasons not recorded. It is for the Assessing officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons.... The reasons recorded should be clear and unambiguous and suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of the mind of the Assessing officer. The reasons recorded should be self explanatory and should not keep the assessee guessing for the reasons. Reasons provide a link between conclusion and evidence. The reasons must be based on evidence. The Assessing Officer, in the event of challenge to the reasons must be able to justify the same on the material available on record... That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reason recorded cannot be supplemented by filing affidavit or making oral submission, otherwise, reasons which are lacking in material particulars would get supplemented, by the time the matter reaches to the court, on the strength of affidavit or oral submissions advanced."

12. In the above view, any improvement in the reasons recorded as sought to be done by oral submissions on the basis of the affidavit in reply of the Commissioner of IncomeTax Mr. K.K. Deb Burman dated 12 May 1988 has to be ignored. The reasons as recorded can alone be subjected to examination, to determine whether it supports the belief that income chargeable to tax has escaped assessment. On minute examination of the reasons recorded, we find that even when reasons recorded are read as a whole, it does not indicate that there has been a failure on the part of the petitioner to disclose fully and truly all facts necessary for assessment. Nor does it state that there has been any misrepresentation on the part of the petitioner. It is on re-examination of the seized diaries (A-1 to A-6) alone, without any fresh material which points to the falsity of the diaries (A-1 to A-6). Therefore when we examine the reasons recorded, without the aid of the affidavit in reply dated 12 March 1988 of the Commissioner of IncomeTax, it clearly indicates a change of opinion on the same set of facts. Thus it is a clear case of the Assessing officer seeking to review his decision taken during the earlier assessment/ re-opening assessment and not a case of reassessment.

13. The reliance placed by Mr. Mohanty upon the decision of this Court in Zohar Siraj Lokhandwala (supra), is misplaced in the facts of this case. In that case, Petitioner had filed a trust deed during the assessment proceedings and claimed that there was no cost of acquisition for the purpose of determining capital gain tax. However, the trust deed itself contains a indication that the acquisition of the property which was transferred, was for a consideration of Rs.300/-. The Assessing Officer sought to re-open and complete its assessment by placing reliance upon the trust deed and in, particular, the cost of acquisition of the property which was subjected to capital gains being recorded therein for the purpose of re-opening assessment. In that case, the Assessing Officer as well as this Court while negating a challenge by the Petitioner before it, placed reliance upon Explanation-I to Section 147 of the Act which provides that mere production of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer, will not necessarily amount to disclosure within the meaning of the first proviso to Section 147 of the Act. In the present facts, it is not the case of the Revenue that any material evidence which was a part of the seized six diaries (A1 to A6), was not brought to the notice of the Assessing Officer, and it does not mention which material relied upon by the Petitioner during the assessment proceedings, had led the Assessing Officer to conclude that the Petitioner is only a finance broker and not a financier. In fact the reasons recorded in this case does not even remotely indicate that any part of the evidence being relied upon to issue the impugned notices were not brought attention to by the petitioner during earlier assessment proceedings for the very assessment years which are sought to be reopened. In the case of Zohar Siraj Lokhandwala (supra), the reliance was placed upon the Explanation-I to Section 147 of the Act, as the assessee therein had not invited attention of the Assessing Officer to the trust deed, in particular, that the cost of acquisition of the capital asset was Rs.300/-. Therefore the decision of this Court in Zohar Siraj Lokhandwala (supra), would have no application to the present facts.

14. Similarly, the reliance placed by Mr. Mohanty on the decision of the Calcutta High Court in Eureka Stock & Share Broking Services Ltd., (supra) would also have no application to the present facts - for the two reasons. Firstly, in the above case, the assessee had by a letter addressed to the Assessing Officer during the course of assessment proceedings, misrepresented facts which led the Assessing Officer to pass an assessment order, to the prejudice of the Revenue. Admittedly, there is nothing in the reasons recorded in this case, to even remotely suggest that there was any misrepresentation of facts by the Petitioner during the assessment proceedings under Section 143(3) read with Section 148 of the Act for the Assessment Years 1989-90 and 1990-91 or even during the regular assessment proceedings for the Assessment Year 1991-92 completed under Section 143(3) of the Act. Secondly, the above decision of Calcutta High Court does not deal with the issue dealt with by this Court in Hindustan Lever Ltd., (supra) that an reopening notice must stand or fall only on the basis of the reasons recorded. In this case the reasons as recorded do not even suggest that there has been any misrepresentation. Thus, Eureka Stock & Share Broking Services Ltd., (supra) has no application to the present facts.

15. In the above view, all the three impugned notices dated 23rd September, 1997 under Section 148 of the Act seeking to reopen the assessment for Assessment Years 1989-90 1990-91 and 1991-92 are bad in law. Therefore, quashed and set aside.

Rule made absolute in terms of prayer clause (a). No order as to costs.