Honble President of Income Tax Appellate Tribunal has constituted Special Bench under section 255(3) of Income-tax Act and referred following questions:- (i) Whether, on facts and in circumstances of case, re- assessment proceedings intimated by Assessing Officer and confirmed by CIT(A) are valid? (ii) If answer to question No. 1 above is in affirmative, as to whether cash credits introduced by assessee(s) are genuine? 2. Learned representatives of both parties have stated that basic facts in all these cases are common. We, therefore, proceed to dispose of all appeals by this common consolidated order for sake of convenience. 3. We have heard learned representatives of both parties and gone through observation of authorities below and examined rival submissions in light of material placed before us. learned counsel for assessee submitted that assessees in ITA Nos. 378/95, 377/95, 380/95 and 389/95 have moved application for admission of additional ground of appeal which reads as under:- That notice issued under section 148 in this case was invalid, barred by time and without recording any valid reasons for reopening of assessment and therefore action of Assessing Officer of reopening assessment under section 147 is illegal and said action has wrongly been upheld by DCIT(A) Jalandhar. 4. learned counsel for assessee submitted that legality and initiation of proceedings under section 147 of IT Act have already been challenged in case of assessee Durga Parshad Goyal and specific ground has been taken in grounds of appeal. Learned counsel for assessee submitted that additional ground so raised is legal in nature which was taken before authorities below. Learned counsel for assessee further submitted that since issue raised in additional ground arises from order of authorities below and reference is also made to Special Bench on same issue, therefore, same may be admitted for hearing. Learned DR, however, opposed request of learned counsel for assessee and submitted that section 148 is meant for Department and it is fundamental duty to unearth undisclosed income. Therefore, Department should not be stopped midway from making investigation. He, accordingly, submitted that additional ground may not be admitted. 5. On consideration of above facts, we are of view that additional ground raised in four appeals is legal in nature which was also agitated before DCIT(A) and no fresh investigation on facts is required, in case additional ground is admitted. Honble Supreme Court in case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 held:- Undoubtedly, Tribunal has discretion to allow or not to allow new ground to be raised. But where Tribunal is only required to consider question of law arising from facts which are on record in assessment proceedings, there is no reason why such question should not be allowed to b e raised when it is necessary to consider that question in order to correctly assess tax liability of assessee. We, accordingly, admit additional ground in four of appeals as mentioned above. 6. facts as taken from one of appeals of Durga Parshad Goyal are that original assessments for assessment years 1982-83 and 1983-84 were made in this case under section 143(1) vide orders dated 30th June, 1983 and 30th November, 1983 respectively. 7. assessments were reopened on receipt of information indicating that searches conducted on business and residential premises of Shri Parshotam Dass and its associate concern and other related persons coupled with allied enquiries made revealed that assessee had received/introduced bogus credits of Rs. 20,000 and Rs. 30,000 (OB of Rs. 20,000 plus Rs. 10,000 new) for assessment years 1982-83 and 1983-84 respectively in name of M/s. Ram Kumar Parshotam Dass who was not actually money lender but was engaged in racket of name lending only. Notices under section 148 were issued for assessment years 1982-83 and 1983-84 on 30th March, 1989 which were served upon assessee on 31st March, 1989. In response thereto, assessee filed letters on 1-5-1989 separately for assessment years 1982-83 and 1983-84 stating therein that he had already filed income tax returns in respect of assessment years 1982-83 and 1983-84 which might be treated to have been filed in response to notice under section 148 of Income-tax Act. assessee objected to legality of initiation of reassessment proceedings on plea that full facts of credits were before Income-tax Officer at time of regular assessments, so notices under section 148 could not be issued. assessee also objected to initiation of reassessment proceedings contending that case was covered under clause (b) of section 147 and not under clause (a) of section 147 and that since notice under clause (b) of section 147 had to be issued within period of four years, therefore, notices issued were beyond time provided under law. legality of initiation of reassessment proceedings were also objected to on plea that subsequent information to Assessing Officer that money lenders were not genuine did not justify reassessment proceedings. However, contention of assessee did not find favour with Assessing Officer. Assessing Officer also called upon assessee to prove genuineness of loan transaction and in response thereto, assessee filed confirmation letter. However, creditor was not produced. On these facts, Assessing Officer was of view that cash credit is not genuine. Assessing Officer also pointed out that enquiries made by Department have revealed that Shri Parshotam Dass and his associate concerns namely Ram Kumar Parshotam Dass, Jai Shankar Karyana Traders & Yogesh Kumar S/o Shri Parshotam Dass and Smt. Savitri Devi, W/o Sh. Purushotam Dass were engaged in business of name lending on vast scale. Assessing Officer, accordingly, rejected contention and made addition in both assessment years. assessment order was challenged before DCIT(A). Same submissions were made before DCIT(A). However, appeal of assessee was dismissed. 8. Learned counsel for assessee argued that orders of authorities below were not in accordance with law because Assessing Officer had n o reason to believe that income chargeable to tax had escaped assessment. He has submitted that cash credits were shown in regular returns and only list is attached with letter of ACIT, Inv. Circle, Bhatinda giving name of t h e parties but no material or evidence of bogus credit is available with Department. He further submitted that there is no denial by creditor to show that credits were bogus. He has further submitted that no material was filed to show as to how credits are bogus. Learned counsel for assessee submitted that no material whatsoever was brought on record to justify contention of bogus credits. He has further submitted that no confessional statement of Shri Parshotam Dass or his associate was recorded. He, accordingly, submitted that t most, Assessing Officer was having some suspicion but suspicion cannot taken as belief of Assessing Officer that cash credits are not genuine. Learned counsel for assessee submitted that reasons recorded by Assessing Officer have been filed by Department on record but, in fact, there is no evidence to show that said Shri Parshotam Dass or his associate had at any stage stated that loan transaction with assessee was ingenuine. Even if some statement of Smt. Savitri Devi W/o Sh. Parshotam Dass was recorded, but there was no reference of loan transaction with any assessee and, as such, it was not open to Department to initiate reassessment proceedings. He has pointed out that general statement made by person disowning loan transaction with certain parties, not including name of assessee, could not empower Assessing Officer to initiate reassessment proceedings. Learned counsel for assessee further submitted that similar questions were referred to Special Bench by Honble President of ITAT in case of Assam Tea Co. v. ITO [2005] 92 ITD 85 (Asr.) in which referred questions challenging initiation of proceedings under section 147 were decided by ITAT Special Bench Amritsar in favour of assessee in Assam Tea Co. (supra). Learned counsel for assessee submitted that point in issue is squarely covered by earlier order of ITAT Amritsar Bench (Special Bench) in case of Assam Tea Co. (supra). Learned counsel for assessee also relied upon decision of Honble Supreme Court in case of ITO v. Lakhmani Mewal Das [1976] 103 ITR 437. 9. On other hand, learned DR submitted that assessee in his written submission admitted that notice under section 147 is valid but assessment is not valid. Learned DR further reiterated that section 148 is meant for Department to unearth, undisclosed and escaped income. Therefore, it was fundamental duty of Revenue Department to proceed under section 147 in order to achieve intent and purpose of Act. He has further submitted that Revenue Department should not be stopped from investigation of case by quashing initiation of proceedings under section 147 of Income-tax Act. Learned DR relied upon order of ITAT Amritsar Bench (Third Member) decision in case of Gopi Chand Prem Kumar v. ITO [2001] 71 TTJ 627 and decision of Honble Supreme Court in case of Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456 and order of ITAT Amritsar Bench in case of Asstt. CIT v. Sachdeva & Sons [2005] 97 ITD 425 (Asr.). Copies are filed. Learned DR submitted that evidence is material but not confessional statement. He has further submitted that material with Assessing Officer was enough to hold that hawala transactions were carried out and cash credits in aforesaid case are bogus. Learned DR further submitted that confessional statement is not material but material information is necessary. He has further submitted that statement of Smt. Savitri Devi was recorded which justified initiation of proceeding under section 147 of Income-tax Act. Learned DR, however, could not say as to whether decision of Special Bench in case of Assam Tea Co. (supra) is challenged by Revenue before High Court or not. Learned DR submitted that ACIT, Inv. Circle, in his letter to Assessing Officer pointed out bogus credits and name lending racket and also supplied list in which name of assessee is appearing. He has submitted that report of investigation has some weight. 10. We have considered rival submissions in light of material placed before us and decisions relied upon by learned representatives of both parties. Before proceeding further in matter, we would like to mention that questions which were referred to Special Bench are identical questions which were also referred to by Honble President to Special Bench in case of Assam Tea Co. (supra) in which Special Bench of ITAT Amritsar Bench decided identical referred questions in favour of assessee and reassessment proceedings were quashed. finding of ITAT Amritsar Special Bench in paragraphs 6 to 6.9 are reproduced as under:- 6. We have considered rival submissions in extenso in light of material placed before us and precedents relied upon. primary question that falls for our consideration is to decide as to whether reassessment proceedings initiated by Assessing Officer and confirmed in first appeal were valid or not. Before going to this question, it would be apposite to deal with contention raised by Mr. Bansal to effect that Assessing Officer having accepted transaction in original assessment proceedings could not have initiated reassessment proceedings on same facts. Section 147, prior to its substitution by Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1- 4-1989 had two clauses, namely (a) and (b). In present appeals, we are concerned with unamended provisions. Relevant portion of clause (a) of section 147, empowers Assessing Officer to assess or reassess any income, where he has reason to believe that by reason of omission or failure on part of assessee to disclose fully and truly all material facts necessary for assessment, any income chargeable to tax has escaped assessment. It shows that proceedings under section 147(a) read with section 148 can be initiated i f two conditions are satisfied, namely, (i) Assessing Officer must have reason to believe that income chargeable to tax has escaped assessment and (ii) he must have reason to believe that such income has escaped assessment by reason of omission or failure on part of assessee to disclose fully and truly material facts necessary for his assessment for that year, or to make return under section 139 for assessment year to Assessing Officer. Both conditions should be cumulatively satisfied to confer jurisdiction with Assessing Officer to initiate proceedings. key words used in this clause are to disclose fully and truly all material facts. So long as disclosure made by assessee is full and true of all material facts, intention of assessee cannot be questioned. If, however, subsequent events, after completion of assessment, belie claim of assessee made at assessment stage, it cannot be said that disclosure earlier made was full and true. Any information coming to possession of Assessing Officer which is specific, reliable and relevant that was not previously disclosed or which exposes untruthfulness of facts given by assessee at assessment stage, certainly empowers Assessing Officer to start reassessment proceedings subject to provisions of this Act. It is immaterial that Assessing Officer at time of making original assessment could have found on further inquiry or investigation that transaction was genuine or not. This is mandate of decision of Honble Apex Court in case of Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456. This leads us to irresistible conclusion that there are no fetters on power of Assessing Officer to initiate reassessment proceedings in respect of transaction which was examined by him at time of original assessment, if subsequent events lead him to believe that any income chargeable to tax has escaped assessment by reason of non-disclosure or wrong disclosure of primary facts at assessment stage. 6.1 Adverting to facts of cases under consideration, it is seen that reassessment proceedings were initiated on strength of some material gathered during course of search at residential and business premises of Sh. Parshotam Dass, on basis of which Assessing Officer came to conclusion that credits introduced by these assessees in their books of account in name of M/s. RKPD were bogus as Sh. Parshotam Dass was only name-lender. stand of aforesaid two cases is that amounts were received through banking channels from M/s. RKPD which was firm and statement of Smt. Savitri Devi W/o Sh. Parshotam Dass, stranger to firm was inconsequential insofar as transactions of assessee with said firm were concerned. 6.2 At this juncture, it would be relevant to get enlightened from certain judicial precedents on this point. In case of Kashmiri Lal Kasturi Lal & Co. v. CIT [1989] 177 ITR 477 (Punj. & Har.), Income-tax Officer found in account books of assessee that firm G had advanced sum of Rs. 20,000 to assessee by way of cash credit. At time of original assessment, it did not come to light whether G had really advanced by way of cash credit or was merely bogus firm lending its name. Later on when assessment proceedings were initiated against G, it transpired that it had indulged in Hawala business with various parties including assessee and that firm merely lent its name to assessee and no amount was in fact advanced. In this case, Tribunal found that ITO had reason to believe on basis of subsequent Tribunal found that ITO had reason to believe on basis of subsequent information that assessee had earlier failed to disclose material facts and hence reassessment proceedings were held to be valid. It was held by Honble High Court that Tribunal was right in holding that action under section 147(a) of Act was rightly taken by ITO against assessee. 6.3 In case of Kirpa Ram Ramji Dass v. ITO [1982] 135 ITR 68 (Punj. & Har.), assessee had shown sum of Rs. 95,000 as having been borrowed from five persons and assessment was completed. Subsequently, as result o f investigation and raids carried out by Income-tax Deptt.; it came to light that numerous parties including five parties mentioned in assessees return were engaged in Hawala business. ITO issued notice under section 147(a) and assessee filed writ petition to quash notice. In this case, it was contended on behalf of petitioner that in statements of persons there was no reference of name of petitioner firm and, therefore, said statement should be taken to be not relevant material. This contention was repelled by observing that when bogus Hawala Hundi proprietors, namely, Meghraj etc.; in categorical terms stated that they did not advance loans to any persons whatsoever, it would automatically mean that no loan was advanced to t h e petitioner and loans shown in their names were in fact bogus transactions brought on record [Emphasis supplied]. In light of these facts, reassessment proceedings were held to be validly started. 6.4 In yet another case, Hazi Amir Mohd. Mir Ahmed v. CIT [1977] 110 ITR 6 3 0 (Punj. & Har.), Assessing Officer inquired about genuineness of certain cash credits found in assessees books at assessment stage and accepted them as true and completed assessment. Later on, Hundi racket operating on all India basis was unearthed and some of creditors shown in balance sheet of assessee made confessional statements to effect that they were lending names and not money. Assessing Officer re-opened assessment of assessee and added sum of Rs. 1,60,000 to his income. appeals before AAC and Tribunal were unsuccessful. When matter travelled to Honble High Court, it was observed that even though breaking of Hawala racket on all India basis could not have rational connection with loans of assessee, yet confessional statements of creditors might have rational connection with loans of assessee. It was found that material was not available in order of Tribunal as to whether confessional statements related in any manner with loans to assessee or not. It was finally held that Tribunal would be justified in upholding re-opening of assessment under section 147(a), if confessional statements were in any manner related to assessee; other not. 6.5 In case of Phool Chand Bajrang Lal (supra), assessee had claimed that it had borrowed sum of Rs. 50,000 from Calcutta Company. Such loan was stated to have been raised and returned in cash though interest on such loan was paid by cheque/bank draft. During assessment proceedings, ITO finalized return by allowing deduction of such interest. Thereafter, he entertained some doubts about genuineness of loan transaction. inquiry from his counterpart at Calcutta revealed that Calcutta Company had not advanced any loans to any person. ITO of assessee examined Managing Director of Calcutta Company who admitted that he had made confession to ITO at Calcutta, that Company had not advanced any loan to any person. It was on basis of these facts that Honble Summit Court held that initiation of re-assessment proceedings as valid. 6.6 legal principles, relevant to issue in question, that can be culled from survey of aforesaid Apex Court and jurisdictional High Court decisions can be summed up as under: (a) In general, if events subsequent to completion of assessment show that assessee had recorded false entries in its account books, Assessing Officer would be justified under section 147(a) to initiate reassessment proceedings provided information gathered after completion of assessment is specified, reliable and relevant. (b-i) In particular initiation of reassessment proceedings would be valid if alleged creditor confesses that so-called loan transaction with assessee was ingenuine and he acted merely as name-lender. (b-ii) initiation of reassessment proceedings would be invalid where alleged creditor confesses or states that he was name-lender to some parties but name of assessee is not appearing in such list. 6.7 Now we will move ahead in testing instant cases touchstone of above-extracted principles. Reverting to facts under consideration, there i s no quarrel on point that entries in name of M/s. RKPD were appearing in books of account of assessees in question which was partnership firm in which Sh. Parshotam Dass was partner and said firm was dissolved on 31-3-1987. Search proceedings were taken against Sh. Parshotam Dass on 31-3-1989 on basis of which department has made out case that transactions appearing in books of these assessees are ingenuine as said Sh. Parshotam Dass was man of little means, hardly having any capacity to advance loans and he, ergo, acted only as name-lender to these parties. It is admitted position on behalf of Deptt. that no statement of Sh. Parshotam Dass was recorded either at time of search at his premises or during course of assessment proceedings. entire case of Revenue is erected on edifice of small capacity of Sh. Parshotam Dass. It is true that Smt. Savitri Devi, W/o Sh. Parshotam Dass in her statement recorded on occasion of search of her husband categorically stated that she had never advanced any loan to anybody during last 8 years. She was asked if she knew Sh. Sushil Kumar, Sh. Ashok Kumar, Bhagwati Devi, in response to which she stated that neither she knew these persons nor any loan was advanced to them. It was further inquired whether she knew Parkash, Mahavir Pd. S/o Sh. Devi Dayal, Krishan Goel S/o Sh. Krishna Murari Goel and whether she had any transaction with them for last 3 years, it was stated that she did not know these persons nor any transaction was made with them. On examination of her preliminary and concluding statements, it becomes abundantly clear that no question was asked regarding financial transactions of her husband with any party. Nothing was placed on record by Revenue to show that search unearthed any specific incriminating material casting doubt over genuineness of transactions of M/s. RKP with these assessees. No statement, much less confessional statement of Sh. Parshotam Dass, was recorded at any stage that could show that he had lent his name or of his associated concerns to assessees in question. department swing into action by initiating reassessment proceedings only on basis of all entries in books of account of Sh. Parshotam Dass and his allied concerns, without establishing any clear-cut connection of name lending by Sh. Parshotam Dass with assessees in question. It is pertinent to note that M/s. RKPD was partnership firm. Neither statement of Sh. Parshotam Dass nor that of any other partner of said firm was recorded which could justify initiation of reassessment proceedings. It is true that attending circumstances such as small financial capacity of Sh. Parshotam Dass to lend huge money create k suspicion in minds of Officers of Department, but suspicion however k cant take place of reasons to believe about escapement of income. As matter of fact, it provides valuable clue for detailed and deep investigation that assessee had not made full and true disclosure of his income. Unfortunately, steps of converting suspicion into belief about escapement of income in instant cases, were completely lost sight of. Except for statement of Smt. Savitri Devi, denying her involvement in any genuine loan transactions, there is no material with Department to justify initiation of reassessment proceedings in cases under scrutiny, which in our considered opinion is not sufficient to sustain reassessment for manifest reason that credits in books of these assessees were appearing in name of M/s. RKPD, in which Smt. Savitri Devi was not partner. position would have been otherwise calling for further examination at our end if credit entries had been appearing in her own name. minimum that was required as to record statement of Sh. Parshotam Dass during course of his assessment proceedings or in cases of these assessees if he was not available during course of search on 31-3-1989. Under such circumstances, we are not persuaded to uphold initiation of reassessment proceedings, which are hereby quashed. We, therefore, answer first question in negative. In view of our answer to question No. 1, second question becomes academic only. 6.8 M/s. Ashoka Industries, appellant in three years has also challenged levy of interest under sections 139(8) and 215 in reassessment proceedings. As proceedings and consequential assessment under section 148 are annulled, there cannot be any question of charging interest under these sections. 6.9 In result, appeal(s) of M/s. Assam Tea Co; and those of M/s. Ashoka Industries are hereby allowed. Learned representatives of both parties have conceded before us that material facts are identical. It is admitted fact that in present case also, statement of Shri Parshotam Dass is not recorded. notice under section 148 was issued on 30th March, 1989 and was served upon assessee on 31st March, 1989 i.e. prior to amendment in section 147 of Income-tax Act. Section 147 of Income-tax Act prior to substitution by Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1-4-1989, stood as under:- If- (a) Assessing Officer has reason to believe that, by reason of omission or failure on part of assessee to make return under section 139 for any assessment year to Assessing Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on part of assessee, Assessing Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to provisions of sections 148 and 153, assess or reassess such income or recompute loss or depreciation allowance, as case may be, for assessment year concerned (hereafter in sections 148 to 153 referred to as relevant assessment year). Explanation 1.For purposes of this section, following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- (a) where income chargeable to tax has been under-assessed; or (b) where such income has been assessed at too low rate; or (c) where such income has been made subject of excessive relief under this Act or under Indian Income-tax Act, 1922 (11 of 1922); or (d) where excessive loss or depreciation allowance has been computed. Explanation 2.Production before Assessing Officer of account books or other evidence from which material evidence could with diligence have been discovered by Assessing Officer will not necessarily amount to disclosure within meaning of this section. 11. In present appeals, we are concerned with unamended provisions. relevant provision of clause (a) of section 147 empowers Assessing Officer to assess or reassess any income, where he has reason to believe that by reason of omission or failure on part of assessee to disclose fully and truly all material facts necessary for assessment, any income chargeable to tax has escaped assessment. It shows that proceeding under section 147(a) read with section 148 can be initiated if two conditions are specified, namely, (i) Assessing Officer must have reason to believe that income chargeable to tax has escaped assessment and (ii) he must have reason to believe that such income has escaped assessment by reason of omission or failure on part of assessee to disclose fully and truly material facts necessary for his assessment for that year or to make return under section 139 for assessment year to Assessing Officer. Both conditions should be cumulatively satisfied to confer jurisdiction to Assessing Officer to initiate proceedings. So long as disclosure made by assessee is full and true of all material facts, intention of assessee cannot be questioned. If however, subsequent events, after completion of assessment, belie claim of assessee made at assessment stage, it cannot be said that disclosure earlier made was full and true. Honble Supreme Court in case of Lakhmani Mewal Das (supra) held:- grounds or reasons which lead to formation of belief contemplated by section 147(a) of Act must have material bearing on question of escapement of income of assessee from assessment because of his failure or omission to disclose fully and truly all material facts. Once there exist reasonable grounds for Income-tax Officer to form above belief, that would be sufficient to clothe him with jurisdiction to issue notice. Whether grounds are adequate or not is not matter for court to investigate. sufficiency of grounds which induce Income-tax Officer is, therefore, not justiciable issue. It is, of course, open to assessee to contend that Officer did not hold belief that there had been such non-disclosure. existence of belief can be challenged by assessee but not sufficiency of reasons for belief. expression reason to believe does not mean purely subjective satisfaction on part of Income-tax Officer. reason must be held in good faith. It cannot be merely pretence. It is open to court to examine whether reasons for formation of belief have rational connection with or relevant bearing on formation of belief and are not extraneous or irrelevant for purpose of section. To this limited extent, action of Income-tax Officer in starting proceedings in respect of Income escaping assessment is open to challenge in court of law. 12. In aforesaid case, whole case depends upon search conducted on business and residential premises of Shri Parshotam Dass. However, confessional statement of Shri Parshotam Dass was not recorded. No material is brought on record except list of ACIT, Inv. Circle, giving name of assessee for name lending credit by Parshottam Dass & Associates. No material is indicated as to how Assessing Officer had formed his belief that by reason of omission or failure on part of assessee to disclose fully and truly all material facts necessary for assessment for that year, income chargeable to tax has escaped assessment for that year. Since no material is brought on record, therefore, it is unbelievable that Assessing Officer had any material or has reason to believe that income chargeable to tax has escaped assessment. same facts and statement of Smt. Savitri Devi were considered by ITAT Amritsar Special Bench in case of Assam Tea Co. (supra) and such statement was not found to be reliable to justify initiation of t h e reassessment proceedings. decision in case of Phool Chand Bajrang Lal (supra) is also considered by Special Bench earlier. decision of ITAT Amritsar Bench in case of Gopi Chand Prem Kumar (supra) relied upon by learned DR is not applicable in view of order of Special Bench of ITAT in case of Assam Tea Co. (supra). In case of Sachdeva & Sons (supra), initiation of reassessment proceedings was held to be justified by ITAT Amritsar Bench because specific material was available in form of incriminating evidence recovered by Enforcement Directorate. This case is, therefore, clearly distinguishable on facts. 13. In present cases, information collected by Department after completion of assessment is not specific, reliable and relevant. Any general information contained in letter of ACIT, Inv. Circle, in our opinion, is not relevant material to sustain initiation of reassessment proceedings. Ld. DR referred to letter of assessee which was in nature of distinguishing case of assessee. Ld. DR also placed copy of reasons for issue of notice under section 148 in both assessment years in case of Durga Prashad Goyal in which Assessing Officer has referred to search conducted at residence of Shri Purshotam Dass mentioned above and further mentioned that assessee has not filed income tax return for assessment years 1982-83 and 1983-84. He, therefore, on such facts stated to have reasons to believe that by reasons of omission for failure on part of assessee to make return under section 139 for both assessment years, income chargeable to tax as escaped assessment of these years. Copy of ITNS -10 is also filed in which in column No. 8 it is stated by Assessing Officer that assessment is proposed to be framed for first time. These facts clearly show that Assessing Officer was not justified in reopening assessment in matter because he has recorded facts contrary to record in assessment order, Assessing Officer mentioned that original assessment for both years were made under section 143(1) vide orders dated 30-6-1988 and 30-11-1983 respectively which show returns are in fact filed. reasons recorded by Assessing Officer for forming his belief for reopening assessment under section 147 are not based on any material or fact, therefore, same are incorrect and does not exist. belief of Assessing Officer for initiating proceedings under section 147 has no rational connection with reasons. Assessing Officer has not mentioned in reasons for issue of notice under section 148 that he has reasons to believe that assessee has failed to disclose fully and truly all material facts necessary for that year. Since no statement of Purshotam Dass is recorded and no report or material is filed on record as suggested by ld. DR, we are of opinion that Assessing Officer merely acted on suspicion and assumption that income chargeable to tax has escaped assessment. ACIT Investigation Circle has merely passed on general information to Assessing Officer about name lending racket by Parshotam Dass & Associates and such information coming to Assessing Officer is neither specific, nor reliable and not relevant against assessee because it has no basis whatsoever. Therefore, such information given to Assessing Officer would not in any manner prove that what was disclosed by assessee in return filed with Revenue Department earlier was not true and correct. belief is of Assessing Officer who initiated reassessment proceedings and not of ACIT, Investigation Circle. It only shows that Assessing Officer has initiated reassessment proceedings without application of mind. There is no material with Department to justify initiation of reassessment proceedings in cases under appeal, which in our considered opinion is not fit case to sustain reassessment. On consideration of above facts, we are of view that Assessing Officer did not validly assumed jurisdiction in initiating proceedings under section 147 of Income-tax Act. Considering above discussion and relying on earlier order of ITAT Amritsar Special Bench in case of Assam Tea Co. (supra), we are of view that cases of assessees are squarely covered by order of Special Bench in case of Assam Tea Co. (supra) therefore, initiation of reassessment proceedings are not in accordance with law. We, accordingly, quash same. We, therefore, answer t h e first question in negative i.e., in favour of assessee and against Revenue. Since question No. 1 is decided in favour of assessee, therefore, there is no need to decide question No. 2 on merits as it is of academic interest only. 14. No other point is argued or pressed nor there is any need to go in those points in view of our above finding. 15. As result, we cancel orders of authorities below and allow all appeals of assessee. appeals of assessee. *** DURGA PRASHAD GOYAL v. INCOME TAX OFFICER