Ms. Sushma Chowla, J.M. ORDER These five appeals by Revenue are against separate orders of CIT(A)-XXV, Mumbai, dt. 19th Sept., 2003 for asst. yrs. 1995-96, 1997-98, 1999- 2000 and dt. 22-9-2003 for asst. yrs. 1996-97 and 1998-99 against orders under s. 144 r/w s. 147 of IT Act. 2. Common ground of appeals have been raised by Revenue in all aforesaid appeals which is as under : "The assessment proceedings were reopened as one of persons Smt. Ramaben Patel is benami of Shri Vasantlal Patel which has been agreed by Shri Ramaben Patel in her statement recorded on 22nd Sept., 1997 and for these reasons, firm is treated as AOP. interest and remuneration paid also needs to be disallowed." 3. Revenue has raised another ground of appeal in asst. yrs. 1995-96, 1997-98 and 1999-2000 which is as under : "On facts and in circumstances of case and in law, learned CIT(A) has erred in holding that assessee fulfils all conditions laid down under s. 44AD, without appreciating facts brought on record by AO." 5. brief facts of case are that assessee is civil contractor and total turnover of assessee firm for all years under consideration was below Rs. 40 lakhs. total turnover of assessee firm for years under consideration and profit declared on such turnover for years are as under : Assessment year Total turnover Income declared 1995-96 14,64,372 1, 17 ,840 1996-97 1,45,210 1997-98 8,31,839 76,541 1998-99 Nil Nil 1999-2000 24,46,399 1,95,720 6. assessee admits to having not maintained regular books of account and assessee being contractor, return of income was filed under s. 44AD of IT Act. assessments in all assessment years were completed under s. 143(1)(a) of IT Act. assessments thereafter have been reopened under s. 147 of IT Act, by recording following reasons : "The assessment proceedings were reopened as one of persons Smt. Ramaben Patel is benami of Shri Vasantilal Patel which has been agreed by Smt. Ramaben Patel in her statement recorded on 22nd Sept., 1997 and for these reasons, firm is treated as AOP. interest and remuneration paid also needs to be disallowed." 7 . assessee did not furnish any return of income, in response to notice issued under s. 148 of IT Act. AO completed assessment, in status of AOP and computed income after making disallowances out of expenses and also out of cash loans and differences in account of debtors. 8. Before CIT(A) assessee challenged validity of reopening of assessment under s. 147 of IT Act. During course of appellate proceedings before CIT(A), learned Authorised Representative for assessee submitted that ground for reopening of assessment was for treating firm as AOP on ground that one of partners did not know anything about business of firm, was not valid ground. Reliance was placed on decision of Hon ble Rajasthan High Court in CIT vs. Gulab Das (1985) 47 CTR (Raj) 195 : (1986) 159 ITR 24 (Raj), facts of which case were claimed to be similar to facts of present case. learned Authorised Representative further pointed out that if partner of firm is not aware of business activities of firm then same would not lead to conclusion that firm is not genuine firm. Reference was made to provisions of s. 184/185 of IT Act. It was further submitted by learned Authorised Representative for assessee that allegation that Mrs. Ramaben Patel was benami had been annulled by verdict of CIT(A) vide order dt. 23rd Dec., 2002. learned Authorised Representative further stated that as assessee had declared income under provisions of s. 44AD of IT Act at percentage which is more than 8 per cent, it is relieved of maintaining books of account and AO could not insist on production of books of account and make additions on that account. learned Authorised Representative further stated that in case assessee had declared profits at less than 8 per cent of its turnover, such case could be scrutinized for regular assessment under s. 143(3) of IT Act. 9. CIT(A) noted that case of assessee was within purview of s. 44AD of IT Act as it was engaged in business of civil construction with turnover less than Rs. 40 lakhs. assessment was reopened by AO on ground that certain information was received from AO of Shri Vasant A. Patel, that another partner of firm Mrs. Ramaben Patel was benami of Shri Vasant A. Patel, as she did not know about business of firm. CIT(A) held that assessment of assessee-firm had not been reopened on valid ground as provisions of s. 147 of IT Act deals with escapement of income. CIT(A) noted that assessment had been reopened for verification and investigation of genuineness of firm which is not permissible under provisions of IT Act. Relying on decision of Rajasthan High Court in Gulab Das case (supra) it was observed by CIT(A) that partnership is valid if conditions mentioned in provisions of s. 184/185 of ITR had been fulfilled and mere fact that partner is not aware about business activities of firm will not render firm non-genuine firm. Accordingly, initiation of proceedings of reopening of assessment were held to be bad and reassessment order was held to be bad. Regarding issue of applicability of provisions of s. 44AD of IT Act, it was observed by CIT(A) that in case of assessee, it could not be taken up for scrutiny if he had opted for filing return under s. 44AD of IT Act. In case where turnover is less than Rs. 40 lakhs and profit is also less than 8 per cent of turnover, appellant is required to adduce evidence and such return can be scrutinized even if he had opted to file return of income under s. 44AD of IT Act. As assessee had fulfilled all conditions laid down under s. 44AD of IT Act, such return should not have been taken up for scrutiny. On this ground also reassessment was held to be bad in law and was held to have been reopened on invalid grounds. 1 0 . Revenue is aggrieved and hence this appeal. learned Departmental Representative for Revenue stated that CIT(A) had quashed reopening of assessment under s. 147 of Act. He further stated that at time of reopening of assessment AO should have reasons to believe and sufficiency of reasons is not relevant. Before issuing notice under s. 148 of IT Act what is required is that AO has reason to believe that income has escaped assessment and AO has recorded reasons in writing. In facts of case before us when AO had material by way of information received from AO dealing with assessment of Shri Vasant A. Patel, on which he acted bona fidely, reassessment can be made and correctness of reasons in such case cannot be called in question. Reliance was placed on various judicial pronouncements of Hon ble Supreme Court for proposition that at time of issuance of notice for reopening assessment, belief of AO is to be on basis of information and its correctness is not to be considered. 11. Reference was made to provision of ss. 184 and 185 (provisions before amendment) of IT Act for proposition that in case of non- compliance of provisions of s. 184 of IT Act firm can be assessed in status of AOP. It is pointed out by learned Departmental Representative for Revenue that in present case assessee had not complied with provisions of s. 184(1)(i) of IT Act. In respect of merit of provisions of s. 44AD of IT Act, it was stated by learned Departmental Representative for Revenue that to extent of assessability of income in question, same cannot be questioned, but AO can question unproved loans raised during year. It was fairly admitted by learned Departmental Representative for Revenue that AO could not ask for production of books of account while assessing income under s. 44AD of Act, but queries could be raised in respect of loans under ss. 68 and 69 of IT Act. Reliance was placed on decision of CIT vs. Sun Engineering Works (P) Ltd. (1992) 107 CTR (SC) 209 : (1992) 198 ITR 297 (SC) that though reassessment was initiated in respect of certain deduction but on reopening whole assessment is open for of certain deduction but on reopening whole assessment is open for assessment of escapement of income. In facts of Sun Engg. Works (P) Ltd. s case (supra), assessment was initially reopened on allowability of certain deductions, but Hundi loans received were also considered in reassessment proceedings. learned Departmental Representative concluded by stating that under mandate of s. 147 of IT Act, AO can make any enquiries and if reopening is held to be valid, matter should go back to AO. 12. learned Authorised Representative for assessee submitted that assessee had filed return of income under s. 44AD of IT Act, wherein AO had no authority to do any assessment. learned Authorised Representative further pointed out that assessment was reopened for doing something indirectly, which he could not do directly. Reliance was placed on decision of Sun Engg. Works (P) Ltd. s case (supra) and also decision of Punjab & Haryana High Court in case of Vipan Khanna vs. CIT (2002) 17 5 CTR (P&H) 335 : (2002) 255 ITR 220 (P&H). learned Authorised Representative for assessee further pointed out that while invoking provisions of s. 147 where any income has escaped from assessment, any and every aspect cannot be looked into. notice in present case was issued for one particular purpose and reassessment was completed on another stand. learned Authorised Representative for assessee further pointed out that reopening in present case was initiated because of belief that one of partners was not aware of affairs of business has no relevance as because of findings of Tribunal in case of Vasantlal A. Patel vs. ITO (ITA No. 5513/Mum/2002), wherein it has been held that there is no material available on record which could indicate Mrs. Ramaben D. Patel is benami of Shri Vasantlal A. Patel. In any case, even if one of partners is found as representing someone else does not make firm AOP, where reassessment proceedings have to be initiated. On merits, it was stated that firm is genuine firm, wherein capital and loans have been introduced by partners. notice has been initiated merely on aforesaid basis, same is not valid and liable to be quashed. Reliance was placed on decision of Hon ble Bombay High Court in Vijaykumar M. Hirakhanwala (HUF) vs. ITO (2007) 207 CTR (Bom) 345 (Writ Petition Nos. 1355 to 1358 of 2006). 13. We have heard rival submissions and perused records. assessee is engaged in business of civil construction. annual source of income of assessee is income from construction business. total turnover of assessee firm for years under consideration was less than Rs. 40 lakhs. Under provisions of s. 44AD of IT Act, person carrying on business of civil construction or supply of labour for civil construction work have alternate method of estimating income from their respective business. As per provisions of s. 44AD of IT Act persons having gross receipts less than Rs. 40 lakhs may estimate income at rate of 8 per cent or more of gross receipts. 14. first issue in present appeal is whether reopening of assessment under s. 147 of IT Act is valid. basis for reopening assessment in present case was that one of partners of firm Mrs. Ramaben Patel did not know anything about business of firm and she w s treated as Benami of Shri Vasant A. Patel, another partner of firm. Under provisions of s. 147 of IT Act, AO having reason to believe that any income chargeable to tax has escaped assessment for any assessment year may reopen assessment for assessing or reassessing such income or any other income which had escaped assessment and comes to his notice subsequently, in course of proceedings under section. primary condition for invoking provisions of s. 147 of IT Act is "the reason to believe". It is established principle of law settled by various judicial pronouncements on issue that "the reason to believe" pre-supposes existence of some material or information based on which reasonable belief of escapement of income could be entertained. 15. Their Lordships of Bombay High Court in Vijaykumar M. Hirakhanwala (HUF) vs. ITO (Writ Petition Nos. 1355 to 1358 of 2006) (supra) had held as under : ". . .In our opinion, reasons recorded that there is hardly any activity from Bombay office is totally vague and would neither constitute any material or information so as to form nexus or reason to believe that income has escaped assessment. As stated earlier for several decades, expenditure incurred at Bombay office of assessee has been consistently allowed in regular assessments and there is no material on record to show that in past expenditure has been erroneously allowed. Thus, in present case, there is no material or information based on which AO could form reasonable belief that income chargeable to tax has escaped assessment. Therefore, it is evident that reopening of assessments are based on pure change of opinion and there is no material whatsoever to constitute any basis for reopening assessments. 16. We may note that for asst. yr. 2002-03 AO has recorded additional ground for reopening assessment namely, excess depreciation has been allowed on account of failure to deduct capital subsidy from written down value of fixed assets while claiming depreciation. assessee in its objection to reopening of assessment has clearly stated that capital subsidy received has in fact been deducted from written down value of fixed assets while claiming depreciation. It appears that explanation given by assessee is accepted by Revenue because neither in order rejecting objections raised by assessee, nor in affidavit in reply and not even before this Court, Revenue has pressed ground for reopening assessment on account of excess depreciation. Thus, only ground on which assessments are sought to be reopened in all years in question is that expenditure/loss incurred at Bombay office cannot be allowed as there is hardly any activity from Bombay office of assessee. In our opinion, reopening of assessments based on above ground which is totally vague and devoid of any substance cannot be basis for reopening assessments. 17 . In result, all petitions are allowed by quashing and setting aside notices all dt. 30th March, 2004 issued under s. 148 of IT Act, 1961." (Emphasis supplied) 16. Under provisions of ss. 184 and 185 of Act, for purpose of assessing firm as firm, requirements are : (i) partnership is evidenced by instrument; and (ii) individual shares of partners are specified in said instrument. Sub-s. (2) to s. 184 of Act provides that certified copy of partnership deed is to be enclosed with return of income in respect of which assessment as firm is sought for first time. Thus, certified copy of partnership deed is to be filed along with return of income for previous year, in which partnership firm was formed. Sub-s. (3) to s. 184 of Act further provides that once firm is assessed as firm for any assessment year, it shall be assessed in same capacity for every subsequent year, if there is no change in constitution of firm or shares of partners remain same. Sub-s. (4) to s. 184 provides that in case of any change taking place in any previous year, certified copy of revised partnership deed shall be furnished along with return of income for that assessment year. Sub-s. (5) to s. 184 of Act provides that in case there is failure on part of firm as mentioned in s. 144 of Act, no deduction by way of any interest, salary, bonus or remuneration paid by firm to any partner of such firm shall be allowed in computing income chargeable under head Profits and gains of business or profession . It further provides that such interest, salary, bonus or remuneration paid to partners was also chargeable to tax under cl. (v) of s. 28 of Act i.e., not includable in hands of partners as profits and gains of business. 17 . provisions of s. 185 of Act at relevant time provides that where firm does not comply with provisions of s. 184 of Act for any assessment year. 18. Under amended provisions by Finance Act, 1992, which were introduced w.e.f. 1st April, 1993, method of assessment as firm has undergone changes and for being assessed as firm requirements are only that partnership should be evidenced by instrument, wherein individual shares of partners are specified and such instrument of partnership should be furnished along with return of income relevant to previous year in which such instrument is executed. 19. In present set of facts and circumstances of case before us, reason for reopening was that one of partners of firm Mrs. Ramaben D. Patel did not know anything about business of firm is not valid ground for reopening of assessment and treating firm as AOP. 20. fact whether one of partners is aware about nature of business or not is not consideration for assessing firm under provisions of s. 184 of IT Act, even if we do not take cognizance of concept of sleeping partners . 21. Before invoking provisions of s. 147 of Act, AO should have reason to believe that income has escaped assessment. requirement of section is that at time of issuance of notice under s. 147 of Act, there is reasonable belief, sufficiency of those reasons though cannot be called in question but belief of AO should be reasonable. Merely because partner is not aware about business activities of firm, under no circumstances will render firm as non-genuine firm under provisions of s. 184 of IT Act, where requirements are that partnership should be evidenced by instrument in writing specifying individual shares of partners and certified copy of such instrument should accompany return of income. mere fact that assessee had furnished only Xerox copy of partnership deed, which was not certified in writing was curable defect. basis for reopening assessment was that one of partners had no knowledge of business is not valid reason as partner in present case has not admitted to being not partner in partnership firm. We have taken into consideration various judicial pronouncements relied upon by learned Departmental Representative, which clearly provide that belief must be held in good faith; it cannot be merely pretence . Their Lordships of Hon ble Bombay High Court in Vijaykumar M. Hirakhanwala (HUF) s case (supra) have categorically held that where there is no material or information, based on which AO could form reasonable belief that income chargeable to tax has escaped assessment, such reopening of assessment is based on pure c h n g e of opinion and cannot constitute any basis for reopening assessment. 22. In view of our discussion hereinabove, we are of view that AO had no reason to believe that income had escaped assessment specially in cases where firm was to be assessed as AOP as one of partners was not aware of business of firm. In case there is no escapement of income, there is no question of reopening of assessment and accordingly we confirm finding of CIT(A) that there are no valid grounds with AO so as to enable him to form reasonable belief that income has escaped assessment and accordingly initiation of proceedings of reopening of assessment are bad and assessment made thereafter be cancelled. 23. In result, appeals of Revenue in ITA Nos. 7815/Mum/2003 to 7819/Mum/2003 are dismissed. *** INCOME TAX OFFICER v. MANSI ENTERPRISES