Judgment :- 1. This Appeal is by the Revenue challenging the order of the Tribunal, which has set aside the order of the Appellate Authority as well as the Assessing Authority, wherein, an addition of Rs.60,92,527/- as unaccounted expenditure under Section 69 of the Income Tax Act (hereinafter referred to as the ‘Act’, for brevity) was made. 2. The facts leading to this appeal are as under: M.N. Dastur and Company Private Limited, the assessee, voluntarily filed the returns of income on 08.02.1995 declaring an income of Rs.7,64,22,786/-. The assessment under Section 143(3) was completed by the Assessing Officer on 26.03.1997 after making several additions. The total income was determined at Rs.11,58,81,750/-. The additions were made on various grounds including additions of Rs.26,85,972/- by disallowing the payment of brokerage on investments. The additions made in the original assessment were challenged by filing appeal before the CIT(A) and thereafter before the Tribunal. While the appeal was pending before the Tribunal on the original assessment, the Assessing Officer issued a notice under Section 148 of the Act dated 26.09.2000 which was served on the assessee on 06.10.2000. The assessment under Section 143(3) read with Section 147 in pursuance to the said notice was completed on 26.03.2002 by making an addition of Rs.60,92,527/-. The Assessing Officer mentioned in the reassessment order that, certain Banks and Financial institutions whose names are found in the assessment order had paid a sum of Rs.60,92,527/- astensibly as brokerage to Sri.J.T.Amrith Singh (hereinafter referred to as ‘JTAS’, for short) on business mobilized by him to the listed banks form the assessee company. Though the sum paid by the banks to the JTAS was shown as transactions of brokerage, but the Assessing Officer felt that in reality it was part of the interest payable to the assessee company, which was diverted at inception and was paid to JTAS on the instruction of the assessee company. Thus according to the Assessing Officer, the said payment constituted unexplained expenditure in the hands of the assessee company. 3. Aggrieved by the same, an appeal was filed to the Commissioner of Income Tax. During the pendency of the appeal, a remand report was called from the Assessing Officer and also other materials, which is said to have been relied on by the Assessing Officer in concluding the assessment. 3. Aggrieved by the same, an appeal was filed to the Commissioner of Income Tax. During the pendency of the appeal, a remand report was called from the Assessing Officer and also other materials, which is said to have been relied on by the Assessing Officer in concluding the assessment. On receipt of such report and other material, he held that, though the impugned payment by the banks to JTAS could not be treated as unexplained expenditure under Section 69C in the hands of the assessee, yet in amounts to receipt of income by the assessee. He also negatived all other grounds urged by the assessee in the said appeal. It is after taking into account all those materials, the said appeal came to be dismissed. 4. Aggrieved by the said order, the assessee preferred an appeal to the Tribunal. The Tribunal held that, when the income is earned by a third party and disclosed by such party, an item of income, which has no bearing on the ultimate computation of income of the assessee, it cannot be said that he deliberately did not disclose the said income. The proceedings initiated for re-assessment was clearly barred by time, as the reassessment ought to have been completed before 31.03.1999. There is an interpolation in the order of satisfaction passed by the Assessing Officer. Therefore, the said reasons recorded do not constitute a sufficient cause for re-opening the assessment. Thus the order passed by the Appellate Authority as well as by the Assessing Authority was set aside. Aggrieved by the said order, the revenue is in appeal. 5. The appeal is admitted to consider the following substantial questions of law: i) Whether the Tribunal was correct in holding that the Assessing Officer whose order was confirmed by the Appellate Commissioner could not have reopened assessments and brought to tax a sum of Rs.60,29,527/- disclosed as a receipt by Sri.J.T.Amrit Singh having received the same from the assessee and conformed by various banks who under oath had stated that this was an interest amount paid to the assessee and of the assessee’s instance transferred Sri.J.T.Amrit Singh? ii) Whether the Tribunal was correct in holding that the reopening of assessments was barred by limitation and consequently the assessment order was also barred by limitation? ii) Whether the Tribunal was correct in holding that the reopening of assessments was barred by limitation and consequently the assessment order was also barred by limitation? iii) Whether the Tribunal was correct in holding that the reasons recorded for reopening assessments based on the information available in the assessment order of Sri.J.T.Amrit Singh was not sufficient and there was no live link between the reasons recorded and the material in possession of the assessing officer as held by the Apex Court in 103 ITR 437? iv) Whether the Tribunal was correct in holding that a sum of Rs.60,29,527/- cannot be brought to tax as the income of the assessee? 6. The learned counsel for the revenue assailing the impugned order submitted that the material on record clearly discloses that an amount of Rs.60,92,527/- was due from five Banks an interest to the assessee. The said amount has been paid on behalf of the assessee by the Banks directly by cheque to their agent JTAS, which receipt, the agent has admitted in his return. In the enquiry conducted in those proceedings, the Banks have categorically stated that it is not a payment made by them on their behalf. It is a payment made on behalf of the assessee on his instructions. The Bank is not in the habit of paying any commission nor the law permits them to pay the commission. The assessee, in those proceedings denied, the receipt of the said amount of any instructions being given by them to the Bank to make the said payment and in substance, they denied the whole transaction. The assessee admits that they have fixed deposits in the five banks, which is earning interest and JTAS is their agent. In the returns filed, they have shown brokerage of Rs.26,85,972/- paid to JTAS. However, this sum of Rs.60,29,527/- is not reflected in their accounts, either as income or as expenditure. It is a clear case of escapement of income and expenditure and therefore, the Assessing Officer having reason to believe that the said income is chargeable to tax has escaped assessment, was justified in initiating proceedings under Section 147 of the Act. However, this sum of Rs.60,29,527/- is not reflected in their accounts, either as income or as expenditure. It is a clear case of escapement of income and expenditure and therefore, the Assessing Officer having reason to believe that the said income is chargeable to tax has escaped assessment, was justified in initiating proceedings under Section 147 of the Act. In the said proceedings, on a request made by the assessee, all the particulars are furnished and the assessee did not choose to file any objections or comply with the demand made therein, not only before the Assessing Officer, but even before the first Appellate Court. In the light of the aforesaid undisputed facts, the Assessing Officer and the first Appellate Authority was justified in passing the impugned orders, whereas the Tribunal without properly appreciating the material on record, ignoring the material evidence on record has erred in interfering with the said assessment orders and therefore, a case for interference is made out. 7. Per contra, the learned counsel appearing for the assessee submitted that, it is settled law that the High Court under Section 260 A, has no jurisdiction to interfere with the questions of facts, which are decided by the Tribunal. Once the Tribunal records a finding, on appreciation of the material on record to the effect that there was no suppression and no duty to disclose, the said finding is binding on this Court. Similarly, when satisfaction recorded do not constitute a sufficient ground for reopening the assessment, and the said satisfaction is not based on his explanation, but on a borrowed opinion, when he did not have any evidence of his own, the satisfaction recorded is vitiated and as rightly held by the Tribunal would not be a sufficient ground to reopen the assessment, which finding cannot be set aside in appeal by this Court. Thirdly, it was contended that in the re-assessment proceedings, the Assessing Officer did not call upon the assessee to state his case. Even otherwise, the assessee was not required to state his case and it was open to them to point out from the material on record that the Revenue has not discharged the burden of proving escaped assessment and therefore this Court in appeal cannot interfere with the said findings. Even otherwise, the assessee was not required to state his case and it was open to them to point out from the material on record that the Revenue has not discharged the burden of proving escaped assessment and therefore this Court in appeal cannot interfere with the said findings. Lastly, it was contended that as is clear from the order of the Assessment Officer itself that, there is no tax liability at all. Therefore, every escapement cannot be found fault with and made the basis for initiating proceedings. In support of her contention, she relied on several judgments of the Apex Court. In the light of the aforesaid facts, the rival contentions and the judgments relied on by both the parties, we proceed to answer the substantial questions of law that are raised in this appeal. 8. The assessee is carrying on the business of consulting engineers. It is being assessed in the status of a Company. For the assessment year 1994-95, the assessee filed its returns of income on 08.02.1995 declaring a total income of Rs.7,64,22,786/-. The case was taken up for scrutiny and the assessment was completed under Section 143(3) of the Act and the total income assessed was 11,58,81,750/-. Aggrieved by the same, an appeal was preferred by the assessee before the Commissioner of Income Tax(A) and thereafter before the Tribunal. During the pendency of those proceedings, for the assessment year 1994-95, in the case of one JTAS, it was found he had received a sum of Rs.60,92,527/- from the assessee. This amount had not been disclosed by the assessee in the earlier returns of income or during the course of assessments. Therefore, it was found that the income liable to tax has escaped assessment and assessments came to be reopened. A notice under Section 148 of the Act dated 26.09.2000 was issued to the assessee, which was duty served on the assessee on 06.10.2000. On receipt of the said notice assessee addressed a letter to the Joint Commissioner of Income Tax on 09.10.2000 requesting him to furnish copy of the reasons for initiating reassessment proceedings to enable the assessee to comply with the notice. On receipt of the said notice assessee addressed a letter to the Joint Commissioner of Income Tax on 09.10.2000 requesting him to furnish copy of the reasons for initiating reassessment proceedings to enable the assessee to comply with the notice. On 04.03.2002, with reference to the earlier notice under Section 148 dated 26.09.2000, the Deputy Commissioner of Income Tax addressed a letter to the assessee on 04.03.2002 calling upon the assessee to furnish an account copy of the six financial institutions a found in their books relevant to the assessment years 1994-95. It was also brought to the notice of the assessee that they have ascertained that the assessee has made most of their investment transaction with the above financial institutions through M/s.J.T.Amrith Singh and Company, situated at Service Centre, S. Russel Street (2nd Floor), Calcutta – 700 071. They requested the assessee to furnish their relationship or transactions with M/s.J.T.Amrith Singh and Company (stock and share brokers). It was also mentioned therein that, for the accounting year 1994-95 while computing income, the assessee has deducted a sum of Rs.26,85,972/- being brokerage. They wanted to know whether this payment was brokerage incurred towards commission payments to M/s.J.T.Amrith Singh and Company. It was also brought to their notice that they have verified that, most of the fund mobilizations to financial institutions were executed and routed through M/s.J.T.Amrith Singh and they acted as their sole agents and financial consultants through whom they were renewing the certificate of deposits with the above financial institutions. It is evident that the assessee has authorized M/s.J.T.Amrith Singh to negotiate on their behalf, the interest of FD accounts with the financial institutions, which is evident from the letters addressed to the assessee by the financial institutions. The assessee has also authorized M/s.J.T.Amrith Singh to receive part of interest accrued on their deposits. Therefore, they called for the following information. “i) Your detailed investments by way of certificates of deposits/negotiable certificate of deposits with the various financial institution with dates of investment and duration of deposits held with receipt of interest details on investments when matured. ii) Please furnish an account copy of the above transactions as found in your books. iii) It is found that most of your investments with the financial institutions have been for a period of 90 days duration and renewed further. ii) Please furnish an account copy of the above transactions as found in your books. iii) It is found that most of your investments with the financial institutions have been for a period of 90 days duration and renewed further. In cases where deposits matured after 31.03.1994 and received in the month of April 1994 and May 1994, how have you accounted the interest accrued till 31.03.1994. Please furnish the entire receipts on investments made with evidence during the previous year relevant to assessment year 1994-95. You are also requested to give entire receipts on investments with proper bifurcation of receipts on long term and short term deposits individually with the brokerage if any paid on that. Please also substantiate with facts that our income returned under the above, have been reflected in the return of income filed by you for the assessment year 1994-95. Your reply should reach before 11.03.2002”. 9. This copy of the letter was duly served on the assessee, which is not in dispute, as is clear from a letter addressed by the assessee seeking for further extension of time dated 11.03.2002. The said information was not furnished within the time stipulated in the aforesaid letter. Therefore, the Assessing Officer proceeded to make the assessment and pass the impugned order adding Rs.60,29,527/-, which is paid as brokerage as unaccounted expenditure under Section 69C of the Act. The said demand was adjusted out of refund to the assessing company for the assessment year 1999-2000. 10. Aggrieved by the said order, the assessee preferred an appeal. It was contended before the Appellate Authority that, the impugned order passed was in violation of the principles of natural justice. The assessee had no sufficient opportunity to comply with the notice. However, in the proceedings before the first Appellate Authority, the assessee did not furnish the particulars sought for in the said letter. During the appeal proceedings, the representative of the assessee gave written submissions vide letter 29.02.2003 and submitted that the said written submissions made by him be treated as his submissions and concluded. In order to appreciate the stand of the assessee, the AR was asked to give his rejoinder on the report of the AO and other evidence used against him. In order to appreciate the stand of the assessee, the AR was asked to give his rejoinder on the report of the AO and other evidence used against him. This was given by the AR vide letter dated 23.02.2004 received on the same date which is reproduced as below: “Adverting to the hearing today, your Honours were kind enough to furnish the copy of the Remand Report along with Annexures – 1 to 4. Your Honours also furnished me a copy of the letter purportedly written by DCIT, Circle – 13(1), Kolkata dated 21.06.2000 marked confidential and addressed to JCIT, Special Range – 2”. At the outset, the appellant raises its objections to certain evidences brought by the Assessing Officer as a part of remand report for the first time in the appellant proceedings. Those papers cannot be relied on in deciding the appeal, as they were not part of the proceedings earlier. The contents found therein cannot be relied on as it is only an unauthenticated photo copy. Further, the so called letter and statements are all unsubstantiated and cannot be relied on. The appellant was requesting the Assessing Officer time and again at the time of assessment proceedings to furnish the information in his possession before framing the assessment. However, for the reasons best known to the Assessing Officer, nothing was furnished and such an Act is deliberate and intentional. Hence, evidences submitted at this stage cannot be relied on and bound to be rejected. The Annexure – 1 containing purported reasons stated to have been recorded by the Assessing Officer before inviting the proceedings is furnished for the first time. There are overwriting in Annexure – 1. The so called reasons extracted in the remand report is at variance. Further, even now the so called findings recorded in the assessment of J.T.Amritasingh which compelled the AO to record the reason of income escapement is not to be found anywhere. Adverting to the remand report, the Assessing Officer has submitted that, Section 69 is not applicable in this case. Further, he has held that if any addition is made for the reasons stated in the order, then the assessee is entitled for similar deductions. Adverting to the remand report, the Assessing Officer has submitted that, Section 69 is not applicable in this case. Further, he has held that if any addition is made for the reasons stated in the order, then the assessee is entitled for similar deductions. It may be noted that the disallowance of brokerage originally made treating it a capital expenditure has been reversed by the ITAT in the appellant’s own case and the brokerage is held as revenue in nature. Hence, even as per AO’s report the assessee is entitled to succeed on merits. The appellant requests for allowing appeals and pleads its submissions may be treated as concluded.” 11. Therefore, it is clear that, the assessee was made known the reasons for reopening the assessment and called upon the assessee to produce documents, which were required to decide whether there is any escaped income or expenditure Even the evidence was furnished. The assessee failed to produce the documents and substantiate his case not only before the Assessing Officer, but even before the first Appellate Authority he did not choose to furnish the particulars sought for. But the assessee was content by raising legal pleas. The assessee did not produce their books of accounts. They did not produce the bank statements sought for by the Department. They also did not deny the relationship with JTAS. Infact, the assessee was examined in the assessment proceedings of JTAS. In the said proceedings, not only the evidence of the assessee was recorded, even the evidence of the Bank was recorded. All those evidence were produced in these proceedings. Not a word is said about the correctness of the statements made in those assessment proceedings. However, they submitted arguments based on the material on record and pointed out that the revenue has failed to establish heir case. The satisfactions recorded do not satisfy the requirement of law. There is an interpolation, i.e., a variance with the remand report and it was also pointed out, if it is an expenditure, they do not have to pay tax. 12. After considering the aforesaid contentions and looking into the material on record, the First Appellate Court did feel that the aforesaid escaped amount do not constitute unexplained expenditure. There is an interpolation, i.e., a variance with the remand report and it was also pointed out, if it is an expenditure, they do not have to pay tax. 12. After considering the aforesaid contentions and looking into the material on record, the First Appellate Court did feel that the aforesaid escaped amount do not constitute unexplained expenditure. But the fact that the returns filed by the assessee do not disclose the said amount in their returns do constitute unexplained income and therefore, he proceeded to dismiss the appeal. Unfortunately, the tribunal without proper appreciation of this undisputed material on record holds at para 6 as under: “Brokerage was paid directly by the bank to J.T.Amrit Singh. When an income is earned by a third party in a transaction and disclosed by such party, we are unable to understand as to how the assessee in this case should disclose such transaction in its assessment proceedings. An item of income which the assessee is not entitled to receive and which has no bearing on the computation of income of the assessee, cannot be expected to be disclosed by the assessee. Proviso to Section 147 is very clear in this regard and law requires the disclosure of the material facts which are necessary for assessment and not something which has no bearing on the assessment.” 13. It is a clear case of misreading the evidence on record, ignoring the material evidence on record. The evidence clearly disclose that the assessee invested the money in six banks under various F.D. receipts. The bank had to pay interest to the assessee. The said interest payable to the assessee by the Bank is the income of the assessee. J.T.Amrit Singh is an agent who helped the bank in mobilizing the funds and getting the assessee the good rate of interest. He was entitled to commission. No Bank pays commission for mobilizing the Fixed Deposits. It is the depositors, who is given a higher rate of interest for such deposit, who has to pay commission. Thus instead of paying to the assessee the interest, who in turn was liable to pay the commission to the JTAS, the bank paid commission directly to J.T.Amrit Singh by way of a cheque and debited the said amount to the account of the assessee on the instructions of the assessee. Thus instead of paying to the assessee the interest, who in turn was liable to pay the commission to the JTAS, the bank paid commission directly to J.T.Amrit Singh by way of a cheque and debited the said amount to the account of the assessee on the instructions of the assessee. It is not a case of income earned by J.T.Amrit Singh which should have been disclosed by the assessee in its returns. The income earned by J.T.Amrit Singh is an income of the assessee which was paid to him as brokerage. In those circumstances, the “failure” on the part of the assessee to declare the income is clearly established. The period of four years prescribed is not attracted. In the light of the aforesaid factual position, the case falls under Section 149(1)(b) read with Explanation 2 of Section 147 of the Act, and therefore the notice issued under Section 148 is in time and not time barred as contended by the assessee. Therefore, the finding recorded by the tribunal that it is barred by time is illegal and requires to be set aside. Accordingly it is set aside. 14. Insofar as the satisfaction to be recorded before initiation of the proceedings is concerned, the satisfaction recorded is as under: “In view of the findings recorded while completing assessment in the case of Smt.J.T.Amrit Singh by the DCIT, Circle-13(1), Kolkata, I have reason to believe that income chargeable to tax escaped assessment for the assessment year 1994-95 in the present assessee’s case because of the failure of the assessee to disclose fully and truly all material facts necessary for the assessment for assessment year 1994-95.” 15. The said reasoning was not found to be in accordance with law because of the interpolation as contained in the Chairman’s report. We have gone through both the documents. What Section 147 provides is that, if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may assess or re-assess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section. In other words, the recording of the satisfaction by the Assessing Officer that any income chargeable to tax has escaped assessment is a condition precedent. In other words, the recording of the satisfaction by the Assessing Officer that any income chargeable to tax has escaped assessment is a condition precedent. Though the section itself do not expressly state that the said reasoning should be reduced into writing. Sub-Section (2) of Section 148 provide that the Assessing Officer before issuing any notice under Section 148 record his reasons for doing so. The necessity of recording of the said reasons is based on the two decisions of the Apex Court. The Apex Court in the case of Phool Chand Bajrang Lal and Another V/s. Income-Tax Officer and Another (vol.203) 1993 page 456) held as under: “The argument is too broad and general in nature and does violence to the plain phraseology o sections 147(a) and 148 of the Act and is against the settled law laid down by this court. We have to look to the purpose and intent of the provisions. One of the purposes of section 147 appears to us to be to ensure that a party cannot get away by willfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn around and say “you accepted my lie, now your hands are tied and you can do nothing.” It would be a travesty of justice to allow the assessee that latitude. In our opinion, therefore, in the facts of the present case, the Income-tax Officer, Azamgarh, rightly initiated the reassessment proceedings on the basis of subsequent information which was specific, relevant and reliable and, after recording the reasons for the formation of his own belief that in the original assessment proceedings, the assessee had not disclosed the material facts truly and fully and, therefore, correctly invoked the provisions of sections 147(a) and 148 of the Act.” Again the Apex Court in the case of Sri Krishna Pvt. Ltd. V/s. Income-Tax Officer and Others (Vol.221) 1996 page 539) held as under: “The Income Tax Officer can issue notice under Section 148 of the Income-Tax Act, 1961, proposing to reopen an assessment only where he has reason to believe that on account on account of either the omission or failure on the part of the assessee to file the return or on account of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year, income has escaped assessment. The existence of the reason(s) to believe is intended to be a check, a limitation, upon his power to reopen the assessment. Section 148(2) imposes a further check upon the said power, viz, the requirement of recording of reasons for such reopening by the Income-Tax Officer, Section 151 imposes yet another check upon the said power, viz., the Commissioner or the Board, as the case may be, has to be satisfied, on the basis of the reasons recorded by the income-tax Officer, that it is a fit case for issuance of such a notice. The power conferred upon the Income-tax Officer by sections 147 and 148 is thus not an unbridled one. It is hedged in with several safeguards conceived in the interest of eliminating room for abuse of this power by the Assessing Officer. The idea was to save the assesses from harassment resulting from mechanical reopening of assessments but this protection avails only to those assesses who disclose all material facts truly and fully. Every disclosure is not and cannot be treated to be a true and full disclosure. A disclosure may be a false one or a true one. It may be a full disclosure or it may not be. A partial disclosure may very often be a misleading one. Every disclosure is not and cannot be treated to be a true and full disclosure. A disclosure may be a false one or a true one. It may be a full disclosure or it may not be. A partial disclosure may very often be a misleading one. What is required is a full and true disclosure of all material facts necessary for making assessment for that year. All the requirements stipulated by section 147 must be given due and equal weight. The enquiry at the state of finding out whether the reassessment notice is void is only to see whether there are reasonable grounds for the Income-tax Officer to belief and not whether the omission/failure and the escapement of income is established. It is necessary to keep this distinction in mind. Since the belief is that of the Income-tax Officer, the sufficient of reasons for forming the belief is not for the court to judge but it is open to an assessee to establish that, in fact there existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the court may look into the conclusion arrived at by the Income-tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income-tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief.” 16. In the instant case this re-assessment proceedings started on receipt of a letter dated 21.6.2001 from the Deputy Commissioner of Income Tax, Circle-13(1), Kolkata, addressed to the Joint Commissioner of Income-Tax. The contents of the said letter which is the information to the Assessing Officer reads as under: “3. Mr.J.T.Amritasingh’s return of income for Asstt. Year 1994-95 was scrutinized and assessed u/s. 143(3) of the Income Tax Act, 1961 on 27.3.1997. Subsequently, the assessment was set-aside by the Appellate Authority with the direction to reframe the assessment. Such re-assessment has since been finalized on 30.3.2000. 4. During the course of re-assessment proceedings, it was gathered that Mr.J.T.Amritasingh had mobilized deposits of M/s.M.N.Dastur and Company Ltd., with a) Hongkong & Shanghai Banking Corporation Ltd. 31. BBD Bag, Calcutta-1 b) American Express Bank Ltd., 21, Old Court House Street, Calcutta-1. c) The South Indian Bank Ltd. 3. Such re-assessment has since been finalized on 30.3.2000. 4. During the course of re-assessment proceedings, it was gathered that Mr.J.T.Amritasingh had mobilized deposits of M/s.M.N.Dastur and Company Ltd., with a) Hongkong & Shanghai Banking Corporation Ltd. 31. BBD Bag, Calcutta-1 b) American Express Bank Ltd., 21, Old Court House Street, Calcutta-1. c) The South Indian Bank Ltd. 3. Daccas Lane Calcutta-69. d) Bank of America 8, India Exchange Place, Calcutta. And. e) ABN Amro Bank N.V. ITC Centre 4, Russel Street Calcutta-71. On mobilization of such deposits of M.N.Dastur & Co., J.T.Amritasingh was purported to have received commission from the aforesaid banks. 5. However, enquiries conducted at this end revealed that the amount received by Mr.J.T.Amritasingh was not commission, but part of the interest on the mobilized funds of M.N.Dastur and Co. 6. The Managers of the aforesaid banks were examined on oath u/s. 131 of the I.T.Act, 1961 and they categorically stated that M.N.Dastur & Co., had instructed the banks to pay part interest to Mr. J.T.Amritasingh, which would normally have gone to M.N.Dastur & Co., had there not been specific instruction to this effect. 7. M.N.Dastur & Co., was also given an opportunity to explain their stand but they simply suggested that they have not parted away with their interest income and that Mr.J.T.Amritha Singh was given “Commission” by the Banks concerned. 8. The entire issue has been discussed threadbare in the assessment order, Xerox copy of which is being enclosed along with this letter for your perusal. 9. This information is being provided to you for necessary action at your end. Should you require any further information from this end, the undersigned shall only be too willing.” 17. By that time, the assessment order under Section 143(3) had been passed by the Assessing Officer. This information was not available with the Assessment Officer or was not disclosed in the return filed by the assessee. It is in that context being satisfied from the aforesaid material, the Assessing Officer had reason to believe that income chargeable to tax has escaped assessment and initiated the proceedings. This information was not available with the Assessment Officer or was not disclosed in the return filed by the assessee. It is in that context being satisfied from the aforesaid material, the Assessing Officer had reason to believe that income chargeable to tax has escaped assessment and initiated the proceedings. Unfortunately, the tribunal without considering the aforesaid material, by hyper technical interpretation of the words in the writing of the Assessing Officer, came to a conclusion that it does not satisfy the requirement of law, ignored the aforesaid two judgments of the Apex Court, as well as the material information which is in the possession of the Assessing Officer before recording the satisfaction. Therefore, the said order is patently illegal, perverse and requires to be set aside and accordingly, it is set aside. 18. It was next contended that the authorities have failed to prove the escaped assessment by any acceptable evidence. It is based on hearsay and surmises and there is nothing on record to show that the payment made by the banks to J.T.Amrit Singh was on the instructions of the assessee. Further it was contended that the assessee had no opportunity to meet the case of the revenue on the notice issued to it and these particulars were not disclosed. When the assessee called upon them to furnish particulars, though the particulars were furnished, they did not give sufficient opportunity to meet those allegations and therefore, the entire proceedings are vitiated. In this context it is necessary to know the nature of the proceedings before the income tax authorities as held by the various courts. 19. In the case of the Commissioner of Income Tax V/s. Mahaliram Ramjidas ((1940) 8 ITR 442 (PC) they have interpreted the scope of Section 34 of 1922 Act which is corresponding to Section 147 of the present Act. The operative part of Section 34 empowers the ITO to proceed de novo under subsection (2) of Section 22 and that in turn leads, if there should still be a question of the accuracy of the return, to an enquiry under Section 23(2) and (3) and in that enquiry the assessee has a statutory right to appear and to produce evidence. Therefore, a construction of Section 34 which requires a quasi-judicial enquiry to be held before the powers under the section can be operated would result in mere duplication of procedure and in two enquires of the same kind, into the same matter, conducted by the same official and without any advantage to the parties. A construction so unreasonable and unpractical ought not to be preferred when another construction is open. Accordingly, their lordships are of opinion that the ITO is not required by the section to convene the assessee or to intimate to him the nature of the alleged escapement, or to give him an opportunity of being heard, before it decided to operate the powers conferred by the section. 20. The same question arose for consideration under the old Act before the Apex Court in the case of S.Narayanappa & others V/s. Commissioner of Income Tax, Bangalore (ITR Vol LXIII 1967 page 219). The appellant contended that the Income Tax Officer should have communicated to the appellant the reasons which led him to initiate the proceedings under Section 34 of the Act and though such a request was made by the appellant to the Income Tax Officer, he declined to disclose the reasons. The Supreme Court held as under: “The Scheme of Section 34 of the Act is that, if the conditions of the main section are satisfied, a notice has to be issued to the assessee containing all or any of the requirements which may be included in a notice under Sub-Section (2) of Section 22. But before issuing the notice, the proviso requires that the officer should record his reasons for initiating action under Section 34 and obtain the sanction of the Commissioner who must be satisfied that the action under Section 34 was justified. There is no requirement in any of the provisions of the Act or any section laying down as a condition for the initiation of the proceedings that the reasons which induced the Commissioner to accord sanction to proceed under Section 34 must also be communicated to the assessee.” 21. There is no requirement in any of the provisions of the Act or any section laying down as a condition for the initiation of the proceedings that the reasons which induced the Commissioner to accord sanction to proceed under Section 34 must also be communicated to the assessee.” 21. Under the present Act dealing with Section 143(2), and 148, the Apex Court in the case of GKN Driveshafts (India) Ltd, V/s. Income Tax Officer and others (Vol.259 2003 page 19) held as under: “When a notice under Section 148 of the Income Tax Act, 1961 is issued, the proper course of action for the notice is to file the return and, if he so desires, to seek reasons for issuing the notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the notice is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order.” 22. Therefore it follows that the ITO is not required under Section 148 of the Act to convey to the assessee or to intimate to him the nature of the alleged escapement, or to give him an opportunity of being heard, before it decided to operate the powers conferred by the section. There is no requirement in any of the provisions of the Act or any section laying down a condition for the initiation of the proceedings that the reasons which induced the Commissioner to accord sanction to proceed under Section 148 must also be communicated to the assessee. The proper course of action for the notices is to file the return and, if he so desires, to seek reasons for issuing the notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the assessee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. The Commissioner of Income Tax (Appeals) has plenary powers in disposing of an appeal. The scope of his powers is conterminous with that of the Income Tax Officer. He can do what the Income-tax Officer can also direct him to do what he has failed to do. The Commissioner of Income Tax (Appeals) has plenary powers in disposing of an appeal. The scope of his powers is conterminous with that of the Income Tax Officer. He can do what the Income-tax Officer can also direct him to do what he has failed to do. Once the appeal is before him, he can revise not only the ultimate computation arrived at by the [assessing officer], but he can revise every process which led to the ultimate computation or assessment. Therefore, the contention that the order passed by the assessing authority is in violation of principles of natural justice for not mentioning in the notice, the particulars of the undisclosed income is without any substance. 23. In this background it is also useful to refer to the powers of the various authorities under the Income Tax Act and the nature of jurisdiction that is exercised and the differences between the original and appellate jurisdiction of the authorities under Act as understood in the ordinary civil law under the Civil Procedure Code. The Apex Court in the case if Commissioner of Income Tax, U.P. V/s. Kanpur Coal Syndicate (Vol .LIII 1964) page 225) held that: “The Appellate Assistant Commissioner has plenary powers in disposing of an appeal. The scope of his powers is conterminous with that of the Income Tax Officer. He can do what the Income-tax Officer can do and can also direct him to do what he has failed to do.” 24. In the case of State of Andhra Pradesh V/s. Hyderabad Asbestos Cement Production Ltd. (Vol.94 1994) 410 the Apex Court held as under: “Not in the narrow sense of revising those matters about which the assessee has a grievance, but a revising authority in the sense that, once the appeal is before him, he can revise not only the ultimate computation arrived at by the [assessing officer], but he can revise every process which led to the ultimate computation or assessment.” The power of appeal under the State Sales Tax enactment herein is altogether different in character and scope from an appeal under the Code of Civil Procedure. The power of appellate authorities under the Tamil Nadu General Sales Tax Act. 1959, and the Andhra Pradesh General Sales Tax Act, 1957, is altogether different from the power of the appellate courts under the Code of Civil Procedure. The power of appellate authorities under the Tamil Nadu General Sales Tax Act. 1959, and the Andhra Pradesh General Sales Tax Act, 1957, is altogether different from the power of the appellate courts under the Code of Civil Procedure. Even if the appeal by the dealer is confined to a particular aspect of assessment, it is open to the appellate authorities to enhance the assessment. They can also annul the order of assessment and order assessment. The appellate authorities under those Acts are in the nature of revising authorities not in the narrow sense of revising those matters about which the assessee has a grievance, but a revising authority in the sense that, once the appeal is before him he can revise not only the ultimate computation arrived at by the [assessing officer], but he can revise every process which led to the ultimate computation or assessment. 25. In fact a full bench of the Madras High Court in the case of State of Tamil Nadu V/s. Arulmurugan & Co. (Vol.51 1982) page 381) had an occasion to exhaustively consider the scope of the appellate jurisdiction. After reviewing the case law on the point it was held us under: “The decision of the Supreme Court in MC Millan’s case (1958) 33 ITR 182 (SC) is not to be considered a mere analogy. In our judgment, it establishes a principle of construction of statutory powers in tax appeals, which is general in nature, and therefore, applicable to the present case. Following the line of approach to statutory construction adopted by the Supreme Court, we hold that the power to extend the time for filing C form declarations, which the proviso to section 8(4) of the Central Sales Tax Act confers, is available to be exercised by every authority who has jurisdiction to deal with the assessment in one way or another, and at one time or another, and is not confined strictly to the assessing authority along, as the prescribed authority.” Further they held as under: “An appellate authority under the taxing enactments sits in appeal, only in a manner of speaking. What it does, functionally, is only to adjust the assessment of the appellant in accordance with the facts on the record and in accordance with the law laid down by the legislature. What it does, functionally, is only to adjust the assessment of the appellant in accordance with the facts on the record and in accordance with the law laid down by the legislature. An appeal is a continuation of the process of assessment, and an assessment is but another name for adjustment of the tax liability to accord with the taxable event in the particular tax-payer’s case. There can be no analogy or parallel between a tax appeal and an appeal, say, in civil cases. A civil appeal, like a law suit in the court of first instance out of which it arises, is really and truly an adversary proceeding, that is to say, a controversy or tussle over mutual rights and obligations between contesting litigants ranged against each other as opponents. A tax appeal is quite different. Even as the assessing authority is not the tax-payer’s “opponent”, in the strictly procedural sense of the term, so too the appellate authority sitting in appeal over the assessing authority’s order of assessment is not strictly an arbitral tribunal deciding a contested issue between two litigants ranged on opposite sides. In a tax appeal, the appellate authority is very much committed to the assessment process. The appellate authority can itself enter the arena of assessment, either by pursuing further investigation or causing further investigation to be done. It can do so on its own initiative, without being prodded by any of the parties. It can enhance the assessment, taking advantage of the opportunity afforded by the tax-payer’s appeal, even though the appeal itself has been mooted only with a view to a reduction in the assessment. These are special and exceptional attributes of the jurisdiction of a tax appellate authority. These attributes underline the truth that the appellate authority is no different, functionally and substantially, from the assessing authority itself. This position has been well brought out in more than one decision of the Supreme Court.” 26. This judgment has been upheld by the Apex Court in the case of State of Andhra Pradesh V/s. Hyderabad Asbestos Cement Production Ltd. referred to supra. 27. There can be no analogy or parallel between a tax appeal and an appeal, say, in civil cases. This judgment has been upheld by the Apex Court in the case of State of Andhra Pradesh V/s. Hyderabad Asbestos Cement Production Ltd. referred to supra. 27. There can be no analogy or parallel between a tax appeal and an appeal, say, in civil cases. A civil appeal, like a law suit in the court of first instance out of which it arises, is really and truly an adversary proceeding, that is to say a controversy or tussle over mutual rights and obligations between contesting litigants ranged against each other as opponents. A tax appeal is quite different. Even as the assessing authority is not the tax-payer’s “opponent”, in the strictly procedural sense of the term, so too the appellate authority sitting in appeal over the assessing authority’s order of assessment is not strictly an arbitral tribunal deciding a contested issue between two litigants ranged on opposite sides. In a tax appeal, the appellate authority is very much committed to the assessment process. The appellate authority can itself enter the arena of assessment, either by pursuing further investigation or causing further investigation to be done. It can do so on its own initiative, without being prodded by any of the parties. It can enhance the assessment, taking advantage of the opportunity afforded by the tax-payer’s appeal, even though the appeal itself has been mooted only with a view to a reduction in the assessment. These are special and exceptional attributes of the jurisdiction of a tax appellate authority. The appellate authorities are in the nature of revising authorities not in the narrow sense of revising those matters about which the assessee has a grievance, but a revising authority in the sense that, once the appeal is before him he can revise not only the ultimate computation arrived at by the [assessing officer], but he can revise every process which led to the ultimate computation or assessment. An appellate authority under the taxing enactments sits in appeal, only in a manner of speaking. What it does, functionally, is only to adjust the assessment of the appellant in accordance with the facts on the record and in accordance with the law laid down by the legislature. An appeal is a continuation of the process of assessment, and an assessment is nothing but another name for adjustment of the tax liability to accord with the taxable event in the particular tax-payer’s case. 28. An appeal is a continuation of the process of assessment, and an assessment is nothing but another name for adjustment of the tax liability to accord with the taxable event in the particular tax-payer’s case. 28. In the background of the settled legal position, when we analyse the facts of this case, it is clear that in the assessment proceedings of one J.T.A.S. year 1994-95, he had shown his income as a commission from the aforesaid bank on mobilisation of the deposits for the assessee. The said amount paid to him was not a commission by the bank, but out of the interest on the mobilised funds of the assessee. In the assessment proceedings of the said J.T.A.S, the assessee was given an opportunity to explain their stand. Their case was that they are not aware about the interest income. J.T.A.S. was given commission by the banks concerned. The banks on their part categorically stated that the assessee had instructed the bank to pay part of the interest to Mr. J.T.A.S which would have normally gone to the assessee. It is in those circumstances, when admittedly, the aforesaid commission paid to J.T.A.S., is not disclosed in the returns filed by the assessee, the re-assessment proceedings were commenced. In the notice issued under Section 148, they have not disclosed the reasons for reopening of the assessment. They simply called upon the assessee to file a return. In view of the aforesaid settled legal position, there was no obligation on the part of the department to set out the reasons for reopening of the assessment under Section 148 and therefore, the contention that the said notice is in violation of principles natural justice, the reasons for reopening of the assessment was not made known and therefore, the entire impugned order should go, is without any substance. After service of the said notice, the assessee called upon the department to furnish the particulars and reason for reopening. The department by the letter dated 4.3.2002 has set out the reasons in detail for the reopening of the assessment proceedings and in fact in the said letter itself, they called upon the assessee to produce the documents mentioned therein which were all in the custody of the assessee. The department by the letter dated 4.3.2002 has set out the reasons in detail for the reopening of the assessment proceedings and in fact in the said letter itself, they called upon the assessee to produce the documents mentioned therein which were all in the custody of the assessee. The grievance of the assessee was after receipt of the aforesaid notice, they sought for time to get the required information, but without waiting, within two weeks therefrom, the assessment orders were passed and thus, again violating the principles of natural justice. The law did not prescribe any time limit for the assessing authority to await for furnishing of particulars. In fact proceedings had been initiated two years back. They had called for particulars though there was a delay of two years in giving the reasons. That by itself would not enable the assessee to seek sufficiently long time to furnish the particulars. The assessee is not an individual or an illiterate person. It is a company and all that is sought in that letter is documents which were in their possession in the nature of accounts books, bank statement and that they have to show that the transaction is true or not. If really, the assessee had a tenable defence, they could have filed their objections to the said letter setting out what their case is and then requested for time to produce the documents. We do not see such a course of conduct. Even otherwise, after the assessment order was passed and an appeal was filed, they could have stated what their case is in writing before the appellate authority, but they have not done so. In the first appellate proceedings, they were furnished with the copy of the order reducing the satisfaction in writing, copy of the remand report which was sought for by the first appellate authority and also copies of the sworn statement recorded in the proceedings pertaining to J.T.A.S as well as the letter dated 21.6.2000 which is the starting point for these proceedings. They did not file any objections disputing the correctness of these documents. They did not file any objections disputing the correctness of these documents. The stand taken is that the reassessment proceedings are barred by time, that the material taken note of do not constitute sufficient reasons for reopening the assessment and it is for the department to prove by acceptable evidence that there is receipt of income which is suppressed and payment of expenditure which is also suppressed. The purpose of Section 147 is to ensure that a party cannot get away by willfully making a false or untrue statement at the time of original assessment. When it came to the knowledge of the Assessing Officer that there is such willful omission in the returns already filed, and gave an opportunity to the assessee to putforth his case in writing and to adduce evidence to substantiate his case that the material collected by them cannot be believed or acted upon. If the assessee does not avail the said opportunity, it cannot be said that by mere pointing out some technical defects, the assessee can succeed. The fact that J.T.A.S, is an agent of the assessee is not in dispute. The assessee has produced fixed deposit receipts of six banks. The said J.T.A.S, is the person who was responsible for mobilising funds and making deposits in the banks. For the said deposits, the bank is bound to pay interest to the assessee. Admittedly, the bank has paid a sum of Rs.60,29,527/- under twenty five cheques directly to J.T.A.S. The short question is, whether the said payment is by the bank on their own account or on account of the assessee. In the assessment proceedings of J.T.A.S, the bank officials have been examined. On oath in categorical terms, they have stated that they have paid by way of cheque directly to J.T.A.S, out of the interest amount payable by them to the assessee, on the instructions of the assessee. In the said proceedings, all that the assessee says is, they have not parted away with their interest income and J.T.A.S, was given commission by the banks concerned. As rightly contended by the bank, there is no provision in any law or contract for payment of omission to agent for mobilization of the deposits. In fact, the same is prohibited. In the said proceedings, all that the assessee says is, they have not parted away with their interest income and J.T.A.S, was given commission by the banks concerned. As rightly contended by the bank, there is no provision in any law or contract for payment of omission to agent for mobilization of the deposits. In fact, the same is prohibited. We find it difficult to accept that the amount paid by the bank directly to J.T.A.S, is on their account for the services rendered by him in mobilising the amount. On the other hand, they have categorically stated that the assessee had instructed the banks to pay part of the interest to J.T.A.S, It is not is dispute that J.T.A.S, is the agent of the assessee. In the returns filed by the assessee, they have shown brokerage of a sum of Rs.26,85,972/-to J.T.A.S. In the letter addressed to the assessee by the department dated 19.2.2003, they wanted information to the effect that for the assessment year 1994-95 while computing the income, the assessee has deducted a sum of Rs.26,85,972/-as brokerage. They wanted to know whether this is a brokerage incurred towards to know whether this is a brokerage incurred towards commission payment to J.T.A.S., and Co. No reply was given. Even in the first appellate court, the said information is not forthcoming. In the circumstances, the assessing officer and the appellate authority were fully justified in drawing the conclusion that the said amount represented the interest amount payable by the bank to the assessee and that the payment by the bank was for and on behalf of the assessee to the commission agent. The said amount is not reflected in the return filed either as income or expenditure. Hence, there is willful suppression of this income and expenditure in the return which is filed. Therefore, the tribunal, without proper appreciation of the facts in the case, committed a serious error in interfering with the well considered order passed by the first appellate authority. It is a case of Tribunal ignoring the material evidence and recording finding which are not supported by any legal evidence and interfering with an order passed by the appellate authority which was based on legal evidence. Therefore the High Court is duty bound to interfere with such perverse order. 29. It is a case of Tribunal ignoring the material evidence and recording finding which are not supported by any legal evidence and interfering with an order passed by the appellate authority which was based on legal evidence. Therefore the High Court is duty bound to interfere with such perverse order. 29. Lastly it was contended that when once it is known that the commission was paid out of the interest due to the assessee from the banks on the fixed deposit receipts, it cannot be said to be an unexplained expenditure as the source of expenditure is well known and therefore, the first appellate authority has rightly held that it would not have constituted an unexplained expenditure which falls under Section 69(c). To that extent, the first appellate authority is right. Rs.60,29,627/- is the commission paid by the assessee to the agent, it would be an expenditure. Whether it is a capital expenditure or revenue expenditure is the subject matter of the earlier proceedings or the commission paid by the assessee was held to be revenue expenditure and hence, full deduction is granted. Therefore, it was contended that the assessee would be entitled to deduction of the entire amount and therefore, the tax liability would be Nil. Hence, it is not a case of escapement of assessment. It confers no right on the authority for initiation of proceedings under Section 147 of the Act. We find it very difficult to accept this contention. Section 69C of the Act which deals with unexplained expenditure, etc, reads as under:- “69C. Unexplained expenditure, etc, - Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure of part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be income of the assessee shall not be allowed as a deduction under any head of income”. 30. In the returns filed, the assessee has not shown Rs.60,29,527/- as interest income received. It is also not shown as an expenditure incurred. Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be income of the assessee shall not be allowed as a deduction under any head of income”. 30. In the returns filed, the assessee has not shown Rs.60,29,527/- as interest income received. It is also not shown as an expenditure incurred. Even after the said omission is pointed out, no explanation is offered. On the contrary, the stand is, it is not a payment made by the assessee at all. Therefore, the assessee cannot claim it as an expenditure. Proviso to Section 69C makes it clear that such unexplained expenditure, which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income. Therefore, when the material on record discloses that a sum of Rs.60,29,527/- is the interest income payable by the banks to the assessee is diverted as a commission directly from the bank to the commission agent, the first appellate authority was justified in treating it as an undisclosed income and bringing it to tax. Therefore, we do not find any substance in the said contention also. 31. For the aforesaid reasons, we answer all the substantial questions of law which are framed, against the assessee and in favour of the revenue. Hence, we pass the following order: The appeal is allowed and the impugned order passed by the tribunal is set aside and the order of the first appellate authority is restored to its original file.