Petition dismissed; reopening of assessment under s.147 valid based on fresh reliable information and prior precedent

HC dismissed the petition and upheld the reopening of assessment under s.147, finding that reopening was permissible based on fresh, reliable information obtained during assessment of a subsequent year and consistent with SC precedent. The court rejected petitioner's belated factual claims as not raised in objections and noted petitioner failed to respond to a s.133(6) notice seeking evidence of transaction genuineness. The HC held the authority considered objections adequately and the impugned order was just and proper.

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Issues Involved:
1. Jurisdiction of the Assessing Officer under Section 147/148 of the Income Tax Act, 1961.
2. Validity of reopening the assessment for A.Y. 2012-13 based on subsequent information.
3. Full and true disclosure of material facts by the petitioner.
4. Credibility of information received from the investigating wings.
5. Assumption of jurisdiction by the Assessing Officer based on tangible material.

Detailed Analysis:

1. Jurisdiction of the Assessing Officer under Section 147/148 of the Income Tax Act, 1961:
The core issue was whether the Assessing Officer (AO) could assume jurisdiction under Section 147/148 of the Income Tax Act, 1961, for reopening the assessment based on subsequent reliable and creditworthy information received from the investigating wings, which indicated bogus transactions or accommodation entries involving the assessee. The court noted that the AO had received credible information from two sources indicating that the petitioner was a beneficiary of accommodation entries, justifying the reopening of the assessment.

2. Validity of reopening the assessment for A.Y. 2012-13 based on subsequent information:
The petitioner challenged the reopening of the assessment for A.Y. 2012-13 under Section 147, arguing that the assessment was initially completed under Section 143(3) after thorough scrutiny. The court found that the AO had tangible material and credible information from the investigating wings, which established a live link with the escapement of income by the petitioner. The court upheld the AO's decision to reopen the assessment, emphasizing that the AO had a reason to believe that income had escaped assessment due to the petitioner's failure to disclose fully and truly all material facts.

3. Full and true disclosure of material facts by the petitioner:
The petitioner contended that it had disclosed all necessary material facts during the original assessment. However, the court observed that mere production of books of accounts or documents does not constitute full and true disclosure. The court highlighted that the AO had received credible information indicating that the petitioner had received accommodation entries, which were not disclosed during the original assessment. Therefore, the court held that the petitioner had not made a full and true disclosure of all material facts.

4. Credibility of information received from the investigating wings:
The respondent argued that the information received from the investigating wings was credible and specific, indicating that the petitioner was a beneficiary of accommodation entries. The court noted that the information was reliable and specific, and the AO had conducted further inquiries under Section 133(6) to verify the genuineness of the information. The court emphasized that the AO is empowered to reopen the assessment based on credible information that prima facie discredits the genuineness of the particulars furnished by the assessee.

5. Assumption of jurisdiction by the Assessing Officer based on tangible material:
The court reiterated that the AO must have a reason to believe that income chargeable to tax had escaped assessment, particularly after four years from the end of the relevant assessment year. The court found that the AO had tangible material and credible information indicating that the petitioner had received accommodation entries, justifying the reopening of the assessment. The court emphasized that the formation of belief by the AO is within the realm of subjective satisfaction, and the AO had cause or justification to know or suppose that income had escaped assessment.

Conclusion:
The court dismissed the petition, upholding the AO's decision to reopen the assessment based on credible information and tangible material. The court found that the petitioner had not made a full and true disclosure of all material facts and that the AO had valid reasons to believe that income had escaped assessment. The court emphasized the AO's duty to make further inquiries when credible information indicates potential tax evasion through accommodation entries. The petition was deemed devoid of merits, and the interim relief granted earlier was vacated.

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