TaxTMI 
TaxTMI 
2012 (5) TMI 44
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....d accounts. The return of income was accepted under Section 143(1) of the Act. On 15.3.2011, a notice was issued by the respondent under Section 148 of the Act on the ground that income chargeable to tax had escaped assessment for the assessment year 2004-05. In response to the notice, the petitioner filed a return declaring loss of Rs.6,100/-, which was the same as declared in the original return. Along with the return the petitioner also filed a letter dated 7.4.2011 in which a request was made to the respondent to supply the reasons recorded for reopening the assessment. The respondent supplied the reasons recorded for reopening the assessment to the petitioner on 30.8.2011. These were accompanied by a letter dated 25.8.2011, which was a covering letter and to this letter, the respondent also enclosed a notice under Section 143(2) calling upon the assessee to furnish certain details. The reasons recorded for reopening are as under : "M/s. A G Holdings Pvt. Ltd. A.Y.-2004-05 Certain investigations were carried out by the Directorate of Investigation, Jhandewalan, New Delhi in respect of the bogus/ accommodation entries provided by certain individuals/ companies. The name ....
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....dgment of the Supreme Court in the case of GKN Driveshafts (India) Ltd. Vs. ITO (2003) 259 ITR 19. In these objections the petitioner took strong objection to the reasons recorded for reopening reassessment and contended that it had not received any accommodation entries from M/s Quality Security Services (P) Ltd., that the amount of Rs.4,50,000/- received from the said company represented share application money for acquiring shares in the petitioner company, that these details were duly disclosed in the audited accounts filed along with the return of income on 23.3.2005, that the copy of the certificate of incorporation, board resolution and share application form were all being filed along with the letter and in these circumstances no income chargeable to tax had escaped assessment. It was further pointed out that the company which subscribed to the shares in the petitioner company is a legal entity incorporated under the Companies Act, 1956 on 1.2.1995, that it was also being regularly assessed to tax, that the payment for the shares was received through banking channels, that the said company had confirmed the investment by an affidavit and that these facts also supported the ....
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....der-affidavit. It was directed that in the meantime the proceedings of re-assessment may continue but no final assessment order would be passed. On 23.3.2012 when the matter was called again, directions were issued to the ld. standing counsel to produce the record, which was available before the Assessing Officer when he recorded the reasons to believe. On 28.3.2012, the standing counsel produced the record before us and we have examined the same. 6. The assessment year concerned is 2004-05. The notice under Section 148 has been issued on 15.3.2011, which is beyond the period of 4 years from the end of the assessment year. Therefore this is a case to which the first proviso to Section 147 applies. Therefore, the assessment can be reopened only if there has been a failure on the part of the assessee to file a return under Section 139 or Section 142(1) or Section 148 or to disclose fully and truly all material facts necessary for his assessment. We are not concerned with a case of failure to file the return since the petitioner has filed its return of income on 23.3.2005. It is therefore, necessary to examine whether there was, on the part of the assessee, a failure to disclose full....
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....as open and legally permissible for the respondent to arrive at a prima facie belief that income chargeable to tax had escaped assessment. 8. On a careful consideration of the matter in the light of the rival contentions it appears to us that the contentions of the ld. standing counsel of the Revenue should prevail. Firstly there is nothing in the affidavit filed by the petitioner to show what were the primary and material facts filed along with the return filed on 23.3.2005 with respect to the share capital of Rs.4,50,000/- received from M/s Quality Security Services (P) Ltd. There is only a blank statement that the audited accounts were filed along with the return. We have also seen the affidavit and Annexure 3 thereto. The Annexure consists of the return of income filed by the petitioner on 23.3.2005 along with the Annexures. The documents attached to the return of income are only the statutory auditor's report and the final accounts namely, the income and expenditure account, the balance sheet and the notes forming part of the accounts. There is nothing in these papers disclosing specifically the receipt of share capital from M/s Quality Security Services (P) Ltd. It has only ....
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....number, etc. have all been reported. In the light of these particulars it is not possible to accept the claim that the particulars allegedly filed by the petitioner along with the return of income are full and true. The investigation report is a pointer and costs grave doubts on basis of evidence/material on the genuineness of the share contribution. We have no doubt that for the purpose of enabling the respondent to reach a prima facie belief that income chargeable to tax had escaped assessment, the details given in the investigation report are relevant. We are aware of the distinction between the relevancy and the sufficiency of the materials on the basis of which reasons are recorded for reopening the assessment. We are also aware of the settled legal position that whereas the relevancy of the materials leading to the belief are justiciable, the sufficiency of those material is not. Even on an objective analysis, it cannot be said that the materials on the basis of which the respondent formed the belief were irrelevant. We are alive to the legal position that at the time of issuing the notice to reopen the assessment, the Assessing Officer is only expected to form a prima facie ....
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....ey apply for the purposes of that section." The objection of the petitioner, as we understand the same, is not that the notice under Section 148 was issued after the expiry of the period of 6 years from the end of the relevant assessment year. The objection is only that the reasons recorded were provided by the respondent after a period of 6 years from the end of the relevant assessment year. The contention is that in such a case the reassessment proceedings are barred by limitation on the basis of the judgment of this Court cited supra. We are unable to accept the contention. The record produced before us by the ld. standing counsel shows that sanction for the proposal to reopen the assessment was accorded by the Additional Commissioner of Income Tax on 9.3.2011. The notice to reopen the assessment was issued on 15.3.2011. The reasons for reopening the assessment had been recorded on 9.3.2011. These were however supplied to the petitioner only on 30.8.2011. There is no requirement in Section 147 or Section 148 or Section 149 that the reasons recorded should also accompany the notice issued under Section 148. The requirement in Section 149(1) is only that the notice under Section ....
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....rom the end of the assessment year which in that case was 1998-99. The last date for issue of notice was 31.3.2005. It may thus be noted that the judgment of this Court in Haryana Acrylic Manufacturing Co. (supra) turned on the peculiar facts of that case, where two sets of reasons had been recorded, by the Assessing Officer. In the first set of reasons there was no allegation of non-disclosure of primary facts by the assessee. It was only in the second set of reasons recorded which surfaced for the first time in the counter affidavit filed by the Revenue before the High Court, that the omission on the part of the assessee to furnish full and true particulars had been specifically mentioned. The counter affidavit had been filed way beyond the expiry of a period of 6 years from the end of the assessment year. It was on these facts that it was held that the reassessment proceedings were invalid. It is significant to note that the recording of the reasons under Section 148(2) shall precede the issue of notice under Section 148(1) as indicated clearly by the words "before issuing any notice under this section". The recording of proper reasons in the cited judgment was taken as 5.11.200....