TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 1088
X X X X Extracts X X X X
X X X X Extracts X X X X
....d in all these three writ petitions is common the Writ Petition No. 1366 of 2009 is taken up as the leading case. 2. In Writ Petition No. 1366 of 2009 , the petitioner has prayed for the following relief : "(i) Issue a writ order or direction in the nature of certiorari quashing the notices under Section 148 of the Income Tax Act for the Assessment Years 2003-04 contained in Annexure No.5 to this writ petition. (ii) Issue a writ order or direction in the nature of mandamus directing the respondent authorities not to make any reassessment against the petitioner under Section 147 in pursuance of the notice contained in Annexure No.5 of the writ petition. (iii)Grant such other/further relief, as the Hon'ble Court may deem just and appropriate in the facts and circumstances of the case." 3. Briefly stated the common facts in the present cases are that the petitioner is a Trust created under the Trust Deed dated 26.5.1998 as corrected by the Deed dated 19.9.2000. The assessments of the Trust for AY 2003-04 and 2006-07 were completed under Section 143(3) of the Act. The Trust is registered under Section 12 AA and Section 80G of the Act. It is alleged in the writ petition that the tr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... A.Y. 2003-04 Assessee is a charitable Trust and derives income from fees, donation and other sources. The original assessment in this case was completed u/s 143(3) of the IT Act, 1961 on 7.3.2006 at net income of Rs. Nil as against the assessee filed its return declaring income Nil on 14/01/2004 after claiming exemption u/s 11 of the IT Act, 1961 of Rs. 94,90,419/-. A perusal of balance sheet it is observed that the assessee has made addition in corpus of Rs. 11,20,010/- however no comments have made by the Assessing Officer in his order passed on 07/03/2006. Therefore, this amount has been left to be considered. Meanwhile, a complaint dated 14/02/2009 was received from Mr. Jitendra Kumar alleging that the donations disclosed by the assessee are not genuine donation. He has already worked in Rohilkhand Educational Charitable Trust in the capacity of Joint Treasurer /Member. His statement u/s 131 was recorded on 27/02/2009. In this statement he alleged that the Trust is debiting various expenditure especially salary of Teachers, Doctors which are either not genuine or inflated and Capitation Fees received from students are being shown as a donation. His statement is placed on rec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....should be declared in the balance sheet which is not the income, to be shown included as the total income as per Section 11(1) (d) of the Act (v) No fresh material was brought to the knowledge of the A.O. so as to give rise to reason to believe that the income of the petitioner has escaped assessment. (vi) The statement of Sri Jitendra Kumar, a non credible person cannot be made basis to invoke the provisions of Section 148 of the Act. The impugned notice is based on change of opinion and has been issued merely to conduct a roving inquiry to collect evidence to reassess the petitioner, which is impermissible in law. (vii) The impugned notices are wholly without jurisdiction. 7. Sri Shubham Agarwal has relied on the following judgments : (i) M/s Indra Prastha Chemicals Pvt. Ltd., Meerut and Othes v. Commissioner of Income Tax, Meerut and Another, 2005 U.P.T.C-53 (All.) para -12. (ii) Sunil Kumar Jain v. Income Tax Officer (2005) 198 CTR (All) 472, Para-9, 11, 18 and 20. (iii) Kothari Filaments and another v. Commissioner of Customs (Port), Kolkata and others (2009)2 SCC 192. (iv) Commissioner of Income Tax v. SFIL Stock Broking Ltd. (2010)233 CTR (Del)69, Para - 9 & 10. (v)....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 'reason to believe' based on information received that following donations and expenditure on salary and other expenses are not genuine. These are fictitious expenditures to be taxed, as they are not for the purposes and object of the Trust, and has thus escaped from assessment to tax : A.Y. Donations Expenses 2002-03 39,45,000.00 2003-04 11,20,0210.00 10,01,554.00 2004-05 72,74,259.00 69,50,186.00 2005-06 2,30,16,308.00 95,51,767.00 2006-07 5,32,61,000.00 95,51,767.00 12.The petitioner filed objections against the reasons recorded under Section 147 and notice under Section 148 of the Act. The objections were considered and rejected by the A.O. by a detailed order dated 3.6.2009 for A.Y. 2006-07 with observations summarized as under : (i) The list of voluntary contributors/donors towards corpus was not enclosed along with the return nor submitted during the assessment proceedings u/s 143(3) of the IT Act, 1961. Further no declaration has been filed issued by the voluntary contributors/donors, who contributed /donated the amount directly to the corpus. Even the names and addresses as well as PAN number of such donors were provided to the department, eithe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... with the Department for A.Y.2004-05, it is observed that the assessee has prepared two balance sheets for this period under consideration. The first balance sheet was finalized as provisional on 26/04/2004 which tallied at Rs. 6,40,89,311.16/- and the other finalized on 30/10/2004 which is tallied at Rs. 5,68,33,136.38/-. Thus there is a difference of Rs. 72,52,154.71/-. 13.From the facts noted above it is clear that the A.O. has relevant material in his possession to form the belief that certain income chargeable to tax has escaped assessment for the assessment years 2002-03, 2003-04, 2004-05, 2005-06 and 2006-07. The sufficiency or correctness of the material is not to be considered at this stage. The 'reason to believe' recorded by the A.O. as well as the order dated 3.6.2009 rejecting the objection of the assessee leaves no manner of doubt that prima facie the A.O. was having material to form the belief in good faith that there was failure on the part of the assessee to disclose fully and truly the material facts necessary for his assessment for the assessment years in question. The necessary conditions for invoking the provisions of Sections 147 and 148, stand satisfied in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....proceedings under section 34 of the Act is open to challenge in a court of law." Reliance was placed in the above context upon an earlier decision of this Court in the case of Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta, (1961) 41 ITR 191 = (AIR 1961 SC 372). The above observations regarding the import of the words "reason to believe" though made in the, context of section 34 of the Indian Income Tax Act, 1922 have, in our opinion, equal bearing on the construction of those words in section 21 of the U.P. Sales Tax Act. (Emphasis supplied by us) 15. In the case of Raymond Woollen Mills Ltd. v. Income -Tax Officers and Others (1999) 236 ITR 34, Hon'ble Supreme Court observed as under : " In this case , we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will....