AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 934
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Income Tax Act, 1961 (hereinafter referred to as "the Act"). Subsequently, by the impugned notices dated 26.03.2014, the assessment in relation to each of the above assessment years is sought to be reopened by the Assessing Officer. In response to the notices issued under section 148 of the Act, the petitioner assessee requested the Assessing Officer to furnish the reasons recorded for reopening the assessment. Upon such reasons being furnished, the petitioner submitted objections against reopening of the assessment. By orders dated 02.09.2014, the respondent Assessing Officer rejected the objections filed by the petitioner against reopening of assessment under section 147 of the Act. Being aggrieved, the petitioner has filed the present petitions challenging the notices issued by the first respondent under section 148 of the Act. 3. Mr. R. K. Patel, learned advocate for the petitioner invited the attention of the court to the reasons recorded by the Assessing Officer for reopening the assessment, to submit that while recording the reasons, the Assessing Officer has not alleged that the assessee has not disclosed purchases in the books or has not disclosed corresponding sale in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s recorded would not vitiate the notice under section 148 of the Act and that the Assessing Officer, therefore, had correctly assumed jurisdiction. It was submitted that considering the reasons recorded for reopening the assessment, it is apparent that the Assessing Officer has found that bogus purchases have been made and that the amount to the extent of bogus purchases would not form part of the expenditure, and income to that extent has escaped assessment. It was pointed out that in the peculiar facts of this case, not reflecting the facts as stated in paragraphs 4 and 5 of the order disposing of the objections in the reasons recorded, would not affect the jurisdiction of the Assessing Officer to reopen the assessment within a period of four years, in a case where no assessment had been framed under section 143(3) of the Act. 4.1 In support of his submissions, the learned counsel placed reliance upon the decision of the Supreme Court in the case of Phool Chand Bajrang Lal and another v. Income-Tax Officer and another, (1993) 203 ITR 456, for the proposition that since the belief is that of the Income Tax Officer, sufficiency of the reasons for forming the belief is not for th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... limited. The court cannot enter into the merits of the subjective satisfaction of the Assessing Officer or judge the sufficiency of the reasons recorded, but rather, determine whether such opinion is based on tangible, concrete and new information that is capable of supporting such a conclusion. The law only requires that the information or material on which the Assessing Officer records his or her satisfaction is communicated to the assessee, without mandating the disclosure of any specific document. This is not to say that the Assessing Officer may in all cases refuse to disclose documents relied upon by him on account of confidentiality, but rather, that fact must be judged on the basis of whether other tangible and specific information is available so as to justify the conclusion irrespective of the contents of the document sought to be kept confidential. It was, accordingly, urged that the action of the Assessing Officer in issuing the impugned notices under section 148 of the Act being in consonance with the relevant statutory provisions and the settled principles enunciated in that regard, there is no warrant for interference by this court. 5. This court has considered t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndantly clear that they are identically worded except for the figures. A perusal of the reasons recorded reveals that the Assessing Officer on verification of the details available on record has noticed that there were bogus purchases. However, from the reasons there is nothing whatsoever to show as to which is the record which shows that there were bogus purchases to the extent stated therein. No details have been mentioned by the Assessing Officer as to what is the basis on which he says that the purchases are bogus. 7. Pursuant to the objections raised by the assessee against the reopening of assessment, the Assessing Officer has passed separate orders dated 02.09.2014 in relation to each assessment year rejecting the objections raised by the assessee, wherein, he has stated that he had received information from the Director General of Income Tax (Inv.), Mumbai that M/s Yash Trading Company, Proprietor Smt. Varshaben Sanatbhai Patel has made bogus purchases from the parties referred to thereunder in relation to the financial years relevant to the assessment years in question. It is further stated that the reason to believe has been recorded on the basis of the knowledge that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....kers P. Ltd. (supra), the conditions with regard to change of opinion would not be attracted, and so long as the ingredients of section 147 of the Act are fulfilled, the Assessing Officer is free to initiate the proceedings under section 147 of the Act. The question that therefore, arises for consideration is as to whether the ingredients of section 147 of the Act are satisfied in the facts of the present case. 10. Before adverting to the merits of the case, reference may be made to the decision of the Supreme Court in the case of Income Tax Officer, I Ward, Distt. VI, Calcutta and others v. Lakhmani Mewal Das, (1976) 103 ITR 437, wherein it has been held that the grounds or reasons which lead to the formation of belief contemplated by section 147(a) of the Act must have a material bearing on the question of escapement of income of the assessee from assessment. Once there exist reasonable grounds for the Income Tax Officer to form the above belief, that would be sufficient to clothe him with jurisdiction to issue notice. 11. This court in Aayojan Developers v. Income Tax Officer, (2011) 335 ITR 234, after referring to various decisions of the Supreme Court as well as other Hi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rges is that the Assessing Officer, on verification of the details available on record, has noticed that there were bogus purchases. However, there is no assertion as regards on the basis of which material on record he has come to such conclusion. A perusal of the order rejecting the objections raised by the petitioner, shows that the reopening is based, not upon the material on record, but on the basis of material received from an external source viz., the DGIT (Inv.), Mumbai, pursuant to inquiries made by him (the DGIT). Therefore, the material on the basis of which the Assessing Officer seeks to assume jurisdiction under section 147 of the Act, is the information received from an external source viz., from the DGIT and not the material on record as reflected in the reasons recorded. Under the circumstances, on the basis of the material on record, the Assessing Officer could not have formed the belief that income chargeable to tax has escaped assessment, inasmuch as, the formation of belief of the Assessing Officer is not based upon the details available on record, but on the material made available by the DGIT (Inv.), Mumbai which is an external source. Under the circumstances, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Commissioner to reopen the matter. That was by a communication dated 17-3-1973 in which the relevant part read as follows: "In this case, the assessee owned 16 acres 33 cents in Nacharam Village near Hyderabad. This was acquired by the Government with effect from 27-10-1964. The assessee was awarded a final compensation of Rs. 2,10,361 on 7-7-1967. The land in question is not agricultural land and has not been subjected to agricultural operations. The capital gains are chargeable to income tax. The value as on 1-1-1954 is estimated at Rs. 1000 per acre and the total value of the entire land as on 1-1-1954 would be about Rs. 16,500. Thus the assessee made a net capital gain of Rs. 1,93,860. Besides the amount of interest that accrued year to year will have to be included as a protective basis. The assessee has filed a return disclosing an income of Rs. 3599 being interest on belated compensation on 17-2-1972. As this has been filed beyond the period prescribed under Section 139(4), the return has been treated as invalid and filed. I have, therefore, reason to believe that the income chargeable to tax has escaped for Assessment Year 1965-66 and that such escapement was b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rm part of the record. However, the said aspect is not reflected in the reasons recorded. On behalf of the Assessing Officer, the learned counsel is not in a position to point out any material on the record on the basis of which the Assessing Officer could have formed such belief. What is now sought to be stated by way of the order rejecting the objections as well as the affidavit-in-reply filed in response to the averments made in the petitions is that the formation of belief is based upon the information which is received from the DGIT (Inv.), Mumbai. It is settled legal position as held by a catena of decisions that the substratum for formation of belief that income liable to tax has escaped assessment has to form part of the reasons recorded. In the present case, the substratum for formation of belief, as indicated in the order rejecting the objections as well as the affidavit-in-reply, is the information given by the DGIT (Inv.), Mumbai, which got no relation with the reasons recorded, which are stated to be based upon the material available on record. Under the circumstances, the Assessing Officer, on the basis of the material on record, could not have formed belief that ther....