TaxTMI 
TaxTMI 
2016 (7) TMI 406
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....notice dated 13.03.2015. He supplied to the petitioner the reasons that he had recorded for issuing the notice. Such reasons read as under: "In this case, the facts of the case is that, a search and seizure action was carried out by the investigation wing, Mumbai in the Bhawarlal Jain Group of cases on 03.10.2013, which resulted in collection of evidences and other findings, which conclusively proved that the said Shri Bhawarlal Jain and his son, Shri Rajesh Bhawarlal Jain had through a web of 70 benami concerns, run and operated by them in the names of their employees, provided accommodation entries to various parties in respect of bogus unsecured loans and bogus purchases. Various evidences including a pen drive, found and seized from the premises of the said Shri Bhawarlal Jain and his son proved the above facts. The pen drive seized from the residential premises of Shri Bhawarlal Jain, located at 171, Silver Arch, Napean Sea Road, Mumbai, was seen to be containing calendar year wise (Jan to Dec) accounts of these benami entities right from F.Y 2004-05 onwards. 2. This group was indulged in giving such accommodation entires of about Rs. 25000 crores. Shri Bhawarlal Jain has ad....
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....so been admitted by the employees, the dummy partners/dummy Directors/dummy proprietors of the entities of this group as also by Shri Bhawarlal Jain. 4. The investigations made by the investigation wing revealed that actual importers of rough diamonds import part of their diamond requirement through benami entities operated by Shri Bhawarlal Jain & family which ensures benefit of suppression of turnover, profits and capital requirement of the former. The consignments are sent on credit by the suppliers in the names of these benami entities at the instance of the actual importers and on receipt of the imported consignments from Customs, through CHA, the consignment is handed over to the actual importer and the bogus stock is entered in the books of the benami entities and the same is not recorded in the books of the actual importer. These benami entities of Shri Bhawarlal Jain group thereafter issue bogus sale bills against the bogus stock. 5. From the details and evidences made available, it is seen that the following entities of Shri Bhawarlal Jain group have given accommodation entries of bogus purchases as under, during FY2007-08 to the assessee M/s. Amit Brothers, 201, Chanda....
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.... by the petitioner for the assessment year in question was accepted under Section 143(1) of the Act without scrutiny. In that view of the matter, the question of change of opinion would not arise since obviously the Assessing Officer had no occasion to form an opinion regarding any of the aspects of the petitioner's return. In this context, we may refer to the decision in case of Assistant Commissioner of Income Tax vs. Rajesh Jhaveri Stock Brokers P. Ltd. reported in [2007] 291 ITR 500 (SC), in which, it was observed as under: "16. Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to adminis....
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....ssessing Officer had such material at his command, after processing which, he recorded his reasons as can be seen from paras 4 to 6 of the reasons, we do not find that he acted without proper application of mind. First part of the reasons recorded in paras 1 to 3 give background of various activities carried on by Bhawarlal group of persons as revealed during search and seizure operation carried out by the investigation wing of the department. Contents of paras 4 to 6 of the reasons refer specifically to the petitioner and are in the nature of the Assessing Officer's observation on the basis of materials supplied to him. This is, therefore, neither a case of issuance of notice without application of mind nor a case of recording of reasons through borrowed satisfaction of another authority or wing of the department. 8. Coming to the question of dissatisfactory disposal of the objections by the Assessing Officer, counsel for the petitioner had vehemently contended that in defiance of the directives of the Supreme Court in case of GKN Driveshafts (India) Ltd. vs. Income Tax Officer and ors. reported in [2003] 259 ITR 198, the Assessing Officer had mechanically rejected all the ob....