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2016 (8) TMI 280
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....d to the petition. The petitioner has received a notice under Section 142(1) of the Act on 12.8.2013 along with questionnaires running into 24 questions calling for various details. On 22.8.2013, the petitioner had specifically replied to the details which are demanded and has also clarified the aspect of commission being paid by the petitioner along with Permanent Account Numbers of the party, to whom the said commission was paid. The petitioner while submitting reply has also specified that TDS was deducted on the amount of the total commission which was paid to the said parties. The particulars were also provided by the petitioner in the context of Question No.16 which was specifically asked for in questionnaire supplied to the petitioner. It is the case of the petitioner that after extensive scrutiny undertaken by the respondent in the assessment proceedings, on 3.10.2015 the assessment order came to be passed under Section 143(3) of the Income-Tax Act by making certain additions as reflected in the order. 3. Feeling aggrieved by and dissatisfied with the addition having been made in the scrutiny assessment, the petitioner has challenged the additions made in the assessment ....
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....ly all material facts necessary for the purpose of assessment. It was submitted that Assessing Authority has specifically gone into and examined the transaction taken place with Target Goods Pvt. Ltd. Company during the original scrutiny assessment and after thoroughly scrutinizing all the relevant details, an assessment order came to be passed. Learned counsel further submitted that there appears to be a non-application of mind on the part of respondent authority in forming a reasonable belief that income of the assessee has escaped the assessment. It was contended by leaned counsel that the order of disposal of objections also appearing to be based on no proper exercise of powers and while forming an opinion, the Assessing Officer has also not verified the impugned transaction and therefore, there appears to be a clear error on the part of authority in deciding to reopen the assessment. Learned counsel submitted that during the scrutiny assessment, factum of TDS amount having been deducted, has also been brought to the notice in addition to addresses, permanent account number as also the amount of commission having been paid and therefore, just to reopen the assessment despite af....
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....t and therefore, that material having been unearthed upon receipt of the information from the separate wing, the authority has rightly and reasonably believed that income of the petitioner is escaped from the assessment. Learned counsel also submitted that opening of reassessment is after proper procedure envisaged under the statutory provision and the authority has acted well within the scope of its authority and therefore, in extraordinary jurisdiction of this Court, no interference be made. Learned counsel for the revenue submitted that an opportunity is available to petitioner to satisfy the assessing authority as at present, no final conclusion is arrived at and therefore, at this stage of the proceeding, no interference be made. 7. Having heard the learned counsel for the respective parties, before adverting to the contentions, the reasons which are recorded are worth to be taken into consideration and hence, same are reproduced hereinafter : "3. The assessee is engaged in the business of manufacturing of textile machinery and spare parts. The assessee has filed his return of income on 29.9.2011 declaring total income at Rs. 5,44,47,395/-. The case was selected for scru....
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....rdinary jurisdiction cannot substitute the belief which has been formulated by the Assessing Officer while taking a decision to reopen the assessment and therefore, when a substantial material is available at command, the authority is to be justified in issuing notice under Section 148 of the Act. This decision cannot be termed as a change of opinion nor can it be said to be passed based upon non-application of mind. The earlier scrutiny assessment was not based upon such information which has been received by the DGIT (Inv.) Branch and therefore, there was no occasion for Assessing Officer to examine the nexus between Kayan brothers and the petitioner and a specific information came to be received that the assessee is the beneficiary of said entry operators well known in the country to the extent of sizable amount of Rs. 210.43 lacs and therefore, the discretion appears to have been rightly exercised by the authority. Therefore, the contentions raised by the learned counsel for the petitioner being devoid of merits, no interference is desirous from this court. 10. The Assessing Officer at the time of issuing notice under Section 148 of the Act is not coming to a final conclusio....
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.... of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. Pvt. Ltd. [1996 (217) ITR 597 (SC)] ; Raymond Wollen Mills Ltd. v. ITO [ 1999 (236) ITR 34 (SC)]. 17. The scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied firstly the Assessing Officer must have reason to believe that income profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reas....
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....ich has become final by the Income-tax authority. It was also contended by the assessee of that case that there was no independent application of mind on the part of Assessing Officer and just based upon said information provided by the Excise Department, the authority resorted to Section 148 of the Act to reopen the assessment. This issue in extenso dealt with by the Division Bench of this Court and by a detailed judgment, came to conclusion that the Assessing Officer has merely relied upon the show cause notice issued by the Excise Department and has not concluded finally and therefore, there is no illegality or irregularity in arriving at a belief that assessment deserves to be reopen. Relying upon the decision delivered by the Apex Court, it is held that action of reopening of assessment was found to be justified. Relevant Paragraph Nos.9, 10, 11, 12, 13 and 16 of the said decision worth to be taken note of and therefore, reproduced hereinbelow : "9. It can thus be seen that the entire material collected by the DGCEI during the search, which included incriminating documents and other such relevant materials, was alongwith report and showcause notice placed at the disposal of....
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.... relevant. What is relevant is the existence of reasons to make the Income Tax Officer believe that there has been under assessment of the assessee's income for a particular year. We are satisfied that the first condition to invoke the jurisdiction of the Income Tax Officer under Section 147(a) of the Act was satisfied.' 11. In case of Income Tax Officer vs Purushottam Das Bangur (supra) after completion of assessment in case of the assessee, the Assessing Officer received letter from Directorate of Investigation giving detailed particulars collected from Bombay Stock Exchange which revealed earning of share and price of share increased during period in question and quotation appearing at Calcutta Stock Exchange was as a result of manipulated transaction. On the basis of such information, the Assessing Officer issued notice for reopening of the assessment. The question, therefore, arose whether the information contained in the letter of Directorate of Investigation could be said to be definite information and the Assessing Officer could act upon such information for taking action under Section 147(b) of the Act. In such background, the Supreme Court observed as under: ....
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.... of the Mining Department, there was under reporting of the raising figure to the extent indicated in the said letter. The report is made by a Government Department and that too after conducting a joint inspection. It gives a reasonably specific estimate of the excessive coal mining said to have been done by the respondent over and above the figure disclosed by it in its returns. Whether the facts stated in the letter are true or not is not the concern at this stage. It may be well be that the assessee may be able to establish that the facts stated in the said letter are not true but that conclusion can be arrived at only after making the necessary enquiry. At the stage of the issuance of the notice, the only question is whether there was relevant material, as stated above, on which a reasonable person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid. Inasmuch as, as a result of our order, the reassessment proceedings have not to go on we don not and we ought not to express any opinion on the merits.' 13. In case of AGR ....
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....e judged at that stage. In SFIL Stock Broking Ltd. (supra), the bench has interfered as it was not discernible whether the assessing officer had applied his mind to the information and independently arrived at a belief on the basis of material which he had before him that the income had escaped assessment. In our considered opinion, the decision rendered therein is not applicable to the factual matrix in the case at hand. In the case of Sarthak Securities Co. Pvt. Ltd. (supra), the Division Bench had noted that certain companies were used as conduits but the assessee had, at the stage of original assessment, furnished the names of the companies with which it had entered into transactions and the assessing officer was made aware of the situation and further the reason recorded does not indicate application of mind. That apart, the existence of the companies was not disputed and the companies had bank accounts and payments were made to the assessee company through the banking channel. Regard being had to the aforesaid fact situation, this Court had interfered. Thus, the said decision is also distinguishable on the factual score.' 16. Thus, the decision in case of Futura Ceramics P....
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....void of merits. Dealing with the contentions of the petitioner that the information received from DGIT, Investigation Branch, Ahmedabad, can never be said to be additional information. We are of the opinion that the information which has been received is on 26.3.2015 from the DGIT, Investigation Branch, Ahmedabad, whereby it has been revealed that present petitioner is also the beneficiaries of those Kayan brothers, who are in the activity of entry operation throughout the country and therefore, it cannot be said that this is not justifiable material to form a reason to belief by the Authority and therefore, this being a case, the Authority is justified in issuing notice under Section 148 of the Act to reopen the assessment and therefore, the challenge contained in the petition being devoid of merits, same deserves to be dismissed. 13. From the aforesaid pronouncements, in the opinion of this Court, the observations made by the Hon'ble Apex Court in the cases referred to above are sufficient enough to meet with the situation and therefore, without repeating or reproducing the same, the Court is of the opinion that extraordinary jurisdiction is not required to be exercised in the....