TaxTMI 
TaxTMI 
2018 (2) TMI 1292
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....rder to do so, he had recorded the following reasons :- "This Office has received information from DCIT-1 [1], Bhilaspur [C.G] that you have received advances of Rs. 10,25,50,000/= from M/s. East West Finvest India Limited during the FY 2009-10 relevant to AY 2010-11. Further upon verification, it is found that M/s. East West Finvest India Limited has procured bogus share application money/premium from paper companies of Kolkata and thereafter advanced loans to certain companies/persons/ entities. M/s. East West Finvest India Limited works as entry operator and earn bogus funds to provide advances to the various persons. In this case, you have received Rs. 10,25,50,000/= as loan or deposit from M/s. East West Finvest India Limited during the financial year 2009-10. Further, you have paid interest of Rs. 3,89,473/= and repaid the loan of Rs. 1,45,88,948/= to M/s. East West Finvest India Limited. As per the information, M/s. East West Finvest India Limited is paper concern. Therefore, the advance/loan received by the assessee from M/s. East West Finvest India Limited is bogus loan. In view of this fact, as per information available, M/s. East West Finvest India Limited is paper con....
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....y on the issue would revolve around the disclosures made by the assessee. When the disclosures are prima facie found to be non genuine, the scrutiny based on such disclosures would not prevent the Assessing Officer from examining the issue through re-assessment. [d] At this stage, it is not necessary for the Assessing Officer to establish with certainty that additions would invariably be made in the reassessment proceedings. What is necessary is his bona fide formation of belief that income chargeable to tax has established assessment. The sufficiency of the material on the basis of which he formed such a belief is not open to judicial review. 4.1 Counsel placed heavy reliance on two decisions of Division Bench of this Court in the cases of [i] Yogendrakumar Gupta v. Income-tax Officer, reported in [2014] 366 ITR 186 [Guj]; and [ii] Gujarat Ambuja Exports Limited v/s. Deputy Commissioner of Income-tax, Circle 2[1], reported in [2017] 86 Taxmann.com 69 (Guj). 5. We may recall, assessment in the present case was framed after scrutiny, during which time, the advances made by M/s. East West Finvest India Limited to the assessee came up under consideration. The notice has been issue....
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.... "From the above judicial pronouncements, the following principles can be culled out : [i] To confer jurisdiction to the Assessing Officer to reopen the assessment under Section 147 of the Income-tax Act beyond four years from the end of the assessment year, the following two conditions must be satisfied (a) that the Assessing Officer must have reason to believe that the income chargeable to tax has escaped assessment; and (b) that the same was occasioned, on account of either failure on the part of the assessee to make a return of his income for that assessment year, or to disclose fully and truly all material facts necessary for assessment of that year, or to disclose fully and truly all material facts necessary for assessment of that year; [ii] both the above conditions are conditions precedent and must be satisfied simultaneously before the Income-tax Officer can assume jurisdiction to reopen the assessment beyond four years of the end of the assessment year; [iii] such reasons must be recorded and if the reasons recorded by the Assessing Officer do not disclose satisfaction of these two conditions, reopening notice must fail; [iv] there is no set format in which such reason....
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....f Manganese exported by them out of India. After due inquiries and investigations, the Customs authorities found that the assessee was systematically undervoicing the value of Manganese as compared with the prevailing market price. The Income Tax Officer on coming to know about the proceedings before the Customs Collector in this respect issued notice for reopening of the assessment. In the reasons that the Assessing Officer relied on the facts as found by the Customs Authorities that the assessee had under-voiced goods during export. Under such circumstances, upholding the validity of the notice for reopening, the Supreme Court held and observed as under :- "So far as the first condition is concerned, the Income Tax Officer, in his recorded reasons, has relied upon the fact as found by the Customs Authorities that the appellant had under invoiced the goods it exported. It is not doubt correct that the said finding may not be binding upon the income tax authorities but it can be a valid reason to believe that the chargeable income has been under assessed. The final outcome of the proceedings is not relevant. What is relevant is the existence of reasons to make the Income Tax Off....
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....judgment of the High Court. The appeal is, therefore, allowed, the impugned judgment of the High Court is set aside and the Writ Petitions filed by the respondents are dismissed. No order as to costs. 12. In case of Income Tax Officer vs Selected Dalurband Coal Co. Pvt. Ltd. (Supra), the assessment was reopened on the basis of the information contained in letter from Chief Mining Officer that the colliery of the assessee had been inspected and there had been under reporting of coal raised. Upholding the validity of re-opening of assessment, the Supreme Court held and observed as under :- "After hearing the learned counsel for the parties at length, we are of the opinion that we cannot say that the letter aforesaid does not constitute relevant material or that on that basis, the Income Tax Officer could not have reasonably formed the requisite belief. The letter shows that a joint inspection was conducted in the colliery of the respondent on January 9, 1967, by the officers of the Mining Department in the presence of the representatives of the assessee and according to the opinion of the officers of the Mining Department, there was under reporting of the raising figure to the ....
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.... has referred to the subsequent information and adverted to the concept of true and full disclosure of facts. It is also noticeable that there was specific information received from the office of the DIT (INV-V) as regards the transactions entered into by the assessee company with number of concerns which had made accommodation entries and they were not genuine transactions. As we perceive, it is neither a change of opinion nor does it convey a particular interpretation of a specific provision which was done in a particular manner in the original assessment and sought to be done in a different manner in the proceeding under Section 147 of the Act. The reason to believe has been appropriately understood by the assessing officer and there is material on the basis of which the notice was issued. As has been held in Phool Chand Bajrang Lal (supra), Bombay Pharma Products (supra) and Anant Kumar Saharia (supra), the Court, in exercise of jurisdiction under Article 226 of the Constitution of India pertaining to sufficiency of reasons for formation of the belief, cannot interfere. The same is not to be judged at that stage. In SFIL Stock Broking Ltd. (supra), the bench has interfered as i....
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....ssing Officer received additional information after the original assessment was over, on the basis of which he formed a belief that the entire transaction was a sham transaction. At this stage, where the Court is examining the validity of notice of reopening, it is not necessary that the Assessing Officer must have conclusive evidence to hold that invariably additions would be made in the income of the assessee. What is required is the reason to believe that income chargeable to tax as escaped assessment. Sufficiency of the materials in the hand of the Assessing Officer which enabled him to form such a belief would not be examined. A reference in this respect is made to a decision of the Supreme Court in the case of Asstt. Commissioner of Income-tax v. Rajesh Jhaveri Stock Brokers P. Limited, reported in [2007] 291 ITR 500. 9. Learned advocate for the Revenue is correct in drawing our attention to the judgment of this Court in the case of Yogendrakumar Gupta [Supra] in which, in somewhat similar background, the question of change of opinion and failure on the part of the assessee to disclose true and full facts came up for consideration. It is undoubtedly true that every case of r....
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....ef on the basis of subsequent new and specific information that the income chargeable to tax has escaped assessment on account of omission on the part of the assessee to make full and true disclosure of primary facts, he may start reassessment proceedings as fresh facts revealed the nondisclosure full and true. Such facts were not previously disclosed or it can be said that if previously disclosed, they expose untruthfulness of facts revealed. 20. The Assessing Officer required jurisdiction to reopen under section 147 read with section 148 of the Act, where the information must be specific and reliable. As held by the Apex Court in the case of Phul Chand Bajrang (supra), since the belief is that of the Incometax Officer, the sufficiency of reasons for forming the belief, is not for the Court to judge but is open to an assessee to establish that there exists no belief or that the belief is not at all a bona fide one or based on vague, irrelevant and nonspecific information. To that limited extent, the Court may look at the view taken by the Income-tax Officer and can examine whether any material is available on record from which the requisite belief could be formed by the Assessi....