TaxTMI 
TaxTMI 
2018 (5) TMI 1387
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....vidual. For the Assessment Year 2010-2011, the petitioner had filed return of income on 30th September 2010 declaring total income of Rs. 8,85,260/=. The return was accepted without scrutiny under Section 143 [1] of the Income-tax Act, 1961 ["the Act" for short]. To reopen such assessment, the Assessing Officer issued the impugned notice dated 31st March 2017. In order to do so, he had recorded the following reasons : "A search u/s. 132 of the Income Tax Act, 1961 was conducted in the case of Venus Group of Ahmedabad on 10.03.2015. Various premises were covered u/s. 132/133A of the Act during the search. During the search action at various premises various incriminating documents were seized. On the terrace of Crystal Arcade, CG Road, Ahmedabad, which was also covered u/s. 132 of the Income Tax Act, documents related to unaccounted cash transactions of the Venus Group were seized. On analysis of documents seized and their correlation, it was found that unaccounted cash transactions were first recorded on cash vouchers. On the basis of recording made on these cash vouchers, the entries were recorded on the day cash book. In this connection information was received from Central ....
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....saction is much more that has been reflected in the registered documents. The actual value of each transaction, including, cash and cheque is found duly recorded in form of a summary sheet, supported by duly authenticated vouchers. The cash payments which are shown in the summary sheet (seized as page no. 155 of Annexure A-2) and vouchers (page No. 150, 151 and 153 of Annexure A-2) are properly recorded in the daily cash book. The entries of date and amounts in these vouchers and sheet etc. are in coded form, ie., the date of transaction has been pre-dated by 10 years and the actual amount has been represented in the cash book by taking (1/100th ) of the actual value. On the basis of the seized material, it has been found that the assessee, Shri Kiran Ravjibhai Vasvani-PAN: AAQPV1065N is one of the parties to the transactions in several land properties with the Venus Group during the financial year 2009-10 relevant to A.Y. 2010-11. The value of the transaction for the land as per the registered documents is as under: Land At Survey No. Registered Number Amount (in Rs.) Type of Transaction Sargasan 428/16 10476/2009 13,81,100/- Purchase Sargasan 430/3 10487/2009 ....
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....148 of the I.T. Act, 1961." Armed with the reasons recorded by the Assessing officer, the petitioner raised objections to the notice of reopening under a communication dated 15th June 2017. Such objections were however rejected by the Assessing Officer by an Order dated 6th July 2017, upon which, this petition came to be filed. Facts are similar in all cases. Learned counsel for the petitioners raised the following contentions. The Assessing Officer had no tangible material to form a belief that income chargeable to tax has escaped assessment. There was no material having a live link with formation of such belief. Under the circumstances, even in a case where the return was originally accepted without scrutiny, reopening of the assessment would not be permissible. Elaborating these contentions, counsel submitted that the reasons recorded nowhere demonstrate that during the search operations at the premises of Venus Group from whom the petitioners had purchased lands, had received any onmoney or cash money for such purchases. Merely because the seized documents and other materials prima facie suggest cash transactions in some of the lands were sold by Venus Group, would not auto....
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....g that no tax or refund was due from him after making such adjustments. With effect from April 1, 1998, the second proviso to section 143(1)(a) was substituted by the Finance Act, 1997, which was operative till June 1, 1999. The requirement was that an intimation was to be sent to the assessee whether or not any adjustment had been made under the first proviso to section 143(1) and notwithstanding that no tax or interest was found due from the assessee concerned. Between April 1, 1998 and May 31, 1999, sending of an intimation under section 143(1) (a) was mandatory. Thus, the legislative intent is very clear from the use of the word intimation as substituted for assessment that two different concepts emerged. While making an assessment, the Assessing Officer is free to make any addition after grant of opportunity to the assessee. By making adjustments under the first proviso to section 143(1)(a), no addition which is impermissible by the information given in the return could be made by the Assessing Officer. The reason is that under section 143(1)(a) no opportunity is granted to the assessee and the Assessing Officer proceeds on his opinion on the basis of the return filed by the a....
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....y the assessee, or (b) no refund is due to him. It is significant that the acknowledgment is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any assessment is done by them? The reply is an emphatic no. The intimation under section 143(1)(a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision. Therefore, there being no assessment under section 143(1)(a), the question of change of opinion, as contended, does not arise." These principles were reiterated by the Supreme Court in the latter judgment in case of Deputy Commissioner of Income- Tax & Anr. vs. Zuari Estate Development & Investment Company Limited, reported in [2015] 373 ITR 661 [SC]. Despite this position, even in a case where the return of the assessee is accepted without scrutiny under Section 143 [1] of the Act, in order to reopen the assessment, the Assessing Officer must have reason to believe that income chargeable to tax has e....
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....rase 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 administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991 (191) ITR 662], for initiation of action under section 147 (a) [as the provision stood at the relevant time] fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is reason to believe, but not the established fact 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....
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....a building situated on C.G Road, Ahmedabad. Number of documents relating to unaccounted cash transactions were seized from such premises. These seized documents were analyzed and co-related. It was found that unaccounted cash transactions were first recorded in the cash vouchers. On the basis of such cash vouchers, entries were recorded in the day cash-book. Further, photocopies of documents and loose papers recovered during search operations were forwarded to the Assessing Officer which contained Summary-Sheet; Daily Cash-book entries, etc. According to the Assessing Officer, analyzing all these documents and by co-relating them, it was found that unaccounted cash transactions were first recorded in the cash vouchers. On the basis of recording made in these cash vouchers, entries were recorded in the day cash-book. Continuity of recording of unaccounted cash transactions indicated that the entries were made to record all unaccounted cash transactions of Venus Group and Vaswani family members [who were part of the group]. The cash book was written in coded form for names, amount, dates, etc. It was found that there were huge cash transactions in the land sales made by the said Venu....