TaxTMI 
TaxTMI 
2018 (12) TMI 1397
X X X X Extracts X X X X
X X X X Extracts X X X X
.... vide letter No.DDIT(Inv.)/Unit3(1)/Kol/x46651/1819/10339 dated 27.02.2018, provided information about certain companies having bank accounts with INDUSIND Bank, Kolkata Stock Exchange Branch and who were involved in giving accommodation entries of various natures to several beneficiaries. 2.2 According to the ADIT (Inv.), one such company is Finelink Suppliers Pvt. Ltd. (FSPL) holding Current A/c No.0515AA2692050 with INDUSIND Bank, Kolkata Stock Exchange Branch. Vide another letter dated 14.03.2018, he stated that between 22.05.2010 to 31.03.2012, huge tune of fund has been washed out from the said account of FSPL by several company seem to be real beneficiary. He also stated that summons u/s 131 issued to FSPL was received back unserved and as per ITD database that the company's income and tax for various years were as under: F.Y. Gross Total Profit before tax Tax 2010-11 26,280 26,280 Nil 2011-12 38,820 38,820 Nil 2012-13 1,02,330 1,02,330 Nil Income-tax details of the directors of FSPL provided by him are as under: Mukesh Sharma AIQPS4217H .... Nil Jitendra Kr.Singh BCZPS0870C .... Nonfiler Kishore Shaw BGIJS6392A .... ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essment. The Assessing Officer had undertaken a mechanical exercise and recorded the reasons for issuing the notice. 5. In support of his contentions the counsel relied on the following decisions: (1) The judgment of the Supreme Court in case of Chhugamal Rajpal V. S.P. Chaliha (1971) 79 ITR 603 (SC), in which noticing that the Assessing Officer had not set out any reasons for coming to the conclusion that it was a fit case to issue notice under Section 148 of the Act, the Supreme Court held that the exercise of reopening exercise was invalid. (2) In case of decision of Division Bench of Gujarat High Court in case of Amar Jewellers Ltd. Vs. Deputy Commissioner of Income-tax (2018)92 tamann.com 4(Gujarat) in which in facts of the case, the Court had come to the conclusion that the notice of reopening was invalid. (3) In the judgment dated 16th April, 2018 of this Court in Income Tax Appeal No. 1297 of 2015 in case of The Principal Commissioner of Income Tax-5 Vs. M/s. Shodiman Investments Private Limited, in which while dismissing the revenue's appeal against the judgment of Income Tax Appellate Tribunal, the ground of the assessee of invalidity of the reopening of assessmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. Pvt. Ltd. [1996 (217) ITR 597 (SC)] ; Raymond Woollen 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 152 are 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 reason to believe that such escapement has occurred by reason of either (i) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed to other accounts by way of RTGS fund transfer pointing out that the real beneficiaries were the petitioner and other similar companies, in whose account the unaccounted money was brought through regular books of accounts. 10. In our opinion, the information supplied by the investigation wing to the Assessing Officer thus formed a prima facie basis to enable Assessing Officer to form a belief of income chargeable tax having escaped assessment. Therefore, it cannot be stated that the Assessing Officer did not have reason to believe that income chargeable to tax had escaped assessment. Being a case where return were accepted without scrutiny, we must leave the question of taxability of such allegedly escaped income to Assessing Officer to examine during scrutiny assessment. 11. The Assessing Officer perused the information supplied by the investigation wing and having formed the belief that income chargeable to tax had escaped assessment, cannot be stated to have acted mechanically. Further, mere fact that assessee had asked for certain information from the Assessing Officer, which at this stage was not supplied, would not invalidate the reasons recorded by the Assessing Officer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der: "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 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 v. 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 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 ....