TaxTMI 
TaxTMI 
2019 (8) TMI 1417
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....ate writ, order or direction quashing the impugned 148 notice dated 29.03.2018 at Annexure-K and impugned order rejecting objection dated 22.11.2018 at Annexure-O. (ii) Pending the hearing and final disposal of this application, this Hon'ble Court be pleased to stay the reassessment proceedings pursuant to notice under section 148 dated 29.03.2018 at Annexure-K. (iii) This Hon'ble Court be pleased to grant any further or other relief as this Hon'ble Court deems just and proper in the interest of justice, and (iv) This Hon'ble Court be pleased to allow this application with costs against the respondent." 4. The facts giving rise to this writ application may be summarized as under: 4.1 The writ applicant is an assessee. The assessee filed its return of income for the A.Y.2011-12, declaring the total income of Rs. 14,00,432/- on 30th March, 2013. The same was processed under Section 143(1) of the Income Tax Act, 1961 (for short " the Act, 1961") without any modification. 4.2 The case was selected for scrutiny assessment and a notice under Section 143(2) dated 12th August, 2013 was issued and served upon the assessee. The case was, th....
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....r, Room No.202, Kolkatta- 700012. 20,00,000 17.01.2011 20.03.2013 25,00,000 21.01.2011 2. Spectrum Stock Service Pvt. Ltd. 1, British Indian Street, 4th Floor, Room No.405, Kolkatta 18,00,0001 22.06.2010 19.03.2015 3. Nirlon Trade & Finance Pvt. Ltd. 29B, Rabindra Sarani, 3rd Floor, Room No.2E, Kolkatta 25,00,000 10/06/10 15.02.2013 25,00,000 10/06/10 15.02.2013 25,00,000 14.06.2010 19.02.2013 25,00,000 16.06.2010 4. Shri Sati Fivest Pvt. Ltd. 3, Amartolla Street, 1st Floor, Kolkatta- 700001 25,00,000 10/06/10 19.03.2013 25,00,000 25.01.2011 5. Ishan Tie Up Pvt. Ltd. 369/14, Dakshindari Road Narmada Appt, 4th Floor, Flat No.9, Kolkatta- 700048. 30,00,000 17.01.2011 13.03.2013 10,00,000 25.01.2011 3. During the investigation, it was also found that all the above companies have No credentials to carry out transaction of huge amounts as per their income profile. These Kolkatta based companies ar....
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....tablished the identity, capacity and genuineness of transactions took place between the assessee and the depositors. The basis for re-opening as stated in your recorded reasons is para-3 and 4 we would like to submit that we cannot be expected to prove the source of source and there are number of judgments of various Court that the assessee is not expected to prove the source of source and hence no addition can be made u/s.68 of the I.T. Act. With reference to your notice dated 13.11.2018 we submit as under. A. The assessee is a construction contractor. B. We have already filed audit report and acknowledgment of ITR vide our letter dated 13.09.2013. C. We enclose herewith all bank statements. D. As already replied. E. Working of Capital Gain and Copy of Computation of Income is enclosed herewith." 4.8 Ultimately, an order came to be passed dated 22nd November, 2018, overruling the objections raised by the assessee against the issue of notice under Section 148 of the Act, 1961. The order reads thus: "The assessee filed its Return of income for A.Y. 2011-12 declaring total income of Rs. 14,00,432/- on 30.03.2013. The a....
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....ion to the following notices and our reply during the assessment u/s. 143(3) of the I.T. Act. We have already proved the identity, capacity and genuineness of transactions in respect of unsecured loan by filing confirmations with PA Number, Address of Five Companies. All transactions are through property banking channel and we have already filed our bank statement as well as bank statements of the lenders/depositors. Moreover, the depositor has directly filed their copy of IT Return. It proves that we have established the identity, capacity and genuineness of transactions took place between the assessee and the depositors. The basis for re-opening as stated in your recorded reasons is para-3 and 4 we would like to submit that we cannot be expected to prove the source of source and there are number of judgments of various Court that the assessee is not expected to prove the source of source and hence no addition can be made u/s.68 of the I.T. Act. 4. The objection raised-by the assessee has been duly considered, however, objections raised by the assessee are not found acceptable on the following reasons: (I) As additional facts and information has come on the recor....
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....eks to reopen the assessment on the ground that the information received from the DDIT (Inv), Jamnagar reveals that the petitioner has taken unsecured loan aggregating to Rs. 2,28,00,000/- during the year under consideration from five shell companies, details whereof are set out in the reasons. He submitted that according to the Assessing Officer, during the investigation it was found that the said companies have no credentials to carry out transactions of huge amounts as per their income profile and, therefore, the Assessing Officer seeks to reopen the assessment on the ground that the above income has escaped assessment. 5.2 The learned counsel invited our attention to the notice dated 16.9.2013 issued by the Assessing Officer during the course of the scrutiny proceedings, to point out that the Assessing officer had called for complete details of the new unsecured loans/deposits taken and accounts squared up, in response to which, the writ applicant had furnished all the necessary details with regard to the loan taken from the five companies referred to in the reasons recorded. 5.3 It was pointed out that the confirmations from the said companies were furnished during the c....
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....icer vs. Lakhmani Mewal Das, reported in (1976) 103 ITR 437 (SC) to make good his submission that the grounds or reasons which lead to the confirmation of the belief contemplated by Section 147(a) of the Act must have a material bearing on the question of escapement of income of the assessee from assessment because of his failure or omission to disclose fully and truly all the materials facts. The reason must be held in good faith. It cannot be merely a pretence. It is open to the Court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of the section. 5.10 Mr. Gandhi also placed reliance on a decision of this Court in the case of Inductotherm (India) (P.) Ltd. vs. M. Gopalan, Deputy Commissioner of Income Tax, reported in (2013) 356 ITR 481. This decision has been relied upon by Mr. Gandhi to fortify his submission that even in case of reopening of an assessment which was previously accepted under Section 143(1) of the Act without scrutiny, the Assessing Officer would have the power to reopen the assessment provided he had some ta....
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....the basis of such tangible material if the Assessing Officer proposes to reopen the assessment, it cannot be termed as a roving or a fishing inquiry. According to Mr. Bhatt, the Assessing Officer could not be said to have merely and mechanically acted on the report of the Investigation Wing. The reasons recorded by the Assessing Officer speak for itself. Mr. Bhatt, in support of his submissions, has placed reliance on the following decisions: "(i) Calcutta Discount Company Limited vs. Income Tax Officer, Companies District, I & Ors., 41 ITR 191 (SC); (ii) Phool Chand Bajrang Lal & Ors. vs. Income Tax Officer & Ors., 203 ITR 456 (SC); (iii) Yogendrakumar Gupta vs. Income-Tax Officer, 366 ITR 186; (iv) Gujarat Power Corporation Ltd. vs. Assistant Commissioner of Income Tax, 350 ITR 266; 6.3 Mr. Bhatt also made available for our perusal the information in writing furnished by the Investigation Wing to the Assessing Officer. It appears that during the course of the investigation, it was found that all those companies said to have given unsecured loan to the writ applicant and which is shown to have been repaid by the writ applicant to the respecti....
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....e of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148." 10. Prior to its amendment with effect from 1-4-1989, section 147 provided as follows :-- "147. Income escaping assessment. - If -- (a) the Income-tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any ass....
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.... his notice subsequently in the course of proceedings under this section, notwithstanding that the reason for such issue has not been included in the reasons recorded under subsection (2) of section 148." 13. In order to appreciate the reasons for the amendment inserting Explanation 3, it would be necessary to advert to some of the judgments of the High Courts, prior to the amendment. 14. The Punjab and Haryana High Court, in its decision, in Vipan Khanna v. Asstt. CIT [2002] 255 ITR 2201 dealt with the question as to whether, after initiating the proceedings under section 147 on the ground that the petitioner had claimed depreciation at a higher rate, the Assessing Officer would be justified in launching an inquiry into the issues which were not connected with the claim of depreciation. This question was answered in the negative. 15. A Division Bench of the Kerala High Court held in Travancore Cements Ltd. v. CIT [2008] 305 ITR 1701 , that upon the issuance of a notice under section 148(2), when the proceedings were initiated by the Assessing Officer on the issues in respect of which he had formed a reason to believe that the income had escaped assessment, it was not open....
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....t the basis of the notice for reopening the assessment. 17. The Parliament stepped in to correct what it regarded as an incorrect interpretation of the provisions of section 147. The Memorandum explaining the provisions of the Finance (No. 2) Bill of 2009 states in this background that some courts had held that the Assessing Officer should restrict the reassessment proceedings only to the issues in respect of which the reasons have been recorded for reopening the assessment and that it was not open to him to touch upon any other issue for which no reasons have been recorded. This interpretation was regarded by Parliament as being contrary to the legislative intent. Hence, Explanation 3 came to be inserted to provide that the Assessing Officer may assess or reassess the income in respect of any issue which comes to his notice subsequently in the course of the proceedings under section 147 though the reasons for such issue were not included in the reasons recorded in the notice under section 148(2). 18. The effect of section 147 as it now stands after the amendment of 2009 can, therefore, be summarised as follows : (i) The Assessing Officer must have reason to believe that any ....
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.... 16. It would, thus, emerge that even in case of reopening of an assessment which was previously accepted under section 143(1) of the Act without scrutiny, the Assessing Officer would have power to reopen the assessment, provided he had some tangible material on the basis of which he could form a reason to believe that income chargeable to tax had escaped assessment. However, as held by the Apex Court in the case of Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd., (supra) and several other decisions, such reason to believe need not necessarily be a firm final decision of the Assessing Officer." 20. In this context, it is also equally well settled that the term "reason to believe" is vitally different from "reason to suspect". We may recall, for a brief while, section 147 of the Act contained the expression "if the Assessing Officer for the reasons to be recorded by him in writing is of the opinion". However, it was soon realized that this expression "is of the opinion" would be too wide giving excessive powers to the Assessing Officer to resort to reopening of assessment. This expression was, therefore, quickly changed to bring back the expression....
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....deleted the words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament reintroduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer. We quote hereinbelow the relevant portion of Circular No.549 dated 31st October, 1989, which reads as follows: "7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression `reason to believe' in Section 147.--A number of representations were received against the omission of the words `reason to believe' from Section 147 and their substitution by the `opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression `has r....
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.... stated that power to reopening cannot be equated with review." REASONS TO BELIEVE 22. The expression "reasons to believe" stands adequately elaborated by the Apex Court in its various pronouncements. The issue is no longer debatable. 23. By relying upon its earlier decision, rendered by a Constitution Bench (five-Judge) judgment, in Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta, AIR 1961 SC 372, a Three-Judge Bench of the apex Court in S. Narayanappa v. Commissioner of Income- Tax, Bangalore, (1967) 63 ITR 219: [AIR 1967 SC 523], held that: "if there are in fact some reasonable grounds for the Income-tax Officer to believe that there had been any non-disclosure as regards any fact, which could have a material bearing on the question of under-assessment that would be sufficient to give jurisdiction to the Income Tax Officer to issue the notice under S. 34. Whether these grounds are adequate or not is not a matter for the Court to investigate. In other words, the sufficiency of the grounds which induced the Income-tax Officer to act is not a justiciable issue. It is of course open for the assessee to contend that the Income-tax Of....
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....diction to reopen the concluded assessment in such a, case. It is correct that the assessing authority could have deferred the completion of the original assessment proceedings for further enquiry and investigation into the genuineness to the loan transaction but in our opinion his failure to do so and complete the original assessment proceedings would not take away his jurisdiction to act under S. 147 of the Act, on receipt of the information subsequently. The subsequent information on the basis of which the I.-T.O acquired reasons to believe that income chargeable to tax had escaped assessment on account of the omission of the assessee to make a full and true disclosure of the primary facts was relevant, reliable and specific. It was not at all vague or non-specific." "26... ...One of the purposes of S. 147, appears to us to be, to ensure that a party cannot get away by wilfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn around and say "you accepted my lie, now your hands are tied and you can do nothing." It would be travesty of justice to allow the assessee that latitude." (Emphasis suppl....
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.... (Emphasis supplied) 27. It is also the law that the Assessing Officer is not precluded to reopen assessment of an earlier year on the basis of his finding of fact, so made on the basis of fresh material, so discovered, in the course of assessment of next assessment year [Ess Kay Engineering Co. P. Ltd. vs Commissioner Of Income-Tax, 2001 247 ITR 818 SC]. 28. In Calcutta Discount Co. Ltd. (supra), the apex Court held that: "9. There can be no doubt that the duty of disclosing all the primary facts relevant to the decision of the question before the assessing authority lies on the assessee. To meet a possible contention that when some account books or other evidence has been produced, there is no duty on the assessee to disclose further facts, which on due diligence, the Income-tax Officer might have discovered, the Legislature has put in the Explanation, which has been set out above. In view of the Explanation, it will not be open to the assessee to say, for example - "I have produced the account books and the documents: You, the assessing officer examine them, and find out the facts necessary for your purpose: My duty is done with disclosing these account-books and ....
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....mphasis supplied) 30. The Apex Court in Income Tax Officer, Cuttack v. Biju Patnaik, 1991 Supp (1) SCC 161, observed that while examining the existence of reasons, record can be looked into. 31. In Niranjan & Co. Pvt. Ltd. v. Commissioner of Income Tax, West Bengal-I, 1986 Supp SCC 272, the apex Court held that: "21. It was contended on behalf of the assessee/appellant relying on the observations of this Court in Commr. of Income-tax, Gujarat v. A. Raman and Co., (AIR 1968 SC 49) (supra), that the Income-tax Officer must have had reason to believe and in consequence of information he must have that reason to believe and it was submitted that the information was already there and there was no new information from which the Income-tax Officer could have formed the belief. Having regard to the facts of this case as discussed above and the nature of the information indicated before, we are of the opinion that there was information in the form of a revised return and since the information mentioned before came to the knowledge of the Income-tax Officer subsequent to the making of the first assessment and the information being such from which a reasonable person could have....
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....hemicals Limited vs. Deputy Commissioner of Income-Tax [OSD], reported in [2012] 346 ITR 228 [Guj] made the following observations : "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 Incometax 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 As....
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....d would constitute genuine and bona fide reason to believe. Reassessment was held to be valid. 37. Similarly in the case of Ankit Agrochem (P. ) Ltd. v. JCIT (2018) 253 Taxman 141 (Raj)(HC) the Court held that; the reassessment on the basis of the information for the DIT stating that the assessee had received share application money from several entities which were only engaged in the business of providing bogus accommodation entries to the beneficiary concerns, the reassessment on the basis of said information was justified. 38. The other cases where reopening has been held to be justified on the basis of the information from the Investigation Wing are as follows: (I) PCIT v. Paramount Communication P. Ltd. (2017) 392 ITR 444 (Delhi)(HC); (ii) Aravali Infrapower Ltd. v. DCIT, (2017) 390 ITR 456 (Delhi)(HC) (iii) Aradhna Estate Pvt. Ltd. v. DCIT, (2018) 404 ITR 105 (Guj) (HC) (iv) Rajnish Jain. v. CIT (2018) 402 ITR 12 (All) (HC) 39. While it is true that the court is conscious that the reassessment notice should not have been routinely issued, at the same time, the nature of power is wide enough that when there is an escapement of incom....
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....idered, applied his mind and recorded the finding of belief that income chargeable to tax had escaped assessment, the reopening could not and should not have been declared as invalid, on the ground that he proceeded on the show cause notice issued by the Excise Department which had yet not culminated into final order. At this stage the Assessing Officer was not required to hold conclusively that additions invariably be made. He truly had to form a bona fide belief that income had escaped assessment. In this context, we may refer to various decisions cited by the counsel for the Revenue. 10. In case of Central Provinces Manganese Ore Co. Ltd. vs. Income Tax Officer, Nagpur (Supra) the Supreme Court noted that in case of the assessee which had an office in London, this Customs authority had come to know that the assessee had declared very low price in respect of the consignment of 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....
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....tion sent by Shri Bagai. Merely because the impugned notice was sent on the next day after receipt of the letter of Shri Bagai does not mean that the Income Tax Officer did not apply his mind to the information contained in the said letter of Shri Bagai. On the basis of the said facts and information contained in the said letter, the Income Tax officer, without any further investigation, could have formed the opinion that there was reason to believe that the income of the assessee chargeable to tax had escaped assessment. The High Court, in our opinion, was in error in proceeding on the basis that it could not be said that the Income Tax Officer had in his possession information on the basis of which he could have reasons to believe that income of the assessee chargeable to tax had escaped assessment for the relevant assessment years. For the reasons aforementioned, we are unable to uphold the impugned 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.....
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....y of reopening observed that sufficiency of reason cannot be considered in a writ petition. It was observed as under : "23. The present factual canvas has to be scrutinized on the touchstone of the aforesaid enunciation of law. It is worth noting that the learned counsel for the petitioner has submitted with immense vehemence that the petitioner had entered into correspondence to have the documents but the assessing officer treated them as objections and made a communication. However, on a scrutiny of the order, it is perceivable that the authority has passed the order dealing with the objections in a very careful and studied manner. He has taken note of the fact that transactions involving Rs. 27 lakhs mentioned in the table in Annexure P-2 constitute fresh information in respect of the assessee as a beneficiary of bogus accommodation entries provided to it and represents the undisclosed income. The assessing officer 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 ....
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....e Tax Officer, Nagpur, 1992 AIR 567, 1991 SCR (3) 627, the Supreme Court noted that in the case of the assessee which had an office in London, the Customs authority had come to know that the assessee had declared very low price in respect of the consignment of Manganese exported by them out of India. After due inquiries and investigations, the Customs authorities found that the assessee was systematically under-voicing 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 recorded, the Assessing Officer relied on the facts as found by the Customs Authorities that the assessee had under-voiced the goods during export. In such circumstances, while 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 ....
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....n the basis that it could not be said that the Income Tax Officer had in his possession information on the basis of which he could have reasons to believe that income of the assessee chargeable to tax had escaped assessment for the relevant assessment years. For the reasons aforementioned, we are unable to uphold the impugned 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." 44. In the case of Income Tax Officer vs Selected Dalurband Coal Co. Pvt. Ltd, 1978 113 ITR 489 Cal, the assessment was reopened on the basis of the information contained in a letter from the Chief Mining Officer that the colliery of the assessee had been inspected and there had been under reporting of the coal raised. Upholding the validity of reopening 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 f....
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....at the authority has passed the order dealing with the objections in a very careful and studied manner. He has taken note of the fact that transactions involving Rs. 27 lakhs mentioned in the table in Annexure P2 constitute fresh information in respect of the assessee as a beneficiary of bogus accommodation entries provided to it and represents the undisclosed income. The assessing officer 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 (INVV) 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 ha....
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....d my lie, now your hands are tied and you can do nothing". It would be travesty of justice to allow the assessee that latitude. As held by the Apex Court in Phool Chand Bajrang Lal v. Income tax Officer (Supra) where transaction itself on the basis of subsequent information is found to be a bogus transaction, the Court held that mere disclosure of such transaction at the time of original assessment proceedings, cannot be said to be a disclosure of 'full' and 'true' facts and the Assessing Officer surely would have jurisdiction to reopen concluded assessment in such a case. The Apex Court also had observed in the said case that the Assessing Officer may start reassessment proceedings either because some fresh facts come to light which were not previously disclosed, or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since the belief is that of the Income tax Officer, the sufficiency of re....
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.... In the post notice correspondence dated March 05, 2014, it has been stated by the Assessing Officer that Basant Marketing Pvt. Ltd. provided accommodation entry to various companies, where assessee company is one of them. Basant Marketing Pvt. Ltd. is a dummy company of one Shri Arun Dalmia and substantial material is found to base such reasons recorded during the search by CBI, Mumbai and, therefore, the Assessing Officer issued a notice to show cause as to why the said amount of Rs. 8.71 crore received from Basant Marketing Pvt. Ltd. should not be treated as cash credit under section 68 of the Act." 47. The following principles of law are discernible from the various decisions we have referred to, relied upon and discussed. (i) The Court should be guided by the reasons recorded for the reassessment and not by the reasons or explanation given by the Assessing Officer at a later stage in respect of the notice of reassessment. To put it in other words, having regard to the entire scheme and the purpose of the Act, the validity of the assumption of jurisdiction under Section 147 can be tested only by reference to the reasons recorded under Section 148(2) of the Ac....
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....ould not be necessary for the Assessing Officer to show that there was any failure to disclose fully or truly all the material facts necessary for the assessment. (ix) In order to assume jurisdiction under Section 147 where assessment has been made under sub-section (3) of section 143, two conditions are required to be satisfied; (i) The Assessing Officer must have reason to believe that the income chargeable to tax has escaped assessment; (ii) Such escapement occurred by reason of failure on the part of the assessee either (a) to make a return of income under section 139 or in response to the notice issued under sub-section (1) of Section 142 or Section 148 or (b) to disclose fully and truly all the material facts necessary for his assessment for that purpose. (x) The Assessing Officer, being a quasi judicial authority is expected to arrive at a subjective satisfaction independently on an objective criteria. (xi) While the report of the Investigation Wing might constitute the material, on the basis of which, the Assessing Officer forms the reasons to believe, the process of arriving at such satisfaction should not be a mere repetition o....
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....ts have escaped assessment or have been assessed at a low rate. However, nothing would preclude the Income Tax Officer from conducting any formal inquiry under Section 133(6) of the Act before proceeding for reassessment under Section 147 of the Act. (xviii) The "full and true" disclosure of the material facts would not include that material, which is to be used for testing the veracity of the particulars mentioned in the return. All such facts would be expected to be elicited by the Assessing Officer during the course of the assessment. The disclosure required only reference to those material facts, which if not disclosed, would not allow the Assessing Officer to make the necessary inquiries. (xix) The word "information" in Section 147 means "instruction or knowledge derived from the external source concerning the facts or particulars or as to the law relating to a matter bearing on the assessment. An information anonymous is information from unknown authorship but nonetheless in a given case, it may constitute information and not less an information though anonymous. This is now a recognized and accepted source for detection of large scale tax evasion. The non-d....