2019 (11) TMI 100

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.... Year, therefore would not be hit by the limitation provided in the proviso to section 147 of the Assessment viz. no failure to disclose all material facts. 3. The reasons recorded in support of the impugned notice as made available to the Petitioner read as under : '1. The assessee has filed electronically its original return of income for A.Y. 2012-13 on 13/09/2012 declaring total income at Rs. 20,93,780/- The return of income was processed u/s. 143(1) of the Income Tax Act, 1961 on 18/07/2013. 2. In the case, an information received from the office of the DDIT (Inv.), Unit 3(1), kolakata vide letter no.DDIT(Inv.) Kol/NMCE/Reports/2017- 18/10737 dated 12/03/2017. The information is with regard to systematic evasion of taxes by Clients / Members of the NMCE (National Multicommodity Exchange) during the different financial years by misuse of the NMCE platform. 3. It has been found from the facts available on record that the assessee through Client Code K00054 has purchased shares amounting to Rs. 149,11,14,352/- and also sold shares amounting to Rs. 149,44,73,390/- during F.Y. 2011-12 relevant to A.Y. 2012-13) thereby resulting into huge profits / loss....

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.... of Explanation 2(b) to the Section 147 of the Income Tax Act, 1961 are clearly attracted. Since no regular assessment has been made in this case, the first proviso to the section 147 is not applicable in this case. Hence, above transactions to the extent of Rs. 33,59,039/- which, being unexplained, are credits to the books of the assessee which has not been offered for taxation for the AY 2012-13. Total income that has escaped assessment during the year comes to Rs. 33,59,039/-. 7. In view of the above, I have reason to believe that income chargeable to tax for the A.Y. 2012-13 to the extent of Rs. 33,59,039/- has escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961 as well as provisions of explanation 2(b) of the section 147 of the Act due to the failure on the assessee to disclose fully and truly all material facts necessary for assessment. It is therefore requested that sanction to reopen the case u/s.147 and issue of notice u/s.148 for the AY 2012-13 may be given as per the provisions of section 151(1) of the Income Tax Act, 1961.' 4. Mr.Shah appearing in support of the Petition submits that the impugned notice is without jurisdiction as....

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....e 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 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 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....

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....icer is not even certain whether the Petitioner made profits or loss or even the entities/persons dealt with, would make the reasons bad in law. However, the reasons as conclusion that above in para 5 thereof is not the only reason in support of the impugned notice. The other reason in support of the impugned notice is recorded in Para 2 to 4 thereof viz. that income of Rs. 33.59 lakhs chargeable to tax has escaped assessment on the basis of the tangible material and information received from the Deputy Director of Income Tax (Investigation) Kolkata by misuse of National Multi-commodity Exchange platform. This is the very income chargeable to tax which has escaped assessment at Rs. 33.59 lakhs. This is as mentioned in the reasons with regard to the Petitioner purchasing and selling shares through Star Commodities i.e. Broker during the previous year relevant to the Assessment Year by misusing the National Multi-commodity Exchange platform. Thus even if paragaph 5 is ignored, the reasons to support the impugned reopening notice can be sustained on the above reasons as indicated in paragraph 2 to 4 thereof. 7. So far as the decisions relied upon by Mr.Shah for the Petitioner, we f....