TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 137
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....r on proceedings were initiated u/s 148 of the Act the reasons for reopening of the assessment read as under:- Reason for issue of Notice u/s 148 for the A.Y. 2009-10 in the case of Shri Magan Behari Lal. 1. The assessee is a director of the company which was incorporated on 23.02.1998 under the Company Act, 1956. The business of the assessee company not mentioned in the return of income for the assessment year 2009-10. The details of the directors of the assessee company are hereunder:- (a) Magan Behari Lal. The assessee filed its return of income on 04.08.2009 for the assessment year 2009-10 declaring income of Rs. 2,45,890/-. No security assessment was made in this case. Details of information received regarding escapement of income and analysis:- 2. The information in this case has been received from the Pr. Director of Income Tax (Investigation). Ahmedabad that the modification of the client codes is a practice under which brokers change the client codes in sale and purchase orders of securities after the trades are conducted. It is legally permitted to rectify inadvertent errors in punching the orders, there were concerns that such modifications could be misused f....
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....2,45,890/- vide acknowledgment no.209. the assessee has intentionally avoided furnishing true and complete particulars of this transaction. In view of the above, I therefore have reason to believe that the income of Rs. 46,05,094/- has escaped assessment as defined by Section 147 of the I.T. Act, 1961. Reasons for formation to belief. 10. Considering the information received from the Pr. Director of Income Tax (Investigation), Ahmedabad and in the light of contents of the return of income filed by the assessee for the assessment year under consideration, it is a case where income to the extent to sum of Rs. 46,05,094/- by way of shifting out the ascertained profit of Rs. NIL and by way of shifting in ascertained loss of Rs. 46,05,094/- as appearing in the details supplied by the Investigation Wing (Ahemdabad) has been suppressed in its books of accounts and return of income for the year under consideration by the assessee with the connivance of the share brokers in consideration of commission paid thereon in cash to the brokers. Hence, I have reason to believe that the income of the assessee to the extent of Rs. 46,05,094/- has escaped assessment. Prior to 1989 section 147 pr....
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....pplication of mind. 6. Per contra, the Ld. DR stated that at the stage of reopening the assessment all that the AO has to see is whether there is a prima facie case. For this proposition, strong reliance was placed on the decision of the Hon'ble Supreme Court in the case of Raymond Woollen Mills Ltd. vs ITO & Ors. [236 ITR 34] and decision of the Hon'ble Delhi High Court in the case of Paramount Communication (P.) Ltd. [392 ITR 444](Delhi). The Ld. DR also relied upon the decision of the Hon'ble Punjab & Haryana High Court in the case of Rakesh Gupta vs CIT [93 taxmann.com 271](P & H). 7. I have given a thoughtful consideration to the orders of the authorities below qua the issue. The reasons for reopening of assessment have been exhibited elsewhere. It can be seen from the reasons that the assessment has been reopened solely on the basis of information received from Pr. DIT(Inv.), Ahmedabad. It seems that the AO has been carried away by the report of the investigation wing without making any independent verification to justify the reopening. The Hon'ble High Court of Bombay in the case of Coronation Agro Industries Ltd. vs DCIT [390 ITR 464](Bom.) had an occasion to consider an ....
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....x has escaped assessment. 5. In the above view, prima facie, we are of the view that the impugned notice is without jurisdiction as it lacks reason to believe that income chargeable to tax has escaped assessment." 8. The Hon'ble High Court of Gujarat in the case of Harikishan Sunderlal Virmani vs DCIT [303 CTR (Guj.) 214] again had the occasion to consider similar issue on identical set of facts and has quashed the notice issued u/s 148 of the Act. The relevant findings of the Hon'ble High Court read as under:- "5.3. Thus from the reasons recorded, the reopening of the assessment is on the information/data supplied by the office of the Principal Director of Income Tax (Investigation), Ahmedabad and the information received from the Principal Director of Income Tax (Investigation), Ahmedabad vide his confidential letter dated 8/3/2016. From the information received, it appears that though the client code of the assessee with the broker - Guinness Securities Limited was WW/2647, modified client code was found to be WW/2108 and therefore, to verify the genuineness of the modification of the client code, by applying Lavenshtein Distance Analysis or digit edit analysis utility, d....
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....esaid ground alone, the impugned reassessment proceedings deserve to be quashed and set aside. 5.5 In view of the above and for the reasons stated above, present petition succeeds. The impugned notice issued under section 148 of the Income Tax Act, 1961 and reopening of the proceedings for A.Y. 2009-2010 cannot sustain and the same deserves to be quashed and set aside and are hereby quashed and set aside. Rule is made absolute accordingly. In the facts and circumstances of the case, there shall be no order as to costs." 9. The Hon'ble High Court of Delhi in the case of PCIT vs Meenakshi Overseas (p.) Ltd. 395 ITR 677 (Del.) was seized with the following question of law for consideration as. "Whether the ITAT erred in law and on facts in quashing the assessment proceedings u/s 147/148 of the Act ?" And the Hon'ble High Court answered the question in negative i.e. in favour of the assessee and against the Revenue. The relevant findings of the Hon'ble High Court read as under:- "22. As rightly pointed out by the ITAT, the 'reasons to believe' are not in fact reasons but only conclusions, one after the other. The expression 'accommodation entry' is used to descr....