TaxTMI 
TaxTMI 
2021 (2) TMI 585
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....e Court be pleased to call for the records of the proceedings, look into them and be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing the impugned 148 notice dated 05.03.2018 at Annexure -A and objection order dated 19.09.2018 at Annexure - E. B) This Hon'ble Court be pleased to issue a writ of mandamus or any other appropriate writ, order or direction asking the respondent not to proceed further in pursuance of Section 148 notice at Annexure- A and objection order at Annexure - E. C) Pending the hearing and final disposal of this application, this Hon'ble Court be pleased to stay further proceedings in pursuance of section 148 notice at Annexure-A. D) 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 E) This Hon'ble Court be pleased to allow this application with costs against the respondent" 4. We may clarify at this stage that the writ applicant herein, namely Heval Navinbhai Patel is the unmarried daughter of the writ applicant of the connected writ application. 5. The subject m....
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...., found during the search operation, it has been noticed that the main persons of the group are engaged in huge land dealings and cash books/cash vouchers/day books with sale deeds of land transaction, it is ample clear that there were huge unaccounted cash transaction. (4) EC Transaction: During the search operation at the premise as discussed above, it is noticed that there is a noting as 'Against EC". It has been decoded that an "Against EC" transaction is unaccounted day cash receipt and payment of equivalent amount of RTGS in the bank account. For example, if there is cash receipt against EC, it indicated that the Equivalent amount of RTGS has been paid to the other party through banking channel. Thus, one leg of the transaction is reflected in cash book and another leg in the bank book. These 'Against EC' vouchers are recorded in the unaccounted day cash book' (5) It is noteworthy that the entries of date and amount are coded from i.e. the date of transaction has been pre-dated by 10 years and the actual amount has been represented in the cash book by taking (1/100t) of the actual value. After, obtaining records from the Sub registrar(s) offices, various ben....
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....herefore, there is no question of the receipt of the amount of Rs. 9,07,26,000/-. 3. I further strongly say that the so called reason recorded is not supported with any seized material found and seized from the premises of Venus Group nor forming part of the reason recorded and therefore, my saying that I have not received any amount of Rs. 9.07 crore is also supported in absence of any supporting evidence. 4. I further object the search reopening which is based on mere general observation nor there is any tangible material or nexus with the so called escapement of income and therefore, the reopening is bad in law. 5. I further say that, there is no reference to any information received from the Assessing Officer of Venus Group in the reason recorded nor there is any application of mind seems to be applied and therefore, the reopening made is bad in law, ab initio void and illegal and therefore, liable to be quashed in toto. 6. Further, there is no such approval u/s. 151 of the prescribed authority and therefore, the reopening made is itself bad in law and void. I hereby say that any correspondence in this regards may please be made at e....
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....is letter no. F.No. PCIT3/Ahd/Tech/App.u/s.147/HNP/2017-18 dated 28/12/2017 u/s. 151 of the I T Act after his satisfaction on the reason recorded by the AO that it is a fit case of issuing notice u/s. 148 of the I T Act. 12. Further, it is to mention that the AO is not required to furnish any supporting evidences/material on the basis of that AO has recorded the reasons for reopening of assessment. There is nowhere in the provisions of Sec.147 r.w.s. 148 of the LT. Act to provide supporting evidence or material. Therefore, the assessee's request for providing supporting material evidences on the basis of which the AO-has formed the belief of escapement of income cannot be accepted and therefore, the same is hereby rejected. 13. Further, as per the decision rendered by the Hon'ble Supreme Court in the case of ACIT vs. Rajesh Jhaveri Stock Brokers P. Limited {2007} reported in 291 ITR 500, at the stage of initiation of reassessment proceedings under section 147 of the Act, it is not required to be conclusively proven that income has actually escaped assessment. The only requirement is that whether there was any relevant material on which a reasonable person can ....
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....s per the said seized material, there is a mentioning of payment made through Bhuro, however, the said seized material and cash voucher is not proved that the so called Mr.Bhuro has ultimately paid the amount to me. Further, I don't know any Mr. Bhuro and therefore the reopening made is not based on tangible material. Further, in the said seized material, there is no such signature of me regarding receipt of the said amount. 2. In reference to para 3 it is said that, the approval memo has been provided in a letter dated 19.09.2018. This is factually incorrect and we have not provided any such approval memo sent by you to higher authority as well as order passed by higher authority based on your memo and, therefore, kindly provide the same. 3. Further, we strongly say that there is specific provision in search cases to apply section 153C based on the seized material referred by you and also after getting satisfaction note of AO of searched person which is absent in my case. Therefore, notice under Section 147/148 is itself bad in law and void and without jurisdiction or in excess of jurisdiction. 4. Further, without prejudice to the above, there is land so....
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....s invited to the sale deed of the subject land, to point out that the same reflects that the sale consideration has been received by three persons, viz., Navinbhai Ramabhai, Nikunjkumar Bhikhabhai and Sachin Bhikhabhai, and that nowhere it is reflected in the sale deed that the petitioner has received any consideration. Referring to the copies of the seized material, it was pointed out that insofar as the subject land being village Ognaj, Survey No.1292/B is concerned, the on-money is said to have been paid to Shri Bhuro and that there is no material to connect the petitioner with the seized material. It was submitted that therefore, based upon the seized material, the Assessing Officer could not have formed the requisite belief that any income chargeable to tax has escaped assessment in the case of the petitioner. 2. It was further submitted that in the present case, the material has been seized during the course of search and hence, there is a specific provision in such cases to apply section 153C of the Income Tax Act based on the seized material and hence, the notice under section 148 of the Act reopening the assessment of the petitioner under section 147 of the Act is....
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.... be permissible. He would further submit that the reasons recorded nowhere indicate or suggest that during the search operation of the premises at the Venus Group, to whom the writ applicants sold the land, it was revealed that there was a huge cash transaction for such purchases. Merely because, the seized documents and other materials prima-facie suggest cash transactions with respect to the sale transaction between the Venus Group and writ applicants, would not automatically imply that the writ applicants had received such cash money. Mr. Shah, would submit that so far as Heval Navinbhai Patel is concerned, she has put her signature in the sale deed as one of the confirming parties. So far as Navinbhai Patel is concerned, his name figures as one of the recipients of a particular amount towards the sale consideration. Mr. Shah would submit that there is nothing to even remotely suggest that Heval Navinbhai Patel had received any cash amount in the sale transaction. He pointed out that so far as Navinbhai Patel is concerned, he received Rs. 26 lakh by way of a cheque towards his share in the property. Mr. Shah submitted that the Assessing Officer has thus proceeded on mere conjunc....
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.... merit in both the writ applications, those may be rejected. ANALYSIS :- 19. At the outset, we may record three settled principles of law which would have some bearing in the present set of cases. First is that in a case where the return filed by the assessee is accepted under Section 143 [1] of the Act without scrutiny, since the Assessing Officer had not formed any opinion, the principle of change of opinion would not apply. This has been made sufficiently clear in the case of Assistant Commissioner of Income-Tax v. Rajesh Jhaveri Stock Brokers Private Limited, reported in [2007] 291 ITR 500 [SC] in which it was held and observed as under :- "One thing further to be noticed is that intimation under section 143(1)(a) is given without prejudice to the provisions of section 143(2). Though technically the intimation issued was deemed to be a demand notice issued under section 156, that did not per se preclude the right of the Assessing Officer to proceed under section 143(2). That right is preserved and is not taken away. Between the period from April 1, 1989 to March 31, 1998, the second proviso to section 143(1)(a), required that where adjustments were made under the....
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.... sometimes the whole procedure laid down in the Act for imposing liability upon the tax payer. In the scheme of things, as noted above, the intimation under section 143(1)(a) cannot be treated to be an order of assessment. The distinction is also well brought out by the statutory provisions as they stood at different points of time. Under section 143(l)(a) as it stood prior to April 1, 1989, the Assessing Officer had to pass an assessment order if he decided to accept the return, but under the amended provision, the requirement of passing of an assessment order has been dispensed with and instead an intimation is required to be sent. Various circulars sent by the Central Board of Direct Taxes spell out the intent of the Legislature, i.e., to minimize the departmental work to scrutinize each and every return and to concentrate on selective scrutiny of returns. These aspects were highlighted by one of us (D. K. Jain J) in Apogee International Limited v. Union of India (1996) 220 ITR 248]. It may be noted above that under the first proviso to the newly substituted section 143(1), with effect from June 1, 1999, except as provided in the provision itself, the acknowledgment of the retur....
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....er section 143(3). A common requirement in both of cases is that the Assessing Officer should have reason to believe that any income chargeable to tax has escaped assessment. 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." 22. The requirement, thus for reopening of assessment, is "reasonable belief". This expression is not synonymous with Assessing Officer having finally ascertained the fact by any legal evidence or conclusion. In this context, the Supreme Court in the case of Rajesh Jhaveri Stock Brokers Private Limited [Supra] had observed as under :- "Section 147 authorizes and permits t....
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....oneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed. There will be no order as to costs." 24. Lastly, it is well settled that the validity of the notice of reopening would be judged on the basis of reasons recorded by the Assessing Officer for issuance of such notice. It would not be permissible for the Assessing Officer to improve upon such reasons or to rely upon some extraneous material to support his action. Reference in this respect can be made to the decision of this Court in the case of Aayojan Developers v. Income-tax Officer, reported in [2011] 10 taxmann.com226/201 Taxman 154 (Mag.)/335 ITR 234 (Guj.) 25. Thus, from the above, the following principles of law are discernable on the subject of reopening of assessment under Section 147 of the Act, 1961. "(I) The Court should be guided by the re....
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....7 is a potent power and should not be lightly exercised. It certainly cannot be invoked casually or mechanically. (viii) If the original assessment is processed under Section 143(1) of the Act and not Section 143(3) of the Act, the proviso to Section 147 will not apply. In other words, although the reopening may be after the expiry of four years from the end of the relevant assessment year, yet it would 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....
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....pinion" has been treated as a built in test to check abuse. If there is tangible material showing escapement of income, the same would be sufficient for reopening the assessment. (xvii) It is not necessary that the Income Tax Officer should hold a quasi judicial inquiry before acting under Section 147. It is enough if he on the information received believes in good faith that the assesee's profits 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 knowle....
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.... that the search and survey proceedings were carried out under Section 132 and documents were seized under Section 133A of the Act from the various premises of the Venus Group. One of the premises of the Venus Group i.e. the Crystal Arcade situated at the C.G. Road, Ahmedabad was covered under Section 132 of the Act. During the course of the search, various documents related to the unaccounted cash transactions of the Venus Group were seized. Upon due verification of all such seized documents, it was found that the unaccounted cash transactions were first recorded on the vouchers and thereafter in the day cash book. The seized documents reflected the unaccounted cash transactions for the period between January, 2007 to March, 2015. The cash book was written in the coded form. Further details and documents were obtained from the office of the Sub-Registrar for the purpose of identifying the beneficiaries in the transactions with the Venus Group. 28. It can thus be seen that the Assessing Officer had analyzed the voluminous material collected by the Revenue during the search operations in connection with the Venus Group. This material, prima facie suggested huge cash transactions ....
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.... years referred to in sub-section (1) of section 153A]:] 2.2.3WITH EFFECT FROM 01.06.2015: Assessment of income of any other person. --153C.[(1)] [Notwithstanding anything contained in section 139. section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that, (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, ~ belongs to; or (b) any books of account or documents, seized or requisitioned, or any information contained therein, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person]-- [and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the....
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....was found during the course of search. 33. A clear analysis of the Section 153(C) of the Act would indicate that the section comes into play only if the following conditions are fulfilled: * search or requisition must have taken place * any money, bullion, jewellery or other valuable articles or other things or books of account or documents (hereinafter called "assets/documents") are found belonging/pertaining to "such other person", or even any information contained therein relates to a person other than the person on whom the said search is conducted * Satisfaction of AO that it belongs to or relates to "such other person" After finding any books account or documents or assets seized or requisitioned, the same shall be handed over to the AO having jurisdiction over such other person. The AO (having jurisdiction) has to be satisfied that the "assets/documents" seized or requisitioned have a bearing on the determination of the total income of such other person. Only then the AO (having jurisdiction) can proceed /s. 153C against such other person in the manner provided u/s. 153A. It is apparent from the above that two separate satisfac....
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....on 153C Section 147 (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer "shall" proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which se....