TaxTMI 
TaxTMI 
2021 (3) TMI 1171
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2.2 The Assessing Officer has reopened the assessment under Section 147 by issuing impugned notice dated 31.03.2019 under Section 148 of the Act. 2.3 At the request of the writ applicant, reasons recorded have been furnished to the writ applicant on 09.05.2019, which reads as under : "2. Since you have filed return of income in response to notice u/s. 148 of the income tax act, therefore, reason for reopening is provided as under: "The assessee company filed its Return of Income for the A.Y. 2012-­13 on 24.08.2012 declaring total income at Rs. 28,910/­. In this case assessment order under Section 143(3) was passed on 31.03.2014. 2. In this case, an information has been received from O/o the DDIT(Inv.), Unit­2, Surat through email on 22.03.2019, related to inquiry report in the case of Shri Afroz Mohd. Hasanfatta and group. In this case, Enforcement Directorate (ED) received information through Customs Department Surat that some of the companies opened their bank accounts with ICICI Bank Surat and used their accounts for making foreign remittances against fake import documents. The ED conducted investigation and filed a charge sheet agai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat he has made different directors and partners in many companies/firms and lent the same to Shri Afroze Mohd. Hasanfatta. 6. Apart from the above, many other facts have been recorded in the charge­sheets filed by the ED as well as investigation made by the Income Tax Deptt. which proved that the entire movement of funds was for the illegal purpose of money laundering. 4. In all, this money laundering scam is known as Afroze Mohd. Hasanfatta group scam. Several entities were traced related to this group on the basis funds trail, which were used as a conduit for channelizing funds to various concerns, ultimate beneficiaries of which were Hong Kong and Dubai based entities, to which the funds were transferred on the fake documents. 5. The detailed information so received from the Investigation Wing, Surat has been perused carefully and it is found that the assessee company is one of the concerns which has provided entry of funds to the below: mentioned entities operated by Shri Afroz Fatta during the F.Y. 2011­12 relevant to A.Y.2012-­13: Sr.No Parties Name Target entities Amount of transaction (in crore) 1 M/s. Nisha Diamond ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....concern either directly or with the intermediary concerns through which funds were circulated, the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidences could not be discovered by AO and could have been discovered with due diligence, accordingly attracting provisions of Explanation 1 of section 147 of the Act. Further, this case is being analysed now on the basis of fresh material which was not available with the Assessing Officer at the time of assessment. It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for its assessment for the year under consideration thereby reopening u/s. 147 of the Act. In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s. 148 has been obtained separately from Principal Commissioner of Income Tax as per the provisions of section 151 of the Act. 3. Further it is pertinent to mention here that as per the guidelines of Hon'ble Gujarat High Court in the case of Sahkari Khand Udhyog Mandal Ltd., you may file objection if....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he proviso to Section 147, the learned counsel pointed out that in the present case, the scrutiny assessment under Section 143(3) was already completed and now it cannot be reopened unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to disclose fully and truly all material necessary facts for its assessment. In this context, the learned counsel submitted that the notice under Section 142(1) was issued by the Assessing Officer to call for certain particulars like details of bank, sales and purchase, stock etc. In response to the notice, the assessee had furnished the names of the persons from whom the purchases and sales were made including the transaction related to purchase with M/s. Agni Gems Pvt. Ltd. The learned counsel has urged that based on the particulars furnished by the assessee, the transaction with M/s. Agni Gems Pvt. Ltd was verified and accepted by the then Assessing Officer and passed the assessment order without any major additions. In this background of facts, the learned counsel submitted that there was no failure on the part of the assessee to disclose material facts necessary f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ies including M/s. Agni Gem Pvt. Ltd, from their bank account to the Dubai and Hongkong bases company on the strength of fake documents for the purpose of money laundering and the assessee is one of the company which had provided entry of funds to the Nisha Diamond and Agni Gems. In this factual background, the learned counsel for the revenue submitted that the Assessing Officer has verified the information and after independent inquiries, he found that the transactions with M/s. Agni Gems Pvt. Ltd., is not genuine and it is an accommodation entries and the assessee was one of the beneficiaries and therefore, the income has escaped assessment. 8. In view of the above contentions, the learned counsel for the revenue urged that the writ application may not be entertained. 9. Having heard the learned counsel appearing for the respective parties and having gone through the materials on record, the only question that falls for our consideration is whether the revenue is justified in reopening the assessment beyond the period of 4 years under Section 147 of the Act. 10. It is settled law that the reopening of the assessment beyond 4 years from the end of the relevant year, the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the records available in the case of the assessee company and after perusal of the assessment records, he found that assessee is one of the concerned which has provided the entries in directly or in circular manner to M/s. Agni Gems Pvt. Ltd, operated by Mr. Afroze Mohd. Hasanfatta and the purchase transactions as recorded in the books of account by the assessee was not genuine and true transactions. The Assessing Officer has also taken into account the statements of Mr. Afroze Mohd. Hasanfatta and Mr. Madan Jain which have been recorded under Section 150 of the PML Act, 2002 and found that the 12 companies had received huge amount from different entities like the present assessee through RTGS credits in their respective bank accounts. through their bank accounts and the said amount were transferred to Dubai and Hongkong companies on the strength of fake import. 14. After careful examination of the materials on record, we found that the Assessing Officer has examined the information received from the Surat wing and based on the information made inquiries to the information and after independent application of find, and upon due satisfaction, he reached to the conclusion that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d assessment which goes to expose the falsity of the statement made by the assessee at the time of original assessment is different from drawing a fresh inference from the some facts and material which was available which the I.T.O. at the time of original assessment proceedings. The two situations are distinct and different. Thus, where the transaction itself on the basis of subsequent information, is found to be a bogus transaction, the mere disclosure of that transaction at the time of original assessment proceedings, cannot be said to be disclosure of the "true" and "full" facts in the case and the I.T.O. would have the jurisdiction 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 Section 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 inco....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... basis of tangible material came in his hand, which tends to expose the untruthfulness of the entry of purchase made in the books of accounts. In this context, we may refer the observation of the Apex Court in the case of Honda Siel Power Products Vs. Dy. CIT, (2011) 10, taxmann.com, wherein, it is held that assessee having not pointed out during assessment proceedings about exprenses incurred relatable to tax free income u/s. 14A, there was an omission and failure on its part to disclose fully and truly material facts, hence, reopening was justified. 23. The next contention raised by the learned counsel is that the reassessment proceedings could be said to have been initiated mechanically on the basis of third party information. We have examined the reasons as indicated above, and we are of the view that the Assessing Officer has verified the information and after application of mind and upon due satisfaction, he formed an opinion that income has escaped assessment. In this regard, it would be profitable to refer the decision of Principal Commissioner of Income Tax, Rajkot Vs. Gokul Ceramics reported in (2016) Taxman 1 (Gujarat), wherein, similar contention was raised and while....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 manipulated transaction. On the basis of such information, the Assessing Officer i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....said 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 material, as stated above, on which a reasonable p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rstood 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 the reason recorded does no....