TaxTMI 
TaxTMI 
2021 (4) TMI 225
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....er 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 17.05.2019, which reads as under : REASONS RECORDED : 1. The assessee Company has its return of income for AY 2012­-13 on 07.02.2013 declaring total income at Rs. 1,75, 310/­. The assessment u/s 143(3) was completed on 26.03.2015. 2. In this case, an information was received from the "DDIT (Inv.) Unit 4(2), Mumbai vide letter No. "DDIT(Inv.)4(2)/ Information/ABR/2018­19 dated 15.03.2019. In this case, an information has been received that during the investigation of the below mentioned assessee, it is found from the. statements of reported account No.23105133390, 23105133404, 23105138686, 23105138937 and 23105138988 with Standard Chartered Bank for the reported entities, prima­facie it is seen that the transactions are seen as these accounts are used by these entities for layering of funds. Further, analysis of the above bank statements vis­avis ITRs filed by reported entities was done and the findings are tab....
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....ioner of Income Tax as per the provisions of section 151 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 been obtained separately from Principal Commissioner of Income Tax as per Provisions of section 151 of the Act." 2.4 The writ applicant raised the objections vide its communication dated 04.07.2019, mainly on the following issues on facts and law: (i) Reasons were not recorded before issuance of notice; (ii) Approval of Principal CIT, in terms of Section 151 of the Act is not obtained; (iii) No failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment; (iii) Reopening is based on "borrowed satisfaction". 2.5 The objections came to be rejected by the respondent vide order dated 30.08.2019. 3. Being aggrieved by the disposal of the objections against the notice for reopening of the assessment, the writ applicant has come up before this Court with the present writ application. 4. We have heard Mr. Sunit Shah, the learned Senior counsel assisted by Mr. Omkar C. D....
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.... and required to be quashed and set aside. 5.4 It was further contended that the Assessing Officer has acted mechanically on the basis of vague information and no further inquiries being made by the Assessing Officer, to come to any independent conclusion that the income has escaped assessment. Therefore, reopening based on the third party satisfaction cannot be sustained in law and the proceedings initiated on borrowed satisfaction required to be quashed and set aside. 6. In view of the aforesaid contention, the learned counsel for the writ application submitted that, the impugned notice as well as the order of disposing off the objections are bad, illegal and without jurisdiction and therefore, the same deserve to be quashed and set aside and accordingly, the writ application may be allowed. 7. On the other hand, Mrs. Kalpana K. Raval, learned Standing Counsel appearing for the revenue has vehemently opposed the writ application, contending that the revenue is justified in reopening the assessment for the year under consideration. She has urged that Assessing Officer has reason to believe that the income has escaped assessment as the primary information received from the....
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....hy;facie it was found that the transactions reflected in the accounts used by the assessee for layering of funds and the credit entries of Rs. 51,00,000/­ is mere an accommodation entries and this credit entries remained unexplained. 12. After careful examination of the reasons recorded and materials on record, it appears that the Assessing Officer has verified the information with regard to suspicious cash transactions and upon analysis of the bank statements, it was seen that compare to turnover, the total income was very less, which in his opinion, was not commensurates with the profit. The Assessing Officer has further observed that in the absence of tax audit report, the turnover was also above Rs. 60,00,000/­. In this backdrop, the Assessing Officer, has come to the conclusion that the assessee is engaged in providing accommodation entries only and the credits of Rs. 51,00,000/­ in the bank account was found unexplained and assessee is the beneficiaries of the transactions. After analysis of the reasons, with respect to formation of belief with regard to escaped income, we find that at the relevant time during the course of earlier assessment proceedings, the t....
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....essment 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 income chargeable to tax had escaped assessment on account of the omission of the assessee to make a full and true ....
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.... 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 expenses 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. 20. 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 rejecting the contention, this Court made the following observations. Paras 9 to 14 read thus: "9. It can thus be seen that the entire material collected by ....
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....id 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 issued notice for reopening of the assessment. The question, therefore, arose whether the information contained in the letter of Directorate of Investigation could be s....
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.... 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 person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot....
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....roducts (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 not indicate application of mind. That apart, the existence of the companies was not disputed and the companies had bank accounts and payments were made to the assessee ....