TaxTMI 
TaxTMI 
2021 (5) TMI 690
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.... under Section 148 of the Act. 2.3At the request, the reasons recorded have been furnished to the assessee 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 incometax act, therefore reason for reopening is provided as under. "The assessee company filed its return of income for the A.Y. 2012-13 on28/09/212 declaring total income at Rs. 6,58,710/-. The assessee was engaged in the business of trading in rough and polished diamonds. The assessment U/s 143(3) of the incometax act was completed on 04/06/2014. 2.1. In this case, an information has been received from the DCIT Central Circle1( 2) vide letter No.DCIT/CC1( 2)/Abd/Shripalinfo./ 2018-19/ 1708 dated 28/02/2019. As per the information received a search action u/s 132 of the incometax act was carried out in the case of Shree Shivpal Vora on 16/12/2016. During the course of search action several incriminating documents were found and seized which revealed that he was in control of affairs of 44 concerns which are in the business of giving accommodation entry and M/s Kalyan Exports Pvt Ltd is one such company. M/s. Madh....
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.... 3. Further it is pertinent to mention here that as per the guidelines of Hon'ble Gujarat High Court in the case of Sahakari Khand Udyog Mandali Ltd Vs. ACIT you may file objection if desires so, within 60 days of receipt of the reason." 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) Provision of Section 148(2) not complied with; (ii) 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"; (iv) provision of Section 151(1) not complied with. 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. Dave, the learned advocate appearing for the writ applicant and Mrs. Kalpana K. Raval, the learned Standing Counsel appearing for the....
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....re, 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 the alleged transactions with M/s. Kalyan Exports Pvt. Ltd. was not truly disclosed at the time of original assessment, as in fact, without any actual purchases, the accommodation entries were being provided by the concerned entity for tax evasion. Referring to the reasons recorded, she pointed out that after final assessment made under Section 143(3) of the Act, the Assessing Officer received fresh information with regard....
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....32 of the Act and several incriminating documents were found and seized and upon analysis of the same, reveals that Mr. Shivpal Vora was managing the affairs of 44 companies, which were in the business of providing the accommodation entries and out of 44 entities, one of the company was M/s. Kalyan Exports Pvt. Ltd., with whom the assessee - M/s. Madhav Gems had entered into transaction of Rs. 4,24,500/-- during the year under consideration. 13. We further take notice of the fact that while recording the reasons, the Assessing Officer has verified the information received from the DCIT Circle1(2) and applied his mind to the information received and after independent inquiries, he came to conclusion that M/s. Kalyan Exports Pvt Ltd was providing accommodation entry without any business activities and assessee is the beneficiary of accommodation entry of Rs. 4,24,500/-and formed his opinion that he has reasoned to believe that amount of Rs. 4,24,500/-has escaped assessment. 14. After careful examination of the reasons recorded and materials on record, we are of the view that the Assessing Officer could be said to have applied his independent mind to the information received fro....
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....n 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 disclosure of the primary facts was relevant, reliable and specific. It was not at all vague or nonspecific. " 17. In case of Yogendrakumar Gupta Vs. ITO (2014) 366 ITR, this Court while rejecting petition challenging the notice for reopening which was issued beyond a period of 4 years from the end of relevant assessment year, wherein, one of the ground was that the issue was previously scrutinized during the assessment proceedings. We may reproduce the observations made i....
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....ed to the DIT (Investigation), Mumbai. A case is registered against Mr.Arun Dalmia, Harsh Dalmia and during the search at their residence and office premises, the substantial material indicated that 20 dummy companies of Mr.Arun Dalmia were engaged in money laundering and the incometax evasion. The said entities included Basant Marketing Pvt. Ltd. Also. From the analysis of details furnished and the beneficiaries reflected, which are spread across the country, the CIT, Koklata, suspected the accommodation entry related to the assessment year 200607 as well, this information has been provided to Director General of Incometax, Kolkata, who in turn, communicated to the Chief Commissioner of Incometax,Ahmedabad. Further revelation of investigation as could be noticed from the record examined (file) deserves no reflection in this petition. Insistence on the part of the petitioner to provide any further material forming the part of investigation carried out against Dalmias also needs to meet with negation, as the law requires supply of information on which Assessing Officer recorded her satisfaction, without necessitating supply of any specific documents. The proceedings initiated under ....
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...., 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. 22. 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 colle....
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....ng 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 ....
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....nt 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 c....
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....ma 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 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 asses....