TaxTMI 
TaxTMI 
2021 (5) TMI 692
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.... the Act and no scrutiny assessment was made under Section 143 of the Act. 3. The Assessing Officer, reopened the assessment under Section 147 of the Act by issuing impugned notice dated 28.03.2019 under Section 148 of the Act. The writ applicant has urged the respondent to treat original income of return as her return of income and requested the respondent to supply copy of the reasons for reopening and same was supplied vide communication dated 25.04.2019. The writ applicant vide letter dated 27.05.2019, raised objections and same came to be disposed of by the revenue vide order dated 07.08.2019. 4. The Assessing Officer before issuing the notice has recorded the following reasons for reopening of the assessment. "Reasons for reopening of the assessment for u/s 147 of the Income-tax Act. . 1. Brief details of the Assessee: The assessee is an individual and has efiled her return of income vide Ack No. 591844330260313 for the year under consideration on 26/03/2013 declaring total income at Rs. 2,45,900/-. 2. Brief details of information collected/received by the AO: The information in respect of the penny stock transaction made in FY 2011-12 was mad....
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.... i.Lack/absence of valid sanction under Section 151 of the Act. ii.The reasons for reopening factually incorrect; iii.No 'reason to believe' that income chargeable to tax has escaped assessment; iv.No live nexus between the information received and material gathered from the different sources. v.Reopening is not permissible for proving and/or fishing inquiry or investigation without their being a specific findings as to escape of income; vi.Reopening is based on borrowed satisfaction. 6. Being aggrieved by the order of disposal of the objections, against the notice for reopening of the assessment, the writ applicant has come up before this Court by filing the present writ applicant. 7. We have heard learned Senior Counsel Mr. Tushar Hemani, assisted by Ms. Vaibhavi Parikh, the learned counsel appearing for the writ applicant and Mr. Manish Bhatt, the learned Senior Counsel assisted Mr. Karan Sangani, the learned advocate appearing for the revenue. 8. Mr. Tushar Hemani, the learned Senior Counsel appearing for the writ applicant, raised the following contentions: a. It was submitted that the impugned notice is b....
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....ani has relied upon the following decisions: i. Principal Commissioner of Income Tax Vs. Smt. Krishna Devi (Delhi High Court, ITA 125 of 2020 decided on 15.01.2021) ii. Prashant S. Joshi Vs. Income Tax Officer (2010) 189, taxmann 1(Bom) iii. Gujarat Lease Finance Ltd. Vs. Deputy Commissioner of Income Tax (2013) 36 taxmann.com.359 (Guj) iv. Krishna Metal Industries Vs. HM Algotar (1997) 225 ITR 853, Gujarat v. N.B. Bhatt Inspecting Asst. Commissioner of Income Tax Vs. I.B.M. World Trade Corporation (1995) 216 ITR 811, Bom. vi. Hindustan Lever Limited Vs. R.B. Wadkar (2004) 137 taxman.479 (Bom) Krupesh Ghanshyambhai Thakkar Vs. Dy. Commissioner of Income Tax, (2017) 77 taxmann.com. 293 (Guj.) 11. On the other hand, learned Senior Counsel Mr. Manish Bhatt, vehemently opposed the writ application, contending that the Assessing Officer was in receipt of information from the ITO (CIB1), Mumbai, that the writ applicant had sold 30,000 penny stock shares of Tuni Textiles Ltd., worth of Rs. 25,72500/-during A.Y 201213 and after in depth investigation into the transaction of the scrip of Tuni Textiles Ltd., it was found that the trans....
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....ssment by examining the return and/or the documents accompanying the return. It is not necessary in such case for the Assessing Officer to come across some fresh tangible material to form ''reason to believe'' that the income has escaped assessment. 16. A plain reading of reasons recorded reveals that, the case of the assessee is reopened under Section 147 of the Act, since the information received from ITO (CIB1), Mumbai, that as per the penny stock transaction data, the assessee had sold 30000 shares of Tuni Textile Ltd., for the consideration of Rs. 25,72,500/-. After receiving the information, the Assessing Officer made enquiries and gathered the information of the assessee and noticed that, the shares sold by the assessee are penny stock. The Assessing Officer has observed that, the transactions with the Tuni Textile Ltd. being a penny stock transactions, he has reason to believe that the income of Rs. 25,72,500/-chargeable to tax has escaped assessment. While forming the opinion with regard to income has escaped assessment, the Assessing Officer has noticed that the price rise in the share of Tuni Textiles Ltd., for the relevant year had not been supported by financial fun....
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....e decision of the Calcutta High Court in the case of East Cost Commercial Com. Ltd., [128 ITR 324], held that, the income tax officer in his affidavit filed in the Court could explain or elaborate or clarify the reasons recorded by him, but he could not thereby introduce new grounds or new reasons or new materials which were not to be found in the recorded reasons, either expressly or by implication. 19. Applying the aforesaid principle of law, in the case of Aayojan Developers (supra) to the facts of the present case, we are of the view that, the facts mentioned in the affidavit by the revenue could not be termed as "new ground" or "new reasons" to supplement the reasons recorded by the Assessing Officer. Therefore, the contention raised by the learned counsel for the writ applicant that, by way of affidavit in reply, the revenue has improved the reasons recorded, has no any merit and cannot be accepted to hold that, the exercise to reopen the assessment is without jurisdiction. 20. The next contention is that, the Assessing Officer failed to record an independent finding as to how the income has escaped assessment. Under such facts and circumstances, it is vehemently con....
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....he examination he makes and, if he likes, from any information that he receives. If he discovers or finds or satisfies himself that the taxable income has escaped assessment, it would amount to saying that he had reason to believe that such income had escaped assessment. The justification for his belief is not to be judged from the standards of proof required for coming to a final decision. A belief though justified for the purpose of initiation of the proceedings under Section 147 may ultimately stand altered after the hearing and while reaching the final conclusion on the basis of the intervening enquiry. At the stage where he finds a cause or justification to believe that such income has escaped assessment, the Assessing Officer is not required to base his belief on any final adjudication of the matter". And, ".....His formation of belief is not a judicial decision but an administrative decision. It does not determine anything at the initial stage, but the Assessing Officer has a duty to proceed so as to obtain, what the taxpayer was always bound to pay if the increase is justified at all. The decision to initiate the proceedings is not to be preceded by any judicial or quasijud....