TaxTMI 
TaxTMI 
2021 (5) TMI 970
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....y assessment was made under Section 143 (3) 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 filed his return of income in response to the notice and requested the respondent to supply the copy of the reasons for reopening and same was supplied vide communication dated 25.04.2019. The writ applicant vide letter dated 25.06.2019 raised objections and the same came to be disposed of by the revenue vide order dated 14.11.2019. 4. The Assessing Officer before issuing the notice has recorded the following reasons for reopening of the assessment: Reasons for Reopening :- "1. Brief details of the assessee: The assessee is an individual and has filed his return of income for the year under consideration on 31.07.2012 declaring total income at Rs. 926320/-. 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 made by the asessee as per information received from the ITO/CIB)1, Mumbai on 02.04.2013 at DIT (I & CI) Mumbai uploaded in the ITS....
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....parately from Principal Commissioner of Income Tax, Jamnagar as per the provisions of section 151 of the Act." 5. The writ applicant raised the objections against the issuance of impugned notice and initiation of the reassessment proceedings, mainly on the following grounds : 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 the income chargeable to tax has escaped assessment; iv. No live nexus/link 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 application. 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. ....
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....bmitted that reopening of the assessment is, therefore, without jurisdiction and hence, the impugned notice deserves to be quashed and set aside. 10. In support of the aforesaid submissions, the learned Senior Counsel Mr. Tushar Hemani 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 appearing for the revenue vehemently opposed the writ application, contending that the AO was in receipt of information from the Investigation ....
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....see, it is not an "assessment". Therefore, when reopening is sought of an assessment, the initial return was processed under Section 143(1) of the Act, the AO can form ''reason to believe'' that income has escaped assessment by examining the return and/or the documents accompanying the return. It is not necessary in such case for the AO 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 dated 02.04..2013 received from ITO (CIB-1), Mumbai at DIT (I & CI, Mumbai) that as per the penny stock transaction data, the assessee had sold 3300 shares of Karma Ispat Limited and earned long term capital gain of Rs. 8,32,132/-. After receiving the information, the AO made enquiries and gathered the information of the assessee and noticed that, the shares sold by the assessee are penny stock. The AO has observed that, the transactions with the Karma Ispat Ltd. being a penny stock transactions, has reason to believe that the income of Rs. 9,13,440/- chargeable to tax has escaped assessment. W....
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....erned investigation wing with regard to bogus accommodation entries of long term capital gain provided by the certain entities. Though, full details of the information and enquiry conducted by Kolkata wing having not been reflected in the reasons recoded, but there was a specific reference made in the reasons recorded by the AO that, the transactions made by the assessee is penny stock. In this context, we may place reliance on the decision of this Court in the case of Aayojan Developers Vs. ITO, [335 ITR 234], wherein, this Court after referring the decision of the Calcutta High Court in the case of East Cost Commercial Com. Ltd., [128 ITR 324], it was 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 term as new ground or n....
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....ment. The expression cannot be read to mean that the assessing officer should have finally ascertained the fact by legal evidence or conclusion. 22. In Praful Chunilal Patel Vs. M.J.Makwana Vs. CIT, [236 ITR 832], this court while interpreting the term 'reason to believe', held that, the word "reason to believe" cannot mean that the AO should have finally ascertained the facts by legal evidence. They only mean that he forms a belief from the 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 AO is not required to ....