TaxTMI 
TaxTMI 
TaxTMI 
2015 (2) TMI 1360
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....rder of the CIT(A)-IV, Ahmedabad dated 7.2.2013. 5. In the assesse's appeal, assessee has raised common ground no.2 and 3, challenging the reopening of the assessment by the AO, and the same read as under: "2.0 The learned Commissioner of Income Tax (Appeals)- IV, Ahmedabad [hereinafter referred to as the "CIT(A)"] erred on facts as also in law in holding that, re-opening of assessment u/s 147 of the Act is based on sufficient tangible material which relates to the year under consideration and that there is failure on the part of the appellant to disclose fully and truly all necessary facts necessary for assessment and thereby dismissing the ground of appeal related to reopening of assessment. That on facts as also in law the reopening ought to have been held as invalid and the same may kindly be held as invalid. 3.0 The Id. CIT(A) also erred in not following decision of the Hon'ble High Court of Gujarat in the case of Futura Ceramics Private Limited, stating that the same is rendered under VAT Act, though, contrary to that, he has validated reopening of assessment proceedings u/s 147 of the Act merely on the basis of Show Cause notice of the Central Excise Department which....
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....lligence, Ahmedabad Zonal Unit [herein after referred to as DGCEI for the sake of brevity] collected an intelligence, indicating that the manufacturers of Ceramic glazed and Vitrified tiles of Morbi and other parts of the State of Gujarat, are engaged in large scale evasion of Central Excise duty by adopting modus operandi like removing finished goods from their registered factory premises by not declaring the actual MRP of their products in the Central Excise Invoice, mis-declaring in the Central Excise Invoices the actual ex-factory prices of such tiles, which is recoverable from their buyers, sale of tiles in the market at prices which vary according to the quality and grade and that the invoices are prepared for third quality, whereas, supply is made of first quality, that the differential value, over and above the value declared in the Central Excise invoices, was collected by them in cash from the buyers and such cash amounts are not accounted for in their statutory records, etc. Thus, the allegation is that, the assessee had adopted a fraudulent method to keep the landed cost of tiles at the barest minimum at the destination so that it does not exceed the artificial MRP decl....
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....d that it is an established position of law that when validity of notice issued under section 148 is challenged, the validity of the same has to be judged on the touch stone of the reasons as recorded by the AO under section 148(2) of the Act alone, and no other material can be taken into consideration for judging the validity of notice. 12. Further, it is also an established position that the notice under section 148 can be issued only when the AO has formed a bona fide belief based on the reasons having backing of the material, which are specific, definite, relevant and reliable. It is not enough for the AO to have material in his possession, but he also must perform further necessary mental act of accepting material and information as reliable, leading to the formation of belief which can be acted upon. 13. Further, the belief formed must be of escapement of income from assessment of income tax, which is chargeable to incometax. 14. Further, the belief must not be a mere pretence, but the belief must be real about escapement of taxable income from income tax, based on relevant and reliable materials. The belief entertained by the AO must not be arbitrary or irrational. It can....
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....a similar show cause notice issued by the Central Excise Authority has held as under: ".... Merely because the Excise Department issued a show cause notice, that cannot be a ground to presume and conclude that there was evasion of excise duty implying thereby that there was also evasion of tax under the VAT Act. It is not even the case of the Department that such show-cause notice proceedings has culminated into any final order against the petitioner. We wonder what would happen to the order of reassessment, if ultimately the Excise Department were to drop the proceedings without levying any duty or penalty from the petitioner." 20. Further, the show cause notice issued by the Excise Department contains the allegation of the Excise Department that the assessee has suppressed sales for the purpose of making payment of excise duty. A perusal of recorded reasons does not show that the AO verified the particulars declared by the assessee in its income-tax return. Nowhere in the recorded reasons, the sale declared by the assessee in its income-tax return, has been brought on record. The AO, as per the recorded reasons, has not verified the income-tax return of the assessee vis-&agrav....