TaxTMI 
TaxTMI 
2022 (3) TMI 81
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....o the reopening of the income tax assessment of the petitioner for the A.Y. 2014- 15 under Section 148 of the Income-Tax Act, 1961 by challenging the notice dated 31st March, 2021 with the following prayers: "(a) quash and set aside the impugned notice at Annexure-A to this petition; (b) pending the admission, hearing and final disposal of this petition, to stay the implementation and operation of the notice at Annexure-A to this petition and stay the further proceedings for the Assessment Year 2014-15; (c) any other and further relief deemed just and proper be granted in the interest of justice; (d) to provide for the cost of this petition." 2. According to the petitioner, the reopening is beyond the period of four years where there is a requirement for the Assessing Officer to form a reason that the income chargeable to the tax has escaped assessment. The reasons supplied to the assessee are very vague. The scrutiny assessment has taken place at earlier point of time and in absence of any new material or the source from which he has formed this belief also is missing. This is nothing according to the petitioner but the change of opinion of the Assessing Officer. 3. We....
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....es (i) the details related to copy of return of income provided and profit and loss account and balance sheet; (ii) mismatch in sales turnover reported in Audit Report; and (iii) the details of unsecured loans along with documentary evidences; (iv) details of purchase and sales exceeding Rs. One Lakh from a single party and (v) the details of interest received and interest paid by the petitioner. 4.3 In response to the aforesaid notice dated 15.06.2016, the petitioner Company had filed detailed reply dated 23.06.2016, whereby the petitioner Company had responded to almost all the issues raised in the notice dated 15.06.2016. 4.4 It is the case of the petitioner that the petitioner Company once again furnished various other details and information vide letter dated 15.07.2016, whereby the petitioner Company had also submitted relevant documents in support of the issues raised. 4.5 However, subsequently, the Assessing Officer had issued notice under Section 142(1) of the said Act dated 04.11.2016 thereby calling upon the petitioner Company to furnish further documentary evidence, more particularly, with respect to unsecured loans with identity proof with a copy of ret....
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....with regard to the so called transaction was reflected in the impugned notice of reopening. 4.9 The Assessing Officer after taking into consideration the aforesaid objection raised by the petitioner Company against reopening, had rejected the said objection vide order dated 14.07.2021 without disclosing the basic detail with regard to the information received by the investigating agency, nature of transaction relating to the escapement of income otherwise chargeable to tax and clarity as regards the name of the person with whom said transaction was related. 5. Learned senior advocate Mr. Tushar Himani appearing with learned advocate Ms. Vaibhavi Parikh for the petitioner, has argued that the Assessing Officer has broadly relied upon "information" provided by the Investigation Wing, who have found that the assessee has entered in financial transaction and has made high value transaction of Rs. 26,42,027/- and has availed accommodation entry by way of bogus sales / purchases / fictitious loans etc., however, on detailed reading of reasons for reopening assigned in the notice dated 04.05.2021 as well as the order rejecting the objection against reopening dated 14.07.2021 the same is....
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....ustified in reopening the case. The sufficiency or correctness of the material is not a thing to be considered at that stage. (iii) The validity of the reopening of the assessment shall have to be determined with reference to the reasons recorded for reopening of the assessment. (iv) The basic requirement of law for reopening and assessment is application of mind by the Assessing Officer, to the materials produced prior to the reopening of the assessment, to conclude that he has reason to believe that income has escaped assessment. Unless that basic jurisdictional requirement is satisfied-a postmortem exercise of analysing the materials produced subsequent to the reopening will not make an inherently defective reassessment order valid. (v) The crucial link between the information made available to the Assessing Officer and the formation of the belief should be present. The reasons must be self evident, they must speak for themselves. (vi) The tangible material which forms the basis for the belief that income has escaped assessment must be evident from a reading of the reasons. The entire material need not be set out. To put it in other words, something therein, which is cri....
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....counter affidavit filed during the writ proceedings before the Court cannot be substituted for the "reasons to believe". (xiv) The decision to reopen the assessment on the basis of the report of the Investigation Wing cannot always be condemned or dubbed as a fishing or roving inquiry. The expression "reason to believe" appearing in Section 147 suggests that if the Income Tax Officer acts as a reasonable and prudent man on the basis of the information secured by him that there is a case for reopening, then Section 147 can well be pressed into service and the assessments be reopened. As a consequence of such reopening, certain other facts may come to light. There is no ban or any legal embargo under Section 147 for the Assessing Officer to take into consideration such facts which come to light either by discovery or by a fuller probe into the matter and reassess the assessee in detail if circumstances require. (xv) The test of jurisdiction under Section 143 of the Act is not the ultimate result of the inquiry but the test is whether the income tax officer entertained a "bona fide" belief upon the definite information presented before him. Power under this section cannot be exerc....
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....ave nexus to the subjective opinion formed by the A.O. regarding the escapement of the income but then, while recording the reasons for the belief formed, the A.O. is not required to finally ascertain the factum of escapement of the tax and it is sufficient that the A.O had cause or justification to know or suppose that the income had escaped assessment [vide Rajesh Jhaveri Stock Brokers (P.) Ltd.'s case (supra)]. It is also well settled that the sufficiency and adequacy of the reasons which have led to the formation of a belief by the Assessing Officer that the income has escaped the assessment cannot be examined by the court." Thus, it was submitted that the Assessing Officer is bound to record the reasons to support the assumption of the jurisdiction and he cannot record only some of the reasons and keep the others upto his sleeves to reserve, if the action is challenged in the Court of law. It is further submitted that the tangible material which forms the basis for the belief that income has escaped assessment must be evident from a bare reading of the reasons supplied. It was further submitted that even in the case of the report of Investigation Wing, the Assessing Offic....
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....tion carried out by the investigating agency are not placed on record, however, the same may be permitted to be perused by the petitioner Company, if Court directs. It is further submitted by the learned senior advocate for the Department that though there is no specific reference to the name of Disman Group of Company nor there being any reference to any particular dubious transaction as submitted by the respondent Authority in the case of the petitioner Company, the original file of the Assessing Officer reflects that the Assessing Officer has assumed jurisdiction for reopening the assessment under Section 147 of the Income Tax Act only after analyzing the information supplied by the Investigation Wing as well as after appreciation of tangible material which is forming part of the original record. It is further submitted that though the reasons supplied does not disclose specific material and evidence, there exist sufficient material on original file for the Assessing Officer to satisfy himself on the existence of the condition precedent i.e. "reason to believe" to reach at the conclusion to reopen the assessment. Even otherwise at the stage of assumption, all the aspects of the ....
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.... year. It is equally established principle of law that such reason to believe of the assessing authority, who disclose that the Authority alone had applied his independent mind, has to record his satisfaction and further such satisfaction has to be "independent" and not borrowed or a dictated satisfaction. 9. In the facts of the present case, the assessee was called upon to show cause as to why the income chargeable to tax for A.Y. 2014-15/A.Y. 2015-16 should not be reopened in terms of power conferred upon Assessing Officer under Section 148 read with Section 147 of the Income Tax Act. It is not in dispute that the assessment year under reconsideration are assessment years 2014-15 / 2015-16 and the impugned notice are dated 31.03.2021/30.03.2021, which is issued beyond the period of 4 years. In fact, the scrutiny assessment under Section 143(3) of the Act was made on 16.11.2016 determining the total income amounting to Rs. 85,440/-. Attention of the respondent Assessing Officer of the aforesaid fact has been drawn by the petitioner assessee by filing objection, however, the Assessing Officer has taken shield off "information" supplied by the Investigation Wing to form "reason to ....
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....y of bogus sales/purchases/ fictitious loans etc. 6. As per the information, it is seen that during F.Y. 201314 relevant A.Y. 2014-15, the assessee has made transaction of Rs. 26,42,027/- and availed accommodation entries by way of bogus sales/purchases/fictitious loans etc. In view of the above, I have reason to believe that the income chargeable to tax to the extent of More than 1 lakh for the year under reference has escaped the assessment within the meaning to section explanation 2(a) of 147 of the I.T. Act, 1961. I am, therefore, satisfied that the above assessee has not fully and truly disclosed his income for the assessment under the provisions of Section 147 of the Income Tax Act, 1961. 7. No information of assets located outside India is available. 8. In this case a return of income was filed for the year under consideration and scrutiny assessment u/s. 143(3) of the Act was made on 16.11.2016 determining the total income amounting to Rs. 85,440/-." 10. This Court has also taken into consideration the affidavit-in-reply filed by the Income Tax Officer, Ward -1, Gandhinagar. On appreciation of contents of the same, we could note that the entire base for reopening ass....