TaxTMI 
TaxTMI 
2022 (3) TMI 81
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....vil Application No.13245 of 2021: "1. The challenge in this petition is made to 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 belie....
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.... power conferred under Section 148(1) of the Income Tax Act, thereby calling upon the petitioner Company to furnish various details which includes (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.....
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....bsolutely vague, scanty and non-specific inasmuch as no basic details with regard to the information received for "nature of transaction and clarity" as regard to the "name of the person" 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....
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....court of law. (ii) At the time of the commencement of the reassessment proceedings, the Assessing Officer has to see whether there is prima facie material, on the basis of which, the department would be justified 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....
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....t, formed part of the original assessment record, per se would not bar the Assessing Officer from reopening the assessment on the basis of such material. The expression "tangible material" does not mean the material alien to the original record. (xiii) The order, disposing of objections or any 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 ....
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....ers not present at the time of the assessment, which appears to be credible to an honest and rational mind leading to a scrutiny of facts indicating incorrect allowance of the expense, such disclosure would constitute information as contemplated in clause (b) of Section 147. (xx) The reasons recorded or the material available on record must have 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 s....
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....er forming part of any reasons supplied or the order disposing the objections passed by the Assessing Officer neither is forming part of the affidavit in reply placed on record. This Court when inquired from the learned senior advocate about the same, learned senior advocate Mr. Bhatt has fairly conceded that the the same being papers related to investigation 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 tho....
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....e of assessee by applying his independent mind and upon appreciation of such information / material on record, the Assessing Officer is further expected to form his independent opinion to arrive at satisfaction which constitutes "reason to believe" that income of the assessee, which otherwise was chargeable to tax has escaped the assessment for any assessment 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....
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....transaction is not conclusively proved. After considering the materials available on records, I am satisfied that the said amount of Rs. 26,42,027/- is required to be brought under the tax net. 5. From the information received, it is noticed that during the F.Y. 2013-14 relevant to 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. 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 t....