TaxTMI 
TaxTMI 
2022 (5) TMI 59
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....iring the petitioner to furnish certain details and documents. On 23.07.2015, the petitioner sent a reply to the aforesaid notice dated 15.07.2015. On 04.08.2015, the income Tax Officer - 3 (4), Lucknow sent another notice to the petitioner seeking certain further details and documents and directed the petitioner to produce the books of accounts, bills and vouchers on 20.08.2015. Amongst other things, the petitioner was directed to furnish the details of scheme wise collections, which were shown at Rs. 184,467,717,884/-, in digitized form in the given format. 3. The petitioner claims that on 18.01.2016, it had sent a reply to the aforesaid letter dated 04.08.2015 stating that it was filing the details of collections made from its members during the year as per the member ledger. Copies of the details in 50 ledgers were submitted and it was stated that the balance details were in the process of being printed and they would be submitted in due course of time. It appears that an objection was raised that the information given was not furnished in a systematic and chronological manner and ultimately on 02.02.2016, the petitioner sent a letter to the ITO Range 3 (4), Lucknow stating ....
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....inal assessment proceedings the A.O. had discussed in detail the addition made under Section 68 of the Act and no tangible material has been found after the completion of original assessment and the assessment has been re-opened for want of verification and, thus, the provisions of Section 147 cannot be resorted only to verify or to further make inquiry. 8. On 25.01.2022, the National Faceless Assessment Centre passed an order disposing of the objections filed by the petitioner in response to the notice under Section 148 of the Act. 9. The petitioner has challenged the notice dated 22.03.2021 issued under Section 148 of the Act as also the order dated 25.01.2022 passed by the National Faceless Assessment Centre rejecting its objection against the aforesaid notice. 10. Before proceeding to examine the rival contentions advanced on behalf the parties, it would be appropriate to have a look at the relevant provisions of the Act and refer to some pronouncements of the Hon'ble Supreme Court explaining the scope of interference under Article 226 of the Constitution of India while examining the validity of a notice issued under Section 148 of the Income Tax Act. 11. The releva....
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....nce or relief in the return; 5[(b-a) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under Section 92-E;] (c) where an assessment has been made, but- (i) income chargeable to tax has been underassessed; or (ii) such income has been assessed at too low a rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed. (d) where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of Section 148. Explanation 4.-For the removal of doubts, it is hereby clar....
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....iency or correctness of the material is not a thing to be considered at this stage." 14. The learned Counsel for the petitioner has submitted that the petitioner had submitted the following break-up of deposits received from its members: - S.No. Range (in Rs.) No. of Depositors (from whom collection received in No.) Amount (in Rs.) 1 Upto Rs. 10 13449 116521 2 11 to 100 137823 8861543 3 101 to 1000 3371147 2204414914 4 1001 to 10000 15741780 63777944894 5 10001 to 50000 4183962 78114460242 6 50001 to 100000 233523 16306022592 7 10001 to 500000 99171 16191517732 8 Above 500000 2877 2172084087 Total 23783732 178775422525 15. During the year, the petitioner had collected the total deposits of Rs. 1,78,77,54,22,525/- from 2,37,83,732 persons and it had furnished KYC documents of 1051 persons for verification on exemplar basis because the number of depositors is quite large. 16. Per contra, Shri Manish Mishra, the learned Counsel representing the Income Tax Department, has stated that in the assessment order dated 21.03.2016, the A.O. had recorded that ....
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....al and the High Court were in error in holding that the information given by internal audit party could not be treated as information within the meaning of Section 147(b) of the Income Tax Act. The audit party has merely pointed out a fact which has been overlooked by the Income Tax Officer in the assessment. The fact that the recognition granted to this charitable trust had expired on 22-9-1992 was not noticed by the Income Tax Officer. This is not a case of information on a question of law. The dispute as to whether reopening is permissible after audit party expresses an opinion on a question of law is now being considered by a larger Bench of this Court. There can be no dispute that the audit party is entitled to point out a factual error or omission in the assessment. Reopening of the case on the basis of a factual error pointed out by the audit party is permissible under law. In view of that we hold that reopening of the case under Section 147(b) in the facts of this case was on the basis of factual information given by the internal audit party and was valid in law. The judgment under appeal is set aside to this extent." (Emphasis Supplied) 21. In the present case ....
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....hange of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since, the belief is that of the Income Tax Officer, the sufficiency of reasons for forming the belief, is not for the Court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and nonspecific information. To that limited extent, the Court may look into the conclusion arrived at by the Income Tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income Tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief. It would be immaterial whether the Income Tax Officer at the time of making the original assessment could or, could not have found by further enquiry or investigation, whether the transaction was genuine or not, if on the basis of subsequent information, the Income Tax Officer arrives at a conclusion, after satisfying the twin conditions prescribed in Section 147(a) of the ....
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....r false, is a material fact - and not an inference, factual or legal, to be drawn from given facts. In this case, it is shown to us that ten persons (who are alleged to have advanced loans to the assessee in a total sum of Rs. 3,80,000 out of the total hundi loans of Rs. 8,53,298) were established to be bogus persons or mere name-lenders in the assessment proceedings relating to the subsequent assessment year. Does it not furnish a reasonable ground for the Income Tax Officer to believe that on account of the failure - indeed not a mere failure but a positive design to mislead - of the assessee to disclose all material facts, fully and truly, necessary for his assessment for that year, income has escaped assessment? We are of the firm opinion that it does. It is necessary to reiterate that we are now at the stage of the validity of the notice under Sections 148/147. The enquiry at this stage is only to see whether there are reasonable grounds for the Income Tax Officer to believe and not whether the omission/failure and the escapement of income is established. It is necessary to keep this distinction in mind. A recent decision of this Court in Phool Chand Bajrang Lal v. IT....
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....follows: - "36.In our view the assessee disclosed all the primary facts necessary for assessment of its case to the assessing officer. What the revenue urges is that the assessee did not make a full and true disclosure of certain other facts. We are of the view that the assessee had disclosed all primary facts before the assessing officer and it was not required to give any further assistance to the assessing officer by disclosure of other facts. It was for the assessing officer at this stage to decide what inference should be drawn from the facts of the case. In the present case the assessing officer on the basis of the facts disclosed to him did not doubt the genuineness of the transaction set up by the assessee. This the assessing officer could have done even at that stage on the basis of the facts which he already knew. The other facts relied upon by the revenue are the proceedings before the DRP and facts subsequent to the assessment order, and we have already dealt with the same while deciding Issue No. 1. However, that cannot lead to the conclusion that there is non-disclosure of true and material facts by the assessee." 29. He has also placed reliance on the dec....
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....this Court in a catena of judgments and it would be sufficient to refer to CIT v. Kelvinator of India Ltd. wherein this Court has held as under: (SCC p. 725, para 5-7) "5. ... where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe".... Section 147 would give arbitrary powers to the assessing officer to reopen assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. 6. We must also keep in mind the conceptual difference between power to review and power to reassess. The assessing officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. 7. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the assessing officer. Hence,....
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....audit objection. 34. To appropriately appreciate the aforesaid submission made by learned counsel for the petitioner, relevant provisions of Sections 44 AD of the Act, as it stood at the relevant time, is being reproduced below: - "44-AD. Special provision for computing profits and gains of business on presumptive basis.- (1) Notwithstanding anything to the contrary contained in Sections 28 to 43-C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession". ....... Explanation.- For the purposes of this section,- (a) .... (b) "eligible business" means,- (i) ... (ii) whose total turnover or gross receipts in the previous year does not exceed an amount of one crore rupees. 35. It is not the petitioner's case that its total ....
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....or the assessment, the bar of four years would not apply. 41. The learned counsel for the petitioner next submitted that the notice under Section 148 of the Act was issued on 22.03.2021 by the DCIT/ACIT-3, Lucknow-New whereas the letter written by the member CIT-1/Lucknow to Additional CIT Range III (4), Lucknow communicating approval under Section 151 for issuance of notice under Section 148 of the Act was received by the A.O. on 24.03.2021. Thus on the date of issuance of notice i.e. on 22.03.2021, the A.O. was not having any approval/sanction of ACIT-1 Lucknow. 42. In reply to the aforesaid submission, Sri. Manish Misra has stated that PCIT-1, Lucknow had granted approval under Section 151 of the Act on 20-03-2020 and the approval was uploaded on the portal of the Department. Acting on the approval uploaded on the portal, the A.O. issued the notice under Section 148 of the Act on 22-03-2020, without waiting for receipt of the paper copy of the approval. 43. We find that there is no need for the paper containing approval being received physically before issuing the notice and the A.O. can proceed to issue a notice under Section 148 of the Act if the approving authority h....