TaxTMI 
TaxTMI 
2022 (8) TMI 964
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....e Respondent be ordered to restrain from enforcing compliance of the impugned notice dated 27.03.2018 under section 148 of the Income Tax Act, 1961 annexed hereto at Annexure-'E" and/or taking any other steps in this regard including ex-parte order or implementation of preliminary order dated 8.10.2018 at Annexure-'I' and further notices issued for purpose of reassessment. (C ) Award the cost of this petition. (D) Grant such other and further relief(s) as this Hon'ble Court deems fit." 2. The subject matter of challenge is the legality and validity of the notice issued by the respondent dated 27.03.2018 under Section 148 of the Income Tax Act, 1961 (for short "the Act, 1961") for the A.Y.2011-12. The reasons assigned by the respondent for reopening are as under; "1. The assessee is an individual and engaged in the business of real estate development. A search action u/s.132 of the Act was carried out at the premises of the assessee on 30.05.2012. Thereafter, the assessee filed return of income on 09.10.2014 showing total income Rs.26,88,450/-. Further, assessment u/s.143(3) r.w.s 153A of the Act was passed on 20.03.2015 assessing total income at Rs.26,....
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....,00,000/- on 25.08.2009 (F.Y.2009-10), Rs.10,00,000/- on 07.12.2009 (F.Y.2009-10) and Rs.50,00,000/- on 14.04.2010 (F.Y. 2010-11) and Rs.64,00,000/- on 05.05.2010 (F.Y.2010-11). Thus the assessee has paid total cash of Rs.1,14,00,000/- during the F.Y.2010-11 to Amit Mukeshbhai Shah and Surbhit Mukeshbhai Shah. However, on verification of the balance sheet and P&L Account submitted by the assessee for A.Y.2011-12 during the assessment proceedings, it is noticed that the assessee has not shown these transactions in his books of accounts. Thus, it is clear that the assessee has made huge payment of Cash of Rs.1,14,00,000/- to Shri Amit Mukesh Shah, Surbhit Mukesh Shah during the year under consideration i.e. A.Y.2011-12 form out of books, therefore the source of the same remains unexplained. 4. Further, on perusal of the inquiry report, as per Agreement between Rajesh Jayantilal Patel and Shri Amit Mukesh Shah & Surbhit Mukesh Shah it is clear that there was cash deal of Rs.1.25 crores between them. However, the land was not sold to Shri Rajesh Jayantilal Patel. The final Dastavej was made by Shri Amit Mukesh Shah and Surbhit Mukesh Shah vide registered deed No.16796/2010 on ....
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....n of income and source of such cash payment of Rs.1,14,00,000/- to Amit Mukesh Shah and Surbhit Mukesh Shah also not disclosed the profit receipt of Rs.1,50,00,000/- received in cash during the year under consideration. I have therefore reason to believe that income of Rs.2,64,00,000/- (Rs.1,14,00,000/-) has escaped assessment in this case for which the case of the assessee for A.Y.2011-12 needs to be reopened within the meaning of section 147 of the I.T. Act. It is therefore requested that necessary approval may kindly be accorded for issuing notice u/s.148 of the I.T. Act in this case. 7. In this case, a return of income was filed for the year under consideration and regular assessment u/ s.143(3) r.w.s. 153A was made on 20.03.2015. Since, 4 years from the end of the relevant year has expired in this case, the requirements to initiate proceedings u/s.147 of the Act are reason to believe that income for the year under consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the assessment year under consideration. It is pertinent to mention here that reason to believ....
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....x, Rajkot-1, Rajkot as per the provision of section 151 of the Act." 3. To the aforesaid, the writ applicant lodged its objections which is at page-94, Annexure-H to the paper-book. The aforesaid objections came to be disposed of by the Assessing Officer vide order dated 08.10.2018. 4. Being dissatisfied with the aforesaid, the writ applicant is here before this Court with the present writ application. 5. We have heard Mr. R.K. Patel, the learned senior counsel assisted by Mr. Darshan R. Patel, the learned advocate appearing for the writ applicant and Ms. Kalpana Raval, the learned senior standing counsel appearing for the revenue. 6. It appears from the materials on record that a search was conducted at the premises of the assessee on 30.05.2012 and notice under Section 143(2) was issued on 11.08.2014 which proceedings culminated in an order under section 143(3) of the Act read with Section 153A of the Act. Such order was dated 20.03.2015. 7. Between 22.09.2015 and 24.09.2015 a survey proceedings under Section 153A of the Act was conducted on one Rekvina Laboratories during which the information relating to two parcels of land surfaced which was not previously revea....
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....e issued in supersession of the earlier instructions and shall be applicable with effect from 1.4.2011." 10. Mr. R.K. Patel, the learned senior counsel appearing on behalf of the writ applicant submitted that the Instruction No.1/2011 dated 31.01.2011 issued by the board as referred to above mandated that the case of the writ applicant be taken up only by an officer not belong the rank of a Deputy Commissioner. It is the case of Mr. Patel that the instructions issued by the board are binding upon the department and would not permit the Assessing Officer to issue notice under Section 148 since the same would run contrary to such instructions. Mr. Patel, therefore, submits that apart from such other grounds as raised by him, only on this short ground, the notice of reopening deserves to be quashed. 11. Section 147 of the Act authorizes the re-opening of any assessment of a previous year. Section 148, which contains the conditions for re-opening assessments, including the limitation period within which notices can be issued, by its proviso, enacts that: "Provided that no notice under this section shall be issued unless there is information with the Assessing Officer whi....
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....r the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of the section. To this limited extent, the action of the Income-tax Officer in starting proceedings in respect of income escaping assessment is open to challenge in a Court of law." 15. In Phool Chand Bajrang Lal & Ors. vs. Income Tax Officer & Ors., 1993 Supp (1) SCR 28, after reviewing the previous case law, and concluding that a valid re-opening is one, preceded by specific, reliable and relevant information, and that the sufficiency of such reasons is not subject to judicial review- the only caveat being that the court can examine the record, if such material existed, it was held that the facts disclosed in the return, if found later to be unfounded or false, can always be the basis of a re-opening of assessment: "appears to us to be, to ensure that a party cannot get away by willfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn around and say "you accepted my lie, now your hands are tied and you can do nothing". It would be tra....
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....ruction No.1 public 2011 dated 31.01.2011 is also misplaced since the same is with respect to the assessment proceedings and not proceedings initiated pursuant to Section 148 of the Act. Reading such instructions to override the effect of section 148 read with section 151 of the Act would be contrary to the intent. Furthermore, the Madras High Court in the case of C. Krishnan, 2014 (52) Taxmann.com 30 was pleased to hold that such instructions are not in the nature of circulars or notifications and hence not mandatory. 19. All the aforesaid facts were not before the Assessing Officer at the time of finalization of the search assessment. It is a settled position of law that the adequacy of the reasons provided by the Assessing Officer fall outside the review powers and remains within the domain of the Assessing Officer at this stage of the proceedings where only a preliminary finding under section 147/148 has been made. It is necessary to reiterate that we are at the stage of the validity of the notice under section 148/147. The inquiry 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 ....