TaxTMI 
TaxTMI 
2023 (2) TMI 211
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....August 31, 2015. A show cause notice was issued on June 1, 2016 under Section 153A of the Act for block assessment. The order of assessment was passed on December 31, 2017, which was challenged by the petitioner as well as the Department before the Income Tax Tribunal. The appeal filed by the petitioner was accepted whereas the one filed by the Department was dismissed. The order was further challenged by the Department by filing an appeal before this Court, which was dismissed vide order dated December 12, 2022. 3. After passing of the order under Section 153A of the Act, during pendency of the appeal against the aforesaid order, a show cause notice was issued to the petitioner on March 28, 2022 under Section 148A(b) of the Act, which was duly replied to by the petitioner. Rejecting the objection raised by the petitioner, order was passed on April 24, 2022 granting sanction for initiation of proceedings against the petitioner under Section 148A(d) of the Act and consequently, a notice was also issued on April 24, 2022. Initiation of proceedings under Section 148 of the Act is subject matter of challenge in the present writ petition. 4. Referring to scheme of the Act, Mr. Agrawal....
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....2 ITR 336) and Delhi High Court in Principal Commissioner of Income Tax vs. Meenakshi Overseas Pvt. Ltd.( (2017) 395 ITR 677) 6. In response, learned counsel for the Revenue submitted that in terms of the amended provisions of Clause(ii) to second proviso of Explanation 1 of Section 148 of the Act specific mention has been made as to what shall form information with the Assessing Officer, which would suggest that 'income chargeable to tax has escaped assessment'. Audit objection has been mentioned as one of them. The aforesaid amendment was introduced with effect from April 1, 2022. Prior to that, the aforesaid proviso provided for objection raised by the Comptroller and Auditor General of India (hereinafter referred to as 'CAG'). In the case in hand as well, there was an objection raised by the Audit specifying that huge income had escaped assessment as the text messages exchanged by the petitioner with various parties have not at all been considered while framing the assessment. This has caused huge loss to the revenue as the income chargeable to the tax had escaped assessment. 7. The objection raised by the Auditor was not treated as information prior to the amendment of Secti....
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.... before issuing any notice under the section, record his reasons for doing so. 13. As the law as stood at that time, upon filing the return the assessee could seek reasons for issuing such notice. After receipt of reasons, the assessee was entitled to question the initiation of reassessment proceedings by filing objections before the Assessing Officer. Before proceeding further, the Assessing Officer was required to dispose of the objections raised by the assessee, challenging his jurisdiction to initiate reassessment proceeding. Any such order passed could be challenged by invoking writ jurisdiction of the Court. Reference can be made to a judgment of Hon'ble the Supreme Court in GKN Driveshafts (India) Ltd. Vs. Income Tax Officer (259 ITR 19 (SC)) 14. The law interpreting the aforesaid provision as existing at that time also provided that the belief has to be that of a prudent person having connection with the material. Fishing and roving enquiry was not possible nor a change of opinion. Sufficiency of reasons could not be a ground to challenge initiation of reassessment proceedings. 15. Section 151 of the Act provides for prior approval of the competent authority before issua....
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....ent in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act; or (iii) any information received under an agreement referred to in Section 90 or Section 90A of the Act; or (iv) any information made available to the Assessing Officer under the scheme notified under Section 135A; or (v) any information which requires action in consequence of the order of a Tribunal or a Court." (emphasis supplied) 21. Newly added Section 148A of the Act provides that the Assessing Officer before issuing notice under Section 148 of the Act shall conduct enquiry, if required, with prior approval of the specified authority with respect to the information which suggests that income chargeable to tax has escaped assessment. Clause (b) thereof provides that an opportunity of hearing is to be afforded to the assessee to show cause as to why notice under Section 148 of the Act be not issued on the basis of information which suggests that income chargeable to tax has escaped assessment. Reply of the assessee, if any, is to be considered and an order is required to be passed in terms of Section 148(d) of the Act. Second proviso to....
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....deduction for such assessment year (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). Explanation -For the purposes of assessment or reassessment or recomputation 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, irrespective of the fact that the provisions of section 148A have not been complied with." X X X X "148. Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may b....
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....y of April, 2021, belongs to the assessee; or (iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee where the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. Explanation 3.-For the purposes of this section, specified authority means the specified authority referred to in section 151." X X X X "148A. The Assessing Officer shall, before issuing any notice under section 148,- (a) conduct any enquiry, if required, with the prior approval of specified authority, with respec....
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....ved any information under the scheme notified under section 135A pertaining to income chargeable to tax escaping assessment for any assessment year in the case of the assessee. Explanation.- For the purposes of this section, specified authority means the specified authority referred to in section 151." (emphasis supplied) 25. In the present case, a perusal of the notice shows that it was issued on the basis of an audit objection. There were cash transactions to the tune of Rs.156,45,19,154/-. During course of assessment, the source and genuineness of the transaction was not asked for. These, having remained unexplained, were required to be treated as income of assessee under Section 68 of the Act. It may have tax effect to the tune of Rs. 64,34,53,872/-. Details of the cash transactions were also annexed with the reasons. It was on the basis of various messages recovered from the mobile phone of the petitioner, which was seized during raid. In terms of aforesaid text messages, the amount was to be delivered to different persons on being identified by showing currency notes bearing particular numbers. The illegal activities of the petitioner were found to be in the nature of ....
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....Bhartiya Directing to Rajkumarji arranging for a note no. for hawala transfer of 10 kg say for Rs.10 lacs 1000000 16.06.2015 -do- Pl. give note for 5kgsi.e. transfer of hawala for Rs.5 lacs 500000 10.08.2015 -do- Pl. give note for 15 kgs i.e transfer of hawala for Rs. 15 lacs 1500000 13.08.2015 -do- Pl. give note for 10 kg i.e transfer of hawala for Rs. 10 lacs 1000000 28 08.2015 Arvind Mittal Arun Kumar 1300000 -do- Vandana Saini 500000 -do- Arun Kumar 500000 -do- Arun Kumar 1300000 -do- Vandana Saini 500000 03.07.2015 -do- 27 kg i.e. Rs.2700000 Rs.10 note no.29B524554 2.700000 30.6.2015 -do- Sneha Kurele 145000 28.06.2015 -do- Jeetu Bhai Ko 25 Subhasji ke a/cmay bol do 2500000 19.06.2015 -do- 10 Rs. Note45T i.e. Rs. 45 crore 450000000 20.05.2015 -do- Kolkata Rajkumarji Rs.2 note no.04D609437 for 40 kg i.e. transfer of hawala fund of Rs. 40 lacs 4000000 20.05.2015 -do- Prasanta Mondal, Kolkata Rs. 10 note no.77m690699 for 40 kg i.e. transfer of hawala fund of Rs. 40 lacs 4000000 ....
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.... Brahmavarta Infraheights P Ltd. A/c No.33739193894 45 Kg, i.e Hawala Money involved Rs.45 lacs 4500000 -do- RTGS managed Brahmavarta Infraheights P Ltd. Aic No.33739193894 20 Kg. i.e Hawala Money involved Rs.20 lacs 2000000 21/03/2015 -do- RTGS managed for 55Lacs and 4468702.22 5500000 4468702 -do- Prashant Mondal Rs. 1 Note no.24E866968 Kg.25 i.e. Hawala Money Rs.25Lacs 2500000 22/03/2015 -do. Suraj 2 Rs. Note no.67A333658 for 50K . i.e. Rs. 50Lacs 5000000 21/03/2015 -do- Escort Wincom Pvt. Ltd. 45Kg. i.e. 45Lacs 4500000 20/03/2015 -do- Sunil Kapoor 45Kg. from salvation to Sunil Kapoor 4500000 19/03/2015 -do- 200 Lala and 100 Five Roses 19/03/2015 -do- Prashant Mondal Rs.2 note no.63S060829 for 50 5000000 18/03/2015 -do- Prashant Mondal '300000' Share Modi ka Alok de raha hai RTGS managed for 50 in Amar Jyoti by Prashant Mondal 5000000 20/03/2015 -do- Gagandeep Construction Co. Pvt. Ltd. Rs.155 i.e. 1550000 1550000 18/03/2015 -do- Suraj Rs.10 note no.18S 066136for 50Kg. i.e. Rs. 50 Lacs 5000000 -do- Suraj Rss 10 note no.53p974097....
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....15 Arvind Rs 5 Note no, J5B779015 5 Lacs 500000 28/0/2015 -do- Arun Kumar, New Delhi Vandana Saini Arun Kumar HUF Sanjay Kumar (Account managed no, 913010053203458 Axis Bank, Delhi) 80 Lacs 30 Lacs 30 Lacs 25 Lacs 16500000 20/07/2015 R.K. (Raj Kumar Ji) Chintu Ji Rs. 6Lacs Rs.5 Note no.82D363143 6Lacs 600000 21/07/2015 R. K. (Raj Kumar Ji) 5.5 Lacs Rs. 5 Note no. 18K941426 5.5 Lacs 550000 27/07/2015 -do- Deepankar Maurya deposit of Rs. 25000 in A/c no. SBI 32970138120 25K 25000 28/08/2015 -do- Deposit of rs.10000 in SBI a/c no. 11288630578 10K 10000 Extracts/analysis of messages derived from Mobile I phone of Subodh Agarwal documentised as Document-2: Date Message from whom received Consent Party/specifying message Transaction Amount 25/05/2015 N Kurele Rs.10 Ni note 24N032491 Ph.no. 01123992886 Yogesh for 75 Kg. Delhi Noida Hawala Money 75 Lacs 7500000/- 07/04/2015 9335126620 Raksha Garg Purchase JP [email protected] amount 3460000 34Lacs 60Thousand 3460000/- 25/08/2015 Rodic Coffee Pvt.Ltd. 10109.00Kg.@ 202.30Kg=2045050 (Arbica Parchment) 20Lacs 45thousand & fifty 2045050/- 10/02/2015 AN Trading of Shares Sneh....
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....e notice which is under challenge in the present petition. The order under Section 148(d) of the Act as annexed with the aforesaid notice specifically refers to the audit objection as the information on the basis of which proceedings were initiated. The information is specific. From the information it was evident that the petitioner was indulging in Hawala activities/transactions. It was specifically mentioned that the material as referred to in the audit objection was not considered at the time of initial assessment. The petitioner had not explained the entries as put to him in the show cause notice issued under Section 148(b) of the Act. His reply was based only on technicalities. The unverified and unexplained transactions are to the tune of Rs.156,45,19,154/-. Section 153A of the Act 29. As far as assessment of the petitioner framed under section 153A of the Act is concerned, in the appeal filed against the order, Commissioner of Income Tax (Appeals) has upheld the order of assessment. Appeal filed before Income Tax Appellate Tribunal, Lucknow Bench 'B', Lucknow (hereinafter referred to as 'the Tribunal') was allowed vide order dated October 7, 2021 on the ground that there ....
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....illegality therein, will not mean that the information in the form of audit objection could not be relied upon to opine that the income chargeable to tax had escaped assessment. Existence or non-existence of information can be subject matter of litigation but not the sufficiency thereof. 33. As far as the argument raised by learned counsel for the petitioner that after assessment had been framed under Section 153A of the Act there was application of mind and examination of record at different levels in the Department as the assessment order is passed with approval of the higher authorities, there was no scope for initiation of fresh proceedings for re-assessment under Section 148 of the Act, in our opinion, even this argument is also to be noticed and rejected. In support of the argument no provision of law as such has been cited except second proviso of Section 153A of the Act, in terms of which only pending proceeding abate. Only reference was made to the judgment of Gujarat High Court passed in Cargo Clearing Agency's case (supra). A plain reading of the aforesaid judgment shows that it is based on the fact that at the time of framing block assessment after search there is deta....
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....alid as having been completed without the service of notice on the assessee within the statutory period, there would be thereafter no assessment in the eye of law. The situation therefore, be akin to where return of the assessee has been accepted without a scrutiny. Reopening of the assessment, if the Assessing Officer has the reason to believe that income chargeable to tax has escaped assessment, would be entirely permissible under section 147 of the Act. Merely on the ground that the reasons recorded by the Assessing Officer proceeded on the same basis on which the Assessing Officer initially desired to make additions but which failed on account of setting aside the order of assessment, would not preclude the Assessing Officer from carrying out the exercise of reopening of the assessment. In the present case, facts are peculiar. It is not as if the Assessing Officer after noticing certain discrepancies in the return of the assessee, slept over his right to undertake the scrutiny assessment. The scrutiny assessment was initiated by issuance of notice under section 143(2) of the Act on 23.9.2013. It was also dispatched for service to the assessee on 24.9.2013 by Speed Post on the l....
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....thereafter had recorded fresh reasons and issued notice under Section 147/148 of the Act. The reasons to believe now recorded have to stand on their own legs and are separate from the reasons to believe, which were recorded earlier before initiation of the re-assessment proceedings, which abated. The said reasons to believe and issue of notice under Section 147/148 of the Act cannot be faulted and rejected on the ground that in the earlier/original assessment or re-assessment proceedings, notice under Section 143(2) was not served on the assessee within the statutory time/period. This was a valid ground to quash the first/original assessment/re-assessment order, but it cannot be a ground to quash the re-assessment proceedings, which have been initiated afresh after recording reasons to believe." 37. It is the settled position of law that prima facie availability of material is sufficient for reopening of the reassessment proceedings and the sufficiency and correctness of the material is not to be considered at that stage. In the case of Raymond Woollen Mills Ltd. Vs. ITO and other ((1999) 236 ITR 34 (SC)) even though it was a case where reasons were required to be recorded in wri....