TaxTMI 
TaxTMI 
2023 (2) TMI 211
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....ut at the premises of the petitioner on 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.....
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..... Deputy Commissioner of Income Tax ((2017) 392 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 trea....
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....is return. Section 148(2) provides that the Assessing Officer, 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....
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....d by the Board from time to time; (ii) any audit objection to the effect that the assessment 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,....
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....ons of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or 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 corres....
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....al of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day 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 ....
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.... any books of account or documents, seized in a search under section 132 or requisitioned under 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. (d) the Assessing Officer has received 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 re....
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....apital & Securities Ltd. 130000 14.02.2015 -do- Rs.l note no.41L679749 used for 75 KG (Rs. 75 lacs 7500000 04.03.2015 Sanjay HDFCR52015030403430793 (Tatwesh Se Na Kahna ham ne diya hai. That is saying by Sanjay a person of Subodh Agarwal, Tatwesh is brother of Sri Sahswat Agarwal director of Rich Capital/NikkiGloba1 being largest entry provider) 865128 19.08.2015 Deepak 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 -....
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.... Transfer hawala fund 45 KG i.e. Rs.45 lacs 4500000 25.03.2015 Brahmavarta Infraheights Pvt Ltd. RTGS for 20 KG i.e. Rs.20 Lacs Transfer Hawala fund of Rs.20 lacs 2000000 26.03.2015 -do- Gyandeep Khemka & Co. (Vikash Agarwal, Vikash Agarwal, HUF & Renuka Agarwal) 4793250 27.03.2015 -do- Abhishek Agarwal Send 10500 i.e. Rs.10,50,000/- decoding 1050000 28.03.2015 -do- Hariom HDFCR520150328613( (4330 FOR 2294784.84) 4330 STAND DECODED AS 43.30 LACS 4330000 26.03.2015 -do- Gyandeep Khemka & Co, A/c No.00540340004413 4793250 25.03.2015 -do - RTGS managed Brahmavarta Infraheights P Ltd. A/c No.32886535860 45 Kg. i.e Hawala Money involved Rs.45 lacs 4500000 -do- RTGS managed 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 -d....
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....ua K K 60 O.K. 60 Lacs 6000000 24/07/2015 Niel Industries RTGS made Rs. 10Lacs from Sunil K Gupta 10 Las 1000000 23/07/2015 Intuition Infranstructurep. Ltd. Rss 5Lacs debited 5Lacs 500000 20/7/2015 N. Kurele 9999@ Yahoo.com 7.75+1 .25=9 O.K. ho gaya 1 Balance 10 Lacs 1000000 11/08/2015 919956111111 60 Lacs withdrawn for Niel Ind. 60 Lacs 6000000 12/08/2015 9435029042 Rambabu 3 Lacs 300000 13/08/2015 Kaka 1 3 Lacs cash 3 Lacs 300000 24/08/2015 Sanjay ji Hyd For 7 Box 7 Lacs 700000 25/08/2015 Lala Recd. 350Cheq & Old account Che 91.3 4 Cr 41 Lacs 30Th 44130000 24/07/2015 Subhash Ghosh A/c no.37641089 Credited Rs. 40 Lacs through RTGS Rodic; and this a/c debited by 60 Lacs 30/07/2015 to Sanjeevani Fer. 60 Lacs 6000000 08/08/2015 VM FROMSC A/c no.623xxxx8673 credited Rs. 50 Lacs on 20/08/2015 and debited Rs. 20 Lacs on 26/08/2015 and Rs. 10 Lacs debited on 28/08/2015 50 Lacs 5000000 26/08/2015 S Baj Suresh Kumar Rs. 102240 ManishGoel HUF 110160 Anuj K Singh 195300 Richa Singh 195600 603300 603300 20/....
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.... Harish Gupta,Orai Usha Devi 3 Lacs, Ram Asrey Gupta 3 Lacs, Rajendra Kumar Gupta 1.5 Lacs 7Lacs 50THousond 750000 26&27/05/2015 -do- Arrangement for transfer of Rs. 50Lacs 50Lacs 5000000 12/06/2015 -do- Manjeet Singh Rs.42Lacs for Success Vyapar Ltd. 42Lacs 4200000 8/06/2015 -do- Kal 5.00 kaRTGS Success me kar diya gaya tha, kya cash aaj mil sakta hai(Ha 2 baje tak)(RTGS made from Ashish Agarwal SBI,Orai Cheq. no.211836) 5Lacs 500000 23/06/2015 -do- Kal 25 entry honi hai;5 Lacs reverse entry 25Lacs 2500000 08/04/2015 Mob.9621325335 Flat no.505 Anand Luxmi Apptt. Chain factory Shastri Ngr., Kanpur; 8Kg 8Lacs 800000 12/05/2015 Mob,7379312345 RTGS for 40 40Lacs 400000 24/05/2015 -do- RTGS Req. 85Lacs (send 50 in evening Shri Hanuman Infra Promoters Pvt. Ltd. 85Lacs 8500000 23/04/2015 Mob.9839133556 8+9+5=22 sent from Aruna Nemani 22Lacs 2200000 18/02/2015 Mob,9198932222 Rs.1 note no.78R493629 for 25 Kg. Prashant Mondal and Rs.50note no. 5DL556919 for 25Kg 50Lacs 5000000 28. After considering the objections f....
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....2A of the Act shall abate. Admittedly, in the case in hand present re-assessment proceedings were not pending on the date when search was carried out at the premises of the petitioner. Notice in the case in hand for initiating re-assessment proceeding was issued on April 24, 2022 whereas search was carried out on August 31, 2015. 31. As to whether an audit objection can constitute information on the basis of which re-assessment proceeding can be initiated, reference can be made to Explanation 1, Clause (ii) to second proviso of Section 148 of the Act. The aforesaid provision clearly provides that any audit objection to the effect that assessment in case of assessee for the relevant assessment year has not been made in accordance with the provisions of the Act is included in the term 'information regarding escaped assessment'. In the case in hand, it is not a matter of dispute that there is an audit objection raised that the assessment of assessee has not been framed properly in accordance with the provisions of the Act. It is a case where petitioner was indulging in providing accommodation entries. The text messages recovered from his mobile phone clearly corroborated the modus ....
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....Gujarat High Court in Krishna Developers and Company vs. Deputy Commissioner of Income-tax ((2017) 94 Taxmann.com 166 (Guj.)) , wherein the Court considered a case where original assessment of the assessee was set aside on technical ground that notice under Section 143(2) of the Act was not served. The argument raised by assessee was that original assessment having failed on the ground of nonissuance of mandatory notice for scrutiny, initiation of proceedings under Section 147/148 was illegal as object was only to cure the defect. The said contention was rejected and the petition was dismissed by the Division Bench of the Gujarat High Court observing that merely on the ground that the reasons recorded by the Assessing Officer were same on the basis of which Assessing Officer has initially decided to make addition but failed as the order was set aside on technical ground would not preclude him from carrying out the exercise of reopening of assessment. Relevant paragraphs are reproduced as under: "20. Nothing contained in the language of section 147 would permit us to hold that even if all the parameters to enable the Assessing Officer to assess or reassess the income by reo....
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....on the same grounds after following due procedure in accordance with law." (emphasis supplied) 35. The aforesaid order of the Gujarat High Court attained finality after dismissal of the Special Leave Petition of the assessee by Hon'ble Supreme Court vide judgment reported in (2018) 91 taxmann.com 306 (SC). 36. Similar issue came up for consideration before Delhi High Court in CIT Vs. Vishal Gupta ((2012) 22 taxmann.com 82/210 Taxman 65 (Mag) (Delhi)). In that case also, the order of assessment was set aside by Tribunal on the ground that statutory notice under Section 143(2) of the Act was not served within stipulated period. Thereafter, notice for reopening the assessment was issued. The Tribunal again set aside the said order. However, Delhi High Court, reversing the order of the Tribunal, observed that if the reason to believe that income for any assessment year has escaped assessment are available, the proceedings under Section 147/148 of the Act are independent. There may be valid ground for setting aside the original assessment order, but the same cannot be the basis to quash the reassessment proceedings. Relevant paragraphs are reproduced as under: "11. The....
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.... made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed. There will be, no order as to costs." (emphasis added) 38. In Assistant Commissioner of Income Tax Vs. Rajesh Jhaveri Stock Brokers P. Ltd. ((2007) 291 ITR 500 (SC)), Supreme Court examined the scope of Section 147 of the Act. It was observed that at the stage of initiation of proceedings, final outcome thereof is not relevant. In terms of the provisions of law existing at that time, at the initiation stage what is required is 'reason to believe', which, with the legal position as existing today, provides initiations of proceedings only on the information received. It is the subjective satisfaction of the Officer. Relevant paragraph 16 thereof is extracted below: "16. Section 147 authorises and permits the Assessing Office....