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2023 (5) TMI 918
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.... the Income Tax Act, 1961. 3. Noticing the basic facts, it was stated that the petitioner is a family trust, which filed the petition through one of the trustees-the authorised signatory. It is the case that the petitioner Trust filed return of income for the Assessment Year 2017-2018 on 28.2.2018 disclosing income of Rs. 72,750/-. While according to the petitioner, it disclosed all material facts fully, the notice under section 148 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') was received by the petitioner. Thereby, the assessment was sought to be reopened. 3.1 On 12.7.2021, the respondent provided reasons recorded by the Assessing Officer for seeking to reopen the assessment. The petitioner filed objections to the reasons recorded on 26.7.2021, which were rejected by the respondent by order dated 14.12.2021. The petitioner has also prayed to set aside the said order disposing of the objections by rejecting them. Under section 142(1) of the Act, notice came to be issued to the petitioner to furnish the details. 3.2 The following were the reasons recorded by the Assessing Officer communicated to the petitioner, "Information was made available....
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.... only other income was of Rs. 58,37,478/-. It was stated that the said income represented exempt income and shown accordingly in the computation of income, comprising of dividend income from equity shares and the units of mutual funds. 3.5 It was stated by the petitioner that therefore the say of the department that income of Rs. 86,53,31,770/- had escaped assessment was wrong and baseless. It was contended that neither the said figure was mentioned nor was communicated. With regard to the nature of income alleged to have been escaped assessment, the assessee stated to the Assessing Officer that it had made elaborate reference for claiming exemption under section 10(38) of the Act in case of Smt. Paru M. Jaikrishna. The petitioner assessee claimed that there was no link or connection of the relevant information in her case with the escapment of income in the present case. 3.6 While rejecting the objections of the petitioner assessee, amongst other aspects, the Assessing Officer stated in his order in paragra No.8 thus, which is relevant to be reproduced, "From the above, it is clear that jurisdiction to reopen an assessment u/s.147 r.w.s 148 of the Income-tax Act, ca....
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....d Chemicals Ltd. vs. Assistant Commissioner of Income-Tax (No.2) [(2014) 52 taxmann.com 141 (Gujarat)], Bankim Bhagwanji Chaauhan vs. Income Tax Officer, Ward 1 being Special Civil Application No. 14021 of 2019, Vijay Harishchandra Patel vs. Income Tax Officer, Ward (3) being Special Civil Application No. 16171 of 2017, Mumtaz Haji Mohmad Memon vs. Income Tax officer, Ward 6(1) being Special Civil Application No. 21030 of 2017, Narendrakukar Mansukhbhai Patel vs. Income Tax Officer Ward 1(2)(3) being Special Civil Application No. 16790 of 2017 were relied on to buttress the same submission. 4.1.2 Learned advocate for the petitioner was relentless in pressing the point that reassessment was sought to be opened on the basis of wrong facts by further relying on Division Bench decision of this court in Sagar Enterprises vs. Assistant Commissioner of Income Tax being Special Civil Application No. 8202 of 1997 by referring to its paragraph Nos. 2 and 4. Also pressed into service were the decisions of the Division Bench of this Court in Manishkumar Pravinbhai Kiri vs. Assistant Commissioner of Income Taxc being Special Civil Application No. 15475 of 2015, in Giraben Atulbhai Shah vs. O....
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....of the Act on 2.5.2018 resulting into 'no demand and no refund intimation'. The case of the petitioner was not selected for regular scrutiny. It was stated that, however, information was made available from and out of the assessment in case of another family member Smt. Paru M. Jaykrishna for the Assessment Year 2017-2018. It was stated that the said Smt. Paru M. Jaykrishna had claimed exemption under section 10(38) of the Act on sale of shares of certain companies and that the promoters of the company are the family members of Jaykrishna Group, who are Munjal Mrugesh Jaykrishna, Pary Mrugesh Jaykrishna and Gokul Mrugesh Jaykrishna. 4.3.1 The following portion from affidavit-in-reply is reproduced so as to notice and highlight the precise case of the department from para-4 of the affidavit, "Information was made available to this office arising out of assessment in the case of Smt. Paru M Jaykrishna (PAN: ADIRPJ9354P) for the AY 2017-18. During the course of assessment proceedings, it was found that the assessee [i.e. Smt. Paru M Jaykrishna (PAN: ADIRPJ9354P)], has claimed exemption u/s 10(38) of the Act of Rs. 59,54,83,421/- on sale of shares of M/s. Aksharchem (India) Ltd. and....
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....rect facts and the reopening was based on incorrect facts and that there was no foundation to exercise powers. 5. Dealing with and disposing of at the outset the aspect of Special Civil Application No. 3922 of 2022 which was filed by Mrugesh Jaykrishna Family Trust-I where Mrugesh Jaykrishna was also a family member of the promoters and in his name also a trust was created as was done in the case of other family members. In the said petition also, the challenge was against the notice dated 30.3.2022 issued to the said family member-assessee under section 148 of the Act. The reasons recorded and weighed with the Assessing Officer to seek reopening of the assessment against the said petitioner were similar and almost identical. 5.1 The said petition was withdrawn by the said petitioner through his learned advocate on the ground that order was passed favouring the said petitioner. The following order was passed while disposing of the petitioner on 20.03.2023, "Learned advocate Mr.Darshan Patel fairly stated that in light of the Assessment Order dated 23.03.2022 passed under Section 147 read with section 144B of the Income Tax Act, 1961, the present petition has become i....
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....o disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Assessing Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year). Explanation 1.For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely : (a) Where income chargeable to tax has been underassessed ; or (b) where such income has been assessed at too low rate ; or (c) where such income has been made the subject of excessive relief under this Act or under the Indian Income-tax Act, 1922 (11 of 1922); or (d) where ....
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....ns were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a) But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is however to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at hand is covered by the main provision and not the proviso." (para 21) 5.3 Similarly, in Raymond Woollen Mills Limited vs. Income Tax Officer, Centre Circle XI, Range Bombay and Others [(2008) 14 SCC 218], the supreme court observed about the scope of judicial review. It was observed that sufficiency or correctness of the reasons are not subject to judicial review. Prima facie existence of material forming the basis of reopening, if available, would justify the exercise of powers by the Assessing Officer. In that case, the assessment was proposed to be reopened on the ground that charging of fiscal duties, labour charges, fuel, wages....
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....s and that there was no escapment of income. 5.4.2 At the stage when the Assessing Officer seeks to reopen the assessment, the final outcome of the proceedings is not relevant. The powers to reopen are liable to be exercised on the basis of cogent probable facts and not on the basis of established facts. Establishment of escapment of income is a stage to arrive at a conclusion of the reassessment proceedings. At the stage of issuance of notice, the only question is to be addressed is whether relevant material is available with the Assessing Officer on the basis of which reasonable likelihood could be gathered that there was an escapment of income. If the facts so suggest, the Assessing Officer would be entitled to form such belief to proceed further. Even the sufficiency of material could not be said to be germane at this stage. Whether the material could conclusively prove the escapment is not a concern at this initial stage. 6. Appreciating the controversy in light of the above principles and facts situation obtaining, it is to be clearly noticed that the transactions were noticed by the Assessing Officer in respect of sale of shares of the companies named M/s. Aksharchem (....