TaxTMI 
TaxTMI 
2023 (9) TMI 114
X X X X Extracts X X X X
X X X X Extracts X X X X
.... rice bran has been regularly filing income tax returns since the year 2008. For the assessment year (A.Y.) 2014-15, he had filed return on 30.11.2014 thereby declaring the total annual income of the firm as Rs.4,73,010/-. On 30.03.2021, the respondent issued notice (Anneuxre P-5) under Section 148 of the Act thereby proposing to initiate re-assessment proceedings on the ground that genuineness of the expenses booked against the purchases made by the petitioner from M/s Natural Sales Enterprises (its acronym "M/s NSE") were doubted by the department and the purchases to the tune of Rs.1,40,05,667/- were to be treated as escaped income. The petitioner was informed that Sh. Avinash who was proprietor of M/s NSE had recorded a statement that his firm was not engaged in any actual business activity and was only issuing bogus invoices and providing accommodation entries to various firms. The petitioner after receiving the reasons recorded by the respondents for re-opening, filed objections (Annexure P-1). However, the said objections were rejected vide order dated 24.11.2021. Feeling aggrieved, the petitioner has filed this petition challenging the notice Annexure P-5 and order Annexure....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f, therefore, it was clear that the petitioner was also involved in availing accommodation entries. Since the petitioner had failed to disclose fully and truly all material facts necessary for his assessment, therefore, notice under Section 148 of the Act, was issued against him. The objections raised by him were duly considered and were rejected. While controverting the various pleas as taken in the petition, the dismissal of the same had been prayed for. 4. We have heard learned counsel for the petitioner and learned Standing Counsel for the respondents at length and have gone through the record. 5. Initiating the arguments, learned counsel for the petitioner submitted that the impugned notice dated 30.03.2021 and order rejecting the objections filed by the petitioner dated 29.11.2021 were both liable to be quashed as the impugned notice suffered from jurisdictional defect. The reassessment proceedings were initiated after expiry of period of five years from the relevant A.Y. 2014-15 and were barred by time. The assessing officer had neither any reason to believe nor any tangible material had been proved on record to show that any income of the petitioner chargeable to tax for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oceedings for re-opening of assessment taken by the revenue, it is open to the assessee to contend before the assessing officer that the re-opening is not sustainable. The orders passed by the assessing officer for re-opening are also open to challenge along with the orders passed on merits, by way of appeal to the Commissioner of Income Tax (Appeals), and thereafter, to the Tribunal and if a substantial question of law arises in that case, by way of an appeal before this Court. Thus, efficacious alternative remedy in this regard has obviously been provided under the Act itself. However, the well settled proposition of law is that the writ jurisdiction to interdict a proceeding under Section 148 of the Act seeking to re-open an assessment can still certainly be exercised when the same is clearly without jurisdiction, whenever there is palpable injustice or the proceedings leading to disposal of the objections are in breach of natural justice and in such circumstances, notwithstanding the availability of an alternative remedy, a notice under Section 148 of the Act can be challenged by filing a writ. Reference in this regard can be made to Parixit Industries (P.) Ltd. v. Assistant C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....relevant assessment year and there was no concealment on his part. No doubt, the well settled proposition of law is that the assessee is under a duty or obligation to disclose basic and primary facts relevant to the assessment and it is for the assessing officer to make further inquiries. Simultaneously, so far as the formation of belief by assessing officer at the stage of initiating action for re-assessment is concerned, the same is within the realm of subjective satisfaction and the Court has only to see whether there was prima facie some material on the basis of which the department could re-open the case. The sufficiency or correctness of the material is not a thing to be considered at that stage. In this regard, reference can be made to the case reported as Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers Pvt. Ltd., (2007) 291 ITR 500 (SC), wherein the Hon'ble Supreme Court while dealing with the scope and effect of Section 147 observed that this section authorizes and permits the assessing officer to assess or re-assess income chargeable to tax, if he has reason to believe that income for any assessment year has escaped assessment. It was held that the wo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uired to be disclosed by his firm had been so disclosed. However, according to the respondents while conducting assessment of M/s NSE for the A.Y. 2014-15, it was revealed that the said firm was providing bogus accommodation entries to several firms including the firm of the petitioner and was not proved to be engaged in any actual business activity. Whereas, the rival claim of the petitioner is that this fact was not revealed at all either from the statement of Sh. Avinash recorded during the course of the said proceedings nor the name of firm of the petitioner had found mentioned in his statement and a wrong observation was made by the assessing officer in this regard. On going through Annexure P-2 which is copy of statement of Sh. Avinash as recorded by the assessing officer on 12.12.2016, undoubtedly, it is revealed that he had neither taken the name of the petitioner himself or of his firm as the person/entity to whom accommodation entries were provided by his firm. However, the respondents also placed reliance upon Annexure R-2 which is copy of statement of account of banker of M/s NSE and which shows transfers of different amounts of money by the firm of the petitioner duri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....E himself accepted that his firm was not involved in any actual business activity at all which prima facie proved that the transactions so reflected in books of account were bogus. Though a feeble argument had been raised to the effect that no opportunity to crossexamine the said Sh. Avinash had been given to the petitioner, however, there is nothing on record to suggest that any specific prayer had been made by the petitioner to allow him to cross-examine Sh. Avinash at the time when the proceedings on impugned notice were conducted. Sh. Avinash had also recorded in his statement that he used to issue cheques in the name of self and those cheques were handed over to the firms to whom accommodation entries were provided by him and those firms used to withdraw the money transferred in the account of his firm by cash on the basis of such cheques. From a perusal of Annexure R-2, it becomes clear that the transfers/credits made in the account of M/s NSE were immediately withdrawn by way of issuance of cheques and, therefore, the statement so made by Sh. Avinash finds support from the statement of bank account of M/s NSE. The assessing officer was only required to have prima facie some ....