TaxTMI 
TaxTMI 
2024 (9) TMI 156
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....s 148 of the Income Tax Act, 1961 by respondent 1 and letter dated 13.11.2018 by the Joint Commissioner of Income Tax i.e. respondent 1. 3. To stay the operation of the further proceedings in pursuance to notice dated 22.03.2018 issued u/s 148 and letter dated 13.11.2018 as an Interim Relief." FACTUAL BACKGROUND: 2. Petitioner is engaged in the business of freight forwarding. In consideration of the services performed in the business carried on by the petitioner company, customers make payment of the service charges and other charges, to the petitioner company, both by cheques and/or through banking channels including electronic transfers and in some cases by cash and in many cases by the combination of cheques and cash. 3. Petitioner company filed its return of income for the Assessment Year ["AY"] 2011-12 on 30.09.2011. Respondent No. 1 reopened the assessment of AY 2011-12 under Section 147 of the Income Tax Act, 1961 ["Act"] by issuing notice under Section 148 of the Act on the ground that income has escaped assessment. 4. Petitioner company after filing the return of income in response to notice under Section 148 of the Act, requested for the reason record....
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....dible information has emerged on account of enquiry conducted by DDIT, whereby, it was found that a total cash of Rs. 5,76,91,714/- has been deposited in petitioner's different bank accounts for the financial year 2010-11. It is further stated that petitioner has failed to explain the source of cash deposited into its bank accounts as no details of parties, in respect of whom the said cash had been received, was furnished by the petitioner. 11. It is further stated that on a perusal of the return filed by the petitioner and the report of DDIT, Investigation Unit-1 (1), Revenue had reasons to believe that the income to the tune of Rs. 3,22,07,477/- for the AY 2010-11 had escaped assessment. 12. It is stated that in this case, scrutiny assessment under Section 143 (3) was never done, so there was no occasion for the AO to enquire about the true nature and source of credits. It is stated that there is an independent application of mind before recording the reason. Hence, the petitioner's contention that the reason recorded was solely based on DDIT's letter dated 29.11.2013 and that the "reason recorded is mechanical and without application of mind" is not correct. 13. With re....
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....ent was opened mechanically and without application of mind is not correct. It is argued that the information supplied by the DDIT (Investigation) was examined in the light of information available on record in the form of the ITR and therefore "reasons to believe" do not suffer from any illegality. The learned counsel further submits that the adequacy or sufficiency of the material on the basis of which the belief was formed by the Assessing Officer for the reopening of the assessment could not be inquired into at this stage. 19. It is in the above background that the Court is called upon to examine whether the reasons recorded by the Assessing Officer for reopening the assessment for the afore-mentioned assessment year satisfies the requirement of law. ANALYSIS & CONCLUSION 20. There are large number of cases explaining the legal requirement that is to be satisfied by the Assessing Officer for valid assumption of jurisdiction under Section 147 of the Act to reopen the assessment. The power to reopen the assessment under Section 147 is a potent power and cannot be exercised lightly. Said power cannot be invoked casually or mechanically. Formation of belief by the Assessin....
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....did with the information so received. He says: "The information so received has been gone through". One would have expected him to point out what he found when he went through the information. In other words, what in such information led him to form the belief that income escaped assessment. But this is absent. He straightaway records the conclusion that "the abovesaid instruments are in the nature of accommodation entry which the assessee had taken after paying unaccounted cash to the accommodation entry given (sic giver)". The Assessing Officer adds that the said accommodation was "a known entry operator" the source being "the report of the Investigation Wing. 21. The third and the last part contains the conclusion drawn by the Assessing Officer that in view of these facts, "the alleged transaction is not the bona fide one. Therefore, I have reason to believe that an income of Rs. 5,00,000 has escaped assessment in the assessment year 2004-05 due to the failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment..." 22. As rightly pointed out by the Income-tax Appellate Tribunal, the "reasons to believe" are no....
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.... is no independent application of mind by the Assessing Officer to the tangible material which forms the basis of the reasons to believe that income has escaped assessment. The conclusions of the Assessing Officer are at best a reproduction of the conclusion in the investigation report. Indeed it is a "borrowed satisfaction". The reasons fail to demonstrate the link between the tangible material and the formation of the reason to believe that income has escaped assessment." 23. Coming back to the present case, the reasons recorded by the Assessing Officer for issuance of notice under Section 148 for reopening of assessment under Section 147 of the Act for AY 2011-12 are extracted below:- "Annexure 'A' Reasons for Issue of Notice U/s 148 for reopening of assessment u/s 147 of IT Act 1961 for the A.Y. 2011-12 in the case of M/s Well Trans Logistics Pvt. Ltd. An information in the case of assessee company was received from the DDIT, Investigation, Unit (1), Delhi vide letter F. No. DDIT(Inv.)/Unit-1(1) 2013-14/541 dated 29.11.2013 in which the following information was provided: "An inquiry in this case was conducted by this office. It was found that....
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....porters/ importers and in such cases commission are paid to brokers and TDS is also deducted. The assessee was also asked to explain the rotation of funds in their own bank accounts as alleged in the STR. In response to this, the assessee admitted that they have branches in Delhi, Ludhiana & Mumbai and the funds are transferred into their own bank accounts to meet various expenses or any other immediate requirement of funds at a particular place. In this regard, it is important to note that the assessee company has failed to explain the source of cash deposited into their bank accounts as no details in respect of the parties from whom such cash has been received has been furnished. From the statement recorded on oath, it has also come to the fore that no commission has been given to brokers in cases where payments has been received in cash and at the same time where payments have been received in cheques, the commission has been paid to brokers. This further creates suspicion regarding the genuineness of cash transactions in the bank accounts of the assessee company. This fact was also confronted to the assessee, however the assessee reiterated the earlier stand t....