2024 (12) TMI 652
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....come on 30 September 2012. The said Return was ultimately assessed in accordance with Section 143 (3) of the Act and saw the passing of an assessment order on 26 March 2015. 3. On 31 March 2019 the impugned notice under Section 148 came to be issued. The respondents in the course of those notice proceedings supplied a copy of the reasons on the basis of which an opinion was formed that income had escaped assessment. The note carrying those reasons, and which stands placed on our record as Annexure A-16, is reproduced hereinbelow:- "Recording of reasons for re-opening of assessment u/s 147 of the Act- The assessee filed his return of income for A.Y. 2012-13 on 30.09.2012 declaring total income of Rs. 10,75,400/-. The assessee is a builder engaged in the business of construction and development of property. The case of Assessee was selected for scrutiny and notice u/s 143 (2) of the Act was issued on 10.09.2013. Assessment proceedings were completed u/s 143 (3) of the Act vide order dated 26.03.2015 accepting the income returned. 2. Thereafter, information has been received from the Joint Director of Income Tax (Investigation), OSD, Unit 1(1), New Delhi vide letter F.No. JDIT(....
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.....1 Further, following amount was also transferred by the society to the companies/firms of Sh. Subhash Dabas during F.Y.2011-12:- S. No. Name of Company/Firm Amount 1. Rainbow Capital Ltd. Nil 2. Tirupati Building & Offices Pvt. Ltd. Nil 3. Tirupati Construction 24,80,29,000/- 4. Tirupati Constwell Pvt. Ltd. 11,63,15,000/- Total 36,43,44,000/- 3.2 The assessee has declared total income of Rs. 10,75,400/- during A.Y. 2012-13 comprising salary income of Rs. 11,90,400/- and Rs. 3,52,232/- from other sources. The assessee has declared loss of Rs. 31,32,939/- from business & profession. M/s. Tirupati Construction prop. concern of assessee has received Rs. 24,80,29,000/- from the society in F.Y. 2011-12 without declaring the same in revenue. Moreover, the assessee has declared loss of Rs. 31,32,939/- from business which is not commensurate with the huge transaction under by him. The reasons for transfer of fund from the society to assessee's concern are unknown as the assessee has not shown the receipt of above amount in his books of accounts. 4. From the above, it is clear that the assessee has received huge sum of Rs. 24,80,29,000/- from the Delhi Stor....
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....ment proceedings, the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the AO and could have been discovered with due diligence, accordingly attracting provisions of Explanation 1 of Section 147 of the Act. 5.5 It is evident from the above discussion that in this case, the issues under consideration were never examined by the AO during the course of regular assessment/reassessment. It is important to highlight here that material facts ...........and the same may be embedded in books of account & financial statement in such a manner that it would require due diligence by the AO to extract these information. For aforestated reasons, it is not a case of change of opinion by the AO. 5.6 In view of the above facts, I have reason to believe that an amount of Rs. 24,80,29,000/- chargeable to tax has escaped assessment for A.Y. 2012-13 due to failure on the part of the assessee to disclose fully and truly all the material facts necessary for his assessment and therefore, this is a fit case for initiation of action u/s 147/148 of the I.T. Act 1961. 6. In this case more than four years ....
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....usal of bank statement of M/s. Delhi States Newspaper Employee Federation CGHS, Sector-19, Dwarka, New Delhi, it has been found that submission of the assessee is partially correct. It was noticed from the balance sheet of M/s. Tirupati Constwell Pvt. Ltd. as well as M/s. M/s Tirupati Construction Co. (Prop. Concern of Shri Subhash Chander Dabas) that M/s. Tirupati Constwell Pvt. Ltd. has advanced of Rs. 9,32,15,010/- interest free loan to the M/s. Tirupati Construction Company which is proprietorship concern of the Petitioner. Although, the Assessing Officer may be incorrect while recording reasons that the money was given by the M/s. Delhi States Newspaper Employee Federation CGHS to Shri Subhash Dabas but during the assessment proceedings, it has been found that money was ultimately reached to the assessee not directly but through company in which he is major shareholder i.e.99.62% of the total shareholding. In other words, the assessee, Sh. Subhash Chander Dabas, proprietor of M/s Tirupati Construction has received Rs.9.32 crore from the M/s. Delhi States Newspaper Employee Federation CGHS through M/s Tirupati Constwell Pvt. Ltd. in which he is a major shareholder owning 99.62%....
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....validity of the proceedings initiated upon a notice under section 148 of the said Act would have to be judged from the stand point of the reasons which existed at the point of time when the section 148 notice was issued. The additional reasons cannot be provided or recorded subsequent to the issuance of notice under section 148. It is, of course, open to the Assessing Officer, if some other information comes within his knowledge to issue another notice under section 148 for different reasons. But that is not the case here. On the basis of the very same notice issued under section 148, the Assessing Officer has recorded additional reasons subsequent to the issuance of notice and this is impermissible in law." 7. It becomes pertinent to observe that the validity of the proceedings initiated upon a notice under Section 148 of the Act would have to be adjudged from the stand point of the reasons which formed the basis for the formation of opinion with respect to escapement of income. That opinion cannot be one of changing hues or sought to be shored upon fresh reasoning or a felt need to make further enquiries or undertake an exercise of verification. Ultimately, the Court would be p....
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....ion nor is it in the nature of a review. The Supreme Court has laid down the test of whether there is tangible material on the basis of which the Assessing Officer has come to the conclusion that there is an escapement of income. The Supreme Court held thus (page 564): "However, one needs to give a schematic interpretation to the words 'reason to believe' failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of 'mere change of opinion', which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of 'change of opinion' is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of 'change of opinion' as an in-built test to check abuse of power by the Assessing Officer. Hence, after April 1, 1989, the Assessing Officer has power to reopen, provided there is 'tangible materia....
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....e foundation of the action initiated by the Assessing Officer of reopening the assessment. Those reasons cannot be supplemented or improved upon subsequently. While disposing of the objections of the assessee, the Assessing Officer has purported to state that the assessee had filed only sketchy details in its return filed in the electronic form. As we have noted earlier, the relevant provisions expressly make it clear that no document or report can be filed with the return of income in the electronic form. The assessee has an opportunity to do so during the course of the assessment proceedings if a notice is issued under section 143 (2). The Assessing Officer was, in our view, not entitled, when he disposed of the objections to travel beyond the ambit of the reasons which were disclosed to the assessee. For all these reasons, we are of the view that the exercise of the jurisdiction under section 147 and section 148 in the present case is without any tangible material. The notice of reopening does not meet the requirements as elucidated in the judgment of the Supreme Court in Kelvinator of India Ltd., (2010) 320 ITR 561 (SC) For these reasons, we make the rule absolute by quashing a....