TaxTMI 
TaxTMI 
2024 (12) TMI 988
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....g assessment for the Assessment Year 2017-18 under section 148 of the Income Tax Act, 1961 [for short 'the Act']. 5. The petitioner filed the return of income for the Assessment Year 2017-18 on 31.08.2017 declaring total income of Rs. 1,73,370/-. It is the case of the petitioner that on 20.02.2021, summons under section 131 (1) of the Act was issued by the Deputy Director of Investigation/Assistant Director of Investigation, 2 (2), Ahmedabad, requiring the petitioner to provide various details asked in the said summons pertaining to the cash deposited in banks during demonetization period from 09,11,2016 to 31.12.2016. 5.1 The petitioner by reply dated 01.03.2021 submitted the details as called for. Thereafter, the petitioner received the impugned notice for reopening. The petitioner was also provided with the reasons recorded as under: "REASONS FOR REOPENING OF THE ASSESSMENT U/S 147 OF THE INCOME-TAX ACT, 1964, In this case, the assessee has filed return of income for A. Y. 2017-18 declaring total income of Rs, 173370/on 31/08/2017. 2. The case of the assessee has been identified as potential case flagged by the Directorate of Income tax (Systems) after risk profiling bas....
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....ng and corroborative evidence showing direct nexus of cash deposited during the demonetization with the amount received from the customers and relying upon the decision of this Court in case of Purviben Snehalbhai Panchhigar vs. Assistant Commissioner of Income Tax reported in [2019] 101 taxmann.com 393 (Guj.) as well as decision of the Hon'ble Apex Court in case of CIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd reported in [2007] 316 (SC), rejected the case of the petitioner. Being aggrieved, the petitioner has preferred this petition. 6. Learned advocate Mr. Darshan Gandhi for the petitioner submitted that impugned reasons recorded are based on incorrect facts and the impugned notice is issued just to carry out roving and fishing inquiry which is not permissible as per the settled legal position. 6.1 It was submitted that merely by stating that analysis of the details available on record and merely observing that known sources of cash deposit is not conclusively proved, cannot be the basis for reopening in absence of any live link between the information received and record available with the Assessing Officer. It was therefore, submitted that there is no independent application....
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....he sources of the cash deposited in the bank, no interference may be made in the petition for setting aside the impugned notice. It was submitted that the Assessing Officer has issued the impugned notice after verification of the facts of the case by independent application of mind forming an opinion that the income chargeable to tax has escaped assessment and the assessment was reopened after recording the reasons and after getting administrative approval from the Additional Commissioner of Income Tax, Range-I, Ahmedabad. 7.2 It was further submitted that while passing order disposing of the objection, the Assessing Officer has categorically observed that the petitioner has failed to furnish any supporting and corroborative evidence proving the direct nexus of cash deposited during demonetization or the same cash which was received from the customer and therefore, it was necessary for the Assessing Officer to carry out the assessment in accordance with law pursuant to the impugned notice for reopening as he has reason to believe on such prima facie conclusion that the income has escaped assessment. 7.3 It was therefore submitted that the respondent-Assessing Officer was justifie....
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....ear, or to disclose fully and truly all material facts necessary for assessment of that year, or to disclose fully and truly all material facts necessary for assessment of that year; [ii] both the above conditions are conditions precedent and must be satisfied simultaneously before the Income-tax Officer can assume jurisdiction to reopen the assessment beyond four years of the end of the assessment year; [iii] such reasons must be recorded and if the reasons recorded by the Assessing Officer do not disclose satisfaction of these two conditions, reopening notice must fail; [iv] there is no set format in which such reasons must be recorded. It is not the language but the contents of such recorded reasons which assumes importance. In other words, a mere statement that the Assessing Officer had reason to believe that certain income has escaped assessment and such escapement of income was on account of non filing of the return by the assessee or failure on his part of disclose fully and truly all material facts necessary for assessment would not be conclusive. Nor absence of any such statement would be fatal, if on the basis of reasons recorded, it can be culled out that there were....
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...., upholding the validity of the notice for reopening, the Supreme Court held and observed as under :- "So far as the first condition is concerned, the Income Tax Officer, in his recorded reasons, has relied upon the fact as found by the Customs Authorities that the appellant had under invoiced the goods it exported. It is not doubt correct that the said finding may not be binding upon the income tax authorities but it can be a valid reason to believe that the chargeable income has been under assessed. The final outcome of the proceedings is not relevant. What is relevant is the existence of reasons to make the Income Tax Officer believe that there has been under assessment of the assessee's income for a particular year. We are satisfied that the first condition to invoke the jurisdiction of the Income Tax Officer under Section 147 (a) of the Act was satisfied." 11. In case of Income Tax Officer vs. Purushottam Das Bangur (Supra) after completion of assessment in case of the assessee, the Assessing Officer received letter from Directorate of Investigation giving detailed particulars collected from Bombay Stock Exchange which revealed earning of share and price of share incre....
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....rt held and observed as under :- "After hearing the learned counsel for the parties at length, we are of the opinion that we cannot say that the letter aforesaid does not constitute relevant material or that on that basis, the Income Tax Officer could not have reasonably formed the requisite belief. The letter shows that a joint inspection was conducted in the colliery of the respondent on January 9, 1967, by the officers of the Mining Department in the presence of the representatives of the assessee and according to the opinion of the officers of the Mining Department, there was under reporting of the raising figure to the extent indicated in the said letter. The report is made by a Government Department and that too after conducting a joint inspection. It gives a reasonably specific estimate of the excessive coal mining said to have been done by the respondent over and above the figure disclosed by it in its returns. Whether the facts stated in the letter are true or not is not the concern at this stage. It may be well be that the assessee may be able to establish that the facts stated in the said letter are not true but that conclusion can be arrived at only after making the n....
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....ought to be done in a different manner in the proceeding under Section 147 of the Act. The reason to believe has been appropriately understood by the assessing officer and there is material on the basis of which the notice was issued. As has been held in Phool Chand Bajrang Lal (supra), Bombay Pharma Products (supra) and Anant Kumar Saharia (supra), the Court, in exercise of jurisdiction under Article 226 of the Constitution of India pertaining to sufficiency of reasons for formation of the belief, cannot interfere. The same is not to be judged at that stage. In SFIL Stock Broking Ltd. (supra), the bench has interfered as it was not discernible whether the assessing officer had applied his mind to the information and independently arrived at a belief on the basis of material which he had before him that the income had escaped assessment. In our considered opinion, the decision rendered therein is not applicable to the factual matrix in the case at hand. In the case of Sarthak Securities Co. Pvt. Ltd. (supra), the Division Bench had noted that certain companies were used as conduits but the assessee had, at the stage of original assessment, furnished the names of the companies with ....
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....fficer which enabled him to form such a belief would not be examined. A reference in this respect is made to a decision of the Supreme Court in the case of Asstt. Commissioner of Income-tax v. Rajesh Jhaveri Stock Brokers P. Limited, reported in [2007] 291 ITR 500. 9. Learned advocate for the Revenue is correct in drawing our attention to the judgment of this Court in the case of Yogendrakumar Gupta [Supra] in which, in somewhat similar background, the question of change of opinion and failure on the part of the assessee to disclose true and full facts came up for consideration. It is undoubtedly true that every case of reopening may have slightly varying facts, giving slightly different colour shade to each situation, nevertheless, the observations made by the Court in the case of Yogendrakumar Gupta [Supra] need to be noted. It was the case in which the notice for reopening was based on information made available to the Assessing Officer who formed opinion suggesting that the assessee had obtained accommodation entries in the form of loans and advances from one business marketing company, a Calcutta based company. Relevant observations made by the Bench in paras 18, 19 & 20 rea....
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....e information must be specific and reliable. As held by the Apex Court in the case of Phul Chand Bajrang (supra), since the belief is that of the Incometax Officer, the sufficiency of reasons for forming the belief, is not for the Court to judge but is open to an assessee to establish that there exists no belief or that the belief is not at all a bona fide one or based on vague, irrelevant and nonspecific information. To that limited extent, the Court may look at the view taken by the Income-tax Officer and can examine whether any material is available on record from which the requisite belief could be formed by the Assessing Officer and whether that material has any rational connection or a live link with the formation of the requisite belief. It is also immaterial that at the time of making original assessment, the Assessing Officer could have found by further inquiry or investigation as to whether the transactions were genuine or not. If on the basis of subsequent valid information, the Assessing Officer forms a reason to believe on satisfying twin conditions prescribed under section 147 of the Act that no full and true disclosure of facts was made by the assessee at the time of....
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....aries reflected, which are spread across the country, the CIT, Koklata, suspected the accommodation entry related to the assessment year 2006-07 as well, this information has been provided to Director General of Income-tax, Kolkata, who in turn, communicated to the Chief Commissioner of Income-tax, Ahmedabad. Further revelation of investigation as could be noticed from the record examined (file) deserves no reflection in this petition. Insistence on the part of the petitioner to provide any further material forming the part of investigation carried out against Dalmias also needs to meet with negation, as the law requires supply of information on which Assessing Officer recorded her satisfaction, without necessitating supply of any specific documents. The proceedings initiated under section 147 of the Act would not be rendered void on non supply of such document for which confidentiality is claimed at this stage, following the decision of the Delhi High Court in case of Acorus Unitech Wireless (P.) Ltd. (supra). Assumption of jurisdiction on the part of the Assessing Officer is since based on fresh information, specific and reliable and otherwise sustainable under the law, challenge....