TaxTMI 
TaxTMI 
2024 (4) TMI 1391
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.... the rival submissions and perused the materials available on record. The return of income for the Asst Year 2010-11 was originally filed by the assessee company on 15.10.2010 declaring Nil income. No assessment was framed on the said return. The ld. AO sought to reopen the assessment for the Asst Year 2010-11 by recording the following reasons:- Sir/Madam, Please refer to your letter dated 03-07-2017 filed in response to notice issued to u/s 142(1) of the IT Act in which you have desired to provide reasons recorded for re-opening of assessment u/s 147 and issuance of notice u/s 148 of the IT Act. In this regard, as desired, the reasons recorded for re-opening of assessment u/s 147 and issuance of notice u/s 148 of the IT Act, 1961 for the Assessment Year 2010-11 is as under:- Reasons for re-opening the assessment u/s 147 and issuance of notice u/s 148 of the IT Act, 1961 in the case of M/s East Delhi Leasing Pvt. Ltd. (PAN: AAACE0240R) for the Assessment Year-2010-11 1. Return of income for the A.Y. 2010-11 in this case was filed on 15.10.2010 declaring returned income at Nil. As per return of income during the year under consideration ....
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....lhi Leasing Pvt. Ltd. has deposited sum of Rs. 7,56,49,303/- in its Bank account No. 0026654227 maintained with CITI Bank. Further, on perusal of bank statements of all related parties, it is observe that all the parties are transactions the huge funds to each other though RTGS which resembled that huge amount is revolving again and again in the bank accounts of all the parties and therefore source of funds revolving in account of all the parties remains unexplained, therefore forming a valid reasons to believe that same funds are revolving again & again is escaped assessment. 5. Reasons for formation of belief In the light of above discussion, it is apparent that the assessee company has made transactions the huge funds to its related parties though RTGS which resembled that huge amount is revolving again and again in the bank accounts of all the parties and the source of funds revolving in account of all the parties remains unexplained. During the year under consideration the assessee company has not done any business activity. Further, return of income of the assessee is perused and it is noticed that the assessee has securities premium account of Rs. 4,50,00,0....
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....n of reassessment of income unless that could comprise factors indicating escapement of income ; that the movement of funds were between existing assessee's and not from any clandestine or undisclosed sources. Accordingly, it was objected that the ld. AO had thus no valid information at all for initiating reassessment. It was also pointed out that the reasons were recorded by the ld. AO based on borrowed satisfaction of Suspicious Transaction Report (STR) received by the ld. AO and there was no independent application of mind on the part of the ld. AO to reach to the conclusion that income of the assessee had escaped assessment warranting reopening thereon. It was submitted that suspicion howsoever strong cannot partake the character of a legal evidence. 5. The ld. AO disposed of the aforesaid objections by a separate communication dated 8.9.2017 addressed to the assessee. In the said letter, the ld. AO stated that the assessee company has made transactions of huge funds to its related parties through RTGS which resembled that huge amount is revolving again and again in the bank accounts of all the parties and the source of funds revolving in account of all the parties remains u....
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....out of sheer suspicion and in order to make roving and fishing enquiries. It is trite law that suspicion howsoever strong cannot partake the character of a legal evidence. The principles laid down by the Hon'ble Apex Court in its recent decision rendered in the context of Criminal Appellate Jurisdiction in the case of Raja Naykar vs State of Chattisgarh in Criminal Appeal No. 902 of 2023 dated 24.1.2024 would be relevant here and would come to the rescue of the assessee herein. For the sake of convenience, the entire order of Hon'ble Apex Court is reproduced below:- "1. This appeal challenges the judgement and order dated 22nd July, 2015, passed by the Division Bench of the High Court of Chhattisgarh, Bilaspur in CRA No. 223 of 2012, thereby dismissing the appeal filed by the Appellant, namely, Raja Naykar (Accused No. 1) and confirming the judgment and order of conviction and sentence awarded to him by the Court of Additional Sessions Judge, Durg (Chhattisgarh) (hereinafter referred to as "Trial Judge") in Sessions Trial No. 14 of 2010 on 23rd November, 2011. 2. Shorn of details, the facts leading to the present appeal are as under: 2.1 On 21st October, ....
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....ence, and threw the body of the deceased after burning the same behind the Baba Balak Nath temple. The prosecution also proved that accused no. 2 helped in throwing the body of the deceased and destroying evidence by way of cleaning the blood stains etc. of the deceased. Thus, the Trial Judge convicted the Appellant for offences punishable under Sections 302 and 201 read with 120B of the Indian Penal Code, 1860 ("IPC" for short) and was awarded a maximum sentence of life imprisonment; whereas Accused Nos. 2 to 4 were convicted for offences punishable under Sections 201 read with 120B of IPC and were sentenced to undergo rigorous imprisonment for five years and fine of Rs.1,000/-. 2.6 Being aggrieved thereby, the Appellant and other accused persons preferred appeals before the High Court through CRA No. 223 of 2012 and CRA No. 38 of 2012 respectively. The High Court by the common impugned judgement, although allowed the appeal filed by the accused nos. 2 to 4; however, it dismissed the appeal filed by the present Appellant and affirmed the order of conviction and sentence awarded to the him by the Trial Judge. 2.7 Being aggrieved thereby, the present appeal. ....
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....CC 71 : AIR 1952 SC 343 : 1952 SCR 1091 : 1953 Cri LJ 129] . This case has been uniformly followed and applied by this Court in a large number of later decisions up-to-date, for instance, the cases of Tufail (Alias) Simmi v. State of Uttar Pradesh [(1969) 3 SCC 198 : 1970 SCC (Cri) 55] and Ramgopal v. State of Maharashtra [(1972) 4 SCC 625 : AIR 1972 SC 656] It may be useful to extract what Mahajan, J. has laid down in Hanumant case [(1952) 2 SCC 71 : AIR 1952 SC 343 : 1952 SCR 1091 : 1953 Cri LJ 129] : "It is well to remember that in cases where the evidence is of a circumstantial nature, the circumstances from which the conclusion of guilt is to be drawn should in the first instance be fully established, and all the facts so established should be consistent only with the hypothesis of the guilt of the accused. Again, the circumstances should be of a conclusive nature and tendency and they should be such as to exclude every hypothesis but the one proposed to be proved. In other words, there must be a chain of evidence so far complete as not to leave any reasonable ground for a conclusion consistent with the innocence of the accused and it must be such as to show that with....
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.... the guilt of the accused, that is to say, they should not be explainable on any other hypothesis except that the accused is guilty. It has further been held that the circumstances should be such that they exclude every possible hypothesis except the one to be proved. It has been held that there must be a chain of evidence so complete as not to leave any reasonable ground for the conclusion consistent with the innocence of the accused and must show that in all human probabilities the act must have been done by the accused. 9. It is settled law that the suspicion, however strong it may be, cannot take the place of proof beyond reasonable doubt. An accused cannot be convicted on the ground of suspicion, no matter how strong it is. An accused is presumed to be innocent unless proved guilty beyond a reasonable doubt. 10. In the light of these guiding principles, we will have to examine the present case. 11. On a perusal of the judgment of the Trial Judge as well of the High Court, it would reveal that the main circumstance on which the High Court and the Trial Judge found the appellant guilty of the crime is the recovery of various articles at his instance. T....
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....r thereof would be admissible in evidence. 14. Undisputedly, the dead body was found much prior to the recording of the Memorandum of the appellant under Section 27 of the Evidence Act. Therefore, only that part of the statement which leads to recovery of the dagger and the rickshaw would be relevant. 15. The Property Seizure Memo would show that the dagger was seized from a place accessible to one and all. According to the prosecution, the incident took place on 21st October, 2009 and the recovery was made on 25th October, 2009. 16. As per the FSL report, the blood stains found on the dagger were of human blood. However, the FSL report does not show that the blood found on the dagger was of the blood group of the deceased. Apart from that, even the serological report is not available. 17. Insofar as the recovery of rickshaw is concerned, it is again from an open place accessible to one and all. It is difficult to believe that the owner of the rickshaw would remain silent when his rickshaw was missing for 3-4 days. As such, the said recovery would also not be relevant. 18. Another circumstance relied on by the Trial Judge is with regard ....
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..... 22. In the result, the appeal is allowed. The impugned judgment and order dated 22nd July, 2015, passed by the Division Bench of the High Court of Chhattisgarh, Bilaspur in CRA No. 223 of 2012 is quashed and set aside. The appellant is directed to be released forthwith, if not required in any other case. (Emphasis supplied by us hereinabove) 7. In our considered opinion, the principles enunciated in the aforesaid decision by Hon'ble Supreme Court would be squarely applicable to the facts of the instant case before us. The ld. AO while recording the reasons had merely suspected that the movement of funds (both inflow and outflow) in assessee's bank account constitutes income of the assessee. This suspicion was however triggered based on the STR received by the ld. AO. At the cost of repetition, we would like to mention the fact that the assessee is engaged in the business of financing and leasing where obviously there would be huge movement of funds (both inflow and outflow) in the bank account of the assessee. Moreover, all these funds were received from the related entities and invested with the related entities in the regular business of financing and leasi....
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....en the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income-tax Officer on the point as to whether action should be initiated for reopening assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and farfetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. The fact that the words "definite information" which were there in section 34 of the Act of 1922, at one time before its amendment in 1948, are not there in section 147 of the Act of 1961, would not lead to the conclusion that action can now be taken for reopening assessment even if the information is wholly vague, indefinite, far-fetched and remote. The reason for the formation of the belief must be held in good faith and sho....