TaxTMI 
TaxTMI 
2025 (1) TMI 1828
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....a writ in the nature of Certiorari or an order quashing the reassessment proceedings initiated by the respondent in pursuance to the notice dated 27.03.2018 u/s 148 of the Act (ANNEXURE-1), for the assessment year 2011-12; c. issue a writ in the nature of mandamus or an order prohibiting the respondent to frame reassessment under the relevant provisions of the Act; d. issue a writ in the nature of Mandamus prohibiting the respondent from making fishing and roving inquiries; e. pass any other order(s) as this Hon'ble Court may deem-to be fit and more appropriate in order to grant interim relief to the petitioner;" 2. As the pleaded facts and the record would reveal, the instant petitions have been filed against initiation of the proceedings under the provisions of Income Tax Act, 1961 (hereinafter referred to as 'Act of 1961'). The present assailment, as reflected in the afore quoted prayer clauses, is to the notice dated 27.03.2018 issued to the petitioner under Section 148 of the Act of 1961 and the order dated 24.09.2018 disposing of the objections raised against initiation of proceedings for re-opening of the assessment under Section 148 of the Act ....
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....l the objections raised under Sections 147 & 148 of the Act of 1961. 4. Learned counsel for the petitioners submit that the respondents have not provided any reasons so as to justify the notice under Section 148 of the Act of 1961 and initiation of the proceedings under Section 147 of the Act of 1961 and it was only a reopening made as an attempt to review an earlier order in the garb of the proceedings in question, whereas it was merely a change of opinion, which is not permissible in law. 4.1. Learned counsel further submits that no independent application of mind for reopening has been made and no case of transaction specific material has been provided which could bring in the reasons to establish a case for reopening. 4.1.1. Learned counsel also submits that there is no information with the respondents which could make it a direct case for reassessment. 4.2. Learned counsel has drawn the attention of this Court to the language used in Section 147 of the Act for the purpose of Income Escaping Assessment wherein the Counsel submits that the petitioner falls under the proviso to Section 147 of the Act of 1961 and thus, once the assessment under sub-section (3) of Secti....
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....ed also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. 9) The first proviso to Section 147 of the Act restricts the action to be taken after expiry of 4 years from the end of the relevant assessment year. However, it has exception. In order to fall under the exception, any income chargeable to tax has escaped assessment for the assessment year by reason of failure on the part of the assessee- (i) to make a return under Section 139 or (ii) no response to a notice issued under sub-section (1) of Section 142 or Section 148; (iii) failure to disclose fully and truly all material facts necessary for assessment of the relevant assessment year. 13) The extended limitation under the first proviso to Section 147 of the Act would apply to the cases where there is failure on the part of the assessee to disclose fully and truly all the material facts necessary for assessment of the relevant assessment year. The assessment proceedings and the nature of facts disclose by the ....
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....entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in the proceedings, the Assessing Officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of abovesaid five assessment years." 5.2. Learned counsel further submits that there are wide powers including the power to initiate proceedings pertaining to escaped assessment and once an order passed in this respect is reasoned and equipped with sufficient material, then any kind of interference by this Court at this stage, would not be appropriate. 5.3. Learned counsel also submits that once the reasons were received at a subsequent stage, such information has to be evaluated and if the satisfaction of the officer is there for conducting proceedings for escaped assessment, then the same has to be initiated. 5.4. Learned counsel further submits that the material which was placed before the authorities indicated that full and true disclosure of the relevant facts has not been made and thus, the provisions of Section 147/....
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.... received and utilised the share application money received from bogus sources lacking genuineness, creditworthiness, genuine identity, which fall within the purview of Section 68 of the Act. 15. In our considered opinion, in the instant case where the return filed by the assessee was not subjected to scrutiny assessment, the belief formed by the AO after due examination of the material on record that the income of the assessee chargeable to tax during the relevant assessment year has escaped assessment cannot be said to be arbitrary or irrational or there exists no rational and intelligible nexus between the reasons and the belief." 6. Heard learned counsel for the parties as well as perused the record of the case, alongwith the judgments cited at the Bar. 7. This Court has carefully examined the provisions of law i.e. Sections 143, 147 & 148 of the Act of 1961, and for ready reference, the same are reproduced as hereunder: "143. Assessment. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely: (a) the total income....
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....ng the sum determined to be payable by, or the amount of refund due to, the assessee under clause (c); and (e) the amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee: Provided that an intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is adjusted but no tax, interest or fee is payable by, or no refund is due to, him: Provided further that no intimation under this sub-section shall be sent after the expiry of [nine months] from the end of the financial year in which the return is made. Explanation.-For the purposes of this sub-section,- (a)"an incorrect claim apparent from any information in the return" shall mean a claim, on the basis of an entry, in the return,- (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory lim....
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....of [three] months from the end of the financial year in which the return is furnished. (3) On the day specified in the notice issued under subsection (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment: Provided that in the case of a- (a) research association referred to in clause (21) of section 10; (b) news agency referred to in clause (22B) of section 10; (c) association or institution referred to in clause (23A) of section 10; (d) institution referred to in clause (23B) of section 10, which is required to furnish the return of income under sub-section (4C) of section 139, no order making an assessment of the total income or loss of such research association, news agency, association or institution, shall....
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....sity, college or other institution, recommend to the Central Government to withdraw the approval and that Government may by order, withdraw the approval and forward a copy of the order to the concerned university, college or other institution and the Assessing Officer. (3A) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of making assessment of total income or loss of the assessee under sub-section (3) [or section 144] so as to impart greater efficiency, transparency and accountability by- (a) eliminating the interface between the Assessing Officer and the assessee in the course of proceedings to the extent technologically feasible; (b) optimising utilisation of the resources through economies of scale and functional specialisation; (c) introducing a team-based assessment with dynamic jurisdiction. (3B) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (3A), by notification in the Official Gazette, direct that any of the provisions of this Act relating to assessment of total income or loss shall not apply or shall apply with such exception....
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....d outside India, chargeable to tax, has escaped assessment for any assessment year. Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment." 148. Issue of notice where income has escaped assessment. Before making the assessment, reassessment or re-computation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished ....
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.... Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee where the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. Explanation 3.-For the purposes of this section, specified authority means the specified authority referred to in section 151." 8. This Court observes that the income escaping assessment was done for the year 2011-12, after a lapse of four years, on the ground that the Assessing Officer had reason to believe that the assessee has failed to bring to the notice of the respo....
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.... term capital gain which is exempted from taxation u/s. 10(38) of the IT Act, 1961. Therefore the assessee has not shown such transaction in computation of total income in income tax return. 5. The assessee transferred share of the above said company resulting in long term capital gain which is exempted u/s. 10(38) of the IT Act, 1961. However, on account of investigation/inquiries made by the DDIT (Inv.), Unit-IV(1), Thane it was found that such transaction of the assessee is bogus transaction. Persons who were involved in providing such bogus long term capital gain, explained modus operandi of such transactions in their statements. This company was found to be paper company which carried out no real business transaction. Volume and price movement of shares of such company was abrupt, unrealistic and not support by fundamentals of the company. The prime objective of such transactions is to accommodate unaccounted cash of beneficiaries showing transfer of shares by beneficiaries. 6. I have examined the information and material available on record and after application of my mind, I have reasons to believe that the above said amount of Rs.1,44,46,915/on account of ....
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....nt of Parshuram Pottery Works Co. Ltd. v. CIT ((1977) 1 SCC 408, decided on 16.11.1976) namely: 1. The Assessing Officer must possess a "reason to believe" that income chargeable to tax has escaped assessment; and 2. Such "reason to believe" must arise due to the omission or failure on the part of the Assessee to make a full and true disclosure of all material facts necessary for the assessment pertaining to the relevant assessment year. 13. This Court further takes cognizance of the series of judgments pronounced by the Hon'ble Apex Court, which have consistently held that it is the duty of the Assessee to make a full and complete disclosure of primary facts. However, it is not incumbent upon the Assessee to disclose everything in absolute detail to the authority. Consequently, the Assessing Officer is vested with the jurisdiction to reopen assessment proceedings only when the conditions prescribed under Section 147 are satisfied. 13.1. Furthermore, it is imperative to note that if, during the original assessment proceedings, the Assessing Officer has arrived at a conclusion based on the material facts placed before him, then a subsequent change in belief, ....
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....ilure or omission on the part of the assessee to make return under Section 139 or in response to notices issued under Section 142(1) or Section 148 or to disclose fully and truly all material facts necessary for the assessment. 14. 2. Once the long-term capital gains have been duly disclosed and assessed, the reassessment of the same after four years, cannot be initiated in the absence of any fresh tangible material indicating that the assessee had failed or omitted to disclose relevant facts at the time of the original assessment. Any attempt to reopen the assessment under such circumstances would be contrary to the legal framework and in violation of the proviso to Section 147 of the Income Tax Act, 1961. 15. This Court further notes that if the provision of the taxing statute prescribes a clear limitation period for reopening such proceedings, a strict interpretation of the same should be taken, otherwise, the same would give indefinite powers to the Assessing Officer in this regard, which may not be in the larger interest of justice. 16. This Court while looking into the peculiar factual matrix of the case, notes that the material in question, i.e., the long term capit....