2017 (1) TMI 517 - HIMACHAL PRADESH HIGH COURT

Reopening of assessment - validity of assessment - reasons to believe - it was not clear that income was taxable in the hands of assessee or loaner - Held that:- AO was in receipt of information from the Deputy Director of Income Tax (Investigation), Faridabad, which revealed that out of his agricultural income and advances received from his friends, loaner had advanced payments as interest free unsecured loan to the petitioner and his family members. - The factum of advancement of such money came to be admitted only in response to the notice. Prior thereto, both the petitioner and his family members maintained stoic silence - also, the source from which the loaner itself received such income, prima facie, was found to be false

The Assessing Officer, in our considered view, has considered the entire material while forming its prima facie view with regard to the alleged payments of interest. Also what was the purpose of loan and what was the source from where it came to be returned is a question, which being a jurisdictional fact requires adjudication by the Assessing Officer. The petitioner may also have justifiable explanation of repayment, but from the material placed before us, it cannot be said that either the initiation of process of assessment or rejection of objections is on flimsy grounds or in an arbitrary manner.

We find existence of reasonable ground, enabling the Assessing Officer to form a belief, with regard to the non-disclosure/escapement of income - In the instant case, we find that the petitioner seeks adjudication, on merits, of the fact in issue, which is impermissible in law. In the absence of definite and authentic information, this Court cannot as a fact finding authority, by way of a roving inquiry examine the matter, holding the proceedings initiated under Section 148 of the Act to be untenable on merits. Assessee is always open to make all such submissions before the appropriate authority.

Application of mind by the sanctioning authority - Held that:- the instant case is not that of mere rubber stamping, for the competent authority, in principle, was in agreement with the reasons assigned by the Assessing Officer, so placed before him, which came to be considered and sanction accorded, with proper application of mind. He himself wrote “I am satisfied that it is a fit case for issue of notice u/s 148”.

Rejection of objections - Held that:- It cannot be said that rejection of the objections are based on frivolous or extraneous factors and circumstances. There is complete and proper application of mind to the attending facts and circumstances. The objections rejected, by a speaking order, also stands duly communicated to the petitioner. Mere rejection of objections cannot lead to formation of an opinion about the Assessing Authority, under all circumstances, deciding the matter in favour of the revenue.

Reliance on a decision dated 04.03.2016, rendered by the Calcutta High Court in Prem Chand Shaw (2016 (3) TMI 328 - CALCUTTA HIGH COURT) is only for the purpose of pressing the provisions of Section 292-B of the Act, which, in the instant case, we do not find to be applicable.

At this stage, what is required to be considered by the jurisdictional authority is only reasons to believe and not “the established fact of escapement of income”, on the lines of Rajesh Jhaveri (2007 (5) TMI 197 - SUPREME Court).

Petition dismissed - Decided against the assessee.