TMI Blog2004 (4) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... ions - held that the proceedings under section 148 by the Assessing Officer had been validly initiated - - - - - Dated:- 9-4-2004 - Judge(s) : M. KATJU., V. C. MISHRA. JUDGMENT The judgment of the court was delivered by M. KATJU J. - This writ petition has been filed challenging the notice under section 148 of the Income-tax Act, 1961, dated November 14, 2002, annexure 6, to the writ petition. Heard learned counsel for the parties. The petitioner is a Hindu undivided family and Brij Mohan Agarwal is the karta of the family. The relevant assessment year is 2001-02. It is alleged in paragraph 6 of the petition that the main source of income of the petitioner is from house property. The petitioner enjoys income from the house ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surprised to receive the impugned notice under section 148 of the Act vide annexure 6 to the writ petition. On February 14, 2003, the petitioner received notice under section 142 of the Income-tax Act with certain queries. The petitioner replied that the time period for issuing the notice under section 143(2) has expired hence respondent No. 1 was not authorised to initiate the proceedings. In paragraph 16 of the petition it is alleged that respondent No. 1 did not point out any reason to believe under section 148. It was also not informed by the respondents that the receipts in respect of sale of shares was doubtful according to the respondents. In compliance with the notice under section 148 the petitioner requested that the return alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent had reason to believe that the assessee has diverted and has concealed his income of Rs. 5,98,800 by disclosing it to be sale proceeds of shares which is not correct as no real transaction of dealing in shares had ever taken place. The petitioner has alleged in paragraph 20 of the writ petition that the purchase of shares is not in dispute, the sale of these shares is also not in dispute. The aforesaid shares have not been transferred in favour of M/s. Yadav and Co. by the concerned company. Merely on the basis of the statement of a third person, reassessment proceedings cannot be initiated against the petitioner. It is alleged in paragraph 22 of the writ petition that the sale value of shares has been disclosed and has been accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve already been indicted in another scam of Rs. 101 crores. A copy of the relevant extract of the investigation report dated July 19, 2002, is annexed as annexure CA-2 to the counter-affidavit. Statement of bank account No. 8273 of the petitioner maintained at the State Bank of India, Agra, is annexure CA-3 to the counter-affidavit, which goes to show that the petitioner was indulging in bogus transactions of shares. The transacted amounts are shown in the pass book which goes to show that the petitioner is actively involved in bogus transactions and was also the recipient of several lakh rupees arising out of these bogus transactions. In paragraph 5 of the counter-affidavit it is stated that the petitioner has falsely shown share proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased shares on bogus transaction from M/s. J. R. D. Stock Broker (P.) Ltd. The director of M/s. J. R. D. Stock Broker (P.) Ltd. Mr. Ashok Gupta has admitted in his statement that he was engaged in providing bogus accommodation entries in exchange of cash/cheques for certain commission. The copies of the statement of Mr. Ashok Gupta are annexures CA-5, 7 and 8 to the counter-affidavit. In paragraph 10 of the counter-affidavit it is stated that the petitioner is the recipient of several lakhs of rupees arising from the bogus transactions entered into through Yadav and Co. and through M/s. J. R. D. Stock Broker (P.) Ltd. The petitioner has concealed all these relevant materials. The earlier assessment was done under section 143(1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to believe that the assessee had concealed his income or that the correct income of the assessee has escaped assessment. In view of the investigation made by the investigation wing of the Department, relevant and very material facts have come before respondent No. 1 that the petitioner was concealing his income by indulging in bogus transactions. All that is required at the stage of issuing of notice under section 148 is that the belief of the Income-tax Officer must be that of an honest and reasonable person based upon reasonable grounds and not on mere suspicion, gossip or rumours. In the present case, we are of the opinion that the belief of respondent No. 1 was an honest and reasonable belief on the material which he had received fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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