TMI Blog2020 (1) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 148 in its order dated 26.11.2019 considered the objections of the petitioner. The objections of the petitioner were dealt with on a point to point basis. While passing the order dated 26.11.2019 the competent Revenue Authority found that necessary prerequisite of Section 147 that there should be an escapement of income stood fulfilled. The reasons recorded in that regard were found to be valid. The authority also noticed the admission of the assessee that he had incurred Long Term Capital Gain of ₹ 47,43,264/during Financial Year 201112, however, the same has not been disclosed in his ITR The validity of the refusal of the request of the petitioner to cross examine Ashok Kumar Kayan, Sunil Kumar Kayan, Devesh Kumar Kayan whose statements were part of the material, was also affirmed as held Income Tax Act, 1961 does not have any provision which may empower the undersigned to enforce the cross examination of a third party by the assessee. However, the statements of Shri Ashok Kumar Kayan are being provided to the assessee for ready reference. Approval under Section 151 of the I.T. Act, 1961, prior to initiation of proceedings under Section 148 of the I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings against the petitioner which are assailed in the instant writ petition, have no legs to stand on and are devoid of jurisdiction. This is the sole submission made by the learned Senior Counsel for the petitioner. 4. Per contra, learned counsel for the Revenue, Sri Subham Agarwal calls attention to various assertions made in the orders impugned dated 28.10.2019 and 26.11.2019 to contend that the requisite approval from the competent authority under Section 151 of the I.T. Act, 1961 was taken prior to the initiation of the proceedings in the manner contemplated by law. He further contends to the material on the basis of which the satisfaction was arrived at by the authorities to come to the conclusion that income of the petitioner had escaped assessment for the Assessment Year 2012-13 was credible and duly considered by the Revenue before initiating reassessment proceedings. 5. Heard learned counsel for the parties. 6. The sole contention of the petitionerassessee that prior approval required from the competent authority under Section 151 of the I.T. Act, 1961 was not obtained before issuing notice under Section 148 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uarely upon the petitioner to reverse the presumption of correctness of the findings in the orders passed by the revisional authorities in discharge of their official duties. There is no reason or basis to decline the presumption of correctness in favour of the said findings so recorded in the orders passed by the revisional authorities regarding approval under Section 151 of I.T. Act, 1961 before initiation of proceedings under Section 148 of the I.T. Act, 1961. This Court has not been shown any reason or material to doubt the correctness of the finding recorded in the orders dated 28.10.2019 and 26.11.2019 that the notice under Section 148 of the I.T. Act, 1961 was issued after taking prior approval under Section 151 of the I.T. Act, 1961 from the Ld. Pr. Commissioner of Income Tax, Noida. This finding has not been shown to be perverse in any manner and is not liable to be interfered with by this Court. The argument on behalf of the petitioner is accordingly rejected. 11. There is more to the controversy. 12. The reasons to believe of the Assessing Officer that income had escaped assessment have been recorded in meticulous deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the assessee for A.Y. 201213 and it is seen that the assessee has not declared any Capital Gain in his return of income. It is clear from the details available on record that the assessee has concealed the capital gain of ₹ 40,10,240/has escaped assessment for AY 201213 with the meaning of provisions of Section 147 of the I.T. Act, 1961. 16. Accordingly proceedings under Section 147 of the I.T. Act, 1961 were initiated to assess the escaped income for Assessment Year 2012-13. 17. At this stage it would be apposite to reflect on some relevant aspects of the statements given by Ashok Kumar Kayan under Section 131 of the I.T. Act, 1961 under oath before the income tax authority at Kolkata which was part of the investigations which led to unearthing of the surreptitious transactions which facilitated the escapement of assessment. In the telling of the said Ashok Kumar Kayan under oath the modus of operandi of the parties to the bogus transactions to facilitate escapement of income was thus described: Q.7 Please state the modus of operandi in respect to providing bogus LTCG/STCL through Penny Stock. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as escaped assessment. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion........At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is 'reason to believe', but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction. 20. Dealing with the scheme of Section 147 to 163 in a composite fashion was considered by the Hon'ble Bombay High Court in Prashant S. J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is also well settled that the reasons for reopening are required to be recorded by the assessing authority before issuing any notice under section 148 by virtue of the provisions of section 148 (2) at the relevant time. Only the reason so recorded can be looked at for sustaining or setting aside a notice issued under section 148. In the case of Equitable Investment Co. (P.) Ltd. vs. ITO [1988] 174 ITR 714 a Division Bench of the Calcutta High Court has held that where a notice issued under section 148 of the IT Act, 1961, after obtaining the sanction of the CIT, is challenged, the only document to be looked into for determining the validity of the notice is the report on the basis of which the sanction of the CIT has been obtained. The IT Department cannot rely on any other material apart from the report. 22. The same principal was reiterated in another Division Bench judgment of the Hon'ble Bombay High Court in Hindustan Lever Ltd. Vs R.B. Wadkar reported at (2004) 268 ITR 332 . ...the reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No additions can be made to those reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the competent Revenue Authority found that necessary prerequisite of Section 147 that there should be an escapement of income stood fulfilled. The reasons recorded in that regard were found to be valid. The authority also noticed the admission of the assessee that he had incurred Long Term Capital Gain of ₹ 47,43,264/during Financial Year 201112, however, the same has not been disclosed in his ITR. 26. The validity of the refusal of the request of the petitioner to cross examine Ashok Kumar Kayan, Sunil Kumar Kayan, Devesh Kumar Kayan whose statements were part of the material, was also affirmed in the following terms; In this regard, it is clarified that the undersigned cannot compel any other person for such cross examination as all these persons are not residing within 200 km. From the office of the undersigned. Therefore they cannot be summoned/called upon for such cross examination. The Income Tax Act, 1961 does not have any provision which may empower the undersigned to enforce the cross examination of a third party by the assessee. However, the statements of Shri Ashok Kumar Kayan are being provided to the assessee for ready ..... X X X X Extracts X X X X X X X X Extracts X X X X
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