TMI Blog2021 (5) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... n with respect to the income chargeable to tax has escaped assessment. As examined the issue of valid sanction as raised by the learned counsel for the writ applicant. We take the notice of the fact that, the copy of the approval has been provided to the assessee at the stage of passing the order of disposing the objections raised by the assessee. Therefore, it is evident that, in the instant case, the authorities concerned have given approval after due application of mind and expressed their satisfaction with regard to the reasons recoded for reopening of the assessment. No hesitation to hold that it could not be said to have that there was no material or grounds before the Assessing Officer and the assumption of jurisdiction on the part of the Assessing Officer under Section 147 of the Act to reopen the assessment by issuing impugned notice under Section 147 of the Act is without authority of law, which render into the notice unsustainable. Therefore, the assessee failed to make out a case. - R/Special Civil Application No. 21922 of 2019 - - - Dated:- 15-3-2021 - Honourable Mr. Justice J.B.Pardiwala And Honourable Mr. Justice Ilesh J. Vora For the Petitioner(s) : M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-during F.Y.201213 relevant to A.Y.201314. The assessee has not claimed exempt LTCG in the return of income. The share price movement in the captioned scrip was seen from public domain and observed that there is share price rise which is prima facie not supported by financial fundamentals of the scrip. Normally, the price manipulation is done by creating a syndicate by the promoters, brokers, managers, controllers etc. and the price of such shares is raised abnormally high to show fictitious LTCG. 4. Enquiries made by the AO as sequel to Information collected/ received : As per AIMS module in ITS/ITBA data available with this office, the assessee has made penny stock transaction in FY 201 and sell TUNI TEXTILE Ltd (scrip code 531411) and the assessee has declared gross total income return of income at ₹ 223430/-only. Assessee has not claimed Exempt income. No transaction details have been furnished which shows that the assessee has availed accommodation entry to the tune of sale consideration received on sale of such shares by way of entering into dubious transactions in penny stock scrip. In view of the facts discussed above, I have reason to believe that income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consideration is deemed to be a case where income chargeable to tax has escaped assessment. Applicability of the provisions of section 147/151 of the facts of the case: NA In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s. 148 has been obtained separately from Principal Commissioner of Income tax as per the provisions of section 151 of the Act. 5. The writ applicant raised the objections against the issuance of impugned notice and initiation of the reassessment proceedings, mainly on the following grounds : (i) Lack/absence of valid sanction under Section 151 of the Act. (ii) The reasons for reopening factually incorrect; (iii) No reason to believe that income chargeable to tax has escaped assessment; (iv) No live nexus between the information received and material gathered from the different sources. (v) Reopening is not permissible for proving and/or fishing inquiry or investigation without their being a specific findings as to escape of income; (vi) Reopening is based on borrowed satisfaction. 6. Being aggrieved by the order of disposal of the obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the Assessing Officer has merely presumed that the transactions entered into by the writ applicant in the scrip in question is a penny stock transaction, which cannot be a legal ground to reopen the assessment for the year under consideration. 9. In view of the aforesaid contentions, the learned counsel submitted that reopening of the assessment is, therefore, without jurisdiction and hence, the impugned notice deserves to be quashed and set aside. 10. In support of the aforesaid submissions, the learned Senior Counsel Mr. Tushar Hemani has relied upon the following decisions: (i) Principal Commissioner of Income Tax Vs. Smt. Krishna Devi (Delhi High Court, ITA 125 of 2020 decided on 15.01.2021) (ii) Prashant S. Joshi Vs. Income Tax Officer (2010) 189, taxman1(Bom) (iii) Gujarat Lease Finance Ltd Vs. Deputy Commissioner of Income Tax (2013) 36 taxmann.com.359 (Guj) (iv) Krishna Metal Industries Vs. HM Algotar (1997) 225 ITR 853, Gujarat (v) N.B. Bhatt Inspecting Asst. Commissioner of Income Tax Vs. I.B.M. World Trade Corporation (1995) 216 ITR 811, Bom. (vi) Hindustan Lever Limited Vs. R.B. Wadkar (2004) 137 taxman.479 (Bom) (vii) Krupesh Ghan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of the assessment after expiry of four years from the end of the relevant assessment year, it is not necessary for the Assessing Officer to show that, there was any failure to disclose fully or truly all material facts necessary for the assessment. When return is processed under Section 143 (1) of the Act and intimation sent to the assessee, it is not an assessment . Therefore, when reopening is sought of an assessment, the initial return was processed under Section 143(1) of the Act, the Assessing Officer can form reason to believe that income has escaped assessment by examining the return and/or the documents accompanying the return. It is not necessary in such case for the Assessing Officer to come across some fresh tangible material to form reason to believe that the income has escaped assessment. 16. A plain reading of reasons recorded reveals that, the case of the assessee is reopened under Section 147 of the Act, since the information was received as per AIMS module and data available with the office that as per the penny stock transaction data, the assessee had sold 30000 shares of Tuni Textiles Mills Ltd, for the consideration of ₹ 49,78,390/-. Af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the Assessing Officer has made reference of the information received from the concerned investigation wing with regard to bogus accommodation entries of long term capital gain provided by the certain entities. Though, full details of the information and enquiry conducted by Investigating wing having not been reflected in the reasons recoded, but a specific reference made in the reasons recorded by the Assessing Officer that, the transactions made by the assessee is penny stock. In this context, we may place reliance on the decision of this Court in the case of Aayojan Developers Vs. ITO, [335 ITR 234] , wherein, this Court after referring the decision of the Calcutta High Court in the case of East Cost Commercial Com. Ltd., [128 ITR 324] , held that, the income tax officer in his affidavit filed in the Court could explain or elaborate or clarify the reasons recorded by him, but he could not thereby introduce new grounds or new reasons or new materials which were not to be found in the recorded reasons, either expressly or by implication. 19. Applying the aforesaid principle of law, in the case of Aayojan Developers (supra) to the facts of present case, we are of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d means cause or justification. If the assessing officer has cause or jurisdiction to know or suppose that income has escaped assessment he can be said to have reason to believe that income has escaped assessment. The expression cannot be read to mean that the assessing officer should have finally ascertained the fact by legal evidence or conclusion. 22. In Praful Chunilal Patel Vs. M.J.Makwana Vs. CIT, [236 ITR 832], this court while interpreting the term 'reason to believe', held that, the word reason to believe cannot mean that the Assessing Officer should have finally ascertained the facts by legal evidence. They only mean that he forms a belief from the examination he makes and, if he likes, from any information that he receives. If he discovers or finds or satisfies himself that the taxable income has escaped assessment, it would amount to saying that he had reason to believe that such income had escaped assessment. The justification for his belief is not to be judged from the standards of proof required for coming to a final decision. A belief though justified for the purpose of initiation of the proceedings under Section 147 may ultimately stand altered af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aped assessment. Therefore, when the information was specific with regard to transactions of penny stock entered into by the assessee with the Tuni Textiles Ltd., and the Assessing Officer had applied his independent mind to the information and upon due satisfaction, led to form an opinion that, the amount of claim of LTCG claimed by the assessee is chargeable to tax has escaped assessment, which facts suggests that, there is live link between the material which suggested escapement of income and information of belief. Under the circumstances, we are satisfied that, there was enough material before the Assessing Officer to initiate proceedings under Section 147 of the Act. 24. In the discussions made hereinabove, we do not agree with the contention that, merely on the information, the Assessing Officer has recorded the reasons and on the basis of borrowed satisfaction, he formed an opinion with respect to the income chargeable to tax has escaped assessment. 25. We have examined the issue of valid sanction as raised by the learned counsel for the writ applicant. We take the notice of the fact that, the copy of the approval has been provided to the assessee at the stage of pass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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