TMI Blog2021 (5) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... income has escaped assessment - when the information was specific with regard to transactions of penny stock entered into by the assessee with the Karma Ispat 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. 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. As examined the issue of valid sanction as raised by the learned counsel for the writ applicant - 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 ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief details of the assessee: The assessee is an individual and has filed her return of income ITR-4 for the year under consideration on 31.07.2012 declaring total income at ₹ 9,29,230/-. 2.Brief details of information collected/received by the AO: The information in respect of the penny stock transaction made in FY 2011-12 was made by the asessee as per information received from the ITO/CIB)1, Mumbai on 02.04.2013 at DIT (I CI) Mumbai uploaded in the ITS data. 3. Analysis of information collected /received :As per the penny stock transaction data available, assessee has made sell transactions on 02.06.2011 of shares of Karma Ispat Limited trade qty. 2900 shares for ₹ 7,99,530/-. 4. Enquiries made by the AO as sequel to information collected /received: As per information received from the ITO(CIB)1, Mumbai on 02.04.2013 at DIT (I CI), Mumbai uploaded in the ITS data. 5. Findings of the AO: As per information received the ITO(CIB)I, Mumbai on 02.04.2013 at DIT (I CI), Mumbai uploaded in the ITS data that the shares sell are of penny stock. On perusal ROI it is noticed and found that assessee shown of total unsecured loan of ₹ 2595430/-. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 objections against the notice for reopening of the assessment, the writ applicant has come up before this Court by filing the present writ application. 7. We have heard learned Senior Counsel Mr. Tushar Hemani, assisted by Ms. Vaibhavi Parikh, the learned counsel appearing for the writ applicant and Mr. Manish Bhatt, the learned Senior Counsel assisted Mrs. Mauna Bhatt, learned Sr. Standing Counsel and Mr.Karan Sangani, the learned advocate appearing for the revenue. 8. Mr. Tushar Hemani, the learned Senior Counsel appearing for the writ applicant raised the following contentions: a. It was submitted that the impugned notice is bad in law and without jurisdiction because the conditions precedent for reopening under Section 147 of the Act are not satisfied; b. It was submitted that, reasonable belief as contemplated under Section 147 /148 of the Act must be that of an honest and reasonable person based upon reasonabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) Krupesh Ghanshyambhai Thakkar Vs. Dy. Commissioner of Income Tax, (2017) 77 taxmann.com. 293 (Guj.) 11.On the other hand, learned Senior Counsel Mr. Manish Bhatt appearing for the revenue vehemently opposed the writ application, contending that the assessing officer was in receipt of information from the Investigation wing I CI wing through AIMS Module of the ITBA, that the writ applicant had sold 2900 penny stock shares of Karma Ispat Ltd., worth of ₹ 7,99,530/- during A.Y 2012-13 and after in depth investigation into the transaction of the scrip of Karma Ispat Ltd., it was found that the transaction was penny stock and the assessee had 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 this background of the facts, the writ applicant is the beneficiary of the accommodation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the case of the assessee is reopened under Section 147 of the Act, since the information dated 02.04..2013 received from ITO (CIB-1), Mumbai at DIT (I CI, Mumbai) that as per the penny stock transaction data, the assessee had sold 2900 shares of Karma Ispat Ltd., for the consideration of ₹ 7,99,530/-. After receiving the information, the assessing officer made enquiries and gathered the information of the assessee and noticed that, the shares sold by the assessee are penny stock. The assessing officer has observed that, the transactions with the Karma Ispat Ltd. being a penny stock transactions, he has reason to believe that the income of ₹ 7,99,530/- chargeable to tax has escaped assessment. While forming the opinion with regard to income has escaped assessment, the assessing officer has noticed that the price rise in the shares of Karma Ispat Ltd, for the relevant year had not been supported by financial fundamental scrip and there was a manipulation by group of syndicate like promoters, brothers and controllers who played major role in rising the price for fictitious long term capital gain and the assessee has availed accommodation of entry to the tune of sale co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xt, 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 the present case, we are of the view that, the facts mentioned in the affidavit by the revenue could not be termed as new ground or new reasons to supplement the reasons recorded by the AO. Therefore, the contention raised by the learned counsel for the writ applicant that, by way of affidavit in reply, the revenue has improved the reasons recorded, has no any merit and cannot be accepted to hold that, the exercise to reopen the assessment is without jurisdiction. 20.The next contention is that, the assessing officer fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lieve 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 after the hearing and while reaching the final conclusion on the basis of the intervening enquiry. At the stage where he finds a cause or justification to believe that such income has escaped assessment, the assessing officer is not required to base his belief on any final adjudication of the matter . And, .....His formation of belief is not a judicial decision but an administrative decision. It does not determine anything at the initial stage, but the assessing officer has a duty to proceed so as to obtain, what the taxp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. 26. In view of the foregoing reasons and considering the facts and circumstances of the present case, we have no hesitation to hold that it could not be said to have that there was no material or grounds before the assessing officer and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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