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2016 (9) TMI 559 - HC - Income TaxReopening of assessment - complaint contained allegations of a private citizen [directors of the petitioner-company] - Held that:- What the Assistant Director communicated to the Assessing Officer in the present case was a private complaint making serious allegations of fraud and financial irregularities against the directors of the petitioner-company. Such allegations by itself would not make a valid ground to reopen the assessment unless coupled with some further reliable material. If the investigation wing had carried out any inquiry after receipt of such a private complaint, the contents thereof are not on record before us and at any rate, never brought to the notice of the Assessing Officer. Before the Assessing Officer there were only two documents. First was the said undated complaint inwarded in the department on 05.03.2008 and second was the covering letter of the Assistant Director of Income Tax (Investigation Wing) dated 28.03.2011 along with which the said private complaint was annexed. As noted, a private complaint without any further investigation by the authorities surely not be a tangible material to enable the Assessing authority to form a belief that income chargeable to tax had escaped assessment. Letter of Assistant Director (Investigation) also did not contain any further material regarding the allegations made by the complainant. In the said letter, he merely brought to the notice of the Assessing Officer that during investigation in connection with the said complaint against Shri Jugal M. Biyani and Shri Rajesh R Bansal, it was found that there were allegations of the assessee-company having claimed undue rebates from the Central Excise department. This letter was addressed on 28.03.2011. Notice under Section 148 of the Act was getting time barred on 31.03.2011. The Assessing Officer was, therefore, under time pressure. He mechanically issued the notice for reopening relying on these two documents. Neither of these two documents contained any material regarding the irregularities of the assessee-company. The complaint contained allegations of a private citizen. The letter of the Assistant Director contained no further information on the issue of reliability of the allegations made in the complaint. Though this letter referred to some findings concerning the assessee during the investigation into the complaint, no such material was placed at the disposal of the Assessing Officer. Assessing Officer stressed the need to verify the accounts of the assessee. In the affidavit in reply filed in this petition also, similar stand was taken by the Assessing Officer while stating that on basis of said information, the detail verification in this regard is absolutely necessary to find out the possibility of escapement of income for the assessment year 2004-05. There is a possibility of a nexus between the petitioner, its directors and other firms to systematically earn hidden income by claiming rebate from the Central Excise Department and evade their liability to pay income tax. All along therefore, the Assessing Officer desired to reopen the assessment to verify whether there had been evasion of tax, surely a purpose for which, the power of reopening cannot be resorted to. - Decided in favour of assessee
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