Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2021 (3) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (3) TMI 900 - GUJARAT HIGH COURTReopening of assessment u/s 147 - assessee has received shareholders' funds from the Kolkata based shell companies - proof of proper application of mind in according sanction under Section 151 of the Act for the purpose of issue of notice under Section 148 - whether the notice of re-opening issued under Section 148 of the Act should be quashed and set-aside? - HELD THAT:- The return filed by the assessee was accepted without scrutiny. Since there was no scrutiny assessment, AO had no occasion to form any opinion on any of the issues arising out of the return filed by assessee. The concept of change of opinion would, therefore, have no application. It is equally well settled that at the stage of reopening of the assessment, the court would not minutely examine the possible additions which the AO wishes to make. The scrutiny at that stage would be limited to examine whether the AO had formed a valid belief, on the basis of the materials available with him, that the income chargeable to tax had escaped assessment. AO has considered the materials on record which would, prima facie, suggest that during the year under consideration there was a huge hike in the amount of the share capital and share premium of the assessee company. The assessee received the amount of share capital and share premium from the Kolkata based shell companies, namely, Prime Vyapaar Pvt. Ltd. and Asha Apartments Pvt. Ltd. respectively. The Assessing Officer, prima facie found, based on the materials on record and the information received, that total share capital of ₹ 40 lakh was received during the year under consideration. On verification of the details of the investors companies, it was found, prima facie, that the same was controlled by one Kolkata based accommodation entry provider, namely Manoharlal Nangalia. In a statement recorded by the department, Manoharlal Nangalia is said to have admitted to the fact that his main business is to provide accommodation entries through shell companies to various beneficiaries in lieu of commission. For mere verification or for a fishing inquiry re-opening of the assessment is not permissible. However, such is not the case on hand. It cannot be said to be a fishing inquiry. There is some tangible material as on date in the hands of the Assessing Officer, and the Assessing Officer, after due application of mind, has recorded a satisfaction of his own that the income has escaped the assessment. It is not a case of mere change of opinion or drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since the belief is that of the Income Tax Officer, the sufficiency of reasons for forming the belief is not for the Court to judge but it is open to an assessee to establish that there, in fact, existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the Court may look the conclusion arrived at by the Income Tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by him and further whether that material had any rational connection or a live link with the formation of the requisite belief. - Decided against assessee.
|