TMI Blog2007 (10) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... at Delhi on 4-3-2003. In the course of the survey, it appears that Shri Sanjay Rastogi admitted of having floated a number of companies to provide accommodation entries to various entities. The Assessing Officer in the present case received the information from the investigation wing that the assessee-company was one such front company of Shri Sanjay Rastogi. Shri M.S. Rastogi the father of said Shri Sanjay Rastogi is a Director of the assessee-company. The said Shri Sanjay Rastogi admitted before the Investigation Wing that various entities approached him or his associates for obtaining bogus entries of either sales or purchases or for seeking commission income, etc. He also stated that a few private limited companies were used as a conduit for execution of such entries/transactions. On the basis of the aforesaid the Assessing Officer issued notices under section 148 of the Act for the assessment years 1998-99, 1999-2000, 2000-01 and 2001-02 on 16-3-2004 for bringing to tax income escaping assessment. The assessments have been thereafter framed under section 144, read with section 147 of the Act on 30-3-2005 for the said four assessment years. For the assessment year 2002-03 the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the conditions of the said section. Secondly, it was also contended that the Assessing Officer erred in invoking the provisions of section 147/148 without satisfying the conditions laid down in the said sections. Thirdly, the various additions made were also contested on merits. The CIT(A) has since dismissed the stand of the assessee on all issues raised before him. Against the aforesaid the assessee is in appeal before us. 4. Before us the first and foremost submissions of the Ld. Counsel Shri B.L. Gupta is that the Assessing Officer has wrongly assumed jurisdiction under section 147/148 of the Act. According to him the reasons furnished do not show formation of belief by the Assessing Officer that any income had escaped assessment. Our attention has been drawn to the reasons supplied to the assessee, which are placed in the Paper-book. The Ld. Counsel contended that the reasons merely record certain transactions in the bank accounts maintained by the assessee. It was argued that mere existence of entries in the bank account cannot lead to a conclusion that any income had escaped the assessment. Reliance was placed on the following decisions of the Tribunal ( i ) Delhi Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of recording of reasons and issuance of notice under section 148 only a prima facie belief is required to be entertained by the Assessing Officer regarding escapement of income, which in the present case stood satisfied on account of the information from the Investigation Wing of the department. The Ld. DR has relied upon the decisions of the Hon ble Supreme Court in the case of Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456 , Sri Krishna (P.) Ltd. v. ITO [1996] 221 ITR 538 and Mahanagar Telephone Nigam Ltd. v. Chairman, CBDT [2000] 246 ITR 173 (Delhi). With regard to the non-fulfilment of the conditions mentioned in section 144, the Ld. DR submitted that although no notice under section 142(1) was issued before completion of assessment but a number of opportunities were provided by the Assessing Officer before finalizing the assessment. According to the Ld. DR the arguments of the assessee, on this aspect at best can be treated as technical default which does not vitiate the entire assessment. With regard to the merits of the additions, the Ld. DR submitted that in the absence of any explanation regarding the source of cash deposits in the bank account, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year. The authorities on the meaning of the expression reason to believe are many and in our view having noted as above, it would not serve any purpose to multiply authorities in this regard. 8. In the above background, we may come back to the facts of the instant case and look at the reasons weighing with the Assessing Officer in the present case to re-open assessment. What we find is that the primary reason weighing with the Assessing Officer was the result of the survey conducted by the Investigation Wing on the business premises of one Shri Sanjay Rastogi on 4-3-2003. In the course of the survey the said Shri Sanjay Rastogi admitted of being engaged in providing of bogus/ accommodation entries to various entities in the shape of purchase and sale or commission incomes etc. From the discussion in the assessment year as also from the reasons recorded, it is noticed that the said Shri Sanjay Rastogi admitted, of having floated a number of front companies which acted as a conduit, to provide accommodation entries to various entities. The said Shri Sanjay Rastogi purportedly identified the assessee-company before us as one such front company. Shri M.S. Rastogi, father of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer recorded a satisfaction under section 147 and proceeded to issue notice of reassessment under section 148 of the Act. The Tribunal found that there was no averment by the Assessing Officer as to whether such transactions resulted into any income escaping assessment or not. The Tribunal further noted that the reasons were recorded so as to re-open assessment and thereafter make further enquiries to arrive at a finding that certain income had escaped assessment. In other words the Tribunal, on facts, found that on the basis of material available at the time of recording of reasons, a belief could not be entertained that certain income had escaped assessment. In the present case, as we have seen earlier, the requisite enquiries were made by the Investigation Wing of the Department before recording of reasons by the Assessing Officer. It was on the basis of investigations carried out that the Assessing Officer entertained a prima facie belief that certain income had escaped assessment. Thus, on facts, the decision of the Tribunal in the case of Bangalore Polymers Ltd. ( supra ) does not help the case of the assessee. Similarly, reliance placed by the assessee on the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned assessment is as a consequence to a notice issued under section 148 on 16-3-2004. According to the assessee and factually there is no dispute to it, the assessee did not file a return in response to the notice under section 148 dated 16-3-2004. Thus, it is contended that clauses ( a ) and ( c ) of section 144(1) are not attracted. Similarly it is submitted that the Assessing Officer did not issue any notice under section 142(1) or a direction under section 142(2A) and thus clause ( b ) is also not attracted. Thus, it is canvassed that the defects triggering the invoking of section 144 do not exist in the present case. 12. On this aspect we have carefully considered the stand of the assessee. The pertinent fact is that the assessee did not file the return in response to notice issued under section 148 of the Act. The issuance of such notice has culminated in the impugned assessment. In this context we may refer to the phraseology of section 148 which empowers the Assessing Officer to call for the return of income after recording of reasons in terms of section 147 of the Act. In sub-section (1) of section 148 the following expression exists : "The provisions of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Section 147 of the said Act predicates the existence of such material. Where an assessee does not respond to a notice under section 148 of the said Act, the taxing authority is obliged to determine the assessee s income as best as it can based, on that material. There is no real difference between the manner in which the taxing authority reaches its conclusions under the provisions of section 144 and section 147. Both are assessments made to its best judgment. It is open to the assessee to argue that the material does not support the assessment made under section 147 as under section 144. There is, therefore, no merit in the submission that the words so far as may be in section 148 exclude the applicability of the provisions of section 144 to an assessment made under section 147." Therefore, merely because the jurisdiction to make an assessment has been invoked under section 147/148, the same does not exclude the applicability of section 144 to the assessment proceedings. As a consequence we are unable to accept the plea of the assessee that the invoking of section 144 in the present case was void ab initio. On the contrary, the assessment has been made under section 144 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o deal with the other grounds of the assessee relating to merits of the additions. As a consequence, the order of the CIT(A) on those issues is also set aside and the Assessing Officer shall make an assessment afresh after complying with the provisions of section 144. 18. Thus, the appeal of the assessee in ITA No. 2829/Delhi/06 stands partly allowed. 19. Now, we take up for consideration the appeal of the assessee for the assessment year 1999-2000 (ITA 2830/Delhi/06). In this case the assessee filed a return of income on 30-12-1999 declaring total income of Rs. 13,700. Herein also, subsequent to the issuance of notice under section 148 to the assessee on 16-3-2004, no return of income was filed by the assessee. The Assessing Officer records in the assessment order that notices under section 143(2) fixing the case for various dates were served but with no response. It is further noted that summons under section 131 was also issued to the assessee but there was no response. In the absence of any response, the Assessing Officer has proceeded to complete the assessment under section 144 of the Act on the basis of the material on record. Accordingly, he has brought to tax sums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee in ITA 2830/Delhi/06 is partly allowed. ITA Nos. 2831/Delhi/06 and 2832/Delhi/06 25. Insofar as the appeals of the assessee for assessment years 2000-01, 2001-02 in ITA Nos. 2831 and 2832/Delhi/06 respectively are concerned, the same are taken up together as the fact situation stands on identical footing. The first grievance of the assessee is against assumption of jurisdiction by Assessing Officer for issuance of notice under section 148 on 16-3-2004. Insofar as the challenge of the assessee is based on reasons considered by us in the appeal for assessment year 1998-99 is concerned, we do not find any merit in the present ground of the assessee. So, however, the assessee has taken an additional plea to challenge the assumption of jurisdiction for issuance of notice under section 148 in the following lines. According to the assessee the requirement of section 151(2) has not been complied with in the present case. According to the assessee the notice under section 148 has been issued without obtaining sanction of competent authority in the manner required in section 151(2) of the Act. For this our attention has been drawn to copy of the reasons recorded where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction by the Assessing Officer by issuance of notice under section 148 of the Act. 28. With regard to the framing of assessment by recourse to section 144 of the Act, herein also admittedly the Assessing Officer has not issued a notice to the assessee as required in the proviso below section 144(1) of the Act. Following our decision in the earlier assessment years, herein also we set aside the order of the CIT (Appeals) and direct the Assessing Officer to make fresh assessment after complying with requirements of section 144 of the Act. 29. In the result, the appeals of the assessee for assessment years 2000-01 and 2001-02 are partly allowed. ITA 2833/Delhi/06, A.Y. 2002-03 30. Now we take the appeal of the assessee for assessment year 2002-03 in ITA No. 2833/Delhi/06. In this case, the return of income was filed by the assessee on 30-10-2002 declaring an income of Rs. 3,150. The assessment in this case has been completed by the Assessing Officer under section 144 of the Act. Herein also the plea of the assessee is that before completing best judgment assessment the show cause prescribed in terms of the proviso to section 144(1) was not issued to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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