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TMI Blog2011 (10) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... Year 2007-08. The Assessing Officer issued a notice on 29 March 2010 proposing to reopen the assessment for Assessment Year 2005-06. Before the Court it is not in dispute that a similar notice was issued on the same day, by which the assessment for Assessment Year 2006-07 was sought to be reopened on the ground that the income chargeable to tax had escaped assessment within the meaning of Section 147. On the request of the assessee, the reasons on the basis of which the assessment was sought to be reopened have been disclosed under a communication dated 8 April 2010. Those reasons are extracted herein below for convenience of reference: "In this case the assessment for the A.Y. 200506 was comp" leted on 31.12.2007 determining total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income Rs.57,35,85,591/- As per Impounded books of account Rs.55,97,71,003/- Excess expenditure claimed Rs. 1,38,14,588/- B. The following discrepancies are also noticed in the account wherein tax evasion is involved which could not be verified/quantified due to non submission on the part of the assessee and which require verification/investigation:- i) As per impounded books of account there is negative balance in cash book; ii) Short deduction of TDS; iii) Personal expenses deserve to be disallowed; iv) Difference in exchange rate fluctuation as per impounded books of account and financial statements attached with the return of income; v) Difference in balance under the head cash balance in ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. 4. Counsel appearing on behalf of the Petitioner submits that the reopening of the assessments for Assessment Years 2005-06 and 2006-07 is on similar grounds and hence, the conclusion which the Court arrives at in the first petition would have to govern the second. On behalf of the Petitioner it has been submitted that; (i) In the reasons disclosed for reopening the assessments for Assessment Years 2005-06 and 2006-07 the Assessing Officer had emphasised that the documents which were impounded during the course of survey operation under Section 133A indicated upon verification certain discrepancies between the documents as impounded and the financials as disclosed in the return. This stand, it was urged, has been changed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether there was tangible material on the basis of which the Assessing Officer could form a reason to believe that income had escaped assessment. In the present case, the answer to that test must be in the affirmative and hence, no case for interference under Article 226 of the Constitution has been made out. 6. The reopening of the assessment in the present case is admittedly within a period of four years of the end of the relevant Assessment Years, 2005-06 and 2006-07. When the reopening takes place within a period of four years of the relevant Assessment Year, the powers of the Assessing Officer are substantially wider than when a reopening is beyond a period of four years. Nonetheless, the power to reopen an assessment cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer. Hence, after 1st April 1989, the Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief." 7. In a judgment of a Division Bench of this Court in Dr. Amin 's Pathology Laboratory v. P.N. Prasa, Joint Commissioner of Income Tax (2001) 252 ITR 673 Hon'ble Mr. Justice S.H. Kapadia (as the learned Chief Justice of India then was) speaking for a Division Bench of this Court had emphasised that a reason to believe that income has escaped assessment has to be the reason of a prudent person. Consequently, if as a result of information received by the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 2009. During the course of the survey certain documents came to be impounded. The Assessing Officer noted that during the course of the proceedings for Assessment Year 2007-08 extracts of the books of account which were found in an impounded C.D. were taken for the period relevant to the Assessment Years to which these proceedings relate. These were verified with the financial statements filed with the return of income. Discrepancies have been revealed in respect of three heads in particular : (i) Difference in interest income; (ii) Difference in miscellaneous receipts; and (iii) Cash payment disallowable under Section 40A(3), being payments in excess of Rs. 20,000/. 10. According to counsel appearing on behalf of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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