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M/s. Hemant Traders Versus Income Tax Officer, Ward 23 (3) (1) , Mumbai

Reopening of assessment - assessee resorting to hoarding of potatoes and making huge profits by fluctuating the day to day price of potatoes in the market - Held that:- During the course of survey, the Assessee's manual books of accounts, cash balance, stock etc. were physically verified and inventory was prepared. The backup of the books of accounts maintained on computer has been taken and impounded for further verification. The details of the group's bank accounts have been obtained and kept .....

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come chargeable to tax for the relevant assessment year has escaped assessment. The Assessing Officer, therefore, had nothing before him which would enable him to record his belief that any such escapement has taken place. In the circumstances, the reasons recorded and which pertain to all the assessment years prior and subsequent to the survey can hardly satisfy requirement in law. This is not how the power under section 147 should be exercised.That is to be exercised and in exceptional cases. .....

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is absolutely no material to institute the proceedings or issue the notice proposing reassessment of income, then, it is the duty of the Court to interfere and quash the proceedings at the threshold. In these circumstances, this Writ Petition is allowed. - Decided in favour of assessee. - Writ petition No. 2308 of 2015, Writ Petition No. 2311 of 2015 - Dated:- 31-3-2015 - S. C. Dharmadhikari And A. K. Menon,JJ. For the Appellants : Ms Ritika Agarwal & K D Jadhwani For the Respondent : Mr S .....

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declare the notice issued under section 148(2) as invalid and illegal and not in conformity with law." 4. The facts and circumstances in which these reliefs are sought are that the Petitioner is a partnership firm registered under the Indian Partnership Act, 1932. It is registered as a commission agent of the Onion Potato Market under the Agricultural Produce Market Committee, Vashi, Navi Mumbai. The Petitioner firm is regularly assessed to income tax. The Petitioner filed a return of incom .....

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o ₹ 13,81,880/- was accepted. 5. In the meanwhile, the survey action under section 133A of the Income Tax Act, 1961 was carried out on 7th January, 2011 at the business premises of the Petitioner at Navi Mumbai. This was pertaining to the assessment year 2011-12. The survey party did not find any discrepancy in the books of accounts. The survey report (Annexure C) dated 2ndApril, 2002 was forwarded by the Deputy Director of Income Tax (Investigations) UnitIV, Mumbai to the first Respondent .....

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nt year 2010-11. In response to this notice, the Assessee sought the reasons for reopening of the assessment by an application dated 23rd May, 2014. A copy of which is marked at page 82 of the paper book. 7. However, on 30th June, 2014 the Income Tax Officer sought certain information and production of documents from the Assessee. The Assessee replied to the same and pointed out that a copy of the 'reasons recorded' have not been supplied and reiterated the said demand. 8. Thereupon the .....

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rded to this office, the case is reopened under section 147 of the Income Tax, 1961 for Assessment Year 2009-10, 2010-11 and 2011-12. Notice under section 148 of the Income Tax Act, 1961 is hereby issued to the Assessee." 10. The Petitioners counsel would submit that there are no reasons much less leading to a belief that income chargeable to tax has escaped assessment. The survey report is made the basis for reopening the assessment and for assessment years 2009-10, 2010-11 and 2011-12. Th .....

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t is pointed out as to how this notice was justified. The reason for issuing it may be the survey and the report thereof but there is an independent satisfaction that income chargeable to tax has escaped assessment. In such circumstances, she submits that the PetitionerAssessee should appear before the Income Tax Officer and he has all opportunity in law to raise contentions challenging the reassessment and on merits. At this stage, this Court should not interfere in writ jurisdiction and merely .....

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risation dated 7/1/2011 which records that there is a group of Assesses which is engaged in wholesale trading of Potato on commission basis. The survey was conducted based on the allegations that these parties are resorting to hoarding of potatoes and making huge profits by fluctuating the day to day price of potatoes in the market. During the course of survey, the Assessee's manual books of accounts, cash balance, stock etc. were physically verified and inventory was prepared. The backup of .....

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sical stock of 672 bags of potato was found. The explanation for the same is recorded. 13. Thus, neither the survey report nor any other material indicates that any income chargeable to tax for the relevant assessment year has escaped assessment. The Assessing Officer, therefore, had nothing before him which would enable him to record his belief that any such escapement has taken place. In the circumstances, the reasons recorded and which pertain to all the assessment years prior and subsequent .....

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