TMI Blog2015 (10) TMI 1767X X X X Extracts X X X X X X X X Extracts X X X X ..... A DEVANI AND MR. A.G.URAIZEE, JJ For the Petitioner : Mr SN Soparkar, Senior Advocate And Mr B S Soparkar, Advocate For the Respondent : Mr Nitin K Mehta, Advocate JUDGMENT PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. Rule. Mr. Nitin Mehta, learned senior standing counsel waives service of notice of rule on behalf of the respondent. Having regard to the facts of the case and the controversy involved in the present case, which lies in a very narrow compass, with the consent of the learned counsel for the respective parties, the matter was taken up for final hearing. 2. The petitioner is an export house engaged in the business of import/export of agro-commodities and is also engaged in the generation of power. The petitioner filed its return of income on 8.11.2007 for the assessment year 2007- 08 declaring total loss at ₹ 39,76,56,625/-. Subsequently, a revised return of income came to be filed on 11.8.2008 declaring total loss of ₹ 92,92,03,429/-. The return was selected for scrutiny and subsequently, the Assessing Officer framed assessment under sub-section (3) of section 143 of the Income tax Act, 1961 (hereinafter referred to as the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of powers under section 147 of the Act. Referring to the reasons recorded, it was pointed out that the petitioner is an associate of M/s. IPOG International and M/s. Benmos Commodities and has entered into substantial cash transactions, as depicted in the reasons recorded. It was submitted that while the petitioner has made cash withdrawals to the extent of ₹ 2,54,00,000/-, the petitioner has not been able to justify the reason for such cash withdrawals and utilisation to the Deputy Director of Income Tax (Investigation) during the course of investigation. It was submitted that it is for this reason that the Assessing Officer has formed a belief that income to the extent of ₹ 2,54,00,000/- has escaped assessment within the meaning of the said expression, as envisaged under section 147 of the Act. The attention of the court was invited to the letter dated 10.2.2014 from the original record of the Department to submit that the petitioner has suppressed material facts and that the Assessing Officer was, therefore, justified in invoking the provisions of section 147 of the Act. 5. In rejoinder, Mr. Soparkar, learned counsel for the petitioner made reference to the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer could have formed a reasonable belief that the said amount had escaped assessment. The purported belief that income has escaped assessment is not based on any direct or circumstantial evidence and is in the realm of mere suspicion. The requirement of law is reason to believe and not reason to suspect . In the present case, since the purported reasons to believe recorded indicate that the Assessing Officer has acted on mere surmise, without any rational basis, the action of reopening of the Assessment is thus clearly contrary to law and is unsustainable. 5.1 It was submitted that, therefore, any attempt on the part of the respondent to substantiate reopening on the basis of the original file of the Department is not permissible. It was contended that the reasons must ex facie show that income has escaped assessment and that in the present case, the reasons do not disclose any escapement of income. 6. Before adverting to the merits of the case, reference may be made to the reasons recorded by the Assessing Officer for reopening the assessment for assessment year 2007-08, which read thus :- In this case, information has been received from the offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I am satisfied that this is a fit case for issuing notice u/s.148 of the Act. 7. The notice under section 148 of the Act has been issued on 24.3.2014 in relation to assessment year 2007-08 and hence, the same has clearly been issued beyond a period of four years from the end of the relevant assessment year. Under the circumstances, it is only if there is any failure on the part of the assessee to disclose fully and truly all material facts, that the Assessing Officer can assume jurisdiction under section 147 of the Act provided the other requirements of the section are satisfied. 8. Section 147 of the Act provides that if the Assessing Officer, has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceeding under that section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned. 9. On a plain reading of the above provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 147 of the Act. Thus, from the reasons recorded, there is nothing to indicate that any income chargeable to tax in the case of the assessee has escaped assessment. The sole basis for reopening the assessment is that the petitioner assessee has withdrawn an amount of ₹ 2,54,00,000/- in cash and has not explained the utilisation. Thus, cash withdrawals from bank accounts maintained by the assessee have been termed as escapement of income by the Assessing Officer. One fails to comprehend as to how the cash withdrawals from accounts maintained by the assessee can be said to amount to escapement of income within the meaning of section 147 of the Act, as stated by the Assessing Officer, when it is not the case of the Assessing Officer that the amount deposited by the assessee in its bank accounts is undisclosed income. 11. The learned counsel for the respondent has emphatically argued that investigations have revealed suspicious transactions into which the assessee has entered into. If that be so, nothing prevents the respondent from investigating further and taking due action in respect thereof. However, mere cash withdrawals from the accounts maintained by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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