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SAMPATRAJ DHARMICHAND JAIN Versus INCOME TAX OFFICER

2016 (7) TMI 67 - GUJARAT HIGH COURT

Reopening of assessment - series of deposits in the accounts unexplained - Held that:- Reopening of an assessment cannot be resorted to for roving or fishing inquiry. The Assessing Officer must have some tangible material at his command to form a belief that income chargeable to tax has escaped assessment. In the present case, this requirement was not satisfied. The Assessing Officer made no effort to find out the assessee and to serve him at his permanent address given to the department which w .....

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ter at the address given in the bank account without any further effort to trace the assessee at his permanent address declaration by the Revenue authorities would not be sufficient to enable the Assessing Officer to jump to the conclusion that such entries remained unexplained and that therefore, there was valid reason to believe that income chargeable to tax has escaped assessment. The element of failure on part of the assessee to disclose truly and fully all material facts would also depend s .....

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08-09. Brief facts are as under. 2. Petitioner is a proprietor of firm M/s Sai Export and is engaged in the business of diamond trading. For the assessment year 2008-09, the petitioner had filed return of income on 08.08.2008, declaring total income of ₹ 1,93,970/- . Such return was taken in scrutiny by the Assessing Officer who framed assessment under section 143(3) of the Income Tax Act, 1961 ('the Act' for short) on 30.08.2010. To reopen such assessment, the Assessing Officer is .....

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ya Bank, Nariman Point Branch, Mumbai in the CA No.500011022938 as the address mentioned in the bank statement was 320B, 3rd Floor, Amrit Diamond House, Tata Road No.1, Opera House, Mumbai. In response, the DDIT(Inv), Unit 7(1), Mumbai stated that the whereabouts of Shri Sampatraj Dharmichand Jain, Prop. Of M/s. Sai Exports could not be traced out hence, verification of the transactions appearing in bank statement whether reflected in the books of account or not, could not be done. 3. On perusal .....

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ficer, the petitioner raised objections to the process of reopening under a communication dated 01.02.2016. Such objections were however rejected by an order dated 04.03.2016, upon which, the petitioner has filed this petition. 5. We may notice that the impugned notice has been issued beyond a period of four years from the end of relevant assessment year. Under such circumstances, in addition to the Assessing Officer forming a reason to believe that income chargeable to tax has escaped assessmen .....

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concern with Ing Vysya bank at Nariman point branch, Mumbai. Such notice was issued at the address mentioned in the bank statement. It was however stated that whereabouts of the proprietor of the Sai Export i.e. the present petitioner could not be traced and therefore, verification of the transactions appearing in the bank statement whether they were reflecting in the books of accounts could not be done. The reasons further record that between 03.04.2007 to 06.12.2010, there were debit entries o .....

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iven in the bank account returned unserved, would not be sufficient to enable the Assessing Officer to form a belief that the income chargeable to tax has escaped assessment. He further submitted that the bank account was duly reflected in the audited books of accounts of the assessee and all entries were duly reflected in such accounts. The notice for reopening issued beyond a period of four years was itself without authority. 8. Learned counsel Shri Sudhir Mehta for the Revenue however submitt .....

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nce, compelling production of books of accounts and other documents and to issue commissions same as those vested in the court under the Code of Civil Procedure. Under section 133 of the Act, the Revenue authorities also have wide powers of requiring any person to furnish information concerning the tax implications. However, before reopening an assessment which has been previously framed after scrutiny, what is essential is that the Assessing Officer must have reason to believe that income charg .....

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levant to assessment in question, there were debit and credit entries in excess to ₹ 114 crores. The Assessing Officer desired to verify whether such transactions were reflected in the books of accounts or not. This the Assessing Officer could not do since the notice could not be served since the addressee was not found at the given address. The reasons therefore record that on account of this, verification of the transactions appearing in the bank account, whether were reflected in the bo .....

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