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2016 (7) TMI 970 - GUJARAT HIGH COURT

2016 (7) TMI 970 - GUJARAT HIGH COURT - [2016] 386 ITR 222 - Validity of reopening an assessment - reasons to believe - undisclosed investment - Held that:- Assessing Officer in the reasons recorded has referred to is the notice issued to assessee for production of details regarding investment of ₹ 25 lacs made in Reliance Mutual Funds; that the assessee did not attend or submit the details regarding the transaction. He was therefore, of the opinion that investment remained unexplained and .....

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estment was very much part of the books of audited accounts of the assessee. If the Assessing Officer had perused such accounts, his anxiety that such investment may not have been reflected in the books would have been taken care of. Even when the petitioner pointed out this fact to the Assessing Officer in the letter of objection, the Assessing Officer did not advert to this issue while disposing of such objections. Surely, having once issued the notice for reopening, it was not impermissible f .....

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regularities, has not come in the reasons recorded and such ground therefore, cannot be examined to support the notice for reopening. - Decided in favour of assessee - SPECIAL CIVIL APPLICATION NO. 4774 of 2016 - Dated:- 20-7-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR SN DIVATIA, ADVOCATE FOR THE RESPONDENT : MRS MAUNA M BHATT, ADVOCATE ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged a notice dated 31.3.2015 issued by the resp .....

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igation Directorate has sent the commission u/s.131(1)(d) to the Ahmedabad Directorate to investigate the cases related to the Sant Shri Asharamji Ashram Ahmedabad based assessee. The DDlT(lnv.), Unit2( 2), Ahmedabad has issued the summons and served on 30/03/2015, asking the assessee to explain the documents which were received from the Surat authorities and the assessee was specifically asked to explain, if the investment of Reliance Mutual Fund of ₹ 25 lacs were recorded in the regular .....

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submitted any details regarding the said transaction. Hence, the sources of investment remain unexplained and needs to be verified. The above points required to be examined in details, after obtaining evidence from the assessee. I have therefore reason to believe that income chargeable to tax has escaped assessment for A.Y.200809 and intend to reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to the notice subsequently in the course of .....

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audited annual accounts filed by the ssessee along with its return. Thus even the facts to not require a reopening of the assessment that too when this information was being verified by the DDIT and not A.O. That when an assessee is summoned by an authority on any particular date, How another Authority being the A0 in the present case drafts a note bearing the reasons for reopening based on such summons. These facts highlights that the note is merely an afterthought. Also as the notice u/s 148 w .....

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.03.15. In the meantime, the Investigation Wing Unit2( 2), Ahmedabad who had territorial jurisdiction over the case of the assessee in his capacity had issued summons u/s 131 of the Act dated. 30.03.2105 to verify certain facts relating to the assessment year 2008-08. Both have independent jurisdiction over the case of the assessee. The Investigation Wing has jurisdiction with respect to the issues arising out of investigation on the basis of information he had. On the. other hand, the then Asse .....

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e further submitted that the reasons are vague and would not permit the Assessing Officer to reopen the assessment on such basis. For examining the details, the assessment cannot be allowed to be reopened. In short, the Assessing Officer cannot be stated to have reasons to believe that income chargeable to tax had escaped assessment. Drawing our attention to the documents filed by the petitioner trust along with the return for the assessment year in question, he submitted that audited accounts i .....

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15. This notice was served only at 5:20 in the evening and due to shortage of time, the representative of the petitioner could not remain present and on the next date without verifying the original records, impugned notice for reopening the assessment came to be issued. Counsel submitted that in the objections raised by the petitioner also, it was brought to the notice of the Assessing Officer that the said investment was duly reflected in the books of accounts. The Assessing Officer while dispo .....

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judgements that validity of notice for reopening an assessment must be judged on the basis of reasons recorded by the Assessing Officer for issuing such notice. The action cannot be supported on the basis of materials outside of the reasons recorded. Division Bench of this Court in case of Dishman Pharmaceuticals and Chemicals Limited v. Deputy Commissioner of Incometax (OSD) (No.1) reported in (2012) 346 ITR 228 (Guj) has observed as under : 8. From the above judicial pronouncements, following .....

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ar, or to disclose fully and truly all material facts necessary for assessment of that year. (ii) Both the above conditions are conditionprecedent and must be satisfied simultaneously before the Incometax Officer can assume jurisdiction to reopen assessment beyond four years of the end of assessment year. (iii) Such reasons must be recorded and if the reasons recorded by the Assessing Officer do not disclose satisfaction of these two conditions, reopening notice must fail. (iv) There is no set f .....

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ment would be fatal, if on the basis of reasons recorded, it can be culled out that there were sufficient grounds for the Assessing Officer to hold such beliefs. (v) Such reasons must emerge from the reasons recorded by the Assessing Officer and cannot be supplied through an affidavit filed before the Court. However, Gujarat High Court in the case of Aayojan Developers v. Income Tax Officer [Supra] has accepted the view that to elaborate such reasons already recorded, reference would be permissi .....

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charges his duty of stating all the primary facts, what inferences and conclusions should be drawn is the duty of the Assessing Officer. (vi) At the time of ascertaining whether the notice was validly issued, what could be the probable conclusion of fresh assessment if reopening is permitted, is not the inquiry of the Court. In other words, the merits of the proposed action, through opening of the assessment, cannot be gone into by the court beyond prima facie stage. 8. In context of reopening o .....

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to have formed any opinion and that therefore, the principle of change of opinion in such cases would not apply. However, even in such a case, the requirement of the Assessing Officer having some material at his command to enable him to form a belief that income chargeable to tax has escaped assessment, would apply. In case of Inductotherm (India) P. Ltd. v. M. Gopalan, Deputy Commissioner of Income tax reported in (2013) 356 ITR 481(Guj), Division Bench of this Court observed as under : 13. Des .....

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as reason to believe that any income chargeable to tax has escaped assessment for any assessment year. This power to reopen assessment is available in either case, namely, while a return has been either accepted under section 143(1) of the Act or a scrutiny assessment has been framed under section 143(3) of the Act. A common requirement in both of cases is that the Assessing Officer should have reason to believe that any income chargeable to tax has escaped assessment. 9. Bearing in mind these p .....

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ence from the assessee and it was for this purpose that the Assessing Officer resorted to reopening of the assessment. 10. In a given case it may be possible for the Assessing Officer to reopen the assessment on the ground that the assessee failed to cooperate with the notice for inquiry which would prima facie establish that there was some material suggesting escapement of income chargeable to tax. In the present case, however, it is not necessary to examine this fine legal issue. This is becau .....

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