TMI Blog2016 (8) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... challenge contained in the petition being devoid of merits, same deserves to be dismissed. As we found that for the exercise of power of reopening of assessment after a period of 4 years, a proper procedure is observed by the Authority, specific approval has been obtained from the competent Authority and upon perusal of original file, we have satisfied ourselves that the approval has been accorded in a proper manner by the competent Authority and since the notice is issued based upon substantial compliance of statutory provision, the Authority has acted well within the bounds of his powers and the Authority has issued notice. We found that the order which has been passed of rejecting the objections raised by the petitioner is also a well reasoned order passed after due exercise of jurisdiction and therefore, same is not, therefore, required to be interfered with. - Decided against assessee - SPECIAL CIVIL APPLICATION NO. 3249 of 2016 - - - Dated:- 5-8-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR MANISH J SHAH, ADVOCATE FOR THE RESPONDENT : MR SUDHIR M MEHTA, ADVOCATE CAV JUDGMENT (PER : HONOURABLE MR.JUSTICE A.J. SHASTRI) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is not relevant to the issue in question, the petitioner has chosen not to attach the same. 2.3 The petitioner has further stated that despite the aforesaid scrutiny assessment having been undertaken on 31.3.2015, notice came to be issued under Section 148 of the Act, on the premise that the Authority has reason to believe that the income chargeable to tax on escape assessment and thereby, the petitioner Company is asked to submit the return within a period of 30 days. The petitioner in response to the same, submitted a letter dated 25.4.2015 undertaking that the return of the petitioner has been thoroughly scrutinized and after scrutiny assessment, specific order came to be passed and therefore, the petitioner has requested the Authority to seek the reasons for issuance of notice so that it can comply with and simultaneously the petitioner filed its return on 28.4.2015 in response to the notice of reassessment. Under the letter dated 10.8.2015, the respondent Authority supplied the reasons, which have been recorded and the petitioner against the said reasons, filed objections on 24.8.2015, pointing out inter alia that the petitioner had disclosed fully and truly all mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Authority as and when demanded and there is full disclosure on the part of the petitioner and therefore, by citing the decision of the Hon'ble Apex Court in the case of Calcutta Discount Co. Ltd. Vs. ITO reported in 41 ITR 191 , learned advocate submitted that even if there is an alternate remedy available to the assessee, this Court can examine whether the Authority has acted within bounds of its jurisdiction. On the premise aforesaid, learned advocate submitted that the relief as prayed for deserves to be granted in the interest of justice. 4. As against this, learned advocate appearing on behalf of the respondent Authority Mr. Sudhir M. Mehta has submitted that the Authority has specific reason to believe that the income of the petitioner has escaped assessment within the meaning of Section 147 of the Act. The reasons which are assigned in details, are sufficient enough to permit the Authority to reopen the assessment and therefore, learned advocate submitted that even if it is beyond the period of 4 years in a given case, the Authority can reopen the assessment moment a reasonable cause to open the assessment. Learned advocate for the respondent further submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er proper process has been undertaken by the Authority. In response to the said order dated 13.7.2016, the file initially came to be presented by the respondent authority but file was containing mere xerox copy of format for granting of such approval and therefore, to reensure, we have directed the respondent Authority to place the original file containing the original papers. Pursuant to that instruction, on 27.7.2016, the learned advocate for the respondent has submitted original file to deal with the said subject matter on the issue of approval under Section 151 of the Act. Before adverting ourselves to the contention raised by the respondent Authority, we have gone through the original file and upon perusal, we are satisfied that the proper approval has already been taken by the Assessing Officer in this regard and therefore, we are left with no doubt that before issuance of the impugned notice, the competent Authority has granted approval in consonance with the provisions contained under Section 151 of the Act and therefore, that aspect is appearing to be not in controversy and the papers contained in file are substantiating the stand of the respondent Authority for the issuan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the information received by Assessing Officer, are well known entry operators of Kolkata and are used to give bogus entry with respect to the share capital, bogus deals pertaining to expenses and are also engaged in the activities of giving long term capital gains to various beneficiaries across the country and it has been found and revealed by the Authority that the present petitioner assessee is one of beneficiaries to the extent of ₹ 39.94 Lacs pertaining to Assessment Year 2009-10. This information is received as stated vide communication dated 26.3.2015 and therefore, on the basis of such materials, the Authority has reason to believe that the income of the petitioner has escaped assessment within the meaning of Section 147 of the Act. It is emerged from the records that on the basis of this new material information having been received, the Authority appears to have issued notice for re-assessment. In the background of aforesaid facts, prima facie it appears that it is not a simple case of change of opinion and there appears to be a concrete tangible material in the form of information as stated the Authority has taken a decision to reopen the assessment. This informa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Court is reproduced hereinafter : 16. Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. [1991 (191) ITR 662], for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said aspect and has come to the conclusion that reopening is permissible. In the said group of appeals, the substantial question of law posed before the Court, whether the ITAT was justified in setting aside the reassessment orders on the ground that reopening of assessment under Section 147 of the Act was bad in law. In that particular group of matters, the reopening was initiated by the authority based upon the show cause notice along with accompanied material forwarded by the Excise Department to the Income-Tax Department and on the basis of said material provided by the Excise Department, the Assessing Officer has reopened the assessment of the assessee by issuing notice under Section 148 of the Act. The assessee of that case in the similar manner in this case has contended that the information provided by a different Investigating Team may not be ipso facto utilized to re open the assessment which has become final by the Income-tax authority. It was also contended by the assessee of that case that there was no independent application of mind on the part of Assessing Officer and just based upon said information provided by the Excise Department, the authority resorted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the prevailing market price. The Income Tax Officer on coming to know about the proceedings before the Customs Collector in this respect issued notice for reopening of the assessment. In the reasons that the Assessing Officer relied on the facts as found by the Customs Authorities that the assessee had undervoiced goods during export. Under such circumstances, upholding the validity of the notice for reopening, the Supreme Court held and observed as under: So far as the first condition is concerned, the Income Tax Officer, in his recorded reasons, has relied upon the fact as found by the Customs Authorities that the appellant had under invoiced the goods it exported. It is not doubt correct that the said finding may not be binding upon the income tax authorities but it can be a valid reason to believe that the chargeable income has been under assessed. The final outcome of the proceedings is not relevant. What is relevant is the existence of reasons to make the Income Tax Officer believe that there has been under assessment of the assessee's income for a particular year. We are satisfied that the first condition to invoke the jurisdiction of the Income Tax Officer under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In case of Income Tax Officer vs Selected Dalurband Coal Co. Pvt. Ltd.(supra) , the assessment was reopened on the basis of the information contained in letter from Chief Mining Officer that the colliery of the assessee had been inspected and there had been under reporting of coal raised. Upholding the validity of re-opening of assessment, the Supreme Court held and observed as under: After hearing the learned counsel for the parties at length, we are of the opinion that we cannot say that the letter aforesaid does not constitute relevant material or that on that basis, the Income Tax Officer could not have reasonably formed the requisite belief. The letter shows that a joint inspection was conducted in the colliery of the respondent on January 9,1967, by the officers of the Mining Department in the presence of the representatives of the assessee and according to the opinion of the officers of the Mining Department, there was under reporting of the raising figure to the extent indicated in the said letter. The report is made by a Government Department and that too after conducting a joint inspection. It gives a reasonably specific estimate of the excessive coal mining said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he DIT (INV-V) as regards the transactions entered into by the assessee company with number of concerns which had made accommodation entries and they were not genuine transactions. As we perceive, it is neither a change of opinion nor does it convey a particular interpretation of a specific provision which was done in a particular manner in the original assessment and sought to be done in a different manner in the proceeding under Section 147 of the Act. The reason to believe has been appropriately understood by the assessing officer and there is material on the basis of which the notice was issued. As has been held in Phool Chand Bajrang Lal (supra), Bombay Pharma Products (supra) and Anant Kumar Saharia (supra), the Court, in exercise of jurisdiction under Article 226 of the Constitution of India pertaining to sufficiency of reasons for formation of the belief, cannot interfere. The same is not to be judged at that stage. In SFIL Stock Broking Ltd. (supra), the bench has interfered as it was not discernible whether the assessing officer had applied his mind to the information and independently arrived at a belief on the basis of material which he had before him that the income ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, if substantial new material is found in the form of information on the basis of which the assessing authority can form a belief that the income of the petitioner has escaped assessment, it is always open for the assessing authority to reopen assessment. From the reasons which are recorded, it clearly emerges that the petitioner is the beneficiary of those entries by Kayan brothers, who are well known entry operators across the country and this fact has been unearthed on account of the information received by DGIT Investigation Branch and therefore, it cannot be said in any way that even if four years have been passed, it is not open for the Authority to reopen the assessment. In the present case, there was independent application of mind on behalf of the assessing authority in arriving at the conclusion that income had escaped assessment and therefore, the contentions raised by the petitioner are devoid of merits. Dealing with the contentions of the petitioner that the information received from DGIT, Investigation Branch, Ahmedabad, can never be said to be additional information. We are of the opinion that the information which has been received is on 26.3.2015 from the DGIT, In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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