TMI Blog2016 (8) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... essment. It is also emerging from the order passed by the authority rejecting the objections submitted by the petitioner dated 21.1.2016 that each and every material submitted by the petitioner has been extensively dealt with and a detailed order came to be passed and the said order is supported by cogent reasons, the decision arrived at to reopen the assessment appears to be just and proper. From the material available, the authority prima facie found that petitioner – assessee is also the beneficiary of those Kayans brothers, who are well known entry operators across the country and to the extent of sizable amount, the petitioner has also been benefited and this part of the income appears to have been escaped assessment in the belief of the authority, the said belief cannot intercepted by exercising extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. Thus from circumstance available and reflected on record, it appears to this Court that the authority has applied its mind and has rightly relied upon the information available before it while exercising the power to reopen the assessment. Thus the background of facts demand reopening of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner submitted the objections and had stated that it had disclosed fully and truly all material facts necessary for assessment and there was no failure on the part of the petitioner to submit any material. Said letter of objection came to be dealt with by the authority and vide order dated 21.1.2016, the respondent authority has passed an order rejecting the objections submitted by the petitioner and the authority has continued to form a belief that the income chargeable to tax has escaped the assessment. It is in this background of the fact the present petition is brought before this Court for examining the legality and validity of the notice under Section 148 of the Act and the order rejecting the objections. 4. Mr.M.J.Shah, learned counsel appearing on behalf of the petitioner has submitted that the authority, while issuing the notice under Section 148 of the Act and the reasons which are based upon such issuance, are not germane to law and there is nothing in the reasons which have been recorded to indicate that the income has escaped the assessment. It was submitted by learned counsel that the information which has been received by the authority which has recorded t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opening of reassessment is not in the right spirit. Learned counsel submitted that the High Court has adequate power of judicial review when the executing authority is trying to act without the jurisdiction or trying to act in the manner in which it is expected to under the law and therefore, based upon that, learned counsel requested the Court to check on the authority not to permit the reopening and to set aside the impugned order as well as the notice issued under Section 148 of the Act. No other submissions advanced by learned counsel for the petitioner. 6. As against this, Mr.Sudhir Mehta, learned counsel appearing on behalf of the Revenue has submitted that the authority is justified in reopening the assessment of the petitioner. The Assessing Authority, while issuing the notice under Section 148 of the Act, has enough material to substantiate the reopening and for forming a reasonable belief that income has escaped the assessment. It was submitted by learned counsel that a specific information has been received by the DGIT (Investigation), Ahmedabad on 26.3.2015 wherein, it is stated that two surveys were carried out by the I/o. Pr.DIT (Inv.) Kolkata on Vikrant Kayan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DIT (Inv.) Kolkata on Vikrant Kayan and Arvind Kayan respectively. The Kayans are known entry operators of Kolkata and have been giving entries of bogus share capital, bogus bill of expenses and bogus long term capital gains to various beneficiaries through out the country. The above mentioned assessee is also a beneficiary of ₹ 127.94 lacs (accommodating co. Agnes Bruno Ltd.) pertaining to A.Y.2008-09. 8. Perusal of the said reasons postulate that an information has been received by DGIT (Inv.) branch of Ahmedabad about bogus purchases wherein, it has been emerged that two survey operations were carried out by the competent authority, Kolkata in case of Vikrant Kayan and Arvind Kayan and the information which has been gathered is that these Kayans are well known entry operators of Kolkata and have been giving entires of bogus share capital, bogus billing entries pertaining and bogus long term capital gains to various beneficiaries across the country and it has been revealed in the said information that this very assessee i.e. present petitioner is also a beneficiary of such entry operation of Kayans to the extent of ₹ 127.94 lacs (accommodating co. Agnes Bruno Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have finally ascertained the fact of legal evidence or conclusion. At the initial stage what is required is reason to believe but, not established fact of escapement of income and therefore, at this stage only question whether there was relevant material to form a reasonable belief is to be seen and in the background of present facts, there is a specific information received about the Kayans brothers during investigation by the authority and it has been prima facie found that present petitioner assessee is also the beneficiary of the said Kayan brothers. At this stage of the proceeding, the factum of said aspect whether the petitioner is beneficiary or not, is not to be finally adjudicated upon by the Assessing Officer and therefore, this Court is not in a position to dwell into it but, only has to examine whether there is a reasonable belief arrived at or not and from the basis of aforesaid circumstance prevailing on record, it appears that the Assessing Officer is justified prima facie in arriving at conclusion to reopen the assessment. A liberty is always available to the petitioner to justify or to deal with the same, but this is not the stage where the process of reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer must have reason to believe that income profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either (i) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148read with section 147(a) But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is however to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at hand is covered by the main provision and not the proviso. 18. So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the search, which included incriminating documents and other such relevant materials, was alongwith report and show-cause notice placed at the disposal of the Assessing Officer. These materials prima facie suggested suppression of sale consideration of the tiles manufactured by the assessee to evade excise duty. On the basis of such material, the Assessing Officer also formed a belief that income chargeable to tax had also escaped assessment. When thus the Assessing officer had such material available with him which he perused, considered, applied his mind and recorded the finding of belief that income chargeable to tax had escaped assessment, the re-opening could not and should not have been declared as invalid, on the ground that he proceeded on the show-cause notice issued by the Excise Department which had yet not culminated into final order. At this stage the Assessing Officer was not required to hold conclusively that additions invariably be made. He truly had to form a bona fide belief that income had escaped assessment. In this context, we may refer to various decisions cited by the counsel for the Revenue. 10. In case of Central Provinces Manganese Ore Co. Ltd. vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer could act upon such information for taking action under Section 147(b) of the Act. In such background, the Supreme Court observed as under: 12. Ms. Gauri Rastogi, the learned appearing for the respondents, has urged that the letter of Shri Bagai was received by the Income tax Officer on March 26, 1974 and on the very next day, that is, on March 27, 1974, he issued the impugned notice under Section 147(b) of the Act and that he did not have conducted any inquiry or investigation into the information sent by Shri Bagai. Merely because the impugned notice was sent on the next day after receipt of the letter of Shri Bagai does not mean that the Income Tax Officer did not apply his mind to the information contained in the said letter of Shri Bagai. On the basis of the said facts and information contained in the said letter, the Income Tax officer, without any further investigation, could have formed the opinion that there was reason to believe that the income of the assessee chargeable to tax had escaped assessment. The High Court, in our opinion, was in error in proceeding on the basis that it could not be said that the Income Tax Officer had in his possession informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our order, the reassessment proceedings have not to go on we don not and we ought not to express any opinion on the merits. 13. In case of AGR Investment Ltd. vs. Additional Commissioner of Income Tax and anr (supra) , a Division Bench of Delhi High Court considered the validity of reopening of assessment where the notice was based on information received from Directorate of investigation that the assessee was beneficiary of bogus accommodation entries. The Court while upholding the validity of reopening observed that sufficiency of reason cannot be considered in a writ petition. It was observed as under: 23 The present factual canvas has to be scrutinized on the touchstone of the aforesaid enunciation of law. It is worth noting that the learned counsel for the petitioner has submitted with immense vehemence that the petitioner had entered into correspondence to have the documents but the assessing officer treated them as objections and made a communication. However, on a scrutiny of the order, it is perceivable that the authority has passed the order dealing with the objections in a very careful and studied manner. He has taken note of the fact that transactions involv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Court had interfered. Thus, the said decision is also distinguishable on the factual score. 16. Thus, the decision in case of Futura Ceramics Pvt. Ltd. And anr vs. State of Gujarat through Secretary and ors (supra) was rendered in an entirely different background and had no direct application to the question whether on the basis of information supplied by the Excise Department to the Assessing Officer of suppression of valuation of goods or clandestine removal of goods for evading excise duty, notice for re-opening of the assessment could have been issued. 12. Considering the aforesaid situation prevailing on record, it appears to this Court that the background of facts demand reopening of assessment and the authority is justified in issuing notice under Section 148 of the Act and the reasons based upon it are sufficient enough to permit the authority to exercise jurisdiction to reopen the assessment. Even from bare reading of the order rejecting the objections also, appear to this Court cogent enough as supported by valid reasons. The same is also not required to be interfered with. Hence, the present petition deserves to be dismissed and accordingly, it is dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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