TMI Blog2017 (1) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... ufficiency of the reasons is not to be gone into by this Court. Information furnished at the time of original assessment, when by subsequent information received from the Principal Director of Income Tax (Investigation), Ahmedabad, itself found to be controverted, the objection to the notice of reassessment under section 147 of the Act must fail. Thus it cannot be said that impugned notice issued under Section 148 of the Act is without jurisdiction and/ or contrary to Section 147 of the Act. - Decided against assessee - SPECIAL CIVIL APPLICATION NO. 18961 of 2016 - - - Dated:- 29-12-2016 - MR. M.R. SHAH AND MR. B.N. KARIA, JJ. FOR THE PETITIONER : MR. HARDIK V VORA, ADVOCATE FOR THE RESPONDENT : MRS MAUNA M BHATT, ADVOCATE CAV JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.0. By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed for an appropriate writ, direction and order to quash and set aside the impugned notice under Section 148 of the Income Tax Act, by which, the Assessing Officer has sought to reopen the assessment for AY 201011, which has been issued as such within the period of four years from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CITI, Ahmedabad was obtained under Section 151 of the Act on 01.09.2015. Therefore, the ground on which this Court issued the notice upon the respondent is not available to the petitioner. Shri Vora, learned advocate for the petitioner has also fairly conceded that ground which was initially canvassed with respect to non compliance of Section 151 of the Act does not survive and same is not available to the assessee. 4.1. However, thereafter Shri Vora, learned advocate for the petitioner has made other submissions on merits while challenging the impugned notice under Section 148 of the Act. 4.2. Shri Vora, learned advocate for the petitioner has submitted that in the facts and circumstances of the case impugned notice under Section 148 of the Act is absolutely bad in law. 4.3. It is vehemently submitted by Shri Vora, learned advocate for the petitioner that the impugned notice under Section 148 of the Act has been issued on the outside information furnished i.e. from Principal Director of Income Tax (Investigation), Ahmedabad and there is no true information of the Assessing Officer for escaping of the income. It is submitted that therefore, on the basis of borrowed satisfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot make any inquiry in detail and mechanically accepted the return of income. It is submitted that thereafter the Assessing Officer received a specific information from the Principal Director of Income Tax (Investigation), Ahmedabad and forwarded information that a search under Section 132 of the Income Tax Act was conducted in the case of one Shri Pravinkumar Jain and the search action has resulted in collection of evidence and other findings which conclusively prove that Shri Pravinkumar Jain is engaged in providing accommodation entries of various natures like unsecured loans, bogus share application / capital and bogus sales and purchases to the beneficiaries spread throughout India. The Assessing Officer further received the information that the present assessee M/s. Ankit Services Pvt. Ltd is also one of the beneficiary of such accommodation entry and is engaged in bogus share application money from various bogus concerns operated by Shri Pravinkumar Jain. It is submitted that thereafter on the basis of such material and the information received the Assessing Officer after forming an opinion that the income chargeable to tax has escaped assessment has issued impugned notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued by the Assessing Officer without any prior approval of the Commissioner. However, the same has no substance and same does not seem to be true. In the affidavit in reply, it is specifically stated that after obtaining approval from the Principal Director of Income Tax (Investigation), Ahmedabad, thereafter the Assessing Officer has issued the impugned notice. Therefore, the impugned notice is not required to be set aside on the aforesaid ground. 7.0. Now, so far as challenge to the impugned notice on the ground that the same is on the borrowed information and that Assessing Officer has not formed independent opinion and / or belief that the income chargeable to tax has escaped assessment is concerned, it is required to be noted that on the basis of information supplied by/ from the office of Principal Director of Income Tax (Investigation), Ahmedabad, the Assessing Officer has found that the petitionerassessee is the beneficiary of the accommodation entry provided by one Shri Pravinkumar Jain. The Assessing Officer was having with him finding of the investigation team based on the material recovered during search conducted of Shri Pravinkumar Jain Group. Under the circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is reason to believe, but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. Pvt. Ltd. [1996 (217) ITR 597 (SC)] ; Raymond Woollen Mills Ltd. v. ITO [ 1999 (236) ITR 34 (SC)]. 17. The scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied firstly the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer not accepting such version of the assessee and not treating them as genuine loans and advances. The relevant observation of the Division Bench are in para 6 to 18. In para 19, the Division Bench has further observed that sufficiency of the reasons recorded by the Assessing Officer need not be gone into by this Court. It is further observed that the Assessing Officer when forms his belief on the basis of subsequent new and specific information that the income chargeable to tax has escaped assessment on account of omission on the part of the assessee to make full and true disclosure of primary facts, he may start reassessment proceedings as fresh facts revealed the nondisclosure full and true. Such facts were not previously disclosed or it can be said that if previously disclosed, they expose untruthfulness of facts revealed. 7.2.1. The Apex Court in the case of Rajesh Jhaveri Stock Brokers P. Ltd.(supra) has held that at the stage of issuance of notice of reopening, the Assessing Officer must have a reason to believe and not the established fact of escapement of income in the following manner (headnote); The expression reason to believe in section 147 would me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings. Assessing Officer, on the basis of information subsequently having come to his knowledge, recognized untruthfulness of the facts furnished earlier. In the present case, since both the necessary conditions to reopen the assessment have been duly fulfilled, sufficiency of the reasons is not to be gone into by this Court. Information furnished at the time of original assessment, when by subsequent information received from the Principal Director of Income Tax (Investigation), Ahmedabad, itself found to be controverted, the objection to the notice of reassessment under section 147 of the Act must fail. At this stage, para 20 of the decision in the case of Yogendrakumar Gupta (supra) is required to be referred to, which reads as under: 20. This Court has examined the belief of the Assessing Officer to a limited extent to inquiry as to whether there was sufficient material available on record for the Assessing Officer to form a requisite belief whether there was a live link existing of the material and the income chargeable to tax that escaped assessment. This does not appear to be the case where the Assessing Officer on vague or unspecific information initiated the proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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