TMI Blog2017 (6) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... h action in case of said Shri Pravin Kumar Jain, the AO has reopened the assessments for AYs 201112 and 201213. Therefore, it cannot be said that there was no tangible material available with the AO to form an opinion that the income chargeable to tax has escaped assessment for the years under consideration. As on the basis of the information supplied by / from the office of Principal Director of Income Tax (Investigation), Ahmedabad, the AO has found that the petitioner – assessee is the beneficiary of accommodation entries provided by one Shri Pravin Kumar Jain. The AO was having with him findings of the Investigating Team based on the material recovered during the search conducted of Shri Pravin Kumar Jain Group. Under the circumstances, it cannot be said that there was no tangible material available with the AO to prima facie form an opinion / belief that the income chargeable to tax has escaped assessment. In the facts and circumstances of the case, it cannot be said that the reopening of the assessment is on change of opinion by the subsequent AO. - Decided against assessee. - Special Civil Application No. 21052 of 2016 And Special Civil Application No. 21087 of 2016 - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions and disallowances. [3.2] That thereafter by impugned notice dated 01.09.2015, the AO has sought to reopen the assessment for AY 201112. That the petitioner assessee filed the return of income on 27.10.2015 declaring total income of ₹ 33,03,225/in response to the impugned notice under Section 148 of the IT Act. That thereafter at the request of the assessee the AO has furnished / provided the reasons for reopening of the assessment for AY 201112. The reasons recorded of reopening the assessment for AY 201112 are as under: Reasons of Reopening the Assessment Name of assesse M/s. Aaspas Multimedia Ltd. (Formerly known as Aaspas Investment Pvt. Ltd.) 607, SakarI, Nr. Gandhigram Railway Station, Ellisbridge, Ahmedabad PAN No. AABCA3153A Status Company A.Y. 201112 The Pr. Director of Income tax (Investigation), Ahmedabad vide confidential letter No.PDIT(Inv)/AHD/Pravin Jain/1516 dated 16.06.2015 forwarded the information that a search u/s.132 of the I.T. Act was conducted in the case of Shri Pravin Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same was processed under Section 143(1) of the IT Act. That thereafter the case was selected for scrutiny and the notice under Section 143(2) of the IT Act was issued. The questionnaire was issued and duly served on the assessee. That the assessee furnished the details of increasing share capital, details of source of income, details of secured and unsecured loans, details of share application money, details of shareholders etc. during the year under consideration. That thereafter the AO passed the scrutiny assessment order under Section 143(3) of the IT Act on 25.02.2014 making certain additions and disallowances. [4.2] That thereafter by impugned notice dated 01.09.2015, the AO has sought to reopen the assessment for AY 201213. That the petitioner assessee filed the return of income on 19.10.2015 declaring total income of ₹ 62,29,334/in response to the impugned notice under Section 148 of the IT Act. That thereafter at the request of the assessee the AO has furnished / provided the reasons for reopening of the assessment for AY 201213. The reasons recorded of reopening the assessment for AY 201213 are as under: Reasons of Reopening the Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the objections referring to the information received from the Investigating Wing and the objections raised by the petitioner are not accepted by the AO and the AO has rejected the same in totality. Hence, the petitioner assessee has preferred the Special Civil Application No.21087/2016 challenging the impugned notice under Section 148 of the IT Act by which the AO has sought to reopen the assessment for AY 201213. [5.0] Shri B.S. Soparkar, learned Advocate has appeared on behalf of the petitioner assessee and Shri Manish R. Bhatt, learned Senior Advocate has appeared on behalf of the Revenue. [5.1] It is vehemently submitted by Shri Soparkar, learned Advocate appearing on behalf of the petitioner assessee that the impugned notices under Section 148 of the IT Act and reopening of the assessment for AY 201112 and 201213 are absolutely bad in law and against the provisions of the statute more particularly under Section 147 of the IT Act. [5.2] It is further submitted by Shri Soparkar, learned Advocate appearing on behalf of the petitioner assessee that as such the subsequent reopening of the assessment for AY 201112 and 201213 is nothing but change of opinion by the subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that however even before the impugned notices, the said Shri Pravin Kumar Jain retracted from his statement which is the basis for reopening of the assessment in the present case. It is submitted that therefore, retracted statement of the third party (Shri Pravin Kumar Jain) cannot be made the basis for reopening. In support of his above submissions, Shri Soparkar, learned Advocate appearing on behalf of the petitioner has relied upon the following decisions of the Hon ble Supreme Court, Bombay High Court and this Court. 1. Lakhmani Mewal Das (1976) 103 ITR 437 (SC) 2. Indian Express Newspapers (Bombay) P. Ltd. (2008) 214 CTR 479 (Bombay) 3. Shardaben K. Modi (2013) 217 Taxman 89 (Gujarat) (MAG) [5.5] It is further submitted by Shri Soparkar, learned Advocate appearing on behalf of the petitioner that even otherwise the reasons to reopen the assessment are too vague and no independent findings are recorded. It is submitted that there is no independent inquiry and/or findings recorded on an independent inquiry that the income has escaped assessments for the years under consideration. [5.6] It is further submitted by Shri Soparkar, learned Advocate appearing on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerns operated by Shri Pravin Kumar 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 under Section 148 of the IT Act, which is as such within the period of four years. [6.3] Shri Bhatt, learned Counsel for the Revenue has also relied upon the decision of the Division Bench of this Court in the case of Dishman Pharmaceuticals and Chemicals Limited vs. Deputy Commissioner of Income Tax (OSD) (No.1) reported in 346 ITR 228 on how reasons to be recorded. She has also produced before the Court the xerox copy of the relevant file and information received by the Assessing Officer from Shri Pravin Kumar Jain on the basis of which the Assessing Officer has issued the impugned notice by forming an opinion that income chargeable to tax as escaped assessment. [6.4] Now, so far as the submission on behalf of the petitioner that the retracted statement of the third party (Shri Pravin Kumar Jain) cannot be the basis to reopen the assessments for the years under consideration and therefore, the reopening of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial supplied from the office of DIT (Investigation), which is in the nature of tangible material, subsequent reopening cannot be said to be on a mere change of opinion by the subsequent AO as sought to be contended on behalf of the petitioner. It is submitted that before the AO while framing the original assessments no opinion was formed on the material / information which is as such subsequent to the passing of the assessment orders. [6.7] Shri Bhatt, learned Counsel appearing on behalf of the Revenue has also heavily relied upon the recent decision dated 29.12.2016 of the Division Bench of this Court in the case of Ankit Financial Services Ltd. vs. Deputy Commissioner of Income Tax, Circle 1(1)(2) rendered in Special Civil Application No.18961/2016 by which the Division Bench of this Court has dismissed the said petition in which the similar notice under Section 148 of the IT Act with similar allegations and the reasons recorded was challenged, has been rejected by this Court. Making above submissions and relying upon above decisions it is requested to dismiss the present petitions. [7.0] Heard learned Counsel appearing on behalf of the respective parties at length. At t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined the fact by legal evidence or conclusion. The term 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 has escaped assessment. It was observed as under: 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 Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991 (191) ITR 662], for init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner that as the transactions with respect to share applications by 4 companies / shareholders named in the reasons recorded are concerned, the same were verified by the AO at the time of framing the original assessments and therefore, the reopening can be said to be on change of opinion by the subsequent AO is concerned, at the outset it is required to be noted that as such there was no material available with the AO at the time of framing original assessments, which are now available with the AO received from the office of Principal Director of Income Tax (Investigation), Ahmedabad. [7.6] At this stage, decision of the Division Bench of this Court in the case of Yogendrakumar Gupta (Supra) is required to be referred to and considered. In the case before the Division Bench on the basis of information from CBI that loans accepted as genuine in original assessment were bogus, when the Assessing Officer initiated reassessment proceedings under Section 147 of the IT Act beyond 4 years, the Division Bench has observed that assumption of jurisdiction on the part of the AO is based on fresh information, specific and reliable and otherwise sustainable under the law, challenge to rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of belief is within the realm of subjective satisfaction of the Assessing Officer. [7.6.2] In the case of Raymond Woolen Mills Ltd. v. Incometax Officer and others, reported in 236 ITR 34 , the Court held that in determining whether commencement of reassessment proceedings was valid, it has only to be seen whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at such stage. [7.7] In the case of Commissioner of Income Tax vs. Navodaya Castles Pvt. Ltd. reported in 367 ITR 306 , Delhi High Court observed as under: 13. As we perceive, there are two sets of judgments and cases, but these judgments and cases proceed on their own facts. In one set of cases, the assessee produced necessary documents/evidence to show and establish identity of the shareholders, bank account from which payment was made, the fact that payments were received thorough banking channels, filed necessary affidavits of the shareholders or confirmations of the directors of the shareholder companies, but thereafter no further inquiries were conducted. The second set of ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... website or search for the addresses of shareholders themselves. Creditworthiness is not proved by showing issue and receipt of a cheque or by furnishing a copy of statement of bank account, when circumstances requires that there should be some more evidence of positive nature to show that the subscribers had made genuine investment or had, acted as angel investors after due diligence or for personal reasons. The final conclusion must be pragmatic and practical, which takes into account holistic view of the entire evidence including the difficulties, which the assessee may face to unimpeachably establish creditworthiness of the shareholders. [7.8] Considering the aforesaid decisions of the Hon'ble Apex Court as well as decision of the Division Bench of this Court and Delhi High Court and applying the same to the facts of the case on hand, it cannot be said that there was no material before the AO to reopen the assessment. In the present case also the reassessment proceedings have been initiated by the AO on the basis of material provided by the Principal Director of Income Tax (Investigation), Ahmedabad. It is also required to be noted that the genuineness of the various co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 200607 as well, this information has been provided to Director General of Incometax, Kolkata, who in turn, communicated to the Chief Commissioner of Incometax, Ahmedabad. Further revelation of investigation as could be noticed from the record examined (file) deserves no reflection in this petition. Insistence on the part of the petitioner to provide any further material forming the part of investigation carried out against Dalmias also needs to meet with negation, as the law requires supply of information on which Assessing Officer recorded her satisfaction, without necessitating supply of any specific documents. The proceedings initiated under section 147 of the Act would not be rendered void on nonsupply of such document for which confidentiality is claimed at this stage, following the decision of the Delhi High Court in case of Acorus Unitech Wireless (P.) Ltd. (supra). Assumption of jurisdiction on the part of the Assessing Officer is since based on fresh information, specific and reliable and otherwise sustainable under the law, challenge to reassessment proceedings warrant no interference. [7.9] In view of the aforesaid facts and circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO has considered the same and after verifying and considering the material on record it has been found by the AO that the present assessee is the beneficiary of the accommodation entries / bogus share application from various bogus companies operated by Shri Pravin Kumar Jain. In the affidavit in reply the Revenue has stated in para 3.8 as under: The allegation of the assessee is not correct. The case of the assessee was reopened based on correct facts / law and procedural requirements of the Act were duly complied with. The information provided by The Pr. Director of Income Tax (Investigation), Ahmedabad vide confidential letter No.PDIT(Inv)/AHD/Pravin Jain/1516 dated 16.06.2015, was throroughly perused. The same has been summarized in the reasons for reopening recorded prior to issuance of section 148 notice. From the same, reason to believe that income has escaped assessment in concerned AY has been logically derived. Thus, only after deriving requisite satisfaction regarding escapement of income on basis of information / material supplied by the Pr. Director of Income Tax (Investigation), Ahmedabad, reopening was initiated. The same is evident from reasons provided for reo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act by legal evidence or inclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayer . In view of these facts, it is most humbly submitted that the allegation or arguments raised by the petitioner are incorrect. Considering the aforesaid facts and circumstances it cannot be said that the impugned notices under Section 148 of the IT Act and the impugned reassessment proceedings are bad in law. [7.12] At this stage it is required to be noted that with respect to another asssessee Ankit Financial Services Ltd. (Supra) in whose case also on the basis of such information received from the office of Principal Director of Income Tax (Investigation), Ahmedabad and with similar allegation of beneficiary of the accommodation entries / share application from the bogus companies operated by Shri Pravin Kumar Jain when the assessment for AY 201011 was sought to be reopened and when the same was challenged before this Court, the Division Bench of this Court vide judgment and order dated 29.12.2016 in Special Civil Application No.18961/2016 has dismissed the said petition. [8.0] In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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