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TMI Blog2017 (6) TMI 605X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn of the petitioner was taken into scrutiny. After detailed examination of the petitioner's claim of having earned such agricultural income, the Assessing Officer passed an order of assessment on 8.12.2011 accepting the return as it is. 2.2. To reopen such assessment, the Assessing Officer issued the impugned notice. In order to do so, he had recorded following reasons: "Reason recorded u/s. 147 of the I.T.Act, 1961 M/s. Greenwell Orchard A.Y.2009-2010 (1) In this case, the assessment was finalized on 18/12/2011 on the total income declared by the assessee at NIL which was inclusive of the agricultural income claimed as exempt. (2) On verification of the facts as brought on record, it was noticed that agricultural land was owned by the partners of the firm in their individual names. This is a case in which alleged exempt income has been introduced in case of firm from the land which is not owned by the firm and ultimately the income so declared by the firm has been diverted to respective partners accounts taking the benefit of section 10(2A) of the Act. (3) These facts have become evident during the course of survey operation u/s. 133A of the I.T.Act was carried ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... once again requested to state the names of at least some parties to whom sales have been made. A.22: I do nt know any party to whom sales have been made. Q.23: Do you know Sh.Saket M.Jain? Have you met him? A.23: I do not know Sh.Sanket M.Jain. I have never met him. (7) Further inquiries revealed that three entities to whom the purported sale of taeakwood was made belong to Sh.Sanket M.Jain, a Chartered Accountant. All these entities have common address 1006, Sakar- 5, B/h Natraj Cinema, Ashram Road, Ahmedabad. Shr. Sunil R.Agrawal was unable to explain the transactions carried out with any of these three concerns or Sh.Sanket M.Jain who is the owner of these concerns. Shri. Sunil Agrawal was also unable to adduce necessary evidences to prove that the alleged sales on account of sale of teakwood was genuine. Hence, there was ample circumstantial evidence that the said sales were bogus and the entire proceeds of the said sales claimed to be agricultural income and credited in the accounts were merely ingenuine entries. In the light of these fact and his own inability ot explain any of the sales, Shri Suni R.Agrawal voluntarily disclosed unaccounted income from these alleged sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. After receiving the sanction as required u/s. 151(1) of the Act from the Joint Commissioner, notice u/s. 148 of the Act shall be issued." 2.3. The petitioner raised objections to the notice of reopening under a communication dated 14th July, 2014. Such objections were however rejected by an order dated 25th August, 2014 and at that stage the petitioner has filed this petition. 3. Learned counsel Mr.Soparkar for the petitioner took us to the documents on record and submitted that the notice for reopening was bad in law. Original assessment was framed after thorough scrutiny. Assessing Officer had examined the petitioner's claim of having earned exempt income from agricultural operations. The petitioner was called upon to produce several documents which the petitioner had supplied. Such documents included the accounts of the firm, the details of the sale of wood made to various agencies and other relevant documents. It is only after examining such materials that the Assessing Officer passed the order of assessment in which he made no dis-allowances. It was therefore not open for the Assessing Officer to reopen such assessment since the same would amount to a mere change of op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer enabling him to form a bonafide belief that income chargeable to tax has escaped assessment, the Court would not examine the sufficiency of the reasons thereof. 5. Having heard learned counsel for the parties and having perused the record, we may remind ourselves that in the present case, the Assessing Officer is seeking to reopen an assessment, though within 4 years from the end of relevant assessment year, in which scrutiny assessment had been made. During such scrutiny, the assessee had presented various documents which included the details of sales of the Teak and Sevan woods. Essentially the claim of the assessee was that the firm was in possession and cultivating two parcels of agricultural land owned by the partners in which Teak and Sevan trees were planted some 8 to 10 years earlier. These trees were harvested and sold in the market at handsome price. The assessee claimed that the total sale proceeds of such wood during the year under consideration came to be Rs. 7,89,49,500/- and after adjusting the expenses, the net income of the firm was Rs. 7,83,73,525/-. To explain relatively small nature of expenditure, the assessee had presented before the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Sunil Agrawal had voluntarily disclosed unaccounted income from such sales as part of total disclosure of Rs. 23.5 crore broken into the hands of separate entities with respect to year under consideration. The reasons referred to the refusal of Shri Sunil Agrawal to comment on the genuineness of the sale of teakwood for Assessment Year 2009-2010 stating that during such period ownership of the firm and the partners were different. It was recorded that there is a similarity of pattern in sale of teakwood during a year under survey i.e. 2013-2014 and the year under consideration i.e. 2009- 2010. It was on the basis of such material that the Assessing Officer formed a belief that the assessee had failed to disclose true and full facts necessary for assessment. 7. It can thus be seen that the Assessing Officer had recorded elaborate reasons to prima facie demonstrate that the figures of sale of teakwood trees for year consideration were not genuine if, at all, exaggerated. This would have direct link to the failure on the part of the assessee to disclose true and full necessary facts. It is by now well settled that for re-opening of the assessment, Assessing Officer had to form a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings cannot be said to be a disclosure of the "true" and "full" facts in the case and Income-tax Officer would have the jurisdiction to reopen the concluded assessment in such a case." 9. In case of Kapoor Brothers v. Union of India and Others reported in [2001] 324 ITR 247 the Division Bench of Patna High Court observed as under: "The only question that falls for consideration is as to whether the instant proceeding initiated in terms of section 147 of the Act and the notice issued under section 148 is legally sustainable in the eye of law. In Sheo Narain Jaiswal's case (1989) 176 ITR 352 (Patna), this court has held that such proceeding cannot be initiated at the behest of the superior authority if the Income Tax Officer fails to form his own belief. In the instant case, the proceeding was not initiated at the instance of the superior officer but on the basis of the materials collected during the course of enquiry, as stated above. It is true that the respondent- Commissioner of Income-tax (Appeals) held that the transaction with the said Sri Kutty was a sham transaction. The assessing officer shall, reopen the assessment for earlier years. In that view of the matter, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment. In this connection, reference may be made to a decision of the Apex Court in the case of Phool Chand Bajrang Lal (1993) 203 ITR 456 wherein it has been held as follows (headnote): "One of the purposes of section 147 is to ensure that a party cannot get away by wilfully making a false or untrue statement at the time of the original assessment and when that falsity comes to notice, to turn around and say : 'you accepted my lie, now your hands are tied and you can do nothing.' It would be a travesty of justice to allow the assessee that latitude." Learned counsel has also relied upon a decision in the case of Hemraj Munshi Ram (2000) 245 ITR 155 (Patna). As stated above, for the purpose of counting limitation, the proviso to section 147 is to be read as a whole, in other words section 147 is to be read as a whole in view of Explanation 1 appended to the proviso to section 147. Section 14 7 deals with income escaping assessment subject to the Provision of sections 148 and 153 of the Act. The proviso to section 151 makes it abundantly clear that notice under section 148, including a proceeding under section 147, can be initiated after the expiry of four years from the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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