TMI Blog2018 (3) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... s no merit in the above grievance also. We find that the power of the Assessing Officer to reopen an assessment under Section 147/148 of the Act on the basis of reasonable belief is not fettled or circumscribed, to be formed only on material found during a tax audit or with material found during examining a case of tax evasion. In fact the basis of fresh tangible material is unqualified i.e. the source of the material could be from any place, however, the only pre-condition is that on the basis of the material so found / obtained by the Assessing Officer, he himself must form a reasonable belief that income chargeable to tax has escaped assessment before issuing a notice for reopening. There is sanctity attached to the orders of the assessment passed under Section 143 (3) of the Act. The Assessing Officer is entitled to reopen an assessment only if the jurisdictional requirements as pointed out under Section 147 and 148 of the Act satisfied. Therefore, though the orders of assessment passed under Section 143 (3) of the Act have sanctity attached, it does not grant immunity to an assessee from proceedings for reopening of assessment year of Section 147 / 148 of the Act, provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identified above on the MCX platform. Review of Risk Management system of the MCX technology platform. Ascertain whether the meetings of the Board of MCX were held in compliance with the companies act, 1956. The office is in the receipt of the report of the Auditor (Price Water Coopers Ltd.) dated 21st April 2014 (after the completion of assessment) wherein it is observed that several officers of Financial Technologies India Ltd. (FTIT) and its associate and group companies were in control and management of assessee and that erstwhile management of assessee had executed several dubious and illegal transactions with several related parties, entities in which the management had significant interests. The observations in the auditg report made it apparent that persons assocaited with FTIL and erstwhile officers of MCX were acting at the behest of FTIL, and had conspired to commit a large scale economic fraud for their own benefit at the cost of MCX and its shareholders. The new management of the assessee has also filed various criminal complaints against the concerned companies and persons who where involved in the commission of the offence. I have closely perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med by Vardhman. Thus, the assessee has claimed excess deduction of ₹ 2.21 crores. 4. The assessee has claimed donation u/s.80G of the Act to the tune of ₹ 2,65,04,500/-. During the year under consideration, the assessee has claimed to have paid donation of ₹ 1.75 Crores to Arunodaya Charitable Trust. The report of the auditor has revealed non existence of the aforesaid trust. Thus, the assessee has claimed excess deduction of ₹ 87.50 lakhs (being 50% of the amount claimed to have been paid) and that the income has escaped assessment to that extent. 5. The assessee has claimed to have engaged Splash Media and Infra Ltd for the purpose of outdoor advertising to display hoarding at Mahim causeway and Haji Ali locations in Mumbai form Dec. 09 to Mar 10 and expended a sum of ₹ 86.03 lakhs for the same. The payments made to Splash Media and Infra Ltd are non genuine and that even the said party has not recorded the said amount as revenue in its books of accounts. Accordingly, the sum of ₹ 86.03 lakhs has escaped assessment as the assessee has claimed dexcess deduction on this ground. 6.The assessee has claimed advertisement expenses on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act, since the case is being reopened after the expiry of four years from the end of the A.Y.2010-11, notice u/s 148 is to be issued after obtaining administrative approval of Pr. Commissioner of Income Tax. 3. The Petitioner objected to the issuing of the impugned notice before the Assessing Officer. However, the same was rejected by an order dated 28th July 2017 by the Assessing Officer. 4. The first grievance of the Petitioner is to the jurisdiction of the Assessing Officer to issue the impugned notice dated 30th March 2017 particularly when the regular Assessment was completed on 22 March 2013 under Section 143(3) of the Act. The impugned notice admittedly is beyond a period of four years from the end of the Assessment Year 2010-11. Therefore, it is submitted that in the absence of any failure to fully and truly disclose of material facts, the impugned notice is hit by the first proviso for Section 147 of the Act. This is more particularly so as the reasons do not indicate the failure of which material fact not being disclosed. In particular it is submitted that at the time of regular assessment proceeding leading to the order dated 30 March 2017, the special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceedings. The two situations were distinct and different. Where the transaction itself, on the basis of subsequent information was found to be a bogus transaction, the mere disclosure of that transaction at the time of the original proceedings could not be said to be a disclosure of true and full facts and the Officer would have jurisdiction to reopen the concluded assessment in such a case . 6. Therefore in the above circumstances prima facie the Petitioner cannot take shelter of the first proviso to Section 147 of the Act. Further the reasons recorded does indicate that the special audit report dated 21 April 2014 is the basis of the reopening notice. Thus in the above facts, it cannot be said that the Assessing Officer did not have reasonable belief that prima facie income chargeable to tax has escaped assessment. 7. The second grievance is of non-application of mind by the Assessing Officer to issue the impugned notice, as it is issued upon the borrowed satisfaction of the special audit. On perusal of the reasons recorded, we find that it does indicate application of mind by the Assessing Officer to the facts in the context of audit report to reach the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hargeable to tax has escaped assessment before issuing a notice for reopening. In fact the Apex Court has observed in Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd. (2007) 291 ITR 500 (SC). has observed that if the Assessing Officer for whatever reasons (material) has reason to believe that income chargeable to tax has escaped assessment then jurisdiction is conferred upon the Assessing Officer to reopen the assessment. Without prejudice to the above in this case, the remit / scope of report of the special audit included expenditure in excess of ₹ 25 lakhs, related party transactions etc. Therefore there is no merit in this objection and prima facie the Assessing Officer has jurisdiction to issue the impugned notice. 11. It was next contended that criminal proceedings initiated on the basis of the special audit report was quashed by this Court. Therefore, the same cannot form the basis of reasonable belief of the Assessing Officer. The considerations which come into play in criminal proceedings and in tax proceedings are entirely different. The special audit report dated 21 August 2014 has itself not been declared to be bad by any Court. T ..... 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