TMI Blog2018 (5) TMI 1551X X X X Extracts X X X X X X X X Extracts X X X X ..... The petitioner is an individual and is engaged in the business of brokerage from dealing in land in and around the City of Surat. For the A.Y. 200708, the Return filed by the petitioner was processed u/s.143(1) of the Income Tax Act, 1961 ( the Act for short) and was accepted without scrutiny. A survey operation was carried out at the business premises of the petitioner on 23.03.2013 during which certain diaries and loose papers were found and impounded. On the basis of the contents of such impounded materials, the Assessing Officer reopened the assessment for the A.Y. 200708, for which the impugned Notice came to be issued. In order to do so, he had recorded the following reasons; In this case assessee has filed return of income for A.Y. 2007-08 showing salary income of ₹ 52,108/-, ₹ 2,29,780 under the head capital gains and income from other sources of ₹ 2,311/- and total income of ₹ 28,419/-. During the course of survey u/s.133A of the IT Act at the business premises of Shri Baldevbhai Bhikhabhai Patel on 23.03.2013 certain diaries and loose papers were found and impounded as per annexure BFI-1 to BFI-35. ON perusal of this impounded papers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shymbhai on 08.10.2006. ii) Received ₹ 10,00,000/- from Manganbhai Jinzala on 09.10.2006. iii) Received cash of ₹ 50,00,000/- from K. AHD to whom loan given returned back. iv) Paid ₹ 2,50,000/- to Reva Mama at Native Place on 16.11.2006. The amount on page is written in code word and it shows the payment made to above said persons/received from the above said persons. It is presumed that this unaccounted transaction 70,25,000/- has been received by Shri. Baldeobhai Bhikhabhai Patel which has not disclosed in his regular books of accounts. This amount is required to be treated as undisclosed income of Baldevbhai and to be added in the return of income for the financial year mentioned above. 5 i) ₹ 10,70,000/- is cash balance on 6.11.2006. ii) ₹ 50,000/- given to Sanjay for operation on 16.11.2006. iii) ₹ 100,000/- given for House Hold Expenses on 16.11.2006. iv) ₹ 80,000/- given to Puiari to do the Jap (religious rituals). v) ₹ 2,00,000/- given to mother for purchase of sarees to be paid in village on 16.11.2000. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006. The amount on page is written in code word and it shows that the amount is received in cash from the above said persons as loan routed through the different persons in the unaccounted books of accounts of assessee and not reflected in the regular books of accounts. The amount of 25,000 US Dollars is in fact money of the assessee shown to be routed through different person in his unaccounted books. Please state as to why the above amount should not be treated as unaccounted income channeled through different person in your unaccounted books of account and not added to your total income. This amount of ₹ 2,68,00,000/- is required further verification. 6 As per the details of page six there are total 2 entries with a period of 22.06.2006 written as 7000/00 taken loan. Other entry is written as 6000/00 loan taken from Panchal of Vapi for investment in land. The amount on page is written in code word and it shows the amount is received from the above said persons as loan. It is presumed that this unaccounted transaction of ₹ 1,30,00,000/- has been received by Shri. Baldeobhai Bhikhabha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Shah, Bhikhabhai Glamour and Ghansyambhai Jewellers. Period is mentioned between 2006-07. In this page the details regarding the amount given to different person is written. As per the code mentioned above have 2000/00 means ₹ 20,00,000/- 2500/00 means ₹ 25,00,000/- 200/00 means ₹ 2,00,000/- 500/00 means ₹ 5,00,000/- 1900/-- means ₹ 19,00,000/- Hence, the total of ₹ 71,00,000/- of unaccounted money is given to different person which is not recorded in the regular books of account. This amount is to be added to the total income of the assessee. 3 In this page the details regarding the amount given to different persons is written. As per the code mentioned above have 250/00 means ₹ 2,50,000/- 500/00 means ₹ 5,00,000/- 500/00 means ₹ 5,00,000/- 2000/00 means ₹ 20,00,000/- Hence the total of ₹ 2,75,00,000/- of unaccounted money is given to different person which is not recorded in the regular books of account. This amount is to be added to the total income of the assessee. 4 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said money transactions are not recorded in the regular books of accounts of the assessee. This amount is to be added to the total income of the assessee. 16 In this page, there is an entry in code word Sandipbhai (Ring Road) (Nr. Badaj Village) as 10 bigha X Total - 4000 purchased share 25%. There are total three entries in code word total of which is as 8000/00, means ₹ 80,00,000/-. The assessee has made unaccounted investment in the above said land. The above said money transactions are not recorded in the regular books of accounts of the assessee. This amount is to be added to the total income of the assessee. BFI-22 9 In this page, there is an entry for receipt of 40 with cut circle there upon in the name of Shri Baldevbhai B Patel who has 25% share in land at Vesu survey No. old 556 paiki 352/2 for receipt of money. It means the assessee has received the amount of ₹ 40,00,000/- being the 25% share. There is an entry in code word as 3500 with circle there upon for the period from 7.3.2006 to 26.9.2006 in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the pendency of the petitioner s application before the Settlement Commission, the assessment proceedings arising out of the impugned Notice of reassessment remained suspended. After the petitioner s application for settlement was rejected, the same were revived. At that stage, the petitioner filed the present petition challenging the notice of reopening. In the meantime, the Assessing Officer went ahead with the reassessment and completed such assessment. 4. Counsel for the petitioner raised only one ground in support of the petitioner s challenge, namely that of valid sanction being granted by the competent authority, before issuing the impugned Notice of reopening of assessment. This contention has two limbs, first part being the petitioner s assertion that no such sanction at all was ever granted and the second being that the sanction, which is produced by the respondent in the affidavit in reply, is not a valid sanction. 4.1 Elaborating this issue, counsel for the petitioner submitted that initially, the Assessing Officer conceded that no such sanction order is available on record. In the affidavit in reply filed to the Notice issued in this case, the respondent ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 in Special Civil Application No.21999 of 2017, in which, in the context of similar contention by the counsel for the petitioner, the following observations were made; 16. The contention that the Assessing Officer had merely and mechanically acted on the report of the investigation wing also cannot be accepted. We have reproduced the reasons recorded by the Assessing Officer and noted the gist of his reasons for resorting to reopening of the assessment. We have recorded that the Assessing Officer had perused the materials placed for his consideration and thereupon, upon examination of such materials formed a belief that income chargeable to tax had escaped assessment. 7. The facts on record would suggest that the petitioner had filed the Return of Income for the relevant Assessment Year, on which, no scrutiny assessment was made. In other words, the Return was processed u/s.143(1) of the Act. Under such circumstances, the Assessing Officer would have wider scope for reopening the assessment since no scrutiny assessment was, originally, framed. The Assessing Officer, therefore, cannot be stated to have formed any opinion and hence, the question of change of opinion wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of reasons recorded and approval obtained u/s.151(1) of the IncomeTax Act for the year under consideration. The copy of the reasons recorded was duly provided to the assessee. During the course of assessment proceedings, the assessee had made a noting in the order sheet. Thereafter, vide an RTI application the assessee had requested a photo copy of the case records, order sheet and also requested examination of the case records which were duly provided. In reply to the RTI application it was intimated by this office that copy of approval obtained u/s.151(1) of the IT Act is presently not found on record. It was intimated that since the office had shifted before six months, it is possible that the approval may be in a separate folder and might got detached from the original order. 8. In view of the above, the assessee filed a Special Civil Application No.21092 of 2017 before the Hon ble Gujarat High Court alleging that prior sanction u/s.151(1) of the Act was not obtained before reopening the assessment proceedings and the assessing officer was not justified in passing the assessment order. Efforts were put in to obtain a copy of the same from the records of the Office of Jt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... metax, who, upon perusal of the same, in his own hands, recorded his satisfaction that it was a fit case for issuance of notice u/s.148 of the Act. In the forwarding letter, he reiterated that he had perused the reasons recorded by the Assessing Officer and upon perusal, he was satisfied and was of the considered opinion that it was a fit case for issuance of notice u/s.148 of the Act. He further stated that therefore, your proposal for reopening the assessment u/s.147 is hereby approved u/s.151(1) of the Act... . 13. It can, thus, be seen that the Addl. Commissioner of Incometax had not only put his remarks on the proforma presented before him by the Assessing Officer but also separately conveyed his satisfaction to the Assessing Officer in a separate letter. The application of mind and grant of sanction was, thus, one integrated exercise. Even independently, we have no reason to believe or hold that this was a case of nonapplication of mind. The Addl. Commissioner of Incometax had perused the materials on record, which included the reasons recorded by the Assessing Officer. He had recorded his satisfaction and opinion that it was a fit case for issuance of Notice u/s.148(1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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