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TMI Blog2018 (5) TMI 1732X X X X Extracts X X X X X X X X Extracts X X X X ..... o, the Assessing Officer had recorded the following reasons :- "Reasons for issuing notice u/s. 148 of the Income Tax Act, 1961. 1. The assessee has filed return declaring income at Rs. 6,92,580/= on 28.03.2011 and scrutiny assessment was completed under Section 143 [3] at the total income of Rs. 8,47,350/=. 2. Information of accommodation entries received from investigation wing, Kolkata : The DDIT [Inv.] Unit 3 (1) - Kolkata vide his letter dated 27.03.2017 has provided a list of 396 paper/accommodation provider companies. In the said list some of the paper company has provided accommodation entries to the assessee during the year, which is discussed in next para. On perusal of assessment orders/list supplied by the ADIT [Invt.], Kolkata, it is found that the assessee company has received following accommodation entries in form of Share Capital & Share Premium during the year from the Kolkata based company : Sr. No. Name & Postal Address of the Company Total Investment in Share Capital/Premium 1 Abhiruchi Vision Pvt. Limited, 4, Ganesh Chandra Avenue, 1st Floor, Room No. 1, Kolkata 11,40,000=00 2 Dreamz Vanijya [P] Limited, 4, Ganesh Chandra Avenue, 1st Floo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are based on alleged bogus investments made by the so-called shell companies of Kolkata. All these investments were examined by the Assessing Officer during the original assessment. Any reopening on the same ground would be hit by the principle of change of opinion. [ii] Impugned notice has been issued beyond the period of four years from the end of relevant assessment year, in absence of any failure on the part of the assessee to disclose truly and fully, all material facts necessary for reopening would not be permissible. [iii] Assessing Officer has proceeded merely on the report of the Investigating Wing, Kolkata without independent application of mind. Thus, the Assessing Officer has acted on the borrowed satisfaction. [iv] Drawing our attention to the last portion of the reasons recorded, counsel for the petitioner argued that the Assessing Officer has taken into account impermissible and extraneous material. The Assessing Officer claims to have carried out discreet inquiry, however, the precise mode of inquiry is not revealed. In any case, reopening of the assessment cannot be sustained on the basis of some information gathered by the Assessing Officer which may not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on borrowed satisfaction. What was provided to him was a list of 396 companies by the Investigating Wing pointing out that these were mere shell companies, their creatison was for the purpose of providing accommodation entires. The Assessing Officer on perusal of the assessment record and list supplied by the Investigating Wing co-related the different material on record and prima facie came to the conclusion that the investment of Rs. 51.15 lakhs made by five of these companies in the form of share-capital or share premium of the assessee company was not genuine. The last aspect has been examined by this Court on numerous occasions. We may refer to one such judgment of the Court in the case of Principal Commissioner of Income-tax, Rajkot-3 v. Gokul Ceramics, reported in [2016] 241 Taxman 1 [Gujarat] wherein the Court had made the following observations :- "9. It can thus be seen that the entire material collected by the DGCEI during the search, which included incriminating documents and other such relevant materials, was alongwith report and show-cause notice placed at the disposal of the Assessing Officer. These materials prima facie suggested suppression of sale considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there has been under assessment of the assessee's income for a particular year. We are satisfied that the first condition to invoke the jurisdiction of the Income Tax Officer under Section 147(a) of the Act was satisfied. 11. In case of Income Tax Officer vs Purushottam Das Bangur (supra) after completion of assessment in case of the assessee, the Assessing Officer received letter from Directorate of Investigation giving detailed particulars collected from Bombay Stock Exchange which revealed earning of share and price of share increased during period in question and quotation appearing at Calcutta Stock Exchange was as a result of manipulated transaction. On the basis of such information, the Assessing Officer issued notice for reopening of the assessment. The question, therefore, arose whether the information contained in the letter of Directorate of Investigation could be said to be definite information and the Assessing Officer could act upon such information for taking action under Section 147(b) of the Act. In such background, the Supreme Court observed as under : 12. Ms. Gauri Rastogi, the learned counsel appearing for the respondents, has urged that the letter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said letter. The report is made by a Government Department and that too after conducting a joint inspection. It gives a reasonably specific estimate of the excessive coal mining said to have been done by the respondent over and above the figure disclosed by it in its returns. Whether the facts stated in the letter are true or not is not the concern at this stage. It may be well be that the assessee may be able to establish that the facts stated in the said letter are not true but that conclusion can be arrived at only after making the necessary enquiry. At the stage of the issuance of the notice, the only question is whether there was relevant material, as stated above, on which a reasonable person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid. Inasmuch as, as a result of our order, the reassessment proceedings have not to go on we don not and we ought not to express any opinion on the merits. 13. In case of AGR Investment Ltd. vs. Additional Commissioner of Income Tax and Anr (supra), a Division Bench of Delhi High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the assessing officer had applied his mind to the information and independently arrived at a belief on the basis of material which he had before him that the income had escaped assessment. In our considered opinion, the decision rendered therein is not applicable to the factual matrix in the case at hand. In the case of Sarthak Securities Co. Pvt. Ltd. (supra), the Division Bench had noted that certain companies were used as conduits but the assessee had, at the stage of original assessment, furnished the names of the companies with which it had entered into transactions and the assessing officer was made aware of the situation and further the reason recorded does not indicate application of mind. That apart, the existence of the companies was not disputed and the companies had bank accounts and payments were made to the assessee company through the banking channel. Regard being had to the aforesaid fact situation, this Court had interfered. Thus, the said decision is also distinguishable on the factual score. 14. Learned Single Judge of Madras High Court in case of Sterlite Industries (India) Ltd. vs. Assistant Commissioner of Income Tax, reported in [2008] 302 ITR 275 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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