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TMI Blog2018 (7) TMI 1558X X X X Extracts X X X X X X X X Extracts X X X X ..... on 11/12/2012 and income was determined at Rs. 2, 44, 81, 670/-. In the case of the assessee, information have been received from the DDIT [Inv] Unit-3(1), Kolkata in reference to sharing of information of shell companies which have given accommodation entries for share premium in Surat based companies. Vide the referred communication, the DDIT [Inv] Unit 3-(1), Kolkata has provided list of 114 Kolkata based shell companies which have given accommodation entries in Surat based companies. It has also been stated by the DDIT [Inv] that master data of paper/shell companies maintained by the Kolkata Directorate which has been prepared/complied on the basis of statement of many entry operators/dummy directors recorded during various search & seizure operation/survey operations/investigations/inquiries was checked. On perusal of data so provided by the DDIT[Inv] Unit 3(1) Kolkata, it is noticed that during the period under consideration, the assessee company has accepted share capital/share premium from the following entries/parties which have been proved to be shell companies based on the investigation conducted by the DDIT(Inv) Unit-3(1), Kolkata: Sr. No Name of the Investo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hants Pvt. Ltd. , 6, Hanspukur Lane, 1st Floor, Room No. 106, Kolkata 7500 75000 2925000 Total 304600 2988500 118794000 On verification of the materials available on record and facts and circumstances of the case, it is seen that the assesee has shown to have received share capital/share premium amounting to Rs. 12, 17, 82, 500/-. Since, the investor companies have been proved to be shell companies indulged in providing accommodation entries, the share capital/share premium claimed to have been received, from such companies by the assessee company is not genuine. Therefore, this amount is nothing but assessee company's own money introduced in the grab of share capital/share premium from the shell company and as such liable for taxation under the provisions of section 68 of the I. T. Act. In view of the above facts, since the above companies are proved to be bogus/paper companies and were given accommodation entries to the assessee company by way of share capital and share premium during the F. Y. 2009-10. I have reason to believe that the share capital/share premium received to the extent of Rs. 12, 17, 82, 500/- (share capital Rs. 29, 88, 500 +Rs. 11, 87, 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar other actions, had admitted to have provided bogus accommodation entries. Counsel lastly contended that merely because such information was received by the Assessing Officer upon his queries breverseeing made with the Investigation Wing rather than the sequence being reverse would not vitiate the notice of reopening. The concept of impermissibility of roving or fishing inquiry cannot be attached to the stage prior to issuance of notice of reopening. In this context, he referred to section 133 of the Income Tax Act which vests the Assessing Officer with certain powers even when the assessment is not pending. 6. We have perused materials on record including the original files of the department with special focus on the four contentions raised by the counsel for the petitioner. One of them is possible of summary disposal. None of the alleged inaccuracies or the errors are demonstrated to be so fundamental as to vitiate the very proceeding for reassessment. No further discussion on this ground is needed. 7. Coming to the question of lack of sanction as required under section 151 of the Act before issuance of notice of reopening, we have perused the original files which would s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial collected by the Investigation Wing of the Income Tax department, Kolkata were supplied to the concerned Assessing Officers of beneficiary companies of such accommodation entries who happened to be stationed at Surat. Large number of reassessment notices were issued. Many of them were challenged before us. On the basis of multiple factual and legal aspects emerging, we have given our judgements in different cases from time to time. 9. The present is, however, a peculiar case where, instead of Investigation Wing of the Income Tax department at Kolkata providing any report or information, it was the Surat Unit of the Income Tax Department which apparently contacted the Investigation Wing at Kolkata and sought information whether there was any material to link the assessee companies at Surat with such bogus accommodation entry transactions. The modality for seeking such information was, we are informed, worked out on the basis of certain parameters and criteria with which we are not concerned. The fact remains that it was the Surat unit of the Income Tax department which got in touch with the Kolkata Investigation Wing of the Income Tax department and sought certain information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect to the exercise undertaken by the Assessing Officer. His view was that in the present case, the Assessing Officer initiated the inquiries at the Investigation Wing of the Income Tax department, Kolkata. He had no sound basis or reason to initiate such inquiry. According to the counsel therefore, the exercise undertaken by the Assessing Officer was vitiated on two grounds: (i) on initiating a roving inquiry and; (ii) asking for information wholly arbitrarily without having reason to believe that the assessee company had received bogus share application money. 12. It is by now well settled that for reopening of the assessment by issuing notice under section 148 of the Act, even in a case where previously no scrutiny assessment was carried out, the Assessing Officer must have reasons to believe that income chargeable to tax had escaped assessment. This aspect has been elaborated by this Court in case of Inductotherm (India) P. Ltd vs. M. Gopalan, Deputy Commissioner of Income Tax reported in 356 ITR 481 making following observations: "13. Despite such difference in the scheme between a return which is accepted under section 143(1) of the Act as compared to a return of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer and held that even post amendment of 01. 04. 1989 in section 147, concept of change of opinion would apply. It was observed as under: "6. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz. , that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re- open the assessment. Therefore, post-1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer reported in 2011 56 DDR (Guj) 212 Division Bench of this Court finding that the reasons recorded by the Assessing Officer for reopening of the assessment only provided that the Assessing Officer desiring to carry out a detailed investigation or verification to bring the assessee in the tax net held that notice of reopening of assessment was not valid. 15. The principle, that the notice of reopening can be issued only upon the Assessing Officer bona fide forming a belief that income chargeable to tax had escaped assessment is thus, well settled. Reassessment cannot be resorted to on mere suspicion or for carrying out fishing or roving inquiries. This is so for many reasons. Reopening of a completed assessment is a serious issue. Once an assessment is reopened on a certain ground, entire assessment at the hands of revenue would be at large. This Court in case of Gujarat Power Corporation Ltd vs. Assistant Commissioner of Income Tax reported in 350 ITR 266 had observed as under: "41. The powers under section 147 of the Act are special powers and peculiar in nature where a quasi-judicial order previously passed after full hearing and which has otherwise become final is subject t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner (Appeals)] may, for the purposes of this Act, - (1) require any firm to furnish him with a return of the names and addresses of the partners of the firm and their respective shares ; (2) require any Hindu undivided family to furnish him with a return of the names and addresses of the manager and the members of the family ; (3) require any person whom he has reason to believe to be a trustee, guardian or agent, to furnish him with a return of the names of the persons for or of whom he is trustee, guardian or agent, and of their addresses ; (4) require any assessee to furnish a statement of the names and addresses of all persons to whom he has paid in any previous year rent, interest, commission, royalty or brokerage, or any annuity, not being any annuity taxable under the head "Salaries" amounting to more than one thousand rupees, or such higher amount as may be prescribed, together with particulars of all such payments made ; (5) require any dealer, broker or agent or any person concerned in the management of a stock or commodity exchange to furnish a statement of the names and addresses of all persons to whom he or the exchange has paid any sum in connectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he specified manner in relation to such points or matters as in the opinion of the said authority will be useful or relevant to any inquiry or proceeding under the Act. The powers of the said specified authority under section 133 of the Act are thus quite wide. Such information and material can be called for, for the purpose of the Act. Pendency of an assessment is not a precondition for exercise of such powers. Even in absence of any pending assessment, such information or material may be summoned, not only from the assessee, being an individual HUF or a firm but also from any other person including a banking company or an officer thereof. Of course, these powers are not unguided or uncanalized and cannot be exercised at the whims of the assessing authority. For example, the powers specified under clause (6) of section 133 are hedged with such information which, in the opinion of the authority, would be useful or relevant to any proceedings under the Act. Thus, even in absence of any assessment, such powers can be exercised of course subject to fulfillment of the conditions provided therein. 18. In case of Pittambi Service Co-operative Bank Ltd and ors vs. Union of India and ors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and the statute itself takes care of such situation, by virtue of the mandate under Section 138 of the Income Tax Act. The said provision reads as follows:" 20. The said judgement was challenged before the Division Bench of Kerala High Court. Division Bench in case of Pittambi Service Co-operative Bank Ltd & ors vs. Union of India and ors reported in 387 ITR 299 dismissed the appeal. 21. In case of Karnataka Bank Ltd vs. Secretary, Government of India and ors reported in [2002] 255 ITR 508 the Supreme Court held and observed that it is not necessary that inquiry should have commenced with the issuance of notice or otherwise before section 133(6) could be invoked. It is with a view to collect information that power is given under section 133(6) to issue notice, inter alia requiring a banking company to furnish information in this respect of such points of matters as may be useful or relevant. Such information can be sought even when no proceeding under the Act is pending. This aspect was reiterated in case of Kathiroor Service Cooperative Bank Ltd vs. Commissioner of Income Tax (CIB) and ors reported in 360 ITR 243 making following observations: "In view of the aforesaid, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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