TMI Blog2018 (8) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no tangible, specific material to justify the impugned reassessment notice. For the above reasons, this petition has to succeed. The impugned reassessment notice dated 30.03.2016 and all further proceedings are hereby quashed. The petition is allowed - decided in favour of assessee - W.P.(C) 11324/2017, C.M. APPL.46251/2017 - - - Dated:- 30-7-2018 - MR. S. RAVINDRA BHAT AND MR. A.K. CHAWLA JJ. Petitioner Through: Dr. Rakesh Gupta, Sh. Sonil Agarwal, Ms. Monika Ghai and Sh. Rohit Kumar Gupta, Advocates. Respondents Through: Sh. Zoheb Hossain, Sr. Standing Counsel with Sh. Deepak Anand, Jr. Standing Counsel. MR. S. RAVINDRA BHAT 1. The writ petitioner, which is engaged in consultancy business in the segment of product promotion and sales services marketed by M/s. Seagram s India Ltd is aggrieved by the re-opening of its assessment for A.Y. 2010-11 under Section 148 of the Income Tax Act, 1961 [hereafter the Act ]. It seeks directions for quashing of the reassessment notice. 2. The facts briefly are that for two previous years A.Y.s 2007-08 and 2008-09, orders seeking to re-examine the original scrutiny assessments were made under Section 263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.08.2017, the revenue sought to re-open the assessment by issuing notice under Sections147/148 of the Act, on 27.03.2017, but for A.Y. 2010-11. In response to the assessee s request, the Revenue furnished the reasons for reopening an assessment. This inter alia reads as follows: 2. In fact investigation into the affairs of the company started on receipt of TEP bearing UIN No. 090845052X (Placed as annexure B). As per the TEP received in the investigation wing of the department the said company made collections from their principals i.e. M/s Pernod Ricard India Pvt Ltd. The company further issued accounts payee cheques in the name of various sub-contractors (allegedly bogus entities) in their names and withdraw cash by self cheques from their accounts and distributed cash in Defence canteens as bribes. On the basis of said TEP and other material available on record case of the assessee for the AY 2007-08 was reopened u/s 263of the Income Tax Act, 1961 and for AY 2008-09 proceedings u/s 147 of the Income Tax Act,1961 were completed and therein a substantive addition of ₹ 1,60,94,586/- on account of disallowance of subcontracting expenses. Further the case of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue directions for proper examinations of the charge in business pattern purchases made during the year. It may also be suggested that the reason for NIL closing stock as on 31.03.2010 be also examined. 7. In view of the additional information/documents received from the Investigation Wing and O/o DGIT (Vigilance), New Delhi material/documents available on record I have reason to believe that Contractor's charges shown in its P L Accounts are bogus and the assessee has willfully and knowingly concealed its particulars of income to avoid tax and that income of ₹ 3,07,95,559/- chargeable to tax has escaped assessment for A.Y. 2010-11, within the meaning of section 147 of the Income tax Act, 1961. 4. The petitioner assessee objected to the re-opening of its assessment for A.Y. 2010-11. It relied importantly upon the fact that its challenge to the opening of reassessment for A.Y. 2009-10 was sub judice and pending before this Court in W.P.(C) 10507/2016 Sky View Consultants Pvt. Ltd. v. Income Tax Officer. It pointed out that on 07.09.2016, this Court had decided the cases and had allowed the petition, ruling that information relating to one A.Y. was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or AY 2007-09 order made pursuant to remits after revision to say that the final order, endorsed by the CIT nowhere indicated that similar expenditure was not genuine. This constituted material available , but was deliberately avoided by invoking power of reassessment under Section 148. 6. In its counter affidavit, and during oral arguments, the revenue, through its counsel, Zoheb Hossain argued that the present controversy arose because of a TEP by the revenue contending that the assessee was engaging in claiming bogus expenditure on account of sub-contractors in its books. It was also alleged that the amount so booked was later withdrawn in cash and used for payment of bribes. Significantly, a complaint was also received against the particular assessing Officer who conducted the assessment proceedings for A.Y. 2007-08, wherein the bogus expenditure was allowed. It was emphasized that the application of mind by the revenue was at two levels- i) by the Investigation Unit on the contents of the TEP by issuing summons to the assessee and providing it an opportunity to establish the genuineness of the said expenditure; and ii) by the AO in the present case who did not blindly foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Phool Chand Bajrang Lal v. ITO (1993) 203 ITR 456 (SC). 8. The disputed reassessment notice, according to the petitioner/assessee is based upon stale material, which does not have a live link with the original assessment and at best only points to suspicion and conjectures with respect to bogus business expenditure, but does not point to tangible fresh material. The assessee relies on unsuccessful attempts by the revenue, for past assessment years to re-open concluded scrutiny assessments, notably 2007-08 and 2008-09, on virtually the same grounds. It is also highlighted that these unsuccessful attempts, though a matter of record, and pointedly referred to in its objections, was studiously ignored when the reassessment notice was issued. Lastly, it was argued that even the revised assessment for previous years, on the same ground, resulted in insignificant additions, thus implying that the expenses were genuine. 9. The note recommending reassessment, in this case, through a letter dated 23.03.2015 inter alia, the ITO (Inv) to the Deputy Commissioner of Income tax, stated as follows (after referring to the previous assessment, revision, addition and reduction of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NDINGS RECOMMENDATION In order to verify the allegations of bogus expenses claimed under the head contract charges claimed in the P L account, the assessee was asked to provided opportunity to explain the expenses and to provide the necessary details which were called for vide summons u/s 131(1A) dated 04-03-2015 so that independent enquiries could by conducted form the third parties. The assessee has neither provided any justification with documentary evidence nor the details of the parties to who the contract charges were paid. Mere clam that the payments were made to the contractors through account payee cheque does not prove the genuineness of the transaction and also the identity of the person to whom the payments have been made as claimed under the head contract charges. In view of the above facts of the case, the assessee did not discharge its onus to prove the genuineness of the expenses claimed under the head contract charges, therefore, I am directed to forward the TEP to you with request to take necessary remedial action u/s 147 of the IT Act for assessment year 2008-09 to 2011-12. This issues with the approval of the Principal Director of Income Tax( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was acceptable to the appellant due to his personal conditions, is justified and no further disallowance is called for. The disallowance of ₹ 3,21,371/- made by the AO is directed to be deleted. 10. In W.P.(C) 10507/2016, which was allowed by this Court on 07.09.2017, it was held that: 11. In the present case, the fact that the assessment order passed after the re- opening of the assessment for AY 2008-09 may have found the entities to whom the Petitioner issued cheques to be fictitious cannot be looked into for the simple reason that it was an order passed 21 days after the reasons in the present case were recorded for re-opening of the assessment for AY 2009-10. In any event, this will not answer one of the principal grounds urged by Dr. Gupta that the tangible material that is required to be shown for justifying the re-opening of assessment has to be relevant to the AY in question, i.e. AY 2009-10. 12. In Commissioner of Income Tax v Gupta Abhushan (P) Ltd. [2009] 312 ITR 166 (Del), it is emphasised that information relating to one AY will not automatically become relevant for re-opening the assessment for another AY. If that would be the position, then t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 131 (1A) can be exercised only by officers named therein and they are all officers in the Department superior to the ITO. If the ITO had to exercise the powers under that provision, he had to be duly authorized to do so. He clearly was not and, therefore, the reports submitted by him could not have formed the valid basis for re-opening the assessment. 16. The third material referred to in the reasons for reopening the assessment, is the investigation undertaken by the DGIT (Vigilance) into the conduct of the erstwhile AO of the Petitioner. A perusal of the letter dated 2nd November 2011 written by the Director (Vigilance) to the DGIT (Vigilance) does not throw any light on any material relevant to AY 200910. In fact, the concluding paragraph of the said letter a request is made for reopening of the assessment for the AY 2007-08 by invoking Section 263 of the Act. This explains why that route was resorted to for AY 2007-08. 17. This Court is therefore satisfied that the jurisdictional requirement for reopening of the assessment for AY 2009-10 has not been fulfilled in the present case. Consequently, the notice dated 29th March 2016 issued by the AO under Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r his assessment during the concluded assessment proceedings, any part of his income, profits or gains chargeable to income-tax has escaped assessment. He may start reassessment proceedings either because some fresh facts had come to light which were not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information. In Gupta Abhushan (supra), in respect of a similar reassessment notice, which relied on a survey conducted after the concerned assessment period, the reopening of assessment under Sections 147/148 was quashed; the Court observed that: Here too, we note that the survey was conducted on 07.03.2002, which falls in the year subsequent to the three years in question in these appeals. The fact that the renovation expenses had not been booked in that year, i.e., financial year ending on 31.03.2002 does not by itself indicate that renovation work had been carried on in the earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X
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