TMI Blog2018 (5) TMI 1845X X X X Extracts X X X X X X X X Extracts X X X X ..... munication of course, refers to handing over certain papers to him on 27-03-2017. However, this has reference only to the list (of shell companies) and not the further information received from Investigation Wing of Kolkata. It was contained in the brief email which accompanied the said letter dated 29-03-2017. Thus, it seems highly unlikely that the Assessing Officer would have decided to issue notice even before full information was supplied to him. In absence of any rebuttal we have no reason to discard the statement of the respondent-Assessing Officer made on oath which even otherwise gets support from the original files, attendant circumstances and facts noted above. - decided against assessee. - Special Civil Application Nos. 22489 & 22514 of 2017 - - - Dated:- 7-5-2018 - AKIL KURESHI AND B.N. Karia, JJ. For the Appellant : S.N. Soparkar, Sr. Adv. and B.S. Soparkar For the Respondent : Nikunt Raval and Mrs. Kalpanak Raval ORDER Akil Kureshi, J. These two petitions involve different assessees. They pertain to the notices issued by the Assessing Officer for reopening the assessments for the assessment year 2010-11. Background facts as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Investor Share Share Capital Share Premium 1. Galore supplier Pvt. Ltd 2, Digamber Jain Temple Road, 1st Floor, Room No. 28, Kolkata 37000 37000 3330000 On verification of the materials available on record and facts and circumstances of the case, it is seen that the assessee has shown to have received share capital/share premium amounting to ₹ 37,00,000/-. 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 such as 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d carried out detailed investigation. Stemming from recording of various statements of Directors of different companies pursuant to search and seizure and such other actions, the department claims that in many of these statements such Directors had admitted to be in control of various companies which were mere shell companies and had provided accommodation entries to range of companies. Such investigation reports based on the material 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 materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und to be shell companies and whose Directors' statements were recorded confirming this aspect. This is, therefore, not a case where the Assessing Officer was proceeding on borrowed satisfaction or that it had dearth information at his command to enable him to form a belief that income chargeable to tax had escaped assessment. 11. Counsel for the petitioner, as noted earlier, had raised a somewhat different contention with respect 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 ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This expression was, therefore, quickly changed to bring back the expression if the Assessing Officer has reason to believe . This aspect was highlighted by the Supreme Court in case of Commissioner of Income Tax v. Kelvinator of India Ltd. reported in 320 ITR 561. In context of section 147 of the Act post its amendment w.e.f. 01-04-1989, the Supreme Court held that Section 147 does not vest arbitrary power in the Assessing Officer 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, powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s again amended section 147 to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same. 14. This Court on number of occasions has held that reopening of assessment cannot be done for carrying out roving or fishing inquiries. In case of Bakulbhai Patel v. Income Tax Officer 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be made to section 133 of the Act. Chapter XIII of the Act pertains to Income Tax Authorities. Part A of Chapter XIII concerns appointment and control of the Income Tax Authorities, Part B to the Jurisdiction and Part C with their powers. Section 133 is included in Part C and reads as under: ** ** ** 22. In the present case, the Assessing Officer has not even called for any information or document from the assessee or any other person in relation to the assessee's proposed assessments. He has, by all accounts, merely contacted the Investigation Wing of the Income Tax department at Kolkata and based on the process of shortlisting, has called for information with respect to dealings of such shortlisted companies. If on the basis of the information so collected, no further information, is made available to the Assessing Officer which would enable him to form a belief that income chargeable to tax had escaped assessment, he would not be justified in issuing notice for reopening. Only in cases, where on the basis of such information he could bona fide form a belief that income chargeable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the judgement of this Court in case of Aishwarya Dying Mills (P.) Ltd. (supra) in which, notice of reopening of assessment on similar grounds have been upheld, further discussion on the issue is unnecessary. We however, have to take into consideration two additional contentions raised by the counsel for the petitioners in the present petitions. 9. His first contention was that the Assessing Officer in the present case had called for certain information from the Investigation Wing of the Kolkata and upon being supplied the material, formed a belief that income chargeable to tax had escaped assessment. According to him, this was wholly impermissible. This Court while rejecting such a contention in case of Aishwarya Dying Mills (P.) Ltd. (supra) placed reliance on section 133 of the Act without noticing provision to sub-section (6) thereof. From the quoted portion of the judgement of this Court in case of Aishwarya Dying Mills Ltd, we could gather that such a contention was raised and rejected by the Court. In the process, the Court undoubtedly made a reference to the powers of an Assessing Officer under section 133 of the Act, in particular, sub-section (6) thereof. The prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing or office of the department, and which information he utilizes and on the basis of reliable information so provided to him he forms a belief that income chargeable to tax had escaped assessment, we do not find that such process can be faulted. Accepting the contention of the counsel for the petitioners would amount to rendering an Assessing Officer a mute spectator once the assessment is over and allowed to act only after some information is provided to him by some other departmental authority or wing. There is neither any statutory force nor any reason to limit his role in this respect. 11. Coming to the question of sequence of events relating to issuance of notice, few events, which emerged from the files made available for our perusal and with respect to which the counsel for the petitioners had not raised any serious factual dispute, may be recorded. On 29-03-2017, the Joint Commissioner of Income Tax, Range-I, Surat, wrote to the respondent-Assessing Officer pointing out that the Investigation Wing of Kolkata had confirmed that out of 389 companies sent by Principal Commissioner of Income Tax, III-Surat, about 114 companies appeared in the list of bogus or shell compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfying himself about the reasons recorded by the DCIT, Circile-1(1)(1), Surat, i.e. the undersigned himself. (iv) The notice u/s. 148 of the Act, was prepared after getting the said approval u/s. 151 of the Act and was issued/dispatched to the assessee i.e. M/s. Amit Polyprints Pvt. Ltd. viz Speed Post on 31-03-2017 itself. (v) The Speed Post has unique number of track the consignment. The number attached to this notice was EG408021705IN. This number also mentioned on the foot note of the notice, as it is a general practice followed in the Income Tax Department. (vi) The invoice receipt of the Postal Department showing the dispatch of the said notice mentioned the time of dispatch as 23:33 Hours of 31-03-2017. (vii) It shows that the notice left the premise of the office of the DCIT, Circle-1(1)(1), Surat i.e. the undersigned only after due approval was received from the Hon'ble Pr. Commissioner of Income Tax-I, Surat on 31-03-2017 and not before it. Hence, it is clear that the date has been mentioned erroneously as 27-03-2017 due to typographical error. (viii) It is also submitted that notice was also sent by e-mail from the official designation based e-mail ..... X X X X Extracts X X X X X X X X Extracts X X X X
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