TMI Blog2019 (8) TMI 1420X X X X Extracts X X X X X X X X Extracts X X X X ..... elief of the AO to a limited extent to look into whether there was sufficient material available on record for the AO to form a reasonable belief and whether there was a live link existing of the material and the income chargeable to tax that escaped assessment. The case on hand is not one where it could be argued that the AO, on absolutely vague or unspecific information, initiated the proceedings of reassessment without taking the pains to form his own belief in respect of such materials. - R/SPECIAL CIVIL APPLICATION NO. 14514 of 2019 - - - Dated:- 27-8-2019 - MR J. B. PARDIWALA AND MR A. C. RAO, JJ. For The Petitioner (s) : MR DARSHAN B GANDHI (9771) For The Petitioner (s) : MR SP MAJMUDAR (3456) ORAL ORDER ( PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs: ( i) This Hon'ble Court may be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing reasons for reopening at A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said return has been processed by CPC. Further, on perusal of R.O.I filed it is noticed and found that assessee had borrowed an unsecured loan to the extent of ₹ 8,51,724/-. The assessee not come forward to provide the details called for and no explanation for such accommodation entries as beneficiaries disclosed. 6. Basis of forming reason to believe and details of escapement of income: On the basis of ROI and ITS data the particulars of information as discussed above has been noticed and found. On perusal of Return of Income filed assessee company has obtained the accommodation entries received as beneficiaries to the extent of ₹ 1,20,00,000/-. The assessee not come forward to provide the details called for and no explanation for such accommodation entries received as beneficiaries has been explained. 7. Sixth paragraph will provide 'basis of reason to believe'. Though no material regarding accommodation entries as beneficiaries of ₹ 1,20,00,000/- has been explained. The assessee has not disclosed accommodation entries as mentioned above which has escaped assessment of ₹ 1,20,00,000/- 8. Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent passed a speaking order, overruling the objections raised by the writ applicant as regards the reopening of the assessment. The order reads thus: Further, Praveen kumar Jain has admitted in his statement recorded on oath U/s. 132[4] of the I.T Act 1961 on 01.10.2013 that he is indulged in providing accommodation entries and also explained the complete modus operandi of providing such entries. In continuation, he had admitted in Question No.75 and furnished the name of 13 company In which he is director and list of name of 39 companies in which he managed and controlled by him. Further, the concerned persons/firm/company/proprietorship concerned controlled by him and one of the company managed and controlled by Praveen kumar Jain is Josh Trading Pvt. Ltd having [PAN NO AACJ4233] and assessee Company Meghavi Minerals Pvt. Ltd. Obtained the accommodation entries has been provided through broker to the extent of ₹ 1,00,00,000/- and ₹ 20,00,000/- respectively by Praveenkumar Jain self. [ Copy of the extract same is hereby provided to assessee company-5] [ 5] How the said material and case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessee company has obtained the accommodation entries from Praveenkumar Jain, who controlled and managed 39 companies in which one of the company Josh Trading Pvt. Ltd having [Pan No:AACCJ4233H] and assessee company Meghavi Minerals Pvt. Ltd obtained the accommodation entries and the same has been provided through broker to the extent of ₹ 1,00,00,.000/- and ₹ 20,00,000/- respectively by Praveenkumar Jain self. [ Copy of the extract same is hereby provided to assessee company] as mentioned in para-4 of this order. We would like to submit that the assessee has not received any loan from Praveeenkumar Jain during the year A.Y.2012-13. It seems that the information on the basis of which you intended to re-open the assessment is factually incorrect. In view of the above facts it seems that you have no jurisdiction to reopen the assessment on basis of factually incorrect reasons recorded. We humbly believe that proceedings u/s. 148 of I.T. Act, requires to be drop down. We will be pleased to furnish any other information required by your good self. 7.2 Further objection raised that asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Furthermore, it is true that you have filedoriginal ROI u/s. 139 on 13/02/2014 after due date and income declared in ROI as per your computation. The reason recorded for re-opening, it is Obvious that the information pertains may after due verification and information are examination of details and information gathered and thereafter conclusion of the facts and evidence leads to finding of reason recorded before reopening the assessment. There are instance that person having PAN number but not filed the ROI and information received in the case is also re-opened in the case of nonfilers. 11. On this issue, the reason to believe arrived at after verifying the facts and figure and thereafter, a concrete conclusion before framing the reopening the case. In which it appears that such income has escaped assessment. In this regards, reopening proceedings are not based on any borrowed satisfaction and not independent opinion has been formed. Further, case has been re-opened after verifying the Return of income and gathered information/details the same has been classified verified and cross examined the issue. The fact and evidence on records the same has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the purpose of the Act, the validity of the assumption of jurisdiction under Section 147 can be tested only by reference to the reasons recorded under Section 148(2) of the Act and the Assessing Officer is not authorized to refer to any other reason even if it can be otherwise inferred or gathered from the records. The Assessing Officer is confined to the recorded reasons to support the assumption of jurisdiction. He cannot record only some of the reasons and keep the others upto his sleeves to be disclosed before the Court if his action is ever challenged in a court of law. ( ii) At the time of the commencement of the reassessment proceedings, the Assessing Officer has to see whether there is prima facie material, on the basis of which, the department would be justified in reopening the case. The sufficiency or correctness of the material is not a thing to be considered at that stage. ( iii) The validity of the reopening of the assessment shall have to be determined with reference to the reasons recorded for reopening of the assessment. ( iv) The basic requirement of law for reopening and assessment is applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to arrive at a subjective satisfaction independently on an objective criteria. ( xi) While the report of the Investigation Wing might constitute the material, on the basis of which, the Assessing Officer forms the reasons to believe, the process of arriving at such satisfaction should not be a mere repetition of the report of the investigation. The reasons to believe must demonstrate some link between the tangible material and the formation of the belief or the reason to believe that the income has escaped assessment. ( xii) Merely because certain materials which is otherwise tangible and enables the Assessing Officer to form a belief that the income chargeable to tax has escaped assessment, formed part of the original assessment record, per se would not bar the Assessing Officer from reopening the assessment on the basis of such material. The expression tangible material does not mean the material alien to the original record. ( xiii) The order, disposing of objections or any counter affidavit filed during the writ proceedings before the Court cannot be substituted for the reasons to believe. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation in Section 147 means instruction or knowledge derived from the external source concerning the facts or particulars or as to the law relating to a matter bearing on the assessment. An information anonymous is information from unknown authorship but nonetheless in a given case, it may constitute information and not less an information though anonymous. This is now a recognized and accepted source for detection of large scale tax evasion. The non-disclosure of the source of the information, by itself, may not reduce the credibility of the information. There may be good and substantial reasons for such anonymous disclosure, but the real thing to be looked into is the nature of the information disclosed, whether it is a mere gossip, suspicion or rumour. If it is none of these, but a discovery of fresh facts or of new and important matters not present at the time of the assessment, which appears to be credible to an honest and rational mind leading to a scrutiny of facts indicating incorrect allowance of the expense, such disclosure would constitute information as contemplated in clause (b) of Section 147. ( xx) The reasons recorded or the material availa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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