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TMI Blog2020 (1) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 20,00,000/- as made by Assessing Officer u/s 68 of the I.T. Act, 1961. 4. That the assessee craves leave to add, to withdraw or amend all or any of the grounds aforesaid on or before the hearing of the appeal. 3. Facts of the case which can be stated quite shortly are as follows: The assessee filed its return of income for the A.Y. 2008-09 declaring a total income of Rs. 760/-. Later on, assessment was reopened and notice u/s 148 of the Act was issued on 21.03.2014. On perusal of income tax return for the A.Y. 2008-09, the AO noticed that the assessee company kept liability of Rs. 10,73,30,000/- towards Securities Premium Account in the Balance Sheet, whereas returned income of the assessee company during the A.Y. 2007-08 was to the tune of Rs. 760/- only. The assessing officer noticed that the information "to whom shares of the assessee company were allotted during the F.Y. 2007-08" had not been furnished by the assessee. Since the assessee company did not respond the notice u/s 142(1) of the Act, therefore the necessary verification of share premium could not be done. The assessee`s case was re-opened on the basis of deposit of a cheque of Rs. 20 lakh at the bank account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . According to Ld. Counsel, even if the information given by the ITO,wd.6(3), Kolkatais adverse against the assessee, at the most it may trigger "reason to suspect"; then AO has to make reasonable enquiry and collect material which would make him believe that there is in fact an escapement of income. Without doing so, the jurisdictional fact necessary to usurp jurisdiction to reopen the regular assessment cannot be made by the AO. For the said proposition, the Ld. AR drew our attention to following case laws: i).PCIT Vs. Meenakshi Overseas Ltd. 395 ITR 677(Del.) (referred to para 19 till para 37). ii).DCIT Vs. Greal Wall Marketing Pvt. Ltd. ITA No.660/Kol/2011 (referred to page 10 para 11) iii).Shri Raj Kumar Goel Vs. ITO ITA No.1028/Kol/2017 (referred to page 5-8 para 11) (iv).Classic Flour & Food Processing Pvt. Ltd. Vs. CIT ITA Nos. 764 to 766/Kol/2014 (page 7 para 12 to 16) v).PCIT Vs. Shodiman Investments (P) Ltd. (2018) 93 taxmann.com 153 (Bom) page 4 para 12 to 14) vi).KSS Petron Pvt. Ltd. Vs. ACIT ITA No. 224/Mum/2014 (referred to page 3 para 8- 11) vii).PCIT Vs. Tupperware India Pvt. Ltd. (2016) 236 Taxman 494 (referred to page 3 para 6 and 9) viii).DCIT Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-opening notice in its entirety, to the Respondent-Assessee. This was contrary to and in defiance of the decision of the Apex Court in GKN Driveshafts v. ITO [2002] 125 Taxman 963/ [2003]259 ITR 19. The entire objects of reasons for re- opening notice as recorded being made available to an Assessee, is to enable the Assessing Officer to have a second look at his reasons recorded before he proceeds to assess the income, which according to him, has escaped Assessment. In fact, non furnishing of reasons would make an Assessment Order bad as held by this Court in CIT v. Videsh Sanchar Nigam Ltd. [2012] 21 taxmann.com 53, 340 ITR 66. In fact, partial furnishing of reasons will also necessarily meet the same fate i.e. render the Assessment Order on re- opening notice bad. Therefore, on the aboveground itself, the question as proposed does not give rise to any substantial question of law as it is covered by the decision of this Court in Videsh Sanchar Nigam Ltd.'s case (supra) against the Revenue in the present facts. 10. Besides, the submissions made on behalf of the Revenue that in view of the decision of the Apex Court in Rajesh Jhaveri Stock Brokers (P) Ltd.'s, case (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of tangible material could be, prima facie, formed to conclude that income chargeable to tax has escaped assessment. Mr. Mohanty, learned counsel is ignoring the fact that the words 'whatever reasons' is qualified by the words 'having reasons to believe that income has escaped assessment'. The words whatever reasons only means any tangible material which would on application of the facts on record lead to reasonable belief that income chargeable, to tax has escaped, assessment This material which, forms the basis, is not restricted, but the material must lead to the formation of reason to believe that income chargeable to tax has escaped Assessment Mere obtaining, of material by itself does not result in reason to believe that income has escaped assessment. In fact, this would be evident from the fact that in para 16 of the decision in Rajesh Jhaveri Stock Brokers (P) Ltd. 's, case (supra), it is observed that the word 'reason' in the 'reason to believe' would mean cause or justification. Therefore, it can only be the basis of forming the belief. However, the belief must be independently formed in the context of the material obtained that there is an escapemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is reason that the recorded reasons even does- not indicate the amount which according to the Assessing Officer, has escaped Assessment. This is an evidence of a fishing enquiry and not a reasonable belief that income chargeable to tax has escaped assessment. 14. Further, the reasons clearly shows that the Assessing Officer has not applied his mind to the information received by him from the DDIT (Inv.). The Assessing Officer has merely issued a re-opening notice on the basis of intimation regarding re-opening notice from the DDIT (Inv.) This is clearly in breach of the settled position in law that re- opening notice has to be issued by the Assessing Office on his own satisfaction and not on borrowed satisfaction. 15. Therefore, in the above facts, the view taken by the impugned order of the Tribunal cannot be found fault with. This view of the Tribunal is in accordance with the settled position in law. 16. Therefore, the question; as framed does not give rise to any substantial question of law. Thus, not entertained." 10. Having taken into consideration the aforesaid judicial precedents and other case laws cited before us by both the parties, in order to appreciate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion from ITO, Wd. 6(3), Kolkata. We note that reasons recorded by AO are only on the basis of appraisal report. These reasons are merely to conduct further inquiry, which is evident from the second para of the reasons recorded by AO, which is reproduced below( to the extent applicable for our discussion) for ready reference: "On the basis of appraisal report [Badalia Group of cases, Sri M. M. Daga and I. C. Baid were involved with Badalia Group], assessment was completed by ACIT. CC.XXVII and information was passed on to ITO, Wd. 6(3), Kolkata. He then passed on his findings as stated above for further enquiry at this end." It is clearly evident from the reasons recorded by the Assessing Officer that there was actually no reason for him to have formed a belief about the escapement of any income of the assessee from the assessment, but the assessment was reopened by him to verify or to conduct further enquiry or to examine certain particulars furnished by the assessee in the return of income.Therefore, it is abundantly clear from the reasons recorded that these are based on appraisal report to conduct further inquiry only.Therefore, it is clear that there is no independent ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the mind of the AO which is not the sufficient/requirement of law for reopening of assessment. The 'reasons to believe' is not synonymous to 'reason to suspect'. 'Reason to suspect' based on an information can trigger an enquiry to find out whether there is any substance or material to substantiate that there is merit in the information adducedby another Income Tax Officer, based on appraisal report of Badalia Group cases, and thereafter the AO has to take an independent decision to re-open or not. And the AO should not act on dictate of any other authority (like in this case an another Income Tax Officer, based on appraisal report of Badalia Group cases), because then it would be borrowed satisfaction. In such a scenario, when the AO was in receipt of the information from another Income Tax Officer, based on appraisal report of Badalia Group cases, he ought to have made enquiries to unravel the truth. It has to be remembered that information is not synonymous to truth. The AO failed to quantify the escapement of income in the reasons recorded. As stated earlier, we note that AO simply on the basis of the information by another Income Tax Officer, which is based on appraisal rep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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