TMI Blog2020 (6) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... re premium received has not been mentioned nor there is any allegation that those share applicants were not traceable or they were bogus / paper companies indulged in sham transactions. Mere information that the assessee had received a high premium, in our view, cannot be said to be a reason to form the belief that the income of the assessee had escaped assessment. AO raised a suspicion, as mentioned in the reasons itself, regarding the source of the capital being not genuine or that it may be a modus operandi by the assessee to introduce its undisclosed income by way of share premium , however, this was a mere suspicion of the AO without even an iota of any incriminating tangible material against the assessee or even otherwise. The powers of Assessing Officer to reopen an assessment, though wide, are not plenary. The words of the statute are reason to believe and not reason to suspect . AO has wrongly and illegally assumed jurisdiction in this case to reopen the assessment. The reasons pointed out by the AO cannot be said to be the reasons to form the belief that income of the assessee had escaped assessment. In view of this, since the assessment order framed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order passed by the Assessing Officer u/s 147 of the Act. Since the legal ground taken by the assessee is regarding the validity of assumption of jurisdiction by the Assessing Officer to reopen the assessment and frame the assessment in question, hence, at the request of the parties, the legal ground is taken first for adjudication. 4. The Ld. Counsel for the assessee has submitted that there was no valid reason for the Assessing Officer to believe that the income of the assessee had escaped assessment. That the Assessing Officer has reopened the assessment without any tangible material coming to his knowledge or any other relevant evidence which may be sufficient to form the belief that the income of the assessee has escaped assessment. He has further submitted that the Assessing Officer has reopened the assessment on the basis of mere suspicion which could not be said to be the reason to believe of the escapement of income from assessment, which is sine qua non for issue of notice u/s 148 of the Act for reopening of the assessment. The Ld. Counsel in this respect has invited our attention to the reasons recorded by the Assessing Officer for reopening of the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015 passed in the case of M/s Lark Chemicals P. Ltd, Mumbai vs ACIT ITAT in ITA No. 2636/M/2013. 7. Now, coming to the contention of ld. DR that intimation issued u/s. 143(1) cannot be equated to an 'assessment'. We are very much aware of the position but merely because assessment was framed u/s. 143(1), it will not lead to the conclusion that the requirement of Section 147 with regard to reasons to believe can be dispensed with when the finality of intimation u/s.143(1) is sought to be disturbed as held by Hon'ble Delhi High Court in the case of Orient Craft Ltd. 354 ITR 536 and Hon'ble Supreme Court in the case of Kelvinator (I) Ltd., 320 ITR 561. 8. Now coming to the issue of reopening, as per the provisions of section 147 of the Act, the AO is authorized to reopen the assessment proceedings, if he has reason to believe that any income chargeable to tax has escaped assessment. The courts of law have time and again held that such a reason to believe that the income of the assessee has escaped assessment should be based on some tangible material which comes to the knowledge of the AO. An assessment cannot be reopened under section 147 of the Act on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and also the transaction is through a stock exchange. The Hon'ble ITAT, Chandigarh followed the decision of the Hon'ble Supreme Court in the case of Durga Das More, 82 ITR 540(SC). It may be noted that the decision of the Hon'ble ITAT has been upheld by the Hon'ble Punjab Haryana High Court in the case of Som Nath Maini, 306. ITR 414. The gist of the decisions is given below:- Assistant Commissioner Of Income-Tax. Vs Som Nath Mainu TTJ Citation : TTJ Citation 100 TTJ 917(chd) 1. After hearing the rival submissions, going through the orders of authorities below and paper book, we find that M/s Ankur International Ltd., although it is a quoted company, its shares were not being transacted at Ludhiana Stock Exchange at the relevant time. Shares have been purchased and sold through the brokers and payments have been received in cheque on different dates as per the statement of account of M/s S.K. Sharma Co. Factual matrix of the case from start of the purchase of shares at the rate of ₹ 3 to the sale of shares at ₹ 55 in a short span of time and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Generally, it is expected that apparent is real but it is not sacrosanct. If facts and circumstances so warrant that it does not accord with the test of human probabilities, transactions have been held to be nongenuine. It is highly improbable that share price of a worthless company can go from ₹ 3 to ₹ 55 in a short span of time, Mere payment by cheque and receipt by cheque does not render a transaction genuine. Capital gain tax vas created to operate in a real world and not that of make belief Facts of the zase only lead to the inference that these transactions are not genuine and male believe only to oft set the loss incurred on the sale of jewellery declared under VDIS. In the totality of facts and circumstances of this case and material on record, we, are of the considered view that the CIT(A) was not justified in deleting the impugned addition. We, accordingly set aside the order of the CIT(A) and restore that of the AO. Som Nath Maini. vs Commissioner Of Income-Tax. Taexpert Citation 1239 OF 2006 ITR Citation 306 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the human probabilities. The assessment has not been framed under scrutiny. Only processing was done u/s 143(1). 7. It is further to be noted that the Hon'ble Supreme Court has also discussed about the meaning of information. In the case of Commissioner of Income-tax v. A. Raman and Co.,67 ITR 11 the Supreme Court held: 'The expression ' information' in the context in which it occurs must, in our judgment, mean instruction or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment.' That information must, it is true, have come into the possession of the Income-tax Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected.' In Maharaj Kumar Kamal Singh v. Commissioner of Income-tax, [1959]35ITR1(SC) it was held that the word 'information' in Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax, when the first assessment of the assessee's income was nade by the Incometax Officer the latter's information was that the assessee was a partner in another concern known as Bisesar House and that the interest had been received from that concern in the capacity of a partner. It was only after the Tribunal and the High Court gave their decision in the proceedings for assessment to tax of Bisesar House that the Income-tax Officer came to know that the interest was not being received by the assessee-firm in the capacity of a partner but in its capacity of a financier advancing monies to Bisesar House as a banker. It was held that the Income-tax Officer had not acted on his own initiative or on the change of his own opinion when he took proceedings under Section 34(l)(b). The correct position had been brought to his notice by the decision of the Tribunal and the High Court and that must beheld to be 'information' as a consequence of which he came to believe that the provisions of Section 34(I)(b) were attracted . ' Reliance is also placed on the decision of Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers P. Ltd. in 291 ITR 500. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies form whom the share premium received has not been mentioned nor there is any allegation that those share applicants were not traceable or they were bogus / paper companies indulged in sham transactions. Mere information that the assessee had received a high premium, in our view, cannot be said to be a reason to form the belief that the income of the assessee had escaped assessment. The Ld. Assessing Officer raised a suspicion, as mentioned in the reasons itself, regarding the source of the capital being not genuine or that it may be a modus operandi by the assessee to introduce its undisclosed income by way of share premium , however, this was a mere suspicion of the Assessing Officer without even an iota of any incriminating tangible material against the assessee or even otherwise. The information received by the Assessing Officer was general and vague information, that of course, can be used to some extent by an Assessing Officer to make further enquiries to ascertain the true facts in a case of an ongoing assessment proceedings; however, in a concluded case of assessment, this general information without pointing out any incriminating information against the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention to the decision of the Coordinate Chandigarh Bench of the Tribunal in the case of D.D. Agro Industries Ltd v ACIT , ITA Nos. 349 350/Chd/2017 order dated 7.9.2017, wherein, on identical facts and circumstances, the Assessing Officer has recorded identical reasons to form belief for reopening of the assessment. The Coordinate Chandigarh Bench of the Tribunal has held that the Assessing Officer assumed jurisdiction relying upon the non-specific routine information blindly without caring to first independently consider the specific facts and circumstances of the case and that the assumption of jurisdiction by the Assessing Officer under the circumstances was wrong. The relevant part of the observations made by the Tribunal (supra) in the identical facts and circumstances of the case or to say in identical set of reasons recorded is reproduced as under:- In our considered view, considering the facts of the present case, we hold that the AO has assumed jurisdiction relying upon non specific routine information blindly without caring to first independently consider the specific facts of the assessee's case. The AO in his wisdom, instead of caring to refer to the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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