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TMI Blog2021 (2) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent proposing to reopen the completed assessment of the Petitioner for A.Y. 2012-13 and the order of objection dt.23-7-2019 (AnnexureB) as well as the reassessment order, if any passed in consequence to the impugned notice. (b) to call for the records of the proceedings, look into them and be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing the impugned notice as well as the order of objection dt.2372019 (Annx.B). (c) Pending the hearing and final disposal of this petition to maintain status quo in the matter and ask the Respondent and its subordinate not to take any action or to do anything in furtherance and pursuance of this impugned notice. (d) To allow this Petition with cost." 4. The subject matter of challenge in this writ application is the impugned notice dated 30.03.2019 (Annexure A to this writ application) issued by the Income Tax Department under Section 148 of the Income Tax Act, 1961 (for short "the Act, 1961") for reopening of the assessment for the years 20122013 as the authority has reason to believe that the income chargeable for the assessment years 201213 has escaped assessment within the meaning of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. Hence, necessary sanction to issue notice u/s. 148 of the Act has been obtained separately form the Principal Commissioner of Income Tax-5, Ahmedabad, as per the provisions of Section 151 of the Act." 5. It appears that the writ applicant lodged its objections as under: "1. On the basis of which material /data you have relied to say that various entities such as Sew Commercial Co. Ltd. Satyam Steel Industries, Krishna Industries, Krunal Industries are not genuine ? 2. By merely saying assessee has been inflating its expenses by booking bogus expenses without receiving any actual goods/service is not valid ground for reopening of case. 3. How you can you say without any evidence or material that assessee has claimed bogus commission expenses or other expenses ?" 6. The objections came to be disposed of vide order dated 23.07.2019 holding as under: "3.1 During the course of inquiries conducted By the Investigating Wing of the Income Tax Department, it was found that the assessee has booked bogus expenditure in the name of various bogus entities such as Sew Commercial Co., Satyam Steel Industries, Krishna Industries, Krunal Industries etc. From verification of return o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of available on record. Thus, it is on the basis of tangible material available with the Assessing Officer, he has formed a prima facie opinion/belief that the income chargeable to tax has escaped assessment. In the present case, since the necessary conditions to reopen the assessment have been duly fulfilled, sufficiency of the reasons is not to be gone into at this stage. Reliance is placed on the decision of Hon. Gujarat High Court in Aaspas Multimedia Ltd. Vs. DCIT [2017] 249 Taxman 568. 7. The Revenue has filed affidavitinreply opposing this writ application making the following averments: "5.2 with reference to para 3.6 it is submitted that eh same are baseless and contrary to the facts on record. The petitioner has made false apprehensions to justify the writ petition filed by abandoning the statutory remedies available. As can be seen from the documents furnished by the petitioner as part of the petition, the notice under Section 148 of the Act was issued on 30.03.2019; the petitioner - assessee has filed the return of income in response to the notice on 19.04.2019; the reasons recorded by the Assessing Officer for reopening the assessee was provided on 16.05.2019; t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for reopening in the case of the petitioner assessee is that the Assessing Officer should have reason to believe that income chargeable to tax has escaped assessment. Such belief was formed by the Assessing Officer on the basis of specific information received through the Investigating Wing that the assessee had suppressed its taxable income by booking bogus expenditure against different parties without receipt of any goods or providing any services. Such information was considered by the Assessing Officer vis-a-vis the immediate verifiable source i.e. facts disclosed by the petitioner in the return of income and formed a prima facie velied that income chargeable to tax has escaped assessment. Therefore, tangible material was available with the AO to form an opinion that the income chargeable to tax has escaped assessment for the year under consideration. Thus, the case of petitioner was covered under the provisions of Clause (b) of Explanation 2 to Section 147 of the Act. The respondent rely on the order dated 23.07.2019 passed for disposing of the objections raised by the assessee at Annexure-C as annexed above. It is pertinent to mention here that in catena of judgments, var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust have reason to believe that the income chargeable to tax had escaped assessment." 8. Mr. S.N.Divatia, the learned counsel appearing for the writ applicant vehemently submitted that the decision to reopen the assessment is merely on a doubt expressed by the authority that the writ applicant has been suppressing its taxable income by booking bogus expenditures and by making payments against the bills raised by different parties without the receipt of any goods or services. He would submit that there is no material worth the name to indicate any of such bogus transactions with the entities namely Sew Commercial Co. Ltd., Satyam Steel Industries, Krishna Industries and Krunal Industries. He would submit that by merely alleging that the writ applicant has been inflating its expenditure by booking bogus expenses without receiving any actual goods/services is not a valid ground for the reopening of the assessment. He would argue that there is not an iota of materials to indicate that the assessee had claimed bogus commission expenses or other expenses. Mr. Divatia in support of his submissions has placed reliance on the decisions of this Court rendered in the case of (1) Pushpak Bull ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the year under consideration is justified ? The following principles of law are descernable from the various decisions of the Supreme Court and this Court on the subject of reopening of the assessment under Section 147 of the Act, 1961 : "(i) The Court should be guided by the reasons recorded for the reassessment and not by the reasons or explanation given by the Assessing Officer at a later stage in respect of the notice of reassessment. To put it in other words, having regard to the entire scheme 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income under section 139 or in response to the notice issued under subsection (1) of Section 142 or Section 148 or (b) to disclose fully and truly all the material facts necessary for his assessment for that purpose. (x) The Assessing Officer, being a quasi judicial authority is expected 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 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not allow the Assessing Officer to make the necessary inquiries. (xix) The word "information" 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 nondisclosure 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 claus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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