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TMI Blog2021 (2) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... ings, look into them and be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing the impugned 148 notice dated 05.03.2018 at Annexure -A and objection order dated 19.09.2018 at Annexure - E. B) This Hon'ble Court be pleased to issue a writ of mandamus or any other appropriate writ, order or direction asking the respondent not to proceed further in pursuance of Section 148 notice at Annexure- A and objection order at Annexure - E. C) Pending the hearing and final disposal of this application, this Hon'ble Court be pleased to stay further proceedings in pursuance of section 148 notice at Annexure-A. D) This Hon'ble Court be pleased to grant any further or other relief as this Hon'ble Court deems just and proper in the interest of justice, and E) This Hon'ble Court be pleased to allow this application with costs against the respondent" 4. We may clarify at this stage that the writ applicant herein, namely Heval Navinbhai Patel is the unmarried daughter of the writ applicant of the connected writ application. 5. The subject matter of challenge in the present writ application is to the notice issued by the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash books/cash vouchers/day books with sale deeds of land transaction, it is ample clear that there were huge unaccounted cash transaction. (4) EC Transaction: During the search operation at the premise as discussed above, it is noticed that there is a noting as 'Against EC". It has been decoded that an "Against EC" transaction is unaccounted day cash receipt and payment of equivalent amount of RTGS in the bank account. For example, if there is cash receipt against EC, it indicated that the Equivalent amount of RTGS has been paid to the other party through banking channel. Thus, one leg of the transaction is reflected in cash book and another leg in the bank book. These 'Against EC' vouchers are recorded in the unaccounted day cash book' (5) It is noteworthy that the entries of date and amount are coded from i.e. the date of transaction has been pre-dated by 10 years and the actual amount has been represented in the cash book by taking (1/100t) of the actual value. After, obtaining records from the Sub registrar(s) offices, various beneficiaries have been identified who have transacted in unaccounted cash while dealing with the entities of Venus Group. In addition to the above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial found and seized from the premises of Venus Group nor forming part of the reason recorded and therefore, my saying that I have not received any amount of Rs. 9.07 crore is also supported in absence of any supporting evidence. 4. I further object the search reopening which is based on mere general observation nor there is any tangible material or nexus with the so called escapement of income and therefore, the reopening is bad in law. 5. I further say that, there is no reference to any information received from the Assessing Officer of Venus Group in the reason recorded nor there is any application of mind seems to be applied and therefore, the reopening made is bad in law, ab initio void and illegal and therefore, liable to be quashed in toto. 6. Further, there is no such approval u/s. 151 of the prescribed authority and therefore, the reopening made is itself bad in law and void. I hereby say that any correspondence in this regards may please be made at e-mail id [email protected] and necessary speaking order may please be mailed with supporting evidences." 7. It appears that the aforesaid noted objections came to be disposed of by the respondents vide order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the AO is not required to furnish any supporting evidences/material on the basis of that AO has recorded the reasons for reopening of assessment. There is nowhere in the provisions of Sec.147 r.w.s. 148 of the LT. Act to provide supporting evidence or material. Therefore, the assessee's request for providing supporting material evidences on the basis of which the AO-has formed the belief of escapement of income cannot be accepted and therefore, the same is hereby rejected. 13. Further, as per the decision rendered by the Hon'ble Supreme Court in the case of ACIT vs. Rajesh Jhaveri Stock Brokers P. Limited {2007} reported in 291 ITR 500, at the stage of initiation of reassessment proceedings under section 147 of the Act, it is not required to be conclusively proven that income has actually escaped assessment. The only requirement is that whether there was any relevant material on which a reasonable person can form the requisite belief that taxable income has escaped assessment. 14. In the case of Raymond Woollen Mills Ltd, vs. ITO [1999] reported in 236 ITR 34, the Hon'ble Supreme Court has held that at the stage of initiation of reassessment, the only thing required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible material. Further, in the said seized material, there is no such signature of me regarding receipt of the said amount. 2. In reference to para 3 it is said that, the approval memo has been provided in a letter dated 19.09.2018. This is factually incorrect and we have not provided any such approval memo sent by you to higher authority as well as order passed by higher authority based on your memo and, therefore, kindly provide the same. 3. Further, we strongly say that there is specific provision in search cases to apply section 153C based on the seized material referred by you and also after getting satisfaction note of AO of searched person which is absent in my case. Therefore, notice under Section 147/148 is itself bad in law and void and without jurisdiction or in excess of jurisdiction. 4. Further, without prejudice to the above, there is land sold for survey No.1292B by Mr. Navinbhai, Nikunjbhai and Sachinbhai, however, the confirming parties are, Navin Patel HUF, minor Dishant, Nima N. Patel and Heval Navinbhai. The name of confirming party has been incorporated in the said document without any rights in the aforesaid land but at the instance of the purchaser of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the seized material, it was pointed out that insofar as the subject land being village Ognaj, Survey No.1292/B is concerned, the on-money is said to have been paid to Shri Bhuro and that there is no material to connect the petitioner with the seized material. It was submitted that therefore, based upon the seized material, the Assessing Officer could not have formed the requisite belief that any income chargeable to tax has escaped assessment in the case of the petitioner. 2. It was further submitted that in the present case, the material has been seized during the course of search and hence, there is a specific provision in such cases to apply section 153C of the Income Tax Act based on the seized material and hence, the notice under section 148 of the Act reopening the assessment of the petitioner under section 147 of the Act is void and without jurisdiction or in excess of jurisdiction. 3. Having regard to the submissions advanced by the learned counsel for the petitioner, Issue Notice returnable on 24th December, 2018. By way of ad-interim relief, the respondent is permitted to proceed further with the assessment; he, however, shall not pass the final order without the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect to the sale transaction between the Venus Group and writ applicants, would not automatically imply that the writ applicants had received such cash money. Mr. Shah, would submit that so far as Heval Navinbhai Patel is concerned, she has put her signature in the sale deed as one of the confirming parties. So far as Navinbhai Patel is concerned, his name figures as one of the recipients of a particular amount towards the sale consideration. Mr. Shah would submit that there is nothing to even remotely suggest that Heval Navinbhai Patel had received any cash amount in the sale transaction. He pointed out that so far as Navinbhai Patel is concerned, he received Rs. 26 lakh by way of a cheque towards his share in the property. Mr. Shah submitted that the Assessing Officer has thus proceeded on mere conjunctures and surmises. It is argued that as there is no material on record with the aid of which, the Assessing Officer could form a belief that the income chargeable to tax has escaped assessment, the question of sufficiency of the material would not arise. Mr. Shah would submit that as per the settled law, the notice of reopening has to be evaluated on the basis of the reasons record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of change of opinion would not apply. This has been made sufficiently clear in the case of Assistant Commissioner of Income-Tax v. Rajesh Jhaveri Stock Brokers Private Limited, reported in [2007] 291 ITR 500 [SC] in which it was held and observed as under :- "One thing further to be noticed is that intimation under section 143(1)(a) is given without prejudice to the provisions of section 143(2). Though technically the intimation issued was deemed to be a demand notice issued under section 156, that did not per se preclude the right of the Assessing Officer to proceed under section 143(2). That right is preserved and is not taken away. Between the period from April 1, 1989 to March 31, 1998, the second proviso to section 143(1)(a), required that where adjustments were made under the first proviso to section 143(1) (a), an intimation had to be sent to the assessee notwithstanding that no tax or refund was due from him after making such adjustments. With effect from April 1, 1998, the second proviso to section 143(1)(a) was substituted by the Finance Act, 1997, which was operative till June 1, 1999. The requirement was that an intimation was to be sent to the assessee whether or not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer had to pass an assessment order if he decided to accept the return, but under the amended provision, the requirement of passing of an assessment order has been dispensed with and instead an intimation is required to be sent. Various circulars sent by the Central Board of Direct Taxes spell out the intent of the Legislature, i.e., to minimize the departmental work to scrutinize each and every return and to concentrate on selective scrutiny of returns. These aspects were highlighted by one of us (D. K. Jain J) in Apogee International Limited v. Union of India (1996) 220 ITR 248]. It may be noted above that under the first proviso to the newly substituted section 143(1), with effect from June 1, 1999, except as provided in the provision itself, the acknowledgment of the return shall be deemed to be an intimation under section 143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is significant that the acknowledgment is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any assessment is done by them? The reply is an emphatic no. The intimation under section 143(1)(a) was deemed to be a notice of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tangible material on the basis of which he could form a reason to believe that income chargeable to tax had escaped assessment. However, as held by the Apex Court in the case of Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd., (supra) and several other decisions, such reason to believe need not necessarily be a firm final decision of the Assessing Officer." 22. The requirement, thus for reopening of assessment, is "reasonable belief". This expression is not synonymous with Assessing Officer having finally ascertained the fact by any legal evidence or conclusion. In this context, the Supreme Court in the case of Rajesh Jhaveri Stock Brokers Private Limited [Supra] had observed as under :- "Section 147 authorizes and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order as to costs." 24. Lastly, it is well settled that the validity of the notice of reopening would be judged on the basis of reasons recorded by the Assessing Officer for issuance of such notice. It would not be permissible for the Assessing Officer to improve upon such reasons or to rely upon some extraneous material to support his action. Reference in this respect can be made to the decision of this Court in the case of Aayojan Developers v. Income-tax Officer, reported in [2011] 10 taxmann.com226/201 Taxman 154 (Mag.)/335 ITR 234 (Guj.) 25. Thus, from the above, the following principles of law are discernable on the subject of reopening of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose fully or truly all the material facts necessary for the assessment. (ix) In order to assume jurisdiction under Section 147 where assessment has been made under sub-section (3) of section 143, two conditions are required to be satisfied; (I) The Assessing Officer must have reason to believe that the income chargeable to tax has escaped assessment; (ii) Such escapement occurred by reason of failure on the part of the assessee either (a) to make a return of income under section 139 or in response to the notice issued under sub-section (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 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6) of the Act before proceeding for reassessment under Section 147 of the Act. (xviii) The "full and true" disclosure of the material facts would not include that material, which is to be used for testing the veracity of the particulars mentioned in the return. All such facts would be expected to be elicited by the Assessing Officer during the course of the assessment. The disclosure required only reference to those material facts, which if not disclosed, would 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the day cash book. The seized documents reflected the unaccounted cash transactions for the period between January, 2007 to March, 2015. The cash book was written in the coded form. Further details and documents were obtained from the office of the Sub-Registrar for the purpose of identifying the beneficiaries in the transactions with the Venus Group. 28. It can thus be seen that the Assessing Officer had analyzed the voluminous material collected by the Revenue during the search operations in connection with the Venus Group. This material, prima facie suggested huge cash transactions in connection with sale of lands against the total declared sale consideration of Rs. 5.38 Crore [rounded off]. The material prima facie suggests that the total cash transactions of Rs. 9,07,26,000/- had taken place. 29. At this stage, when we are concerned with the re-opening of the assessment, that too, in the case of Heval Navinbhai Patel, where the return was not filed for the assessment year and in the case of Navinbhai Patel, where the return filed by him was accepted without scrutiny, the material at the command of the Assessing Officer is sufficient to permit the process of reopening. As he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person]-- [and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1)of section 153A] :]" 32. A perusal of the above noted provisions would reveal that in the case of search action, carried out under section 132 of the Income Tax Act, prior to 1.6.2015, if any money, bullion, jewellery or other valuable article or thing, or books of accounts or documents, seized or requisitioned "belongs" or "belong" to a person other than the person referred to section 153A, then the AO of the searched person while passing the assessment order under section 153A or prior to that, will have to record his satisfaction about those documents, and if such documents would reveal any undisclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents or assets seized or requisitioned, the same shall be handed over to the AO having jurisdiction over such other person. The AO (having jurisdiction) has to be satisfied that the "assets/documents" seized or requisitioned have a bearing on the determination of the total income of such other person. Only then the AO (having jurisdiction) can proceed /s. 153C against such other person in the manner provided u/s. 153A. It is apparent from the above that two separate satisfaction ought to be recorded which is * First by the AO of the person on whom search was conducted i.e "searched person" for any "documents/assets" found pertaining to or belonging to the "such other person" * Secondly by the AO of other person, regarding "assets/documents" seized or requisitioned have a bearing on the determination of the total income of such other person. From the above analysis, it is clear that the provision of Section 153C can be invoked in case of "Other Person" only if the assets or documents as mentioned above are seized in the search u/s. 132(1) or requisitioned u/s. 132A in case of any other person. From this it follows that if documents are impounded u/s. 133A then provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned 35. Indisputably in the case on hand, the search was undertaken prior to 01.06.2015. If that be so then, it is clear that before issuing the notice und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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