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TMI Blog2021 (3) TMI 1013X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs in continuity of the same and allow the petition as prayed for. (B) Pending admission, hearing and disposal of this petition, ad-interim relief be granted and the Hon'ble Court may pleased to stay the operation, implementation and execution of the impugned notice under Section 148 dated 29.3.2019 at Annexure 'A' and objection rejection order dated 15.07.2019 at Annexure 'F'. (C) Award the costs of this petition. (G) Grant such other and further reliefs as this Hon'ble Court deems fit." 4 The facts giving rise to this writ application may be summarized as under: 4.1 The subject matter of challenge in the present litigation is to the notice issued under Section 148 of the Income Tax Act, 1961 dated 29th March 2019 for the purpose of reopening of the assessment for A.Y. 2012-13. 4.2 The writ applicant is an individual. For the assessment year 2012-13, the writ applicant had filed a return of income on 27th September 2012 declaring the total income of Rs. 10,35,770/-. Such return was accepted without scrutiny under Section 143(1) of the Income Tax, 1961 (for short, 'the Act'). To reopen such assessment, the impugned notice came to be iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the year under consideration by adopting fraudulent means and through a predesigned nexus. 4 As per the above discussion, I have reason to believe that undisclosed income of Rs. 25,00,000/- on account of obtained accommodation entries from Mainak Comtrade Pvt Ltd and Purvanil Trade and Commerce Pvt Ltd has escaped assessment for A.Y. 2012-13 and I intend to reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to the notice subsequently in the course of the proceedings under this Section. 5 In this case a return of income was filed for the year under consideration but no scrutiny assessment u /s. 143(3) of the IT Act was made. Accordingly, in this case only requirement to initiate proceedings u/s 147 of the IT Act is reason to believe which has been recorded above. 6 In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax ha escaped assessment. 7 In this case more than four years have lapsed from the end of the assessment year under consideration. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring for the Revenue would submit that there being no merit in this writ application, the same be rejected. * ANALYSIS: 9 Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the notice of reopening issued under Section 148 of the Act should be quashed and set aside. 10 The return filed by the assessee was accepted without scrutiny. Since there was no scrutiny assessment, the Assessing Officer had no occasion to form any opinion on any of the issues arising out of the return filed by assessee. The concept of change of opinion would, therefore, have no application. It is equally well settled that at the stage of re-opening of the assessment, the court would not minutely examine the possible additions which the Assessing Officer wishes to make. The scrutiny at that stage would be limited to examine whether the Assessing Officer had formed a valid belief on the basis of the material available with him that the income chargeable to tax had escaped assessment. Both these aspects have been examined by the Supreme Court in Assistant Commissioner of Income Tax v. Rajes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, by the Explanation as introduced by the Finance (No. 2) Act of 1991 an intimation sent to the assessee under section 143(1) (a) was deemed to be an order for the purposes of section 246 between June 1, 1994, to May 31, 1999, and under section 264 between October 1, 1991, and May 31, 1999. It is to be noted that the expressions intimation and assessment order have been used at different places. The contextual difference between the two expressions has to be understood in the context the expressions are used. Assessment is used as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable and sometimes the whole procedure laid down in the Act for imposing liability upon the tax payer. In the scheme of things, as noted above, the intimation under section 143(1)(a) cannot be treated to be an order of assessment. The distinction is also well brought out by the statutory provisions as they stood at different points of time. Under section 143(1)(a) as it stood prior to April 1, 1989, the Assessing 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 assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is reason to believe, but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Pvt. Ltd. [1996 (217) ITR 597 (SC)] ; Raymond Woollen Mills Ltd. v. ITO [1999 (236) ITR 34 (SC)]." 11 The aforesaid aspects have also been reiterated by the Supreme Court in the later judgment in the case of Deputy Commissioner of Income Tax and another v. Zuari Estate Development and Investment Company Limited [(2015) 373 ITR 661 (SC)]. 12 In the present case, the Assessing Officer has considered the material on record which would prima facie suggest that the assessee had sold number of share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dential premises of Jignesh Shah along with incriminating digital as well as documentary evidences. The information further reveals that the writ applicant herein had obtained accommodation entries of Rs. 25 Lakh from Mainak Comtrade Private Limited and Purvanil Trade and Commerce Private Limited through Dhanlaxmi Bank transfer during the F.Y. 2011-12. 15 It is the case of the Revenue that the assessee has entered into a bogus / accommodation entry transaction. 16 The case on hand is not a case where the Income Tax Officer seeks to draw any fresh inference which could have been raised at the time of the original assessment on the basis of the materials placed before him by the assessee relating to the transfer of Rs. 25 Lakh through the Dhanlaxmi Bank during the F.Y. 2011-12 and which he failed to draw at that time. Acquiring fresh information, specific in nature and reliable in character, relating to the concluded assessment, which goes to expose the falsity of the statement made by the assessee at the time of original assessment is different from drawing a fresh inference from the same facts and material which was available with the I.T.O. at the time of the original assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer may start reassessment proceedings either because some fresh facts come to light which were not previously disclosed, or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since the belief is that of the Income Tax Officer, the sufficiency of reasons for forming the belief, is not for the Court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and nonspecific information. To that limited extent, the Court may look the conclusion arrived at by the Income Tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by him and further whether that material had any rational connection or a live link with the formation of the requisite belief. 19 We now come to the second argument of the writ applicant as regards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee. On the basis of the material. it is gathered that the assessee has entered into bogus / accommodation entry transaction of Rs. 25,00,000-l. The directors and the concerned persons in whose name these entities are registered, admitted by way of filing affidavit that the companies are not carrying out any genuine business and engaged into providing accommodation entries through Jignesh Shah. Therefore, the assessee has maneuvered a sum total of Rs. 25,00,000/by not showing his otherwise true income during the year under consideration by adopting fraudulent means and through a predesigned nexus. 4. As per the above discussion, I have reason to believe that undisclosed income of Rs. 25,00,000/on account of obtained accommodation entries from Mainak Comtrade Pvr Ltd. and Purvanit Trade and Commerce Pvt. Ltd. has escaped assessment for A.Y. 201213 and I intend to reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to the notice subsequently in the course of the proceedings under this section. 5. In this case a return of income was filed for the year under consideration but no scrutiny assessment u/s. 143( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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