TMI Blog2021 (4) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is found to be a bogus transactions, mere a disclosure of said transaction at the time of original proceedings, cannot be said to be a disclosure of true and full facts in the case. Assessee was aware that the transaction with M/s. Agni Pvt Ltd was not business transaction but in the form of bogus purchase, it was only an accommodation entries and the company was one of the beneficiaries of the transactions, despite of this, the assessee failed to disclose true and correct facts at the relevant time and therefore, the Assessing Officer is entitled to initiate reassessment proceedings on the basis of tangible material came in his hand, which tends to expose the untruthfulness of the entry of purchase made in the books of accounts. In this context, we may refer the observation of the Apex Court in the case of Honda Siel Power Products Vs. Dy. CIT, [ 2011 (7) TMI 275 - SC ORDER ] wherein, it is held that assessee having not pointed out during assessment proceedings about expenses incurred relatable to tax free income u/s. 14A, there was an omission and failure on its part to disclose fully and truly material facts, hence, reopening was justified. Reassessment proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equest of the writ applicant, reasons recorded have been furnished to the writ applicant on 17.05.2019, which reads as under : 2. In this connection, reason for re opening of the case for A.Y. 2012 13 are as under 1. The assessee company filed its Return of Income for the A.Y. 2012 13 on 25.09.2012 declaring total income at ₹ 7,58,720/ Assessment in the case of the assessee was completed u/s 143(3) on 31.03.2014. 2. In this case, an information has been received from O/o the DDIT(Inv.), Unit 2, Surat through email on 22.03.2019, related to inquiry report in the case of Shri Afroz Mohd. Hasanfatta and group. In this case, Enforcement Directorate (ED) received information through Customs Department Surat that some of the companies opened their bank accounts with ICICI Bank Surat and used their accounts for making foreign remittances against fake import documents. The ED conducted investigation and filed a charge sheet against some persons on 18.07.2014 and later on a supplementary chargesheet was filed on 18.07.2014 before the Special Court under the Prevention of Money Laundering Act, 2002. During the course of investigation by ED, searches at several places we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and his statement was recorded on 22.05.2014 under section 50 of PMLA, 2002. In his statements, he has Stated the entire modus operandi of money laundering scam. 5. Shri Madanlal M Jain was arrested on 17.07.2014 under section 19 of PMLA, 2002. In his statements, he has stated the entire modus operandi of money laundering scam. He has stated that he has made different directors and partners in many companies/firms and lent the same to Shri Afroze Mohd. Hasanfatta. 6. Apart from the above, many other facts have been recorded in the charge sheets filed by the ED as well as investigation made by the Income Tax Deptt. which proved that the entire movement of funds was for the illegal purpose of money laundering. 4. In all, this money laundering scam is known as Afroze Mohd. Hasanfatta group scam. Several entities were traced related to this group on the basis funds trail, which were used as a conduit for channelizing funds to various concerns, ultimate beneficiaries of which were Hong Kong and Dubai based entities, to which the funds were transferred on the fake documents. 5. The detailed information so received from the Investigation Wing, Surat has been perused ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the assessment year under consideration. It is pertinent to mention here that reasons to believe that income has escaped assessment for the year under consideration have been recorded above (refer paragraphs 2 to 7). Though, during the course of assessment proceedings, the assessee company has disclosed the transaction with the alleged concern either directly or with the intermediary concerns through which funds were circulated, the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidences could not be discovered by AO and could have been discovered with due diligence, accordingly attracting provisions of Explanation 1 of section 147 of the Act. Further, this case is being analysed now on the basis of fresh material which was not available with the Assessing Officer at the time of assessment. It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for its assessment for the year under consideration thereby reopening u/s. 147 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.4 The writ applicant raised the objections vide its communication dated 04.07.2019, mainly on the following issues on facts and law: (i) Provision of Section 148(2) not complied with; (ii) No failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment; (iii) Reopening is based on borrowed satisfaction ; (iv) provision of Section 151(1) not complied with. 2.5 The objections came to be rejected by the respondent vide order dated 30.08.2019. 3. Being aggrieved by the disposal of the objections against the notice for reopening of the assessment, the writ applicant has come up before this Court with the present writ application. 4. We have heard Mr. Sunit Shah, the learned Senior counsel assisted by Mr. Omkar C. Dave, the learned advocate appearing for the writ applicant and Mrs. Kalpana K. Raval, the learned Standing Counsel appearing for the revenue. 5. Mr. Sunit Shah, the learned Senior Counsel appearing for the writ applicant raised the following contentions: 5.1 There was full and true disclosure by the writ applicant during the course of filing of return as well as original assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opening is bad. 5.5 The learned counsel vehemently submitted that according to the case of the revenue, assessee has made entered into transaction with M/s. Agni Gems Pvt. Ltd amount to ₹ 4,57,48,000/ and in the reasons recorded, the amount of ₹ 10,13,00,000/ has been shown as escaped assessment. Therefore, when the purchase was of ₹ 4,57,48,000/ then, how the Assessing Officer has recorded that the amount of ₹ 10,13,00,000/ has escaped assessment. In this regard, it has been urged that this discrepancies show that Assessing Officer has not applied his mind while forming the belief of escape assessment. 5.6 It was further contended that the Assessing Officer has acted mechanically on the basis of the information received from the concerned department and there is no any independent application of mind by the Assessing Officer to arrive at the conclusion that the income chargeable to tax has escaped assessment. Therefore, reopening based on the third party satisfaction cannot be sustained in law and the proceedings initiated on borrowed satisfaction required to be quashed and set aside. 6. In view of the aforesaid contention, the learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax have escaped assessment and same was occasioned either on account of failure on the part of the assessee to make a return of his income or disclose fully and truly all material facts necessary for assessment of that year and both the conditions are condition precedent and must be satisfied simultaneously before issuance of the notice. 11. We have carefully examined the materials on the record as well as the reasons recorded. It appears from the record that the assessee company had filed its return of income for the assessment year 2012 13 dated 25.09.2012 declaring total income at ₹ 7,58,720/ and assessment for the year under consideration was completed under Section 143(3) of the Act on 31.03.2014. We take the notice of the fact that the transaction of purchases with M/s. Agni Gems pvt. Ltd. amounting ₹ 4,57,48,000/ was the reason for reopening of the assessment for the year under consideration. 12. A plain reading of the reasons recorded as indicated above, emerge that the Assessing Officer had received inquiry report in relation to Mr. Afroze Mohd. Hasanfatta and Mr. Madan Jain, who made foreign remittances through 12 different companies, controlled an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a and their group. Therefore, the reasons recorded led to belief, to form an opinion by the Assessing Officer regarding the escapement of assessment having live link with the conclusion and materials gathered during the inquiry. 15. In view of the aforesaid discussion, it could be said that after framing of the assessment made under Section 143(3) of the Act, tangible material came into the hands of the Assessing Officer through the investigation wing and upon perusal of the same, he made independent inquiries and applied his mind and upon due satisfaction, he formed an opinion that, the income has escaped assessment. 16. The main contention advanced by the learned counsel that at the final assessment proceedings, all the material facts including the transactions with M/s. Agni Pvt. Ltd having been duly recorded in the books of accounts and same was thoroughly examined by the Assessing Officer and in this circumstances, when there was no concealment or suppression of any facts, the reopening beyond 4 years in the absence of any non disclosure of material facts cannot be permitted. 17. We do not agree with the above contention mainly on the ground that during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fic. It was not at all vague or nonspecific. 18. In case of Yogendrakumar Gupta Vs. ITO (2014) 366 ITR, this Court while rejecting petition challenging the notice for reopening which was issued beyond a period of 4 years from the end of relevant assessment year, wherein, one of the ground was that the issue was previously scrutinized during the assessment proceedings. We may reproduce the observations made in paras 16, 17 and 21, which read thus: 19. In Aradhna Estate (P) Ltd Vs. DCIT, (2018) 91 taxmann.com 119, this Court held that where reassessment proceedings were initiated on the basis of the information received from the investigation wing that assessee had received certain amount from the Shell Companies working as an accommodation entry provider merely because these transactions were scrutinized by the Assessing officer during original assessment proceedings, the reassessment could not be held unjustified. 20. In Aaspas Multimedia Ltd. VS DCIT (2017) 78 taxmann.com , this Court while examining the validity of the notice, held that where assessment was made on the basis of information received from the Principal DIT, (Investigation), that assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llected by the DGCEI during the search, which included incriminating documents and other such relevant materials, was along with report and show cause notice placed at the disposal of the Assessing Officer. These materials prima facie suggested suppression of sale consideration of the tiles manufactured by the assessee to evade excise duty. On the basis of such material, the Assessing Officer also formed a belief that income chargeable to tax had also escaped assessment. When thus the Assessing officer had such material available with him which he perused, considered, applied his mind and recorded the finding of belief that income chargeable to tax had escaped assessment, the re opening could not and should not have been declared as invalid, on the ground that he proceeded on the show cause notice issued by the Excise Department which had yet not culminated into final order. At this stage the Assessing Officer was not required to hold conclusively that additions invariably be made. He truly had to form a bona fide belief that income had escaped assessment. In this context, we may refer to various decisions cited by the counsel for the Revenue. 10. In case of Central Provinces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e information and the Assessing Officer could act upon such information for taking action under Section 147(b) of the Act. In such background, the Supreme Court observed as under: 12. Ms. Gauri Rastogi, the learned counsel appearing for the respondents, has urged that the letter of Shri. Bagai was received by the Income tax Officer on March 26, 1974 and on the very next day, that is, on March 27, 1974, he issued the impugned notice under Section 147(b) of the Act and that he did not have conducted any inquiry or investigation into the information sent by Shri. Bagai. Merely because the impugned notice was sent on the next day after receipt of the letter of Shri. Bagai does not mean that the Income Tax Officer did not apply his mind to the information contained in the said letter of Shri. Bagai. On the basis of the said facts and information contained in the said letter, the Income Tax officer, without any further investigation, could have formed the opinion that there was reason to believe that the income of the assessee chargeable to tax had escaped assessment. The High Court, in our opinion, was in error in proceeding on the basis that it could not be said that the Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice was invalid. Inasmuch as, as a result of our order, the reassessment proceedings have not to go on we don not and we ought not to express any opinion on the merits. 13. In case of AGR Investment Ltd. v. Additional Commissioner of Income Tax and anr. (supra), a Division Bench of Delhi High Court considered the validity of reopening of assessment where the notice was based on information received from Directorate of investigation that the assessee was beneficiary of bogus accommodation entries. The Court while upholding the validity of reopening observed that sufficiency of reason cannot be considered in a writ petition. It was observed as under: 23 The present factual canvas has to be scrutinized on the touchstone of the aforesaid enunciation of law. It is worth noting that the learned counsel for the petitioner has submitted with immense vehemence that the petitioner had entered into correspondence to have the documents but the assessing officer treated them as objections and made a communication. However, on a scrutiny of the order, it is perceivable that the authority has passed the order dealing with the objections in a very careful and studied manner. He has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd being had to the aforesaid fact situation, this Court had interfered. Thus, the said decision is also distinguishable on the factual score. 14. Learned Single Judge of Madras High Court in case of Sterlite Industries (India) Ltd. v. Assistant Commissioner of Income Tax reported in [2008] 302 ITR 275 (Mad) upheld the notice for reopening which was based on information from enforcement directorate showing possible inflation of purchases made by the assessee. 24. The learned counsel raised the contention that while according the sanction under Section 151 of the Act, the authority concerned has not applied his mind properly and mechanically accorded the sanction. We have perused the papers of the approval, which shows that the competent authority has given the satisfaction in hand writing and has expressed his satisfaction with regard to reasons recorded and accorded the sanction to issue impugned notice. Therefore, the approval for reassessment was granted on the date on which the impugned notice was issued. In this circumstances, the contention raised by the learned advocate for the writ applicant that sanction was not obtained before issuance of the notice cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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