TMI Blog2022 (3) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... iled to disclose all material facts and has to form independent opinion resulting into reason to believe with regard to escapement of income chargeable to tax in case of the petitioner. Department has tried to improvise by referring to the original file of the Department to emphasize that there is tangible material on record to show that the petitioner Company has made purchase transaction and has availed accommodation entry by way of bogus sales / purchases / fictitious loans etc. with Disman Group of Company. In our opinion, in absence of specific details as regards particulars of nature of transaction basic details of information, clarity with regard to name of person with whom such transaction has been entered into, goes to the very root of the matter. The sole object of providing reasons for reopening of the assessment is to prima facie supply the relevant material to the assessee to meet with his case and at the same time, it reflects the basic ingredients of reason to believe for Assessing Officer to assume the jurisdiction under Section 147 and 148 - such non-recording of specific details lead us to belief that without proper application of mind, the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer to form a reason that the income chargeable to the tax has escaped assessment. The reasons supplied to the assessee are very vague. The scrutiny assessment has taken place at earlier point of time and in absence of any new material or the source from which he has formed this belief also is missing. This is nothing according to the petitioner but the change of opinion of the Assessing Officer. 3. We have heard Mr. Tushar P. Hemani, learned Senior Advocate assisted by Ms. Vaibhavi Parikh, learned advocate for the petitioner, who has drawn the attention of ours to the order dated 14th July, 2021 rejecting the objections against the reopening towards that none of the factual aspect has been dealt with or the aspect of the detailed order has been passed. He also has further urged that it is a borrowed satisfaction as could be culled out from the material. 4. Issue Notice returnable on 28 th September, 2021. Ona query raised by the Court, it is noticed that after the order dated 14th July, 2021, no notice so far has been issued on the part of the Assessing Officer. Before 28th September, 2021 if any notice is received, the learned advocate for the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her details and information vide letter dated 15.07.2016, whereby the petitioner Company had also submitted relevant documents in support of the issues raised. 4.5 However, subsequently, the Assessing Officer had issued notice under Section 142(1) of the said Act dated 04.11.2016 thereby calling upon the petitioner Company to furnish further documentary evidence, more particularly, with respect to unsecured loans with identity proof with a copy of return of income filed as well as confirmation of sundry creditors duly signed along with details of PAN No. The Assessing Officer had also called upon the petitioner Company to furnish the bank statements and details as well as details of assets and to produce book of accounts along with bills / vouchers in response to the aforesaid notice dated 04.11.2016. The petitioner vide letter dated 15.11.2016, had drawn the attention of the Assessing Officer was drawn to the fact that the relevant documents are already produced on earlier occasion and had further placed on record the details as sought for, more particularly, with regard to the unsecured loans along with identity proof of the parties from whom unsecured loans were availed and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adly relied upon information provided by the Investigation Wing, who have found that the assessee has entered in financial transaction and has made high value transaction of ₹ 26,42,027/- and has availed accommodation entry by way of bogus sales / purchases / fictitious loans etc., however, on detailed reading of reasons for reopening assigned in the notice dated 04.05.2021 as well as the order rejecting the objection against reopening dated 14.07.2021 the same is silent in respect to the basic details as to the person with whom said transactions of the petitioner Company have been found to be dubious or with regard to the basic details of information received as well as with regard to the nature of transaction . Mr. Hemani vehemently submitted that the reasons supplied by the Assessing Officer are vague, which is further reflected from the impugned order of the Assessing Officer rejecting the objections wherein none of the factual aspect as raised by the petitioner has been dealt with by the Assessing Officer. It is further submitted that the reopening assessment is based on borrowed satisfaction as can be reflected from the reasons supplied as well as bare reading of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erently defective reassessment order valid. (v) The crucial link between the information made available to the Assessing Officer and the formation of the belief should be present. The reasons must be self evident, they must speak for themselves. (vi) The tangible material which forms the basis for the belief that income has escaped assessment must be evident from a reading of the reasons. The entire material need not be set out. To put it in other words, something therein, which is critical to the formation of the belief must be referred to. Otherwise, the link would go missing. (vii) The reopening of assessment under Section 147 is a potent power and should not be lightly exercised. It certainly cannot be invoked casually or mechanically. (viii) If the original assessment is processed under Section143(1) of the Act and not Section 143(3) of the Act, the proviso to Section 147 will not apply. In other words, although the reopening may be after the expiry of four years from the end of the relevant assessment year, yet it would not be necessary for the Assessing Officer to show that there was any failure to disclose fully or truly all the material facts necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no ban or any legal embargo under Section 147 for the Assessing Officer to take into consideration such facts which come to light either by discovery or by a fuller probe into the matter and reassess the assessee in detail if circumstances require. (xv) The test of jurisdiction under Section 143 of the Act is not the ultimate result of the inquiry but the test is whether the income tax officer entertained a bona fide belief upon the definite information presented before him. Power under this section cannot be exercised on mere rumours or suspicions. (xvi) The concept of change of opinion has been treated as a built in test to check abuse. If there is tangible material showing escapement of income, the same would be sufficient for reopening the assessment. (xvii) It is not necessary that the Income Tax Officer should hold a quasi judicial inquiry before acting under Section 147. It is enough if he on the information received believes in good faith that the assesee's profits have escaped assessment or have been assessed at a low rate. However, nothing would preclude the Income Tax Officer from conducting any formal inquiry under Section 133(6) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was submitted that the Assessing Officer is bound to record the reasons to support the assumption of the jurisdiction and he cannot record only some of the reasons and keep the others upto his sleeves to reserve, if the action is challenged in the Court of law. It is further submitted that the tangible material which forms the basis for the belief that income has escaped assessment must be evident from a bare reading of the reasons supplied. It was further submitted that even in the case of the report of Investigation Wing, the Assessing Officer is under obligation to demonstrate some link between the tangible material with the income having escaped assessment which should be reflected in the reasons so supplied. In absence of the aforesaid settled legal procedure being not followed, it can be presumed that the respondent Authority has no valid grounds to assume the jurisdiction for reopening. 6. Per contra, learned Senior Advocate Mr. Manish Bhatt assisted by learned advocate Mr. Karan Sanghani for the respondents has referred to and relied upon the affidavit-in-reply filed by the Income Tax Officer, Ward -1, Gandhinagar and has vehemently objected the grant of any relief s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act only after analyzing the information supplied by the Investigation Wing as well as after appreciation of tangible material which is forming part of the original record. It is further submitted that though the reasons supplied does not disclose specific material and evidence, there exist sufficient material on original file for the Assessing Officer to satisfy himself on the existence of the condition precedent i.e. reason to believe to reach at the conclusion to reopen the assessment. Even otherwise at the stage of assumption, all the aspects of the petitioner Company shall be verified and after giving sufficient opportunity to the petitioner Company, case against the petitioner Company shall be finalized. Thus, it was submitted that the respondent is justified in its action and has further prayed to summarily dismiss the petition. 7. Having heard the learned advocates appearing for the respective parties and having perused the material placed on record. The only question, which arises for consideration of this Court is whether the Assessing Officer was justified in issuing the impugned notices dated 30.03.2021/31.03.201 in reopening the assessment in exercise of powers c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year under reconsideration are assessment years 2014-15 / 2015-16 and the impugned notice are dated 31.03.2021/30.03.2021, which is issued beyond the period of 4 years. In fact, the scrutiny assessment under Section 143(3) of the Act was made on 16.11.2016 determining the total income amounting to ₹ 85,440/-. Attention of the respondent Assessing Officer of the aforesaid fact has been drawn by the petitioner assessee by filing objection, however, the Assessing Officer has taken shield off information supplied by the Investigation Wing to form reason to believe during relevant assessment year. In particular, it is recorded by the Assessing Officer that the assessee has entered in financial transaction and made high value transaction of ₹ 26,42,027/- and availed accommodation entry by way of bogus sales / purchases/ fictitious loan, which has resulted into escapement of income and has thereby rejected the objection raised by the assessee against reopening of assessment. This Court has closely gone through the orders rejecting the objection against reassessment as well as has also examined the reasons recorded by the Assessing Officer for reopening of the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not fully and truly disclosed his income for the assessment under the provisions of Section 147 of the Income Tax Act, 1961. 7. No information of assets located outside India is available. 8. In this case a return of income was filed for the year under consideration and scrutiny assessment u/s. 143(3) of the Act was made on 16.11.2016 determining the total income amounting to ₹ 85,440/-. 10. This Court has also taken into consideration the affidavit-in-reply filed by the Income Tax Officer, Ward -1, Gandhinagar. On appreciation of contents of the same, we could note that the entire base for reopening assessment is on the premise that there was information supplied by the Investigation Wing and the Assessing Officer has made cursorily reference to high value transaction of ₹ 26,42,027/- as well as also referred to accommodation entry entered upon by the petitioner Company by way of bogus sales / purchases / fictitious loans etc. Thus, it appears that the reasons for reopening of the assessment in the case of petitioner Company for annual assessment year 2014-15/2015-16 by the Assessing Officer is based on the borrowed satisfaction and the Assessing Of ..... 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