9911796707
TMI Blog2022 (8) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Centre, rejecting the objections filed by the petitioner in response to the aforesaid notice. 3. The petitioner's case is that it had filed its return for the Assessment Year 2015-16 on 02-09-2015 declaring a total income of Rs.3,49,140/-, which was processed on 10-10-2015 under Section 143 (1) of the Act. The case was selected for scrutiny and notices under Section 143 (2) and Section 142 (1) were issued alongwith a questionnaire asking for certain details. The questionnaire inter alia demanded production of all the share capital details of the petitioner's share-holders alongwith PAN and mode of payment for obtaining shares in his name or in the name of family members, and also the details of share premium receipts. The petitioner submitted a reply giving the details of all investor companies to whom shares were allotted. The matter of increase in share capital was examined during assessment proceedings under Section 143 (3) of the Act and nothing adverse came out from the information submitted in response to the questionnaire. By means of an order dated 01-06-2017, the petitioner was assessed for a total income of Rs.3,49,140/-. 4. On 30-03-2021, the A.O. issued a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected for scrutiny under CASS for the reason "Large Share premium received during the year" and it is apparent that the increase of share capital has already been examined by the A.O. and re-opening of the case under Section 148 on the same issue is not valid. It is stated in the reasons for issuance of the notice that information had been received from I & CI Wing, but what information was received was not brought to the knowledge of the petitioner. The issue of increase in share capital has been independently examined by the I & CI Wing vide notice dated 22-05- 2017 and the petitioner has complied with all the requirements of the notice. No new information was in possession of the A.O. which would form the basis of issuance of the notice under Section 148 of the Act. 8. On 03-03-2022, the National Faceless Assessment Centre passed an order rejecting the petitioner's objections stating that the original assessment for A.Y. 2015-16 was only a limited scrutiny assessment to verify the applicability of Section 56 (2) (vii b) of the Act, which means to verify any difference in aggregate consideration received on issue of shares when compared with Fair Market Value of the shares and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mills Ltd. v. ITO, (2008) 14 SCC 218, the Hon'ble Supreme Court reiterated that while examining the validity of a notice issued under Section 148 of the Income Tax Act, "we do not have to give a final decision as to whether there is a suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage." 12. In light of the aforesaid pronouncements of the Hon'ble Supreme Court we proceed to examine the rival submissions advanced on behalf of the parties so as to ascertain as to whether there was prima facie some material on the basis of which the Department could reopen the case, without going into the sufficiency or correctness of the material. 13. Mr. Pradeep Agrawal, the learned Counsel representing the petitioner, has submitted that after completion of assessment for the A.Y. 2015-16 on 01-06-2017, no new or fresh tangible material had come to knowledge of the A.O. for initiating the proceedings under Section 147 / 148 of the Act and, therefore, the initiation of the proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable income escaping assessment. The A.O. had completed the assessment under Section 143 (3) on the basis of facts available on record at that time and the A.O. could not examine the facts which were discovered later on and, therefore, the case has been re-opened on the basis of fresh material on record. 16. Regarding the petitioner's contention based on the judgment passed by ITAT in Arohul Foods Pvt. Ltd. matter, the respondents have stated that the said order has not been accepted by the department and an appeal under Section 260 A of the Act has been already been filed before this Court. 17. In Phool Chand Bajrang Lal v. ITO, (1993) 4 SCC 77, the Hon'ble Supreme Court held that: - "25. From a combined review of the judgments of this Court, it follows that an Income Tax Officer acquires jurisdiction to reopen assessment under Section 147(a) read with Section 148 of the Income Tax Act, 1961 only if on the basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons which he must record, to believe that by reason of omission or failure on the part of the assessee to make a true and full disclosure of all material facts necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Officer under Sections 34/147. Take this very case: the Income Tax Officer says that on the basis of investigations and enquiries made during the assessment proceedings relating to the subsequent assessment year, he has come into possession of material, on the basis of which, he has reasons to believe that the assessee had put forward certain bogus and false unsecured hundi loans said to have been taken by him from non-existent persons or his dummies, as the case may be, and that on that account income chargeable to tax has escaped assessment. According to him, this was a false assertion to the knowledge of the assessee. The Income Tax Officer says that during the assessment relating to subsequent assessment year, similar loans (from some of these very persons) were found to be bogus. On that basis, he seeks to reopen the assessment. It is necessary to remember that we are at the stage of reopening only. The question is whether, in the above circumstances, the assessee can say, with any justification, that he had fully and truly disclosed the material facts necessary for his assessment for that year. Having created and recorded bogus entries of loans, with what face can the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t ascertain that the companies were mere paper companies having no existence and real business. The questionnaire annexed to the notice dated 20-04-2017 issued under Section 142 (1) of the Act required the petitioner to produce all the share capital details of its shareholders alongwith PAN and mode of payment for obtaining shares, but while providing information in response to the notice, the petitioner did not disclose the mode of payment for obtaining shares. 20. We have noticed that the petitioner has himself annexed with the Writ Petition a copy of a notice dated 07-05-2018 issued by the ITO (Intelligence & Criminal Investigation) calling for information under Section 133 (6) of the Act, regarding details of the shareholders in the following format: - Sl. Name of the shareholder Company Address PAN Amout Received Mode of Receipt Date of Receipt Account Number in which the money was received No. of equity shares allotted during F.Y. 2014-15 A copy of the reply sent by the petitioner has also been annexed with the Writ Petition, in which the following details have been furnished: - Sl Name and occupation of allottee Address of allottee Nationality of allottee Num ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner, are bogus shell companies, through which the operators provide accommodation entries for routing the unaccounted money of the petitioner company through banking channels, thereby causing taxable income escaping assessment. This fact could not be examined by the AO during the original assessment for want of a full and true disclosure of facts by the petitioner. Therefore, the A.O. did not examine the aforesaid issues and he did not form an opinion regarding the same during the limited scrutiny assessment proceedings. In such a situation, it is not a case of change of opinion or the drawing of a different inference from the same facts as were earlier available but the A.O. has acted on fresh information and it is not a review of the existing material. 23. The learned Counsel for the petitioner has placed reliance upon a judgment of the Hon'ble Supreme Court in the case of CIT v. Marico Ltd., (2020) 16 SCC 354 and has contended that if the query raised by the A.O. is replied and is not rejected in the assessment order, it would mean that the A.O. has accepted the view and the notice issued on the same issue would amount to have been issued on a mere change of opinion. It woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. It is a result of understanding, experience and reflection. 17. It is well settled and held by this Court in a catena of judgments and it would be sufficient to refer to CIT v. Kelvinator of India Ltd. wherein this Court has held as under: (SCC p. 725, para 5-7) "5. ... where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe".... Section 147 would give arbitrary powers to the assessing officer to reopen assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. 6. We must also keep in mind the conceptual difference between power to review and power to reassess. The assessing officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. 7. One must treat the concept of "change of opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the view that the assesse had disclosed all primary facts before the Assessing Officer and it was not required to give any further assistance to the Assessing Officer any disclosure of other facts. It was for the Assessing Officer at this stage to decide what inference whould be drawn from the facts of the case. In the present case the Assessing Officer on the basis of the facts disclosed to him did not doubt the genuineness of the transaction set up by the Assessee." "We are clearly of the view that the Revenue in view of its Counter Affidavit before the High Court that it was not relying upon the non disclosure of facts by the Assessee could not have been permitted to orally urge the same. Even otherwise we find that the Assessee had fully and truly disclosed all material facts necessary for its assessment and, therefore, the Revenue cannot take the benefit of the exgtended period of limitation of 6 years." "Revenue has failed to show non disclosure of facts the notice having been issued after a period of four years is required to be quashed." 26. However, in the same judgment, after referring to the earlier judgments in the cases of Clagett Brachi Co. Ltd. versus CIT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alcutta Company 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 ITO at the time of original assessment proceedings. The two situations are distinct and different. Thus, where the transaction itself on the basis of subsequent information, is found to be a bogus transaction, the mere disclosure of that transaction at the time of original assessment proceedings, cannot be said to be disclosure of the "true" and "full" facts in the case and the ITO would have the jurisdiction to reopen the concluded assessment in such a case. It is correct that the assessing authority could have deferred the completion of the original assessment proceedings for further enquiry and investigation into the genuineness to the loan transaction but in our opinion his failure to do so and complete the original assessment proceedings would not take away his jurisdiction to act under Section 147 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: ............ Explanation 1.-Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso." (Emphasis supplied) 31. As is evident from the discussions made in the preceding paragraphs of this judgment, the facts regarding the petitioner's dealings with shell companies for routing its own unaccounted money into its books of accounts had not been truly and fully disclosed by the petitioner during the original assessment and scrutiny assessment. The petitioner did not furnish complete information regarding its share transactions, particularly the information regarding the mode of receipt of amount for share transfer, the date of receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
