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TMI Blog2022 (11) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn of income for the Assessment Year 2010-11. Subsequently, a Tax evasion petition was received in the case of Mr. Dhrub Narayan Parihast, who was son of the Respondent Assessee, on the alleged sale of huge land property during the relevant period. Thereafter, certain enquiries were conducted by the office of the Deputy Director of Income Tax (Investigation), Dhanbad. During the course of investigation and enquiry, a statement on oath of Mr. Dhrub Narayan Parihast was also recorded under Section 131 of the Income Tax Act, 1961. A detailed enquiry report was received in the office of the Assessing Officer regarding finding of the enquiry and investigation carried out in this case. Thereafter, the Assessing Officer re-opened the assessment of the Respondent Assessee and issued notice under Section 148 of the Income Tax Act, 1961 for the assessment of income concerning the A.Y. 2010-11. However, the Respondent chose not to file any return. Thereafter, the Assessing Officer had received information that the CBI, ACB, Dhanbad has lodged a FIR regarding the land scam on 19.06.2012 vide case no. Mohanpur Circle, Deoghar being RC16 (A)/2012-D and case no. RC 15(A)/2012-D. In the said FI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... j) when the High Court in that case has dismissed the departmental appeal against the ITAT's order quashing the assessment order on the ground that the reason recorded in that case was only to deeply verify the information, but in the present case notice under Section 148 was issued not only to verify the information but also to assess the escaped income of the Respondent Assessee. He further submits that when the Assessing Officer has recorded along with sufficient reasons, that he had reason to believe that the income of the Respondent from sale of land has escaped from assessment, it cannot be held that the notice issued thereafter under Section 148 of the Income Tax Act, 1961 was bad in law and therefore the entire assessment proceeding was liable to be quashed. In support of his contention learned counsel for the Revenue relied upon the judgment passed in the case of Deputy Commissioner of Income Tax (Central) Circle 1 (2) Versus M.R.Shah Logistics Pvt. Ltd. reported in 2022 SCC Online SC 365. 6. Mr. Mahendra Choudhary, learned counsel for the Assessee submits that the initiation of proceeding for assessment/re-assessment under section 147/148 of the Income Tax Act, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48 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 (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income 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: [Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person is found to have any asset (including financial interest in any entity) located outside India.] [Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148.] [Explanation 4.-For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012 (23 of 2012), shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012.] 148. Issue of notice where income has escaped assessment.-[(1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Now coming back to the case we have to analyze as to whether the Assessing Officer was having any reason to believe that the Assessee had escaped assessment. For brevity, reason recorded by the AO is extracted herein below: "03.03.2016. Information is received from the DDIT (Inv), Dhanbad vide F.No. DDIT (Inv)/ DHN/T392X/2015-16/1318 dated 28th March, 2016 that Smt. Maheshwari Devi W/o Shri Deo Narayan Parihast, Dhanukdtola, Deoghar has sold 35 acres land amounting to Rs. One crore but income Tax return has not filed for the A.Y 2009-10. He has invested huge amount in land during the year. Some of these land properties have also been sold during the year and earning lakhs of rupees from these sale transaction which need to be verified. In view of the above facts, I have reason to believe that the income from sale of land have escaped from assessment. Therefore, it is necessary to issue notice u/s 148 of the Income Tax Act, 1961 to assess the income of the assessee for the A.Y 2009-10. Since more than four years have been passed from the end of the relevant assessment year and tax effect on income escaping assessment is more than one lah. Hence, the approval of Pr. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; whereas the fact is divergent. As such, the notice issued for initiation of reassessment proceeding does not have any legs to stand in the eye of law." In the instant case, by going through the recorded reasons of the Assessing Officer it clearly transpires that the Assessing Officer has himself held that "these sale transaction which needs to be verified". This observation of the Assessing Officer itself makes the reason to believe as reason to suspect. There cannot be a fishing and itinerant enquiry under section 147/148 of the Act. In the case of Principal Commissioner of Income-tax-5 versus Manzil Dinesh Kumar Shah reported in [2018]95 Taxmann.co 46 (Gujarat)- the Hon'ble Court has held at Paragraph no. 7 as under: "7. It is equally well settled that the notice or reopening can be supported on the basis of reasons recorded by the Assessing Officer. He cannot supplement such reasons. The third principle of law which is equally well settled and which would apply in the present case is that reopening of the assessment would not be permitted for a fishing or a roving inquiry. This can as well be seen as part of the first requirement of the Assessing Officer having reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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