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TMI Blog2023 (1) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... ration. For the relevant assessment year 2009-10, the assessee had filed his return of income on 31.3.2011. The intimation u/s. 143(1) came to be issued on 11.4.2014. Notice u/s. 148 of the Act came to be issued on 28.3.2016 after the expiry of four years from the end of the assessment year proposed to be reopened. It was the submission by ld. AR that the reasons recorded for the purpose of reopening was at page 5 of the paper book, which reads as follows: 'The assessee individual derives income from mining business. The assessee filed his return of income for the A.Y. 2009-10 on 31.3.2011 showing a total income of Rs. 2,05,26,930/-. The return was processed on 11.4.2014 u/s. 143(1) of the I.T. Act, 1961. As per information available with department, Shri B.C. Deb, its lease period expired on 19.11.1973. It has produced 1162260 MT of iron ore illegally. The State Government issued show cause notice for recovering an amount of Rs. 243,48,48,107/- u/s. 21(5) of MM(DR) Act, 1957 on the ground that Shri B.C. Deb has raised iron and manganese ores from the area which is outside the lease area. B.C. Deb did unlawful mining operation to an extent of 1,46,755,848 Cubic Meter. The D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strate, Keonjhar with the officers of the Mining Department and Forest Department that there was no illegal mining in any area outside the leased area in the case of the assessee. It was the further submission that in respect of illegal mining itself, the Assessing Officer had written a letter to the Director, Mines and the Director of Mines had referred the issue to the Dy. Director of Mines in respect of illegal mining and till today, the Assessing Officer has not got any reply on the issue of illegal mining. It was the submission that the Assessing Officer talks of mining of 321500 MTs of iron ore and 13025 MT of Manganese in the assessment year 2009-10 and 36500 MT of iron ore and 4255 MTs of Manganese in the assessment year 2010-11. It was the submission that the actual mining done by the assessee and disclosed by the assessee far exceeds these figures also. It was the further submission that no illegal mining has been found nor proved in the case of the assessee by any of the authorities whose reports and allegations have been adopted by the Assessing officer for the purpose of reopening of the assessment of the assessee. It was the submission that even as on today, though th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the assessee is engaged in the mining business. The assessee had filed returns of income for two assessment years under reference which were processed u/s. 143(1) of the Act. Though the lease period of the assessee had expired on 19.11.1973, yet he had produced 11,62,260 MT of iron ore illegally. The State Government had issued a show cause notice for recovering an amount of Rs. 243,48,48,107/- u/s. 21(5) of MMDR Act, 1957 on the ground that the assessee had raised iron and manganese ores from the area which was outside the lease area. The assessee had done unlawful mining operations to the extent of 1,46,756 cubic metres. The DDM (Deputy Director of Mines), Joda also reported that the assessee had unlawfully raised iron ore to the extent of 58,03,094 MT of iron ores valued at Rs. 158.71 crores and 3,55,228 MT of manganese ores valued at Rs. 67.48 crores. Despite the fact that no lease was granted in favour of the assessee, he had illegally raised 11,85,345 MT of iron ores and 36,726 MT of manganese ores from the years 2006-07 to 2009-10. Since the said income was not disclosed in the returns of income of Ay 2009-10 & Ay 2010-11, the A.O. had reasons to believe that income had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial, as stated above, on which a reasonable person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid. Inasmuch as a result of our order, the reassessment proceedings have now to go on we do not and we ought not to express any opinion on the merits". ii.) In the following cases, it was held that where the A.O. had received information from the Investigation wing, the reopening u/s. 147 of the Act on the basis of said information was justified. - Hon'ble Punjab & Haryana High Court in the case of Rakesh Gupta vs. CIT (93 taxmann.com 271) - Hon'ble Delhi High court in the case of Rajat Export Import India (p.) Ltd. vs. ITO (18 taxmann.com 311). - Hon'ble Delhi High Court in the case of Paramount Intercontinental (p.) Ltd. vs. ITO (88 taxmann.com 595) - Hon'ble Gujarat High Court in the case of Peass Industrial Engineers (p.) Ltd. vs. DCIT (73 taxmann.com 185) - Hon'ble Delhi High Court in the case of AGR Investment Ltd. vs. Additional CIT (197 Taxman 177) - Hon'ble Kolkata High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry, the reasons were recorded by the A.O. on 21.03.2016. The notice u/s. 148 was issued on 28.03.2016 after receipt of approval from CIT-I, Bhubaneswar on 28.03.2016. Hence there is no infirmity in the action of the A.O. and allegations of the assessee are totally baseless. 4. The argument of the ld. AR of the assessee that re-assessment proceedings were initiated after 4 years from the end of the relevant assessment year without specifically stating that there was also a failure on the part of the assessee disclose fully and truly all the facts necessary for assessment is also absurd since no assessments u/s. 143(3) were made by the A.O. for two assessment years and returns for A.y. 2009-10 & A.y. 2010-11 were only processed u/s. 143(1) of the Act. 5. The argument of the ld. AR of the assessee that the re-opening resorted to by the A.O. was based on surmises and suspicion rather than any concrete evidence is also absurd. The assessee has shown lower production of iron ores/manganese ores in the books of account than that reported by Deputy Director of Mines, Joda. Hence there was credible information from a government authority which formed reasons to believe that income ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the ITO for initiating proceedings under Sections 147 and, 148 were not in accordance with law. As in that case, the Commissioner merely accorded permission under Section 151 without stating any reason himself. It is axiomatic that his order would also not be in accordance with Section 151. The case before us is entirely different. We have found that the reasons recorded by the AO justify the initiation of proceedings under Sections 147 and 148. As the Principal Commissioner agreed with these reasons, it was not necessary for him in his order according sanction to reiterate the reasons furnished by the AO. There is nothing that indicates that he did not apply his mind to the reasons furnished by the AO. 45. Reasons to believe are there. The reasons are based on tangible material. The return and account books of assessee had not undergone scrutiny at the time of assessment. The information is specific and not vague. A reasonable person can form an opinion on the basis of the material. The information received could form the basis of reason to believe that income has escaped assessment and the re-opening is not on mere suspicion. Hence, the assumption of Jurisdiction is in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to provide elaborate reasoning to arrive at a finding of approval when the Principal Commissioner is satisfied with the reasons recorded by the Ao. Similarly, in case of virbhadra Singh vs. Deputy Commissioner Circle Shimla [2017] 88 taxmann.com 888 (HP) where the competent authority was in agreement with the reasons assigned by the Assessing Officer, so placed before him, which came to be considered and sanction accorded with proper application of mind, by recording "I am satisfied that it is a fit case for issuance of notice u/s. 148", the issuance of notice under section 147/148 was held to be valid. 7. As far Instruction No. 40/2016 issued by CBDT is concerned, same is not applicable to the facts of the present case. The said instruction states that the country has shifted to digital mode of payments. In this scenario, no financial transaction would remain undisclosed. Hence there is an apprehension that there would be an increased turnover in the current year might lead to reopening of earlier years' assessments. It was thus conveyed that on the ground of mere increase in turnover, it would not be a reason to reopen the assessments of earlier years. This instruction h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed. There will be no order as to costs." The Hon'ble Kerala High Court in the case of G. Sukesh vs. DCIT (118 Taxman 427) held in para-4, 5 & 6 as under: "4. On an examination of the matter, I have to agree with the counsel for the revenue that the writ petition is premature. It is also too early for anybody to pronounce that the Assessing Officer had no business or reason to believe that income had escaped assessment. The section gives power to assess or reassess such income or any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of proceedings under the section. The petitioner is, therefore, not justified in submitting that all definite figures should be with the officer, well beforehand, and then only notice is contemplated. The expression in the course of proceedings' is wide in its amplitude, and it will, therefore, be proper to conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its returns and same was adopted by the Assessing Officer, therefore, the reopening is valid. 8. Ld. CIT DR has also relied upon the decision of the Hon'ble Kerala High Court in the case of G. Sukesh vs DCIT (2001) 118 TAXMAN 427 (Ker), wherein, it has been held that the expression "in the course of proceedings" is wide in its amplitude and, therefore, the information at the time of issuing notice under section 148 need not be complete and accurate. 9. He has also placed reliance on the decision of Hon'ble Karnataka High Court in the case of Prasanna V Ghotage vs DCIT (79 taxmann.com 103), wherein, the Hon'ble High Court has held that where the Committee has submitted its report wherein, assessee was accused of being involved in illegal mining and, moreover, there was huge under invoicing in sale of iron ore, the reopening initiated by the AO on the basis of the said report was valid. It was the submission that the reopening of the assessment is liable to be upheld 10. It was the submission by ld. CIT DR that substantial number of opportunities had been given by the ld. CIT(A) to the assessee but the assessee has been non-cooperative. It was the submission that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has been accused of being involved in illegal mining and there was huge under invoicing in sale of iron ore. In the case of the assessee, herein, though Shah Commission report talks of substantial illegal mining, same did not fructify into any actual finding of illegal mining in the case of the assessee. In fact, the Hon'ble Supreme Court had restored the issue to the State Government in 2016 and even today after a lapse of 7 years, no action is initiated. 16. Coming to the decision of G. Sukesh(supra), Hon'ble Kerala High Court has held that the information at the time of issuing notice u/s. 148 need not be complete and accurate. Admittedly, in the present case, at the time of issuance of notice u/s. 148, there was no information which showed that the assessee has done any illegal mining. This is because though the Hon'ble Supreme Court has restored the issue to the State Government on 8.6.2016, this was on account of an appeal filed by the State Government against the decision of the Hon'ble Jurisdictional High Court in favour of the assessee on the issue of illegal mining. Thus, the very foundation of the reasons recorded for reopening of the assessment di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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