TMI Blog2009 (9) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... lant. Ms. P.L. Bansal, Advocate, for the respondent. JUDGMENT The judgment of the court was delivered by VALMIKI J.MEHTA, J. - These writ petitions are filed by the petitioners seeking the relief of quashing of the notices issued under Section 147/148 of the Income Tax Act, 1961 (hereinafter referred to as "The Act") by the respondents with respect to the Assessment Years 1977-1978 to 1982-1983. One of the prayers in the writ pertained to seeking direction against respondent No.1 to furnish a copy of the reasons for reopening of the completed assessments before issuing the impugned notices. This part of the relief has already become infructuous in as much as the respondents along with their counter-affidavit have furnished the reasons for initiation of the proceedings under Section 147/148 of the Act. 2. The case of the petitioner is that for the Assessment Years 1977-1978 to 1982-1983, it duly submitted its return of income along with complete details necessary for making the assessments. The assessments orders were thereafter passed under Section 143(3) of the Act for these Assessments Years. After scrutiny of the returns for 1981-82 and 1982-83, the respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income has escaped assessment. 148. (1) Before making the assessment, reassessment or recomputation under section 147, the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 139; and the provisions of this Act shall, so far as may be apply accordingly as if the notice were a notice issued under that sub-section. (2) The Income-tax Officer shall, before issuing any notice under this section, record his reason for doing so." 4. The basic contention of the petitioner is that the aforesaid provisions require "reasons to believe" and which reasons had to be a reasonable in that the material sought to be relied upon must have nexus and must be sufficient for reopening of the completed assessments. It was contended that if there is a mere change of opinion without sufficient material for reopening of the assessments, the same is illegal. The counsel for the petitioner has taken us through the reasons which have been given for reopening of the assessments and which have been filed as Annexure R-16 to R-20 along with the counter affidavit. The said reasons are given se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that on account of omission or failure on the part of the assessee to disclose fully and truly material facts of its income to the extent of Rs.6,26,546 has escaped assessment. As per attached letter No. 779 dated 21.2.1986 it is evident that the assessee has introduced his undisclosed income in the form of bogus cash credits. In view of the above facts, I have reason to believe that income to the extent of Rs.6,26,546 has escaped assessment. Necessary approval to reopen the assessment may kindly be accorded. Dated: 21.2.1986 (Mridula Ghosh) Income-tax Officer, Coy. Cir.XXIV, New Delhi ."(Emphasis added) (Assessment year 1980-1981) Reasons: It has come to my notice that the assessee introduced cash credit in the assessment year under consideration amounting to Rs.6,10,075. The genuineness of these cash credits has not been proved by the assessee despite several opportunities given. I have, therefore, reason to believe that on account of omission or failure on the part of the assessee to disclose fully and truly material facts of its income to the extent of Rs.6,10,075/- has escaped assessment. As per attached letter No. 779 dated 21.2.1986 it is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 1985-86, it is seen that no share allotment has been done up to accounting period relevant to assessment year 1985-86. Registered letters seeking confirmation of deposit of share application money were sent to the 46 persons from whom this money was alleged to have been received at the addresses furnished by the assessee coy. and these regd. letters came back unserved in 32 cases out of 46 with the Notings "No Such Person Known". It may further be mentioned over here that no interest payment has been shown to these persons on the share application money deposited by them. I issued a letter listing the "Loans Raised" by the assessee coy. during various assessment years asking it to prove the following regarding these cash credits/advances alleged to have been received by them. 1) Genuineness of the party; 2) Genuineness of the transaction; 3) Capacity of the party. No satisfactory reply had been furnished by the assessee company. The amounts of loan as per assessment record for assessment year 1981-82 and 82-83 are as under: Assessment Year Unsecured loan 1981-82 Rs.7,56,783/- 1982-83 Rs.9,05,004/- Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1986. To Income Tax Officer, Comp. Circle-XXIV,[4th floor] Central Revenue Buldg., New Delhi. Sub: Verification of deposit of Rs.15,19,000/- in the name of M/s. Eastern Trading Co. (P.A.No.-SSC/VIII/300/E/B/Cal.) appearing in the books of M/s. Diwakar Engineers Pvt. Ltd., 1/5B, Asaf Ali Road, New Delhi, an assessee assessed at your end- Detailed information regarding the same. Ref. Letter No. I.T.O./Comp. Circle/XXIV/761 dt. 12.2.1986. The undersigned is directed to inform that the assessment records of M/s Eastern Trading Co. (P.A. No. SSC/VIII/300/E/B/Cal) have been examined by the concerned I.T.O. "B‟-Ward, SSC-VIII and a letter to that effect incorporating the fact that the assessee is not in a position to make such a huge deposit has already been despatched to you (Copy of the same is enclosed). Further more, the concerned ITO has also taken up the matter with his Commissioner of Income Tax, W.B. (a copy of the said letter is also enclosed for ready reference). As regards other deposits, enquiries are being conducted at this end. Those will be sent very soon. (Ranen De) Encl. Two letters. Income Tax Officer/INV-IV, Calcutta ." "OF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der will be passed under Section 147 of the Act. It was further contended that the expression used in the reasons recorded viz "in my opinion prima facie grounds exists" is correct and cannot be faulted. 7. It is trite and laid down now in catena of decisions that powers under Section 147/148 can only be exercised when there is material found for reopening of the assessments and a mere change of opinion is not sufficient. The counsel for the revenue does not dispute this. We, therefore, are to see whether there are sufficient materials as required in law for reopening of the assessments. Before however so doing, we would like to refer to one para of a recent judgment of the Supreme Court reported as Assistant Commissioner of Income-Tax vs. Rajesh Jhaveri Stock Brokers P. Ltd. 2007 (291) ITR 500. The relevant portions of this judgment reads as under:- "Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the Assessing Officer has cause or justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the persons with respect to whom the credits were appearing in the books of accounts as loans and which were not complied with by the assessee. In fact, the AO became suspicious because in the assessment year 1983-1984, the assessee has sought to credit as income the payments due as interest in the earlier years and whereafter consequently a detailed correspondence ensued with the assessee and to which the assessee did nothing accept stonewall. We are of the clear opinion that in the facts and circumstances of the present case, there existed sufficient materials for the Income Tax Officer to initiate proceedings under Section 147 of the Act by issuing notices under Section 148 of the Act. It is not a case of change of opinion but materials have come to light including those during the assessment of the subsequent assessment years throwing clear doubt on the genuineness of the credits/loans and that this was because of omission on failure on the part of the assessee to disclose fully and truly all material facts necessary as a result of which income chargeable to tax has escaped assessment. 10. One of the contentions which has been raised by the counsel for the petitioner is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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