2023 (1) TMI 781 - HC - Income Tax

Reopening of asseessment u/s 147 - Reason to believe - information received from the DDIT (Inv), Unit 2(3), Ahmedabad has inferred and formulated an opinion with regard to the trading transactions of the petitioner on NSEL platform - HELD THAT - When specific report has unearthed the modus operadi, the authority found it necessary to reopen the assessment and as such the proposition which has been canvassed by the learned advocate that it is borrowed satisfaction or the order passed is without application of mind are not worthy of acceptance. In fact, petitioner has not truly and fully disclosed the material as has been demanded and as such it is always open for the respondent authority to reopen the assessment when the case is based upon a peculiar background or material unearthed subsequently. This is not even a case of change of opinion, but in fact, the detailed discussion undertaken herein before has led us to the situation where this Court is not finding safe to accept the stand of the petitioner in exercise of extraordinary jurisdiction and this Court is of the clear opinion that authority is specifically seized with the power and it is examining the process which would not call for interference and we have absolutely no reason to interfere and so no reason as to why authority would not apply its independent mind while examining the issue and scrutinise the stand of petitioner. Hence, this Court is not inclined to interfere with the discretion being exercised by respondent authority. We have gone through the judgments which have been relied upon by petitioner in detail. We are of the opinion that background of facts is quite distinct and peculiar in nature to the present case on hand which would not permit us to just apply in a routine manner or as a straightjacket formula and as such, the judgments cited are of no assistance of the petitioner. We are of the opinion that petitioner has not made out any case calling for interference. Accordingly, petition stands dismissed.

Summary

Issues Involved:
1. Challenge to the notice under Section 148 of the Income Tax Act, 1961.
2. Validity of the reopening of assessment for the assessment year 2013-2014.
3. Allegations of non-application of mind and borrowed satisfaction by the respondent authority.
4. Examination of new, fresh, and tangible material for reopening the assessment.
5. Allegations of non-disclosure of true and correct facts by the petitioner.
6. Permissibility of reopening based on change of opinion.
7. Examination of the procedural fairness in the disposal of objections by the respondent authority.

Issue-wise Detailed Analysis:

1. Challenge to the Notice under Section 148 of the Income Tax Act, 1961:
The petitioner challenged the notice issued under Section 148 of the Income Tax Act dated 23.03.2020, seeking to reopen the assessment for the assessment year 2013-2014. The petitioner argued that the reasons for reopening were misconceived and baseless, leading to the filing of objections which were disposed of by the respondent authority without proper consideration.

2. Validity of the Reopening of Assessment for the Assessment Year 2013-2014:
The petitioner contended that the reopening of the assessment was impermissible as there was no new, fresh, and tangible material distinct from what was already part of the original assessment proceedings. The petitioner relied on various judgments to substantiate that reopening based on the same material is not permissible. The respondent, however, argued that specific information regarding bogus accommodation entries necessitated the reopening of the assessment.

3. Allegations of Non-application of Mind and Borrowed Satisfaction by the Respondent Authority:
The petitioner argued that the order disposing of the objections and the notice under Section 148 reflected non-application of mind and that the satisfaction was borrowed. The respondent countered that the reopening was based on specific information and detailed investigation reports, which justified the reopening of the assessment.

4. Examination of New, Fresh, and Tangible Material for Reopening the Assessment:
The petitioner argued that the reopening was based on the same material available during the original assessment proceedings and no new tangible material was presented. The respondent, however, presented detailed findings from the investigation report, indicating that the petitioner had taken accommodation entries through the NSEL platform, which were not disclosed during the original assessment.

5. Allegations of Non-disclosure of True and Correct Facts by the Petitioner:
The respondent argued that the petitioner failed to disclose true and correct facts regarding the NSEL trade transactions during the original assessment. The investigation revealed that the transactions were merely on paper with no physical delivery of goods, leading to the conclusion that the petitioner had not disclosed material facts, justifying the reopening of the assessment.

6. Permissibility of Reopening Based on Change of Opinion:
The petitioner contended that the reopening was based on a mere change of opinion, which is impermissible. The respondent argued that the reopening was not based on a change of opinion but on new findings from the investigation, which indicated that the petitioner had engaged in bogus transactions through the NSEL platform.

7. Examination of the Procedural Fairness in the Disposal of Objections by the Respondent Authority:
The petitioner argued that the disposal of objections was done without proper consideration and application of mind. The respondent, however, presented a detailed order disposing of the objections, indicating that the objections were considered, and the reopening was justified based on new findings from the investigation.

Conclusion:
The court, after considering the arguments and evidence presented by both parties, concluded that the reopening of the assessment was justified based on the new findings from the investigation, which indicated that the petitioner had not disclosed material facts during the original assessment. The court found no reason to interfere with the discretion exercised by the respondent authority and dismissed the petition. The court emphasized that the petitioner is not remediless and has the right to challenge any adverse order passed by the authority through the statutory remedies available under the Income Tax Act.