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TMI Blog2012 (7) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessment - is settled legal position that section 147 cannot be exercised for making a roving inquiry and that the Assessing Officer, before reopening the assessment has to form a belief that income chargeable to tax has escaped assessment - the petitioner had placed all relevant material on record - in favour of assessee. - Special Civil Application No.12768 of 2009 - - - Dated:- 2-7-2012 - Akil Kureshi and Harsha Devani, JJ. For Appellant: Mr Manish J Sah : 1 For Respondent: Notice Served by DS : 1 Mr Sudhir M Mehta : 1 JUDGEMENT Per: Harsha Devani: 1. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 24.03.2009 issued by the respondent under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost factors were consumed at 66.50% percentage but, the production was increased only at 49.64%. Considering the ratio or raw material consumed in the previous year, the production/turnover for the current year would be Rs.15,16,71,966 as against Rs.13,63,10,809/- shown by the assessee. 4. So, the assessee has under stated the turnover to the extent of Rs.1,53,61,157/- which needs to be investigated in depth. In view of the discussion in aforesaid paras, I am of the considered view that substantial income has escaped assessment in view of section 147 of the IT Act 1961, for which assessment need to be reopened. 3. The petitioner filed its objections to the reasons for reopening on 29.04.2009, contending that the assessment cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led and documents annexed therewith and more particularly, to the notice dated 07.10.2004 issued by the Assessing Officer under section 142(1) of the Act calling upon the petitioner to furnish details of gross profit working for current and two preceding years and the reasons for fall in gross profit, if any. It was pointed out that in response to the said notice, the petitioner had submitted the break up in a chart annexed at page 52 to the present petition, giving all details regarding computation of the gross profit for the year under consideration as well as two previous years and that it was after taking the relevant material into consideration that the Assessing Officer, after due application of mind, had framed the assessment under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d truly all material facts necessary for its assessment. The reopening of assessment, after the expiry of four years from the end of the relevant assessment year, is, therefore, well within the authority and jurisdiction of the Assessing Officer. 6. From the facts noted hereinabove, indubitably the impugned notice has been issued after the expiry of a period of four years from the end of the relevant assessment year and as such, for the purpose of invoking jurisdiction under section 147 of the Act, the Assessing Officer has to form a belief that income chargeable to tax has escaped assessment and that such escapement is by reason of failure on the part of the petitioner to disclose fully and truly all material facts. The formation of beli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much as the only belief formed by the Assessing Officer is that the understatement of turnover needs to be investigated. It is settled legal position that section 147 of the Act cannot be exercised for making a roving inquiry and that the Assessing Officer, before reopening the assessment has to form a belief that income chargeable to tax has escaped assessment. Besides, as noticed earlier, the assessment is sought to be reopened after the expiry of a period of four years from the end of the relevant assessment year. Apart from the fact that there is no allegation to the effect that there was any failure to disclose true and correct facts on the part of the petitioner, from the material on record, it is apparent that the petitioner had plac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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