9911796707
TMI Blog2014 (5) TMI 1005X X X X Extracts X X X X X X X X Extracts X X X X ..... months to make the assessee aware that his return has been selected for scrutiny assessment. The material came into existence during post search enquiry when it became known that the gift cheques shown in the return filed u/s 139 of the Act were not regular transactions but were purely arranged transactions to avoid income tax - income disclosed in the return filed u/s 139 of the Act could not become "undisclosed income", merely because in post search enquiry, it came known that the gift cheques was a sham transaction - An amount which has already been included in the regular assessment cannot be assessed again in the course of block assessment - The gift cheques, having been disclosed in the return u/s 139 of the Act could not be re-assessed in block assessment proceedings u/s 158BC - The authorities were justified in not including the gift cheques in block assessment proceedings. The material found in post search enquiries could form a "reason to believe" that income had escaped assessment by issuance of a notice under Section 143(2) of the Act - the period u/s 143(2) of the Act had expired, the AO having genuine reasons to believe that income had escaped assessment and consequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 148 dated 15.12.2004 was issued for the assessment years 2000-01, 2001-02. In view of the decision of the Supreme Court in GKN Driveshafts (India) Ltd. Vs. Income Tax Officer and others 259 ITR 19, the petitioner moved an application dated 25.02.2005 requesting the authority to supply him the reasons for re-opening the assessment proceedings. In response to the said application, the Assessing Officer supplied the reasons dated 10.01.2004 to the petitioner. The reasons so recorded for arriving at a belief that income had escaped assessment for the assessment year 1999-2000 is, that subsequent to the search and seizure operation which was carried out on 03.10.2002, post search enquiries were made and, it was found that the gift transaction shown in the return of income were not regular transactions but purely arranged transactions. It was found that the bank Account of three donors indicated that just before the date of issuing the gift cheque, there was no availability of fund and that one day before the issuance of the cheque, an amount was transferred in the said Account for the purpose of issuing the gift cheque. It was found that the donors were strangers and that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the Finance Act has amended Section 158 B(b) to clarify that block assessment of "undisclosed income" is based on the evidence found in the search and seizure operation and the material or information recovered during post search enquiry. In the light of this amendment, the learned counsel submitted that the "reasons to believe" as well as the counter affidavit clearly indicates that the formation of the belief was the material found in post search enquiry. The learned counsel consequently, submitted that such material found through post search enquiry could only be utilized in block assessment proceedings and could not be utilized in re-opening the assessment. The learned counsel consequently, submitted that the entire proceedings initiated under Section 148 was patently illegal, without jurisdiction and was liable to be quashed. In support of his submissions, the learned counsel placed reliance on the decision of the Madras High Court in Mrs. Kumari Kanagam Vs. Commissioner of Income Tax, [2014] 363 ITR 105 (Mad), Indra Prastha Chemicals Pvt. Ltd. And Others Vs. Commissioner of Income-Tax And Another, (2004) 271 ITR 113 (Alld.), Assistant Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he question that the assessment so made was under assessed, in that event it would be sufficient to initiate proceedings for re-assessment. Sri Chopra further submitted that the assessment for the block period could be done on the basis of the books of account or document and such other material by which the information was available to the Assessing Officer. The learned counsel submitted that only "undisclosed income" found in proceedings under Section 132A of the Act could be utilised in block assessment under Chapter XIV B of the Act but such income, which had already been disclosed in the return but had escaped taxation could not be assessed in block proceedings and that the same could be done in proceeding initiated under Section 148 of the Act. The learned counsel for the department further submitted that where the transaction itself on the basis of subsequent information was found to be a bogus transaction, the mere disclosure of the transaction at the time of original proceeding could not be said to be a disclosure of true and full facts and, therefore, the Assessing Officer would have jurisdiction to re-open the concluded assessment by issuance of a notice under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an always be investigated in a petition filed under Article 226 of the Constitution of India. The expression "reasons to believe" as contained in Section 147 of the Act does not mean purely subjective satisfaction on the part of the Assessing Officer but it means that the belief must be held in good faith and it is open to the Court to examine whether the reasons to believe have a rational connection or bearing to the formation of belief or is based on irrelevant or extraneous considerations. The Supreme Court has clearly held that the formation of the opinion and belief of the Assessing Officer is a condition precedent and without such formation, the Assessing Officer would not have any jurisdiction to proceed further under Section 148 of the Act. In Rajesh Jhaveri Stock Brokers P.Ltd. (Supra) the Supreme Court held that the expression "reason to believe" means cause or justification and that if the Assessing Officer had a cause or justification to know that income had escaped assessment it could be said that the Assessing Officer had reason to believe that the income had escaped assessment. The expression "reason to believe" cannot be read to mean t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, it is the discretion of the Assessing Officer to accept the return as it is or to proceed further with the assessment of income. Once the Assessing Officer decides to proceed, he has to issue notice under Section 143(2) of the Act within the prescribed period, which in the instant case, at the relevant moment of time, was 12 months to make the petitioner aware that his return has been selected for scrutiny assessment. It may also be noticed here that when the petitioner filed his return under Section 139 of the Act, the Assessing Officer did not have any material other than the return filed by the petitioner. If the Assessing Officer had reasons to believe that any claim made in the return was inadmissible, he would serve a notice to the assessee under Section 143(2) of the Act directing him to produce evidence in support of his claim. This was not done as there was no material before the Assessing Officer. The material came into existence during post search enquiry when it became known that the gift cheques shown in the return filed under Section 139 of the Act were not regular transactions but were purely arranged transactions to avoid income tax. Such income disclose ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
