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TMI Blog2014 (7) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... cts for assessment - the reasons recorded clearly indicates that scrutiny proceedings for AY 2008-09 and survey action taken u/s 133A of the Act has brought on record evidence indicating bogus purchase bills from various parties, one of them being M/s. Rahul Industries for the AY 2005-06 as indicated in the chart annexed to the reasons recorded – the notice and the reasons recorded does indicate that there is relevant material obtained during the survey and assessment proceedings for assessment year 2008-09 on the basis of which a reasonable person could reasonably form the belief that income chargeable to tax has escaped assessment – thus, there was no reason to interfere in the notice of reassessment u/s 148 of the Act – Decided against Assessee. - Writ Petition No. 2860 of 2012 - - - Dated:- 18-6-2014 - M. S. Sanklecha And G. S. Kulkarni,JJ. For the Petitioner : Mr. J. D. Mistry, K. Gopal with Jitendra Singh For the Respondent Mr. Suresh Kumar JUDGMENT In this petition, the challenge is to a notice dated 7 December 2010 of the Assessing Officer issued under Section 148 of the Income Tax Act,1961 ( the Act ) seeking to reopen the assessment for the Assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 crores (from A.Y.2005-06 to A.Y.2010-11) worth of purchase are found to be from the parties which are non existent/bogus billers. The chart annexed shows the year wise amount of bogus transactions done by the assessee. Hence, accordingly I have reason to believe that income chargeable to tax for A.Y. 2005-06-7 has escaped assessment. Issue notice u/s. 148. Date : 7/12/2010 sd/ (S.N. Bhatia), Dy. Commissioner of Income Tax 1(2),Mumbai. The petitioner made a grievance of not receiving a chart stated to be annexed to the reasons. Therefore, on 2nd April 2012 the Assessing Officer furnished the petitioner with another copy of the reasons recorded along with a chart annexed to the reasons for reopening the assessment. 3. The petitioner by its letter dated 23 April 2012 objected to the impugned notice dated 7 December 2010. The objection was on the ground that the proposed reopening of assessment for A.Y. 2005-06 was beyond the period of 4 years from the end of the assessment year in the absence of any failure on the part of the petitioner to disclose truly and fully all material facts necessary for assessment. Besides, it was contended that as all the material wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,056/- Total: ₹ 50,41,851/- Out of these two, he points out that during the assessment proceedings the Assessing Officer had asked for details of purchase and sales of more than ₹ 10 lacs by the individual parties. This is evident by a questionre issued by the Assessing officer which is annexed to the affidavit in rejoinder filed by the petitioner. In response the petitioner had given details of all its suppliers including Symphony Metalam Private Ltd. Therefore, according to the petitioner the same was not only a fact disclosed but also a subject matter of scrutiny at the time when the original assessment order was passed. In view of the above, it is submitted that the entire exercise is only a change of opinion. Besides, it was emphasized that there was no new material which would warrant a change of opinion. 5. Mr. Suresh Kumar, learned Counsel appearing for the revenue in support of the impugned order submits as under: a) The reasons recorded for issuing the impugned notice dated 7 December 2010 clearly indicates that fresh information was accessed during the scrutiny proceeding for subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 148 of the Act. This is for the reason that the earlier assessment order which is being sought to be disturbed is not a waste paper but has sanctity attached to it. The reopening of an assessment under Section 148 of the Act cannot be arbitrary or on a mere change of opinion or at a mere whim and caprice of the Assessing Officer. It is for this reason that the Supreme Court in GKN Drive Shafts India vs. ITO 259 ITR 19 has provided that the Assessing Officer would furnish reasons as recorded for issuing notice to reopen an assessment and the assessee would be entitled to file its objections. The Assessing Officer would then dispose of the objections by a speaking order. Thus one more safe guard was provided by the Apex Court to ensure that there is proper application of mind before an assessment is reopened as reopening of an assessment is likely to cause harassment. It is at this stage that assessee normally move the Court, if they are of the view that the notice for reopening is without jurisdiction. The Court would interfere at this stage if ex facie the pre conditions for issuing the notice viz. recording of reasons before issuing a notice, the reason to believe that income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fundamental rights or where the constitutionally of statue is challenged, then even in a petition challenging a notice under Section 148 of the Act we would in appropriate cases exercise our writ jurisdiction notwithstanding the availability of an alternative remedy. 7. Now, we shall examine the present facts. The petitioner has contended that the impugned notice dated 7 December 2010 was beyond the period of 4 years from the end of the relevant assessment year i.e. 2005-06 and the jurisdictional requirement of reason to believe that income chargeable to tax has escaped assessment on account of failure of the petitioner to disclose all material facts truly and fully at the time of the original assessment is not satisfied. 8. It was first contended by the petitioner that the escapement of tax on income must arise out of failure to disclose fully and truly all facts necessary for assessment of income. In this case, it is submitted that all documents including the bills received from Rahul Industries and M/s. Symphony Metalam Private Ltd. as well as other suppliers were disclosed by the assessee during the original assessment proceedings leading to assessment order dated 27 Marc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of income. At the stage of issue of the notice the only requirement is to examine whether on the available material a reasonable person could form a reasonable view to believe that income chargeable to tax has escaped assessment. This satisfaction has necessarily to be the subjective satisfaction of the Assessing Officer and unless it is shown by the petitioner that such a reasonable belief as arrived at by the Assessing Officer in the facts of the case is just not possible, this Court will not stall proceedings for reassessment duly initiated. In this case, we are of the view that the satisfaction of the Assessing Officer to form a reasonable belief that income chargeable to tax has escaped assessment is not unreasonable. 9. The petitioner next emphasized the fact that the assessment was completed under Section 143(3) of the Act. Further, during the course of assessment proceedings the petitioner was specifically asked by the Assessing Officer to furnish the details of sales and purchase of more than ₹ 10 lacs. Consequently, the purchases of ₹ 46,61,056/- from M/s. Symphony Metalam P. Ltd. was a subject matter of examination by the Assessing Officer during the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inclusion of Central excise and customs duty in valuation of inventory. In view of this position, I have reason to believe that income chargeable to tax has escaped assessment inasmuch as excise and customs duty leviable, ₹ 5.85 crores has not been added to the value of the closing stock, while completing the scrutiny assessment under section 143(3) on January 29, 1999. It was in the above context, that this Court held that The reasons recorded by the Assessing Officer nowhere state that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year . The above observation has to be read in the light of the reasons recorded for reopening the assessment. The recording or non recording of the words failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment would not by itself bestow or oust jurisdiction. One would necessarily have to read the reasons as a whole to find out whether or not there has been a failure to disclose truly and fully all necessary facts for assessment. In the present case, the reasons recorded clearly indicates that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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