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TMI Blog2016 (8) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... tiny assessment has been undertaken, if substantial new material is found in the form of information on the basis of which the assessing authority can form a belief that the income of the petitioner has escaped assessment, it is always open for the assessing authority to reopen assessment. From the reasons which are recorded, it clearly emerges that the petitioner is the beneficiary of those entries by Kayan brothers, who are well known entry operators across the country and this fact has been unearthed on account of the information received by DGIT Investigation Branch and therefore, it cannot be said in any way that even if four years have been passed, it is not open for the Authority to reopen the assessment. In the present case, there was independent application of mind on behalf of the assessing authority in arriving at the conclusion that income had escaped assessment and therefore, the contentions raised by the petitioner are devoid of merits. Dealing with the contentions of the petitioner that the information received from DGIT, Investigation Branch, Ahmedabad, can never be said to be additional information. We are of the opinion that the information which has been recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner that after extensive scrutiny undertaken by the respondent in the assessment proceedings, on 3.10.2015 the assessment order came to be passed under Section 143(3) of the Income-Tax Act by making certain additions as reflected in the order. 3. Feeling aggrieved by and dissatisfied with the addition having been made in the scrutiny assessment, the petitioner has challenged the additions made in the assessment order by way of filing an appeal before the CIT (Appeals). The appellate authority had passed an order but, since it is not related to the issue involved in the present petition, same is not made a part of the proceedings. The petitioner has subsequently received the notice under Section 148 of the Income-Tax Act on 31.3.2015, inter-alia, stating to the petitioner that the authority has reason to believe that income chargeable to tax had escaped assessment and thereby, asking the petitioner to file return in the prescribed form within a period of 30 days. 4. The petitioner vide letter dated 25.4.2015 informed the authority that return of the petitioner has already been scrutinized in detail and the assessment order has been passed only after detailed inquiry an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned transaction and therefore, there appears to be a clear error on the part of authority in deciding to reopen the assessment. Learned counsel submitted that during the scrutiny assessment, factum of TDS amount having been deducted, has also been brought to the notice in addition to addresses, permanent account number as also the amount of commission having been paid and therefore, just to reopen the assessment despite aforesaid material on record having been examined, the decision tantamounts to mere change of opinion which is not permissible and thereby, contended that the impugned notice as also the order deserves to be quashed and set aside. Learned counsel further submitted that the information received by DGIT (Inv.) Ahmedabad can never be termed as an additional information and that information can never be used to reopen the assessment. If that be so, the decision of authority to reopen the assessment said to be based on extraneous information. Learned counsel submitted that if the authority is not taking appropriate decision in consonance with the principle of law then, it is always open for the High Court to put check on the authority by exercising extraordinary jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the respective parties, before adverting to the contentions, the reasons which are recorded are worth to be taken into consideration and hence, same are reproduced hereinafter : 3. The assessee is engaged in the business of manufacturing of textile machinery and spare parts. The assessee has filed his return of income on 29.9.2011 declaring total income at ₹ 5,44,47,395/-. The case was selected for scrutiny and assessment was completed u/s.143(2) dated 3.10.2013 assessing income at ₹ 4,45,52,400/-. 4. In this case, information has been received by DGIT (Investigation), Ahmedabad vide No.DGIT(Inv.) /AHD/VAT/Bogus Purchase/2014-15 dated 26.3.2015. It is stated in the letter that two surveys were carried out by the Pr.DIT (Inv.) Kolkata on Vikrant Kayan and Arvind Kayan respectively. The Kayans are known entry operators of Kolkata and have been giving entries of bogus share capital, bogus bills of expenses and bogus long term capital gains to various beneficiaries through out the country. The above mentioned assessee is also a beneficiary of ₹ 210.43 lacs (accommodating co. Target Goods Pvt. Ltd.) pertaining to A.Y.2011-12. 8. On perusal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operators well known in the country to the extent of sizable amount of ₹ 210.43 lacs and therefore, the discretion appears to have been rightly exercised by the authority. Therefore, the contentions raised by the learned counsel for the petitioner being devoid of merits, no interference is desirous from this court. 10. The Assessing Officer at the time of issuing notice under Section 148 of the Act is not coming to a final conclusion and his reason for belief is merely a cause or justification and therefore, that expression based upon which the action is initiated, cannot be treated to mean that Assessing Officer has finally ascertained the fact of legal evidence or conclusion. At the initial stage, what is required to be seen is that reason to believe is concluded not on the established fact of the escapement of income and therefore, only question left for relevant consideration is, whether there was a material to form a reasonable belief to be seen and therefore, looking to the position prevailing as on date, it is always open for the petitioner to justify or to deal with the same when final assessment is taking place. But, at this stage, neither the petitioner nor this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied firstly the Assessing Officer must have reason to believe that income profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either (i) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148read with section 147(a) But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is however to be noted that both the conditions must be fulfilled if the case falls within the ambit of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, it is held that action of reopening of assessment was found to be justified. Relevant Paragraph Nos.9, 10, 11, 12, 13 and 16 of the said decision worth to be taken note of and therefore, reproduced hereinbelow : 9. It can thus be seen that the entire material collected by the DGCEI during the search, which included incriminating documents and other such relevant materials, was alongwith report and showcause notice placed at the disposal of the Assessing Officer. These materials prima facie suggested suppression of sale consideration of the tiles manufactured by the assessee to evade excise duty. On the basis of such material, the Assessing Officer also formed a belief that income chargeable to tax had also escaped assessment. When thus the Assessing officer had such material available with him which he perused, considered, applied his mind and recorded the finding of belief that income chargeable to tax had escaped assessment, the re-opening could not and should not have been declared as invalid, on the ground that he proceeded on the show-cause notice issued by the Excise Department which had yet not culminated into final order. At this stage the Assessing Officer was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manipulated transaction. On the basis of such information, the Assessing Officer issued notice for reopening of the assessment. The question, therefore, arose whether the information contained in the letter of Directorate of Investigation could be said to be definite information and the Assessing Officer could act upon such information for taking action under Section 147(b) of the Act. In such background, the Supreme Court observed as under: 12. Ms. Gauri Rastogi, the learned appearing for the respondents, has urged that the letter of Shri Bagai was received by the Income tax Officer on March 26, 1974 and on the very next day, that is, on March 27, 1974, he issued the impugned notice under Section 147(b) of the Act and that he did not have conducted any inquiry or investigation into the information sent by Shri Bagai. Merely because the impugned notice was sent on the next day after receipt of the letter of Shri Bagai does not mean that the Income Tax Officer did not apply his mind to the information contained in the said letter of Shri Bagai. On the basis of the said facts and information contained in the said letter, the Income Tax officer, without any further investigation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t material, as stated above, on which a reasonable person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid. Inasmuch as, as a result of our order, the reassessment proceedings have not to go on we don not and we ought not to express any opinion on the merits. 13. In case of AGR Investment Ltd. vs. Additional Commissioner of Income Tax and anr (supra) , a Division Bench of Delhi High Court considered the validity of reopening of assessment where the notice was based on information received from Directorate of investigation that the assessee was beneficiary of bogus accommodation entries. The Court while upholding the validity of reopening observed that sufficiency of reason cannot be considered in a writ petition. It was observed as under: 23 The present factual canvas has to be scrutinized on the touchstone of the aforesaid enunciation of law. It is worth noting that the learned counsel for the petitioner has submitted with immense vehemence that the petitioner had entered into correspondence to have the docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and further the reason recorded does not indicate application of mind. That apart, the existence of the companies was not disputed and the companies had bank accounts and payments were made to the assessee company through the banking channel. Regard being had to the aforesaid fact situation, this Court had interfered. Thus, the said decision is also distinguishable on the factual score. 16. Thus, the decision in case of Futura Ceramics Pvt. Ltd. And anr vs. State of Gujarat through Secretary and ors(supra) was rendered in an entirely different background and had no direct application to the question whether on the basis of information supplied by the Excise Department to the Assessing Officer of suppression of valuation of goods or clandestine removal of goods for evading excise duty, notice for re-opening of the assessment could have been issued. 12. On the basis of aforesaid proposition laid by series of decisions, we are of the opinion that when the Authority is armed with the tangible material in the form of specific information received by the Investigation Wing, Ahmedabad is throughly justified in issuing a notice for reassessment. It is revealed from the said ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he challenge contained in the petition being devoid of merits, same deserves to be dismissed. 13. From the aforesaid pronouncements, in the opinion of this Court, the observations made by the Hon ble Apex Court in the cases referred to above are sufficient enough to meet with the situation and therefore, without repeating or reproducing the same, the Court is of the opinion that extraordinary jurisdiction is not required to be exercised in the background of aforesaid facts. No doubt, the High Court has power of judicial review to scrutinize the decision of administrative authority but, once it is found that the authority below has acted well within the bounds of its authority and peripheral limit, it is not always to exercise and invoke extraordinary jurisdiction and to examine and substitute the finding of the reasonable belief. The scope of Articles 226 and 227 of the Constitution are sufficiently analyzed by series of decisions wherein, it has been propounded that what is to be seen is a decision making process and one of such decisions delivered by the Hon ble Apex Court in the case of State of U.P. Anr. V/s. Johri Mal , reported in AIR 2004 SC 3800 wherein, the scope o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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