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TMI Blog2016 (9) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... or the petitioner, however, vehemently contended that the material before the Assessing Officer was insufficient. He submitted that unless and until there was a specific reference to the assesseecompany in the statement of the Director, an automatic presumption would not arise that the investment made by the M/s. Bhumidev Credit Corporation Ltd in the petitionercompany was also bogus. However, we must remind ourselves that, at this stage, what is required for the Assessing Officer is to form a reason to believe that income chargeable to tax has escaped assessment. Whether such additions would be sustained or not is not a relevant consideration. In exercise of writ jurisdiction, therefore, we would not hamper further progress in the assessment. - Special Civil Application No. 14353 of 2016 - - - Dated:- 29-8-2016 - Akil Kureshi And A. J. Shastri, JJ. Mr Ketan H Shah, Advocate for the Petitioner ORDER ( Per : Honourable Mr. Justice Akil Kureshi ) 1. The petitioner has challenged a notice dated 30.03.2016 issued by the respondent-Assessing Officer seeking to reopen the petitioner's assessment for the assessment year 2009-10. 2. Brief facts are as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 151 of the Income Tax Act. 3. From the reasons recorded, it can be seen that the Assessing Officer had received information from the investigation wing of the department intimating that during the assessment of one M/s. Kutch Ginning and Spinning Pvt. Ltd., it was found that the said company had received share application money/premium of ₹ 75 lacs from a non-discript company, M/s. Bhumidev Credit Corporation Ltd. Upon inquiry, it was found that such company was non-genuine. During such inquiry, statement of Director of M/s. Bhumidev Credit Corporation Ltd. was also recorded, who accepted that the company was indulging in issuance of cheque on receiving equivalent cash amounts. Said M/s. Bhumidev Credit Corporation Ltd had also invested ₹ 10 lacs in the assesseecompany as share application money vide two cheques dated 13.02.2009 and 14.02.2009 of ₹ 5 lacs each. Thus, the assessee-company was one of the beneficiaries of accommodation entry in form of share application money from such M/s. Bhumidev Credit Corporation Ltd. It was on the basis of such information available, the Assessing Officer formed a belief that the income chargeable to tax in case of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information given in the return could be made by the Assessing Officer. The reason is that under section 143(1)(a) no opportunity is granted to the assessee and the Assessing Officer proceeds on his opinion on the basis of the return filed by the assessee. The very fact that no opportunity of being heard is given under section 143(1)(a) indicates that the Assessing Officer has to proceed accepting the return and making the permissible adjustments only. As a result of insertion of the Explanation to section 143 by the Finance (No. 2) Act of 1991 with effect from October 1, 1991, and subsequently with effect from June 1, 1994, by the Finance Act, 1994, and ultimately omitted with effect from June 1, 1999, by the Explanation as introduced by the Finance (No. 2) Act of 1991 an intimation sent to the assessee under section 143(1)(a) was deemed to be an order for the purposes of section 246 between June 1, 1994, to May 31, 1999, and under section 264 between October 1, 1991, and May 31, 1999. It is to be noted that the expressions intimation and assessment order have been used at different places. The contextual difference between the two expressions has to be understood in the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991 (191) ITR 662], for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is reason to believe , but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment and Investment Company Ltd. reported in 373 ITR 661 from which following observations may be noted: After going through the detailed order passed by the High Court, we find that the main issue which is involved in this case is not at all addressed by the High Court. A contention was taken by the appellant-Department to the effect that since the assessee's return was accepted under section 143(1) of the Income Tax Act, there was no question of change of opinion inasmuch as while accepting the return under the aforesaid provision no opinion was formed and, therefore, on this basis, the notice issued was valid. We find that this aspect is squarely covered by the judgement of this Court in Asst. CIT v. Rajesh Jhaveri Stock Brokers Private Ltd. [2008] (14) SCC 208 in the following manner: 6. In case of Inductotherm (India) P. Ltd vs. M.Gopalan, Deputy Commissioner of Income Tax reported in 356 ITR 481, this Court taking note of the decision of Supreme Court in case of Assistant Commissioner of Income Tax vs. Rajesh Jhaveri Stock Brokers P. Ltd. and other judgements held and observed that the power to reopen the assessment is available in either ..... X X X X Extracts X X X X X X X X Extracts X X X X
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