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TMI Blog2018 (2) TMI 1534X X X X Extracts X X X X X X X X Extracts X X X X ..... are concerned in the present case, if facts noted by the Assessing Officer and recorded in reasons are ultimately established, invocation of section 68 of the Act would be called for. The contention that the Assessing Officer had merely and mechanically acted on the report of the investigation wing also cannot be accepted. We have reproduced the reasons recorded by the Assessing Officer and noted the gist of his reasons for resorting to reopening of the assessment. We have recorded that the Assessing Officer had perused the materials placed for his consideration and thereupon, upon examination of such materials formed a belief that income chargeable to tax had escaped assessment. - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Pvt. Ltd, 29A Weston Street, 3rd Floor, R.No.C2, Kolkatta 31000 310000 5890000 5. J.P. Engineering Corporation Pvt. Ltd., AE326, Salt Lake City, Ground Floor, Kolkatta 42000 420000 420000 6. Subhlabh tradecomm Pvt Ltd., 29A Weston Street 3rd Floor, C2, Omer Mansi, Kolkata 12500 125000 2375000 7. Swift Vyapaar Pvt ltd. 27, Braboune Road, 4th floor, Room No. 401, Kolkata 12500 125000 2375000 8. ACOLYTE TIEUP PVT LTD. 574, DAKHINDARI ROAD, GRUND FLOOR, KOLKATA700048 12500 125000 2375000 9. BRAVEMEN TRADERS PVT LTD RGM744, CHAINAR PARK, P.O. HATIARA, OPP CLUB TOWN ENCLAVE KOLKATA700157 14000 140000 2660000 10. SAHIBA AGENCIES PVT LTD 23A, KALAKAR STREET, 2ND FLOOR, KOLKATA700007 14000 140000 2660000 11. TRANSTARDE VINIMAY PVT LTD 8/1b, CENTRE SINTHEE ROAD, PO SINTHEE KOLKATA700050 12500 125000 2375000 12. SLOW AND SOUND ELECTRONICS PVT LTD 2, DIGAMBER JAIN TEMPLE ROAD, 1ST FLOOR, ROOM NO. 28, KOLKATA700007 58500 585000 11115000 13. SUBHREKHA VYAPPAR PVT LTD 6, HANSPUKUR LANE, 1ST FLOOR ROOM NO.106 KOLKATA 7000007 65000 650000 12350000 14. ARIHANT ENTERPRISE LTD 27, SIKDAR PARA STREET, GROUND FLOOR, KOLKATA 19000 550000 3610000 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner filed the present petition. 5. Taking us through the materials on record, counsel for the petitioner raised the following contentions in support of the challenge : 1) The notice of reopening has been issued beyond a period of four years from the end of relevant assessment year, the original assessment having been framed after scrutiny. There was no failure on part of the assessee to disclose truly and fully all material facts necessary for assessment. Impugned notice therefore, is bad in law. 2) During the scrutiny assessment, the Assessing Officer had minutely examined the nature and source of share application money received by the assessee company. The assessee had supplied all necessary details. Only upon being satisfied about the genuineness of such investments that the Assessing Officer made no additions. Any attempt on his part to revisit this issue would be a change of opinion. In this connection, counsel relied on judgment of Division Bench of Delhi High Court in case of Allied Strips Ltd. v. Assistant Commissioner of Incometax reported in (2016) 384 IR 424 (Del). 3) The reasons recorded by the Assessing Officer lack validity. Nowhere has it come on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bona fide belief, the Court would not scuttle the reopening process. Counsel relied on judgment of the Supreme Court in case of Raymond Woolen Mills Ltd. v. Incometax officer and others reported in 236 ITR 34 in which it was observed as under : "In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Incometax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, such amount is liable to be taxed under section 68 of the Act. He therefore, recorded his satisfaction that the income to the tune of ₹ 14.76 crores had escaped assessment and that this was due to the assessee having failed to disclose truly and fully all facts. 8. Section 147 of the Act provides interalia that if the Assessing Officer has the reason to believe that any income chargeable to tax has escaped assessment, he may subject to the provisions of section 148 to 153 of the Act, assess or reassess such income. Proviso to section 147 ofcourse requires that where the assessment under subsection( 3) of section 143 of the Act has been made for the relevant assessment year, no action shall be taken under this section after the expiry of the four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment by reason of the failure on part of the assessee to make return under section 139 or in response to a notice issued under subsection( 1) of section 142 or 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. In this context, it is well settled that the requirement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over, prima facie, suggesting that the assessee company had received bogus share application/premium money from number of shell companies. 11. Merely because the transactions in question were examined by the Assessing Officer during the original assessment would not make any difference. The scrutiny was on the basis of disclosures made and materials supplied by the assessee. Such material is found to be prima facie untrue and disclosures not truthful. Earlier scrutiny or examination on the basis of such disclosures or materials would not debar a fresh assessment. Each individual case of this nature is bound to have slight difference in facts. Judgement of Delhi High Court in case of Allied Strips Ltd.(supra) does not suggest that merely because a particular issue was examined during the original assessment proceeding, the Assessing Officer would be debarred from resorting to reopening of the assessment, even if he had sufficient fresh materials at his command, to form a reasonable belief that the assessee had made incorrect disclosures or had not made full disclosures which would have a vital bearing on the assessment of his income. If that is the ratio, counsel for the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting of the material and the income chargeable to tax that escaped assessment. This does not appear to be the case where the Assessing Officer on vague or unspecific information initiated the proceedings of reassessment, without bothering to form his own belief in respect of such material. We need to notice that the Joint Director, CBI, Mumbai, intimated to the DIT (Investigation), Mumbai. A case is registered against Mr.Arun Dalmia, Harsh Dalmia and during the search at their residence and office premises, the substantial material indicated that 20 dummy companies of Mr.Arun Dalmia were engaged in money laundering and the incometax evasion. The said entities included Basant Marketing Pvt. Ltd. also. From the analysis of details furnished and the beneficiaries reflected, which are spread across the country, the CIT, Koklata, suspected the accommodation entry related to the assessment year 200607 as well, this information has been provided to Director General of Incometax, Kolkata, who in turn, communicated to the Chief Commissioner of Incometax, Ahmedabad. Further revelation of investigation as could be noticed from the record examined (file) deserves no reflection in this petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s would be made in the income of the assessee. What is required is the reason to believe that income chargeable to tax as escaped assessment. Sufficiency of the materials in the hand of the Assessing Officer which enabled him to form such a belief would not be examined. A reference in this respect is made to a decision of the Supreme Court in the case of Asstt. Commissioner of Incometax v. Rajesh Jhaveri Stock Brokers P. Limited, reported in [2007] 291 ITR 500." 13. The next contention that the Assessing Officer did not demonstrate any material enabling him to form a belief that income chargeable to tax has escaped assessment is fallacious. The Assessing Officer recorded detailed reasons pointing out the material available which had a live link with formation of belief that the income chargeable to tax had escaped assessment. At this stage, as is often repeated, we would not go into sufficiency of such reasons. In this context, reference can be made to decision of Supreme Court in case of Raymond Woolen Mills Ltd. (supra). In case of Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd. reported in (2007) 291 ITR 500(SC), it was observed as under : "The expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is a company and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, explanation offered by the assessee company shall be deemed to be not satisfactory, unless the person in whose name such credit is recorded in the books of the company also offers an explanation about the nature and source of sum so credited and such explanation in the opinion of the Assessing Officer has been found to be satisfactory. Essentially, this proviso eases the burden of proof on the Revenue while making addition under section 168 with respect to non genuine share application money of the companies. Even in absence of such proviso as was the case governing the periods with which we are concerned in the present case, if facts noted by the Assessing Officer and recorded in reasons are ultimately established, invocation of section 68 of the Act would be called for. 16. The contention that the Assessing Officer had merely and mechanically acted on the report of the investigation wing also cannot be accepted. We have reproduced the reasons recorded by the Assessing Officer and noted the gist of his reasons for resorting to reope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Officer on coming to know about the proceedings before the Customs Collector in this respect issued notice for reopening of the assessment. In the reasons that the Assessing Officer relied on the facts as found by the Customs Authorities that the assessee had undervoiced goods during export. Under such circumstances, upholding the validity of the notice for reopening, the Supreme Court held and observed as under: "So far as the first condition is concerned, the Income Tax Officer, in his recorded reasons, has relied upon the fact as found by the Customs Authorities that the appellant had under invoiced the goods it exported. It is not doubt correct that the said finding may not be binding upon the income tax authorities but it can be a valid reason to believe that the chargeable income has been under assessed. The final outcome of the proceedings is not relevant. What is relevant is the existence of reasons to make the Income Tax Officer believe that there has been under assessment of the assessee's income for a particular year. We are satisfied that the first condition to invoke the jurisdiction of the Income Tax Officer under Section 147(a) of the Act was satisfied." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted Dalurband Coal Co. Pvt. Ltd.(supra), the assessment was reopened on the basis of the information contained in letter from Chief Mining Officer that the colliery of the assessee had been inspected and there had been under reporting of coal raised. Upholding the validity of reopening of assessment, the Supreme Court held and observed as under: "After hearing the learned counsel for the parties at length, we are of the opinion that we cannot say that the letter aforesaid does not constitute relevant material or that on that basis, the Income Tax Officer could not have reasonably formed the requisite belief. The letter shows that a joint inspection was conducted in the colliery of the respondent on January 9,1967, by the officers of the Mining Department in the presence of the representatives of the assessee and according to the opinion of the officers of the Mining Department, there was under reporting of the raising figure to the extent indicated in the said letter. The report is made by a Government Department and that too after conducting a joint inspection. It gives a reasonably specific estimate of the excessive coal mining said to have been done by the respondent over and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into by the assessee company with number of concerns which had made accommodation entries and they were not genuine transactions. As we perceive, it is neither a change of opinion nor does it convey a particular interpretation of a specific provision which was done in a particular manner in the original assessment and sought to be done in a different manner in the proceeding under Section 147 of the Act. The reason to believe has been appropriately understood by the assessing officer and there is material on the basis of which the notice was issued. As has been held in Phool Chand Bajrang Lal (supra), Bombay Pharma Products (supra) and Anant Kumar Saharia (supra), the Court, in exercise of jurisdiction under Article 226 of the Constitution of India pertaining to sufficiency of reasons for formation of the belief, cannot interfere. The same is not to be judged at that stage. In SFIL Stock Broking Ltd. (supra), the bench has interfered as it was not discernible whether the assessing officer had applied his mind to the information and independently arrived at a belief on the basis of material which he had before him that the income had escaped assessment. In our considered opinion, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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