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TMI Blog2018 (8) TMI 1434X X X X Extracts X X X X X X X X Extracts X X X X ..... Scheme thus makes detailed provisions for declaration of income which hitherto was either undisclosed or not charged to tax. Upon such declaration being accepted, declarant would pay tax at the prescribed rate with surcharge and penalty. Upon such amounts being paid, declarant would receive certain immunities. The income so declared would not be included in the total income of any assessment year. Even Benami transactions would not be targeted. The scheme thus appears to have been framed to encourage disclosures of unaccounted income. Upon acceptance of such disclosure, Revenue would collect tax, surcharge and penalty at the prescribed rates. In turn, the declarant would have peace of mind and certain immunities. In the present case, same amount which the Assessing Officer wishes to tax in the hands of the petitioner company by resorting to reopening of assessment was declared by Garg Logistics Pvt Ltd. under such declaration. Declaration was accepted by the competent authority pursuant to which Garg Logistics Pvt Ltd. in three installments also deposited the entire amount of tax with surcharge and penalty. Any attempt on part of the Assessing Officer to assess the same income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Garg Logistics Pvt Ltd. under section 183 of the Finance Act 2016, under the Income Declaration Scheme 2016 ( the scheme for short). In the reasons, the Assessing Officer reproduced the entire declaration made by Garg Logistics Pvt Ltd. under the scheme which showed share investments of a total of ₹ 6.25 crores in the assessee company through different companies. A further sum of ₹ 11 lacs was showed as commission paid, thus coming to a total disclosure of ₹ 6.36 crores. The Assessing Officer then goes on to compare the statement of Garg Logistics Pvt Ltd. and the accounts of the assessee company and detects minor discrepancies. In the reasons, the Assessing Officer thereafter, proceeds to refer to case of one Pradeep Birewar group who was subjected to search action, during which, large scale diversion of funds through shell companies in close association of one Shirish Chandrakant Shah, referred to as SCS was unearthed. The trail of such investments was traced to the assessee company. On this basis, the Assessing Officer indicated that the assessee company had been introducing its unaccounted income through accommodation entries. With this background, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge and penalty was deposited by Garg Logistics Pvt Ltd. in three installments. Sum of ₹ 1.62 crores was deposited on 24.11.2016, second installment of ₹ 1.62 crores was deposited on 28.3.2017 and the last installment of ₹ 3.24 crores was deposited on 24.8.2017. He clarified that the entire payment was not for this particular declaration alone but for declarations which were spread over three different assessment years. 5. Based on such facts, learned counsel for the petitioner raised the following contentions : 1) The Assessing Officer had no reason to believe that the income chargeable to tax had escaped assessment. Reasons recorded by him nowhere disclosed any foundation for such a belief. 2) The amount in question was the income disclosed by Garg Logistics Pvt Ltd under the scheme. Such declaration was accepted by the department, pursuant to which, Garg Logistics Pvt Ltd had also paid full tax with penalty as provided under the scheme. Any attempt on part of the Assessing Officer to assess such amount in the hands of the assessee would amount to double taxation. 3) The Assessing Officer has placed reliance on declaration made by Garg Logistics Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss or depreciation if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. This power to reopen assessment is available in either case, namely, while a return has been either accepted under section 143(1) of the Act or a scrutiny assessment has been framed under section 143(3) of the Act. A common requirement in both of cases is that the Assessing Officer should have reason to believe that any income chargeable to tax has escaped assessment. xxxx 16. It would, thus, emerge that even in case of reopening of an assessment which was previously accepted under section 143(1) of the Act without scrutiny, the Assessing Officer would have power to reopen the assessment, provided he had some tangible material on the basis of which he could form a reason to believe that income chargeable to tax had escaped assessment. However, as held by the Apex Court in the case of Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd., (supra) and several other decisions, such reason to believe need not necessarily be a firm final decision of the Assessing Officer. 8. We may recall the Assessing Officer rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the assessee by the Assessing Officer. 9. The reasons so recorded simply lack validity. We are conscious that it is well settled by series of judgments of the Supreme Court that in the context of the reasons recorded by the Assessing Officer to form a belief that income chargeable to tax has escaped assessment, it is not necessary for him to demonstrate conclusively that the addition will invariably be made or sustained. As long as belief is formed bona fide on the basis of tangible materials on record, the Court would not examine the sufficiency of such reasons. Reference in this respect can be made to the decision in case of Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd. reported in (2007) 291 ITR 500(SC). However, in the present case, we see no reasons at all. The conclusions are based on surmises and conjectures which are not permissible in law and not backed by any material on record. This is so for an amount of ₹ 6.25 crores of share capital investment. 10. Insofar as sum of ₹ 11 lacs is concerned, we may recall, this was the commission received by Garg Logistics Pvt Ltd. as per the declaration made under the scheme. The Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year under the Income Tax Act, if the declarant makes the payment of tax and surcharge referred to in section 184 and the penalty under section 185 by the specified date. Section 190 of the Act of 2016 provides that the provisions of the Benami Transactions (Prohibition) Act, 1988 shall not apply in respect of declaration of undisclosed income made in the form of investment in any asset, if the asset existing in the name of benamidar is transferred to the declarant within the prescribed period. Section 197 of the Act of 2016 is a clarificatory provision and interalia provides for removal of doubt. It is declared that where any declaration has been made under section 183 but no tax, surcharge or penalty has been paid within the prescribed time, the undisclosed income shall be chargeable to tax under the IncomeTax Act in the previous year in which such declaration is made. 12. The Scheme thus makes detailed provisions for declaration of income which hitherto was either undisclosed or not charged to tax. Upon such declaration being accepted, declarant would pay tax at the prescribed rate with surcharge and penalty. Upon such amounts being paid, declarant would receive ce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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