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TMI Blog2019 (3) TMI 1402X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of assessee. - W.P.No.21919 to 21921 of 2018 And W.M.P.Nos.25719 , 25720, 25721 & 34931 of 2018 - - - Dated:- 25-2-2019 - Dr. Justice Anita Sumanth For the Petitioner : Mr.R.L.Ramani for Mr.B.Raveendran For the Respondent : Mr.Naveen Durai Babu Standing Counsel ORDER Heard Mr.R.L.Ramani, learned senior counsel for Mr.B.Raveendran, learned counsel for the petitioner and Mr.Naveen Durai Babu, learned Standing counsel for the respondent. 2. The writ petitioner has approached this Court challenging proceedings under Section 148 of the Income Tax Act, 1961 (in short 'Act') dated 31.03.2018 and an order disposing objections raised against issuance of the aforesaid notice, dated 30.07.2018, in respect of assessment years 2013-14 to 2015-16. 3. The facts in relation to all writ petitions are common. The petitioner is a partnership firm with two partners. Returns of income have been filed in respect of the three assessment years in question. Intimations under Section 143(1) of the Act had been issued by the respondent for all the years. A survey under Section 133A of the Act was initiated in the premises of the petitioner on 12.01.2018. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 15,00,000/- had been taken under duress from the petitioner by the surveying officials towards advance tax liability. By letter dated 05.02.2018, the petitioner sought return of the cheques since, according to it, the computation of taxes as effected by the petitioner was perfectly in order and the petitioner had been regular in defraying its tax liability. There was thus no necessity for the Department to have taken the cheques in advance and even without an assessment or demand pending. 7. This was followed by issuance of notices under Section 148 of the Income Tax Act dated 31.03.2018 on the ground that the assessing officer had reasons to believe that income had escaped assessment for the three assessment years in question and calling upon the petitioner to file returns of income within thirty days from the date of receipt of the notice, offering the correct income to tax. 8. The petitioner, in response to the notices under section 148, enclosed a copy of the returns already filed by it, being of the view that there had been no escapement of income and the original return reported its income truly and correctly. In line with the judgment of the Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objections the Assessing Authority passed the impugned orders dated 30.07.2018 rejecting the objections. The orders are identical for all the three years. A reading of the same makes it amply clear that the re-assessment is based solely and wholly on the statement recorded from Mr.Janakiraman. Paragraph no.4 of the impugned order makes this more than clear, as extracted below: 'During the course of survey it is found that the assessee Firm has not maintained any proper books of accounts. In statement recorded from partner of the firm Shri T.Janakiraman he has stated that firm has not maintained any proper books of accounts in respect of the turnover reported. But I have maintained month-wise just sales summary ledger as. However individual bills were discarded after making a turnover entry. Hence I am not in a position to provide the individual bills/voucher day wise. The assessee has agreed with the Department that the net profit margin can be taken as 18.75% on the sales turnover of the Firm. On perusal of the return of income filed for the Asst. year 2013-14, it is observed that the net profit on the sales turnover as admitted by the assessee is only 0.49% on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under Section 132(4) of the Act and subsequently retracted, was set aside by the court. 16. The Central Board of Direct Taxes has also issued a circular in F.No.286/2/2003 dated 10.03.2003 to the following effect: 'F.No.286/2/2003-IT(Inv) Govt.of India, Ministry of Finance Company Affairs, Department of Revenue, Central Board of Direct Taxes, No.254/North Block, New Delhi 10th March 2003 To All Chief Commissioner of Income Tax (Cadre Contra) All Directors General of Income Tax Inv. Sir, Subject: Confession of Additional income during the course of search seizure and survey operation- Regarding. Instances have come to the notice of the Board where assessee have claimed that they have been forced to confess the undisclosed income during the course of the search seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessee while filing returns of income. In these circumstances, on confessions during the course of search seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n mind the conceptual difference between power to review and power to reassess. The assessing officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of 'change of opinion' is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. 7. One must treat the concept of 'change of opinion' as an in-built test to check abuse of power by the assessing officer. Hence, after April 1, 1989, the assessing officer has power to reopen, provided there is 'tangible material' to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words 'reason to believe' but also inserted the word 'opinion' in Section 147 of the Act. However, on receipt of representations from the companies against omission of the words 'reason to believe', ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. [Explanation.-For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purpose of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act.] 21. Thus, where, under Section 132(4), the statement recorded by the searching officer is specifically permitted to be used as evidence in any proceeding under either the 1922 or the present Act, there is no such sanctity conferred on a statement recorded under Section 133A(iii). The utility of a statement recorded in the course of survey is limited to the extent to which it is useful or relevant to any proceeding under the Act. Thus, a statement recorded in the course of survey can, at best, support a proceeding for reassessment; that is, where the Assessing Officer has material in his possessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jit Kumar; (v) Finally, the word may used in Section 133A(3)(iii) of the Act, viz., record the statement of any person which may be useful for, or relevant to, any proceeding under this Act, as already extracted above, makes it clear that the materials collected and the statement recorded during the survey under Section 133A are not conclusive piece of evidence by itself. 8. For all these reasons, particularly, when the Commissioner and the Tribunal followed the circular of the Central Board of Direct Taxes dated 10.3.2003, extracted above, for arriving at the conclusion that the materials collected and the statement obtained under Section 133A would not automatically bind upon the assessee, we do not see any reason to interfere with the order of the Tribunal.' 23. In the light of the detailed discussion above, and in the light of Circular F.No.286/2/2003 dated 10.03.2003 as well as the admitted position that there is not a shread of material apart from the statement recorded under Section 133A that forms the basis of the proceedings for reassessment, I am of the view that the reasons dated 28.05.2018 have no legs to stand. The impugned notices dated 31.03.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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