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TMI Blog2019 (6) TMI 710X X X X Extracts X X X X X X X X Extracts X X X X ..... rial also specifically refers to the petitioner, which clearly establishes a link between the relied upon materials and the petitioner. Considering the nature of material available with the Revenue, it is not possible to state that on the reasons recorded, the Assessing Officer could not have formed the belief that income chargeable to tax has escaped assessment. No infirmity can be found in the action of the respondent in issuing the impugned notice under section 148 - Decided in favour of revenue. - R/SPECIAL CIVIL APPLICATION NO. 14886 of 2018 - - - Dated:- 6-5-2019 - MS HARSHA DEVANI AND MR BHARGAV D. KARIA, JJ. For The Petitioner (s) : MR B S SOPARKAR (6851) For The Respondent (s) : MRS MAUNA M BHATT (174) ORAL JUDGMENT ( PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. By this petition under article 226 of the Constitution of India, the petitioner has challenged the notice dated 31.3.2018 issued by the respondent under section 148 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) proposing to reopen the assessment of the petitioner for assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the above submissions, it was submitted that there is no escapement of income inasmuch as the petitioner had disclosed all material facts in the books of accounts and, therefore, it is not permissible for the revenue to reopen the assessment. 4.2 It was submitted that there is no independent application of mind on the part of the Assessing Officer while recording the reasons for reopening and that merely placing reliance on the materials provided by the investigation wing for recording the reasons is impermissible. It was submitted that the Assessing Officer must record an independent finding as to how income has escaped assessment on a proper application of mind. However, in the present case, no inquiry has been conducted by the Assessing Officer based on the evidence collected in the earlier search. Referring to the reasons recorded for reopening the assessment, it was submitted that there is no independent correlation established in respect of any transaction between Shri Pradip Birewar and the petitioner assessee. It was submitted that there is no link between the information received and formation of opinion that income has escaped assessment and that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Commissioner of Income Tax, 2009 (319) ITR 282, wherein the court recorded that if the Assessing Officer has reason to believe that the assessee has not disclosed fully and truly all material facts, then it should have been stated clearly in the reasons recorded, which has not been done. Instead, the court found that the order dated 28.08.2008 rejecting the objections of the petitioner therein, sought to supplement the reasons which had been recorded, so as to fill in the lacunae, attempting to bring it within the ambit and scope of the proviso to section 147 of the Act. The court held that the order dated 28.08.2008 traveled far beyond the reasons recorded, as had been communicated, which is not permissible and therefore, the Court cannot look into the contents thereof, which seek to supplement the reasons recorded. It is the statutory duty of the Assessing Officer to record reasons for issuing notice under section 148 of the Act and the reasons recorded cannot further be supplemented or explained by a subsequent order so as to give an entirely different complexion to the case. 4.6 Reliance was placed upon the decision of Delhi High Court in Principal Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to arrive at a subjective satisfaction independently on an objective criteria. While the report of the Investigation Wing might constitute the material on the basis of which he forms the reasons to believe the process of arriving at such satisfaction cannot be a mere repetition of the report of investigation. The recording of reasons to believe and not reasons to suspect is the precondition to the assumption of jurisdiction under Section 147 of the Act. The reasons to believe must demonstrate link between the tangible material and the formation of the belief or the reason to believe that income has escaped assessment. 4.7 Reliance was also placed upon the decision of Delhi High Court in Principal Commissioner of Income-tax v. RMG Polyvinyl (I) Ltd., [2017] 83 taxmann.com 348 (Delhi) , wherein the court placed reliance upon its earlier decision in the case of Principal Commissioner of Income-tax-6 v. Meenakshi Overseas (P.) Ltd. (supra). 4.8 Referring to the reasons recorded, it was submitted that the crucial link between the information available to the Assessing Officer and the formation of belief is absent in the reasons recorded. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appraisal report, the DDIT has discussed in detail the modus operandi of SCS for arranging bogus LTCG. 7. In the reasons recorded, the Assessing Officer has then referred to the contents of appraisal report wherein, it has been stated that bogus LTCG entries were made to the beneficiaries to whom shares were allotted through private placement of convertible shares recorded as PHY in the pradeep abad sheet. PHY refers to the transactions where shares of SGSL (Ganesh) have been acquired by the beneficiary clients in physical certificate form. Thus, in this case, shares are not purchased through exchange. A perusal of the entries recorded shows that the assessee has received payout of ₹ 60,89,495/- for 3,62,000 shares in assessment year 2011-12, which is not genuine sale consideration, but mere accommodation entries. 8. Thus, from the reasons recorded, it emerges that the material, which formed the basis for the formation of belief that income chargeable to tax has escaped assessment is the evidence found during the course of search in the case of SCS and the appraisal report. The search had been conducted in the case of Barter Group and Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Aayojan Developers v. Income Tax Officer, 335 ITR 234 (Gujarat) , wherein, the court has referred to the decision of the Calcutta High Court in case of East Coast Commercial Company Ltd. v. Income Tax Officer and Ors., (1981) 128 ITR 326 (Calcutta), wherein it was held that the Income Tax Officer, in his affidavit filed in the court, could explain or elaborate or clarify the reasons recorded by him, but he could not thereby introduce new grounds or new reasons or new materials, which were not to be found in the recorded reasons, either expressly or by implication. 10. Thus, it is open for the Assessing Officer to explain or elaborate or clarify the reasons recorded by him, but he cannot introduce new grounds or new reasons or new materials, which were not found in the recorded reasons, either expressly or by implication. Moreover, the reasons recorded do not have to be very elaborate, but should reflect application of mind on the part of the Assessing Officer to the evidence available and should show that on the reasons recorded, he could have formed the belief that income chargeable to tax has escaped assessment. 11. Therefore, while th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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