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TMI Blog2021 (2) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... s premises of the Venus Group During the course of the search, various documents related to the unaccounted cash transactions of the Venus Group were seized. Upon due verification of all such seized documents, it was found that the unaccounted cash transactions were first recorded on the vouchers and thereafter in the day cash book. The seized documents reflected the unaccounted cash transactions for the period between January, 2007 to March, 2015. The cash book was written in the coded form. Further details and documents were obtained from the office of the Sub-Registrar for the purpose of identifying the beneficiaries in the transactions with the Venus Group. It can thus be seen that the Assessing Officer had analyzed the voluminous material collected by the Revenue during the search operations in connection with the Venus Group. This material, prima facie suggested huge cash transactions in connection with sale of lands against the total declared sale consideration of ₹ 5.38 Crore [rounded off]. The material prima facie suggests that the total cash transactions of ₹ 9,07,26,000/- had taken place. When we are concerned with the re-opening of the assessment, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ONOURABLE MR. JUSTICE J.B.PARDIWALA) 1. Since the issues raised in both the captioned writ applications are the same and the reasons assigned for the reopening of the assessment are also the same, those were heard analogously and are being disposed of by this common judgment and order. 2. For the sake of convenience, the Special Civil Application No. 17557 of 2018 is treated as the lead matter. 3. By way of this writ application under Article 226 of the Constitution of India, the writ applicants have prayed for the following reliefs: A) This Hon'ble Court be pleased to call for the records of the proceedings, look into them and be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing the impugned 148 notice dated 05.03.2018 at Annexure -A and objection order dated 19.09.2018 at Annexure E. B) This Hon'ble Court be pleased to issue a writ of mandamus or any other appropriate writ, order or direction asking the respondent not to proceed further in pursuance of Section 148 notice at Annexure- A and objection order at Annexure E. C) Pending the hearing and final disposal of this application, this Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aswani/ Ashok Sunderdas Vaswani proves about its verification and authenticity as these transaction entries were supported with supporting vouchers also. (3) Supporting Vouchers: There are two different colours of vouchers i.e. Green and pink coluors. The green colour vouchers are the indicators of receipt of cash whereas pink colour vouchers indicate expenses/ payments. Green colour envelopes contains details of land, survey no., name of broker and vouchers relating to persons(parties). On correlation of the seized evidences, found during the search operation, it has been noticed that the main persons of the group are engaged in huge land dealings and cash books/cash vouchers/day books with sale deeds of land transaction, it is ample clear that there were huge unaccounted cash transaction. (4) EC Transaction: During the search operation at the premise as discussed above, it is noticed that there is a noting as Against EC . It has been decoded that an Against EC transaction is unaccounted day cash receipt and payment of equivalent amount of RTGS in the bank account. For example, if there is cash receipt against EC, it indicated that the Equivalent amount of RTGS has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if Your Honour is having any statements of Directors / Partners of Venus Group alleging that I have entered into any financial transaction with them, kindly provide the same since this would be tangible material for the purpose of sec. 148. 2. Now, in reference to para 6 of your reason recorded, there is reference to land at survey no. 1292b, registered on 21.10.2011 wherein, I have been stated to be confirming party. I further say that I have not entered into any such transaction with the Venus Group and therefore, there is no question of the receipt of the amount of ₹ 9,07,26,000/-. 3. I further strongly say that the so called reason recorded is not supported with any seized material found and seized from the premises of Venus Group nor forming part of the reason recorded and therefore, my saying that I have not received any amount of ₹ 9.07 crore is also supported in absence of any supporting evidence. 4. I further object the search reopening which is based on mere general observation nor there is any tangible material or nexus with the so called escapement of income and therefore, the reopening is bad in law. 5. I further say that, there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of information that a search u/s. 132/Survey u/s. 133A of the I T Act, 1961, was carried out at the various premises of Venus Group. One of the premises i.e. Crystal Arcade at C G road, Ahmedabad was covered u/s. 132 of the I T Act, 1961 and documents related to unaccounted cash transactions of the Venus Group were seized. Therefore, the reopening made is as per law and it is legal. 11. The approval to issue notice u/s. 148 of the I T Act was accorded by the PCIT-3, Ahmedabad vide his letter no. F.No. PCIT3/Ahd/Tech/App.u/s.147/HNP/2017-18 dated 28/12/2017 u/s. 151 of the I T Act after his satisfaction on the reason recorded by the AO that it is a fit case of issuing notice u/s. 148 of the I T Act. 12. Further, it is to mention that the AO is not required to furnish any supporting evidences/material on the basis of that AO has recorded the reasons for reopening of assessment. There is nowhere in the provisions of Sec.147 r.w.s. 148 of the LT. Act to provide supporting evidence or material. Therefore, the assessee s request for providing supporting material evidences on the basis of which the AO-has formed the belief of escapement of income cannot be accepted and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity would be given before finalizing the case. 8. Thereafter, once again the writ applicants lodged further objections dated 22.10.2018, which reads thus: 1. That in para 2 you have stated that there is document seized from Venus Group for Ognaj land survey No.1292 as per A7, page 46 regarding payment made through Bhuro and you also relied upon cash payment voucher as per Annexure A7 page No. 2 to 45. In this connection we hereby say that, even as per the said seized material, there is a mentioning of payment made through Bhuro, however, the said seized material and cash voucher is not proved that the so called Mr.Bhuro has ultimately paid the amount to me. Further, I don t know any Mr. Bhuro and therefore the reopening made is not based on tangible material. Further, in the said seized material, there is no such signature of me regarding receipt of the said amount. 2. In reference to para 3 it is said that, the approval memo has been provided in a letter dated 19.09.2018. This is factually incorrect and we have not provided any such approval memo sent by you to higher authority as well as order passed by higher authority based on your memo and, therefore, ki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey No.1292/B, registered on 21.10.2011 and that the total sale consideration as per the sale deed is ₹ 5,38,00,000/-. It was pointed out that on the basis of the material seized, the Assessing Officer has sought to reopen the assessment of the petitioner on the ground that the petitioner has received ₹ 9,07,26,000/- as unaccounted cash (on-money) over and above the registered sold value of the land in question. The attention of the court was invited to the sale deed of the subject land, to point out that the same reflects that the sale consideration has been received by three persons, viz., Navinbhai Ramabhai, Nikunjkumar Bhikhabhai and Sachin Bhikhabhai, and that nowhere it is reflected in the sale deed that the petitioner has received any consideration. Referring to the copies of the seized material, it was pointed out that insofar as the subject land being village Ognaj, Survey No.1292/B is concerned, the on-money is said to have been paid to Shri Bhuro and that there is no material to connect the petitioner with the seized material. It was submitted that therefore, based upon the seized material, the Assessing Officer could not have formed the requisite belief that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year. So far as writ applicant of the connected writ application is concerned i.e. Navinbhai Patel, his return was filed under Section 143 (1) of the Act and the reopening of assessment is beyond the period of 4 years. In the case of Heval Navinbhai Patel, the reopening is within the period of 4 years. Mr. Shah would submit that in a case where the return was originally accepted then, reopening of the assessment would not be permissible. He would further submit that the reasons recorded nowhere indicate or suggest that during the search operation of the premises at the Venus Group, to whom the writ applicants sold the land, it was revealed that there was a huge cash transaction for such purchases. Merely because, the seized documents and other materials prima-facie suggest cash transactions with respect to the sale transaction between the Venus Group and writ applicants, would not automatically imply that the writ applicants had received such cash money. Mr. Shah, would submit that so far as Heval Navinbhai Patel is concerned, she has put her signature in the sale deed as one of the confirming parties. So far as Navinbhai Patel is concerned, his name figures as one of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been furnished by the assessee though his total income or the total income of any other person in respect of which he is assessable under this Act, it would be deemed to be one of the cases where the income chargeable to tax has escaped the assessment. She would submit that there was material prima-facie suggesting that there were cash transactions. 18. In such circumstances referred to above, Ms. Bhatt prays that there being no merit in both the writ applications, those may be rejected. ANALYSIS :- 19. At the outset, we may record three settled principles of law which would have some bearing in the present set of cases. First is that in a case where the return filed by the assessee is accepted under Section 143 [1] of the Act without scrutiny, since the Assessing Officer had not formed any opinion, the principle of change of opinion would not apply. This has been made sufficiently clear in the case of Assistant Commissioner of Income-Tax v. Rajesh Jhaveri Stock Brokers Private Limited, reported in [2007] 291 ITR 500 [SC] in which it was held and observed as under :- One thing further to be noticed is that intimation under section 143(1)(a) is given with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne 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 context the expressions are used. Assessment is used as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable and sometimes the whole procedure laid down in the Act for imposing liability upon the tax payer. In the scheme of things, as noted above, the intimation under section 143(1)(a) cannot be treated to be an order of assessment. The distinction is also well brought out by the statutory provisions as they stood at different points of time. Under section 143(l)(a) as it stood prior to April 1, 1989, the Assessing Officer had to pass an assessment order if he decided to accept the return, but under the amended provision, the requirement of passing of an assessment order has been dispensed with and instead an intimation is required to be sent. Various circulars sent by the Central Board of Direct Taxes spell out the intent of the Legislature, i.e., to mini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment is not done away with. Section 147 of the Act permits the Assessing Officer to assess, reassess the income or re-compute the 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). 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. 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 ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 Income-tax 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. The appeals are dismissed. There will be no order as to costs. 24. Lastly, it is well settled that the validity of the notice of reopening would be judged on the basis of reasons recorded by the Assessing Officer for issuance of such notice. It would not be permissible for the Assessing Officer to improve upon such reasons or to rely upon som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... speak for themselves. (vi) The tangible material which forms the basis for the belief that income has escaped assessment must be evident from a reading of the reasons. The entire material need not be set out. To put it in other words, something therein, which is critical to the formation of the belief must be referred to. Otherwise, the link would go missing. (vii) The reopening of assessment under Section 147 is a potent power and should not be lightly exercised. It certainly cannot be invoked casually or mechanically. (viii) If the original assessment is processed under Section 143(1) of the Act and not Section 143(3) of the Act, the proviso to Section 147 will not apply. In other words, although the reopening may be after the expiry of four years from the end of the relevant assessment year, yet it would not be necessary for the Assessing Officer to show that there was any failure to disclose fully or truly all the material facts necessary for the assessment. (ix) In order to assume jurisdiction under Section 147 where assessment has been made under sub-section (3) of section 143, two conditions are required to be satisfied; (I) The Assessing Officer mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if circumstances require. (xv) The test of jurisdiction under Section 143 of the Act is not the ultimate result of the inquiry but the test is whether the income tax officer entertained a bona fide belief upon the definite information presented before him. Power under this section cannot be exercised on mere rumours or suspicions. (xvi) The concept of change of opinion has been treated as a built in test to check abuse. If there is tangible material showing escapement of income, the same would be sufficient for reopening the assessment. (xvii) It is not necessary that the Income Tax Officer should hold a quasi judicial inquiry before acting under Section 147. It is enough if he on the information received believes in good faith that the assesee s profits have escaped assessment or have been assessed at a low rate. However, nothing would preclude the Income Tax Officer from conducting any formal inquiry under Section 133(6) of the Act before proceeding for reassessment under Section 147 of the Act. (xviii) The full and true disclosure of the material facts would not include that material, which is to be used for testing the veracity of the particulars ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusion was merely based on some documents seized in the course of search undertaken at the premises of the Venus Group under Section 132 of the Act. The Assessing Officer cannot be said to have merely concluded without verifying the fact that it is a case of reopening of the assessment. 27. It is not in dispute, as evident from the reply filed by the department that the search and survey proceedings were carried out under Section 132 and documents were seized under Section 133A of the Act from the various premises of the Venus Group. One of the premises of the Venus Group i.e. the Crystal Arcade situated at the C.G. Road, Ahmedabad was covered under Section 132 of the Act. During the course of the search, various documents related to the unaccounted cash transactions of the Venus Group were seized. Upon due verification of all such seized documents, it was found that the unaccounted cash transactions were first recorded on the vouchers and thereafter in the day cash book. The seized documents reflected the unaccounted cash transactions for the period between January, 2007 to March, 2015. The cash book was written in the coded form. Further details and documents were obtained fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A]:] 2.2.3WITH EFFECT FROM 01.06.2015: Assessment of income of any other person. --153C.[(1)] [Notwithstanding anything contained in section 139. section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that, (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, ~ belongs to; or (b) any books of account or documents, seized or requisitioned, or any information contained therein, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person]-- [and that Assessing Officer shall proceed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged to person other than the searched person. There is a clear distinction between both the conditions. Subsequent to 1.6.2015, the information embedded in the document is sufficient for taking action under section 153C, but prior to 1.6.2015 action under section 153C could be taken if documents belong to the person other than the searched person was found during the course of search. 33. A clear analysis of the Section 153(C) of the Act would indicate that the section comes into play only if the following conditions are fulfilled: search or requisition must have taken place any money, bullion, jewellery or other valuable articles or other things or books of account or documents (hereinafter called assets/documents ) are found belonging/pertaining to such other person , or even any information contained therein relates to a person other than the person on whom the said search is conducted Satisfaction of AO that it belongs to or relates to such other person After finding any books account or documents or assets seized or requisitioned, the same shall be handed over to the AO having jurisdiction over such other person. The AO (having jurisdiction) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial facts necessary for assessment and the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. For better understanding of both the sections the same are reproduced below and read parallelly Section 153C Section 147 (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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