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TMI Blog2021 (3) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... e his jurisdiction vested in him for the purpose of dealing with the objections raised by the writ applicant. On receipt of the reasons, the noticee is entitled to file his objections and the Assessing Officer, in turn, is obliged to dispose of the objections by passing a speaking order. Though the Assessing Officer had an opportunity at the stage of dealing with the objections to verify the contention of the writ applicant, which went to the root of the matter, he very conveniently ignored the issue by taking a stance that the factual proposition would be examined at the time of reassessment proceedings after giving sufficient opportunity to the assessee. Such stance of the Assessing Officer leads this Court to prima facie believe that the Assessing Officer had no good reason to issue the impugned notice for reopening. Had the Assessing Officer been more pro-active, he would have realized upon looking into the objections raised by the writ applicant that issuing notice for the assessment year 2015-16 could be a mistake. The aforesaid aspects prima facie leave us to note that the Assessing Officer had no material to suggest that the writ applicant had made payment in cash to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43 (3)of the Act, was made. The return, in such circumstances, was processed under Section 143 (1) of the Act. The reasons assigned by the Assessing Officer to the writ applicant by way of communication dated 20.06.2018 are as under:- Reasons for reopening :- 1. The assessee by name Shri Purshottambhai B. Pitroda Prop. Of M/s. J.P.Fabricators had filed his return of income for A.Y. 2015-16 on 30.09.2016 and declared total income of ₹ 2,76,15,370/-. The assessee is engaged in business of mining contractors in Prop. Concern of M/s. JP Fabricators. 2. The information has been received vide letter No.DCIT/CC-1(1)/Venus Government Resolution./InOAO/2017-18 dated 09.02.2018 from DCIT, Central Circle-1(1), Ahmedabad regarding involvement of M/s. J.P.Fabricators prop. Concern of Shri Purshottam B. Pitroda in accommodation entry amounting to ₹ 1,40,00,000/- through Venus Group in F.Y. 2014-15 i.e. A.Y. 2015-16. 3. On analysis of information received, it is observed that a search u/s. 132 of the Income Tax Act, 1961 was conducted in the case of Venus Group of Ahmedabad on 10.03.2015 at various premises and incriminating documents were seized. Documents rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned on the other seized evidences lke cash voucher, summary sheet of Against EC transactions (page number 2 to 9 of Annexure A- 129, seized from the Terrace of Crystal Arcade) and cash book related to 'Against EC' transactions. It has been found that 'Against EC' entries are the cash receipt and cash payment to various parties who are in the need of RTGS/cash. The Venus Group through its concerns like Sunderdeep Builders (SDB), Sanjeet Motor Finance Private Limited (SMFPL) and Greenstone Agro-Products infrastructure Private Limited is involved in the business of providing accommodation entries. From the correlation of the bank statements and the transactions recorded in the seized unaccounted cash book and supporting cash vouchers, various beneficiaries have been identified who have transacted in unaccounted cash while dealing with the entities of Venus Group. On this basis, it has been found that Shri Purshottambhai Bachubhai Pitroda Prop. of M/S. J.P.FABRICATORS, PAN : ABWPM6274B has been accepted accommodation entry of ₹ 1,40,00,000/through cash payment to the Venus Group in / financial year 2014-15 i.e. A.Y.2015-16. 4. On verification of the inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12-13 i.e. A.Y. 2012-2013 2013-2014. During A.Y. 2015-2016 the said loan is repaid in installments through RTGS. The assessee has not received any loan from Sanjeet Motor Finance P. Ltd. in cash. It appears that the AO has mainly relief upon the information received without verifying the books of accounts. 3. Since the assessee has paid no payment in cash to Sanjeet Motor Finance P. Ltd. the question of undisclosed income during A.Y. 2015-2016 does not arise, Therefore, the reopening of the assessment is bad in law. The copy of accounts of Sanjeet Motor Finance P. Ltd. from the books of the assessee is enclosed. 5. The aforesaid objections came to be disposed of by the Assessing Officer vide communication dated 10.09.2018. The relevant paras 5 and 6 respectively reads as under: 5.Regarding contentions raised by assessee vide para 4, 5, 6 of the letter dated 07.07.2018. It is submitted that that the contention raised by the assessee is on the factual proposition of the issue under consideration that will be examined at the time of reassessment proceedings after giving sufficient opportunities to the assessee. since this order is passed to dispose the objections rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t applicant in his objections. Mr. Shah further submits that, on receipt of the reasons, the noticee is entitled to file objections to the issuance of notice and the Assessing Officer is obliged to dispose of the same by passing a speaking order. According to Mr. Shah, the order in the case on hand disposing of the objections cannot be termed as a speaking order. Mr. Shah would submit that, though the Assessing Officer had an opportunity at the stage of considering the objections to verify the contention of the assessee, going to the root of the matter, the Assessing Officer very conveniently turned a blind eye by taking a stance that the contention raised by the assessee being factual in nature, the same would be examined at the time of reassessment proceedings. Mr. Shah clarified that in the memorandum of the writ application, he has also raised the ground as regards the applicability of Section 147 of the Act in view of the insertion of Chapter-XIV-B w.e.f. 01.07.1995 with the heading Special Procedure for assessment of search cases . However, according to Mr. Shah, he will not be in a position to make good this submission in view of the judgment pronounced by this very Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not taken away. Between the period from April 1, 1989 to March 31, 1998, the second proviso to section 143(1)(a), required that where adjustments were made under the first proviso to section 143(1) (a), an intimation had to be sent to the assessee notwithstanding that no tax or refund was due from him after making such adjustments. With effect from April 1, 1998, the second proviso to section 143(1)(a) was substituted by the Finance Act, 1997, which was operative till June 1, 1999. The requirement was that an intimation was to be sent to the assessee whether or not any adjustment had been made under the first proviso to section 143(1) and notwithstanding that no tax or interest was found due from the assessee concerned. Between April 1, 1998 and May 31, 1999, sending of an intimation under section 143(1) (a) was mandatory. Thus, the legislative intent is very clear from the use of the word intimation as substituted for assessment that two different concepts emerged. While making an assessment, the Assessing Officer is free to make any addition after grant of opportunity to the assessee. By making adjustments under the first proviso to section 143(1)(a), no addition which is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the first proviso to the newly substituted section 143(1), with effect from June 1, 1999, except as provided in the provision itself, the acknowledgment of the return shall be deemed to be an intimation under section 143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is significant that the acknowledgment is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any assessment is done by them? The reply is an emphatic no. The intimation under section 143(1)(a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision. Therefore, there being no assessment under section 143(1)(a), the question of change of opinion, as contended, does not arise. 8. These principles were reiterated by the Supreme Court in the latter judgment in case of Deputy Commissioner of Income- Tax Anr. vs. Zuari Estate Development Investment Company Limited, reported in [2015] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jesh Jhaveri Stock Brokers Private Limited [Supra] had observed as under :- Section 147 authorizes and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991 (191) ITR 662], for initiation of action under section 147 (a) [as the provision stood at the relevant time] fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf of the revenue, wherein, the following has been stated:- 1. I am respondent in the present petition and having made myself conversant on the basis of the available records, able to depose to the statements and averments made herein. 2. At the outset, I most respectfully submit that the petition is filed at a pre-mature stage inasmuch as only a notice u/s.148 read with section 147 of the Income Tax Act ('the Act' for short) has been issued. In the event, the petitioner's aggrieved by the reassessment, alternative efficacious remedy is available by way of an Appeal to the CIT(A) and thereafter to the Tribunal as per the provisions of the Act. On this ground alone, I humbly submit that the petition is devoid of any merits and be summarily rejected. 3. The facts are that the assessee who is proprietor of J.P.Fabricators had filed his return of income for A.Y. 2015-16 on 30.09.2015 declaring total income of ₹ 2,76,15,370/-. The assessee is engaged in business as Mining contractors in prop. concern of M/s. J.P.Fabricators. 4. Subsequently, an information was received vide letter dated 09/02/2018 from DCIT, Central Circle-1(1), Ahmedabad rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h evidences seized from Terrace of Crystal Arcade C.G. Road Ahmedabad. The names mentioned on these pages were also mentioned on the other seized evidences like cash voucher, summary sheet of Against EC transactions (page number 2 to 9 of Annexure A- 129, seized from the Terrace of Crystal Arcade) and cash book related to 'Against EC' transactions. It was found that 'Against EC' entries were the cash receipt and cash payment to various parties who were in the need of RTGS/cash. The Venus Group through its concerns like Sunderdeep Builders (SDB), Sanjeet Motor Finance Private Limited (SMFPL) and Greenstone Agro- Products infrastructure Private Limited was involved in the business of providing accommodation entries. From the correlation of the bank statements and the transactions recorded in the seized unaccounted cash book and supporting cash vouchers, various beneficiaries were identified who had transacted in unaccounted cash while dealing with the entities of Venus Group. On this basis, it was found that Shri Purshottambhai Bachubhai Pitroda Prop. of M/S. J.P.FABRICATORS, PAN : ABWPM6274B had accepted accommodation entry of ₹ 1,40,00,000/through cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reply, the Respondent states that the petition has been filed at a premature stage as only a notice u/s.148 has been issued and further states that in any event if the petitioner is aggrieved by the reassessment, the petitioner has an alternative efficacious remedy by way of appeal to C.J.T.(Appeals), and thereafter to the Income Tax Appellate Tribunal as per the provision of Income Tax Act, 1961. In this regard, I state that the contentions of the Respondent that the petition has been filed at a premature stage and there is alternative efficacious remedy are devoid of any merit and also contrary to the settled law that notice u/s.148 can be challenged before the Hon'ble jurisdictional High Court by preferring writ petition under article 226 of the Constitution of India. The reference may be made to the judgment of Hon'ble Supreme Court in case of Calcutta Discount Company (1961) 41 ITR 191 and the judgment of this Hon'ble Court in the case of Parixit Industries Ltd vs. ITO (2013) 352 ITR 349. 5. In para 3 to 6 of the Affidavit-in-Reply, the Respondent merely states the facts of the case and further repeats what the Assessing Officer has stated in the reasons recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andate of provisions of Section 151 of the IT Act has not been followed in proper spirit and perspective. 13. Having heard the learned counsel appearing for the respective parties and having gone through the materials on record, the only question that falls for our consideration is, whether the impugned notice of reopening issued under Section 148 of the Act should be quashed and set aside ? 14. Keeping the aforesaid legal principles in mind, we may revert to the facts of the case on hand. 15. The writ applicant is an individual assessee. For the assessment year 2015-16, the writ applicant filed his return of income on 30.09.2015 showing the total income of ₹ 2,76,15,370/-. The writ applicant is in the business of mining contracts. It is the case of the department that it is in receipt of specific information that the writ applicant is involved in the accommodation entries through the Venus Group. It appears that a search under Section 132 of the Act was conducted in the case of Venus Group of Ahmedabad on 10.03.2015 and from the various premises owned by the Venus Group, few incriminating documents were seized. The stance of the writ applicant before the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer had an opportunity at the stage of dealing with the objections to verify the contention of the writ applicant, which went to the root of the matter, he very conveniently ignored the issue by taking a stance that the factual proposition would be examined at the time of reassessment proceedings after giving sufficient opportunity to the assessee. Such stance of the Assessing Officer leads this Court to prima facie believe that the Assessing Officer had no good reason to issue the impugned notice for reopening. Had the Assessing Officer been more pro-active, he would have realized upon looking into the objections raised by the writ applicant that issuing notice for the assessment year 2015-16 could be a mistake. 19. Therefore, the aforesaid aspects prima facie leave us to note that the Assessing Officer had no material to suggest that the writ applicant had made payment in cash to Sanjeet Motor Finance Pvt. Ltd. and thereafter, received the same amount back through the RTGS. 20. In the aforesaid context, we may also refer to and rely upon the observations made by a Coordinate Bench of this Court in the case of Pal Gram Hindu Sarvajanik Trust Vs. Income Tax Officer (E) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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