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TMI Blog2021 (3) TMI 1013X X X X Extracts X X X X X X X X Extracts X X X X ..... pany was prima facie found to be a shell company. The assessee had claimed exempt of long term capital gain by way of sale of shares of such company. Acquiring fresh information, specific in nature and reliable in character, relating to the concluded assessment, which goes to expose the falsity of the statement made by the assessee at the time of original assessment is different from drawing a fresh inference from the same facts and material which was available with the I.T.O. at the time of the original assessment proceedings. The two situations are distinct and different. Thus, where the transaction itself on the basis of the subsequent information, is found to be a bogus transaction, the mere disclosure of that transaction at the time of original assessment proceedings, cannot be said to be disclosure of the true and full facts in the case and the I.T.O. would have the jurisdiction to reopen the concluded assessment in such a case. It is correct that the assessing authority could have deferred the completion of the original assessment proceedings for further enquiry and investigation into the genuineness to the transaction, but, in our opinion, his failure to do so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and further reliefs as this Hon'ble Court deems fit. 4 The facts giving rise to this writ application may be summarized as under: 4.1 The subject matter of challenge in the present litigation is to the notice issued under Section 148 of the Income Tax Act, 1961 dated 29th March 2019 for the purpose of reopening of the assessment for A.Y. 2012-13. 4.2 The writ applicant is an individual. For the assessment year 2012-13, the writ applicant had filed a return of income on 27th September 2012 declaring the total income of ₹ 10,35,770/-. Such return was accepted without scrutiny under Section 143(1) of the Income Tax, 1961 (for short, 'the Act'). To reopen such assessment, the impugned notice came to be issued by the Assessing Officer dated 14th May 2019. In order to do so, the Assessing Officer recorded the following reasons: 2. In this case, information and documentary evidences were from the office of the DDIT (Inv), Unit 1(3), Ahmedabad vide his letter No.DDIT(Inv)-1(3)/AJHD/S S/JSSS/15 Scrips/Disssemination/ ACDPJ5838L/2018-19 dated 25.03.2019 received through mail on 25.03.2019, wherein, it was intimated that the search u/ 132 action was on 11.09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax which has escaped assessment and which comes to the notice subsequently in the course of the proceedings under this Section. 5 In this case a return of income was filed for the year under consideration but no scrutiny assessment u /s. 143(3) of the IT Act was made. Accordingly, in this case only requirement to initiate proceedings u/s 147 of the IT Act is reason to believe which has been recorded above. 6 In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax ha escaped assessment. 7 In this case more than four years have lapsed from the end of the assessment year under consideration. Hence necessary sanction to issue notice u/s 148 of the Act is requested for approval from the Principal Commissioner of Income Tax-1, Ahmedaad as per provision of section 15-1 of the Act. 5 The writ applicant raised detailed objections to the notice of reopening under a communication dated 11th July 2019. Such objections were rejected by the Assessing Officer on 15th July 2019, upon which, this writ application came ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he return filed by the assessee was accepted without scrutiny. Since there was no scrutiny assessment, the Assessing Officer had no occasion to form any opinion on any of the issues arising out of the return filed by assessee. The concept of change of opinion would, therefore, have no application. It is equally well settled that at the stage of re-opening of the assessment, the court would not minutely examine the possible additions which the Assessing Officer wishes to make. The scrutiny at that stage would be limited to examine whether the Assessing Officer had formed a valid belief on the basis of the material available with him that the income chargeable to tax had escaped assessment. Both these aspects have been examined by the Supreme Court in Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd. [{2007) 291 ITR 500 (SC)] of which following observations may be noted: 13. One thing further to be noticed is that intimation under section 143(1)(a) is given without prejudice to the provisions of section 143(2). Though technically the intimation issued was deemed to be a demand notice issued under section 156, that did not per se preclude the right of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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(1)(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 minimize the departmental work to scrutinize each and every return and to concentrate on selective scrutiny of returns. These aspects were highlighted by one of us (D. K. Jain J) in Apogee Interna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Pvt. Ltd. [1996 (217) ITR 597 (SC)] ; Raymond Woollen Mills Ltd. v. ITO [1999 (236) ITR 34 (SC)]. 11 The aforesaid aspects have also been reiterated by the Supreme Court in the later judgment in the case of Deputy Commissioner of Income Tax and another v. Zuari Estate Development and Investment Company Limited [(2015) 373 ITR 661 (SC)]. 12 In the present case, the Assessing Officer has considered the material on record which would prima facie suggest that the assessee had sold number of shares of a company which was found to be indulging in providing bogus claim of long term and short term capital gain. The company was prima facie found to be a shell company. The assessee had claimed exempt of long term capital gain of ₹ 25,00,000/- (Twenty Five Lakh) by way of sale of shares of such company. 13 In the judgment in the case of Principal Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 It is the case of the Revenue that the assessee has entered into a bogus / accommodation entry transaction. 16 The case on hand is not a case where the Income Tax Officer seeks to draw any fresh inference which could have been raised at the time of the original assessment on the basis of the materials placed before him by the assessee relating to the transfer of ₹ 25 Lakh through the Dhanlaxmi Bank during the F.Y. 2011-12 and which he failed to draw at that time. Acquiring fresh information, specific in nature and reliable in character, relating to the concluded assessment, which goes to expose the falsity of the statement made by the assessee at the time of original assessment is different from drawing a fresh inference from the same facts and material which was available with the I.T.O. at the time of the original assessment proceedings. The two situations are distinct and different. Thus, where the transaction itself on the basis of the subsequent information, is found to be a bogus transaction, the mere disclosure of that transaction at the time of original assessment proceedings, cannot be said to be disclosure of the true and full facts in the case and the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of opinion or drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since the belief is that of the Income Tax Officer, the sufficiency of reasons for forming the belief, is not for the Court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and nonspecific information. To that limited extent, the Court may look the conclusion arrived at by the Income Tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by him and further whether that material had any rational connection or a live link with the formation of the requisite belief. 19 We now come to the second argument of the writ applicant as regards the validity of the sanction. The proposal in writing put forward by the Income Tax Officer seeking approval from the Principal Commissioner of Income Officer 1 under Section 151 of the Act for the purpose of reopening of the assessment under Section 147 of the Act reads thus: Reasons for reopening the assessment in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng out any genuine business and engaged into providing accommodation entries through Jignesh Shah. Therefore, the assessee has maneuvered a sum total of ₹ 25,00,000/by not showing his otherwise true income during the year under consideration by adopting fraudulent means and through a predesigned nexus. 4. As per the above discussion, I have reason to believe that undisclosed income of ₹ 25,00,000/on account of obtained accommodation entries from Mainak Comtrade Pvr Ltd. and Purvanit Trade and Commerce Pvt. Ltd. has escaped assessment for A.Y. 201213 and I intend to reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to the notice subsequently in the course of the proceedings under this section. 5. In this case a return of income was filed for the year under consideration but no scrutiny assessment u/s. 143(3) of the IT Act was made. Accordingly, in this case only requirement to initiate proceedings u/s 147 of the IT Act is reason to believe which has been recorded above. 6. In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to facts of this case and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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