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TMI Blog2021 (4) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... in forming an opinion that the income has escaped assessment. Therefore, the contention with regard to change of opinion and that there was full disclosure at the previous assessment lacks merit. We are of the firm opinion that, there is prima facie tangible material to form an opinion that the income has escaped assessment and the assessee failed to disclose truly and fully all primary facts at the time of the previous assessment, as a result, the assessing officer could not draw proper legal inferences with regard to the alleged transaction. Therefore, as at the relevant time, there was no formation of opinion with regard to the alleged transaction, the assessing officer is not prohibited to form an opinion on the basis of the tangible material that came in his hands by way of information. It cannot be said that, there was no tangible material before the assessing officer and that he proceeded mechanically based on the sole information and the impugned notice is without jurisdiction and contrary to Section 147 - Writ petition dismissed. - R/Special Civil Application No. 19545 of 2018 - - - Dated:- 8-3-2021 - Honourable Mr. Justice J.B.Pardiwala And Honourable Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his office is in receipt of following information from the office of Asst. (Inv.) Unit-2(2), Mymbai:- Enquiries have been conducted in the case of Shri Yogesh D. Waghela, Prop. Of M/s. Brown Pharmaceuticals Chemicals, PAN AAWPW7911Q. It is seen that Shri Yogesh D. Waghela has not filed return of income for A.Y. 1011-12 2012-13. Summons were issued to HDFC ICICI Bank and statements of following accounts for F.Ys 2010-11 2011-15 were obtained: Sr. No.Name of the Bank Account in the name of Account No.1HDFC Bank Brown Pharmaceuticals Chemicals 4750500016352ICICI Bank Brown Pharmaceuticals Chemicals 15805006609 On further perusal of account nos.00475050001635 015805006609 of the assessee held with HDFC Bank ICICI Bank respectively, it is seen that credits debits in the above bank accounts are as under:- Bank account No.F.Y. 2010-11F.Y. 2011-12Credits (Rs.)Credits (Rs.)Debits (Rs.)HDFC Bank 47505000163512,48,64,51412,30,04,96311,85,82,618 12,04,41,646ICICI Bank -158050066091,15,28,0511,15,39,051Account closed on 15.07.2010 It is pertinent to mention here M/s. Brown Pharmaceuticals Chemicals is amongst the concerns which are declared as susp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -1. It is also seen from the bank stataements provided by the HDFC Bank and ICIC Bank (which are enclosed herewith) that the amount of transactions entered into by the beneficiaries mentioned in the Annexure-1 is more than ₹ 1 lakh for F.Y. 2010-11 2011-12. Therefore, this information is being passed on to you as your assessee has transacted with Shri Yogesh D Waghela, Prop. Of M/s. Brown Pharmaceuticals Chemicals, PAN AAWPW7911Q and has availed accommodation entries by way of sale /purchase to evade the due taxes. Analysis of Information received From the information received it is clear that Mr. Yogesh D. Waghela is involved in hawala dealings (entry providing/cheque discounting/bogus billing etc.), in the name of M/s. Brown Pharmaceuticals Chemicals, PAN AAWPW7911Q, which has no genuine business and only providing accommodation entries in the form of sale/purchase to its beneficiary parties. The assessee i.e. M/s. Ami Organics Pvt. Ltd. Is one of the beneficiaries as per the list provided along with the information. Therefore, the transactions reflected in the bank statement of M/s. Brown Pharmaceuticals Chemicals are nothing but only for the benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . M/s. Brown Pharmaceuticals Chemicals is merely an entry provider having not genuine business. Therefore, all the parties who which have credits or to whom money is debited are alleged beneficiaries of accommodation entries provided by M/s. Brown Pharmaceuticals Chemicals in the form of either purchased or sale. Therefore, the assessee is one of the beneficiaries of accommodation entries. The information was passed after making proper enquiry and after issuing summons 133(6) Notices to the Banks/parties. Satisfaction of this office :- The failure is on the part of assessee as it has shown bogus purchases by way of making transaction with an entry provider entity i.e. M/s. Brown Pharmaceuticals Chemicals. The assessee has not disclosed true fair picture of its business transactions. Considering the abovementioned factual backdrop, I have reasons to believe that in this case, income of ₹ 1,40,78,914/- has escaped assessment within the meaning of explanation-1 to section 147 of the I.T. Act, 1961. I am fully satisfied that the income of ₹ 1,40,78,914/- chargeable to tax has escaped assessment and this is a fit case for the proceedings u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by the AO u/s 143(2)/142(1) and order sheet entries recorded during the 143(3)/147 proceedings. It is imported to highlight here that material facts relevant for the assessment on the issue(s) under consideration were not filed during the course of assessment proceeding and the same may be embedded in annual report, audited P -L A/c. balance sheet and books of account in such a manner that it would required due diligence by the AO to extract these information. For foretasted reasons, it is not a case of charge of opinion by the AO. In this case, more than four years have lapsed from the end of assessment year 201213. Hence necessary sanction to issue notice u/s 148 has been obtained separately from Principal Commissioner of Income-tax, Vadodara-l, Vadodara as per the provisions of section 151 of the Act. 2.4 The writ applicant raised the objections vide its communication dated 10.12.2018 and raised the following issues on facts and law : (i) Reopening is bad in law as the same is beyond a period of four years from the end of the assessment year . (ii) Reopening is based on change of opinion . (iii) Reopening is based on borrowed satisfaction . (iv) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer to arrive at a conclusion that the income chargeable to tax has escaped assessment. Therefore, reopening based on the borrowed satisfaction cannot be sustained in law; (d) It was further contended that, the assessee has not made any purchases from M/s. Brown Pharmaceuticals during the year under consideration and therefore, the question of any bogus purchases from M/s. Brown Pharmaceuticals does not arise at all and therefore, the revenue failed to appreciate the facts properly and has proceeded merely on the basis of the conjectures and surmises. 6. In view of the aforesaid contentions, the learned counsel for the writ applicant submitted that, the impugned notice as well as the order of disposing off the objections are bad, illegal and without jurisdiction and therefore, the same deserve to be quashed and set aside and accordingly, the writ application may be allowed. 7. On the other hand, Mr. Varun K. Patel, the learned standing counsel appearing for the Revenue vehemently opposed the writ application and contended that, the revenue is justified in reopening the assessment for the year under consideration. He urged that, at the time of original assessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific query was raised so far the payment of ₹ 1,40,78,914/- made to M/s. Brown Pharmaceuticals is concerned and apparently, there was no suspicion in the mind of the assessing officer with regard to the alleged payment. Therefore, there was no occasion to form an opinion with regard to the alleged payment made by the assessee towards the purchases made from Aroma Impex. 10. A plain reading of the reasons recorded reveals that, the revenue received information from the office of the Assistant DIT, (Inv.), Unit 2(2), Mumbai that, M/s. Brown Pharmaceuticals is a non filer and providing accommodation entries without having actual business and the parties who have credited and debited in the bank accounts of M/s. Brown Pharmaceuticals were beneficiaries of the accommodation entries in the form of bogus sales or purchases. The assessing officer while recording the reasons observed that, the assessee M/s. Ami Organics was one of the beneficiaries as per the list provided along with the information and therefore, the transactions reflected in the bank statement of M/s. Brown Pharmaceuticals is bogus and sham. It also appears from the reasons recorded that, the assessing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not debar a fresh assessment. Each individual case of this nature is bound to have slight difference in facts. Judgement of Delhi High Court in case of Allied Strips Ltd.((supra)) does not suggest that merely because a particular issue was examined during the original assessment proceeding, the Assessing Officer would be debarred from resorting to reopening of the assessment, even if he had sufficient fresh materials at his command, to form a reasonable belief that the assessee had made incorrect disclosures or had not made full disclosures which would have a vital bearing on the assessment of his income. If that is the ratio, counsel for the petitioner wishes to cull out from such judgment, we record our respectful disagreement. In case of Yogendrakumar Gupta((supra)), the Court rejected a petition challenging the notice of reopening which was issued beyond a period of four years from the end of relevant assessment year, in which also one of the grounds was that the issue was previously scrutinised during the assessment proceedings. The Court observed as under : 16. Ostensibly, thus, there was disclosure and the occasion would not arise to term this as the assessee not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tantial material indicated that 20 dummy companies of Mr.Arun Dalmia were engaged in money laundering and the incometax evasion. The said entities included Basant Marketing Pvt. Ltd. also. From the analysis of details furnished and the beneficiaries reflected, which are spread across the country, the CIT, Koklata, suspected the accommodation entry related to the assessment year 200607 as well, this information has been provided to Director General of Income tax, Kolkata, who in turn, communicated to the Chief Commissioner of Income tax,Ahmedabad. Further revelation of investigation as could be noticed from the record examined (file) deserves no reflection in this petition. Insistence on the part of the petitioner to provide any further material forming the part of investigation carried out against Dalmias also needs to meet with negation, as the law requires supply of information on which Assessing Officer recorded her satisfaction, without necessitating supply of any specific documents. The proceedings initiated under section 147 of the Act would not be rendered void on nonsupply of such document for which confidentiality is claimed at this stage, following the decision of the Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Assessing Officer did not demonstrate any material enabling him to form a belief that income chargeable to tax has escaped assessment is fallacious. The Assessing Officer recorded detailed reasons pointing out the material available which had a live link with formation of belief that the income chargeable to tax had escaped assessment. At this stage, as is often repeated, we would not go into sufficiency of such reasons. In this context, reference can be made to decision of Supreme Court in case of Raymond Woolen Mills Ltd.((supr a)). In case of Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd. reported in (2007) 291 ITR 500(Hon'ble Supreme Court), it was observed as under : The expression reason to believe in section 147 would mean cause or justification. If the Assessing Officer has cause or 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. What is required is reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer has been found to be satisfactory. Essentially, this proviso eases the burden of proof on the Revenue while making addition under section 168 with respect to non genuine share application money of the companies. Even in absence of such proviso as was the case governing the periods with which we are concerned in the present case, if facts noted by the Assessing Officer and recorded in reasons are ultimately established, invocation of section 68 of the Act would be called for. 16. The contention that the Assessing Officer had merely and mechanically acted on the report of the investigation wing also cannot be accepted. We have reproduced the reasons recorded by the Assessing Officer and noted the gist of his reasons for resorting to reopening of the assessment. We have recorded that the Assessing Officer had perused the materials placed for his consideration and thereupon, upon examination of such materials formed a belief that income chargeable to tax had escaped assessment. In case of Principal Commissioner of Incometax, Rajkot3 v. Gokul Ceramics reported in (2016) 241 Taxman 1 (Gujarat), similar contention was raised by the counsel for the assessee conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... So far as the first condition is concerned, the Income Tax Officer, in his recorded reasons, has relied upon the fact as found by the Customs Authorities that the appellant had under invoiced the goods it exported. It is not doubt correct that the said finding may not be binding upon the income tax authorities but it can be a valid reason to believe that the chargeable income has been under assessed. The final outcome of the proceedings is not relevant. What is relevant is the existence of reasons to make the Income Tax Officer believe that there has been under assessment of the assessee s income for a particular year. We are satisfied that the first condition to invoke the jurisdiction of the Income Tax Officer under Section 147(a) of the Act was satisfied. 11. In case of Income Tax Officer vs Purushottam Das Bangur ((supra)) after completion of assessment in case of the assessee, the Assessing Officer received letter from Directorate of Investigation giving detailed particulars collected from Bombay Stock Exchange which revealed earning of share and price of share increased during period in question and quotation appearing at Calcutta Stock Exchange was as a result of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngth, we are of the opinion that we cannot say that the letter aforesaid does not constitute relevant material or that on that basis, the Income Tax Officer could not have reasonably formed the requisite belief. The letter shows that a joint inspection was conducted in the colliery of the respondent on January 9,1967, by the officers of the Mining Department in the presence of the representatives of the assessee and according to the opinion of the officers of the Mining Department, there was under reporting of the raising figure to the extent indicated in the said letter. The report is made by a Government Department and that too after conducting a joint inspection. It gives a reasonably specific estimate of the excessive coal mining said to have been done by the respondent over and above the figure disclosed by it in its returns. Whether the facts stated in the letter are true or not is not the concern at this stage. It may be well be that the assessee may be able to establish that the facts stated in the said letter are not true but that conclusion can be arrived at only after making the necessary enquiry. At the stage of the issuance of the notice, the only question is whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The reason to believe has been appropriately understood by the assessing officer and there is material on the basis of which the notice was issued. As has been held in Phool Chand Bajrang Lal ((supra)), Bombay Pharma Products ((supra)) and Anant Kumar Saharia ((supra)), the Court, in exercise of jurisdiction under Article 226 of the Constitution of India pertaining to sufficiency of reasons for formation of the belief, cannot interfere. The same is not to be judged at that stage. In SFIL Stock Broking Ltd. ((supra)), the bench has interfered as it was not discernible whether the assessing officer had applied his mind to the information and independently arrived at a belief on the basis of material which he had before him that the income had escaped assessment. In our considered opinion, the decision rendered therein is not applicable to the factual matrix in the case at hand. In the case of Sarthak Securities Co. Pvt. Ltd. ((supra)), the Division Bench had noted that certain companies were used as conduits but the assessee had, at the stage of original assessment, furnished the names of the companies with which it had entered into transactions and the assessing officer was made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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