9911796707
TMI Blog2021 (4) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... cted for scrutiny assessment and under Section 143 (2) of the Act, the notice was issued on 06.08.2013. The notice under Section 142 (1) of the Act along with questionnaire was issued on 17.10.2013 and 30.10.2014 and in response to the notices, the assessee company submitted its details. After perusing the details furnished by the assessee, the assessing officer raised the issues i.e. (1) Disallowance of cash payment under Section 40A (3) of the Act, (2) Employee's contribution towards P.F & ESIC (3) Disallowance under Section 195 of the Act and finally, the additions were made under the issue raised and the scrutiny assessment framed vide order dated 04.03.2015. 2.2 Thereafter, the assessing officer reopened the assessment under Section 147 of the Act by issuing impugned notice dated 01.03.2018 under Section 148 of the Act. 2.3 At the request, the reasons recorded have been furnished to the assessee, which reads as under:- "Brief details of the assessee The assessee company is engaged in the business manufacturing of Pharmaceuticals Intermediates. The assessee filed its e-return of income on 27.09.2012 declaring total income of Rs. 2,02,,52,860/-. The return was processe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ASTIK PHARMACEUTICALSAADPS3220M13YASH CHEMAODPM1361D Furthermore, summons issued to the assessee at F-15, Saibaba Nagar, Boriwali (W), Mumbai was returned unserved. An inspector was deputed to trace out the assessee. Inspector submitted his report, wherein it has been stated that the above mentioned subject party is not traceable at the given address. In view of the above facts that the assessee is a non filer, there are huge credits and almost equal debits in the bank in the bank accounts of the assessee, name of the assessee is operating in the hawala dealer list for F.Y. 2009-10 & 2010-11; the names of many parties who have credited/debited amounts to /from the accounts of the assessee are also reflecting in such list either as Hawala Dealer or as beneficiaries; it is established that the assessee is merely a 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 the assessee in the form of either purchased or sale. In the above background, it is established that the assessee is involved in hawala dealings, having no genuine business and only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as suspicious parties by Maharashtra State VAT Department. The assessee assessed under the jurisdiction of this office is also one of the beneficiaries of the accommodation entries provided in the form of purchase/sale by M/s. Brown Pharmaceuticals & Chemicals, Transactions with a merely entry provider entry which has not genuine is enough to formulate the reason to believe that the amount of Rs. 1,40,78,914/- has not been taxed and has escaped assessment. Basis of formation of reason to believe : The following facts emerging from information/data available with this office make strong reason to believe that the amount of Rs. 1,40,78,914/- is assessee's bogus purchase and it was to be added in assessee's income. Thus, this income chargeable to tax has escaped assessment and this is a fit case for the proceedings u/s. 147 of the I.T.Act, 1961. Shri Yogesh D Waghela (Prop. Of M/s. Brown Pharmaceuticals & Chemicals, PAN AAWPW7911Q) has not filed return of income for the year under consideration i.e. A.Y. 2012-13. Transactions carried out by the assessee, mostly in March-2012, reflected in the HDFC Bank account of M/s. Brown Pharmaceuticals & Chemicals, A/c. 00475050001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary for his assessment for the year under consideration. It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for his assessment for the year under consideration thereby necessitating reopening u/s. 147 of the Act. It is true that the assessee has filed a copy of annual report and audited P & L A/c. and balance sheet along with return of income where various information / material were disclosed. However, the requisite full and true disclosure of all material facts necessary for assessment has not been made as noted above, It is pertained to mention here that even though the assessee has produced books of accounts. Annual report, audited P & L A/c and balance sheet or other evidence as mentioned above, the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the AO and could been discovered with due diligence, accordingly attracting provisions of Explanation 1 of section 147 of the Act. It is evident from the above discussion that in this case, the issues under consideration were never examined by the AO during the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial in the hands of the Assessing officer, reopening is impermissible in law. In this regard, the learned counsel submitted that, at the time of previous assessment, various details were called for including purchase and sales register, stock register, monthly quantitative and value wise details of purchases and after examining the details, conscious decision being taken by the assessing officer not to make any addition in respect of purchases while framing the assessment under Section 143 of the Act. Therefore, the amount paid to M/s. Brown Pharmaceuticals at the instance of Aroma Impex to discharge the dues having reflected in the ledger of said entities as well as in the audited books of accounts, which had already been examined at the time of scrutiny assessment. In this background of the facts, the learned counsel submitted that, pre-condition for reopening in the case of beyond four years having not been satisfied as there was no failure on the part of the assessee to disclose the material facts and it is a case of mere change of opinion; (c) It was submitted that, the assessing officer has acted mechanically on the basis of the information received from the concerned depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record, the only question that falls for our consideration is whether the impugned notice of reopening should be quashed ? It is an admitted fact that, the assessee Ami Organics ltd. entered into financial transactions to the tune of Rs. 1,40,78,914/- with M/s. Brown Pharmaceuticals for the year under consideration. According to the case of the assessee, it made total purchases of Rs. 25,68,35,509/- during the year under consideration which were duly reflected in the audited annual accounts. The total purchases included the purchases of Rs. 2,56,18,486/- made from Aroma Impex and certain payments were directly made to Aroma Impex, however, as regard the payment to the tune of Rs. 1,40,78,914/- due to the Aroma Impex, the party i.e. Aroma Impex had requested the assessee to make payment to that extent i.e. Rs. 1,40,78,914/- directly to M/s. Brown Pharmaceuticals towards the dues of Aroma Impex and accordingly, on different dates, the assessee had paid the same to M/s. Brown Pharmaceuticals. 9. We take the notice of the fact that, on the basis of the particulars furnished by the assessee, the previous assessment was framed by addition of certain amount under the different heads a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... framing of the assessment made under Section 143(3) of the Act, some tangible material came into the hands of the assessing officer through the investigation wing and upon perusal of the same, he made independent enquiries and applied his mind and upon due satisfaction, he formed an opinion that, the income has escaped assessment. 13. The learned counsel for the writ applicant vehemently contended that, it is a case of mere change of opinion and the proceedings could be said to have been initiated mechanically on the basis of the third party information. This Court in the case of Aaradhna Estate Pvt. Ltd. Vs. Deputy Commissioner of Income Tax [(2018) 91 taxmann.com 119], after referring to various other decisions of this Court as well as of the Apex Court observed in paras 11, 12, 13, 14, 15 & 16 as under : 11. Merely because the transactions in question were examined by the Assessing Officer during the original assessment would not make any difference. The scrutiny was on the basis of disclosures made and materials supplied by the assessee. Such material is found to be prima facie untrue and disclosures not truthful. Earlier scrutiny or examination on the basis of such disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, where assessee company is one of them. Basant Marketing Pvt. Ltd. is a dummy company of one Shri Arun Dalmia and substantial material is found to base such reasons recorded during the search by CBI, Mumbai and, therefore, the Assessing Officer issued a notice to show cause as to why the said amount of Rs. 8.71 crore received from Basant Marketing Pvt. Ltd. should not be treated as cash credit under section 68 of the Act. 21. This Court has examined the belief of the Assessing Officer to a limited extent to inquiry as to whether there was sufficient material available on record for the Assessing Officer to form a requisite belief whether there was a live link existing of the material and the income chargeable to tax that escaped assessment. This does not appear to be the case where the Assessing Officer on vague or unspecific information initiated the proceedings of reassessment, without bothering to form his own belief in respect of such material. We need to notice that the Joint Director, CBI, Mumbai, intimated to the DIT (Investigation), Mumbai. A case is registered against Mr.Arun Dalmia, Harsh Dalmia and during the search at their residence and office premises, the substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m from reopening the assessment on the principle of change of opinion. As noted, the opinion would be formed on the basis of disclosures. When disclosures are found to be prima facie untrue, the opinion formed earlier would not prevent Assessing Officer from examining the issue. In the present case, as noted, Assessing Officer received additional information after the original assessment was over, on the basis of which he formed a belief that the entire transaction was a sham transaction. At this stage, where the Court is examining the validity of notice of reopening, it is not necessary that the Assessing Officer must have conclusive evidence to hold that invariably additions would be made in the income of the assessee. What is required is the reason to believe that income chargeable to tax as escaped assessment. Sufficiency of the materials in the hand of the Assessing Officer which enabled him to form such a belief would not be examined. A reference in this respect is made to a decision of the Supreme Court in the case of Asstt.Commissioner of Incometax v. Rajesh Jhaveri Stock Brokers P. Limited, reported in [2007] 291 ITR 500." 13. The next contention that the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso reads as under : "68.... Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assesseecompany shall be deemed to be not satisfactory, unless ( a) the person being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory;..... 15. As per this proviso, where the assessee is a company and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, explanation offered by the assessee company shall be deemed to be not satisfactory, unless the person in whose name such credit is recorded in the books of the company also offers an explanation about the nature and source of sum so credited and such explanation in the opinion of the Assessing Officer has been found to be satisfac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made. He truly had to form a bona fide belief that income had escaped assessment. In this context, we may refer to various decisions cited by the counsel for the Revenue. 10. In case of Central Provinces Manganese Ore Co. Ltd.vs. Income Tax Officer, Nagpur ((supra)) the Supreme Court noted that in case of the assessee which had an office in London, this Customs authority had come to know that the assessee had declared very low price in respect of the consignment of Manganese exported by them out of India. After due inquiries and investigations, the Customs authorities found that the assessee was systematically undervoicing the value of Manganese as compared with the prevailing market price. The Income Tax Officer on coming to know about the proceedings before the Customs Collector in this respect issued notice for reopening of the assessment. In the reasons that the Assessing Officer relied on the facts as found by the Customs Authorities that the assessee had undervoiced goods during export. Under such circumstances, upholding the validity of the notice for reopening, the Supreme Court held and observed as under: "So far as the first condition is concerned, the Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elieve that the income of the assessee chargeable to tax had escaped assessment. The High Court, in our opinion, was in error in proceeding on the basis that it could not be said that the Income Tax Officer had in his possession information on the basis of which he could have reasons to believe that income of the assessee chargeable to tax had escaped assessment for the relevant assessment years. For the reasons aforementioned, we are unable to uphold the impugned judgment of the High Court. The appeal is, therefore, allowed, the impugned judgment of the High Court is set aside and the Writ Petitions filed by the respondents are dismissed. No order as to costs." 12. In case of Income Tax Officer vs Selected Dalurband Coal Co. Pvt. Ltd.((supra)), the assessment was reopened on the basis of the information contained in letter from Chief Mining Officer that the colliery of the assessee had been inspected and there had been under reporting of coal raised. Upholding the validity of reopening of assessment, the Supreme Court held and observed as under: "After hearing the learned counsel for the parties at length, we are of the opinion that we cannot say that the letter aforesaid does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... communication. However, on a scrutiny of the order, it is perceivable that the authority has passed the order dealing with the objections in a very careful and studied manner. He has taken note of the fact that transactions involving Rs. 27 lakhs mentioned in the table in Annexure P2 constitute fresh information in respect of the assessee as a beneficiary of bogus accommodation entries provided to it and represents the undisclosed income. The assessing officer has referred to the subsequent information and adverted to the concept of true and full disclosure of facts. It is also noticeable that there was specific information received from the office of the DIT (INVV) as regards the transactions entered into by the assessee company with number of concerns which had made accommodation entries and they were not genuine transactions. As we perceive, it is neither a change of opinion nor does it convey a particular interpretation of a specific provision which was done in a particular manner in the original assessment and sought to be done in a different manner in the proceeding under Section 147 of the Act. The reason to believe has been appropriately understood by the assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, 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.
15. In view of the discussions made hereinabove, 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 of the Act.
16. For the foregoing reasons, no case is made out and accordingly, present writ application deserves to be dismissed and is hereby dismissed. No order as to costs. X X X X Extracts X X X X X X X X Extracts X X X X
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