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TMI Blog2021 (5) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... t exprenses incurred relatable to tax free income u/s. 14A, there was an omission and failure on its part to disclose fully and truly material facts, hence, reopening was justified. As examined the reasons as indicated above, and we are of the view that the Assessing Officer has verified the information and after application of mind and upon due satisfaction, he formed an opinion that income has escaped assessment. See GOKUL CERAMICS [ 2016 (7) TMI 214 - GUJARAT HIGH COURT] Eligible sanction under Section 151 - As perused the papers of the sanction which would show that Assessing Officer presented the reasons recorded for approval of Principal Commissioner in prescribed format on 29.03.2019 through Additional Commissioner of Income Tax. Both the officers have perused the reasons recorded and opined that it is a fit case to issue notice under Section 148 of the Act. The Additional Commissioner of the Income Tax has expressed his satisfaction with regard to reasons recorded by the AO and found that it is a fit case to issue notice. The Principal Commissioner of Income Tax was also satisfied with the reasons recorded and put his remarks of his own handwriting that on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e u/s.148 of the incometax act, therefore reason for reopening is provided as under. The assessee company filed its return of income for the A.Y. 2012-13 on28/09/212 declaring total income at ₹ 6,58,710/-. The assessee was engaged in the business of trading in rough and polished diamonds. The assessment U/s 143(3) of the incometax act was completed on 04/06/2014. 2.1. In this case, an information has been received from the DCIT Central Circle1( 2) vide letter No.DCIT/CC1( 2)/Abd/Shripalinfo./ 2018-19/ 1708 dated 28/02/2019. As per the information received a search action u/s 132 of the incometax act was carried out in the case of Shree Shivpal Vora on 16/12/2016. During the course of search action several incriminating documents were found and seized which revealed that he was in control of affairs of 44 concerns which are in the business of giving accommodation entry and M/s Kalyan Exports Pvt Ltd is one such company. M/s. Madhav Gems Pvt Ltd has entered into transaction of ₹ 4,24,500/-with M/s. Kalyan Exports Pvt Ltd durin the F.Y.2011-12, 3. Since from the search action of Investigation wing, it is established that M/s. Kalyan Exports Pvt Ltd was invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 2.4 The writ applicant raised the objections vide its communication dated 04.07.2019, mainly on the following issues on facts and law: (i) Provision of Section 148(2) not complied with; (ii) No failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment; (iii) Reopening is based on borrowed satisfaction ; (iv) provision of Section 151(1) not complied with. 2.5 The objections came to be rejected by the respondent vide order dated 30.08.2019. 3. Being aggrieved by the disposal of the objections against the notice for reopening of the assessment, the writ applicant has come up before this Court with the present writ application. 4. We have heard Mr. Sunit Shah, the learned Senior counsel assisted by Mr. Omkar C. Dave, the learned advocate appearing for the writ applicant and Mrs. Kalpana K. Raval, the learned Standing Counsel appearing for the revenue. 5. Mr. Sunit Shah, the learned Senior Counsel appearing for the writ applicant raised the following contentions: 5.1 It was submitted that the respondent authority failed to comply with the provisions of Section 148(2) of the Act, as before issuing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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, Mrs. Kalpana K. Raval, learned Standing Counsel appearing for the revenue has vehemently opposed the writ application, contending that the revenue is justified in reopening the assessment for the year under consideration. She has urged that the alleged transactions with M/s. Kalyan Exports Pvt. Ltd. was not truly disclosed at the time of original assessment, as in fact, without any actual purchases, the accommodation entries were being provided by the concerned entity for tax evasion. Referring to the reasons recorded, she pointed out that after final assessment made under Section 143(3) of the Act, the Assessing Officer received fresh information with regard to alleged transaction reflected in the bank account of the assessee and upon verification, the Assessing Officer found that the information is correct and the assessee is the beneficiary of the accommodation entries and therefore, he has reason to believe that inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , one of the company was M/s. Kalyan Exports Pvt. Ltd., with whom the assessee M/s. Madhav Gems had entered into transaction of ₹ 4,24,500/-- during the year under consideration. 13. We further take notice of the fact that while recording the reasons, the Assessing Officer has verified the information received from the DCIT Circle1(2) and applied his mind to the information received and after independent inquiries, he came to conclusion that M/s. Kalyan Exports Pvt Ltd was providing accommodation entry without any business activities and assessee is the beneficiary of accommodation entry of ₹ 4,24,500/-and formed his opinion that he has reasoned to believe that amount of ₹ 4,24,500/-has escaped assessment. 14. After careful examination of the reasons recorded and materials on record, we are of the view that the Assessing Officer could be said to have applied his independent mind to the information received from the concerned department and after being duly satisfied, he reached to the conclusion that the assessee failed to disclose the true facts with regard to alleged accommodation entries provided by the M/s. Kalyan Exports Pvt. Ltd. which provides a lin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation into the genuineness to the loan transaction but in our opinion his failure to do so and complete the original assessment proceedings would not take away his jurisdiction to act under Section 147 of the Act, on receipt of the information subsequently. The subsequent information on the basis of which the I.T.O. acquired reasons to believe that income chargeable to tax had escaped assessment on account of the omission of the assessee to make a full and true disclosure of the primary facts was relevant, reliable and specific. It was not at all vague or nonspecific. 17. In case of Yogendrakumar Gupta Vs. ITO (2014) 366 ITR , this Court while rejecting petition challenging the notice for reopening which was issued beyond a period of 4 years from the end of relevant assessment year, wherein, one of the ground was that the issue was previously scrutinized during the assessment proceedings. We may reproduce the observations made in paras 16, 17 and 21, which read thus: 16. Ostensibly, thus, there was disclosure and the occasion would not arise to term this as the assessee not having disclosed fully and truly all the material facts necessary for assessment. However, in esse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Incometax, Kolkata, who in turn, communicated to the Chief Commissioner of Incometax,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 Delhi High Court in case of Acorus Unitech Wireless (P.) Ltd. ((supra)). Assumption of jurisdiction on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me u/s. 14A, there was an omission and failure on its part to disclose fully and truly material facts, hence, reopening was justified. 22. The next contention raised by the learned counsel is that the reassessment proceedings could be said to have been initiated mechanically on the basis of third party information. We have examined the reasons as indicated above, and we are of the view that the Assessing Officer has verified the information and after application of mind and upon due satisfaction, he formed an opinion that income has escaped assessment. In this regard, it would be profitable to refer the decision of Principal Commissioner of Income Tax, Rajkot Vs. Gokul Ceramics reported in (2016) Taxman 1 (Gujarat) , wherein, similar contention was raised and while rejecting the contention, this Court made the following observations. Paras 9 to 14 read thus: 9. It can thus be seen that the entire material collected by the DGCEI during the search, which included incriminating documents and other such relevant materials, was along with report and showcause notice placed at the disposal of the Assessing Officer. These materials primafacie suggested suppression of sale cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 v. 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 manipulated transaction. On the basis of such information, the Assessing Officer issued notice for reopening of the assessment. The question, therefore, arose whether the information contained in the letter of Directorate of Investigation could be said to be definite information and the Assessing Officer could act upon such information for taking action under Section 147(b) of the Act. In such background, the Supreme Court observed as under: 12. Ms. Gauri Rastogi, the learned counsel appearing for the respondents, has urged that the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 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 there was relevant material, as stated above, on which a reasonable person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid. Inasmuch as, as a result of our order, the reassessment proceedings have not to go on we don not and we ought not to express any opinion on the merits. 13. In case of AGR Investment Ltd. v. Additional Commissioner of Income Tax and anr. (supra), a Division Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 aware of the situation and further the reason recorded does not indicate application of mind. That apart, the existence of the companies was not disputed and the companies had bank accounts and payments were made to the assessee company through the banking channel. Regard being had to the aforesaid fact situation, this Court had interfered. Thus, the said decision is also distinguishable on the factual score. 14. Learned Single Judge of Madras High Court in case of Sterlite Industries (India) Ltd. v. Assistant Commissioner of Income Tax reported in [ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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