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TMI Blog2021 (8) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... 13.08.2013, notice under Section 143(2) of the Act came to be issued to provide certain documents. On 22.07.2014 and subsequently, on 05.08.2014, the petitioner received notices under section 142(1) of the Act, to which, the petitioner filed detailed reply on 04.09.2014. The respondent passed Assessment Order under section 143(3) of the Act on 14.10.2014. It is contended that despite the petitioner fully and truly disclosed all material facts relevant for his assessment during the course of scrutiny assessment along with statement of income with annexures, the petitioner surprisingly received notice dated 27.03.2019, issued under section 148 of the Act. The petitioner filed RoI in response to the same under protest and requested for reasons for reopening the assessment for the Assessment Year 2012-13. On 15.07.2019, the petitioner filed objections against the reasons recorded, which were disallowed on 11.09.2019. It is further contended that there were no allegations against the petitioner for not disclosing the material on record at the time of scrutiny assessment, and therefore, in the absence of any fault on the part of the petitioner, reopening of a scrutinized issue, is contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Anil Group of companies. Further, information so received from the Investigation Wing being tangible material and no opinion having been formed on the same during the original proceedings, challenge made in the petition to the impugned notice, is thoroughly misconceived and untenable. 3.1 The respondent, in the reply, has further contended that the petitioner has not fully and truly disclosed all material facts relevant for his assessment at the time of filing of return for the year 2012-13, and despite showing huge turn-over of Rs. 24,10,82,501/- in the audited books of account, had disclosed a meager income of Rs. 1,42,694/-. Further, on perusal of the information received from the Jt. DIT (Inv.) (OSD), Unit- 2(3), Ahmedabad, it came to the knowledge of the Assessing Officer that the assessee has shown huge sales amounting to Rs. 24,10,82,501/- and purchase of Rs. 27,93,86,111/- during the A.Y. 2012-13. Further, same sale and purchases were made to/from Anil group of companies viz. Anil Ltd, Anil Bioplus Ltd., Anil Tradecom Ltd, Anil Mines & Minerals Ltd, and Anil Nutrients Ltd. in the A.Y. 2012-13 and subsequent years as well. Further, it is contended that Shri Nikhil D. Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the assessment proceedings. Further, so far as allegation regarding sanction is concerned, it is submitted that the Assessing Officer had taken necessary approval under section 151 of the Act for reopening the case of the of the petitioner. It is also mentioned that such approval was granted by the Principal Commissioner of Income Tax-3, Ahmedabad after carefully perusing the reasons recorded by the Assessing Officer. Hence, the contention of the petitioner with regard to valid sanction is devoid of any merits. 4. Learned advocate Mr. D. K. Patel for the petitioner vehemently and fervently argued that in the present case, the reopening of assessment is bad in law. He further argued that it is without independent inquiry and without application of mind. He also argued that there is no material on record so as to arrive at such prima-facie conclusion. 4.1 In support of his case, the learned advocate for the petitioner has relied upon following decisions: i) Tax Appeal No. 7 of 2019 dated 10.06.2019, Principal CIT v. Atul Limited; ii) OX KPO Services Pvt. Ltd v. DCIT, (2018) 94 Taxmann.Com 467 (Guj); iii) DY. CIT v. OX KPO Services Pvt. Ltd Vs. DCIT, (2018) 99 Taxmann.Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner has not fully and truly disclosed all material facts at the time of original assessment, and therefore, this petition is required to be dismissed. 5.1 Learned senior standing counsel Mrs. Bhatt further contended that the decisions relied by the learned advocate for the petitioner are not applicable to the present case. So far as the decision in New Delhi Television Ltd (supra) upon which, the petitioner has placed heavy reliance, is concerned, the said decision also would be of no avail to the petitioner inasmuch as, in the said case, the assessee had assessed all materials prior to reopening and subsequent to the proceedings and therefore, the facts and circumstances are totally different. Eventually, she urged that this petition deserves to be dismissed being devoid of any merits. 6. Having heard the arguments advanced by both the sides and perusing material on record, as per the case of the department, the petitioner - assessee has provided accommodation entries to the Anil Group of companies to the tune of Rs. 24,10,82,501/- and the income derived from commission, ranges into 0.75% to 1%, is not disclosed by the petitioner during the year under consideration and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bhalaxmi Trading Company has shown unsecured loan of Rs. 1,33,97,945/- during F.Y. 2011-12 to 2013-14 relevant to A.Y. 2012-13 to 2014-15. On being asked regarding the creditworthiness and genuineness of such unsecured loan, Shri Nikhil D. Gupta, son of Smt. Geetaben D. Gupta stated that all the transactions were carried out by Anil Group only. As can be seen ultimate beneficiary of total fund of Rs. 1,74,88,107/- were Agranil Marketing Ltd and Jalaram Commodities Pvt. Ltd shown as sundry debtors, are the related company of Anil Group. Further, according to Nikhil Gupta sundry creditors amounting to Rs. 12,63,61,871/- as on 31.03.2012 were again Anil Group of companies. From the books of accounts of Subhalaxmi Trading for F. Y. 2011-12 and the facts stated in the statement by Shri Nikhil D. Gupta Power of authority holder of Geetaben D. Gupta, it is crystal clear that the unsecured loan shown in the audited books of accounts Subhalaxmi Trading for F.Y. 2011-12 were paper transactions (accommodation entries) carried out by Anil Group of companies in the name of Subhalaxmi Trading". It is concluded that, "From the detail discussion made above, it is proved beyond any reasonable doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the assessee to make the return under section 139, or in response to a notice issued under Sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all the material facts necessary for his assessment for that assessment year. So far as the case of the present petitioner is concerned, the assessment for the A.Y. 2012-13 is sought to be reopened by the Assessing Officer under section 147/148 of the said Act, on his having arrived at a satisfaction that the income for the said assessment year had escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. 8. It is pertinent to note that as held by the Supreme Court in catena of decisions, the formation of belief by the Assessing Officer at the stage of initiation of action under section 147 of the Act is within the realm of subjective satisfaction. The Supreme Court in the case of Assistant Commissioner of Income Tax versus Rajesh Jhaveri Stock Brokers P. Ltd. reported in (2007) 291 ITR 500(SC), had an occasion to deal with the scope and effect of section 147 as substituted w.e.f. April 1st, 1989, in which the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndly he must also have reason to believe that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a). But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is, however, to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147." 9. In the case of Raymond Woollen Mills Ltd. Versus Income-Tax Officer and others reported in 1999 236 ITR 34(SC), the Supreme Court observed that the Court has only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. 10. It is very pertinen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the mere disclosure of that transaction at the time of original assessment proceedings cannot be said to be a disclosure of the "true" and "full" facts in the case and the Income-Tax Officer would have the jurisdiction to reopen the concluded assessment in such a case." 6.5 Further, the term "reason to believe", however, is not defined in the Act but it can be gathered and available from the information, leading the Assessing Officer to reopen the assessment. The term itself is suggestive of its prima facie characteristics and not established or conclusive facts or information. Meaning thereby, it is the Assessing Officer's prima facie belief, of course, derived from the some material / information, etc. leading him to reopen the assessment. 6.6 The ambit and import of the term "reason to believe" has been examined in numerous cases, notably in ITO v. Lakhmani Mewal Das [(1976) 103 ITR 437: 1976 (3) SCC 757]. The Apex Court held that, "the reason must be held in good faith. It cannot be merely a pretence. It is open to the Court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odation entry providers", and the "accommodation entries" are provided by them to the persons who are the tax evaders. The entries on paper apparently may appear to be of routine nature, but the trail of money transited through the layers would be subsequently unearthed during the search and seizure operations conducted either at the assessee's premises or his associate's premises or at the premises of some third party, who may be an accommodation entry provider. Under the circumstances, when the material is brought to the notice of the Assessing Officer, which would prima facie discredit or impeach the genuineness of the particulars furnished by the assessee at the time of original assessment, and when it prima facie establishes the link between the assessee and the third party who is an accommodation entry provider, the Assessing Officer is empowered rather duty bound to make further inquiry / investigation to unearth such camouflage or wrong or illegal dealings of the assessee. As observed by the Supreme Court in the case of Sumati Dayal vs Commissioner Of Income-Tax reported in AIR 1995 SC 2109, apparent must be considered as real until it is shown that there are reasons to bel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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