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TMI Blog2022 (1) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... ne basis. No addition or deletion is allowed in the reason recorded. In the light of the aforesaid discussion, a plain reading of the impugned reasons recorded by the AO to reopen (supra) it nowhere mentions that there has been any failure on the part of the assessee to disclose fully and truly all material facts for assessment. Therefore relying on ratio decidendi of PHILIPS CARBON BLACK LIMITED VERSUS ASSISTANT COMMISSIONER OF INCOME TAX AND ORS. [ 2019 (3) TMI 993 - CALCUTTA HIGH COURT] and other High Courts (supra) we find force in the contention of the Ld. A.R. that the essential jurisdictional fact as necessary for usurpation of jurisdiction u/s. 147 first proviso is absent, without which the AO does not enjoy the jurisdiction to reopen the assessment which has been framed originally u/s. 143(3) of the Act. Assessee succeeds in its challenge in respect of usurpation of jurisdiction without satisfying the first proviso to Section 147 of the Act in the facts and circumstances of the case. Therefore we are inclined to quash the notice of the AO issued u/s. 148. Therefore all consequential actions fall being non-est in the eyes of law. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the end of the relevant assessment year, then the AO has to record the jurisdictional fact that the income chargeable to tax has escaped assessment because the assessee failed to disclose fully and truly all material facts necessary for the assessment. The Hon'ble Calcutta High Court in this regard has held in M/s. Philip Carbon Black (supra) as under: "Once there is finding that reasons to believe are not good reasons, jurisdiction is not derived to compel assessee to submit to reassessment. Submissions made on behalf of revenue regarding non-disclosure also cannot be accepted in the facts and circumstances, Court having noticed there is no such statement to that effect in the reasons to believe." 3. In the case of M/s. Sound Casting Pvt. Ltd. (supra) the Hon'ble Bombay High Court's Head Notes reads as under: Validity of reopening of assessment framed after scrutiny beyond a period of four years from the end of the relevant A.Y. - A.O. purported to reopen assessment on ground that melting loss of 7.75% claimed by assessee is higher than what is found in a similar line of business - A.Y. 2005-06 - Held that:-No allegation has been made that that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied inasmuch as the original assessment was completed under section 143(3) of the said Act. Condition (b) deals with a special kind of escapement of income chargeable to tax. The escapement must arise out of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 This is clearly not the case here because the petitioner did file the return Since there was no failure to make the return, the escapement of income cannot be attributed to such failure. This leaves us with the escapement of income chargeable to tax which arises out of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. If it is also found that the petitioner had disclosed fully and truly all material facts necessary for its assessment, then no action under section 147 could have been taken after the four year period indicated above. So, the key question is whether or not the petitioner had made a full and true disclosure of all material facts? 29. In the reasons supplied to the petitioner, there is no whisper, what to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 of the Act on the basis of information received from the DDIT (Inv), Unit-IV(1), Kolkata for the following reasons: "Information was received from the DDIT (Inv), Unit-IV(1), Kolkata vide letter dated 15.07.2014 on the subject matter of STR Reference Number 1000011461 in the case of M/s. Ceebuild Co. Pvt. Ltd. which is assessed in this jurisdiction. As per the information received, one Uttam Kumar Surana, one of the Directors of M/s. Vriddhi Raj Trading Co. Ltd., Kolkata has stated under oath before the DDIT (Inv), Unit-IV(1), Kolkata on 05.07.2014 that he and his two sons have provided accommodation entries of share capital and loan of ₹ 1.17 crores to M/s. Ceebuild Co. Pvt. Ltd. through their various paper companies in a complex maze of financial transactions during the Financial years 2008-09, 2009-10 & 2010-11. The modus operandi involved receiving the funds from the beneficiary company and then routing the same through his own paper companies - M/s. Kailashpati Commercial Pvt. Ltd., M/s. Shiv Trading Co. Pvt. Ltd. & M/s. Vriddhi Raj Trading Co. Ltd. before finally reaching the ultimate beneficiary M/s. Ceebuild Co. Pvt. Ltd. has similarly received accommodat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a belief that income chargeable to tax as escaped assessment. Information adverse may trigger "reason to suspect" and not 'reasons to believe'. When there is "reason to suspect" then AO to make a reasonable enquiry and collect material which would make him belief, that there is in fact an escapement of income. It is settled by the Hon'ble Supreme Court in Ganga Saran and Sons P. Ltd. v. ITO, [1981] 130 ITR 1 (SC) that the expression "reason to believe" the expression in section 147 'is stronger" then the expression "is satisfied". Therefore the AO has to record his reason to believe escapement of income and if he intends to reopen an assessment which has been framed earlier u/s. 143(3) after the expiry of four (4) years from the end of the relevant assessment year, then he has to clearly record the additional condition precedent in the reasons recorded that the escapement of chargeable income was due to the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. And it is settled that when there is challenge to the validity of the reasons recorded in the AO to usurp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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