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TMI Blog2022 (4) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... cer fall outside the review powers and remains within the domain of the Assessing Officer at this stage of the proceedings where only a preliminary finding under section 147/148 has been made. Having regard to the materials on record it cannot be said that there is a there is a total non-application of mind on the part of the AO while recording the reasons for reopening of the assessment. It also cannot be said that his conclusion was merely based on the observations and information received from the Investigation Wing. AO could be said to have applied his mind to the same. AO could not be said to have merely concluded without verifying the facts that it is the case of reopening of the assessment. We have examined the belief of the AO to a limited extent to look into whether there was sufficient material available on record for the Assessing Officer to form a reasonable belief and whether there was a live link existing of the material and the income chargeable to tax that escaped assessment. The case on hand is not one where it could be argued that the Assessing Officer, on absolutely vague or unspecific information, initiated the proceedings of reassessment without taking th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1 Lakh. 2.4 The writ applicant vide letter dated 04.01.2016, furnished all the relevant details including the details relating to the purchases. 2.5 The Assessing Officer, thereafter, proceeded to pass the assessment order under Section 143(3) read with Section 153A of the Act dated 28.03.2016 without making any addition in respect of the purchases. 2.6 It appears that thereafter the respondent No.3 issued the impugned notice dated 28.03.2019 under Section 148 of the Act seeking to reopen the case of the writ applicant for the year under consideration. In such circumstances, referred to above, the writ applicant is here before this Court with the present writ application. 3. We have heard Mr. Tushar Hemani, the learned senior counsel assisted by Ms. Vaibhavi Parikh, the learned advocate appearing for the writ applicant and Ms. Kalpana Raval, the learned senior standing counsel appearing for the revenue. 4. The reasons assigned by the Assessing Officer for the purpose of reopening are as under; Brief details of the Assessee. The assessee company filed its return of income on 20.10.2014 showing total income of ₹ 12,80,15,570/-. An order u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ijal Ashok Shah a commission agent based in Mumbai. This bill is nothing but the assessee s bogus purchase and attempt to reduce its tax liability through the said tainted concerns. 5. In view of above facts and discussion made hereinabove, the undersigned has reason to believe and satisfied that the transactions made to the assessee company M/s. Amar Jewellers Ltd. with M/s. Swastik Corporation amounting to ₹ 29,94,900/- are bogus in nature. By claiming the bogus purchase expenses, the assessee thereby reduced its profit and resultant tax liability. 6. In view of above facts/material available on records and after analyzing the same, I have reason to believe and am satisfied that income of the assessee to the extent of ₹ 29,94,900/- has escaped assessment for A.Y. 2013-14 within the meaning of section 147 of the I.T. Act. 7. In this case, return of income was filed for the year under consideration and assessment u/s.143(3) r.w.s. 153A of the Act was made on 28.03.2016. Since 4 years from the end of the relevant year has expired in this case, the requirements to initiate proceeding u/s.147 of the Act are reason to believe that income for the year un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as under; 6. In your letter dated 07.05.2019, your honour has observed that Shri Bijal Ashok Shah, Prop. Of M/s. Swastik Corporation in the statement recorded in the course of survey stated that he has done cash transactions with some parties. The statement of Shri Bijal Ashok Shah cannot be ground to treat the transactions of assessee with M/s. Swastik Corporation are bogus as Shri Bijal Ashok Shah didn t say that he has given the bogus bills to the assessee. 7. The above submission made at para no.6 concerning the statement of Shri Bijal Ashok Shah is made without receipt of the actual statement recorded by the revenue. So the statement may please be supplied as requested earlier. 8. From the above discussions, it is clear that assessee has made true and full disclosure for the purpose of the assessment. As per the proviso to Sec. 147, notice u/s.148 cannot be issued after expiry of 4 years, if assessee make true and full disclosure of material facts necessary for his assessment. In this case, the notice was issued on 28.03.2019 which should have been issued by 31.03.2018, so issue of the notice is time barred. The Explanation 3 of Sec. 147 has no applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017-18 dated 17.10.2017 by the ADIT (Inv.), Unit 4(2), Mumbai. (ii) Recorded the reasons for initiating proceedings under section 147 of the Act for obtaining approval of the Pr. CIT-1, Surat on 20.03.2019. (iii) Recorded satisfaction of Addl. CIT, Range 1(1), Surat on 22.03.2019. (iv) Recorded satisfaction of Pr. CIT, Surat 1 on 25.03.2019 and conveyed his approval through letter No.SRT/Pr.CIT-1/HQ/Reopening/Range-1(1) 315-327/2018-19 dated 25.03.2019, a copy thereof marked to this office for necessary action. (v) Issued notice under section 148 on 28.03.2019 through ITBA module. (vi) Reasons for reopening were provided to the assessee by letter dated 07.05.2019 through ITBA module. 3.3 From the above narrated facts, it is clear that the issue of notice under section 148 and subsequent supply of the reasons so recorded to you, are after carefully following procedures prescribed by the law and also keeping the material facts available on record, which may please be noted. Hence, looking to the facts of the case and way in which the procedures were followed, your claim does not hold any weightage, therefore, the same is rejected summarily. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of the assessee has escaped assessment. Mr. Hemani would submit that the reopening is nothing but a roving or a fishing inquiry. 8. Per contra , Ms. Raval, the learned senior standing counsel appearing for the revenue would submit that the reopening is based on tangible information provided by the External Agencies. Such information was not available with the authorities at the time of original proceedings based on survey proceedings under Section 133A of the Act. Ms. Raval would submit that the Assessing Officer may be permitted to complete the reassessment proceedings and this Court may not interfere at this stage. ANALYSIS 9. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the Assessing Officer committed any error in issuing notice under Section 148 of the Act for the reopening of the assessment. 10. Section 147 of the Act authorizes the re-opening of any assessment of a previous year. Section 148, which contains the conditions for re-opening assessments, including the limitation period within which notices can be issued, by its pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the Income-tax Officer. 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 and are not extraneous or irrelevant for the purpose of the section. To this limited extent, the action of the Income-tax Officer in starting proceedings in respect of income escaping assessment is open to challenge in a Court of law. 14. In Phool Chand Bajrang Lal Ors. vs. Income Tax Officer Ors. , 1993 Supp (1) SCR 28, after reviewing the previous case law, and concluding that a valid re-opening is one, preceded by specific, reliable and relevant information, and that the sufficiency of such reasons is not subject to judicial review- the only caveat being that the court can examine the record, if such material existed, it was held that the facts disclosed in the return, if found later to be unfounded or false, can always be the basis of a re-opening of assessment: appears to us to be, to ensure that a party cannot get away by willfully making a false or untrue statement at the time of orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the survey action, one statement of ijal Ashok Shah was recorded on oath wherein he admitted that he is engaged in the business of providing accommodation entries to the beneficiaries in lieu of commission. Bijal Ashok Shah also disclosed the modus operandi employed by him to provide the entries to the beneficiaries . Bijal Ashok Shah, in his statement, has also named the writ applicant herein as one of the recipients of the accommodation entries. All these facts were not before the Assessing Officer at the time of finalization of the search assessment. It is a settled position of law that the adequacy of the reasons provided by the Assessing Officer fall outside the review powers and remains within the domain of the Assessing Officer at this stage of the proceedings where only a preliminary finding under section 147/148 has been made. It is necessary to reiterate that we are at the stage of the validity of the notice under section 148/147. The inquiry at this stage is only to see whether there are reasonable grounds for the Income Tax Officer to believe and not whether the omission/failure and the escapement of income is established. It is necessary to keep this distinction in ..... 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