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TMI Blog2022 (8) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... into whether there was sufficient material available on record for the AO 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 AO, on absolutely vague or unspecific information, initiated the proceedings of reassessment without taking the pains to form his own belief in respect of such materials. - R/Special Civil Application No. 17787 of 2018 - - - Dated:- 22-3-2022 - Honourable Mr. Justice J.B.Pardiwala And Honourable Ms. Justice Nisha M. Thakore For the Petitioner(s) : Darshan R Patel For the Respondent(s) : Mrs Kalpanak Raval ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs; (A) Issue a writ of certiorari and/or a writ of mandamus and/or any other writ direction or order to quash and set aside the impugned notice dated 27.03.2018 under section 148 of the Income Tax Act6, 1961 annexed hereto at Annexure-E along with preliminary order dated 8.10.2018 anne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -BF- 1 IMPOUNDED from the premise of having M/s.Rekvina Laboratories at 328-329, Paradise Complex, Sayajiaganj, Vadodara. These pages contain of transactions in respect of a particular land located at Survey No.391/1 and 392, Gotri, Vadodara. 3. On perusal of the inquiry report, it is noticed that as per agreement regd. No.0365 date 05/05/2010 (which found impounded as per Annexure-BF-1 dated 23.09.2015 during the search action at the residential premise of Shri Mukesh Shah at 36, Samptro Colony, Alkapuri, Vadodara from 22.09.2015 to 23,09.2015 between Shri Amit Mukesh Shah, Surbhit Mukesh Shah and Rajesh Jayantilal Patel to sell the land. It is clearly mentioned at para-3 of the agreement that Rs.1.25 crore cash has been paid by Shri Rajesh Jayantilal Patel, Prop. M/s. Bhoomi Developers, Dr. Yagnik Road, Rajkot to Amit Mukeshbhai Shah Surbhit Mukeshbhai Shah, Scanned copy of the agreement is reproduced as under; On verification, it is noticed that impounded pages contain the details of both cash and cheque. It is clearly observed from the impounded pages, impounded agreement, consensus agreement and Dastavej that the cheque entries clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are clearly matched. The cheque entry are clearly matching with what the sellers of land and confirming parties. Impounded pages contain the details of both cash and cheque. It is observed from the impounded impounded agreement, consensus agreement and Dastavej that the cheque entries clearly match. For better clarity comparison of Para 4(I) of Consensus agreement between the parties and the impounded page no.71 of Annexure-BF-1 impounded during survey at the premises of M/s. Rekvina Pharmaceuticals are reproduced herewith. Thus, it is clear that the assessee was given his shares in this land which was mentioned in the impounded pages, both cash of Rs.1,50,00,000/- and Rs.5,55,00,000/- by cheque. From the impounded material it is clear that the assessee has received total cash of Rs.1,50,00,000/- during the year under consideration i.e. A.Y. 2011-12. However, no verification of the balance sheet submitted by the assessee for A.Y. 2011-12, the assessee has not shown these transactions in his books of accounts. Thus it is clear that the assessee has received huge cash of Rs.1,50,00,000/- during the year under consideration i.e. A.Y.2011-12 which is required to be taken under tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 pertinent 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 have been discovered with due diligence, accordingly provision of explanation 1 of Section 147 of the Act. It is important to highlight here that material facts relevant for the assessment on the issue under consideration were not filed during the course of assessment proceedings and the same may be embedded in annual report, audited P L A/c balance sheet and books of account in such a manner that if would require due diligence by the AO to extract these information. For afore-stated reason, it is not a case of change of opinion by the AO. In this case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies-Instructions to Subordinate Authorities. Instruction No.1/2011 [F.No.187/12/2010-IT(A-1)], Dated 31.01.2011. References have been received by the Board from a large number of taxpayers, especially from mofussil areas, that the existing monetary limits for assigning cases to ITOs and Dcs/Acs/ is causing hardship to the taxpayers, as it results in transfer of their cases to a DC/AC who is located in a different station, which increases their cost of compliance. The Board had considered the matter and is of the opinion that the existing limits need to be revised to remove the above mentioned hardship; An increase in the monetary limit is also considered desirable in view of the increase in the scale of trade and industry since 2001, when the present income limits were introduced. It has therefore been decided to increase the monetary limits as under; Income declared (Mofussil areas) Income declared (Metro cities) ITOs Acs/Dcs ITOs DCs/ACs Corporate returns Upto Rs.20 Lacs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty is discharged, it is upto the assessing officer to inquire further and draw the necessary inferences while completing the assessment. 14 . As to what can be the valid grounds for re-opening an assessment has been the subject matter of several decisions of the supreme court. In Income Tax Officer, Calcutta Ors. vs. Lakhmani Mewal Das , 1976 (3) SCR 956 , the Supreme Court held that the reasons to believe must be based on objective materials, and on a reasonable view. The court held as follows: The grounds or reasons which lead to the formation of the belief contemplated by Section 147(a) of the Act must have a material bearing on the question of escapement of income of the assessee from assessment because of his failure or omission to disclose fully and truly all material facts. Once there exist reasonable grounds for the Income-tax Officer to form the above belief, that would be sufficient to clothe him with jurisdiction to issue notice. Whether the grounds are adequate or not is not a matter for the Court to investigate. The sufficiency of grounds which induce the income-tax Officer to act is, therefore, not a justiciable issue. It is, of course, open to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be per se reason to re-open. 6. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. 7. One must treat the concept of change of opinion as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. 17. It is therefore, clear that the basis for a valid reopening of assessment should be the availability of tangible material, which can lead the AO to scrutinize the returns for the previous assessment year in question, to determine, whether a notice under Section 147 is called for. 18. The decision to reopen is based on tangible information, which wa ..... 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