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TMI Blog2023 (2) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... ply was based only on technicalities. The unverified and unexplained transactions are to the tune of ₹156,45,19,154/-. Assessment framed u/s 153A - Second proviso to Section 153A of the Act will not come to the rescue of the petitioner for the reason that in terms thereof assessment or re-assessment pending for the assessment years in question on the date of initiation of search u/s 132 or making requisition u/s 132A of the Act shall abate. Admittedly, in the case in hand present re-assessment proceedings were not pending on the date when search was carried out at the premises of the petitioner. Notice in the case in hand for initiating re-assessment proceeding was issued on April 24, 2022 whereas search was carried out on August 31, 2015. As to whether an audit objection can constitute information on the basis of which re-assessment proceeding can be initiated, reference can be made to Explanation 1, Clause (ii) to second proviso of Section 148 of the Act. The aforesaid provision clearly provides that any audit objection to the effect that assessment in case of assessee for the relevant assessment year has not been made in accordance with the provisions of the Act is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the Department could reopen the case. Sufficiency or correctness of the material is not to be considered. The present case cannot be said to be a case of change of opinion for the reason that there is no finding recorded in the earlier assessment order passed under Section 153A of the Act, which was set aside on technical ground of non approval of the competent authority in terms of Section 153D of the Act. - WRIT TAX No. -1290 of 2022 - - - Dated:- 25-1-2023 - HON'BLE RAJESH BINDAL,CHIEF JUSTICE HON BLE J. J. MUNIR, JUDGE For the Petitioner : Mr. Dhruva Agrawal, Senior Advocate with Shubham Agrawal, Advocate For the Respondents : Mr. Gaurav Mahajan, Senior Standing Counsel for Income Tax Department ORDER 1. The petitioner has approached this Court praying for quashing of notice dated March 28, 2022 (Annexure-13) issued under Section 148A(b) of the Income Tax Act, 1961 (for short the Act ), notice dated April 24, 2022 (Annexure-15) issued under Section 148 of the Act and order dated April 24, 2022 passed by respondent no. 2 rejecting the objections raised by the petitioner against issuance of notice under Section 148A(b) of the Act. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the assessment for the same year cannot be reopened by issuing notice under Section 148 of the Act. In support of the arguments, reliance was placed upon judgments of Madhya Pradesh High Court in Ram Ballabh Gupta Vs. Assistant Commissioner of Income Tax and others ((2005) 199 CTR) and Gujarat High Court in Cargo Clearing Agency vs. Joint Commissioner of Income Tax ((2008) 218 CTR). 5. As far as merits of the controversy and challenge to the order granting permission for issuance of notice under Section 148 of the Act are concerned, it was submitted that the grounds mentioned in the order granting approval for the show cause notice is nothing else but change of opinion. In support of the argument, reliance was placed upon judgment of Hon ble the Supreme Court in Commissioner of Income Tax vs. Kelvinator of India Ltd ((2010) 228 CTR (SC) 488). At the time of block assessment after search was carried out all the issues and the material available, were considered. In fact, the entire process started after an audit objection, to which reply was given by the assessee explaining the reasons as to why the objection raised by the audit was not tenable. There was no fresh material ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax and another decided on June 2, 2022, to submit that merits of the controversy cannot be gone into at this stage. Once the competent authority had applied its mind while granting approval for reopening of the assessment, the merits of the controversy cannot be gone into. Special Leave Petition filed against the aforesaid order before Hon ble the Supreme Court also stands dismissed vide order dated September 2, 2022. 9. Heard learned counsel for the parties and perused the paper book. SCHEME OF INCOME TAX ACT FOR REASSESSMENT 10. Before we proceed to consider the arguments raised by the parties, we deem it appropriate to examine the scheme of the Act for reassessment as the same has undergone a change with effect from April 1, 2021. Position prior to April 1, 2021 11. In terms of Section 147 of the Act, existing prior to its amendment with effect from April 1, 2021, an Assessing Officer could initiate proceedings for reassessment for reasons to believe that any income chargeable to tax has escaped assessment. Explanation 2 of Section 147 provides certain instances which for the purpose of section were admitted to be a case where income chargeable to tax ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess there is information with the Assessing Officer which suggests that income chargeable to tax has escaped assessment. The prerequisite is only availability of information, suggesting that income has escaped assessment. Such an exercise of power has to be with prior approval of the specified authority. 19. In Explanation 1 to the aforesaid Section, meaning of words information with the Assessing Officer which suggests that income chargeable to tax has escaped assessment , has been defined. It includes objection raised by the CAG to the effect that assessment for the relevant assessment year has not been made in accordance with the provisions of the Act. 20. The aforesaid provision has undergone a change vide Finance Act, 2022 with effect from April 1, 2022. Clause (ii) of Explanation 1, now contain words any audit objection instead of the words any final objection raised by the CAG . The condition is information in the form of audit objection to the effect that assessment has not been framed in accordance with the provisions of the Act. The relevant clauses are reproduced hereunder : Explanation 1-For the purposes of this section and section 148A, the information w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 148 of the Act. After the substantial amendments carried out in the Act, it now provides that the proceedings can be initiated in case where income chargeable to tax has escaped assessment. Proviso to Section 148 of the Act provides that before issuing such notice, the Assessing Officer should have information which suggests that the income chargeable to tax has escaped assessment. In terms of Clause (ii) of Explanation 1, meaning has been assigned to the term information suggesting that income chargeable to tax has escaped assessment to include even an audit objection. In the case in hand as well, notice under Section 148 of the Act has been issued on the basis of an audit objection giving complete details as to how the income chargeable to tax has escaped assessment. Merely because in some of the show cause notices issued to the petitioner during the course of assessment proceedings after search, a brief reference was made to some information, which was not finally dealt with, will not absolve or will not come to the rescue of the assessee to claim that the issue has already been considered. It is for this reason that the audit objection was raised. 24. For the sake of conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,- (i) any information in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time; (ii) any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act; or (iii) any information received under an agreement referred to in Section 90 or Section 90A of the Act; or (iv) any information made available to the Assessing Officer under the scheme notified under Section 135A; or (v) any information which requires action in consequence of the order of a Tribunal or a Court. Explanation 2.-For the purposes of this section, where,- (i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nished, if any, in response to the show-cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires: Provided that the provisions of this section shall not apply in a case where,- (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed therefrom. The chats and messages were thoroughly examined and on the basis of same, additions were made in the case of M/s Kanpur Organics Pvt. Ltd., wherein a sum of ₹1,51,00,000/- was surrendered. Also on the basis of the said material, the assessments of other group assessees were framed. The contents of the information as such was not disputed by the petitioner. 27. The details of the persons to whom the cash has been delivered as per the information extracted from the text messages in the mobile of the petitioner, which forms part of the notice are extracted below: Date Message from whom received Consent Pally/specifying message Transaction Amount 23.05.2014 Sonu Kanpur 23 Aaye hai a/c mein 2300000 10.01.2015 Arvind Mittal UBI RKD Chq. No.033805 250000 12.01.2015 -do- Kamleshji 10mt (Rs.Ten Crores using Ten Rs.note No.63m356014 for hawala transfer) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -do- Arun Kumar 1300000 -do- Vandana Saini 500000 03.07.2015 -do- 27 kg i.e. Rs.2700000 Rs.10 note no.29B524554 2.700000 30.6.2015 -do- Sneha Kurele 145000 28.06.2015 -do- Jeetu Bhai Ko 25 Subhasji ke a/cmay bol do 2500000 19.06.2015 -do- 10 Rs. Note45T i.e. Rs. 45 crore 450000000 20.05.2015 -do- Kolkata Rajkumarji Rs.2 note no.04D609437 for 40 kg i.e. transfer of hawala fund of Rs. 40 lacs 4000000 20.05.2015 -do- Prasanta Mondal, Kolkata Rs. 10 note no.77m690699 for 40 kg i.e. transfer of hawala fund of Rs. 40 lacs 4000000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Using of Rs.10 note no.31c584165 04.04.2015 -do- Qnt. Of Dev Shankar Pandey Sulabh Shares:37500 Shares @91 27.03.2015 -do- Send 10500 from Abhishek Agarwal 25.03.2015 -do- Brahmavarta Infraheights Pvt Ltd. Transfer hawala fund 45 KG i.e. Rs.45 lacs 4500000 25.03.2015 Brahmavarta Infraheights Pvt Ltd. RTGS for 20 KG i.e. Rs.20 Lacs Transfer Hawala fund of Rs.20 lacs 2000000 26.03.2015 -do- Gyandeep Khemka Co. (Vikash Agarwal, Vikash Agarwal, HUF Renuka Agarwal) 4793250 27.03.2015 -do- Abhishek Agarwal Send 10500 i.e. Rs.10,50,000/- decoding 1050000 28.03.2015 -do- Hariom HDFCR520150328613( (4330 FOR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Suraj Rs.10 note no.18S 066136for 50Kg. i.e. Rs. 50 Lacs 5000000 -do- Suraj Rss 10 note no.53p974097 for 50Kg. i.e. Rs. 50Lacs 5000000 17/03/2015 -do- Prashant Mondal Rs.50 note no.8AH386946 for 50kg. i.e. 50 Lacs 5000000 12/03/2015 -do- Jai Sharma RTGs managed 40 ka 4000000 -do- Kothari 50000 share ka matter -do- Gabajee For 10 kg note of Rs.10 no. 60k487337 6000000 11/03/2015 -do- Deoraji For 15 Note of Rs.10 no.23a137127 1500000 03/03/2015 -do- Deendayalji Rs.15 Note of Rs.5 no. 40c799140 1500000 24/02/2015 -do- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For 7 Box 7 Lacs 700000 25/08/2015 Lala Recd. 350Cheq Old account Che 91.3 4 Cr 41 Lacs 30Th 44130000 24/07/2015 Subhash Ghosh A/c no.37641089 Credited Rs. 40 Lacs through RTGS Rodic; and this a/c debited by 60 Lacs 30/07/2015 to Sanjeevani Fer. 60 Lacs 6000000 08/08/2015 VM FROMSC A/c no.623xxxx8673 credited Rs. 50 Lacs on 20/08/2015 and debited Rs. 20 Lacs on 26/08/2015 and Rs. 10 Lacs debited on 28/08/2015 50 Lacs 5000000 26/08/2015 S Baj Suresh Kumar Rs. 102240 ManishGoel HUF 110160 Anuj K Singh 195300 Richa Singh 195600 603300 603300 20/08/2015 Arvind Rs 5 Note no, J5B779015 5 Lacs 500000 28/0/2015 -do- Arun Kumar, New Delhi Vandana Saini Arun Kumar HUF Sanjay Kumar (Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11994000/- 19/03/2015 Sanjiv Srivastava No of share to purchase will be decided by so that the profit on sale next year will be as below: Profit to be allocated @ 9.00 to twelve persons of Surendra Gupta and others 108 Lacs 1Cr. 8 Lacs 10800000/- 22/06/2015 A Kurele Physical Shares of 320000 of Modi Udyog Ltd. Account used Ocian Advisery Pvt. Ltd. a/c 600350116274 HDFC Bank and New Wave Commo Deal Pvt Ltd. 600350116508 - - 08/04/2015 R Kant Rs. 10 ka Note no. 87A075453 for 2.5 Peti 2.5Lacs 250000/- 28/07/2015 Karva Vivek 10 for 10 days and 168000 11 Lacs 68Thousand 1168000 23/03/2015 Harish Gupta,Orai Usha Devi 3 Lacs, Ram Asrey Gupta 3 Lacs, Rajendra Kumar Gupta 1.5 Lacs 7Lacs 50THousond 750000 26 27/05/2015 -do- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initial assessment. The petitioner had not explained the entries as put to him in the show cause notice issued under Section 148(b) of the Act. His reply was based only on technicalities. The unverified and unexplained transactions are to the tune of ₹156,45,19,154/-. Section 153A of the Act 29. As far as assessment of the petitioner framed under section 153A of the Act is concerned, in the appeal filed against the order, Commissioner of Income Tax (Appeals) has upheld the order of assessment. Appeal filed before Income Tax Appellate Tribunal, Lucknow Bench B , Lucknow (hereinafter referred to as the Tribunal ) was allowed vide order dated October 7, 2021 on the ground that there was violation of provisions of Section 153D of the Act with reference to prior approval of Additional Commissioner of Income Tax before passing the order of assessment. The opinion of the Tribunal was that the process of granting mechanical approval under Section 153D of the Act vitiated the entire proceedings. The Department filed Income Tax Appeal No. 86 of 2022 against the aforesaid order before this Court, which was dismissed on December 12, 2022, upholding the order passed by the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord at different levels in the Department as the assessment order is passed with approval of the higher authorities, there was no scope for initiation of fresh proceedings for re-assessment under Section 148 of the Act, in our opinion, even this argument is also to be noticed and rejected. In support of the argument no provision of law as such has been cited except second proviso of Section 153A of the Act, in terms of which only pending proceeding abate. Only reference was made to the judgment of Gujarat High Court passed in Cargo Clearing Agency s case (supra). A plain reading of the aforesaid judgment shows that it is based on the fact that at the time of framing block assessment after search there is detailed examination of the record even at the higher level, hence, no scope is left for raising the issue again by initiating proceeding under Section 148 of the Act. However, in the case in hand, it is undisputed case on record that the order of assessment passed in case of the petitioner under Section 153A of the Act was set aside only on the ground that there was no application of mind by the higher authorities for granting approval under Section 153D of the Act. And the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round that the reasons recorded by the Assessing Officer proceeded on the same basis on which the Assessing Officer initially desired to make additions but which failed on account of setting aside the order of assessment, would not preclude the Assessing Officer from carrying out the exercise of reopening of the assessment. In the present case, facts are peculiar. It is not as if the Assessing Officer after noticing certain discrepancies in the return of the assessee, slept over his right to undertake the scrutiny assessment. The scrutiny assessment was initiated by issuance of notice under section 143(2) of the Act on 23.9.2013. It was also dispatched for service to the assessee on 24.9.2013 by Speed Post on the last known address. The Commissioner (Appeals) however, held that there was no proof of service of notice and since section 143(2) requires service of notice, the assessment was framed without complying with the mandatory requirements. 21. We may refer to some of the decisions on the point. In case of A G Group Corporation (supra), the Court noticed that at one point the Revenue had reopened the assessment of the assessee. However, such assessment failed on the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment or re-assessment proceedings, notice under Section 143(2) was not served on the assessee within the statutory time/period. This was a valid ground to quash the first/original assessment/re-assessment order, but it cannot be a ground to quash the re-assessment proceedings, which have been initiated afresh after recording reasons to believe. 37. It is the settled position of law that prima facie availability of material is sufficient for reopening of the reassessment proceedings and the sufficiency and correctness of the material is not to be considered at that stage. In the case of Raymond Woollen Mills Ltd. Vs. ITO and other ((1999) 236 ITR 34 (SC)) even though it was a case where reasons were required to be recorded in writing, Hon ble the Supreme Court opined that only prima facie material has to be seen on the basis of which the Department could reopen the case. Sufficiency or correctness of the material is not to be considered. The issues can be examined in detail during the assessment proceedings. Relevant paragraph thereof is extracted below: 3. In this case, we do not have to give a final decision as to whether there is suppression of material facts by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 91) 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is reason to believe , but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. Pvt. Ltd. (1996) 217 ITR 597 (SC); Raymond Woollen Mills Ltd. v. ITO (1999) (236) ITR 34 (SC). 39. The present case cannot be said to be a case of change of opinion for the reason that there is no finding recorded in the earlier assessment order passed under Section 153A of the Act, which was set aside on technical ground of non approval of the competent authority in terms of Section 153D of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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