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TMI Blog2024 (12) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Assessing Officer for opening of the assessment. In case of Mehrunnisa Mohamed Fazal Maniar [ 2021 (3) TMI 1013 - GUJARAT HIGH COURT ] and Backbone Projects Ltd. [ 2021 (8) TMI 382 - GUJARAT HIGH COURT ] as well as Kantibhai Dharamshibhai Narola [ 2021 (2) TMI 102 - GUJARAT HIGH COURT ] the information was available with the Assessing Officer from the concern controlled by Jigesh Shah and Sanjay Shah from which the assessee was beneficiary of accommodation entry. It therefore, appears that in the facts of the case, the reasons recorded by the AO are absolutely vague based upon the borrowed satisfaction and without application of mind. With regard to the alleged accommodation entry from Mahavir Sales Corporation amount as reflected in the reasons recorded for both the Assessment Years which clearly shows that there is non application of mind on the part of the Assessing Officer to reopen the assessment on the basis of such information. It is also pertinent to note that the petitioner-Assessee has requested forming the basis of the reasons recorded, however, the same was never provided. On the contrary, in the order disposing of the objections, the Assessing Officer has recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Jignesh Shah and Sanjay Shah. During the course of search action various incriminating documents were found and seized from the premises of Shri Jignesh Shah and Sanjay Shah. It is further worth to mention here that, on going through the information available in Insight Portal, it can be seen that, Investing Wing, Ahmedabad during the investigation found that both Jignesh Shah and Sanjay Shah are managing and controlling multiple companies and concerns which are not carrying out any genuine business activity. These concerns are involved into activity of providing accommodation entries of various kinds such as unsecured loans, share premium, bogus gains, contrived losses etc. Further, as per Inspector Report, various concerns were found to be non-existent at their addresses. Moreover, the directors of companies/persons in whose names the said concerns are registered, admitted by way of filing affidavits that the companies/concerns are not carrying out genuine business activities and are engaged into providing accommodation entries through Jignesh Shah and Sanjay Shah. On perusal of information so received from Investigation Wing, Ahmedabad, it is noticed that the assessee F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment to the tune of Rs. 1,06,67,277/ for the AY 2016-17 within the meaning of Section 147 of the Income-tax Act, 1961.I have, therefore, reason to believe that this is a fit case for reopening the assessment u/s. 147 of the Act and for issue of if notice u/s. 148 of the income-tax Act, 1961 5.3 For the Assessment Year 2017-18, the reasons recorded are as under:- Issues as per reasons recorded for reopening As per the information received from the credible sources that Shri Chiragkumar B. Patel is in the business of providing accommodation entries to various persons/entities by way of transferring the funds through RTGS/internal fund transfer. Huge amount of funds have been routed through the account by receiving and making RTGS and internal fund transfer coupled transaction volume not matching with the declared profile/turnover of the customer and customer reluctant to provide details of the transactions in the account has given rise to suspicious. On carefully examining the information available in Insight Portal, it can be seen that, the entire funds credited by way of RTGS or by transfer got immediately debited by transfer or by clearing on the same day. The balance in the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is one of the beneficiaries of taking accommodation entry of unsecured loan to tune of Rs. 1,06,67,277/- in the form of fictitious loan from Shri Jignesh Shah and Sanjay Shah to the tune of Rs. 6,90,006/- and Rs. 99,77,271/- from M/s. Mahavir Sales Corporation. As the details of transactions made available on ITBA was found to be correct, a notice u/s. 148 of the Act dated 30.03.2021 was issued to the assessee, after following the due procedure and Notice under Section 148 was served upon the assessee. 5.7 Whereas, the first paragraph of the objections order for Assessment Year 2017-2018 reads as under:- In the instant case, the assessee M/s. FILCO Tram Centre Private Ltd., filed return of income for the AY 2017-18 on 29-10-2017 declaring income of Rs. 80,48,820/-. The assessee's return for A.Y. 2017-18 was processed u/s. 143 (1) of the I.T. Act, 1961. Subsequently, the case was selected for scrutiny under CASS. The assessment u/s.143(3) was completed on 30.11.2019, determining a total income of Rs. 80,48,820/-. The DGIT (System), New Delhi had made data available in case of the assessee that it has obtained accommodation entry of Rs. 99,77,271/- from M/s. Mahavir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvocate Mr. Hemani invited the attention of the Court to the response of the Assessing Officer in para 5.12.1 in the order disposing of the objections in respect of the denial of the petitioner of having a transaction with the parties mentioned in the reasons recorded, to the effect that the Assessing Officer has stated that whether or not the loan availed from Jignesh Shah and M/s. Mahavir Sales Corporation is bogus or not is an issue of merit and shall be looked into only during the course of the assessment proceedings. 7.5 It was therefore, submitted that when the petitioner has denied any transactions with the parties mentioned in the reasons recorded, the verification of such transaction or whether the petitioner has entered into such transactions cannot be looked into at the time of reassessment as the Assessing Officer has failed to point out any prima facie material to link the information in his possession with the petitioner-assessee. 7.6 It was therefore, submitted that the entire reasons recorded by the Assessing Officer are based upon the borrowed satisfaction and there is no prima facie opinion formed for escapement of income. It was therefore, submitted that the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction under Article 226 of the Constitution of India. 7.9 In support of his submissions, reliance was placed on the decision of this Court in the case of Mehrunnisa Mohamed Fazal Maniar Vs. Income Tax Officer reported in [2021] 127 taxmann.com 547 (Gujarat) and the decision in case of Backbone Projects Ltd. v. Assistant Commissioner of Income Tax reported in (2021) 437 ITR 144 to submit that in case of accommodation entry from Jignesh Shah and Sanjay Shah, this Court has not entertained the petition challenging the notice issued under Section 148 of the Act in the facts of those cases. It was further submitted that similarly as the petitioner is alleged to have being beneficiary of accommodation entry from Jignesh Shah and Sanjay Shah as per the reasons recorded, no interference is required to be made by this Court in the impugned notices. 8.1 In the rejoinder, learned Senior Advocate Mr. Hemani for the petitioner submitted that no reliance can be placed on the material except what is stated in the reasons recorded. In support of his submission, the reliance was placed in the case of Kantibhai Dharamshibhai Narola Vs. Assistant Commissioner of Income Tax reported in (2021) 436 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra), the information was available with the Assessing Officer from the concern controlled by Jigesh Shah and Sanjay Shah from which the assessee was beneficiary of accommodation entry. It therefore, appears that in the facts of the case, the reasons recorded by the Assessing Officer are absolutely vague based upon the borrowed satisfaction and without application of mind. 9.1 With regard to the alleged accommodation entry from Mahavir Sales Corporation is concerned, the amount of Rs. 99,77,271/- is reflected in the reasons recorded for both the Assessment Years which clearly shows that there is non application of mind on the part of the Assessing Officer to reopen the assessment on the basis of such information. It is also pertinent to note that the petitioner-Assessee has requested forming the basis of the reasons recorded, however, the same was never provided. On the contrary, in the order disposing of the objections, the Assessing Officer has recorded that the petitioner availed the accommodation entry from Mahavir Sales Corporation which was denied by the petitioner in the objections. 9.2 We have perused the materials in form of report referred to and relied by the learned Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naged by Shri Chiragkumar B. Patel has given accommodation entries of Rs. 99,77,271/- to the assessee M/s. Filco Trade Centre Pvt. Ltd. During the enquiry it is noticed that Shri Chiragkumar. B. Patel is in the activity of providing accommodation entries to various persons/entities by way of transferring funds through RTGS/Internal fund transfer. The entire fund credited by U of RTGS or by transfer got immediately debited bytransfer or by clearing on the same day. The balance in the account is very low or Nil at the end of the day. The assessee company is one of the beneficiaries which has availed/obtained accommodation entries to the tune of Rs. 99,77,271/- from M/s. Mahavir Sales Corporation. From the above it is clear that M/s. Mahavir Sales Corporation is indulging in providing accommodation entries without carrying out any real business activities and the assessee is one of the entity who got the accommodation entries to the tune of Rs. 99,77,271/- without carrying out any real business activities. 9.3 Thus, even on the averments made on oath the respondent has reiterated that the petitioner has availed the accommodation entry from Mahavir Sales Corporation to the tune Rs. 99, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfied-a postmortem exercise of analysing the materials produced subsequent to the reopening will not make an inherently defective reassessment order valid. (v) The crucial link between the information made available to the Assessing Officer and the formation of the belief should be present. The reasons must be self evident, they must speak for themselves. (vi) The tangible material which forms the basis for the belief that income has escaped assessment must be evident from a reading of the reasons. The entire material need not be set out. To put it in other words, something therein, which is critical to the formation of the belief must be referred to. Otherwise, the link would go missing. (vii) The reopening of assessment under Section 147 is a potent power and should not be lightly exercised. It certainly cannot be invoked casually or mechanically. (viii) If the original assessment is processed under Section 143 (1) of the Act and not Section 143(3) of the Act, the proviso to Section 147 will not apply. In other words, although the reopening may be after the expiry of four years from the end of the relevant assessment year, yet it would not be necessary for the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opening, certain other facts may come to light. There is no ban or any legal embargo under Section 147 for the Assessing Officer to take into consideration such facts which come to light either by discovery or by a fuller probe into the matter and reassess the assessee in detail if circumstances require. (xv) The test of jurisdiction under Section 143 of the Act is not the ultimate result of the inquiry but the test is whether the income tax officer entertained a bona fide belief upon the definite information presented before him. Power under this section cannot be exercised on mere rumours or suspicions. (xvi) The concept of change of opinion has been treated as a built in test to check abuse. If there is tangible material showing escapement of income, the same would be sufficient for reopening the assessment. (xvii) It is not necessary that the Income Tax Officer should hold a quasi judicial inquiry before acting under Section 147. It is enough if he on the information received believes in good faith that the assesee's profits have escaped assessment or have been assessed at a low rate. However, nothing would preclude the Income Tax Officer from conducting any formal inquiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35. The power to reopen a completed assessment under Section 147 of the Act 1961 has been bestowed on the Assessing Officer, if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. However, this belief that income has escaped assessment has to be the reasonable belief of the Assessing Officer himself and cannot be an opinion and/ or belief of some other authority. On the basis of the information by itself received from another agency, there cannot be any reassessment proceedings. However, upon receipt of the information/material received from other source, the Assessing Officer is required to consider the material on record in case of the assessee by applying his mind and thereafter is required to form an independent opinion on the basis of the material on record that the information has bearing on the income of the assessee and such income has escaped assessment. Without forming such an opinion, solely and mechanically relying upon the information received from other source, there cannot be any reassessment. It is also established principle of law that if a particular authority has been designated to record his/her satisfaction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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