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TMI Blog2025 (2) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitute information which may warrant examination as to whether a concluded assessment for any previous AY is liable to be reopened, surely that material which was wholly unconnected with AY 2019-20, would not sustain the invocation of Section 148 for that year.
Thus, allow the instant writ petition and quash the order u/s 148A (d) as well as the notice under Section 148 of the Act. X X X X Extracts X X X X X X X X Extracts X X X X ..... the recitals which appear in the introductory part of that order and which are reproduced hereinbelow: "On perusal of the information as reported in INSIGHT (High Risk CRIU/VRU under Non-PAN) Portal of the Income-Tax Department during the FY 2018-19 (relevant AY 2019-20). The following information has been received in the name of the assessee Sh. Harvinder Singh: Assessment Year Information Description with information value 2019-20 Investment of Rs. 250 Crs in Real Estate and 6 Crs. In Luxury Cars It is alleged that in the last 2-3 years the assesee had bought properties in Delhi in Delhi-NCR worth Rs. 250 crores and 15 luxury cars worth 5-6 Crores in his and his company's name. He has a lot of places of keep his back money including his own residence ad other houses and his associates (here below) houses and invest on behalf of top officials/ bureaucrats/ judicial officers as well. His personal staff of work and residence is are aware of all his whereabouts of his black money and other illegal works. He is a partner in a company namely M/s AJS Builders. This company is involved in frauds and they both duped hundreds of investors. Today Ms. Madhu Singh (MD of the company) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department. The issue is being flagged by insight and assessee was confronted with the allegations and no roving inquiring was made." 7. We find ourselves unable to sustain the commencement of reassessment action for AY 2019-20 in light of the abject failure on the part of the AO, even at this stage and before us, to have placed any material which may have even remotely indicated or sustained the formation of belief that income pertaining to AY 2019-20 had escaped assessment. While the AO does appear to have also doubted the acquisition of various other assets in the previous years, that surely would not sustain or commend to us as constituting material that would be pertinent or relevant to AY 2019-20. 8. While the other material which has now come or fallen into the hands of the AO may, hypothetically speaking, constitute information which may warrant examination as to whether a concluded assessment for any previous AY is liable to be reopened, surely that material which was wholly unconnected with AY 2019-20, would not sustain the invocation of Section 148 for that year. 9. We bear in mind the well-settled position that the reasons for the formation of opinion cannot be of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment for the assessment year 2006-2007 could have been reopened. Upon the return of income being filed by the assessee both in the electronic form and subsequently in the conventional mode, the assessee received an intimation under section 143 (1). The Assessing Officer would have been legitimately entitled to issue a notice under section 143 (2) within the statutory period. That period has expired. We must clarify that the non-issuance of a notice under section 143 (2) does not preclude the Assessing Officer from reopening the assessment under section 147. For that matter, as has been held by the Supreme Court in Asst. CIT v. Rajesh Jhaveri Stock Brokers P. Ltd., (2007) 291 ITR 500 (SC), the failure of the Assessing Officer to take steps under section 143 (3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when an intimation under section 143 (1) has been issued. But it is also a settled principle of law that when the Assessing Officer issues a notice under section 148, at that stage the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief (Rajesh Jhaveri (supra). At th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason to believe', Parliament reintroduced the said expression and deleted the word 'opinion' on the ground that it would vest arbitrary powers in the Assessing Officer. 12. If the test of whether there exists any tangible material were to be applied in the present case, it would be evident that the Assessing Officer has not acted within his jurisdiction in purporting to reopen the assessment in exercising the powers conferred by section 148. There was a disclosure clearly by the assessee that it is a body corporate incorporated in Singapore, the principal business of which is to invest in Indian securities; that the assessee is a tax resident of Singapore and that the profits which the assessee realised from its transactions in securities constituted its profits from business. The assessee stated that it had no permanent establishment in India as defined in article 5 of the DTAA and that based on the provisions of article 7 the profits of Rs. 131.70 crores from transactions in Indian securities were not liable to tax in India. The only basis on which the assessment is sought to be reopened is on the assumption that the provisions of section 115AD would stand attracted. That is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice." 12. As is manifest from the above, the Proviso again ties the initiation of action to the existence of information which already exists or is in the possession of the AO and on the basis of which it comes to form the opinion that income liable to tax has escaped assessment. The provision thus fortifies our view that the foundational material alone would be relevant for the purposes of evaluating whether reassessment powers were justifiably invoked. Accordingly, and for all the aforesaid reasons we find ourselves unable to sustain the impugned reassessment action." 10. We, accordingly, and for all the aforesaid reasons, allow the instant writ petition and quash the order under Section 148A (d) as well as the notice under Section 148 of the Act, both dated 26 April 2023. 11. This order, however, shall be without prejudice to the right of the AO to comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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