AHMEDABAD HIGH COURT
PCIT VS MANZIL DINESHKUMAR SHAH
07-05-2018
R/TAX
APPEAL NO. 451 of 2018
With
R/TAX
APPEAL NO. 457 of 2018
With
R/TAX
APPEAL NO. 458 of 2018
1.
These Tax Appeals arise out of common background, we may record facts from Tax
Appeal No.451 of 2018.
2.
Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal
dated 16.06.2017 raising following questions for our consideration:
“[A]
Whether the Appellate Tribunal was right in law and on facts in admitting the
additional ground challenging the reopening of assessment which was not raised
earlier in assessment proceedings as well as before the CIT(A) and therefore
was not emerging from the order of the CIT(A)?
[B]
Whether the Appellate Tribunal was right in law and on facts in quashing the
reassessment order ?”
3.
Respondent assessee is an individual and is a proprietor of one trading firm.
For the assessment year 2009-10, the return filed by the assessee was accepted
without scrutiny. To reopen such assessment, the Assessing Officer issued a
notice. In order to issue the notice, he had recorded following reasons:
“The
assessee has filed his return of income in ACIT, CPC, Bangalore vide
acknowledgment No.96931140300909 for A.Y. 2009-10 on 30/09/2010 declaring total
income Rs. 3,44,587/ which was processed u/s. 143(1) of the I.T. Act on
11/08/2010. However no scrutiny assessment u/s. 143(3) was made.
In
this case the information conveyed by the DGIT (Inv.) Mumbai dated 22/02/2013 addressed
to DGIT(Inv.)Ahmedabad alongwith the Board's confidential letter dated
21/02/2013 to take actions in respect of cases of nogenuine Billsinformation
emanating out of VAT Department, Mumbai to the CCITIII, Ahmedabad. The
CCITIII, Ahmedabad vide letter dated 20/03/2013 forwarded the same to the
CITV, Ahmedabad. The same was forwarded to the O/o. The Jt. CIT, Range11,
Ahmedabad by the CITA'badV, Ahmedabad vide letter No.VIT
V/Ahd/Inf.VAT/201213/6675 DATED 21/03/2013.
The
Jt. CIT. Range11, Ahmedabad vide letter No.Jt.CIT/R11/NonGenuine Bills/2012
13/6675 dated 22/03/2013 forwarded the same to this office. The information
received from the VAT Department, Mumbai relating to bogus purchases of each
beneficiary firm from Hawala Biller. On verification of information it is found
that the assessee MANJIT DINESHKUMAR SHAH has also made purchases of
Rs.3,21,74,262/ during the F.Y. 200809 (A.Y. 2009-10) from Hawala Dealer as
information received by this office. It needs deep verification. I have therefore
firm reason to believe that the income chargeable to tax has escaped assessment
for the A.Y. 2009-10 due to the omission or failure on the part of the assessee
to disclose fully and truly all material facts necessary for assessment. Thus,
the case needs to be reopened by issuing notice u/s 148 of the I.T. Act,
1961.”
4.
The Tribunal by the impugned judgment held that the notice was invalid, against
which view of the Tribunal, the Revenue has preferred this appeal.
5.
Mrs.Bhatt for the department vehemently contended that Assessing Officer had
sufficient material to enable him to form a belief that income chargeable to
tax has escaped assessment. After verifying the information emerging from the
record he was primafacie of the opinion that the assessee had shown purchases
from Hawala dealers. In other words, the purchases were bogus. Original
assessment was made under section 143(1) of the Income Tax Act, 1961 ('the Act'
for short). The Tribunal committed an
error in invalidating the reassessment
proceedings.
6.
By now it is well settled that even in case where the original assessment is
made without scrutiny, the requirement of the Assessing Officer forming the
belief that income chargeable to tax has escaped assessment, would apply.
Reference in this respect can be made of the judgment in case of Inductotherm
(India) P. Ltd. v. M. Gopalan, Deputy Commissioner of IncomeTax reported in [2013]
356 ITR 481 (Guj).
7.
It is equally well settled that the notice of reopening can be supported on the
basis of reasons recorded by the Assessing Officer. He cannot supplement such
reasons. The third principle of law which is equally well settled and which
would apply in the present case is that reopening of the assessment would not
be permitted for a fishing or a roving inquiry. This can as well be seen as
part of the first requirement of the Assessing Officer having reason to believe
that income chargeable to tax has escaped assessment. In other words, notice of
reopening which is issued barely for making fishing inquiry, would not satisfy
this requirement.
8.
With this background, we may revert to the reasons recorded by the Assessing
Officer. Information from the Value Added Tax Department of Mumbai was placed
for his consideration. This information contained list of allegedly bogus
purchases made by various beneficiaries from Hawala dealers. Assessee was one
of them. As per this information, he had made purchases worth Rs.3.21 crores
(rounded off) from such Hawala dealers during the financial year 201011. According
to the Assessing Officer, this information 'needed deep verification'.
9.
If on the basis of information made available to him and upon applying his mind
to such information, the Assessing Officer had formed a belief that income
chargeable to tax has escaped assessment, the Court would have readily allow
him to reassess the income. In the present case however, he recorded that the
information required deep verification. In plain terms therefore, the notice
was being issued for such verification. His later recitation of the mandatory
words that he believed that income chargeable to tax has escaped assessment,
would not cure this fundamental defect.
10.
Learned counsel for the Revenue however urged us to read the reasons as a whole
and come to the conclusion that the Assessing Officer had independently formed
a belief on the basis of information available on record that income in case of
the assessee had escaped assessment. Accepting such a request would in plain
terms require us to ignore an important sentence from the reasons recorded viz.
'it needs deep verification'.
11.
Before closing, we can only lament at the possible revenue loss. The law and
the principles noted above are far too well settled to have escaped the notice
of the Assessing Officer despite which if the reasons recorded fail the test of
validity on account of a sentence contained, it would be for the Revenue to
examine reasons behind it.
12.
Both these Tax Appeals are dismissed.
--------------------------------------------------------------------------------
No comments:
Post a Comment