Point of Law: The Court should be guided by the reasons recorded for the reassessment and not by the reasons or explanation given by the Assessing Officer at a later stage in respect of the notice of reassessment. To put it in other words, having regard to the entire scheme and the purpose of the Act, the validity of the assumption of jurisdiction under Section 147 can be tested only by reference to the reasons recorded under Section 148(2) of the Act and the Assessing Officer is not authorized to refer to any other reason even if it can be otherwise inferred or gathered from the records. The Assessing Officer is confined to the recorded reasons to support the assumption of jurisdiction. He cannot record only some of the reasons and keep the others upto his sleeves to be disclosed before the Court if his action is ever challenged in a court of law.

ORDER :

(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)

1. Since the subject matter of both the writ applications is the same and the assessee is also the same, those were taken up for hearing analogously and are being disposed of by this common order.

2. For the sake of convenience, we treat the Special Civil Application No.16265 of 2019 as the lead matter.

3. By this writ application under Article 226 of the Constitution of India, the writ applicant - a partnership firm has prayed for the following reliefs:

“(a) To issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, orders or directions quashing and setting aside the impugned notice dated 30.03.2019 [Annex.A] issued by the Respondent proposing to reopen the completed assessment of the Petitioner for A.Y. 2012-13 and the order of objection dt.23-7-2019 (Annexure-B) as well as the reassessment order, if any passed in consequence to the impugned notice.

(b) to call for the records of the proceedings, look into them and be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing the impugned notice as well as the order of objection dt.23-7-2019 (Annx.B).

(c) Pending the hearing and final disposal of this petition to maintain status quo in the matter and ask the Respondent and its subordinate not to take any action or to do anything in furtherance and pursuance of this impugned notice.

(d) To allow this Petition with cost.”

4. The subject matter of challenge in this writ application is the impugned notice dated 30.03.2019 (Annexure A to this writ application) issued by the Income Tax Department under Section 148 of the Income Tax Act, 1961 (for short “the Act, 1961”) for reopening of the assessment for the years 20122013 as the authority has reason to believe that the income chargeable for the assessment years 201213 has escaped assessment within the meaning of Section 147 of the Act, 1961. The reasons assigned for reopening of the assessment are as under:

“3. The information has been personally analyzed along with all relevant date/documents. From the information received, it is seen that the assessee has booked expenses in the names of various entities such as Sew Commercial Co. Ltd. Saytam Steel Industries, Krishna Industries, Krunal Industries ( to name a few) etc. As per the information, the assessee has also claimed bogus commission expenses.

4. On receipt of the information, necessary verification/inquiry has been made with the return of income filed by the assessee. ITS data available on ITBA/ITD for A.Y. 2012-13. It is seen from the profit and loss account forming part of return of income filed by the assessee that the assessee has claimed huge commission expenses of Rs.85,72,637/and other expenses of Rs.1,15,26,078/-whereas the sundry creditors reflected in the balance sheet is to the extent of Rs.1,74,17,702/-. These figures disclosed in the profit and loss account and balance sheet buttress the information that the assessee has been inflating its expenses by booking bogus expenses without receiving any actual goods/services.

5. In view of above findings, I have reasons to believe that this is a case where income chargeable to as has escaped assessment by an amount of more than Rs.1 lakh and it is a fit case for reopening the assessment as the income chargeable to tax has escaped within the meaning of section 147 of the Act.

6. In this case, a return of income was filed for the year under consideration, but no scrutiny assessment u/s. 143(3) of the Act was made. Accordingly, in this case, the only requirement to initiate proceedings u/s. 147 is reason to believe which has been recorded above in above paras. It is pertinent to mention here that in this case, the assessee has filed return of income for the year under consideration, but no assessment as stipulated u/s. 2(4) of the Act was made and the return of income was only processed u/s. 143(1) of the Act. In view of the above, provisions of clause (b