2021 0 Supreme(Guj) 69

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
J.B.PARDIWALA, ILESH J. VORA, JJ.
M.R. Organisation - Appellant
Versus
Income Tax Officer - Respondents
R/Special Civil Application No. 16265 of 2019, 16266 of 2019
Decided on : 07-01-2021

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.

Income Tax Act, 1961 - Section 148 - Civil Application – Taxation – Assessment - Case of Reopening of Assessment - Prayed to issue a writ of certiorari or a writ in nature of certiorari or any other appropriate writ, orders or directions quashing and setting aside impugned notice - Writ application is impugned notice for reopening of assessment for years as the authority has reason to believe that income chargeable for assessment years has escaped assessment within reasons assigned for reopening of assessment - Assessee has booked expenses in the names of various entities such as Sew Krishna Industries - Profit and loss account forming part of return of income filed by assessee that assessee has claimed huge commission expenses and other expenses whereas sundry creditors reflected in the balance sheet is to extent - These figures disclosed in profit and loss account and balance sheet buttress information that assessee has been inflating its expenses by booking bogus expenses without receiving any actual goods/services –

Finding of the Court:

It cannot be said that there is total non-application of mind on the part of the Assessing Officer while recording the reasons for reopening of the assessment - It also cannot be said that his conclusion was merely based on the observations and information received from the Investigation Wing as the Assessing Officer could be said to have applied his mind to the same. The Assessing Officer could not be said to have merely concluded without verifying the fact that it is case of reopening of the assessment - Whether there was sufficient or any tangible materials available on record for Assessing Officer to form the reasonable belief and whether there was 'live link' existing of material and the income chargeable to tax that escaped assessment, case on hand is not one, where it can be argued that the Assessing Officer on absolutely vague or unspecific information, initiated proceedings of reassessment without taking pains to form his own belief in respect of such materials –

Result: Writ applications discharged

Act Referred :
CONSTITUTION OF INDIA : Art.226
INCOME TAX ACT : S.142(1), S.143(1), S.143(3), S.147, S.148, S.148(2), S.151

Advocate Appeared :
For the Appellant : Mr SN Divatia, Adv.
For the Respondent : Mrs Mauna M. Bhatt, adv.

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