Point of Law: It is well settled that the validity of the notice of reopening would be judged on basis of reasons recorded by the Assessing Officer for issuance of such notice. It would not be permissible for the Assessing Officer to improve upon such reasons or to rely upon some extraneous material to support his action.

ORDER :

J.B.PARDIWALA, J.

1. By this writ application under under Article 226 of the Constitution of India, the writ applicant has prayed for the following relief:-

“(A) This Hon'ble Court be pleased 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 148 notice at Annexure-B and the order disposing the objections at Annexure-I.

(B) This Hon'ble Court be pleased to issue a writ of mandamus or any other appropriate writ, order or direction asking the respondent not to proceed further in pursuance of section 148 notice at Annexure-B and the order rejecting the objections at Annexure-I.

(C) Pending the hearing and final disposal of this application, this Hon'ble Court be pleased to stay further proceedings in pursuance of section 148 notice at Annexure-B.”

2. The subject matter of challenge in the present litigation is to the notice of reopening of the assessment issued under Section 148 of the Income Tax Act, 1961 (for short 'the Act') for the A.Y. 2015- 2016.

3. It is not in dispute that the return of income was filed for the year under consideration, but no scrutiny assessment under Section 143 (3) of the Act, was made. The return, in such circumstances, was processed under Section 143 (1) of the Act. The reasons assigned by the Assessing Officer to the writ applicant by way of communication dated 20.06.2018 are as under:-

Reasons for reopening :-

“1. The assessee by name Shri Purshottambhai B. Pitroda Prop. Of M/s. J.P.Fabricators had filed his return of income for A.Y. 2015-16 on 30.09.2016 and declared total income of Rs.2,76,15,370/-. The assessee is engaged in business of mining contractors in Prop. Concern of M/s. JP Fabricators.

2. The information has been received vide letter No.DCIT/CC-1(1)/Venus Government Resolution./InOAO/2017-18 dated 09.02.2018 from DCIT, Central Circle-1(1), Ahmedabad regarding involvement of M/s. J.P.Fabricators prop. Concern of Shri Purshottam B. Pitroda in accommodation entry amounting to Rs.1,40,00,000/- through Venus Group in F.Y. 2014-15 i.e. A.Y. 2015-16.

3. On analysis of information received, it is observed that a search u/s. 132 of the Income Tax Act, 1961 was conducted in the case of Venus Group of Ahmedabad on 10.03.2015 at various premises and incriminating documents were seized. Documents related to unaccounted cash transactions of the Venus Group were seized from the Terrace of Crystal Arcade, C.G.Road, Ahmedabad. On analysis of documents seized and their correction, it was found that unaccounted cash transactions were first recorded on cash vouchers.

On the basis of recording made on these cash vouchers, the entries were recorded on the day cash book.

On the basis of close examination and collaboration with various documents seized during the course of search it emerges that cash vouchers. On the basis of recording made on these cash vouchers, the entries were recorded on the day cash book. On the basis of close examination and collaboration with various documents seized during the course of search it emerges that (i) These expenses are incurred as per the dates mentioned on the bills/vouchers issued by the third party for availing goods/services by Venus group/Vaswani family. (ii) The estimate mentioned on the seized cash vouchers are not the estimate but are actual expenses incurred and payments have been made to meet these expenses. (111) The amounts mentioned on the seized documents are in coded form and written by omitting two zeros 1.e., 100 times less than the actual amount paid for these expenses. (iv) The dates mentioned on the seized documents are in coded form. They are written in such a way to represent 10 year back period from the actual date of availing goods/services. There are various transactions recorded in the seized documents including the unaccounted cash book seized from Terrace of Crystal Arcade C.G, Road Ahmedabad with the noting as ‘Against EC’.