Point of Law : Sufficiency of the evidence or material is not open to scrutiny by the Court but the existence of the belief is the sine qua non for a valid exercise of power.

JUDGMENT :

ASHOKKUMAR C. JOSHI, J.

1. This petition, under Article 226 of the Constitution of India, is filed by the petitioner – Priya Blue Industries Private Limited – assessee seeking to quash and set aside the Notice dated 30.03.2019 issued by the respondent authority under section 148 of the Income Tax Act, 1967 (herein after referred to as “the Act”) for the Assessment Year 2012-13, as it has reason to believe that the income chargeable to tax for the assessment year under consideration has escaped assessment within the meaning of section 147 of the Act.

2. The facts in nutshell of the case of the petitioner are that the petitioner is a Company incorporated under the Companies Act, 1956 and engaged in the business of ship breaking. During the Financial Year 2011-12, relevant to Assessment Year 2012-13 (i.e. the year under consideration), the petitioner made total sales of Rs.26,266.19 lakh, which included the sales made to M/s. Harsh Enterprise also for which, the entire sales proceeds were received during the year under consideration. The same was duly reflected in the Audited Annual Accounts. The case of the petitioner for the year under consideration was selected for scrutiny assessment and various details were called by the then Assessing Officer, which were furnished by the petitioner. The then Assessing Officer also called for various details pertaining to TCS vide notice dated 07.03.2014, against which the petitioner, vide communication dated 23.08.2014 supplied the details including acknowledgment of E-TCS quarter-wise returns along with transaction register which duly included details as to sales made to M/s. Harsh Enterprise during the year under consideration. That, while framing assessment under section 143(3) of the Act vide order dated 05.03.2015, though after due examination, the Assessing Officer had not disturbed the sales declared by the petitioner, the respondent authority issued notice dated 30.03.2019 under section 148 of the Act seeking to reopen the case of the petitioner for the year under consideration. In response to the said notice, the petitioner company filed its Rol on 24.04.2019 and also requested to supply the reasons for reopening, which were supplied vide letter dated 15.08.2019. A perusal of the same revealed that the case of the petitioner was reopened on the count that the petitioner is the beneficiary of the accommodation entries to the tune of Rs.1,06,16,632/-. The case of the respondent was that, cash was deposited in the bank account of M/s. Kiran Trading (a third party), which in turn, was followed by transfers to the account of M/s. Harsh Enterprise (also a third party) and subsequently, funds were transferred by M/s. Harsh Enterprise to various other parties. Accordingly, the department presumed that M/s. Harsh Enterprise was engaged in providing accommodation entries and since, the petitioner had received Rs.1,06,16,632/- from M/s. Harsh Enterprise, the department presumed the said transaction to be accommodation entries and hence, the department had reason to believe that such income at the hands of the petitioner company had escaped assessment. Against the reasons accorded, the petitioner, vide letter dated 20.09.2019, raised objections against reopening on various factual as well as the legal grounds, however, the respondent authority disposed of the said objections vide order dated 15.10.2019 inter alia holding that the reopening was justified and valid in the eyes of law. Being aggrieved, the petitioner is before this Court by way of this petition.

3. We have heard, learned senior advocate Mr. Tushar Hemani for learned advocate Ms. Vaibhavi Parikh for the petitioner and learned advocate Mrs. Mauna M. Bhatt, learned senior standing counsel for the respondent.

3.1 The learned senior advocate for the petitioner has vehemently and fervently argued that the case on hand is a peculiar type of case, wherein, the revenue/respondent authority is calling a person who was already taxed a