The main legal point established is that the Assessing Officer's belief for the reassessment of income under section 148 of the Income Tax Act is based on subjective satisfaction and the existence of cogent facts suggesting a possibility of escapement of income.

JUDGMENT :

(N.V. Anjaria, J.)

Heard learned advocate Mr. Darshan Patel for the petitioner and learned advocate Mr. Varun Patel for the respondent, at length.

2. By filling the present petition under Article 226 of the Constitution, the petitioner has prayed to set aside notice dated 28.3.2021 issued by the Assessing Officer under section 148 of the Income Tax Act, 1961 seeking to reopen the assessment of the petitioner for the Assessment Year 2017- 2018 stating that he had reasons to believe that income of the petitioner chargeable to tax for the assessment year under consideration had escaped tax within the meaning of section 147 of the Income Tax Act, 1961.

3. Noticing the basic facts, it was stated that the petitioner is a family trust, which filed the petition through one of the trustees-the authorised signatory. It is the case that the petitioner Trust filed return of income for the Assessment Year 2017-2018 on 28.2.2018 disclosing income of Rs. 72,750/-. While according to the petitioner, it disclosed all material facts fully, the notice under section 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was received by the petitioner. Thereby, the assessment was sought to be reopened.

3.1 On 12.7.2021, the respondent provided reasons recorded by the Assessing Officer for seeking to reopen the assessment. The petitioner filed objections to the reasons recorded on 26.7.2021, which were rejected by the respondent by order dated 14.12.2021. The petitioner has also prayed to set aside the said order disposing of the objections by rejecting them. Under section 142(1) of the Act, notice came to be issued to the petitioner to furnish the details.

3.2 The following were the reasons recorded by the Assessing Officer communicated to the petitioner,

“Information was made available to this office arising out of assessment in the case of Smt. Paru M. Jaykrishna (PAN: ADIRPJ9354P) for the AY 2017-18. During the course of assessment proceedings, it was found that the assessee has claimed exemption u/s 10(38) of the Act of Rs. 59,54,83,421/- on sale of shares of M/s Aksharchem (India) Ltd. and M/ s. Asahi Songwon Colours Ltd.. The promoters of both the companies are family members of Jaykrishna Group i.e. Munjal Mrugesh Jaykrishna, Paru Mrugesh Jaykrishna and Gokul Mrugesh - Jaykrishna The promoters have offloaded their holdings in both the companies through BSE/NSE during the FY 2016-17. On the basis of details filed by the assessee it has been noticed that the shares sold in FY 2016-17 were originally allotted to them under promoter quota at par, long back. In the AY 2017-18, the promoter's holding was transferred to Trusts created in the name of (1) Mrugesh Jaykrishna Family Trust-1, (2) Munjal M. Jaykrishna Family Trust, (3) Mrugesh Jaykrishna Family Trust-2 and (4) Gokul M Jaykrishna Family Trust, through bulk deal (insider trading). The beneficiaries of both the Trust appears to be the promoter group itself. The assessee has calculated LTCG of Rs. 59,54,83,421/- on such transfer and claimed u/s 10(38) of the Act.”

3.3 Analysing the information collected as above, it was observed by the Assessing Officer inter alia that the assessee had undertaken transactions as per the above details, however, the same were not shown in the return of income. It was concluded that during the previous year relevant to the Assessment Year, the assessee was having income exceeding the taxable limit, however, the same was not reflected in the return of income filed by the assessee. It was stated that in light of the material on record, it was claimed that the assessee had not disclosed the taxable income in the return of income and therefore the income chargeable to tax to the tune of Rs. 86,53,31,770/- escaped the assessment.

3.4 Raising objections to the reasons recorded, the petitioner-assessee stated that it had filed return of income for the Assessment Year 2017-2018 and that as evident from the computation of income shown therein,