Reopening of assessment under the Income Tax Act requires new material evidence; reliance on previously considered information is insufficient.

JUDGMENT :

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned advocate Mr.S.N.Divatia for the petitioner and learned Senior Standing Counsel Mr.Varun K.Patel for the respondent no.1.

2. Rule returnable forthwith. Learned Senior Standing Counsel Mr.Varun K.Patel waives service of notice of rule on behalf of respondents.

3. Learned Senior Standing Counsel Mr.Varun Patel has tendered the affidavits on behalf of the respondent no.2, pursuant to the order dated 24.07.2024, one of the affidavit is filed by the Additional Commissioner of Income Tax Range-2(1)- Ahmedabad and another is filed by the Additional Commissioner of Income Tax(Audit) Ahmedabad, who were holding the charge of Joint Commissioner of Income Tax, Range-2(1)-Ahmedabad at the relevant time.

4. Learned advocate Mr.Patel referring the to averments made in the aforesaid affidavits affirmed on 4th August, 2024, pointed out that both the Officers were under tremendous pressure due to faceless regime to be implemented from 01.04.2021 and therefore inadvertent mistake has been committed by granting sanction for reopening of the assessment for issuance of the notice dated 30.03.2021.

5. Considering such explanation, without going into the veracity of the same for according the sanction, this petition is disposed of on the facts and submissions made by the learned advocate for the petitioner on merits.

6. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice under Section 148 of the Income Tax Act, 1908 (for short ‘the Act’) dated 30.03.2021 for the Assessment Year 2017-18.

7. The reasons recorded for reopening of the Assessment are as under:

“Issues as per reasons recorded for reopening

As per the information received from the credible sources that a search action u/s.132 of the Income-tax Act, 1961 was carried on 05.02.2019 in the case of Kaushal Group. During the course of search action various incriminating documents were found and seized from the premises of Kaushal Group (Kaushal Limited). It is further worth to mention here that, on going through the information available in Insight Portal, it can be seen that, Investigation Wing, Ahmedabad during the investigation found that the Kaushal Group are managing and controlling multiple companies and concerns which are not carrying out any genuine business activity. These concerns are involved into activity of providing accommodation entries of various kinds such as bogus Long Term Capital Gain/loss or Short Term Capital Gain/Loss, Unsecured Loans, Share Premium, Bogus Gains, Contrived Losses etc.

On perusal of information so received from Investigation Wing, Ahmedabad, it is noticed that the assessee Shah Mohitbhai Somchand (HUF) (AADHS3845Q) is one of the beneficiaries who has availed/obtained accommodation entries to the tune of Rs.6,53,36,784/- from Kaushal Limited (AABCK7885P) under various head such as bogus Long Term Capital Gain/loss or Short Term Capital Gain/Loss, Unsecured Loans, Share Premium, Bogus Gains, Contrived Losses etc. who has controlled and managed by Kaushal Group of companies. Failure on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment, the income of the assessee has escaped assessment to the tune of Rs.6,53,36,784/- for the AY 2017- 18 within the meaning of Section 147 of the Income-tax Act, 1961. I have, therefore, reason to believe that this is a fit case for reopening the assessment u/s. 147 of the Act and for issue of notice u/s. 148 of the Income-tax Act, 1961.”

8. It appears on perusal of the aforesaid reasons that the Assessing Officer has formed a reason to believe in view of the accommodation entries of Rs.6,53,36,784/- from Kaushal Limited under various heads such as Long Term Capital Gains/Loss or Short Term Capital Gains/Loss, Unsecured Loans, Share Premium, Bogus Gains, Contrived Losses etc. Thus the Assessing Officer was not sure as to on what basis and what type of accommodati