IMPORTANT POINT
The court established that reopening assessments requires a clear and valid reason to believe that income has escaped assessment, which was not present in this case.

ORDER :

Niral R. Mehta, J.

1. Heard learned advocate Mr. B.S. Soparkar for the petitioner and learned advocate Ms. Maithili Mehta for the respondent.

2. Rule returnable forthwith. Learned advocate Ms. Maithili Mehta waives service of notice of Rule for the respondent.

3. By these petitions, the petitioner has challenged the notices dated 30th March 2021 / 31st March 2021 issued under Section 148 of the Income Tax Act, 1961 (for short, “the Act”) by the respondent – Assessing Officer seeking to reopen the completed assessment for the Assessment Years 2014-15, 2015-16 and 2016-17.

4. The brief facts of the case are that the petitioner is a company registered under the Companies Act, 1956 and is assessed to tax regularly. The petitioner filed its return of income for the Assessment Years 2014-15, 2015-16 and 2016-27 declaring total income as under :

4.1 However, the petitioner paid tax on book profit under the MAT provisions of the Act as under :

4.2 The case of the petitioner was selected for scrutiny and assessment orders were passed under Section 143(3) of the Act assessing total income as under :

4.3 For the Assessment Year 2016-17, the petitioner preferred an appeal before the CIT(A) against the assessment order, which was partly allowed by order dated 8th January 2020.

4.4 Thereafter, the respondent issued notice dated 30th March 2021 / 31st March 2021 under Section 148(3) of the Act reopening the assessment for all the three assessment years on the basis of the information received on account of search conducted at the premises of one Mr. Hitesh Jain under Section 132 of the Act on 23rd May 2017. On the basis of the statement of Mr. Hitesh Jain, it was found that he was doing activity of providing accommodation entries to the various beneficiaries with the help of approximately 39 shell / papers concerns and they do not exist on the address provided and the petitioner was one of the beneficiaries.

4.5 The petitioner thereupon filed return of income and copies of reasons recorded were provided by the respondent – Assessing Officer. The petitioner raised various objections and requested the respondent to drop the proceedings. The said objections were disposed of by the respondent rejecting the same.

5. Being aggrieved, the petitioner has preferred these petitions.

5.1 Learned advocate Mr. Soparkar for the petitioner submitted that the impugned notices are issued by the respondent – Assessing Officer without application of mind and only on the basis of the information is self-satisfactory and no inquiry is required. It was also submitted that the respondent – Assessing Officer ought to have formed “reason to believe” so as to show and communicate as to why and what grounds / cause the income has escaped assessment. It was submitted that there is no live link between the material found and the escapement of income inasmuch as in absence of any tangible material on record, the Assessing Officer would not assume the jurisdiction to reopen the assessment.

5.2 It was submitted that the sanction granted for reopening the assessment is in mechanical manner as the reas