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IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD
DEVENDRA KUMAR UPADHYAYA, SUBHASH VIDYARTHI, JJ.
Rochana Agarwal C/o Ved Prakash Agarwal – Petitioner
Versus
Assistant Commissioner of Income Tax, Sitapur and Others – Respondents
Writ Tax No. 37 of 2022
Decided On : 28-03-2022
Income Tax Act, 1961 - Section 148 - Constitution of India,1950 - Article 226 - Assess/reassess income/loss - Petitioner has challenged validity of a notice issued by Assistant Commissioner of Income Tax - Petitioner has also challenged order passed by ACIT rejecting her objections against initiation of re-assessment proceedings - Petitioner’s case is that on he had filed an income-tax return for assessment year for a total income of amount before Income Tax Officer-3 (5) and return of petitioner was processed on same day under Section 143 (1) of Act - On Income Tax Officer-3 (5) had issued a notice to petitioner under Section 133 (6) of Act calling for certain information pertaining to assessment year - Petitioner submitted requisite information through her reply filed on and Income Tax Officer accepted submissions of petitioner made in her reply and dropped proceedings -Para 24.
Finding of the Court:
From a combined review of judgments of this Court it follows that an Income Tax Officer acquires jurisdiction to reopen assessment under Section 147(a) read with Section 148 of Income Tax Act, 1961 only if on basis of specific reliable and relevant information coming to his possession subsequently he has reasons which he must record to believe that by reason of omission or failure on the part of assessee to make a true and full disclosure of all material necessary for his assessment during concluded assessment proceedings, any part of his income profit or gains chargeable to income tax has escaped assessment - He may start reassessment proceedings either because some fresh come to light which were not previously disclosed or some information with regard to previously disclosed comes into his possession which tends to expose the untruthfulness of those - In such situations it is not a case of mere change of opinion or drawing of a different inference from same as were earlier available but acting on fresh information - Since belief is that of Income Tax Officer sufficiency of reasons for forming belief is not for Court to judge but it is open to an assessee to establish that there in fact existed no belief or that belief was not at all a bona fide one or was based on vague irrelevant and nonspecific information.
Result: Writ Petition dismissed.
JUDGMENT :
SUBHASH VIDYARTHI, J.
1. Heard Shri Suyash Agrawal and Ms. Surangama Sharma, learned counsel for the petitioner and Shri Manish Misra, learned counsel for the respondents.
2. By means of this writ petition filed under Article 226 of the Constitution of India, the petitioner has challenged the validity of a notice dated 31.03.2021 issued by the Assistant Commissioner of Income Tax, Sitapur New (hereinafter referred to as ‘ACIT’) under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’) proposing to assess/reassess the income/loss for the assessment year 2015-16, stating therein that he has reasons to believe that petitioner's income chargeable to tax has escaped assessment and directing the petitioner to submit a return for the said assessment year. The petitioner has also challenged the order dated 02.09.2021 passed by the ACIT rejecting her objections against the initiation of re-assessment proceedings under Section 147 read with Section 148 of the Act.
3. The petitioner’s case is that on 30.03.2016, he had filed an income-tax return for the assessment year 2015-16 for a total income of Rs. 10,69,430/- before the Income Tax Officer-3 (5), Lakhimpur and the return of the petitioner was processed on the same day under Section 143 (1) of the Act. On 16.05.2019, the Income Tax Officer-3 (5), Lakhimpur Kheri had issued a notice to the petitioner under Section 133 (6) of the Act calling for certain information pertaining to the assessment year 2017-18. The petitioner submitted the requisite information through her reply filed on 04.06.2019 and the Income Tax Officer accepted the submissions of the petitioner made in her reply and dropped the proceedings.
4. On 31.03.2021, the ACIT issued the impugned notice under Section 148 of the Act to the petitioner in respect of the assessment year 2015-16 stating that he had reason to believe that the petitioner's income chargeable to tax for the said assessment year has escaped assessment within the meaning of Section 147 of the Act. On 10.04.2021, the petitioner asked for being provided with the reasons for re-opening of the assessment. The petitioner's contention is that the ACIT required her to file a return in compliance of the notice dated 31-03-2021 under Section 148 of the Act and only then the reasons for re-opening of the assessment would be supplied to her. On 31.03.2021, the petitioner filed a return in compliance to the aforesaid notice dated 31-03-2021 under Section 148 of the Act before Income Tax Officer-3 (5), Lakhimpur Kheri. On 01.06.2021, the ACIT supplied a copy of the approval under Section 151 of the Act containing the reasons for initiating the proceedings under Section 147 read with Section 148 of the Act and also containing the satisfaction of the Approving Authority for issuing notice under Section 148 of the Act.
5. The ACIT has recorded that during investigation, it was observed that the M/s KCGP Share Broking Service Pvt. Ltd. has been used to provide bogus accommodation entries to various beneficiaries. The assessee has sought to bring his unaccounted money into his regular books and/or convert his unaccounted money into camouflaged capital gain/loss and claiming it to be exempt under Section 10 (38), or setting of such bogus loss against genuine taxable profits.
6. The ACIT has further noted that the Assessing Officer has gone through the income tax return and other related documents of the assessee and has observed that the assessee is one of the beneficiaries of M/s KCGP Share Broking Services Pvt. Ltd. which is engaged in providing accommodation entry to the beneficiaries. The assessee is a beneficiary of receiving bogus accommodation entries to the tune of Rs. 6,94,540/-. The ACIT has expressed the view that the assessee has introduced her own undisclosed income in her books of account by way of accommodation entries by showing artificial transactions to make the same valid transactions though it is simply a planning to introduce
Under section 147 of the Act the proceedings for the reassessment can be initiated only if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any....
Point of Law : Court satisfied that there was prima facie material available on record before the assessing officer for issuing a notice for reassessment and the notice under Section 148.
The court emphasized the need for tangible material to believe that income had escaped assessment and held that the power to grant approval for re-opening an assessment is coupled with a duty and can....
Reopening of assessment under Section 148 is invalid if based on materials already available during the original assessment, constituting a mere change of opinion without fresh evidence.
Point of law: It is no doubt true that the Court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income Tax Officer on the point as to whethe....
The 'reason to believe' for reassessment must be based on tangible material with a direct nexus to the formation of the belief, and reassessment cannot be made on a change of opinion.
It is settled law that, at the stage of Section 148 of the Act, what is required is “reason to believe”, but not the established fact of escapement of income. This aspect has been considered by the A....
Reopening of assessment under the Income Tax Act requires tangible new material; mere change of opinion is insufficient.
It is a settled position of law that reopening of case under Section 147 of the act, after expiry of 4 years, cannot be justified unless the income chargeable to tax has escaped assessment by reason ....
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