Deputy Commissioner of Income-tax, Central Circle-I, Jodhpur/ Commissioner of Income-tax, Central Circle, Jaipur v. Sambhav Energy Limited
[Citation -2017-LL-0411-69]

Citation 2017-LL-0411-69
Appellant Name Deputy Commissioner of Income-tax, Central Circle-I, Jodhpur/ Commissioner of Income-tax, Central Circle, Jaipur
Respondent Name Sambhav Energy Limited
Court HIGH COURT OF RAJASTHAN AT JODHPUR
Relevant Act Income-tax
Date of Order 11/04/2017
Assessment Year 2011-12
Judgment View Judgment
Keyword Tags reassessment proceedings • income chargeable to tax • condition precedent • reason to believe • escaped assessment • incriminating document
Bot Summary: The entire process of search and survey was carried out on 10.2.2010 and on 6.1.2011 a notice under Section 153-A of the Act of 1961 was issued to petitioners Mukesh Modi, Daksha Kumari Jain and Bharat Das Vaishnav. The Assessing Officer on 22.3.2013, while recording reasons to reopen the assessment under Section 147 of the Act of 1961, issued notices under Section 148 of the Act of 1961. As already stated, learned Single Bench accepted the version advanced by the assessee with specific finding that the notices issued under Section 147/148 of the Act of 1961 are not satisfying the pre-requisites as prescribed. To examine the entire issue, we have looked into the notices issued under Section 147/148 of the Act of 1961. SAW-1201/2014 Learned Single Bench in detail has considered the entire law relating to pre-conditions for reassessment under Section 147/148 of the Act of 1961, but in our considered opinion has not looked into the notices under Section 148 of the Act of 1961 so minutely. Looking to the document aforesaid we are of considered opinion that the Assessing Officer had adequate reason to believe to issue notice under Section 148 of the Act of 1961. Learned Single Bench failed to appreciate the notice concerned in light of the scope and spirit of the pre- conditions for issuing a notice under Section 148 of the Act of 1961.


HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Spl. Appl. Writ No. 1201/2014 1. Deputy Commissioner of Income Tax,, Central Circle-I, Jodhpur. 2. Commissioner of Income Tax,, Central Circle, Jaipur. Appellants Versus Sambhav Energy Limited, Having Its Office At 5,, Damodaran Street, Kellys, Chennai (Tamil Nadu)- 600010 Through Pradeep Bhandari, General Manager. Respondent Connected With D.B. Spl. Appl. Writ No. 1003 / 2014 Deputy Commissioner & Anr. Appellant Versus Daksha Kumari Jain Respondent D.B. Spl. Appl. Writ No. 1005 / 2014 Deputy Commissioner & Anr. Appellant Versus Sambhav Energy Lit. Respondent D.B. Spl. Appl. Writ No. 1006 / 2014 Deputy Commissioner & Anr. Appellant Versus Nakoda Land Developers. Respondent D.B. Spl. Appl. Writ No. 1007 / 2014 Deputy Commissioner & Anr. (2 of 9) [ SAW-1201/2014] Appellant Versus Krishna Dairy Product, Respondent D.B. Spl. Appl. Writ No. 1019 / 2014 Dy. Commissioner Of I.T. Jod., & Anr. Appellant Versus Sambhav Energy Limited Respondent D.B. Spl. Appl. Writ No. 1020/2014 Deputy Commissioner & Anr. Appellant Versus Mukesh Modi. Respondent D.B. Spl. Appl. Writ No. 1021 / 2014 Deputy Commissioner & Anr. Appellant Versus Prakash Beverages Respondent D.B. Spl. Appl. Writ No. 1044 / 2014 Deputy Commissioner & Anr. Appellant Versus Nakoda Land Developers. Respondent (3 of 9) [ SAW-1201/2014] D.B. Spl. Appl. Writ No. 1045 / 2014 Dy. Commissioner Of I.T. Jod., & Anr. Appellant Versus Bharat Das Vaishnav Respondent D.B. Spl. Appl. Writ No. 1046 / 2014 Dy. Commissioner Of I.T. Jod., & Anr. Appellant Versus Nakoda Land Developers ----Respondent D.B. Spl. Appl. Writ No. 1047 / 2014 Deputy Commissioner & Anr. ----Appellant Versus Prakash Beverages ----Respondent D.B. Spl. Appl. Writ No. 1202 / 2014 1. Deputy Commissioner of Income Tax,, Central Circle-I, Jodhpur. 2. Commissioner of Income Tax,, Central Circle, Jaipur. ----Appellants Versus Prakash Beverages, Having Its Office At,, Krishna Nagar, Padeeb, Sirohi, Rajasthan Through Its Partner Smt. Daksha Jain W/o Shri Virendra Kumar Modi Aged About 47. Respondent For Appellant(s) : Mr. K.K.Bissa For Respondent(s) : Ms. Archana for Mr. Sanjay Nahar (4 of 9) [ SAW-1201/2014] HON'BLE MR. JUSTICE GOVIND MATHUR HON'BLE MR. JUSTICE VINIT KUMAR MATHUR Judgment Per Hon ble Govind Mathur,J. 11/04/2017 These appeals are before us to examine correctness of judgment dated 11.4.2014, passed by learned Single Bench in batch of writ petitions led by SB Civil Writ Petition No.1140/2014, Mukesh Modi v. Dy. Commissioner of Income Tax, Jodhpur,. By judgment impugned learned Single Bench, while accepting petitions for writ, quashed notices issued under Section 147/148 of Income Tax Act, 1961 (hereinafter referred to as Act of 1961 ) to petitioner assessees. As per learned Single Bench expression reason to believe as referred under Section 148 of Act of 1961 means existence of rational and intelligible nexus between reasons and belief, so that on such reason no one properly instructed on facts and law could reasonably entertain belief. On basis of this ratio learned Single Bench held that while issuing notices under Section 147/148 of Act of 1961 Assessing Officer had no reason to believe that any income chargeable to tax has escaped assessment for assessment year and Assessing Officer simply for his own verification and to clear his doubts and suspicion initiated proceedings impugned. (5 of 9) [ SAW-1201/2014] We are in complete agreement with interpretation accepted by learned Single Bench pertaining to expression reason to believe and on basis of that only we too have examined validity of notices in question. Before coming to that, it would be appropriate to mention certain necessary facts in brief. search as per Section 132 of Act of 1961 and survey under Section 133-A were simultaneously conducted by investigation wing of Income Tax Department at business/residential premises of Modi @ Adarsh Group of Sirohi. Petitioners Mukesh Modi, Daksha Kumari Jain and Bharat Das Vaishnav were eventually covered under search action and survey was conducted relating to Prakash Beverages, Nakoda Land Developers and Sambhav Energy. During course of search and survey certain documents/loose papers were seized and impounded. entire process of search and survey was carried out on 10.2.2010 and on 6.1.2011 notice under Section 153-A of Act of 1961 was issued to petitioners Mukesh Modi, Daksha Kumari Jain and Bharat Das Vaishnav. notice under Section 153 of Act of 1961 was issued to Krishna Dairy by placing reliance upon certain documents found during course of search. While undertaking proceedings under Section 153-A of Act of 1961 Assessing Officer scrutinised material seized during course of search and survey and after consideration of same issued consolidated questionnaire to assessees concerned. (6 of 9) [ SAW-1201/2014] On 23.12.2011 assessment under Section 153-A read with Section 143(3) of Act of 1961 came to be completed by making certain additions of income tax in hands of Mukesh Modi, Daksha Kumari Jain and Bharat Das Vaishnav. assessments made by Assessing Officer as above are admittedly subject matter of appeals said to be pending before Commissioner of Income Tax (Appeals). Assessing Officer on 22.3.2013, while recording reasons to reopen assessment under Section 147 of Act of 1961, issued notices under Section 148 of Act of 1961. While giving challenge to notices aforesaid petitioners contended that no cogent reasons were recorded by Assessing Officer and whatever reasons recorded suggest that Assessing Officer has assumed jurisdiction to initiate reassessment proceedings on its mere ipse dixit to clear suspicions and for verification. It is also important to mention that respondent petitioners responded notice dated 22.3.2013 on 31.5.2013 with following preliminary objections:- a. condition precedent for section 147 is that there must be reason to believe that income chargeable to tax has escaped assessment and belief entertained by ITO must not be arbitrary or irrational. b. It must be based on objective reasons which are relevant and material. belief must be in good faith and not merely be pretence. (7 of 9) [ SAW-1201/2014] c. act of ITO must be based on evidence and not on mere suspicion, imagination and speculation. d. In addition to above requirements there should be some direct nexus between information in possession and conclusion drawn by authority concerned and any conclusion based on any irrelevant and extraneous material would vitiate its effect. e. There has to be fresh material/information in possession of assessing authorities for purpose of formation of belief that income of any particular assessment year has escaped assessment. f. burden is on revenue to establish that there was income chargeable to tax, which has escaped assessment. As already stated, learned Single Bench accepted version advanced by assessee with specific finding that notices issued under Section 147/148 of Act of 1961 are not satisfying pre-requisites as prescribed. To examine entire issue, we have looked into notices issued under Section 147/148 of Act of 1961. Assessing Officer, at threshold, noticed that during course of search several incriminating documents alongwith cash, jewelery and other valuables were found and seized from various premises of group concerned. During course of survey inventory of consumable items, details of bank accounts, (8 of 9) [ SAW-1201/2014] cheque books found, was also prepared. material made available was not matched by survey team as same were not verifiable from records. He also noticed that cheque books, bank accounts etc. were belonging to various persons which are not connected with day to day business affairs of assessee. Assessing Officer also provided necessary details relating to dummy bills which were not taken into account earlier. By providing all necessary details Assessing Officer recorded that he had reason to believe that amount of Rs.10,37,22,520/- and various other amounts chargeable to tax escaped during assessment for account year 2010-11. From perusal of notice, it is apparent that reason to believe that income chargeable to tax has escaped assessment, is not mere suspicion but is based on good faith. Assessing Oficer has given complete details of documents which were not taken into consideration earlier. documents referred in notice are also sufficient to show direct nexus between information in possession and conclusion withdrawn by Assessing Officer. Assessing Officer though was not having fresh material for purpose of formation to believe that income of any particular assessment year has escaped assessment, but with all bonafides he noticed that certain documents escaped consideration and that resulted into escape of income chargeable to tax. (9 of 9) [ SAW-1201/2014] Learned Single Bench in detail has considered entire law relating to pre-conditions for reassessment under Section 147/148 of Act of 1961, but in our considered opinion has not looked into notices under Section 148 of Act of 1961 so minutely. Paras 3, 4, 5, 6, 7, 8 and 9 of notice in specific terms indicate material to arrive at conclusion to have bonafide belief that huge part of income which may be chargeable to tax was escaped. Looking to document aforesaid we are of considered opinion that Assessing Officer had adequate reason to believe to issue notice under Section 148 of Act of 1961. Learned Single Bench failed to appreciate notice concerned in light of scope and spirit of pre- conditions for issuing notice under Section 148 of Act of 1961. appeals, thus, deserves acceptance, hence, are allowed. judgment impugned dated 11.4.2014, passed by learned Single Bench, is set aside. writ petitions preferred by petitioner respondents are dismissed. (VINIT KUMAR MATHUR)J. (GOVIND MATHUR)J. MathuriaKK/PS Deputy Commissioner of Income-tax, Central Circle-I, Jodhpur/ Commissioner of Income-tax, Central Circle, Jaipur v. Sambhav Energy Limited
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