JUDGMENT
Bhargav D. Karia, J. – Heard learned advocate Mr. Darshan Gandhi for the petitioner and learned Senior Standing Counsel Mr. Varun K. Patel for the respondent.
2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Varun Patel waives service of notice of rule for respondent.
3. Having regard to the controversy arising in this petition in narrow compass, with the consent of the learned advocates for the respective parties, the matter is taken up for hearing.
4. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the assumption of the jurisdiction by the respondent-Assessing Officer to issue notice dated 30.03.2021 for reopening assessment for the Assessment Year 2017-18 under section 148 of the Income Tax Act,1961 [for short ‘the Act’].
5. The petitioner filed the return of income for the Assessment Year 2017-18 on 31.08.2017 declaring total income of Rs. 1,73,370/-. It is the case of the petitioner that on 20.02.2021, summons under section 131(1) of the Act was issued by the Deputy Director of Investigation/Assistant Director of Investigation, 2 (2), Ahmedabad, requiring the petitioner to provide various details asked in the said summons pertaining to the cash deposited in banks during demonetization period from 09,11,2016 to 31.12.2016.
5.1 The petitioner by reply dated 01.03.2021 submitted the details as called for. Thereafter, the petitioner received the impugned notice for reopening. The petitioner was also provided with the reasons recorded as under:
“REASONS FOR REOPENING OF THE ASSESSMENT U/S 147 OF THE INCOME-TAX ACT, 1964, In this case, the assessee has filed return of income for A. Y. 2017-18 declaring total income of Rs, 173370/on 31/08/2017.
2. The case of the assessee has been identified as potential case flagged by the Directorate of Income tax (Systems) after risk profiling based on enquiry reports and findings of the Directorate of Income tax (investigation) and Directorate of intelligence & Criminal Investigation. The information has been disseminated to this office through the Insight Portal wherein enquiry reports and findings have been uploaded by the field officers of the respective directorate. In this case, information has been received that during the year under consideration, as per details available on records, it is noticed that the assessee has made cash deposit during the demonetization period in its Bank Account of Rs. 56,07,000/-. As a outcome of enquiry / perusal and analysis of details available on records, it is noticed that the known source of cash deposit is not conclusively proved.
3. From the above details and Insight information available on the system for the year under consideration, it is found that the assessee has made transaction of cash deposit and source of the cash deposit is not proved.
4. The report is perused and having satisfied with the outcome and no further enquiry is necessary. I have gone through the information received and I have also gone through the material available on records. The ITBA/ITD data available in this office is also verified. The information and facts are found to be correct. On personal analysis of the data, prima facie, I have reason to believe that an amount of Rs. 56,07,000/- has escaped assessment within the meaning of section 147 of the I. T. Act. In view of this, the case is fit to be proceeded u/s, 147 and u/s.148 of the I. T. Act.
5. The assessee has filed return of income for year under consideration, which does not commensurate with the transactions found in information available with this office as stated above.
6. it is pertinent to mention here that the assessee filed return of income but chosen not to disclose fully and truly all particulars of income in the ITR filed as discussed above and no assessment was made in this case.”
5.2 The petitioner filed objections on 31.07.2021 explaining that the cash deposited during demonetization period is not Rs. 56,07,000/- as stated in the reasons recorded but it was Rs. 80,07,000/-. The petitioner also provided reconciliation of cash sales and cash deposits in the said reply.
5.3 However, the respondent-Assessing Officer, by order dated 27.10.2021, observing that the petitioner did not furnish any supporting and corroborative evidence showing direct nexus of cash deposited during the demonetization with the amount received from the customers and relying upon the decision of this Court in case of Purviben Snehalbhai Panchhigar v. Assistant Commissioner of Income Tax reported in [2019] (Gujarat) as well as decision of the Hon’ble Apex Court in case of CIT v. Rajesh Jhaveri Stock Brokers (P) Ltd reported in [2007] 316 (SC), rejected the case of the petitioner.
Being aggrieved, the petitioner has preferred this petition.
6. Learned advocate Mr. Darshan Gandhi for the petitioner submitted that impugned reasons recorded are based on incorrect facts and the impugned notice is issued just to carry out roving and fishing inquiry which is not permissible as per the settled legal position.
6.1 It was submitted that merely by stating that analysis of the details available on record and merely observing that known sources of cash deposit is not conclusively proved, cannot be the basis for reopening in absence of any live link between the information received and record available with the Assessing Officer. It was therefore, submitted that there is no independent application of mind forming a reason to believe that income has escaped assessment.
6.2 It was further submitted that merely the cash deposits does not constitute the income, more particularly when, as per the objection raised by the petitioner, total deposit of cash upto 07.11.2016 was Rs. 3,23,00,000/- and from 08.11.2016 to 31.12.2016 i.e. during the period of demonetization, cash deposit was of Rs. 80,07,000/- and thereafter, from 01.01.2017 to 31.03.2017 cash deposited was Rs.1,31,85,000/-. It was therefore, submitted that the petitioner has explained in detail the cash collected from the custoemers as well as the cash sales during the Financial Year 2016-17 and the cash deposited by the petitioner in the bank account.
6.3 It was further submitted that the Assessing Officer has also not referred to the inquiry conducted pursuant to the summons under section 131(1) of the Act by the Investigation Wing and straightaway arrived at a conclusion that there is escapement of income in absence of any material available on record. It was therefore submitted that the impugned notice is without jurisdiction as the same is issued only to verify, more particularly, when the petitioner has provided all the details along with audited balance-sheet, statement of bank account along with the reply.
6.4 In support of his submissions, reliance was placed on the following decisions:
| (i) | | Hemant Manharlal Shah HUF v. ITO reported in [2018] (Gujarat) ; |
| (ii) | | CIT v. Indo Arab Services reported in [2015] (Delhi); |
| (iii) | | Sunrise Education Trust v. ITO Exemption reported in [2018] (Gujarat) ; |
| (iv) | | Priyanka Pharmachem v. ITO reported in [2016] (Gujarat). |
7. On the other hand, learned Senior Standing Counsel Mr. Varun K. Patel for the respondent-Assessing Officer submitted that the reasons recorded by the Assessing Officer are based upon the outcome of the inquiry and perusal of the analysis of the details available on record and on basis of such analysis, it was noticed that the petitioner assessee has failed to prove conclusively the sources for deposit of cash deposited in the bank account of Rs. 56,07,000/-.
7.1 It was therefore submitted that as per the settled legal position, at this stage, once the Assessing Officer has come to the prima facie conclusion that the petitioner has failed conclusively to prove the sources of the cash deposited in the bank, no interference may be made in the petition for setting aside the impugned notice. It was submitted that the Assessing Officer has issued the impugned notice after verification of the facts of the case by independent application of mind forming an opinion that the income chargeable to tax has escaped assessment and the assessment was reopened after recording the reasons and after getting administrative approval from the Additional Commissioner of Income Tax, Range-I, Ahmedabad.
7.2 It was further submitted that while passing order disposing of the objection, the Assessing Officer has categorically observed that the petitioner has failed to furnish any supporting and corroborative evidence proving the direct nexus of cash deposited during demonetization or the same cash which was received from the customer and therefore, it was necessary for the Assessing Officer to carry out the assessment in accordance with law pursuant to the impugned notice for reopening as he has reason to believe on such prima facie conclusion that the income has escaped assessment.
7.3 It was therefore submitted that the respondent-Assessing Officer was justified in initiating reassessment proceedings on the basis of the information received from the Investigation Wing that the petitioner has deposited cash of Rs. 56,07,000/-during the demonetization period for which, the petitioner has failed conclusively to prove the known sources of such deposit. In support of his submissions, reliance was placed on the decision of this Court in case of
Jayant Security and Finance Ltd v.
Assistant Commissioner of Income Tax, Officer Circle 1(1) reported in
[2018] (
Gujarat) wherein, this Court held that on the basis of the additional information received by the Assessing Officer, a belief was formed that the transaction entered by the petitioner in the said case was a sham transaction and therefore, this Court did not interfere with the notice for reopening. In the facts of the said case, this Court has considered various decisions which are relied upon by learned Senior Standing Counsel Mr. Patel as under:
“7. The reasons thus recorded do not proceed only on the information supplied by the Investigating Wing. The Assessing Officer having applied his mind and processed such information, formed his belief that the income chargeable to tax has escaped assessment. Neither the application of mind, nor the formation of belief that income chargeable to tax has escaped assessment on the basis of information available at the disposal of Assessing Officer, have to be expressed in any rigid format in the reasons recorded. Hence, as these two essential requirements can be gathered from the reasons recorded, the notice for reopening cannot fail on such basis. Division Bench of this Court in case of Dishman Pharmaceuticals & Chemicals Limited v. Deputy Commissioner of Income-Tax [OSD], reported in
[2013] (
Gujarat) [Guj] made following observations :
“From the above judicial pronouncements, the following principles can be culled out :
[i] To confer jurisdiction to the Assessing Officer to reopen the assessment under Section 147 of the Income-tax Act beyond four years from the end of the assessment year, the following two conditions must be satisfied (a) that the Assessing Officer must have reason to believe that the income chargeable to tax has escaped assessment; and (b) that the same was occasioned, on account of either failure on the part of the assessee to make a return of his income for that assessment year, or to disclose fully and truly all material facts necessary for assessment of that year, or to disclose fully and truly all material facts necessary for assessment of that year; [ii] both the above conditions are conditions precedent and must be satisfied simultaneously before the Incometax Officer can assume jurisdiction to reopen the assessment beyond four years of the end of the assessment year; [iii] such reasons must be recorded and if the reasons recorded by the Assessing Officer do not disclose satisfaction of these two conditions, reopening notice must fail; [iv] there is no set format in which such reasons must be recorded. It is not the language but the contents of such recorded reasons which assumes importance. In other words, a mere statement that the Assessing Officer had reason to believe that certain income has escaped assessment and such escapement of income was on account of non filing of the return by the assessee or failure on his part of disclose fully and truly all material facts necessary for assessment would not be conclusive. Nor absence of any such statement would be fatal, if on the basis of reasons recorded, it can be culled out that there were sufficient grounds for the Assessing Officer to hold such beliefs..”
7.1 We may also refer to the judgment of Division Bench of this Court in the case of Principal Commissioner of Income-tax, Rajkot v. Gokul Ceramics , reported in [2016]
1 [Gujarat], wherein, the following observations were made:-
“9. It can thus be seen that the entire material collected by the DGCEI during the search, which included incriminating documents and other such relevant materials, was along with report and show-cause notice placed at the disposal of the Assessing Officer. These materials prima facie suggested suppression of sale consideration of the tiles manufactured by the assessee to evade excise duty. On the basis of such material, the Assessing Officer also formed a belief that income chargeable to tax had also escaped assessment. When thus the Assessing officer had such material available with him which he perused, considered, applied his mind and recorded the finding of belief that income chargeable to tax had escaped assessment, the re-opening could not and should not have been declared as invalid, on the ground that he proceeded on the show-cause notice issued by the Excise Department which had yet not culminated into final order. At this stage the Assessing Officer was not required to hold conclusively that additions invariably be made. He truly had to form a bona fide belief that income had escaped assessment. In this context, we may refer to various decisions cited by the counsel for the Revenue.
10. In case of Central Provinces Manganese Ore Co. Ltd. v. Income Tax Officer, Nagpur (supra) the Supreme Court noted that in case of the assessee which had an office in London, this Customs authority had come to know that the assessee had declared very low price in respect of the consignment of Manganese exported by them out of India. After due inquiries and investigations, the Customs authorities found that the assessee was systematically under invoicing the value of Manganese as compared with the prevailing market price. The Income Tax Officer on coming to know about the proceedings before the Customs Collector in this respect issued notice for reopening of the assessment. In the reasons that the Assessing Officer relied on the facts as found by the Customs Authorities that the assessee had undervoiced goods during export. Under such circumstances, upholding the validity of the notice for reopening, the Supreme Court held and observed as under :-
“So far as the first condition is concerned, the Income Tax Officer, in his recorded reasons, has relied upon the fact as found by the Customs Authorities that the appellant had under invoiced the goods it exported. It is not doubt correct that the said finding may not be binding upon the income tax authorities but it can be a valid reason to believe that the chargeable income has been under assessed. The final outcome of the proceedings is not relevant. What is relevant is the existence of reasons to make the Income Tax Officer believe that there has been under assessment of the assessee’s income for a particular year. We are satisfied that the first condition to invoke the jurisdiction of the Income Tax Officer under Section 147(a) of the Act was satisfied.”
11. In case of Income Tax Officer v. Purushottam Das Bangur (supra) after completion of assessment in case of the assessee, the Assessing Officer received letter from Directorate of Investigation giving detailed particulars collected from Bombay Stock Exchange which revealed earning of share and price of share increased during period in question and quotation appearing at Calcutta Stock Exchange was as a result of manipulated transaction. On the basis of such information, the Assessing Officer issued notice for reopening of the assessment. The question, therefore, arose whether the information contained in the letter of Directorate of Investigation could be said to be definite information and the Assessing Officer could act upon such information for taking action under Section 147(b) of the Act. In such background, the Supreme Court observed as under:
“12. Ms. Gauri Rastogi, the learned counsel appearing for the respondents, has urged that the letter of Shri Bagai was received by the Income tax Officer on March 26, 1974 and on the very next day, that is, on March 27, 1974, he issued the impugned notice under Section 147(b) of the Act and that he did not have conducted any inquiry or investigation into the information sent by Shri Bagai. Merely because the impugned notice was sent on the next day after receipt of the letter of Shri Bagai does not mean that the Income Tax Officer did not apply his mind to the information contained in the said letter of Shri Bagai. On the basis of the said facts and information contained in the said letter, the Income Tax officer, without any further investigation, could have formed the opinion that there was reason to believe that the income of the assessee chargeable to tax had escaped assessment. The High Court, in our opinion, was in error in proceeding on the basis that it could not be said that the Income Tax Officer had in his possession information on the basis of which he could have reasons to believe that income of the assessee chargeable to tax had escaped assessment for the relevant assessment years. For the reasons aforementioned, we are unable to uphold the impugned judgment of the High Court. The appeal is, therefore, allowed, the impugned judgment of the High Court is set aside and the Writ Petitions filed by the respondents are dismissed. No order as to costs.”
12. In case of Income Tax Officer v. Selected Dalurband Coal Co. Pvt. Ltd. (supra), the assessment was reopened on the basis of the information contained in letter from Chief Mining Officer that the colliery of the assessee had been inspected and there had been under reporting of coal raised. Upholding the validity of re-opening of assessment, the Supreme Court held and observed as under :-
“After hearing the learned counsel for the parties at length, we are of the opinion that we cannot say that the letter aforesaid does not constitute relevant material or that on that basis, the Income Tax Officer could not have reasonably formed the requisite belief. The letter shows that a joint inspection was conducted in the colliery of the respondent on January 9, 1967, by the officers of the Mining Department in the presence of the representatives of the assessee and according to the opinion of the officers of the Mining Department, there was under reporting of the raising figure to the extent indicated in the said letter. The report is made by a Government Department and that too after conducting a joint inspection. It gives a reasonably specific estimate of the excessive coal mining said to have been done by the respondent over and above the figure disclosed by it in its returns. Whether the facts stated in the letter are true or not is not the concern at this stage. It may be well be that the assessee may be able to establish that the facts stated in the said letter are not true but that conclusion can be arrived at only after making the necessary enquiry. At the stage of the issuance of the notice, the only question is whether there was relevant material, as stated above, on which a reasonable person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid. Inasmuch as, as a result of our order, the reassessment proceedings have not to go on we don not and we ought not to express any opinion on the merits.”
13. In case of AGR Investment Ltd. v. Additional Commissioner of Income Tax & Anr. (supra), Division Bench of Delhi High Court considered the validity of reopening of assessment where the notice was based on information received from Directorate of investigation that the assessee was beneficiary of bogus accommodation entries. The Court while upholding the validity of reopening observed that sufficiency of reason cannot be considered in a writ petition. It was observed as under :
“23. The present factual canvas has to be scrutinized on the touchstone of the aforesaid enunciation of law. It is worth noting that the learned counsel for the petitioner has submitted with immense vehemence that the petitioner had entered into correspondence to have the documents but the assessing officer treated them as objections and made a communication. However, on a scrutiny of the order, it is perceivable that the authority has passed the order dealing with the objections in a very careful and studied manner. He has taken note of the fact that transactions involving Rs.27 lakhs mentioned in the table in Annexure P-2 constitute fresh information in respect of the assessee as a beneficiary of bogus accommodation entries provided to it and represents the undisclosed income. The assessing officer has referred to the subsequent information and adverted to the concept of true and full disclosure of facts. It is also noticeable that there was specific information received from the office of the DIT (INV-V) as regards the transactions entered into by the assessee company with number of concerns which had made accommodation entries and they were not genuine transactions. As we perceive, it is neither a change of opinion nor does it convey a particular interpretation of a specific provision which was done in a particular manner in the original assessment and sought to be done in a different manner in the proceeding under Section 147 of the Act. The reason to believe has been appropriately understood by the assessing officer and there is material on the basis of which the notice was issued. As has been held in Phool Chand Bajrang Lal (supra), Bombay Pharma Products (supra) and Anant Kumar Saharia (supra), the Court, in exercise of jurisdiction under Article 226 of the Constitution of India pertaining to sufficiency of reasons for formation of the belief, cannot interfere. The same is not to be judged at that stage. In SFIL Stock Broking Ltd. (supra), the bench has interfered as it was not discernible whether the assessing officer had applied his mind to the information and independently arrived at a belief on the basis of material which he had before him that the income had escaped assessment. In our considered opinion, the decision rendered therein is not applicable to the factual matrix in the case at hand. In the case of Sarthak Securities Co. Pvt. Ltd. (supra), the Division Bench had noted that certain companies were used as conduits but the assessee had, at the stage of original assessment, furnished the names of the companies with which it had entered into transactions and the assessing officer was made aware of the situation and further the reason recorded does not indicate application of mind. That apart, the existence of the companies was not disputed and the companies had bank accounts and payments were made to the assessee company through the banking channel. Regard being had to the aforesaid fact situation, this Court had interfered. Thus, the said decision is also distinguishable on the factual score.”
13. Learned Single Judge of Madras High Court in case of
Sterlite Industries (India) Ltd. v.
Assistant Commissioner of Income Tax reported in
[2009] 302 ITR 275 (Madras) upheld the notice for reopening which was based on information from enforcement directorate showing possible inflation of purchases made by the assessee.”
8. The question of change of opinion and failure on the part of the assessee to disclose truly and fully all material facts, in the present case are closely connected. Undoubtedly, as noted earlier, the Assessing Officer during the original assessment had examined the transactions. However, such examination would necessarily be on the basis of disclosures made by the assessee in the return filed and during the scrutiny assessment. If the Assessing Officer has information to form a reasonable opinion that
prima facie the entire transaction itself was sham and bogus, as reference to such transaction during the original assessment and raising certain queries in this respect would not prevent him from reopening the assessment on the principle of change of opinion. As noted, the opinion would be formed on the basis of disclosures. When disclosures are found to be
prima facie untrue, the opinion formed earlier would not prevent Assessing Officer from examining the issue. In the present case, as noted, Assessing Officer received additional information after the original assessment was over, on the basis of which he formed a belief that the entire transaction was a sham transaction. At this stage, where the Court is examining the validity of notice of reopening, it is not necessary that the Assessing Officer must have conclusive evidence to hold that invariably additions would be made in the income of the assessee. What is required is the reason to believe that income chargeable to tax as escaped assessment. Sufficiency of the materials in the hand of the Assessing Officer which enabled him to form such a belief would not be examined. A reference in this respect is made to a decision of the Supreme Court in the case of
Asstt. Commissioner of Income-tax v.
Rajesh Jhaveri Stock Brokers P. Limited , reported in
[2007] 291 ITR 500 (SC).
9. Learned advocate for the Revenue is correct in drawing our attention to the judgment of this Court in the case of Yogendrakumar Gupta [Supra] in which, in somewhat similar background, the question of change of opinion and failure on the part of the assessee to disclose true and full facts came up for consideration. It is undoubtedly true that every case of reopening may have slightly varying facts, giving slightly different colour shade to each situation, nevertheless, the observations made by the Court in the case of Yogendrakumar Gupta [Supra] need to be noted. It was the case in which the notice for reopening was based on information made available to the Assessing Officer who formed opinion suggesting that the assessee had obtained accommodation entries in the form of loans and advances from one business marketing company, a Calcutta based company. Relevant observations made by the Bench in paras 18, 19 & 20 read thus:-
“18. As mentioned hereinabove, we had called for the original file, which had revealed new, valid and tangible information supporting Assessing Officer’s opinion received from DCIT, Kolkata, based on the material found during the search by the CBI, where Basant Marketing Pvt. Ltd. is said to be a dummy company of one Shri Arun Dalmia. What has been emphasized by the learned Senior Counsel appearing for the petitioner is that the Assessing Officer had attempted to fill in the gap by terming the amount received from Basant Marketing Pvt. Ltd. as “accommodation entry”, which she could not have done without further inquiry/ verification. Yet another contention emphasized by the learned Senior Counsel is that the post notice correspondence made after the reasons recorded could not have added anything which was lacking in the reasons themselves. He urged that in absence of any statement given by any Director of Basant Marketing Pvt. Ltd. stating that the assessee received and obtained accommodation entry in the form of loans and advances, the reasons lack basis. The Director Mr. Dalmia of Basant Marketing Pvt. Ltd. as contended also does not reveal anywhere and, therefore, it is premature on the part of the Assessing Officer to so record the reasons. It is further urged that the affidavit of Rishabh Dalmia stating on oath that the loan transactions with the petitioner are genuine for having been carried out only through cheques, prima facie vindicates that the entire exercise is based on suspicion. The entire thrust, therefore, is that issuance of notice is nothing but a fishing inquiry.
19. As discussed at length while adverting to the law, that sufficiency of reasons recorded by the Assessing Officer need not be gone into by this Court. Of course, the Assessing Officer when forms his belief on the basis of subsequent new and specific information that the income chargeable to tax has escaped assessment on account of omission on the part of the assessee to make full and true disclosure of primary facts, he may start reassessment proceedings as fresh facts revealed the nondisclosure full and true. Such facts were not previously disclosed or it can be said that if previously disclosed, they expose untruthfulness of facts revealed.
20. The Assessing Officer required jurisdiction to reopen under section 147 read with section 148 of the Act, where the information must be specific and reliable. As held by the Apex Court in the case of Phul Chand Bajrang (supra), since the belief is that of the Incometax Officer, the sufficiency of reasons for forming the belief, is not for the Court to judge but is open to an assessee to establish that there exists no belief or that the belief is not at all a bona fide one or based on vague, irrelevant and nonspecific information. To that limited extent, the Court may look at the view taken by the Income-tax Officer and can examine whether any material is available on record from which the requisite belief could be formed by the Assessing Officer and whether that material has any rational connection or a live link with the formation of the requisite belief. It is also immaterial that at the time of making original assessment, the Assessing Officer could have found by further inquiry or investigation as to whether the transactions were genuine or not. If on the basis of subsequent valid information, the Assessing Officer forms a reason to believe on satisfying twin conditions prescribed under section 147 of the Act that no full and true disclosure of facts was made by the assessee at the time of original assessment and, therefore, the income chargeable to tax had escaped assessment, his belief and the notice of reassessment based on such belief/ opinion needs no interference. In the present case, since both the necessary conditions have been duly fulfilled, sufficiency of the reasons is not to be gone into by this Court. The information furnished at the time of original assessment, when by subsequent information received from the DCIT, Kolkata, itself found to be controverted, the objection to the notice of reassessment under section 147 of the Act must fail. At the costs of in gemination, it needs to be mentioned that at the time of scrutiny assessment, a specific query was raised with regard to unsecured loans and advances received from the said company namely, Basant Marketing Pvt. Ltd. based at Kolkata. These being the transactions through the cheques and drafts, there would arise no question of the Assessing Officer not accepting such version of the assessee and not treating them as genuine loans and advances. Furnishing the details of names, addresses, PANs, etc. also would lose its relevance if subsequently furnished information, which has been made basis for issuance of notice impugned, concludes that Basant Marketing Pvt. Ltd. is merely a dummy company of one Shri Arun Dalmia, which provided the accommodation entries to various beneficiaries.
21. This Court has examined the belief of the Assessing Officer to a limited extent to inquiry as to whether there was sufficient material available on record for the Assessing Officer to form a requisite belief whether there was a live link existing of the material and the income chargeable to tax that escaped assessment. This does not appear to be the case where the Assessing Officer on vague or unspecific information initiated the proceedings of reassessment, without bothering to form his own belief in respect of such material. We need to notice that the Joint Director, CBI, Mumbai, intimated to the DIT (Investigation), Mumbai. A case is registered against Mr. Arun Dalmia, Harsh Dalmia and during the search at their residence and office premises, the substantial material indicated that 20 dummy companies of Mr. Arun Dalmia were engaged in money laundering and the income-tax evasion. The said entities included Basant Marketing Pvt. Ltd. also. From the analysis of details furnished and the beneficiaries reflected, which are spread across the country, the CIT, Koklata, suspected the accommodation entry related to the assessment year 2006-07 as well, this information has been provided to Director General of Income-tax, Kolkata, who in turn, communicated to the Chief Commissioner of Income-tax, Ahmedabad. Further revelation of investigation as could be noticed from the record examined (file) deserves no reflection in this petition. Insistence on the part of the petitioner to provide any further material forming the part of investigation carried out against Dalmias also needs to meet with negation, as the law requires supply of information on which Assessing Officer recorded her satisfaction, without necessitating supply of any specific documents. The proceedings initiated under section 147 of the Act would not be rendered void on non supply of such document for which confidentiality is claimed at this stage, following the decision of the Delhi High Court in case of Acorus Unitech Wireless (P.) Ltd. (supra). Assumption of jurisdiction on the part of the Assessing Officer is since based on fresh information, specific and reliable and otherwise sustainable under the law, challenge to reassessment proceedings warrant no interference.”
7.4 Relying upon the above decision, it was submitted that this Court has considered various decisions wherein it is held that once the Assessing Officer has prima facie formed a reason to believe that income has escaped assessment, no interference is required to be made while exercising extraordinary jurisdiction under Article 226 of the Constitution of India.
8. Having heard learned advocates for the respective parties and considering the facts of the case, it is not in dispute that the petitioner has disclosed in the return of income for the Assessment Year 2017-18 that the petitioner has deposited cash of Rs.80,07,000/- between 09.11.2016 and 30.12.2016. Moreover, the petitioner has also explained in the objection reply to the impugned notice by explaining that the deposit was of Rs. 80,07,000/- and not Rs. 56,07,000/- as stated in the impugned notice. The assessee has explained that there were cash sales in addition to the cash received from the debtors which was deposited during the said period. It also emerges from the said reply that the total cash deposited by the petitioner up to 07.11.2016 was Rs. 3,23,00,000/- and the cash deposited during the demonetization period is Rs. 80,07,000/- as against total cash sales of Rs. 57,55,624/-.
9. Thus, the petitioner has explained the cash deposit in the bank account during demonetization period. The Assessing Officer however, has discarded above explanation of the petitioner only observing that the petitioner has failed to furnish supporting and corroborative evidence proving direct nexus of cash deposited during demonetization with the amount of cash received from the customers. Such reasons assigned by the Assessing Officer in the order disclosing the objection is contrary to the facts on record as the petitioner has explained in detail about cash deposited in the bank account during the year under consideration.
10. It also appears from the record that the petitioner has along with the objections, submitted the requisite details, copies of bank statements, audited balance-sheet account etc. which was not even referred to by the Assessing Officer in the order disposing the objection.
11. It appears that the Assessing Officer has formed reasonable belief that income chargeable to tax has escaped assessment only on the basis of the information available with him regarding the failure on the part of the petitioner-assessee of known source for the cash deposited ignoring that the petitioner has categorically stated in the reply that the cash deposited is out of the sales which is duly reflected in the books of account.
12. In such circumstances, in absence of any independent application of mind by the respondent- Assessing Officer and in absence of any live link between the information received and the material available record, the impugned notice cannot be sustained. Merely because the Assessing Officer wishes to verify veracity of cash deposit cannot be the basis for reopening for making roving and fishing inquiry by reassessment even in case where the return was not scrutinized before acceptance originally. Therefore, respondent assessing officer could not have assumed jurisdiction to issue the impugned notice for reopening.
13. Reliance placed by the learned advocate for the respondent on the aforesaid decisions would not be applicable in the facts of the case because the respondent assessing officer has failed to assume jurisdiction in absence of any tangible material to arrive at primafacie reason to believe that income has escaped assessment.
14. In view of the foregoing reasons, the petition succeeds. The impugned notice dated 30.03.2021 issued under section 148 of the Act for reopening the assessment for A.Y.2017-18 is accordingly quashed and set aside. Rule is made absolute. No order as to costs.