Calcutta High Court
Amber Tie- Up Limited vs Income Tax Officer on 16 January, 2017
Author: Debangsu Basak
Bench: Debangsu Basak
ORDER SHEET
WP No. 938 of 2016
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
AMBER TIE- UP LIMITED
Versus
INCOME TAX OFFICER, WARD 8(1) & ORS.
BEFORE:
The Hon'ble JUSTICE DEBANGSU BASAK
Date : 16th January, 2017.
Mrs. Manju Agarwal,
Mr. Bajrang Manot, Advs.
...for the petitioner
Md. Nizamuddhin, Adv.
...for the respondent
The Court : The petitioner assails invocation of Section 148 of the Income Tax Act, 1961 read with Section 147 thereof against the petitioner in respect of an identified assessment year.
Learned advocate for the petitioner submits that, the assessing officer did not have any material before it to form a reasonable opinion for invocation of Section 148. She refers to the reasons given for invocation of Section 148. She submits that, the reasons are vague. The allegation is of receipt of Rs. 2.20 crores approximately in the relevant assessment year. She submits that, the details of the persons making the 2 funds available are not specified. She submits that, it is not a case that, the assessing officer speaks of one transaction. In view of the vagueness of the charges against the petitioner, the assessing officer ought not to have formed an opinion that there was an income escaping assessment on the materials made available to him. Since such materials are available he ought not to have invoked Section 148.
In support of the contention that the assessing officer is required to form an opinion for the purpose of invoking Section 148 of the Act of 1961 and nature and extent of the opinion required to be formed, learned advocate for the petitioner relies upon 329 ITR 110 (Sarthak Securities Co. (P.) Ltd. vs. Income-tax Officer-Ward 7(3), 299 ITR 383 (Commissioner of Income-tax vs. Atul Jain) and 79 ITR 603 (Chhugamal Rajpal vs. S.P. Chaliha).
Learned advocate for the petitioner refers to the reasons for invocation of Section 148 and to the objections raised by the petitioner with regard thereto and ultimately the disposal of such objections by the assessing officer. She submits that, even on the disposal of the objection by the assessing officer, the reasons given for invocation of Section 148 are vague at best. She submits that, allegations of the transaction are without any particulars for the petitioner to meet the same in the reassessment assuming that, the reassessment is allowed to be done. Therefore she 3 submits that, the Court ought to confirm the interim order already passed and quash the proceeding under Section 148 undertaken by the assessing officer.
Learned advocate for the department submits that, the assessing officer had adequate reasons to believe that income had escaped in assessment during the particular assessment year. He refers to the reasons for the invocation. He submits that, there are suspicious transaction in cash and cheque relating to the assessee which the assessing officer needs to visit. He submits that, the petitioner did not submit the details of the transactions at the time of the order of assessment and, therefore, the assessing officer is required to have a relook into the same. He further submits that, the disposal of the objections cannot be construed as an order of reassessment. The petitioner can still demonstrate that, the assumptions made by the assessing officer are incorrect by producing relevant records.
I have considered the rival contentions of the parties and the materials made available on record.
The assessing officer in the present case seeks to invoke under Section 148 after four years from the relevant date of the assessment.
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The assessing officer has forwarded the reasons for invoking Section 148 to the assessee. The reasons speak of a suspicious transaction. It specifies that, the assessee had allegedly received a fund of Rs. 2.20 crores approximately either in individual or current account or proprietorship account maintained with an identified bank. It speaks of transactions by which the assessee has transferred the management of the assessee company in favour of a new management. It speaks of sale of shares of the assessee company. It speaks of the sale of shares being in cash and, therefore, an income has escaped assessment. The assessee had raised an objection to the invocation of Section 148 by a writing dated April 19, 2016. The objection was disposed of by a writing dated August 5, 2016. By the order dated August 5, 2016 the assessing officer finds that huge unaccounted cash deposits were made in the bank account of some individual persons with a particular bank and that, such deposited cash were transferred by issuing cheques routed through various companies to the assessee and other beneficiaries during the assessment year concerned. It finds that, the assessee had received funds of Rs. 2.20 crores sources of which were not found to be disclosed.
Atul Jain (supra) holds that, there must be reasons to believe warranting issuance of a notice under Section 148 by the assessing officer. It goes on to say that, mere satisfaction of the assessing officer for 5 the issuance of a notice is not enough. There must be reason on record which had led him to believe that a notice should be issued.
Sarthak Securities Co. (P.) Ltd. (supra) holds that, the formation of belief is a condition precedent as regards the escapement of tax pertaining to the assessment year by the assessing officer. The assessing officer is required to form an opinion before he proceeds to issue a notice. This view can be found in paragraph 15 of the report. It goes on to say that, conclusive proof is not germane at this stage for formation of opinion. However formation of belief must be on the base or foundation or platform of prudence, which a reasonable person is required to apply.
Chhugamal Rajpal (supra) holds that, when a notice under Section 148 is not specific, it is required to be set aside.
In the present case on receipt of information that, a suspicious transaction of Rs. 2.20 crores had happened in respect of the account of the assessee for the relevant financial year, the assessing officer had undertaken the exercise of issuance of notice under Section 148 of the Act of 1961. It appears from the material made available on record that, the assessing officer had applied his mind to the materials placed before him before issuance of the notice under Section 148. He was informed of a suspicious transaction which had resulted in a sum of Rs. 2.20 crores approximately coming into the account of the assessee by way of diverse 6 transactions. On basis of such information, he had applied his mind and formed an opinion that he should undertake an exercise under Section
148. He has explained his stand after the objections were raised on behalf of the assessee. In the order dated August 5, 2016 while disposing of the objections the assessing officer has stated that, during the verification of a report of suspicious transaction, it was found that, huge unaccounted cash deposit made in the bank account of individual person of a concerned bank and the deposited cash of such bank account was finally transferred by issued cheque routed through various companies to the assessee and other beneficiaries during relevant financial year. In such circumstances, he finds that, the assessee had received a fund of Rs. 2.20 crores from sources which were not found to be disclosed.
The assessing officer has given reasons for the invocation of Section 148. He has disclosed the foundational basis for doing so. The basis cannot be wished away as mere surmise. He is not required to have conclusive proof at the stage of Section 148.
In view of such categorical findings returned by the assessing officer, it would not be appropriate to interfere in the facts of the present case. W.P. No. 938 of 2016 is dismissed. The interim order dated December 21, 2016 is vacated. No order as to costs.
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Learned advocate for the petitioner seeks stay of the order. He submits that, there subsists an interim order preventing coercive action from being taken. Such interim order should be continued with.
The assessing officer has to reopen the assessment and come to a finding of income escaping assessment prior to any coercive measure being taken. There is no immediate threat of a coercive action being taken. In such circumstances, there is no need for continuation of the interim order. The prayer for stay is considered in such light and refused.
(DEBANGSU BASAK, J.) TR/