Amar Jewellers Ltd v. The Assistant Commissioner Of Income Tax ==========================================================Appearance

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 17598 of 2019 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE J.B.PARDIWALA Sd/- andHONOURABLE MS. JUSTICE NISHA M. THAKORE HONOURABLE MS. JUSTICE NISHA M. THAKORESd/-==========================================================1Whether Reporters of Local Papers may be allowedYesto see the judgment ?2To be referred to the Reporter or not ?Yes3Whether their Lordships wish to see the fair copyNoof the judgment ?4Whether this case involves a substantial questionNoof law as to the interpretation of the Constitutionof India or any order made thereunder ? ========================================================== AMAR JEWELLERS LTD. Versus THE ASSISTANT COMMISSIONER OF INCOME TAX ==========================================================Appearance: MR. TUSHAR HEMANI, LD. SR. COUNSEL WITH MS VAIBHAVI K PARIKH(3238) for the Petitioner(s) No. 1MRS KALPANA K RAVAL(1046) for the Respondent(s) No. 1========================================================== CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALAandHONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 22/03/2022 ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1.By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for thefollowing reliefs; “(A) quash and set aside the impugned notice atAnnexure-A to this petition. (B)pending the admission, hearing and finaldisposal of this petition, to stay the implementationand operation of the notice at Annexure-A to thispetition and stay the further proceedings for theAssessment Year 2013-14; (C ) any other and further relief deemed just andproper be granted in the interest of justice; (D)to provide for the cost of this petition.” 2.The facts giving rise to this writ application may besummarized as under; 2.1The writ applicant is a company incorporated underthe Companies Act, 1956 (for short “the Act, 1956”). TheCompany is engaged in the business of Gold & Jewellery.During the Financial Year 2012-13, relevant to theAssessment Year 2013-14 (i.e,. the year underconsideration), the writ applicant claims to have madevarious purchases including the purchases from aproprietary concern viz “Swastik Corporation” andaccording to the writ applicant, such purchases are dulyreflected in the audited annual accounts. 2.2The search action under Section 132 of the Act wascarried out on 07.08.2013 in the cases of Amar Group of Surat wherein the case of the writ applicant herein wasalso covered. Later, notice under Section 153A of the Actwas issued by the then Assessing Officer on 19.08.2014for the year under consideration. The writ applicant filedits return of income on 20.10.2014 in response to thenotice issued under Section 153A declaring its totalincome at Rs.12,80,15, 570/-. 2.3The then Assessing Officer vide notice dated11.12.2015 issued under Section 142(1) of the Act calledfor various details including the details relating to thepurchases made during the year under considerationexceeding Rs.1 Lakh. 2.4The writ applicant vide letter dated 04.01.2016,furnished all the relevant details including the detailsrelating to the purchases. 2.5The Assessing Officer, thereafter, proceeded to passthe assessment order under Section 143(3) read withSection 153A of the Act dated 28.03.2016 without makingany addition in respect of the purchases. 2.6It appears that thereafter the respondent No.3 issuedthe impugned notice dated 28.03.2019 under Section 148of the Act seeking to reopen the case of the writ applicantfor the year under consideration. In such circumstances,referred to above, the writ applicant is here before thisCourt with the present writ application. 2.4The writ applicant vide letter dated 04.01.2016,furnished all the relevant details including the detailsrelating to the purchases. 2.5The Assessing Officer, thereafter, proceeded to passthe assessment order under Section 143(3) read withSection 153A of the Act dated 28.03.2016 without makingany addition in respect of the purchases. 2.6It appears that thereafter the respondent No.3 issuedthe impugned notice dated 28.03.2019 under Section 148of the Act seeking to reopen the case of the writ applicantfor the year under consideration. In such circumstances,referred to above, the writ applicant is here before thisCourt with the present writ application. 3.We have heard Mr. Tushar Hemani, the learnedsenior counsel assisted by Ms. Vaibhavi Parikh, thelearned advocate appearing for the writ applicant and Ms.Kalpana Raval, the learned senior standing counselappearing for the revenue. 4.The reasons assigned by the Assessing Officer forthe purpose of reopening are as under; “Brief details of the Assessee. The assesseecompany filed its return of income on 20.10.2014showing total income of Rs.12,80,15,570/-. An orderu/s. 143(3) r.w.s 153A of the Act was passed on28.03.2016 determining assessed income ofRs.12,84,15,570/-. The assessee company isJewellers. 2.This office is in possession of a piece ofinformation disseminated by Investigation Wing,Mumbai. An enquiry was carried by the Dy. Directorof Income Tax (Inv.), Unit-4(2), Mumbai in the case ofSwastik Corporation (Prop Shri Bijal Ashok Shah),after information was received about the suspiciousfinancial transaction entered into by them. Furtherthis office is also in possession ofa piece ofinformation disseminated by Investigation Wing,Surat. An enquiry was carried by the Dy. Director ofIncome Tax (inv.), Unit-2, Surat in the case of M/s. A.Kumar & Others concerns connected to it, afterinformation was received about the suspiciousfinancial transaction entered into by them. 2.1During the course of survey proceedings on14.01.2017, statement of Shri Bijal Ashok Shah, Prop.M/s. Swastik Corporation was received on oath. In thestatement, he admitted that he has done cashtransactions with some parties. As per modusoperandi explained, he stated that he provides accommodation entry in lieu of commission withoutany corresponding buying/selling of stock and areentered in the Tally Accounts. Since Shri Bijal AshokShah, Prop. M/s. Swastik Corporation has admittedthat he is engaged in the business of giving bogusentry. Thus the transactions made by M/s. AmarJewellers Limited with M/s. Swastik Corporationamounting to Rs.29,94,900/- are bogus in nature. 3.Report of the DDIT (Inv.), Unit-4(2) Mumbai hasbeen perused with reference to the statements ofShri Bijal Ashok Shah, Prop. M/s. Swastik Corporation.After perusal and having verified, the finding of theDDIT (Inv.), Unit-4(2), Mumbain is found to be inorder that M/s. Swastik Corporation is a paper entity,which is handled by Shri Bijal Ashok Shah engaged inthe business of giving bogus accommodation entry inlieu of certain margin of commission. 4.After perusal of statement of Shri Bijal AshokShah, Prop. M/s. Swastik Corporation and the DDIT(inv.), Unit-4(2), Mumbai, it is confirmed that theassessee company M/s. Amar Jewellers Ltd. hasreceived bogus purchase bills amounting toRs.29,94,900/- during the F.Y. 2012-13 relevant toA.Y.2013-14 from M/s. Swastik Corporation which isrun and controlled by Shri Bijal Ashok Shah acommission agent based in Mumbai. This bill isnothing but the assessee’s bogus purchase andattempt to reduce its tax liability through the saidtainted concerns. 4.After perusal of statement of Shri Bijal AshokShah, Prop. M/s. Swastik Corporation and the DDIT(inv.), Unit-4(2), Mumbai, it is confirmed that theassessee company M/s. Amar Jewellers Ltd. hasreceived bogus purchase bills amounting toRs.29,94,900/- during the F.Y. 2012-13 relevant toA.Y.2013-14 from M/s. Swastik Corporation which isrun and controlled by Shri Bijal Ashok Shah acommission agent based in Mumbai. This bill isnothing but the assessee’s bogus purchase andattempt to reduce its tax liability through the saidtainted concerns. 5.In view of above facts and discussion madehereinabove, the undersigned has reason to believeand satisfied that the transactions made to theassessee company M/s. Amar Jewellers Ltd. with M/s.Swastik Corporation amounting to Rs.29,94,900/-are bogus in nature. By claiming the bogus purchaseexpenses, the assessee thereby reduced its profitand resultant tax liability. 6.In view of above facts/material available on records and after analyzing the same, I have reasonto believe and am satisfied that income of theassessee to the extent of Rs.29,94,900/- has escapedassessment for A.Y. 2013-14 within the meaning ofsection 147 of the I.T. Act. 7.In this case, return of income was filed for theyear under consideration and assessment u/s.143(3)r.w.s. 153A of the Act was made on 28.03.2016.Since 4 years from the end of the relevant year hasexpired in this case, the requirements to initiateproceeding u/s.147 of the Act are reason to believethat income for the year under consideration hasescaped assessment because of failure on the part ofthe assessee to disclose fully and truly all materialfacts necessary for his assessment for theassessment year under consideration. It is pertinentto mention here that reasons to believe that incomehas escaped assessment for the year considerationhave been recorded above (refer paragraphs 1 to 6).I have carefully considered the assessment recordscontaining the submissions made by the assessee inresponse to various notices issued during theassessment proceedings and have noted that theassessee has not fully and truly disclosed thefollowing material facts necessary for his assessmentfor the year under consideration. It is evident from the above facts that the assesseehad not truly and fully disclosed material factsnecessary for his assessment for the year underconsideration thereby necessitating reopeningu/s.147 of the Act. It is true that the assessee has filed a copy of annualreport and audited P&L account and balance sheetalong with return of income where variousinformation/material were disclosed. However, therequisite full and true disclosure of all material factsnecessary for assessment has not been made asnoted above. It is pertinent to mention here thateven though the the assessee has produced audited P&L account and balance sheet as mentioned above,the requisite material facts as noted above in thereasons for reopening was not as such disclosed andcould not be discovered by the AO, accordinglyattracting provisions of Explanation-1 of section 147of the Act. It is evident from the above discussion that in thiscase, the issues under consideration were neverexamined by the AO during the course of regularassessment/reassessment. This fact is corroboratedfrom the contents of notice issued by the AOu/s.143(2), 153A proceedings. It is important tohighlight here that material facts relevant for theassessment on the issue(s) under consideration werenot filed during the course of assessment proceedingand the same may be embedded in annual report,audited P&L A/c, balance sheet and books of accountin such a manner that it would require due diligenceby the AO to extract these information. For abovestated reasons, it is not a case of change of opinionby the AO.” 5.To the aforesaid, the writ applicant filed its objectionsas under; It is evident from the above discussion that in thiscase, the issues under consideration were neverexamined by the AO during the course of regularassessment/reassessment. This fact is corroboratedfrom the contents of notice issued by the AOu/s.143(2), 153A proceedings. It is important tohighlight here that material facts relevant for theassessment on the issue(s) under consideration werenot filed during the course of assessment proceedingand the same may be embedded in annual report,audited P&L A/c, balance sheet and books of accountin such a manner that it would require due diligenceby the AO to extract these information. For abovestated reasons, it is not a case of change of opinionby the AO.” 5.To the aforesaid, the writ applicant filed its objectionsas under; “6.In your letter dated 07.05.2019, your honourhas observed that Shri Bijal Ashok Shah, Prop. OfM/s. Swastik Corporation in the statement recordedin the course of survey stated that he has done cashtransactions with some parties. The statement ofShri Bijal Ashok Shah cannot be ground to treat thetransactions of assessee with M/s. SwastikCorporation are bogus as Shri Bijal Ashok Shah didn’tsay that he has given the bogus bills to the assessee. 7.The above submission made at para no.6concerning the statement of Shri Bijal Ashok Shah ismade without receipt of the actual statementrecorded by the revenue. So the statement may please be supplied as requested earlier. 8.From the above discussions, it is clear thatassessee has made true and full disclosure for thepurpose of the assessment. As per the proviso toSec. 147, notice u/s.148 cannot be issued afterexpiry of 4 years, if assessee make true and fulldisclosure of material facts necessary for hisassessment. In this case, the notice was issued on28.03.2019 which should have been issued by31.03.2018, so issue of the notice is time barred. TheExplanation 3 of Sec. 147 has no application, whereprovision of Sec. 147 is applicable. When mainproviso of Sec.147 is not applicable by virtue ofprovision to Sec. 147, there cannot be application ofExplanation of the said section. 9.In the reasons recorded, the assessing officerhas not indicated the manner in which assesseefailed to disclose truly and fully material factsnecessary to assessment. 10.In your letter dated 07.05.2019, you hounourhas observed that it is true that the assessee hasfiled a copy of annual report and audited P&Laccount and balance sheet along with return ofincome where various information/material weredisclosed. However, the requisite full and truedisclosure of all material facts necessary forassessment has not been made. The statementmade by Shri Bijal Ashok Shah cannot be the groundfor treating assessee not disclosing fully and truly thematerial facts necessary for assessment particularlywhen the statement is not supported by anyevidence and cross examination was not provided tothe assessee. Even the statement of Shri Bijal AshokShah was never provided to the assessee. Further, itis to be noted that in the reasons recorded, it wasstated that Bijal Ashok Shah has done cashtransactions with some parties. He has never statedthat he has issued the bogus bills to the assessee. Itis to be noted that no notice u/s.133(6) was issued for making inquiry before issuing notice u/s.148. 11.On merits, it is submitted that during the yearunder consideration, assessee has made bothpurchases and sales with M/s. Swastik Corporationwhich are supported by bills and payments andreceipts through banking channels. The ledgeraccount of M/s. Swastik Corporation as appearing inthe books of accounts of the assessee duly confirmedby the party is enclosed herewith.” 6.The objections lodged by the writ applicant came tobe disposed of by the Assessing Officer vide its orderdated 13.09.2019. The order reads thus; for making inquiry before issuing notice u/s.148. 11.On merits, it is submitted that during the yearunder consideration, assessee has made bothpurchases and sales with M/s. Swastik Corporationwhich are supported by bills and payments andreceipts through banking channels. The ledgeraccount of M/s. Swastik Corporation as appearing inthe books of accounts of the assessee duly confirmedby the party is enclosed herewith.” 6.The objections lodged by the writ applicant came tobe disposed of by the Assessing Officer vide its orderdated 13.09.2019. The order reads thus; “3.2 So far as, first objection is concerned, thecourse of action starting from dissemination ofinformation upto supply of reasons related toproceedings of reopen of assessment is narratedhereunder for your ready reference:- (i)This office is in possession of informationrelated to transaction with Swastik Corporationduring F.Y.2012-13, which was disseminated throughletter No.DDIT(Inv.) Unit-4(2)NM/Information/2017-18dated 17.10.2017 by the ADIT (Inv.), Unit 4(2),Mumbai. (ii)Recorded the reasons for initiating proceedingsunder section 147 of the Act for obtaining approval ofthe Pr. CIT-1, Surat on 20.03.2019. (iii)Recorded satisfaction of Addl. CIT, Range 1(1),Surat on 22.03.2019. (iv)Recorded satisfaction of Pr. CIT, Surat 1 on25.03.2019 and conveyed his approval throughletterNo.SRT/Pr.CIT-1/HQ/Reopening/Range-1(1)315-327/2018-19 dated 25.03.2019, a copy thereof marked to this office for necessary action. (v)Issued notice under section 148 on 28.03.2019through ITBA module. (vi)Reasons for reopening were provided to theassessee by letter dated 07.05.2019 through ITBAmodule. 3.3From the above narrated facts, it is clear thatthe issue of notice under section 148 and subsequentsupply of the reasons so recorded to you, are aftercarefully following procedures prescribed by the lawand also keeping the material facts available onrecord, which may please be noted. Hence, lookingto the facts of the case and way in which theprocedures were followed, your claim does not holdany weightage, therefore, the same is rejectedsummarily. 4.The second objection of the assessee regardingsupply of information and report of InvestigationWing,. The report being confidential and alsocontains data pertains to other beneficiary partycould not be shared in toto, but the relevant portionof the report which pertains to the assessee M/s.Amar Jewellers Limited is being already conveyed toyou in the reasons provided. 5.The third and fourth objection issues, it isworthwhile to mention here that Shri Bijal AshokShah, Prop. Of Swastik Corporation was recorded onoath. In the statement, he admitted that he has donecash transactions with some parties including yourcompany. The modus operandi is clearly explainedin paragraph no.2 to 6 of the reason recorded, whichwas already supplied to you, which mentions thatShri Bijal Ashok Shah, Prop. M/s. Swastik Corporationhas admitted that he is engaged in the business ofgiving bogus entry/accommodation entry only in lieuof margin of commission without any correspondingbuying/selling of stock. In view of the above, these objections are also dismissed accordingly. 5.The third and fourth objection issues, it isworthwhile to mention here that Shri Bijal AshokShah, Prop. Of Swastik Corporation was recorded onoath. In the statement, he admitted that he has donecash transactions with some parties including yourcompany. The modus operandi is clearly explainedin paragraph no.2 to 6 of the reason recorded, whichwas already supplied to you, which mentions thatShri Bijal Ashok Shah, Prop. M/s. Swastik Corporationhas admitted that he is engaged in the business ofgiving bogus entry/accommodation entry only in lieuof margin of commission without any correspondingbuying/selling of stock. In view of the above, these objections are also dismissed accordingly. 6.The fifth contention that the assessee has madeboth purchases and sales with M/s. SwastikCorporation which are supported by bills andpayments and receipts through banking channelsstands apart the issue involved of re-assessment inthe case for the year under consideration. Thestatement and subsequent investigation revealedthat M/s. Swastik Corporation is a paper entity andShri Bijal Ashok Shah, Prop. M/s. Swastik Corporationhas admitted that he is engaged in the business ofgiving bogus entry/accommodation entry only in lieuof margin of commission without any correspondingbuying/selling of stock,. In view of the above thecontentions and ledger account furnished has norelevance on the issue discussed herein, hence thesame is rejected.” 7.The principal argument of Mr. Hemani on behalf ofthe assessee is that the reopening is beyond a period offour years and there was no failure on the part of theassessee to fully and truly disclose its income. Mr.Hemani would submit that the reopening is based onchange of opinion. He would submit that the statement ofShri Bijal Ashok Shah which is sought to be relied uponcould be said to be of a tainted person and would notconstitute tangible material so as to arrive at theconclusion that the income in the hands of the assesseehas escaped assessment. Mr. Hemani would submit thatthe reopening is nothing but a roving or a fishing inquiry. 8.Per contra, Ms. Raval, the learned senior standingcounsel appearing for the revenue would submit that the reopening is based on tangible information provided bythe External Agencies. Such information was notavailable with the authorities at the time of originalproceedings based on survey proceedings under Section133A of the Act. Ms. Raval would submit that theAssessing Officer may be permitted to complete thereassessment proceedings and this Court may notinterfere at this stage. ANALYSIS 9.Having heard the learned counsel appearing for theparties and having gone through the materials on record,the only question that falls for our consideration iswhether the Assessing Officer committed any error inissuing notice under Section 148 of the Act for thereopening of the assessment. 10.Section 147 of the Act authorizes the re-opening ofany assessment of a previous year. Section 148, whichcontains the conditions for re-opening assessments,including the limitation period within which notices can beissued, by its proviso, enacts that: “Provided that no notice under this section shall beissued unless there is information with the AssessingOfficer which suggests that the income chargeable totax has escaped assessment in the case of theassessee for the relevant assessment year and theAssessing Officer has obtained prior approval of thespecified authority to issue such notice.” 11.Almost six decades back, the Supreme Court, in itsdecision in the case of Calcutta Discount CompanyLtd. vs. Income Tax Officer, reported in 1961 (2) SCR241 had underscored the obligation of every assessee tomake a true and full disclosure and said that: “Provided that no notice under this section shall beissued unless there is information with the AssessingOfficer which suggests that the income chargeable totax has escaped assessment in the case of theassessee for the relevant assessment year and theAssessing Officer has obtained prior approval of thespecified authority to issue such notice.” 11.Almost six decades back, the Supreme Court, in itsdecision in the case of Calcutta Discount CompanyLtd. vs. Income Tax Officer, reported in 1961 (2) SCR241 had underscored the obligation of every assessee tomake a true and full disclosure and said that: “There can be no doubt that the duty of disclosing allthe primary facts relevant to the decision of thequestion before the assessing authority lies on theassesses.” 12.The Supreme Court further held that once the duty isdischarged, it is upto the assessing officer to inquirefurther and draw the necessary inferences whilecompleting the assessment. 13.As to what can be the valid grounds for re-opening anassessment has been the subject matter of severaldecisions of the supreme court. In Income Tax Officer,Calcutta & Ors. vs. Lakhmani Mewal Das, 1976 (3)SCR 956, the Supreme Court held that the “reasons tobelieve” must be based on objective materials, and on areasonable view. The court held as follows: “The grounds or reasons which lead to the formationof the belief contemplated by Section 147(a) of theAct must have a material bearing on the question ofescapement of income of the assessee fromassessment because of his failure or omission todisclose fully and truly all material facts. Once thereexist reasonable grounds for the Income-tax Officerto form the above belief, that would be sufficient toclothe him with jurisdiction to issue notice. Whether the grounds are adequate or not is not a matter forthe Court to investigate. The sufficiency of groundswhich induce the income-tax Officer to act is,therefore, not a justiciable issue. It is, of course, opento the assessee to contend that the Income-taxOfficer did not hold the belief that there had beensuch non-disclosure. The existence of the belief canbe challenged by the assessee but not thesufficiency of reasons for the belief. The expression"reason to believe" does not mean a purelysubjective satisfaction on the part of the Income-taxOfficer. The reason must be held in good faith. Itcannot be merely a pretence. It is open to the Courtto examine whether the reasons for the formation ofthe belief have a rational connection with or arelevant bearing on the formation of the belief andare not extraneous or irrelevant for the purpose ofthe section. To this limited extent, the action of theIncome-tax Officer in starting proceedings in respectof income escaping assessment is open to challengein a Court of law.” 14.In Phool Chand Bajrang Lal & Ors. vs. Income Tax Officer & Ors., 1993 Supp (1) SCR 28, afterreviewing the previous case law, and concluding that avalid re-opening is one, preceded by specific, reliable andrelevant information, and that the sufficiency of suchreasons is not subject to judicial review- the only caveatbeing that the court can examine the record, if suchmaterial existed, it was held that the facts disclosed in thereturn, if found later to be unfounded or false, can alwaysbe the basis of a re-opening of assessment: “appears to us to be, to ensure that a party cannotget away by willfully making a false or untruestatement at the time of original assessment andwhen that falsity comes to notice, to turn around and say "you accepted my lie, now your hands are tiedand you can do nothing". It would be travesty ofjustice to allow the assessee that latitude.” 15.A three judge Bench, of the Supreme Court, in theCommissioner of Income Tax, Delhi v. Kelvinator ofIndia Ltd., 2010 (1) SCR 768, after considering itsprevious decisions, re-stated the position of law as follows: “appears to us to be, to ensure that a party cannotget away by willfully making a false or untruestatement at the time of original assessment andwhen that falsity comes to notice, to turn around and say "you accepted my lie, now your hands are tiedand you can do nothing". It would be travesty ofjustice to allow the assessee that latitude.” 15.A three judge Bench, of the Supreme Court, in theCommissioner of Income Tax, Delhi v. Kelvinator ofIndia Ltd., 2010 (1) SCR 768, after considering itsprevious decisions, re-stated the position of law as follows: “5....where the Assessing Officer has reason tobelieve that income has escaped assessment,confers jurisdiction to re-open the assessment.Therefore, post-1st April, 1989, power to re-open ismuch wider. However, one needs to give a schematicinterpretation to the words "reason to believe"..… Section 147 would give arbitrary powers to theAssessing Officer to re-open assessments on thebasis of "mere change of opinion", which cannot beper se reason to re-open. 6. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power toreview; he has the power to re-assess. But re-assessment has to be based on fulfillment of certainpre-condition and if the concept of "change ofopinion" is removed, as contended on behalf of theDepartment, then, in the garb of re-opening theassessment, review would take place. 7. One must treat the concept of "change of opinion"as an in-built test to check abuse of power by theAssessing Officer. Hence, after 1st April, 1989,Assessing Officer has power to re-open, providedthere is "tangible material" to come to the conclusionthat there is escapement of income fromassessment. Reasons must have a live link with theformation of the belief.” 16.It is therefore, clear that the basis for a valid re-opening of assessment should be the availability oftangible material, which can lead the AO to scrutinize thereturns for the previous assessment year in question, todetermine, whether a notice under Section 147 is calledfor. 17.It appears that in the case on hand, the searchassessment was finalized under section 143(3) read withSection 153A of the Act on 28.03.2016. Thereafter, surveyaction under section 133A of the Act was conducted bythe Investigating Wing, Mumbai on 14.01.2017 in the caseof Shri Bijal Ashok Shah, proprietor of M/s. SwastikCorporation. During the course of the survey action, onestatement of ijal Ashok Shah was recorded on oathwherein he admitted that he is engaged in the business ofproviding accommodation entries to the beneficiaries inlieu of commission. Bijal Ashok Shah also disclosed themodus operandi employed by him to provide the entries tothe beneficiaries . Bijal Ashok Shah, in his statement, hasalso named the writ applicant herein as one of therecipients of the accommodation entries. All these factswere not before the Assessing Officer at the time offinalization of the search assessment. It is a settledposition of law that the adequacy of the reasons providedby the Assessing Officer fall outside the review powers andremains within the domain of the Assessing Officer at thisstage of the proceedings where only a preliminary finding under section 147/148 has been made. It is necessary toreiterate that we are at the stage of the validity of thenotice under section 148/147. The inquiry at this stage isonly to see whether there are reasonable grounds for theIncome Tax Officer to believe and not whether theomission/failure and the escapement of income isestablished. It is necessary to keep this distinction inmind. (See Shri Krishna (P.) Ltd. vs. ITO (1996) 221 ITR538/87 Taxman 315). under section 147/148 has been made. It is necessary toreiterate that we are at the stage of the validity of thenotice under section 148/147. The inquiry at this stage isonly to see whether there are reasonable grounds for theIncome Tax Officer to believe and not whether theomission/failure and the escapement of income isestablished. It is necessary to keep this distinction inmind. (See Shri Krishna (P.) Ltd. vs. ITO (1996) 221 ITR538/87 Taxman 315). 18.Having regard to the materials on record it cannot besaid that there is a total non-application of mind on thepart of the Assessing Officer while recording the reasonsfor reopening of the assessment. It also cannot be saidthat his conclusion was merely based on the observationsand information received from the Investigation Wing. TheAssessing Officer could be said to have applied his mind tothe same. The Assessing Officer could not be said to havemerely concluded without verifying the facts that it is thecase of reopening of the assessment. We do not find meritin the vociferous submission of the learned counselappearing for the writ applicant that the contents of thereasons recorded by the Assessing Officer for thereopening of the assessment is merely an introductionabout the investigations conducted by the InvestigationWing, the modus operandi of the entry provided, thesumming up of inquiry of the Investigation Wing, theinformation received from the Investigation Wing etc. Wehave examined the belief of the Assessing Officer to a limited extent to look into whether there was sufficientmaterial available on record for the Assessing Officer toform a reasonable belief and whether there was a live linkexisting of the material and the income chargeable to taxthat escaped assessment. The case on hand is not onewhere it could be argued that the Assessing Officer, onabsolutely vague or unspecific information, initiated theproceedings of reassessment without taking the pains toform his own belief in respect of such materials. 19.In the result, this application fails and is herebyrejected. (J. B. PARDIWALA, J) (NISHA M. THAKORE,J) Vahid