Anderson Biomed Private Limited v. The Assistant Commissioner Of Income Tax, Circle 1(1)(1) =======================================Appearance

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 21716 of 2019 FOR APPROVAL AND SIGNATURE: HONOURABLE MS. JUSTICE BELA M. TRIVEDIandHONOURABLE DR. JUSTICE ASHOKKUMAR C. JOSHI ======================================= Whether Reporters of Local Papers may be allowed1 NOto see the judgment ?to see the judgment ?2 To be referred to the Reporter or not ?YES Whether their Lordships wish to see the fair copy of3 NOthe judgment ?the judgment ? Whether this case involves a substantial question4 of law as to the interpretation of the Constitution ofNOIndia or any order made thereunder ?India or any order made thereunder ? =======================================ANDERSON BIOMED PRIVATE LIMITED Versus THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(1) =======================================Appearance: MR TUSHAR HEMANI, SR. ADVOCATE for MS VAIBHAVI K PARIKH(3238) for the Petitioner(s) No. 1 MR NIKUNT RAVAL for MRS KALPANAK RAVAL(1046) for the Respondent(s) No. 1 ======================================= CORAM: HONOURABLE MS. JUSTICE BELA M. TRIVEDIandHONOURABLE DR. JUSTICE ASHOKKUMAR C. JOSHI Date : 31/07/2021 CAV JUDGMENT (PER : HONOURABLE DR. JUSTICE ASHOKKUMAR C. JOSHI) 1.This petition, under Article 226 of the Constitution of India, is filed by the petitioner – Anderson Biomed Private Limited –assessee seeking to quash and set aside the Notice dated30.03.2019 issued by the respondent authority under section 148of the Income Tax Act, 1967 (herein after referred to as “the ITAct”) for the Assessment Year 2012-13, as it has reason tobelieve that the income chargeable to tax for the assessmentyear under consideration has escaped assessment within themeaning of section 147 of the IT Act. 2.The facts, as emerge from the record, are that thepetitioner is a Company incorporated under the Companies Act,1956. During the Financial Year 2010-11, relevant to AssessmentYear 2011-12, the petitioner entered into certain commoditiestransactions through broker namely “AA Plus Shares Brokers Pvt.Ltd.” (herein after referred to as “the broker company”) in which,the petitioner incurred loss and eventually, an amount ofRs.2,07,92,029/- became payable to the broker company, whichremained outstanding even on 31.03.2011 and was reflected inSchedule-9: Sundry Creditors forming part of the Audited AnnualAccounts. Such amount was repaid by the petitioner companyduring the Financial Year 2011-12, relevant to the AssessmentYear 2012-13 i.e. the year under consideration, in variousinstallments through banking channel, as is evident from theledger of the broker company. Thereafter, the petitioner filed itsReturn of Income (RoI) for the year under consideration on24.09.2012, declaring total income of Rs.1,18,22,690/-. However,the respondent authority issued notice dated 30.03.2019 undersection 148 of the IT Act seeking to reopen the case of thepetitioner for the year under consideration. In response to thesaid notice, the petitioner company filed its RoI on 21.08.2019and also requested to supply the reasons for reopening, which were supplied vide letter dated 12.09.2019. A perusal of thesame revealed that the respondent authority is of the view thatthe petitioner had transactions aggregating to Rs.2,07,92,029/-with the broker company during the year under consideration andhence, the petitioner has taken accommodation entries to thetune of Rs.2,07,92,029/- and the respondent authority has reasonto believe that the petitioner has escaped assessment. Againstthe reasons accorded, the petitioner,videletter dated02.10.2019, raised objections against reopening on factual aswell as the legal grounds, however, the respondent authoritydisposed of the said objections raised by the petitioner holdingthat the reopening is justified. Being aggrieved, the petitioner isbefore this Court by way of this petition. were supplied vide letter dated 12.09.2019. A perusal of thesame revealed that the respondent authority is of the view thatthe petitioner had transactions aggregating to Rs.2,07,92,029/-with the broker company during the year under consideration andhence, the petitioner has taken accommodation entries to thetune of Rs.2,07,92,029/- and the respondent authority has reasonto believe that the petitioner has escaped assessment. Againstthe reasons accorded, the petitioner,videletter dated02.10.2019, raised objections against reopening on factual aswell as the legal grounds, however, the respondent authoritydisposed of the said objections raised by the petitioner holdingthat the reopening is justified. Being aggrieved, the petitioner isbefore this Court by way of this petition. 3.We have heard, learned senior advocate Mr. Tushar Hemanifor learned advocate Ms. Vaibhavi Parikh for the petitioner andlearned advocate Mr. Nikunt Raval for learned advocateMrs. Kalpana Raval for the respondent. 3.1The learned senior advocate for the petitioner, invitingattention to the reasons recorded, submitted that as is emergingfrom the reasons recorded, an inquiry was carried by the DeputyDirector of Income Tax (Inv.), Unit-1(3), Ahmedabad in the caseof various bogus concerns of Shri Jignesh Sudhirbhai Shah, who isengaged in the business of providing the accommodation entries.That, search under section 132 of the IT Act conducted on11.09.2018, resulted into seizure of unaccounted cash of Rs.19.3crores (related to accommodation entries and commission earnedthereon) from the residential premises of Shri Jignesh Shah alongwith incriminating digital as well as documentary evidence. Itwas found that Shri Jignesh Shah is managing and controlling multiple companies and concerns, which are not carrying out anygenuine business activity. These concerns are involved inactivity of providing accommodation entries of various kinds suchas unsecured loans, share premiums, bogus gains, contrivedlosses etc. The concerns were found to be non-existent at theiraddresses. It is further recorded that on a perusal of the list ofshell/paper companies, furnished by Shri Jignesh Shah, it is seenthat M/s. Aa Plus Share Brokers Pvt. Ltd. (the broker company) isone of the shell/paper company, controlled by Shri Jignesh Shahand from the details of accommodation entries provided by theshell/paper companies controlled by Shri Jignesh Shah, it is seenthat the petitioner company has taken accommodation entriesfrom shell/paper company - M/s. Aa Plus Share Brokers Pvt. Ltd.(the broker company). The learned senior advocate for thepetitioner further submitted that on the basis of such informationreceived from Shri Jignesh Shah, it is recorded that it is provedthat M/s. Anderson Biomed Pvt. Ltd. (the petitioner company) hastaken accommodation entries to the tune of Rs.2,07,92,029/-from the shell/paper company namely M/s. Aa Plus Share BrokersPvt. Ltd. (the broker company) during the Financial Year 2011-12,relevant to Assessment Year 2012-13. The learned senioradvocate for the petitioner, with all vehemence at command,submitted that reopening has been made for wrong assessmentyear as the transactions with the broker company have beenmade in the previous year i.e. in the Assessment Year 2011-12(Financial Year 2010-11) and no amount has been received fromthem in the year under consideration. He further submitted that,in fact, payment has been made to the broker company.Mr. Hemani, the learned senior advocate for the petitioner, theninvited the attention of the Court to the date-wise details ofaccommodation entries, to the tune of Rs.2,07,92,029/-, taken by the petitioner company from the broker company and submittedthat if the dates of transactions are seen, they pertain to the year2011 only. the petitioner company from the broker company and submittedthat if the dates of transactions are seen, they pertain to the year2011 only. 3.2The learned senior advocate for the petitioner submittedthat, thus, two glaring mistakes are there in the reasons recordedviz. firstly the petitioner company has carried out transactionswith the broker company in the previous year i.e. AssessmentYear 2011-12 and no transaction has been carried out in the yearunder consideration i.e. Assessment Year 2012-13 and only theoutstanding liability of the previous year stood cleared in the yearunder consideration. He submitted that in the Audit Report of thepetitioner company for the previous year i.e. Assessment Year2011-12, in Schedule-9: Sundry Creditors, the subject amount ofRs.2,07,92,029/- has been shown as payable as on 31.03.2011 tothe broker company, which fact proves that the amount inquestion pertains to the previous year and not for the year underconsideration. Secondly, he submitted that in the reasonsrecorded, it has been alleged that the amounts shown in thetable totalling to Rs.2,07,92,029/- of different dates, are theaccommodation entries received by the petitioner company fromthe broker company, however, in fact, the said amount is notreceived by the petitioner company but is paid by the petitionercompany to the broker company for the transactions made forthe Assessment Year 2011.-12. Accordingly, from the facts anddocumentary evidence, it is proved that the case of the petitionercompany has been wrongly reopened alleging availment ofaccommodation entries from the broker company and thedepartment has wrongly assumed the jurisdiction without anybasis and tangible material. The learned senior advocate for thepetitioner, relying upon the decision of the Apex Court in GKN Driveshafts (India) Ltd. v. ITO & Ors., (2003) 259 ITR 19(SC), submitted that in the absence of any new material orinformation, the reopening of the assessment is not permissible. 3.3The learned senior advocate for the petitioner furthersubmitted that even otherwise, no reliance could be placed andcognizance could not be taken from the material found from thethird party premises, on borrowed information and therefore, thesubsequent reopening is nothing but a change of opinion of thesubsequent Assessing Officer and it cannot be said that theincome chargeable to tax has escaped assessment. 3.4Making above submissions, it is urged by the learned senioradvocate for the petitioner to allow the present petition and toquash and set aside the impugned notice. 4.Per contra, learned advocate Mr. Nikunt Raval for therespondent authority, while opposing the present petition, drewour attention to the affidavit-in-reply filed on behalf of therespondent authority and submitted that upon tangible materialfound against the present petitioner, impugned notice undersection 148 of the IT Act has been issued. He submitted that oneof the Directors of the broker company namely Mrs. ShalubenNikeshbhai Shah, in her affidavit dated 19.10.2018 has madedeclaration that the said company is engaged in the business ofarranging / facilitating / providing accommodation entries tovarious parties and the transactions are carried out under theadvice and consultation of Shri Jignesh Shah. He submitted thatthe petitioner company has taken accommodation entries to thetune of Rs.2,07,92,029/- from Shri Jignesh Shah through itsmanaged and controlled company i.e. the broker company. He further submitted that statements of Shri Jignesh Shah andMrs. Shaluben Nikeshbhai Shah have been recorded undersection 131 of the IT Act from which, it is revealed that ShriJignesh Shah is managing and controlling multiple companies andconcerns which are not carrying out any genuine businessactivity. It is also revealed that the then Director of the brokercompany was just a ‘dummy director’ (Mrs. Shaluben NikeshbhaiShah) and said company (broker company) was providing andarranging for the accommodation entries. The learned advocatefor the respondent submitted that thorough investigation wascarried out and it was found that no genuine transaction wascarried out by the broker company in the commodity exchange inthe name of the petitioner company. The learned advocate forthe respondent further submitted that in order to further verifythe claim of the assessee, the financial details of the brokercompany were obtained from the RoC database and on perusal ofits balance sheet, there appeared no liability as on 31.03.2011and therefore, the contention of the petitioner that the paymentswere made to settle the outstanding liability pertaining toprevious year, is incorrect and misguiding. He submitted thatupon inquiry made by the Assessing Officer, the say of thepetitioner that the transactions in question are related toprevious year, did not get substantiated by any cogent proof andmaterial, on the contrary, it was found that no transactions in thenature of commodity trading were carried out during theFinancial Year 2010-11. Thus, all these transactions are in thenature of accommodation entries, which have escaped theassessment. 4.1Relying upon the decision of the Apex Court in RaymondWoollen Mills Ltd. v. ITO, [1999] 236 ITR 34 (SC), he submitted that, as held by the Court in the said decision, at thetime of recording the reason for satisfaction of AO, there shouldbe prima facie some material on the basis of which, thedepartment could reopen the case. The sufficiency orcorrectness of the material is not a thing to be considered at thisstage. It will be open to the assessee to prove that theassumption of fact made in the notice was erroneous at the timeof assessment proceedings. 4.2Making above submissions, it is urged that the Court maynot interfere in the impugned notice and requested to dismiss thepetition. 5.Having regard to the submissions advanced by the learnedadvocates for the respective parties and having perused thematerial placed on record, it appears to us that the learned senioradvocate for the petitioner has challenged the impugned noticemainly on the ground that when jurisdictional facts are notestablished, the department cannot assume the jurisdiction andreopen the assessment. The basis for such submission is that,according to the learned senior advocate for the petitioner, thepetitioner has taken the accommodation entries in question inthe previous year i.e. Assessment Year 2011-12 (Financial Year2010-11) and not in the year under consideration i.e. AssessmentYear 2012-13. His further contention is that there is no tangiblematerial with the respondent authority for recording satisfactionand reopening the assessment for the year under considerationand accordingly, he submitted that the petitioner is not beforethe Court for sufficiency of reasons but for the absence ofreasons for reopening the assessment. 5.1At this juncture, it would be apt to refer to the observationsmade by us with regard to the scope and ambit of section 147 ofthe IT Act in paragraphs 7, 8, 9 and 10 of CAV Judgement dated05.07.2021 rendered in Special Civil Application No. 19821 of2019, which are as under: 5.1At this juncture, it would be apt to refer to the observationsmade by us with regard to the scope and ambit of section 147 ofthe IT Act in paragraphs 7, 8, 9 and 10 of CAV Judgement dated05.07.2021 rendered in Special Civil Application No. 19821 of2019, which are as under: “7.At the outset, it may be noted that as per the settledlegal position, two conditions have to be satisfied beforethe Assessing Officer invokes his jurisdiction to reopen theassessment under section 147 of the said Act after theexpiry of four years from the end of the relevantassessment year – firstly, that the Assessing Officer musthave reason to believe that the income chargeable to taxhas escaped assessment for the concerned assessmentyear, and secondly, such escapement of assessment wasby reason of failure on the part of the assessee to make thereturn under section 139, or in response to a notice issuedunder Sub-section (1) of Section 142 or Section 148 or todisclose fully and truly all the material facts necessary forhis assessment for that assessment year. So far as thecase of the present petitioner is concerned, the assessmentfor the A.Y. 2012-13 is sought to be reopened by theAssessing Officer under section 147/148 of the said Act, onhis having arrived at a satisfaction that the income for thesaid assessment year had escaped assessment by reasonof the failure on the part of the assessee to disclose fullyand truly all material facts necessary for his assessment. 8.It is pertinent to note that as held by the SupremeCourt in catena of decisions, the formation of belief by theAssessing Officer at the stage of initiation of action undersection 147 of the Act is within the realm of subjectivesatisfaction. The Supreme Court in the case of AssistantCommissioner of Income Tax versus Rajesh JhaveriStock Brokers P. Ltd. reported in (2007) 291 ITR500(SC), had an occasion to deal with the scope and effectof section 147 as substituted w.e.f. April 1[st], 1989, in whichthe Court has observed as under : - “Section 147 authorises and permits the AssessingOfficer to assess or reassess income chargeable totax if he has reason to believe that income for anyassessment year has escaped assessment. The word“reason” in the phrase “reason to believe” would mean cause or justification. If the Assessing Officerhas cause or justification to know or suppose thatincome had escaped assessment, it can be said tohave reason to believe that an income had escapedassessment. The expression cannot be read to meanthat the Assessing Officer should have finallyascertained the fact by legal evidence or conclusion.The function of the Assessing Officer is to administerthe statute with solicitude for the public exchequerwith an inbuilt idea of fairness to taxpayers. Asobserved by the Supreme Court in Central ProvincesManganese Ore Co. Ltd. v. ITO [1991] 191 ITR 662,for initiation of action under section 147(a) (as theprovision stood at the relevant time) fulfillment of thetwo requisite conditions in that regard is essential. Atthat stage, the final outcome of the proceeding is notrelevant. In other words, at the initiation stage, whatis required is “reason to believe”, but not theestablished fact of escapement of income. At thestage of issue of notice, the only question is whetherthere was relevant material on which a reasonableperson could have formed a requisite belief. Whetherthe materials would conclusively prove theescapement is not the concern at that stage. This isso because the formation of belief by the AssessingOfficer is within the realm of subjective satisfaction(see ITO v. Selected Dalurband Coal P. Ltd.[1996] 217 ITR 597 (SC)]; Raymond WoollenMills Ltd. v. ITO [1999] 236 ITR 34 (SC). The scope and effect of section 147 as substitutedwith effect from April 1, 1989, as also sections 148 to152 are substantially different from the provisions asthey stood prior to such substitution. Under the oldprovisions of section 147, separate clauses (a) and(b) laid down the circumstances under which incomeescaping assessment for the past assessment yearscould be assessed or reassessed. To conferjurisdiction under section 147(a) two conditions wererequired to be satisfied : firstly the Assessing Officermust have reason to believe that income, profits orgains chargeable to income tax have escapedassessment, and secondly he must also have reasonto believe that such escapement has occurred byreason of either omission or failure on the part of theassessee to disclose fully or truly all material factsnecessary for his assessment of that year. Both these conditions were conditions precedent to be satisfiedbefore the Assessing Officer could have jurisdiction toissue notice under section 148 read with section147(a). But under the substituted section 147existence of only the first condition suffices. In otherwords if the Assessing Officer for whatever reasonhas reason to believe that income has escapedassessment it confers jurisdiction to reopen theassessment. It is, however, to be noted that both theconditions must be fulfilled if the case falls within theambit of the proviso to section 147.” 9.In the case of Raymond Woollen Mills Ltd.Versus Income-Tax Officer and others reported in1999 236 ITR 34(SC), the Supreme Court observedthat the Court has only to see whether there wasprima facie some material on the basis of which theDepartment could reopen the case. The sufficiency orcorrectness of the material is not a thing to beconsidered at this stage. 10.It is very pertinent to note that in the case ofPhool Chand Bajrang Lal versus Income-TaxOfficer reported in 203 ITR 456 (SC), it wasobserved that the acquiring fresh information,specific in nature and reliable in character, relating tothe concluded assessment, which went to expose thefalsity of the statement made by the assessee at thetime of original assessment was different fromdrawing fresh inference from the same facts andmaterial which was available with the Income-TaxOfficer at the time of the original assessmentproceedings. Where the transaction itself on the basisof the subsequent information was found to be abogus transaction, the mere disclosure of thattransaction at the time of original proceedings couldnot be said to be disclosure of the true and full facts,and the Officer would have the jurisdiction to reopenthe concluded assessment in such a case. Theprecise observation made by the Supreme Court inthe said case may be reproduced as under : - “In the present case as already noticed, the Income-Tax Officer, Azamgarh, subsequent to the completionof the original assessment proceedings, on making anenquiry from the jurisdictional Income-Tax Officer atCalcutta, learnt that the Calcutta company from “In the present case as already noticed, the Income-Tax Officer, Azamgarh, subsequent to the completionof the original assessment proceedings, on making anenquiry from the jurisdictional Income-Tax Officer atCalcutta, learnt that the Calcutta company from whom the assessee claimed to have borrowed theloan of Rs. 50,000/- in cash had not really lent anymoney but only its name to cover up a bogustransaction and, after recording his satisfaction asrequired by the provisions of section 147 of the Act,proposed to reopen the assessment proceedings.The present is thus not a case where the Income-TaxOfficer sought to draw any fresh inference whichcould have been raised at the time of the originalassessment on the basis of the material placedbefore him by the assessee relating to the loan fromthe Calcutta company and which he failed to draw atthat time. Acquiring fresh information, specific innature and reliable in character, relating to theconcluded assessment, which goes to expose thefalsity of the statement made by the assessee at thetime of the original assessment is different fromdrawing fresh inference from the same facts andmaterial which were available with the Income-TaxOfficer at the time of the original assessmentproceedings. The two situations are distinct anddifferent. Thus, where the transaction itself, on thebasis of subsequent information, is found to be abogus transaction, the mere disclosure of thattransaction at the time of original assessmentproceedings cannot be said to be a disclosure of the“true” and “full” facts in the case and the Income-TaxOfficer would have the jurisdiction to reopen theconcluded assessment in such a case.” 5.2Further, the term “reason to believe”, however, is notdefined in the Act but it can be gathered from the availableinformation, leading the Assessing Officer to reopen theassessment. The term itself is suggestive of its prima faciecharacteristics and not established or conclusive facts orinformation. Meaning thereby, it is the Assessing Officer’s primafacie belief, of course, derived from the some material /information, etc. leading him to reopen the assessment. 5.3The ambit and import of the term “reason to believe” hasbeen examined in numerous cases, notably in ITO v. Lakhmani Mewal Das [(1976) 103 ITR 437: 1976 (3) SCC 757].TheApex Court held that the reason must be held in good faith. Itcannot be merely a pretence. It is open to the Court to examinewhether the reasons for the formation of the belief have arational connection with or a relevant bearing on the formation ofthe belief and are not extraneous or irrelevant for the purpose ofthe section. To this limited extent, the action of the Income TaxOfficer in starting proceedings in respect of income escapingassessment is open to challenge in a Court of law. Rationalconnection postulates that there must be a direct nexus or livelink between the material coming to the notice of the Income TaxOfficer and the formation of his belief that there has beenescapement of the income of the assessee from assessment inthe particular year because of his failure to disclose fully andtruly all material facts. It is no doubt true that the Court cannotgo into the sufficiency or adequacy of the material and substituteits own opinion for that of the Income Tax Officer on the point asto whether action should be initiated for reopening assessment.At the same time we have to bear in mind that it is not any andevery material, howsoever vague and indefinite or distant,remote and far-fetched, which would warrant the formation of thebelief relating to escapement of the income of the assessee fromassessment. 6.Adverting to the facts of the case on hand, as referred toherein above, it is the case of the petitioner that theaccommodation entries upon which the respondent authority isrelying are pertaining to the previous year and not of the yearunder consideration. It is also the case of the petitioner thatthere is no tangible material, even otherwise in the hands of therespondent to substantiate that the income chargeable to tax hasescaped assessment qua the assessee. The department, in the affidavit-in-reply filed by it, however, has replied to the saidqueries which go to the root of the matter. It is averred that onnecessary inquiries made, it was found that no transactions in thenature of commodity trading were carried out during theFinancial Year 2010-11 by M/s. AA Plus Commodity Broking Pvt.Ltd. [Previously known as AA Plus Share Brokers Pvt. Ltd.] i.e. thebroker company. Further, the financial details of M/s. AA PlusCommodity Broking Pvt. Ltd. [Previously known as AA Plus ShareBrokers Pvt. Ltd.] were obtained from the Registrar of Companies’database and no such outstanding liability, as claimed by thepetitioner, has been found on perusal of the balance sheet for theFinancial Year 2010-11. So, the payments are not in the natureof clearing the outstanding dues as claimed by the assesseecompany as there was no outstanding liability on the part of theassessee company of any previous year but these transactionsare only in the nature of the accommodation entries, which haveescaped assessment and hence, there is escapement of incomechargeable to tax. It is further averred that in the speaking orderdated 21.11.2019 disposing of the objections raised by petitioner,it was informed to the petitioner that during the course ofreassessment proceedings, a notice under section 133(6) of theAct was issued to M/s. Multi Commodity Exchange of India Ltd.And the response received was in negative. It stated that nosuch transactions were carried out by the client M/s. AndersonBiomed Private Limited (the petitioner company) in commoditytrading and hence, the claim that the transactions were carriedout in Financial Year 2010-11 is wrong and without anysubstance. Further, from the inquiry made with IndianCommodity Exchange (ICEX) clearly revealed that no suchtransactions are being carried out by the client. Thus, thetangible material / information on the basis of which the case ofthe petitioner was reopened within the meaning of section 147 of the IT Act is information disseminated by the Investigation Wing,Ahmedabad in the case of Shri Jignesh Shah. Further, variousinquiries were made and statements were recorded of theconcerned persons, which revealed no transaction had beencarried out for the client. Thus, in the case on hand, prima facie,there appears live link between the material coming to the noticeof the Assessing Officer and the formation of his belief that therehas been escapement of the income of the assessee fromassessment in the year under consideration because of his failureto disclose fully and truly all material facts. 6.1So far as the contention of learned senior advocate for thepetitioner as regards borrowed satisfaction is concerned, it issubmitted in reply by the respondent that the case of thepetitioner is reopened on account of the information and tangiblematerial received from the Investigation Wing, Ahmedabad in thecase of Shri Jignesh Shah. Further, it is averred that in the caseof the petitioner, no scrutiny assessment was held for the yearunder consideration. Further, prior to initiating the proceedingsunder section 147 of the IT Act, the Assessing Officer has verifiedthe case record and accordingly, has drawn satisfaction thatincome to the tune of Rs.2,07,92,029/- has escaped assessment. 6.1So far as the contention of learned senior advocate for thepetitioner as regards borrowed satisfaction is concerned, it issubmitted in reply by the respondent that the case of thepetitioner is reopened on account of the information and tangiblematerial received from the Investigation Wing, Ahmedabad in thecase of Shri Jignesh Shah. Further, it is averred that in the caseof the petitioner, no scrutiny assessment was held for the yearunder consideration. Further, prior to initiating the proceedingsunder section 147 of the IT Act, the Assessing Officer has verifiedthe case record and accordingly, has drawn satisfaction thatincome to the tune of Rs.2,07,92,029/- has escaped assessment. 6.2Further, as it emerges from the record, the search andseizure under section 132 of the IT Act was carried out on11.09.2018 in the case of Shri Jignesh Shah and during theinvestigation, it was found that Shri Jignesh Shah was managingand controlling multiple companies and concerns which were notcarrying out any genuine business activity. These concerns werefound to be involved in providing accommodation entries, whichwas stated to have been admitted by Shri Jignesh Shah in his statement on oath under section 131 of the IT Act. Further, thethen Director of the broker company was found to be just adummy Director (Ms. Shaluben Nikeshbhai Shah), who, in heraffidavit dated 19.10.2018 had made declaration that the saidcompany was engaged in the business of arranging / facilitating /providing accommodation entries to various parties. 6.3The gist of assailing by the learned senior advocate for thepetitioner is the absenteeism of reasons and no tangible materialwith the department for reopening the assessment, however,considering the aforesaid facts and circumstances of the case, weare of the considered view that it cannot be said that there wasno reason to believe for the Assessing Officer that the incomechargeable to tax had escaped assessment, because suchexercise of reopening has been made only after due inquiries andrecording of statements of concerned persons, as referred toherein above, and on having found prima facie material,impugned notice is issued to the petitioner. 6.4The learned advocate for the respondent has relied uponthe decision of this Court in Peass Industrial Engineers (P.)Ltd. v. Deputy Commissioner of Income Tax, [2016] 76Taxmann.com 106 (Gujarat), relevant of which is extractedherein below: “9.On the basis of aforesaid proposition laid by series ofdecisions, we are of the opinion that when the Authority isarmed with the tangible material in the form of specificinformation received by the Investigation Wing,Ahmedabad is throughly justified in issuing a notice forreassessment. It is revealed from the said additionalmaterial available on hand a reasonable belief is formed bythe Assessing Authority that income of the petitioner hasescaped assessment and therefore, once the reasonablebelief is formulated by the Authority on the basis of cogent “9.On the basis of aforesaid proposition laid by series ofdecisions, we are of the opinion that when the Authority isarmed with the tangible material in the form of specificinformation received by the Investigation Wing,Ahmedabad is throughly justified in issuing a notice forreassessment. It is revealed from the said additionalmaterial available on hand a reasonable belief is formed bythe Assessing Authority that income of the petitioner hasescaped assessment and therefore, once the reasonablebelief is formulated by the Authority on the basis of cogent tangible material, the Authority is not expected to concludeat this stage the issue finally or to ascertain the fact byevidence or conclusion, we are of the opinion thatfunction of the assessing authority at this stage is toadminister the statute and what is required at thisstage is a reason to believe and not establish fact ofescapement of income and therefore, looking to thescope of Section 147 as also Sections 148 to 152 ofthe Act, even if scrutiny assessment has beenundertaken, if substantial new material is found inthe form of information on the basis of which theassessing authority can form a belief that theincome of the petitioner has escaped assessment, itis always open for the assessing authority to reopenassessment. From the reasons which are recorded, itclearly emerges that the petitioner is the beneficiary ofthose entries by Kayan brothers, who are well known entryoperators across the country and this fact has beenunearthed on account of the information received by DGITInvestigation Branch and therefore, it cannot be said in anyway that even if four years have been passed, it is not openfor the Authority to reopen the assessment. In the presentcase, there was independent application of mind on behalfof the assessing authority in arriving at the conclusion thatincome had escaped assessment and therefore, thecontentions raised by the petitioner are devoid of merits.Dealing with the contentions of the petitioner that theinformation received from DGIT, Investigation Branch,Ahmedabad, can never be said to be additionalinformation. We are of the opinion that the informationwhich has been received is on 26.3.2015 from the DGIT,Investigation Branch, Ahmedabad, whereby it has beenrevealed that present petitioner is also the beneficiaries ofthose Kayan brothers, who are in the activity of entryoperation throughout the country and therefore, it cannotbe said that this is not justifiable material to form a reasonto belief by the Authority and therefore, this being a case,the Authority is justified in issuing notice under Section 148of the Act to reopen the assessment and therefore, thechallenge contained in the petition being devoid of merits,same deserves to be dismissed. As we found that for theexercise of power of reopening of assessment after aperiod of 4 years, a proper procedure is observed by theAuthority, specific approval has been obtained from thecompetent Authority and upon perusal of original file, wehave satisfied ourselves that the approval has beenaccorded in a proper manner by the competent Authority and since the notice is issued based upon substantialcompliance of statutory provision, the Authority has actedwell within the bounds of his powers and the Authority hasissued notice. We found that the order which has beenpassed of rejecting the objections raised by the petitioner isalso a well reasoned order passed after due exercise ofjurisdiction and therefore, same is not, therefore, requiredto be interfered with.” and since the notice is issued based upon substantialcompliance of statutory provision, the Authority has actedwell within the bounds of his powers and the Authority hasissued notice. We found that the order which has beenpassed of rejecting the objections raised by the petitioner isalso a well reasoned order passed after due exercise ofjurisdiction and therefore, same is not, therefore, requiredto be interfered with.” 6.5Thus, the function of the assessing authority at this stage isto administer the statute and what is required is a reason tobelieve and not to establish fact of escapement of income andtherefore, looking to the scope of Section 147 as also sections148 to 152 of the Act, even if scrutiny assessment has beenundertaken, if substantial new material is found in the form ofinformation on the basis of which the assessing authority canform a belief that the income of the petitioner has escapedassessment, it is always open for the assessing authority toreopen the assessment. 6.6Next is the decision in Aaspas Multimedia Ltd. v.Deputy Commissioner of Income Tax, Circle 1(1), [2017]83 Taxmann.com 82 (Gujarat), relevant of which is extractedas under: “…In the present case the reassessment proceedings havebeen initiated by the Assessing Officer on the basis ofmaterial provided by the Principal Director (Investigation).It is also required to be noted that the genuineness of thevarious companies who made share applications aredoubted. The assessee is alleged to have been engaged inbogus share applications from various bogus concernsoperated by PKJ. The assessee is the beneficiary of thesaid transactions of share application by those bogusconcerns. In the wake of information received by theAssessing Officer, when the Assessing Officer formed abelief that the investment made from the funding of suchcompanies which are bogus, the Assessing Officer hasrightly assumed jurisdiction of initiating the reassessment proceedings. The Assessing Officer, on the basis ofinformation subsequently having come to his knowledge,recognized untruthfulness of the facts furnished earlier. Inthe present case, since both the necessary conditions toreopen the assessment have been duly fulfilled, sufficiencyof the reasons is not to be gone into by this Court.Information furnished at the time of original assessment,when by subsequent information received from thePrincipal Director (Investigation), itself found to becontroverted, the objection to the notice of reassessmentunder section 147 must fail.” 6.7In the case on hand also, the Assessing Officer has reasonto believe that the petitioner company was providingaccommodation entries for the shell/paper companies meaningthereby, bogus companies/concerns. The reasons for theformation of the belief by the Assessing Officer in the instantcase, appear to have a rational connection with or relevantbearing on the formation of belief that there has beenescapement of the income of the assessee from assessment inthe particular year because of his failure to disclose fully andtruly all material facts. Accordingly, no interference is called forat the hands of this Court in this petition under Article 226 of theConstitution of India. 6.8The learned senior advocate for the petitioner has reliedupon the decision of the Apex Court in GKN Driveshafts (India)Ltd. (supra). There cannot be any other view than what is takenin the said decision, however, in the case on hand, when thedepartment has not considered the objections raised by thepetitioner for the reason that the petitioner company has failed todisclose fully and truly all the material facts necessary for hisassessment for the year under consideration and when theAssessing Officer has reason to believe that income chargeable totax has escaped assessment, we are of the view that the above decision would be of no avail to the petitioner. 6.8The learned senior advocate for the petitioner has reliedupon the decision of the Apex Court in GKN Driveshafts (India)Ltd. (supra). There cannot be any other view than what is takenin the said decision, however, in the case on hand, when thedepartment has not considered the objections raised by thepetitioner for the reason that the petitioner company has failed todisclose fully and truly all the material facts necessary for hisassessment for the year under consideration and when theAssessing Officer has reason to believe that income chargeable totax has escaped assessment, we are of the view that the above decision would be of no avail to the petitioner. 7.In the backdrop as aforesaid, present petition fails and isdismissed accordingly. Ad-interim relief is vacated forthwith. Noorder as to costs. [ Bela M. Trivedi, J. ] hiren [ A. C. Joshi, J. ]