Kantibhai Dharamshibhai Narola v. The Assistant Commissioner Of Income Tax, Ward 3(2)(4

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 19549 of 2018With R/SPECIAL CIVIL APPLICATION NO. 19550 of 2018With R/SPECIAL CIVIL APPLICATION NO. 19551 of 2018 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE J.B.PARDIWALA Sd/-Sd/- ================================================================ KANTIBHAI DHARAMSHIBHAI NAROLA Versus THE ASSISTANT COMMISSIONER OF INCOME TAX, WARD 3(2)(4) ================================================================ Appearance: MR TUSHAR HEMANI, SR.ADVOCATE with MS VAIBHAVI K.PARIKH for the Petitioner(s) No. 1 MRS KALPANAK RAVAL(1046) for the Respondent(s) No. 1 ================================================================ CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALAandHONOURABLE MR. JUSTICE ILESH J. VORA Date : 06/01/2021 COMMON ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1.Since the issues raised in all the captionedwrit-applications are interrelated, those were heard analogouslyand are being disposed of by this common judgment and order. 2.For the sake of convenience, the Special Civil ApplicationNo.19549 of 2018 is treated as the lead matter. 3.By this writ-application under Article 226 of theConstitution of India, the writ-applicant seeks to challenge thelegality and validity of the notice dated 28[th] March 2018(Annexure-A to the writ-application) issued by the respondentunder Section 148 of the Income Tax Act, 1961 (for short, 'theAct 1961') seeking to reopen the writ-applicant's income taxassessment for the Assessment Year 2011-12 on the ground ofbeing illegal, contrary to law and without jurisdiction. 4.The facts giving rise to this writ-application may besummarised as under : 5.The writ-applicant derived income from a partnership firm,salary, capital gains and income from other sources during theAssessment Year 2011-12, i.e. the year under consideration. 6.It appears from the materials on record that thewrit-applicant along with three other co-owners (writ-applicantsof the connected writ-applications) sold a parcel of agricultureland bearing Revenue Survey No.203/2, Khata No.2367, oldtenure land admeasuring 7000 sq.yards of Draft Town PlanningScheme No.50, Final Plot No.68, situated at village Katargam,Surat, to two individuals, namely, Ankitkumar Gagjibhai Koshiya and Swintubhai Arvindbhai Mavani, vide the sale-deeddated 29[th] March 2011 for the total sale consideration ofRs.1,46,33,000=00. 7.It is the case of the writ-applicant that the saleconsideration was received by cheque. The details as to theshare holdings of all the four co-owners of the land in questionare as follows : NameShareKantibhai Dharamshibhai Narola (Petitioner)1/6thVijaybhai Dharamshibhai Narola1/6thJerambhai Bhikhabhai Khokariya1/3rdAmbalal Laljibhai Patel1/3rd 8.The writ-applicant filed his return of income for theAssessment Year 2011-12 on 29[th] December 2011 declaring thetotal income at Rs.6,67,350=00, which included the long-termcapital gain of Rs.22,48,496=00 arising on account of sale of theland in question. 9.The case of the writ-applicant for the year underconsideration was selected for scrutiny and various details werecalled for by the then Assessing Officer and the same were dulyfurnished by the writ-applicant from time to time. 10.It is the case of the writ-applicant that he had furnished adeclaration in writing at the stage of the original assessment,whereby it was pointed out that he himself along with threeother co-owners had sold the land in question. The writ-applicant also furnished the purchase-deed as well as thesale-deed with respect to the land in question. 9.The case of the writ-applicant for the year underconsideration was selected for scrutiny and various details werecalled for by the then Assessing Officer and the same were dulyfurnished by the writ-applicant from time to time. 10.It is the case of the writ-applicant that he had furnished adeclaration in writing at the stage of the original assessment,whereby it was pointed out that he himself along with threeother co-owners had sold the land in question. The writ-applicant also furnished the purchase-deed as well as thesale-deed with respect to the land in question. 11.Upon due examination of all the relevant aspects of thematter, the then Assessing Officer chose not to make anyaddition in respect of the capital gains arising on account of thesale of the land in question while framing the assessment underSection 143(3) of the Act 1961 vide order dated 31[st] December2013. 12.It appears that after a period of four years from the end ofthe relevant Assessment Year, the respondent issued theimpugned notice dated 28[th] March 2018 under Section 148 ofthe Act 1961 for the purpose of reopening of the assessment forthe year under consideration. 13.The reasons assigned for reopening of the assessment areas under : “In the case of assessee, a piece of information was receivedfrom the DCIT, CC-4, Surat, regarding that a search andsurvey operation was carried at the residential andbusiness premises in the case of K.Star Group on17.08.2016. During the course of search and survey, it wasfound that the M/s. K. Star Corporation was purchased landamounting to Rs.1,46,33,000/-, situated at moje. Katargam,Dis: Surat, having F.P. No. 68, T.P. No.50, R.S. No. 203/2,sale deed registration no. SRT/4/KTG/7068/2011 dated25.03.2011. Total area 5853 Sq. and Meters = 7000 sq.yards. The project “Silverstone River” was developed byM/s. K.Star Corporation upon the said piece of land. The rate of purchase of the above piece of land is Rs.20,000/-per Sq. yard and the purchase value of the piece of landmentioned in the said working is Rs.13,08,80,100/- (may beafter some deductions) but the sale deed is made forRs.1,46,33,000/- only. This proved that the M/s. K.StarCorporation has made unaccounted cash investment ofRs.11,62,47,100/-(Rs.13,08,80,100/-lessRs.1,46,33,000/-) for purchase of the said land piece ofland. The actual and sole developers of the project isKishorbhai Bhurabhai Koshiya. As such, Shri KishorbhaiBhurabhai Koshiya made unaccounted cash investment ofRs.11,62,47,100/-, for purchase of the aforesaid land, uponwhich, the project “Silverstone River’ was developed by theassessee group. Similarly, the above unaccounted cashpayments and by the assessee also constitute unaccountedincome of the seller of the land. The assessee i.e. ShriKantilal Dharmashibhai Narola was one partner of seller ofthe land. As per the information, the assessee Shri KantilalDharmashibhai Narola has received unaccounted cashreceipts of Rs.2,90,61,775/- (as per the assessee share 25%of Rs.11,62,47,100/-) and not shown his return of incomefor the A.Y. 2011-12. Information has been analysis and consciously considered.On the perusal of the details received from the DCIT, CentralCircle-4, Surat, during the course of survey and searchproceedings, it was found that the M/s. K.Star Corporationhas made unaccounted investment of Rs.11,62,47,100/- forpurchase of the said piece of the land. In this case, theassessee i.e. Shri Kantilal Dharmashibhai Narola has received unaccounted cash of Rs.2,90,61,775/- (25% ofRs.11,62,47,100/-) during the F.Y. 2010-11 relevant to A.Y.2011-12. On the verification of the return of income filed bythe assessee, it is appeared that he has not disclosed theamount of Rs.2,90,61,775/- cash receipts during the yearunder consideration and same is requires to be taxed as anunaccounted income of the assessee for A.Y. 2011-12. Information has been analysis and consciously considered.On the perusal of the details received from the DCIT, CentralCircle-4, Surat, during the course of survey and searchproceedings, it was found that the M/s. K.Star Corporationhas made unaccounted investment of Rs.11,62,47,100/- forpurchase of the said piece of the land. In this case, theassessee i.e. Shri Kantilal Dharmashibhai Narola has received unaccounted cash of Rs.2,90,61,775/- (25% ofRs.11,62,47,100/-) during the F.Y. 2010-11 relevant to A.Y.2011-12. On the verification of the return of income filed bythe assessee, it is appeared that he has not disclosed theamount of Rs.2,90,61,775/- cash receipts during the yearunder consideration and same is requires to be taxed as anunaccounted income of the assessee for A.Y. 2011-12. In view of the above facts and circumstances of the case, Ihave therefore reason to believe that income ofRs.2,90,61,775/- has escaped assessment in this case, forwhich the case of the assessee for A.Y. 2011-12 needs to bereopened within the meaning of section u/s 147 of the I.T.Act.” 14.The writ-applicant filed his objections to the reasonsreferred to above vide letter dated 30[th] November 2018, whichread as under : “1.The assessee was in receipt of reasons recorded forreopening of the assessee’s case for A.Y. 2011-12. From thereason recorded it is evident that during the course ofsearch and survey proceedings in the case of K.Star Group itis found that M/s K.Star Corporation has purchased landamounting to Rs.1,46,33,000/- having total area of 5853 Sq.mts. equivalent to 7000 Sq. yards. In the reasons your GoodSelf alleged that as per “seized incriminating document”found during the search proceedings the rate of purchase ofland is Rs.20,000/- per sq. yard and total purchase valueas per said “seized incriminating document” comes toRs.13,08,80,100/-. On the basis of said alleged working Your Good Self have stated that the assessee being one ofco-owner of land and having 25% share received cash ofRs.2,90,61,775/- [116247100 (130880100-14633000) *25%] which was not shown in return of income. On the basisof said alleged working your Good Self have stated that theassessee being one of co-owners of land and having 25%share received cash of Rs.2,90,61,775/- which was notshown in return of income. The assessee vehemently objected the alleged receipt ofunaccounted cash for the sale of land to M/s K.StarCorporation. However to file detailed objection against yourgood selves belief of escapement of income i.e.Rs.2,90,61,775/-, the assessee requested Your Good Self toforward the copy of alleged “seized incriminating document”relied upon to work out the rate of purchase of land. 2.With reference to captioned subject the assessee is inreceipt of aforesaid letter wherein your Good Self haveforwarded the seized incriminating information receivedfrom ADIT (Inv) on the basis of which reopening of theassessee's case for A.Y. 2011-12 was made. The saidinformation/excel sheet is reproduced herein below forready reference purpose : S.N.203/2, FP-68, TP-50 (KATARGAM), LAXMIVADI, SURATSILVERSTONESQ.FT.AVERAGETOTALRIVERSOLD1224753434420635489 2S.N.203/2, FP-68, TP-50 (KATARGAM), LAXMIVADI, SURAT UNSOLD336994800185755200TOTAL1611743762606390689LAND COST7000 * 20000130880100AVERAGE 1611741500241761000CONSTR. COST PER SQ.FT.TOTAL COST372641100BALANCE233749589SHARE - KB100233749589 3.From the reasons it is evident that : (a) During the course of search and surveyproceedings in the case of K.Star Group it is found thatM/s K.Star Corporation has purchase land amountingto Rs.1,46,33,000/- having total area of 5853 Sq. mtsequivalent to 7000 Sq. yards. (b) As per working the rate of purchase of land isRs.20,000/- per sq. yard and total purchase value asper said workings comes to Rs.13,08,80,100/- asagainst sale deed of Rs.1,46,33,000/-. 2S.N.203/2, FP-68, TP-50 (KATARGAM), LAXMIVADI, SURAT UNSOLD336994800185755200TOTAL1611743762606390689LAND COST7000 * 20000130880100AVERAGE 1611741500241761000CONSTR. COST PER SQ.FT.TOTAL COST372641100BALANCE233749589SHARE - KB100233749589 3.From the reasons it is evident that : (a) During the course of search and surveyproceedings in the case of K.Star Group it is found thatM/s K.Star Corporation has purchase land amountingto Rs.1,46,33,000/- having total area of 5853 Sq. mtsequivalent to 7000 Sq. yards. (b) As per working the rate of purchase of land isRs.20,000/- per sq. yard and total purchase value asper said workings comes to Rs.13,08,80,100/- asagainst sale deed of Rs.1,46,33,000/-. (c) On the basis of alleged working your Good Selfhave concluded that Shri Kishorbhai BhurabhaiKoshiya, the sole key person of K.Star Corporation hasmade unaccounted investment of Rs.11,62,47,100/-for purchase of land. (d) On the basis of said alleged working your GoodSelf have stated that the assessee being one ofco-owner of land and having 25% share received cashof Rs.2,90,61,775/- which was not shown in return ofincome. 3.The assessee vehemently objects to the alleged receiptof cash from M/s K.Star Corporation or KishorbhaiBhurabhai Koshiya amounting to Rs.2,90,61,755/- andconsequential reopening of his case for A.Y. 2011-12. Thesale consideration was received as per document valueonly. 4.At the outset the assessee state that from the reasonsrecorded for reopening it is evident that the sole base for thecurrent year’s reopening is the alleged details found duringthe course of search proceedings at K.Star Group. In thisconnection the assessee state that, now as per the settledlaw in view of various judicial ruling any proceedings/additions on the basis of third party evidences is bad inlaw. The assessee vehemently object to the allegation of thereceipt of cash towards the sale of land to M/s K.StarCorporation. 5.In reasons recorded for reopening Your Good Self havesolely relied on the working reproduced above found duringthe course of search and seizure proceeding in the case ofK.Star group. In this regard it is submitted that the saidsheet seems to be the estimate sheet prepared by the K.Star Group. This sheet shows the estimated working of project ofSilverstone river showing thereof the no. of square feetbooked, its average rate, total amount of booked flats,un-booked no. of Sq feets, the estimated rate at which theflats may be booked and its total amount, land cost showingtherein the area in Sq. yards, its rate per Square meter andtotal cost of land. Area of Square foot to be constructed,Average cost of construction per Square Foot and totalestimated cost of construction. Working of total estimatedcost, total estimated collection and estimated balanceamount. Thus as seen above all the figures mentioned in theabove reproduced sheet are on estimated basis andtherefore the land cost of Rs.13,08,80,100/- cannot beconsidered as actual consideration received by the assesseealong with his co-owners. 6.Further it is submitted that the assessee had notmade any transaction with K.Star Corporation. As informedby Your Good Self in the aforesaid letter the saidincriminating document on which Your Good Self is relyingupon was seized from the back office of M/s. K.StarCorporation. The assessee had sold the land underreference to Shri Swintubhai Mavani and Shri AnkitbhaiKoshiya. In this regard copy of sale deed is enclosedherewith. M/s. K.Star Corporation is an unknown entity forthe assessee and the assessee had not executed anyagreement or made any transactions with the said firm. Italso came to the knowledge of the assessee that M/s.K.Star Corporation was not into existence at the time ofexecution of sale deed. Therefore reopening made on the basis of the document seized from an unknown entity is notjustified and therefore the reopening proceedings should bequashed. 7.Further nowhere in the above sheet it is mentionedthat the assessee along with other co-owners have receivedRs.13,08,80,100/- for sale of land. The assessee has notreceived any amount over and above the document value i.e.Rs.36,58,250/- (25% of Rs.1,46,33,000/-). The land costmentioned in the sheet may be the estimated market valueof the land as on the date of preparing the sheet. Thus theassessee vehemently objects alleged receipt of unaccountedcash for the sale of land to M/s. K.Star Corporation just onthe basis of the estimate sheet. 8.Further, there is no failure on the part of the assesseeto disclose the particulars of sale of land in question duringthe course of original assessment proceedings andaccordingly current reassessment proceedings beyond 4years is bad in law and need to be quashed. In view of what is stated herein above, the assesseevehemently object alleged receipt of unaccounted cash andconsequential reopening of its case for A.Y. 2011-12.Therefore the assessee requests your goodselves to drop thereassessment proceeding initiated under section 148 of theAct.” 15.The objections came to be disposed of by the respondentvide order dated 3[rd] December 2018, which reads as under : “As per the information available on record, the assesseealong with other co-owners has sold a property for a totalsale consideration of Rs.1,46,33,000/- only whereas theseized incriminating documents actual sale was made forRs.13,08,80,100/- hence, receipt of on-money to the tune ofRs.11,62,47,100/- was allegedly received by the sellers ofthe land, wherein the assessee's share comes toRs.3,27,20,025/- (1/4th share). Thus, there was goodenough reason to believe that income has escapedassessment within the meaning of section 147 of Income-taxAct, 1961 and accordingly the case was re-opened. Theprovision of Section 147 of the I.T. Act and ratio of variouscase laws delivered in the context of the above provisionshave imparted a clear direction to the A.O. under whichcircumstances a case can be re-opened and what are thepre-requisites for doing so. It is worthwhile to note that in allthe case laws of the Apex Court as elaborately discussedhereunder, it is commonly held that what is required tore-open a case is “Reason to believe” but not to establishfacts of escapement of income. The sufficiency or correctnessof the material is not to be considered because it is open tothe assessee to prove that the facts assumed by theAssessing Officer in the notice were erroneous (RaymondWoolen Mills vs. ITO [(1999) 236 ITR 34 (SC)]. (i)In this case, notice u/s.148 of the I.T. Act is issuedafter recording reason applicable to the relevant A.Y. Asobserved by the Hon'ble Supreme Court in the case of“Centre Provinces Manganese Ore Co. Ltd. vs. ITO (1991)191 ITR 662, for initiation of action u/s.147(a) (as the provision stood at the relevant time) fulfillment of the twocondition is essential. At that stage, the final outcome of theproceeding is not relevant. In other words, what is requiredis “Reason to believe” but not to establish fact ofescapement of income. At the stage of issue of notice theonly question is whether there was relevant material onwhich a reasonable person could have formed a requisitebelief. Whether the material would conclusively prove theescapement is not the concern at this stage. This is sobecause the formation of belief by the Assessing Officer iswithin the realm of subjective satisfaction.” 16.Being dissatisfied with the above, the writ-applicant is herebefore this Court with the present writ-application. SUBMISSIONS : provision stood at the relevant time) fulfillment of the twocondition is essential. At that stage, the final outcome of theproceeding is not relevant. In other words, what is requiredis “Reason to believe” but not to establish fact ofescapement of income. At the stage of issue of notice theonly question is whether there was relevant material onwhich a reasonable person could have formed a requisitebelief. Whether the material would conclusively prove theescapement is not the concern at this stage. This is sobecause the formation of belief by the Assessing Officer iswithin the realm of subjective satisfaction.” 16.Being dissatisfied with the above, the writ-applicant is herebefore this Court with the present writ-application. SUBMISSIONS : 17.Mr.Tushar Hemani, the learned senior counsel, assisted byMs.Vaibhavi Parikh, the learned counsel appearing for thewrit-applicant, vehemently submitted that the assessment forthe year under consideration was framed under Section 143(3) ofthe Act 1961 and the same is sought to be reopened beyond theperiod of four years from the end of the relevant AssessmentYear on the ground that the Assessing Officer has receivedinformation that certain amount was received by thewrit-applicant in cash towards his share of the saleconsideration. 18.Mr.Hemani would argue that there is nothing on record toeven remotely indicate that there was failure on the part of the writ-applicant to make full and true disclosure of thetransaction. The capital gains earned on the sale of land wasduly disclosed in the return of income. The then AssessingOfficer, after minute examination of all the relevant aspects, hadconsciously chose not to make any addition in respect of thecapital gains while framing the assessment under Section 143(3)of the Act 1961. The respondent now proposes to touch the verysame issue by reopening the case of the writ-applicant, which isnothing but mere change of opinion. 19.Mr.Hemani submitted that the writ-applicant and the otherco-owners had no transaction worth the name with M/s. K.StarCorporation. M/s. K.Star Corporation is a third party. In thecourse of the search, which might have been carried out in thecase of M/s. K.Star Corporation, some documents might havebeen collected, and relying on the same, it is now sought to besaid that the total sale consideration received wasRs.13,08,80,100=00 as against the sale consideration ofRs.1,46,33,000=00 as mentioned in the sale-deed. 20.Mr.Hemani pointed out that the land was sold to twoindividuals, viz. Ankitkumar Koshiya and Swintubhai Mavanirespectively, and not to M/s. K.Star Corporation. M/s. K.StarCorporation is an unknown entity and the writ-applicant had notransaction with the same. 21.Mr.Hemani would submit that there is nothing in thematerials collected from M/s. K.Star Corporation to indicate asregards the actual sale consideration over and above the saleconsideration mentioned in the sale-deed. 22.Mr.Hemani submitted that the department, on its own, hasprepared a rough estimate as regards the cost of the project putup by M/s. K.Star Corporation. While working out the cost ofproject, the department has come out with the figure ofRs.13,08,80,100=00 towards the value of the land. 23.Mr.Hemani pointed out that the two individuals namedabove who purchased the agriculture land in March 2011 fromthe writ-applicant along with the three co-owners later joined thenewly formed partnership firm, namely, M/s. K.StarCorporation, as partners and their respective share in theagriculture land were contributed as share capital. 24.Mr.Hemani would submit that there is absolutely no basiswhatsoever or any evidence for the unfounded assumption thatthe agriculture land was sold for Rs.13,08,80,100=00. Hesubmits that there is no tangible material so as to reopen thecase of the writ-applicant. 23.Mr.Hemani pointed out that the two individuals namedabove who purchased the agriculture land in March 2011 fromthe writ-applicant along with the three co-owners later joined thenewly formed partnership firm, namely, M/s. K.StarCorporation, as partners and their respective share in theagriculture land were contributed as share capital. 24.Mr.Hemani would submit that there is absolutely no basiswhatsoever or any evidence for the unfounded assumption thatthe agriculture land was sold for Rs.13,08,80,100=00. Hesubmits that there is no tangible material so as to reopen thecase of the writ-applicant. 25.In such circumstances referred to above, Mr.Hemani, thelearned senior counsel, prays that there being merit in hiswrit-application, the same may be allowed and the impugnednotice be quashed and set-aside. 26.On the other hand, this writ-application and the connectedtwo writ-applications have been vehemently opposed byMs.Kalpana Raval, the learned senior standing counselappearing for the Revenue. Ms.Raval would submit that theoffice of the respondent received information from the DCIT, Central Circle-4, Surat, that a search and survey operation wascarried out at the residential and business premises of M/s.K.Star Group on 17[th] August 2016. During the course of thesearch and survey, it was found that M/s. K.Star Corporationhad purchased the land in question situated at Mouje Katargam,Surat. She would submit that the writ-applicant is one of thesellers of the land and at the relevant point of time he had 25%share holding in the land and had received Rs.2,90,61,775=00towards his share. In such circumstances, the Assessing Officerhas formed an opinion that the amount of Rs.2,90,61,775=00escaped assessment. 27.Ms.Raval invited the attention of this Court to theaverments made in paragraphs 5, 6 and 7 of theaffidavit-in-reply, which read thus : “5.With reference to para no. 3.2, I state that this officehas received information from the DCIT, Central Circle-4,Surat wherein it was communicated that a search andsurvey operation was carried out at the residential andbusiness premises in the case of K.Star Group on17.08.2016. During the course of search and survey, it wasfound that the M/s. K.Star Corporation was purchased landamounting to Rs.1,46,33,000/- situated at Moje Katargam,Dist.Surat situated at F.P. No.68, T.P. No.50, RS. No.203/2,sale deed registration No.SRT/4/KTG/7068/2011 dated25.03.2011. Total area of 5853 sq. mts = 7000 sq. yard. Theproject “Silverstone River” was developed by M/s. K.StarCorporation upon the said piece of land. The rate ofpurchase of the above piece of land was Rs.20,000/- per sq.yard and the purchase of the above piece of land mentioned in the said working was Rs.13,08,80,100/- (may be aftersome deductions) but the sale deed was executed forRs.1,46,33,000/- only. The above working proved that M/s.K.Star Corporation had made unaccounted cash investment-ofRs.11,62,47,100/-(Rs.13,08,80,100/-Rs.1,46,33,000/-) for purchase of said piece of land. Theactual and sole developers of the project were ShriKishorbhai Bhurabhai Koshiya. So, it is ascertained thatShri Kishorbhai Bhurabhai Koshiya made unaccounted cashinvestment of Rs.11,62,47,100/- for purchase of theaforesaid land, upon which, the project “Silverstone River”was developed by the assessee group. The assessee is oneof the sellers of the land and was 25% share holder in thelandandreceivedRs.2,90,61,775/-(25% ofRs.11,62,47,100/-) and the same is not shown in his returnof income for the AY 2011-12. After recording the abovereasons and forming satisfaction that the amount ofRs.2,90,61,775/- escaped assessment, the case wasreopened u/s. 147 of the Act. Further, notice u/s. 148 of theAct was issued after following the procedure prescribed asper the Act and obtaining approval from the CompetentAuthority which was duly served upon the assessee. 6.With reference to para no. 3.3 to 7, this office is inpossession of specific information received from the DCIT,Central Circle which is further based on Investigation Wingand these are the internal limbs of the Department and thedecision of the Hon’ble High Court in the case of AradhanaEstate P. Ltd. Vs. DCIT is applicable in this case. It is onceagain reiterated that there is no change of opinion. Further, impounded material was also received wherein the abovefacts could clearly be examined. So, after forming the beliefand obtaining necessary approvals and as per theprocedure laid down in the Act, the case was reopened u/s.147 of the Act. There is no estimation of the figures but theworking was made after deducing the figures on thedocumentary evidences collected during the course ofsearch. In view of the above discussion and on the ratio laiddown by the Hon’ble High Court there is no borrowedsatisfaction and all the reasons recorded for reopening arevalid and this office duly followed the complete procedure asper the provisions of the Act. There is no deviation from theprocedure. The contention that the impugned notice is bad,illegal, contrary to law and is required to be appropriatelyquashed and set aside is totally ruled as this office basedon the information available and after examining the same,reopened the assessment of the assessee. 7.In view of the above stated facts, there is no illegalityin the issue of the notice u/s 148 dated 28.03.2018 and theprayers sought in the present petition are required to berejected and petition is required to be dismissed with costs.” 28.In such circumstances referred to above, Ms.Raval praysthat there being no merit in this writ-application and also theconnected two writ-applications, those be rejected. 29.As regards the averments made in paragraphs 5,6 and 7 ofthe reply referred to above filed by the Revenue, thewrit-applicant has filed rejoinder, wherein paragraph 5 statesthat : “5.As regards Para 5 and 6 of the Affidavit-in-reply,contents thereof are denied. It is submitted that thePetitioner has sold the land in question to two individuals[viz. (1) Ankitkumar Gagjibhai Koshiya and (2) SwintubhaiArvindhbhai Mavani) and not to M/s. K.Star Corporation.There is no involvement of any unaccounted cashinvestment over and above the sale consideration recordedin the conveyance deed. The project ‘Silverstone river” hasnot been developed by the Petitioner. The so called seizedmaterial was found during the course of search carried outin the case of a third party namely M/s. K.Star Corporationand the same appears to be merely some rough estimatesprepared by M/s. K.Star Corporation with respect to someconstruction project namely “Silverstone river” on the land inquestion. In this paper, it was also mentioned thatflats/apartments already build up and sold are not lessthan 1,22,000 sq. ft. and remaining area is unsold. Itsuggests that this is fully developed land and this sheet hasbeen prepared after full development in the year 2014-15.Also the Petitioner has not entered into any transaction withM/s. K.Star Corporation. It is also nowhere stated in the socalled seized material that the Petitioner or any of the otherco-owners was given any cash towards sale considerationover and above the amount mentioned in the conveyancedeed. It has been baselessly stated that the sole developerof the project was Kishore Bhurabhai Koshiya and it hasbeen further baselessly assumed that the said person hasmade unaccounted cash payment of Rs.11,62,47,100/-. Inany case, this reopening beyond a period of four years and there is no failure on the part of the Petitioner as to full andtrue disclosure. Also the issue on hand was threadbareexamined at the original assessment stage. Validity ofreopening is to be tested strictly on the basis of reasonsrecorded prior to reopening. Also reopening is based onborrowed satisfaction. Also the share of the Petitioner hasbeen erroneously presumed to be 25%. All these fallaciesclearly show that no case is made out for reopening. Hence,the impugned notice deserves to be quashed.” ANALYSIS : 30.Having heard the learned counsel appearing for the partiesand having gone through the materials on record, the onlyquestion that falls for our consideration is, whether theimpugned notice should be quashed. 31.On 14[th] December 2018, a Coordinate Bench of this Court,while issuing the notice, passed the following order : “1.Mr. Tushar Hemani, learned advocate for thepetitioner has invited the attention of the court to thereasons recorded for reopening the assessment, to submitthat the Assessing Officer seeks to reopen the assessmenton the ground that the assessee has received unaccountedcash in respect of the sale of the property described therein.It was pointed out that in this case, scrutiny assessmenthad been carried out for the assessment year underconsideration, during the course of which, details had beencalled for by the Assessing Officer, which had been dulyfurnished. Reference was made to Annexure-B to the petition to point out that the details with regard to the saletransaction had been duly submitted to the AssessingOfficer. The attention of the court was further invited to thecommunication dated 28.10.2013 of the petitioner to theAssessing Officer furnishing details with regard to theproperty in question and the working of the capital gaincalculation as per indexation, to submit that during thecourse of scrutiny assessment, the Assessing Officer haslooked into all these aspects in detail and, therefore, theassessment is sought to be reopened on a mere change ofopinion. 2.It was further submitted that the document in questionwas seized during the course of search in the case of M/s.K.Star Corporation, however, the petitioner has not sold theland in question to M/s. K. Star Corporation but to two otherpersons, and hence also, the very basis for the formation ofthe belief that income chargeable to tax has escapedassessment, is incorrect. 3.Having regard to the submissions advanced by thelearned advocate for the petitioner, Issue Notice returnableon 5th February, 2019. By way of ad-interim relief, therespondent is permitted to proceed further pursuant to theimpugned notice; he, however, shall not pass the final orderwithout the permission of this court. Direct service ispermitted today.” 32.The law as regards the reopening of the assessment underSection 147 of the Act 1961 is well-settled. (i)The Court should be guided by the reasons recordedfor the reassessment and not by the reasons or explanationgiven by the Assessing Officer at a later stage in respect ofthe notice of reassessment. To put it in other words, havingregard to the entire scheme and the purpose of the Act,the validity of the assumption of jurisdiction under Section147 can be tested only by reference to the reasonsrecorded under Section 148(2) of the Act and the AssessingOfficer is not authorized to refer to any other reason evenif it can be otherwise inferred or gathered from the records.The Assessing Officer is confined to the recorded reasonsto support the assumption of jurisdiction. He cannotrecord only some of the reasons and keep the others uptohis sleeves to be disclosed before the Court if his action isever challenged in a court of law. (ii)At the time of the commencement of thereassessment proceedings, the Assessing Officer has to seewhether there is prima facie material, on the basis ofwhich, the department would be justified in reopening thecase. The sufficiency or correctness of the material is nota thing to be considered at that stage. (iii)The validity of the reopening of the assessment shallhave to be determined with reference to the reasonsrecorded for reopening of the assessment. (iv)The basic requirement of law for reopening andassessment is application of mind by the Assessing Officer, to the materials produced prior to the reopening of theassessment, to conclude that he has reason to believe thatincome has escaped assessment. Unless that basicjurisdictional requirement is satisfied-a postmortemexercise of analysing the materials produced subsequent tothe reopening will not make an inherently defectivereassessment order valid. (v)The crucial link between the information madeavailable to the Assessing Officer and the formation of thebelief should be present. The reasons must be self evident,they must speak for themselves. (vi)The tangible material which forms the basis for thebelief that income has escaped assessment must be evidentfrom a reading of the reasons. The entire material need notbe set out. To put it in other words, something therein,which is critical to the formation of the belief must bereferred to. Otherwise, the link would go missing. (vii)The reopening of assessment under Section 147 is apotent power and should not be lightly exercised. Itcertainly cannot be invoked casually or mechanically. (viii) If the original assessment is processed under Section143(1) of the Act and not Section 143(3) of the Act, theproviso to Section 147 will not apply. In other words,although the reopening may be after the expiry of fouryears from the end of the relevant assessment year, yet itwould not be necessary for the Assessing Officer to show that there was any failure to disclose fully or truly all thematerial facts necessary for the assessment. (ix)In order to assume jurisdiction under Section 147where assessment has been made under sub-section (3) ofsection 143, two conditions are required to be satisfied; (i)The Assessing Officer must have reason tobelieve that the income chargeable to tax has escapedassessment; (ii)Such escapement occurred by reason of failureon the part of the assessee either (a) to make a returnof income under section 139 or in response to thenotice issued under sub-section (1) of Section 142 orSection 148 or (b) to disclose fully and truly all thematerial facts necessary for his assessment for thatpurpose. (x)The Assessing Officer, being a quasi judicial authorityis expected to arrive at a subjective satisfactionindependently on an objective criteria. (xi)While the report of the Investigation Wing mightconstitute the material, on the basis of which, theAssessing Officer forms the reasons to believe, the processof arriving at such satisfaction should not be a mererepetition of the report of the investigation. The reasons tobelieve must demonstrate some link between the tangible material and the formation of the belief or the reason tobelieve that the income has escaped assessment. (xii)Merely because certain materials which is otherwisetangible and enables the Assessing Officer to form a beliefthat the income chargeable to tax has escaped assessment,formed part of the original assessment record, per se wouldnot bar the Assessing Officer from reopening theassessment on the basis of such material. The expression“tangible material” does not mean the material alien to theoriginal record. (xiii) The order, disposing of objections or any counteraffidavit filed during the writ proceedings before the Courtcannot be substituted for the “reasons to believe”. material and the formation of the belief or the reason tobelieve that the income has escaped assessment. (xii)Merely because certain materials which is otherwisetangible and enables the Assessing Officer to form a beliefthat the income chargeable to tax has escaped assessment,formed part of the original assessment record, per se wouldnot bar the Assessing Officer from reopening theassessment on the basis of such material. The expression“tangible material” does not mean the material alien to theoriginal record. (xiii) The order, disposing of objections or any counteraffidavit filed during the writ proceedings before the Courtcannot be substituted for the “reasons to believe”. (xiv) The decision to reopen the assessment on the basis ofthe report of the Investigation Wing cannot always becondemned or dubbed as a fishing or roving inquiry. Theexpression “reason to believe” appearing in Section 147suggests that if the Income Tax Officer acts as areasonable and prudent man on the basis of theinformation secured by him that there is a case forreopening, then Section 147 can well be pressed intoservice and the assessments be reopened. As aconsequence of such reopening, certain other facts maycome to light. There is no ban or any legal embargo underSection 147 for the Assessing Officer to take intoconsideration such facts which come to light either bydiscovery or by a fuller probe into the matter and reassess the assessee in detail if circumstances require. (xv)The test of jurisdiction under Section 143 of the Actis not the ultimate result of the inquiry but the test iswhether the income tax officer entertained a “bona fide”belief upon the definite information presented before him.Power under this section cannot be exercised on mererumours or suspicions. (xvi) The concept of “change of opinion” has been treatedas a built in test to check abuse. If there is tangiblematerial showing escapement of income, the same wouldbe sufficient for reopening the assessment. (xvii) It is not necessary that the Income Tax Officer shouldhold a quasi judicial inquiry before acting under Section147. It is enough if he on the information received believesin good faith that the assesee's profits have escapedassessment or have been assessed at a low rate. However,nothing would preclude the Income Tax Officer fromconducting any formal inquiry under Section 133(6) of theAct before proceeding for reassessment under Section 147of the Act. (xviii) The “full and true” disclosure of the material factswould not include that material, which is to be used fortesting the veracity of the particulars mentioned in thereturn. All such facts would be expected to be elicited bythe Assessing Officer during the course of the assessment.The disclosure required only reference to those material facts, which if not disclosed, would not allow the AssessingOfficer to make the necessary inquiries. (xviii) The “full and true” disclosure of the material factswould not include that material, which is to be used fortesting the veracity of the particulars mentioned in thereturn. All such facts would be expected to be elicited bythe Assessing Officer during the course of the assessment.The disclosure required only reference to those material facts, which if not disclosed, would not allow the AssessingOfficer to make the necessary inquiries. (xix) The word “information” in Section 147 means“instruction or knowledge derived from the external sourceconcerning the facts or particulars or as to the law relatingto a matter bearing on the assessment. An informationanonymous is information from unknown authorship butnonetheless in a given case, it may constitute informationand not less an information though anonymous. This isnow a recognized and accepted source for detection of largescale tax evasion. The non-disclosure of the source of theinformation, by itself, may not reduce the credibility of theinformation. There may be good and substantial reasonsfor such anonymous disclosure, but the real thing to belooked into is the nature of the information disclosed,whether it is a mere gossip, suspicion or rumour. If it isnone of these, but a discovery of fresh facts or of new andimportant matters not present at the time of theassessment, which appears to be credible to an honest andrational mind leading to a scrutiny of facts indicatingincorrect allowance of the expense, such disclosure wouldconstitute information as contemplated in clause (b) ofSection 147. (xx)The reasons recorded or the material available onrecord must have nexus to the subjective opinion formedby the A.O. regarding the escapement of the income butthen, while recording the reasons for the belief formed, theA.O. is not required to finally ascertain the factum of escapement of the tax and it is sufficient that the A.O hadcause or justification to know or suppose that the incomehad escaped assessment [vide Rajesh Jhaveri StockBrokers (P.) Ltd.'s case (supra)]. It is also well settled thatthe sufficiency and adequacy of the reasons which have ledto the formation of a belief by the Assessing Officer that theincome has escaped the assessment cannot be examinedby the court. 33.It appears from the materials on record, more particularly,the objections filed by the writ-applicant, that from day one hehas been telling the respondent that the land was not sold toM/s. K.Star Corporation. The land was sold to two individualsnamed above. Later, if those two individuals sell the land andjoin M/s. K.Star Corporation, then the same has nothing to dowith the transaction of sale between the writ-applicant and thetwo individuals, namely Ankitkumar Koshiya and SwintubhaiMavani. Even, while disposing of the objections, the AssessingOfficer has kept a conspicuous silence in this regard. This aspectof the matter has not been dealt with while considering theobjections. 34.We are of the view that having accepted the entiretransaction on the basis of the scrutiny assessment underSection 143(3) of the Act 1961, the reopening on the basis ofsome information is not valid in the eyes of law and liable to bequashed for the reason that the Assessing Officer failed to applyhis mind. Thus, the reasons were merely recorded on theborrowed satisfaction by the Assessing Officer. The source for allthe conclusions was the information received from the DCIT, CC-4, Surat, and that too, based on a search and survey carriedout at the residential and bus