Sanjay Baulal Surana v. The Assitant Commissioner Of Income Tax

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 20501 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 ?YESWhether their Lordships wish to see the fair copy ofWhether their Lordships wish to see the fair copy of3 NOthe judgment ?Whether this case involves a substantial questionthe 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 ? =======================================SANJAY BAULAL SURANA Versus THE ASSITANT COMMISSIONER OF INCOME TAX =======================================Appearance: MR TUSHAR HEMANI, SR. ADVOCATE for MS VAIBHAVI K PARIKH(3238) for the Petitioner(s) No. 1MR 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 : 11/08/2021 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 – assessee seeking to quash and setaside the Notice dated 27.03.2019 issued by the respondentauthority under section 148 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for the Assessment Year 2013-14,as it has reason to believe that the income chargeable to tax forthe assessment year under consideration has escapedassessment within the meaning of section 147 of the Act. 2.The facts of the case of the petitioner are that thepetitioner, who is an individual, had, during the Financial Year2012-13, relevant to Assessment Year 2013-14 (i.e. the yearunder consideration), derived income from the house property,business income and income from other sources. During the yearunder consideration, the petitioner entered into Agreements toSell in respect of the Offices owned by him being Office Nos. HG-12 and HG-13, situated in International Trade Center, MajuraGate Crossing, Ring Road, Surat, with Babylon Trading andInvestment Pvt. Ltd., dated 23.08.2012 for Rs.70 lakh, andreceived part consideration of Rs.35 lakh through RTGS and withGyaneshwar Vyapar Pvt. Ltd. dated 25.09.2012 for Rs.70 lakh andreceived part consideration of Rs.50 lakh through RTGS. Since,the said offices were occupied by the tenant and the petitionercould not get the same vacated, the aforesaid agreements to sellcame to be cancelled vide agreements dated 10.11.2012 and01.12.2012 respectively. Accordingly, amounts of Rs.36,40,384/-and Rs.51,61,096/- (principal + interest) were returned to theBabylon Trading and Investment Pvt. Ltd. and GyaneshwarVyapar Pvt. Ltd. respectively, by cheque No. 401374, debited tothe petitioner’s account on 21.12.2012 and No. 401381, debitedto the petitioner’s account on 29.12.2012, during the year underconsideration. Thereafter, the petitioner filed his Return of Income (RoI) for the year under consideration on 31.10.2013declaring the total income at Rs.31,52,550/-. The case of thepetitioner for the year under consideration was selected forscrutiny assessment and various details were called by the thenAssessing Officer, which were furnished by the petitioner. That,while framing assessment under section 143(3) of the Act videorder dated 25.01.2016, no addition came to be made. However,after a period of almost six years, the respondent authorityissued notice dated 27.03.2019 under section 148 of the Actseeking to reopen the case of the petitioner for the year underconsideration. In response to the said notice, the petitioner filedits RoI on 12.04.2019 and also requested to supply the reasonsfor reopening, which were supplied vide letter dated 07.05.2019.A perusal of the same revealed that the case of the petitionerwas reopened on the count that the amounts received from theaforesaid companies during the year under consideration werenothing but an outcome of the accommodation entries. The caseof the respondent was that, as per the information received fromthe DDIT (Inv.), Unit 1(3), Kolkata, a search and seizure actionwas carried out in the case of one Banka Group (a third party) on21.05.2018 and it was found that the Banka Group is involved inthe activity of providing accommodation entries through thevarious companies controlled and managed by it. The petitionerhad received a sum of Rs.50,00,112/- from M/s. GyaneshwarVyapar Pvt. Ltd., which was alleged to be a company controlledand managed by the Banka Group and hence, the respondentwas of the view that the said amount was the outcome of anaccommodation entry. Further, as per the second informationreceived from the DDIT (Inv.), Unit 4(2), Kolkata in respect of M/s.Babylon Trading and Investment Pvt. Ltd., the name of the saidcompany appeared in the database of various shell companies controlled and managed by Gopal Banka and Manoharlal Nanglia(alleged entry operator). Since, the petitioner had received asum of Rs.35,00,056/- from the said company, the respondentwas of the view that the said amount was the outcome of anaccommodation entry. Accordingly, the respondent had reasontobelievethattheincomeofRs.85,00,168/-(Rs.50,00,112+35,00,056) had escaped assessment. Hence, thecase of the petitioner for the year under consideration wasreopened. Against the reasons accorded, the petitioner, videletter dated 19.09.2019, raised objections against reopening onfactual as well as the legal grounds, however, the respondentauthority disposed of the said objections raised by the petitionervide order dated 11.10.2019 inter alia holding that the reopeningis justified and valid in the eyes of law. Being aggrieved, thepetitioner is before 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 hasvehemently submitted that the basis for reopening theassessment by the Assessing Officer is receipt of money by thepetitioner from the aforesaid companies, however, in fact, thesaid money, received towards part consideration in respect oftwo agreements to sell of the offices owned by the petitioner,was returned, with interest, to the said companies by cheques asthe agreements to sell came to be cancelled as the tenant did notvacate the same and the said fact, was also brought to the noticeof the respondent authority while raising objections against 3.1The learned senior advocate for the petitioner hasvehemently submitted that the basis for reopening theassessment by the Assessing Officer is receipt of money by thepetitioner from the aforesaid companies, however, in fact, thesaid money, received towards part consideration in respect oftwo agreements to sell of the offices owned by the petitioner,was returned, with interest, to the said companies by cheques asthe agreements to sell came to be cancelled as the tenant did notvacate the same and the said fact, was also brought to the noticeof the respondent authority while raising objections against reopening. However, the respondent, while passing the orderdisposing of the objections, had stated that had the said amountbeen the advance towards agreements to sell, the same wouldhave been shown in the balance-sheet or sale proceeds in theprofit and loss accounts, but it was not the case and on thecontrary, the petitioner had shown the same as unsecured loan.The learned senior advocate for the petitioner submitted that thesaid observation of the respondent is misconceived for the reasonthat the advance was returned to the concerned, during the yearunder consideration itself and hence, there was no question ofreflecting the same in the balance-sheet. Further, theagreements to sell were cancelled and hence, there was noquestion of reflecting the sale proceeds in the profit and lossaccount. He submitted that merely, the petitioner had shownunsecured loans of Rs.15,25,68,165/-, would not mean that thepetitioner had received the same from the above two parties. 3.2The learned senior advocate for the petitioner furthersubmitted that had it been a case of accommodation entry, theamounts in question would have remained with the petitioner,but it is not the case here. The said amounts had been dulyreturned to the concerned with interest. He further submittedthat thus, the department is not justified in proposing to reopenthe case of the petitioner on such false pretext and that thereasons for reopening lacked validity. 3.3The learned senior advocate for the petitioner submittedthat the statement of a tainted party cannot be considered astangible material so as to have reason to believe that the incomechargeable to tax has escaped assessment. He submitted thatthe reopening is based on mere change of opinion of the Assessing Officer inasmuch as notice under section 148 of the Actcan be issued only if an Assessing Officer has reason to believethat any income chargeable to tax has escaped assessment andfor such formation of belief, there should be some tangiblematerial and act, which is lacking in the case on hand. Hesubmitted that the case of the petitioner was selected forscrutiny assessment and the issue on hand was examinedthreadbare at the original assessment and accordingly, merelybecause the Assessing Officer happens to change his opinion,action under section 147 of the Act cannot be taken. It iscontended and argued by the learned senior advocate for thepetitioner that the assessment for the year under considerationwas found to be proper and the same was admitted by theAssessing Officer and therefore, if creditworthiness was found inthe transactions, the impugned reopening, merely relying uponthe information received from the DDIT (Inv.), Unit 1(3), Kolkataand DDIT (Inv.), Unit 4(2), Kolkata, sans any independentsatisfaction of the Assessing Officer, only on borrowedsatisfaction, is illegal and bad in law and it cannot be said thatthe petitioner has failed to disclose fully and truly all materialfacts relevant for the assessment. 3.4The learned senior advocate for the petitioner furthersubmitted that the petitioner has no connection, either withMukesh Banka or Gopal Banka or Manoharlal Nanglia and thepetitioner has never carried out any transaction with them.Further, there is no statement on record to show that theaccommodation entry has been provided to the petitioner andonly on the basis of generalize information, the case of thepetitioner cannot be reopened. Further, both the companies inquestion, are genuine companies and are still active in the RoC and they are nowhere covered in the list of shell companies. 3.5Making 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 reasons recorded for reopening ofassessment dated 07.05.2019, and submitted that the amountscredited in the bank accounts of the petitioner – assessee were inthe nature of accommodation entries only and the transactionsclearly represent the income escaped assessment in the yearunder consideration. The learned advocate for the respondentsubmitted that two information, one from the DDIT (Inv.), Unit1(3), Kolkata and another, from the DDIT (Inv.), Unit 4(2), Kolkatahad been received. So far as the first information is concerned, itis revealed that the amount of Rs.50,00,112/- received by theassessee, petitioner herein, from M/s. Gyaneshwar Vyappar Pvt.Ltd. is a company belonging to Banka Group of companies, in theform of accommodation entry. Further, it was found from thedetailed investigation report, based on documentary evidenceand statement under section 132(4) of the Act of the entryprovider Shri Mukesh Banka, recorded during the course ofsearch/ survey/ enquiry action on 19.07.2018, that variouscompanies controlled and managed by Shri Mukesh Banka, wasinvolved in large scale to provide accommodation entries in thenature of unsecured loans/ other forms to various beneficiaries.The assessee i.e. the petitioner herein was found to be one of thebeneficiaries. 4.1The learned advocate for the respondent further submittedthat so far as the second information is concerned, oninvestigation, it was found that the name of Babylon Trading andInvestment Pvt. Ltd. appeared in the department’s database ofshell entity, which was controlled by entry operators Gopal Bankaand Manoharlal Nanglia. Amit Kumar Chaudhary, who was one ofthe dummy Directors of that company, had admitted in hisstatement recorded under section 131 of the Act on 14.11.2014that he had acted as only dummy Director for the companycontrolled by Shri Manoharlal Nanglia and used for facilitatingaccommodation entries to the beneficiary companies. It waseventually found that the assessee i.e. the petitioner herein hadreceived Rs.35,00,056/- in the form of accommodation entry inthe nature of unsecured loan or other forms, which clearly showsthat the income chargeable to tax has escaped assessment. 4.2It is further submitted by the learned advocate for therespondent that the petitioner had shown unsecured loan ofRs.15,25,68,165/- under the head “Unsecured Loan from Others”,which shows that the petitioner had received unsecured loanfrom the above two parties and hence, the contention of thepetitioner that the petitioner had received advance against theagreements to sell, is nothing but an afterthought. It issubmitted that the financial analysis of such paper/shellcompanies of Banka Group from which the petitioner hadreceived unsecured loan, had been carried out by theInvestigation Wing, Kolkata which revealed that, i) no profitaccumulation in the company/ies across various financial year; ii)no actual business is done being “0” turnover; iii) most of thecompanies have shown income under the head of “otherincome”, which shows that the companies have no actual business activity; iv) Shri Mukesh Banka, in his statements undersections 131 and 132(4) of the Act, respectively recorded on30.05.2018 and 19.07.2018, has admitted that these companiesare paper/shell companies, controlled and managed by him; v)the Directors of these companies are dummy Directors as per thestatements of Shri Mukesh Banka, recorded under section 132(4)of the Act; and vi) these companies were found to be non-existent as per the inquiry made by the Inspector of the Income-Tax of Investigation Wing, Kolkata. 4.3It is further submitted that on examination of the bankaccount, it was observed that the bank account was credited withtransfers or RTGS, which were directly credited to the account ofthe beneficiary concerns or layered through the bank accounts ofshell/paper companies and finally transferred to the bankaccounts of the beneficiary concerns. The intermediarycompanies are mentioned in the database of shell/papercompanies held with the department. It is submitted thatthorough inquiry was carried out by the Investigation Wing,Kolkata and after verifying all the aspects regarding theincriminating documents unearthed during the course of searchaction, it declared the transactions were accommodation entriesprovided by the bogus companies, managed and controlled byShri Mukesh Banka and Shri Manoharlal Nanglia and thus, there istangible material on record. In support, the learned advocate forthe respondent has relied upon a decision in Pushpak Bullion(P) Ltd. v. DCIT, [2017] 85 Taxmann.com 84 (Guj.). 4.4It is further submitted that there is no procedural lapse and/or deviation from procedure prescribed in reopening and thereasons recorded do not lack validity as all the procedures, laid down under the Act, have been duly followed and necessaryapprovals from the competent authority are received. 4.5So far as the contention of the learned senior advocate forthe petitioner to the effect that merely on the basis of change ofopinion, assessment for the year under consideration is sought tobe reopened, the learned advocate for the respondent submittedthat the case of the petitioner is sought to be reopened on thebasis of some tangible material available and on the establishedfact the transactions were bogus in nature, and all the relevantinformation available with the department at the time ofrecording the reasons for reopening have been duly discussed inthe reasons. down under the Act, have been duly followed and necessaryapprovals from the competent authority are received. 4.5So far as the contention of the learned senior advocate forthe petitioner to the effect that merely on the basis of change ofopinion, assessment for the year under consideration is sought tobe reopened, the learned advocate for the respondent submittedthat the case of the petitioner is sought to be reopened on thebasis of some tangible material available and on the establishedfact the transactions were bogus in nature, and all the relevantinformation available with the department at the time ofrecording the reasons for reopening have been duly discussed inthe reasons. 4.6So far as the contention of the petitioner that the case isreopened beyond a period of four years from the end of therelevant assessment year is concerned, the learned advocate forthe respondent submitted that all the requirements under section147 of the Act to initiate the proceedings are fulfilled. Further,the case of the petitioner was reopened on account ofinformation received from the Investigation Wing, Kolkata, asreferred to herein above and from the information disseminatedby the Investigation Wing, Kolkata, it is evident that the assesseehas failed to furnish fully and truly, all material facts before theAssessing Officer. 4.7Making 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 learned advocates 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, theamounts were received by the petitioner towards partconsideration in pursuance to the agreements to sell in respect ofthe two offices owned by the petitioner and since, the offices,which were occupied by the tenant, could not be vacated, thesaid amounts, together with interest, were returned to theconcerned during the year under consideration, which is evidentfrom the record. Further, he has submitted that the case of thepetitioner was selected for scrutiny assessment and at therelevant time, the petitioner had disclosed fully and truly, allmaterial facts, relevant for the assessment and hence, merely, onthe basis of change of opinion, the impugned notice is issued. 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 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 the “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 the return 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” wouldmean 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 the stage 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). stage 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 theseconditions 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 be considered 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 fromwhom 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 assessment proceedings. 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 and available from theinformation, 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. LakhmaniMewal 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 in the 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”. 5.4It would also be worthwhile to refer to the observationsmade by us in the CAV Judgment dated 06.08.2021 Special CivilApplication No. 22613 of 2019, which read as under: the 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”. 5.4It would also be worthwhile to refer to the observationsmade by us in the CAV Judgment dated 06.08.2021 Special CivilApplication No. 22613 of 2019, which read as under: “7.As stated hereinabove, the often posed question as towhether the Assessing Officer could have assumed thejurisdiction under Section 147/148 of the said Act on thebasis of the information / material received from theinvestigating wings unearthing the bogus transactions oraccommodation entries involving the assessee, has beenagain posed before this Court. Before adverting thesubmissions made by the learned advocates for the parties,it may be noted that the words “accommodation entries”have not been defined anywhere in the Act, however, incatena of decisions, the Courts have dealt with the issue of“accommodation entries”. It cannot be gainsaid that thetax-evaders in order to bring back their unaccountedincome to their books of accounts without paying any taxthereon, use numerous methods and techniques. Forrouting the unaccounted income, the taxevaders under theguise of loan entries or share capital entries or othercamouflage entries create an appearance of legitimatetransactions in their books of accounts. Such wellrecognized rackets are controlled and conducted by thepersons known as “accommodation entry providers”, andthe “accommodation entries” are provided by them to thepersons who are the taxevaders. The entries on paperapparently may appear to be of routine nature, but the trailof money transited through the layers would be subsequently unearthed during the search and seizureoperations conducted either at the assessee’s premises orhis associate’s premises or at the premises of some thirdparty, who may be an accommodation entry provider.Under the circumstances, when the material is brought tothe notice of the Assessing Officer, which would prima faciediscredit or impeach the genuineness of the particularsfurnished by the assessee at the time of originalassessment, and when it prima facie establishes the linkbetween the assessee and the third party who is anaccommodation entry provider, the Assessing Officer isempowered rather duty bound to make further inquiry /investigation to unearth such camouflage or wrong orillegal dealings of the assessee. As observed by theSupreme Court in the case of Sumati Dayal vsCommissioner Of Income-Tax reported in AIR 1995 SC2109, apparent must be considered as real until it is shownthat there are reasons to believe that apparent is not real,and that the Taxing Officers are entitled to look into thesurrounding circumstances to find out the reality, and thematter has to be considered by applying the test of humanprobabilities.” 6.In the aforesaid prelude, if the facts of the case areadverted to, as referred to herein above, it is the case of thepetitioner that the petitioner had returned the amounts inpursuance to the agreements to sell, as aforesaid during the yearunder consideration and that, there is no tangible material, evenotherwise in the hands of the respondent to substantiate that theincome chargeable to tax has escaped assessment qua theassessee. The department, in the reasons recorded forreopening as well as in the affidavit-in-reply filed by it, however,has replied to the said queries which go to the root of the matter.It is averred that two information, one from the DDIT (Inv.), Unit1(3), Kolkata and another, from the DDIT (Inv.), Unit 4(2), Kolkatahad been received. So far as the first information is concerned, itwas revealed that the amount of Rs.50,00,112/- received by theassessee, petitioner herein, from M/s. Gyaneshwar Vyappar Pvt.Ltd. was a company belonging to Banka Group of companies, in the form of accommodation entry. Further, it was found from thedetailed investigation report, based on documentary evidenceand statement under section 132(4) of the Act of the entryprovider Shri Mukesh Banka, recorded during the course ofsearch/ survey/ enquiry action on 19.07.2018, that variouscompanies controlled and managed by Shri Mukesh Banka, wereinvolved in large scale to provide accommodation entries in thenature of unsecured loans/ other forms to various beneficiaries.The assessee i.e. the petitioner herein was found to be one of thebeneficiaries. 6.1So far as the second information is concerned, oninvestigation, it was found that the name of Babylon Trading andInvestment Pvt. Ltd. appeared in the department’s database ofshell entity, which was controlled by entry operator Gopal Bankaand Manoharlal Nanglia. Amit Kumar Chaudhary, who was one ofthe dummy Directors of that company, had admitted in hisstatement recorded under section 131 of the Act on 14.11.2014that he had acted as only dummy Director for the companycontrolled by Shri Manoharlal Nanglia and used for facilitatingaccommodation entries to the beneficiary companies. It waseventually found that the assessee i.e. the petitioner herein hadreceived Rs.35,00,056/- in the form of accommodation entry inthe nature of unsecured loan or other forms, which clearlyshowed that the income chargeable to tax had escapedassessment. 6.2Further it is averred that the petitioner had shownunsecured loan of Rs.15,25,68,165/- under the head of“Unsecured Loan from Others”, which showed that the petitionerhad received unsecured loan from the above two parties andhence, the contention of the petitioner that the petitioner had received advance against the agreements to sell was found to bean afterthought. Further, the financial analysis of suchpaper/shell companies of Banka Group from which the petitionerhad received unsecured loan, was carried out by the InvestigationWing, Kolkata which revealed that, i) no profit accumulation inthe company/ies across various financial year; ii) no actualbusiness is done being “0” turnover; iii) most of the companieshave shown income under the head of “other income”, whichshows that the companies have no actual business activity; iv)Shri Mukesh Banka, in his statements under sections 131 and132(4) of the Act, respectively recorded on 30.05.2018 and19.07.2018, has admitted that these companies are paper/shellcompanies, controlled and managed by him; v) the Directors ofthese companies are dummy Directors as per the statements ofShri Mukesh Banka, recorded under section 132(4) of the Act; andvi) these companies were found to be non-existent as per theinquiry made by the Inspector of the Income-Tax of InvestigationWing, Kolkata. 6.3Moreover, on examination of the bank account, it wasobserved that the bank account was credited with transfers orRTGS, which were directly credited to the account of thebeneficiary concerns or layered through the bank accounts ofshell/paper companies and finally transferred to the bankaccounts of the beneficiary concerns. The intermediarycompanies are mentioned in the database of shell/papercompanies held with the department. Thorough inquiry wascarried out by the Investigation Wing, Kolkata and after beingverifying all the aspects regarding the incriminating documentsunearthed during the course of search action, it was declaredthat the transactions were accommodation entries provided bythe bogus companies managed and controlled by Shri Mukesh Banka and Shri Manoharlal Nanglia and tangible material appearsto have been there on record. Thus, the contention of thelearned senior advocate for the petitioner that merely on thebasis of change of opinion, reopening is sought, stands nugatory. 6.4The learned senior advocate for the petitioner hassubmitted that in the scrutiny assessment proceeding carried outunder section 143(3) of the Act, the petitioner had submitted allthe details relevant for the assessment and thus, discharged theonus under section 68 of the Act, however, it appears that theAssessing Officer has found that the petitioner has not fully andtruly disclosed all material facts necessary for assessment for thereason that the petitioner was found to be the beneficiary of theaccommodation entry. Therefore, there is clear failure on thepart of the assessee to fully and truly disclose all the factsnecessary for assessment proceeding under section 143(3) of theAct. 6.5Thus, considering the aforesaid facts and circumstances ofthe case, we are of the considered view that it cannot be saidthat there is no reason to believe that the income chargeable totax has escaped assessment because such exercise of reopeninghas been made only after due inquiries and recording ofstatements of concerned persons, as referred to herein above,and on having found prima facie material, impugned notice isissued to the petitioner. 6.6In Peass Industrial Engineers (P.) Ltd. v. DeputyCommissioner of Income Tax, [2016] 76 Taxmann.com 106(Gujarat), this Court has observed as under: “9.On the basis of aforesaid proposition laid by series of 6.5Thus, considering the aforesaid facts and circumstances ofthe case, we are of the considered view that it cannot be saidthat there is no reason to believe that the income chargeable totax has escaped assessment because such exercise of reopeninghas been made only after due inquiries and recording ofstatements of concerned persons, as referred to herein above,and on having found prima facie material, impugned notice isissued to the petitioner. 6.6In Peass Industrial Engineers (P.) Ltd. v. DeputyCommissioner of Income Tax, [2016] 76 Taxmann.com 106(Gujarat), this Court has observed as under: “9.On the basis of aforesaid proposition laid by series of decisions, 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 thoroughly 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 cogenttangible 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 148 of 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 Authorityand 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 t