Sca/18528/2019 Of Falguni Bhavesh Jariwala v. Income Tax Officer, Ward 2(3)(5)

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/SPECIAL CIVIL APPLICATION NO. 18528 of 2019 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE N.V.ANJARIA andHONOURABLE MR. JUSTICE BHARGAV D. KARIA ==========================================================1Whether Reporters of Local Papers may be allowedto see the judgment ?2To be referred to the Reporter or not ?3Whether their Lordships wish to see the fair copyof the judgment ?4Whether this case involves a substantial questionof law as to the interpretation of the Constitutionof India or any order made thereunder ?==========================================================FALGUNI BHAVESH JARIWALA VersusINCOME TAX OFFICER, WARD 2(3)(5) ==========================================================Appearance:MR MANISH J SHAH(1320) for the Petitioner(s) No. 1MR NIKUNT RAVAL FOR MRS KALPANA K RAVAL(1046) for the Respondent(s) No. 1========================================================== CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIAand HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 03/10/2022 ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1.Heard learned advocate Mr. Manish J. Shah forthe petitioner and learned advocate Mr.Nikunt Raval for learned advocate Ms. KalpanaRaval for the respondents. 2.Having regard to the controversy involved inthis petition, with the consent of thelearned advocates for the respective parties,the petition is taken up for final hearing. 3.Rule returnable forthwith. Learned advocateMr. Nikunt Raval waives service of notice ofrule for the respondents. 4.By this petition under Article 226 of theConstitution of India, the petitioner haschallenged the notice dated 25.03.2019 issuedunder section 148 of the Income Tax Act, 1961 (For short “the Act”) proposing to reopen the assessment for the Assessment Year 2012-2013as well as order dated 18.09.2019 disposingof the objections raised by the petitioneragainst the impugned notice for reopening theassessment. 5.Brief facts of the case are that the petitioner filed return of income on26.09.2012 for the Assessment Year 2012-2013,showing business income and long-term capitalgain from sale of immovable property ofRs.50,00,000/-. 5.1) The respondent accepted this returnunder section 143(1) of the Act as noassessment was made under section 143(3) ofthe Act. The respondent thereafter, after aperiod of six years, issued a notice dated05.02.2019 under section 133(6) of the Actstating that the department had informationthat there were debit entries in petitioner's Kotak Mahindra Bank Account No. reflecting short-term loan to M/s. Mamta Fab,M/s. Parimal Fashion and M/s. Mohan Textilesof Rs.50,00,000/- and therefore, variousdetails were called for. 5.2) In reply thereto, the petitioneraddressed a letter dated 11.02.2019 enclosingPAN Card therewith and further stated thatshe had filed the return on 26.09.2012enclosing therewith copy of the return andacknowledgment, computation of income, profitand loss account, balance sheet and copy ofbank statement reflecting the transactionswith the above three parties along withledgers accounts. 5.3) Thereafter, the respondent AssessingOfficer issued a notice under section 148dated 25.03.2019 for the year underconsideration stating that he had reason to believe that income has escaped assessmentand asked the petitioner to file the incometax return within 30 days from receipt of thesaid notice. 5.4) The petitioner filed the same returnon 10.05.2019 in response to the above noticeas was filed on 26.09.2012 which she hadfiled under section 139 of the Act. 5.3) Thereafter, the respondent AssessingOfficer issued a notice under section 148dated 25.03.2019 for the year underconsideration stating that he had reason to believe that income has escaped assessmentand asked the petitioner to file the incometax return within 30 days from receipt of thesaid notice. 5.4) The petitioner filed the same returnon 10.05.2019 in response to the above noticeas was filed on 26.09.2012 which she hadfiled under section 139 of the Act. 5.5) The petitioner thereafter addresseda letter dated 09.05.2019 requesting therespondent to supply the reasons recorded bythe Assessing Officer for reopening theassessment. The reasons recorded by theAssessing Officer for reopening theassessment under section 147 of the Act readas under : “Brief Details of the Assessee: Theassessee had filed return of Income InITR-4videAcknowledgmentNo.496020751260912 for the A. Y. 2012-13 on26.09.2012 declaring total Income at Rs.1,77,150/-. The return has been processed U/s. 143(1) on 20.02.2013. Theassessee is having Income from Salaryfrom Fountainhead Education Trust,Business &Profession and other sources. 2. Brief Details of informationcollected/received by the AO: AnInformation has been received from ADIT(Inv.)-2, Surat on 28.12.2017. In thisInformation, it was mentioned that asavingsaccountbearingnumber was opened in the name ofMrs. Falguni Bhavesh Jariwala on04.01.2012 at Kotak Mahindra Bank, Clothmarket, Surat. On verification of abovebank account, it was noticed thatcheques deposited amounted to Rs.50,00,000/- and RTGS credits amounted toRs. 40,00,000/- received from Mr.Ishaali F Lakda ((Rs. 22.98 Lakhs), Mrs.HamedabenEsaqbh(Rs.7.Lakh)and-M/s.Parimal Fashion (Rs. 10 Lakhs).Against these credits, cash withdrawalsamounted to Rs. 1.11 Lakhs, chequesissued amounted to Rs. 49.50 Lakhs and asingle RTGS payment amounting to Rs.30.00 Lakhs favouring M/s. ParimalFashion. The ADIT(Inv.), Unit-2, Surat has issuedsummons U/s. 131 of the Act was issuedto the assessee and her statement onoath was recorded on 21.09.2017 whereinit has been stated by her that she is ateacher by profession and doing businessof grey trading in the name and style offirm M/s. Falguni Textiles. The assesseehad stated that she has sold her flat atRangeelaParktoShriIshaqallLakdawala,Smt.HamidaishaqaliLakdawala and Shri Hatim Ishaqall Lakdawala for a total consideration ofRs. 50,00,000/- and the same has beenshown in the return of Income for therelevant period under consideration. Further, when inquired with respect toM/s. Mamta Fab, M/s. Parimal Fashion andM/s. Mohan-Textiles, it has been statedby the assessee that these entries are ashort period of loan which has beenreceived back by the assessee. Theassessee has sold her property at BlockNo. 2, Flat No. E/5, Rangeela Park,GhodDod road, Surat for a total saleconsideration of Rs. 50,00,000/- and thesame amount is appearing in the bankaccount No. of the assesseemaintained with Kotak Mahindra Bank.Moreover, the assessee apart from beinga teacher in M/s. Fountainhead school isalso running business of grey trading inthe name and style of M/s. FalguniTextiles and has submitted copies ofreturn of income along with Audit reportfor relevant period. The debit entriesrepresent-short period loans given bythe assessee to M/s. Mamta Fab, M/s.Parimal Fashion and M/s. Mohan Textiles.The relevant details has not beensubmitted by the assessee. Therefore,the assessing Officer has to examine theIssue relating to loans given to theseparties. 3.AnalysisofInformationcollected/received:- After analysis ofthe above Information received from ADIT(Inv.)-2, Surat on 28.12.2017. In thisInformation, it was mentioned that asavingsaccountbearingnumber was opened in the name of 3.AnalysisofInformationcollected/received:- After analysis ofthe above Information received from ADIT(Inv.)-2, Surat on 28.12.2017. In thisInformation, it was mentioned that asavingsaccountbearingnumber was opened in the name of Mrs. Falguni Bhavesh Jariwala on04.01.2012 at Kotak Mahindra Bank, Clothmarket, Surat. On verification of abovebank account, It was noticed thatcheques deposited amounted to Rs.50,00,000/- and RTGS credits amounted toRs. 40,00,000/- received from Mr.Ishaali F Lakda ((Rs. 22.98 Lakhs), Mrs.HamedabenEsaqbh (Rs. 7. Lakh) andM/s.Parimat Fashion (Rs. 10 Lakhs).Against these credits, cash withdrawalsamounted to Rs. 1.11 Lakhs, chequesissued amounted to Rs. 49.50 Lakhs and asingle RTGS payment amounting to Rs.30.00 Lakhs favouring M/s. ParimalFashion. The ADIT (Inv.), Unit-2, Surat hasissued summons U/s. 131 of the Act wasissued to the assessee and her statementon oath was recorded on 21.09.2017wherein it has been stated by her thatshe is a teacher by profession and doingbusiness of grey trading in the name andstyle of firm M/s. Falguni Textiles. Theassessee had stated that she has soldher flat at Rangeela Park to ShriIshaqall Lakdawala, Smt. Hamida ishaqallLakdawala and Shri Hatim IshaqallLakdawala for a total consideration of Rs.50,00,000/- and the same has been shownin the return of Income for the relevantperiod under consideration. Further, when Inquired with respect toM/s. Mamta Fab, M/s. Parimal Fashion andM/s. Mohan Textiles, it has been statedby the assessee that these entries are ashort period of loan which has been received back by the assessee. Theassessee has sold her property at BlockNo. 2, Flat No. E/5, Rangeela Park,GhodDod-road, Surat for a total saleconsideration of Rs. 50,00,000/- and thesame amount is appearing in the bankaccount No. of the assesseemaintained with Kotak Mahindra BankMoreover, the assessee apart from beinga teacher In M/s. Fountainhead school isalso running business of grey trading inthe name and style of M/s. FalguniTextiles and has submitted copies ofreturn of Income along with Audit reportfor relevant period. The debit entriesrepresent short period loans given bythe assessee to M/s. Mamta Fab, M/s.Parimal Fashion and M/s. Mohan Textiles.The relevant details has not beensubmitted by the assessee. Therefore,loans given to these parties requires tobe verified. 4. Enquiries made by the AO as sequel toinformation collected/received:- Noticeu/s 133(6) of the I.T. Act was issued tothe assessee on 05/02/2019. Vide abovenotice, he was asked to provide thedetails of the above transactionsalongwith all relevant documents duringthe year under consideration. Inresponse to the same, the assessee hadfiled submission on 14.02.2019. In hissubmission, he had submitted copy of PANcard, copy of ROI filed along withcomputation of Income, Balance Sheet &Profit and Loss account of FalguniTextiles and only confirmation of M/s.Mamta Fab, M/s. Parimal Fashion and M/s.Mohan Textiles. No any others detallsfiled by the assessee. 5. Findings of the AO:- On verificationof submission filed by the assessee, itwas found that the assessee has shownIncome from Salary from FountainheadEducation Trust Rs. 2,74,750/-, Profitsand Gains from Business and Professionof Rs. Nil and Income from other sourcesat Rs. 24,939/-. It is also shown fromthe working of Capital gain thatassessee has sold Immovable property fora sale consideration at Rs. 50,00,000/-and have taken cost of Acquisition ofRs. 28,76,708/- Further, the assesseehave also claimed exemption of Rs.21,23,292/-. Further, on verification of the detailsfiled by the assessee, it is found thatshe has not submitted the transactionoccurred between her and short termloans given to parties M/s. 5. Findings of the AO:- On verificationof submission filed by the assessee, itwas found that the assessee has shownIncome from Salary from FountainheadEducation Trust Rs. 2,74,750/-, Profitsand Gains from Business and Professionof Rs. Nil and Income from other sourcesat Rs. 24,939/-. It is also shown fromthe working of Capital gain thatassessee has sold Immovable property fora sale consideration at Rs. 50,00,000/-and have taken cost of Acquisition ofRs. 28,76,708/- Further, the assesseehave also claimed exemption of Rs.21,23,292/-. Further, on verification of the detailsfiled by the assessee, it is found thatshe has not submitted the transactionoccurred between her and short termloans given to parties M/s. Mamta Fab, M/s. Parimal Fashion and M/s.Mohan Textiles. Only confirmation of thesaid parties have been filed. Bankdetails and other relevant details havenot been filed by the assessee.Therefore, the genuineness of the saidtransactions does not proved by theassessee. The assessee has also statedthat these entries are a short period ofloan which has been received back by theassessee from M/s. Mamta Fab, M/s.Parimal Fashion and M/s. Mohan Textiles. From the above discussion, it is clearthat the assessee has to shown Rs.50,00,000/- as Its taxable income fromLong Term Capital Gain and has to paytax accordingly which the assessee has not done. Hence, this leads to beliefthatduringtheyearunderconsideration, the assessee has earnedincome from Long Term Capital Gain ofRs.50,00,000/- which represents incomeof the assessee which escaped assessmentbecause of non-submission of true andcorrect details in ROI filed by her. Theassessee has also not justified thetransactions of the above said partiesbefore the ADIT(Inv.)-2, Surat duringthe course of proceedings. 6. Basis of forming reason to believeand details of escapement of Income: Onverification of submission filed by theassessee, it was found that the assesseehas shown Income from Salary fromFountainhead Education Trust of Rs.2,74,750/-, Profits and Gains fromBusiness and Profession of Rs. Nil andIncome from other sources at Rs.24,939/-. It is also shown from theworking of Capital gain that assesseehas sold Immovable property for a saleconsideration at Rs. 50,00,000/- andhave taken cost of Acquisition of Rs.28,76,708/-. Further, the assessee havealsoclaimedexemptionofRs.21,23,292/-. Further, on verification of the detailsfiled by the assessee, it is found thatshe has not submitted the transactionoccurred between her and short termloans given to parties M/s. Mamta Fab,M/s. Parimal Fashion and M/s. MohanTextiles. Only confirmation of the saidparties have been filed. Bank detailsand other relevant details have not beenfiled by the assessee. Therefore, the genuineness of the said transactionsdoes not proved by the assessee. Theassessee has also stated that theseentries are a short period of loan whichhas been received back by the assesseefrom M/s. Mamta Fab, M/s. ParimalFashion and M/s. Mohan Textiles. Itshows that the assessee has knowinglyand willful attempt to evade the tax. From the above discussion, it is clearthat the assessee has to shown Rs.50,00,000/- as Its taxable income fromLong Term Capital Gain and has to paytax accordingly which the assessee hasnot done. Hence, this leads to beliefthatduringtheyearunderconsideration, the assessee has earnedIncome from Long Term Capital Gain ofRs.50,00,000/- which represents incomeof the assessee which escaped assessmentbecause of non-submission of true andcorrect details in ROI filed by her. Theassessee has also not justified thetransactions of the above said partiesbefore the ADIT(Inv.)-2, Surat duringthe course of proceedings. From the above discussion, it is clearthat the assessee has to shown Rs.50,00,000/- as Its taxable income fromLong Term Capital Gain and has to paytax accordingly which the assessee hasnot done. Hence, this leads to beliefthatduringtheyearunderconsideration, the assessee has earnedIncome from Long Term Capital Gain ofRs.50,00,000/- which represents incomeof the assessee which escaped assessmentbecause of non-submission of true andcorrect details in ROI filed by her. Theassessee has also not justified thetransactions of the above said partiesbefore the ADIT(Inv.)-2, Surat duringthe course of proceedings. Therefore, I have reason to believe thatthe above Income of Rs. 50,00,000/- 15chargeable to tax, has escaped theassessment for A.Y. 2012-13 by reason offailure on the part of the assessee tofile his true and correct return ofIncome. Hence, notice u/s 148 r.w.s 147of the I.T.Act 1961 is to be issued forthe A.Y: 2012-13. 7. Escapement of income chargeable totax in relation to any assets (Including financial interest in any entity)located outside India:- No such Assets. Applicability of the provisions ofsection 147/151 to the facts of thecase: In this case, a return of Incomewas filed for the year underconsideration but no scrutiny assessmentU/s. 143(3) of the Act was made.Accordingly, in this case, the onlyrequirement to initiate proceeding U/s.147 of the Act Is reason to believewhich has been recorded above (referparagraph 6). It is pertinent to mentioned here thatin this case, the assessee has filedreturn of income for the year underconsideration but no assessment asstipulated u/s. 2(40) of the Act wasmade and the return of Income was onlyprocessed u/s. 143(1) of the Act. Inview of the above, the provisions ofclause (b) of Explanation 2 to section147 of the Act are applicable to fact ofthis case and the assessment year underconsideration is deemed to be a casewhere Income chargeable to tax hasescaped assessment. In this case, more than four years havelapsed from the end of the assessmentyearunderconsideration.Hence,necessary sanction to issue the noticeU/s. 148 of the Act is being obtainedseparately from Principal Commissionerof Income-tax-2, Surat as per theprovisions of section 151 of the Act.” 5.6) The petitioner filed detailedobjections through his Chartered Accountantby a letter dated 29.05.2019 and requestedthe Officer to drop the reopeningproceedings. 5.7) The Assessing Officer passed theorder dated 18.09.2019 rejecting such objections raised by the petitioner towardsreopening the assessment. 5.8) Being aggrieved by the impugnednotice as well as the order rejecting theobjections raised by the petitioner, thepetitioner has preferred the presentpetition. 6.Learned advocate Mr. Manish Shah for thepetitioner submitted that notice undersection 148 of the Act and the order disposing off the objections are bad in lawand therefore, are required to be quashed andset aside. 6.1) It was submitted that the petitionerwho has sold her residential property forRs.50,00,000/- has computed capital gain at'Nil' in her return under section 139 bydeducting from the sale price, the indexedcost of acquisition of the said property atRs.28,76,708/- and reinvestment into thepurchase of a new residential property ofRs.21,23,292/- leaving 'Nil' result and fromthe receipt of Rs.50,00,000/- as deposited inthe bank account therefrom, has advanced loanof Rs.49,50,000/- to three parties, which isalso shown in the statement of bank accountsupplied to the Assessing Officer and alsothis happens in the month of March 2012immediately after the petitioner receivedRs.50,00,000/- of sale price of flat. It was 6.1) It was submitted that the petitionerwho has sold her residential property forRs.50,00,000/- has computed capital gain at'Nil' in her return under section 139 bydeducting from the sale price, the indexedcost of acquisition of the said property atRs.28,76,708/- and reinvestment into thepurchase of a new residential property ofRs.21,23,292/- leaving 'Nil' result and fromthe receipt of Rs.50,00,000/- as deposited inthe bank account therefrom, has advanced loanof Rs.49,50,000/- to three parties, which isalso shown in the statement of bank accountsupplied to the Assessing Officer and alsothis happens in the month of March 2012immediately after the petitioner receivedRs.50,00,000/- of sale price of flat. It was submitted that such evidence in the form ofbank statement was annexed with letter dated11.02.2019 and therefore, the respondentAssessing Officer could not have issuednotice under section 148 of the Act. 6.2) It was submitted that the petitionerhas also in his objections submitted adetailed account of entire transaction, whichshould have left no matter of doubt aboutfact that the petitioner has shown sale inthe computation of capital gain from the saleand thereafter investment into purchase offlat under section 54F of the Act and thatthe advance of Rs.49,50,000/- was from thesale price of Rs.50,00,000/- as clearly shownin the bank account of the petitioner withKotak Mahindra Bank, Surat, all in the monthof March 2012. 6.3) It was submitted that the reasons fall far short of the valid reasons to takeproceedings under section 147 and the orderrejecting objections falls far short of thedecision of Hon'ble Supreme Court in case ofGKN Driveshafts (1) Ltd. vs. ITO reported in(2003) 259 ITR 19. 6.4) It was submitted that the reasonsare nothing more than totally relying on aborrowed opinion and there is no independentapplication of mind to the facts of the case. 6.5) The petitioner also placed relianceon the judgment of the Hon'ble Supreme Courtin case of Calcutta Discount Co. Ltd. vs. ITOreported in 41 ITR 191, wherein it is held asunder : "That though the writ of prohibitionof certiorari would not issueagainst an executive authority, theHigh Courts had power to issue in afit case an order prohibiting anexecutive authority from actingwithout jurisdiction. Where suchaction of an executive authority, actingwithoutjurisdictionsubjected, or was likely to subject,a person to lengthy proceedings andunnecessary harassment, the HighCourts would issue appropriateorders or directions to prevent suchconsequences. The existence of suchalternative remedies as appeals andreference to the High Court was not,however, always a sufficient reasonfor refusing a party quick relief bya writ or order prohibiting anauthorityactingwithoutjurisdiction from continuing suchaction. When the constitutionconferred on the High Courts thepower to give relief it becomes theduty of the Courts to give suchrelief in fit cases and the courtswould be failing to perform theirduty if relief were refused withoutadequate reasons." Nikunt Raval for the respondent submittedthat the assessee filed the return of incomefor Assessment Year 2012-2013 on 26.09.2012,declaring total return income of Rs.1,77,150/-, however, such return was neitherselected for scrutiny nor re-opened. It wassubmitted that subsequently, information hasbeen received from the ADIT(Inv)-2, Surat Nikunt Raval for the respondent submittedthat the assessee filed the return of incomefor Assessment Year 2012-2013 on 26.09.2012,declaring total return income of Rs.1,77,150/-, however, such return was neitherselected for scrutiny nor re-opened. It wassubmitted that subsequently, information hasbeen received from the ADIT(Inv)-2, Surat that a saving bank account bearing number was opened in the name of thepetitioner assessee on 04.01.2012 at KotakMahindra Bank, Cloth Market, Surat and onverification of the bank account, it wasnoticed that an amount of Rs.50,00,000/- wasdeposited through cheque and RTGS creditsamounted to Rs.40,00,000/- received from Mr.IshaliF.Ladawala(Rs.22.98lacs)Mrs.Hamedaben Ishaqali (Rs.7 lakhs) and M/s.Parimal Fashion (Rs. 10 lakhs). Against thesecredits, cash withdrawal amounted to Rs.1.11lakhs, cheques issued amounted to Rs.49.50lakhs and a single RTGS payment amounting toRs.30 lakhs favouring M/s. Parimal Fashion.It was submitted that in response to thesummons issued by the ADIT(Inv)-2, Surat, theassessee has stated that she is teacher byprofession and doing business of grey tradingin the name and style of firm, M/s. FalguniTextiles. The assessee further stated that she has sold her flat at Rangeela Park toShri Ishaqali Lakdawala, Smt. HamidaLakdawala and Shri Hatim Ishaqali Lakdawalafor a total consideration of Rs.50,00,000/-.Regarding the other credits in the bankaccount, the assessee has stated that theseentries are the short period loan given bythe assessee which has been received back.However, on perusal of the records, it wasnoticed that the assessee had sold immovableproperty during the year under considerationfor Rs.50,00,000/- and claimed indexed costof acquisition and deduction under section54F of the Act. Since there were no detailsof the claim of the indexed cost ofacquisition and deduction under section 54Fand the assessee failed to furnish the samein response to notice under section 133(6) ofthe Act issued by the Assessing Officer, theAssessing Officer was of the view that theassessee should have shown the capital gain at Rs.50,00,000/- for the year under consideration. 7.1) Learned advocate Mr. Raval submittedthat as per section 147 of the Act, at thetime of reopening of assessment, theAssessing Officer had the reasons to believethat the income has escaped assessment beforeissuance of notice under section 148 of theAct on the basis of documentary evidenceavailable on record and after dueverification that the income for the yearunder consideration has escaped assessment,notice for reopening of assessment wasissued. 7.2) It was submitted that though theassessee had submitted that the transactionsregarding the advancement of loans andadvances to M/s. Mamta Fab, M/s. ParimalFashion and M/s. Mohan Textiles were genuine but in absence of bank accounts of theparties to whom loans were advanced, theassessee failed to establish the genuineness of the transactions. It was submitted thatthe Investigation Wing, Surat had forwardedthe information and after analysing the facts and independent inquiries carried out, it was prima facie inferred that the assessee hadnot shown the full sale consideration andfailed to establish the genuineness of theLoans and Advances. Investigation Wing is the internal limb ofthe Department and not an external agency.After receiving the information, the same wasanalysed and reasons were recorded forreopening of assessee's case. Necessary approvals before the issue of notice u/s.148of the Act taken from appropriate authority.It was submitted that the details available of the transactions. It was submitted thatthe Investigation Wing, Surat had forwardedthe information and after analysing the facts and independent inquiries carried out, it was prima facie inferred that the assessee hadnot shown the full sale consideration andfailed to establish the genuineness of theLoans and Advances. Investigation Wing is the internal limb ofthe Department and not an external agency.After receiving the information, the same wasanalysed and reasons were recorded forreopening of assessee's case. Necessary approvals before the issue of notice u/s.148of the Act taken from appropriate authority.It was submitted that the details available on record at the time of reopening ofassessment proceedings are sufficient for theAssessing Officer to form a belief that theincome had escaped assessment. However, thereopened assessment proceedings would befinalized only after providing opportunitiesof being heard and therefore, reopeningproceedings may not be interfered with. 7.4) It was submitted that deciding theissue of re-opening requires verification onthe basis of details and submission, which ispossible during the course of assessmentproceedings only. If the points are to bedecided at the stage of initiation, thenthere is no requirement of the assessmentproceedings. The verification can surely bedone under the provisions of section 147 ofthe Income-Tax Act, 1961. 7.5) Relying upon the judgment in case of Raymond Woollen Mills Vs. ITO reported in(1999) 236 ITR 34 (SC), it was submitted thatwhat is required to re-open a case is "Reasonto believe" but not the established facts ofescapement of income. The sufficiency orcorrectness of the material is not to beconsidered because it is open to the assesseeto prove that the facts assumed by theAssessing Officer in the notice wereerroneous. 7.6) Reliance was also placed on thedecision of Hon'ble Supreme Court in case ofCentral Provinces Manganese Ore Co. Ltd., Vs.ITO (1991) 191 ITR 662, wherein it is heldthat for initiation of action under section147, fulfillment of the two conditions isessential. At this stage, the final outcomeof the proceeding is not relevant. In otherwords what is required is "Reason to believe"but not the established fact of escapement of income. At the stage of issuance of noticethe only question is whether there wasrelevant material on which a reasonableperson could have formed a requisite belief.Whether the material would conclusively provethe escapement is not of any concern at thisstage. This is so because the formation ofbelief by the Assessing Officer is within therealm of subjective satisfaction. 7.7) Reliance was placed on the decisionof the Hon'ble Supreme Court in case of ACITVs. Rajesh Jhaveri Stock Brokers Pvt Ltd.,reported in (2007) 292 ITR 500 (SC), whereinit is held that in order to invoke theprovisions of section 147 of the Act, if theAssessing Officer for whatever reason has'reason to believe' that income has escapedassessment, then jurisdiction is conferred onthe Assessing Officer to reopen theassessment. 8.Having considered the submissions made by learned advocates of both the sides in orderto reopen the assessment it is necessary toform the reason to believe on the basis ofprima facie material that income has escapedassessment. The crucial link between theinformation made available to the AO and theformation of belief should be gathered. Thereasons must be self evidenced and they mustspeak for themselves so as to enable onperusal of the reasons that tangible materialwhich forms the basis for the belief thatincome has escaped assessment must beevident. 9.In the facts of the case, the original assessment is processed under section 143(1)of the Act and not under section 143(3) ofthe Act and therefore, provision to section147 of the Act would not apply. Reopening of the assessment under section 147 of the Act learned advocates of both the sides in orderto reopen the assessment it is necessary toform the reason to believe on the basis ofprima facie material that income has escapedassessment. The crucial link between theinformation made available to the AO and theformation of belief should be gathered. Thereasons must be self evidenced and they mustspeak for themselves so as to enable onperusal of the reasons that tangible materialwhich forms the basis for the belief thatincome has escaped assessment must beevident. 9.In the facts of the case, the original assessment is processed under section 143(1)of the Act and not under section 143(3) ofthe Act and therefore, provision to section147 of the Act would not apply. Reopening of the assessment under section 147 of the Act is a potent power and should not be lightly exercised and it can never be invoked casually or mechanically. The AO being a quasi judicial authority is expected toarrive at a subjective satisfaction independently on an objective criteria. 10.It is true that report of the investigation wing might constitute the material, on the basis of which, the AO formsreason to believe, however the process ofarriving at such satisfaction should not bemere repetition of the report of the investigation. The AO must demonstrate somelink between tangible material and formationof belief or reason to belief that income hasescaped assessment. In the facts of the casemerely certain material which is otherwisetangible and enables the AO to form a beliefthat income chargeable to tax has escaped assessment, which form part of originalassessment record per se would not bar the AO from reopening the assessment on the basis of such material. The expression “tangiblematerial” does not mean material alien to theoriginal record. 11.However, even if the decision to reopenassessment on the basis of report ofinvestigation wing condemned or dubbed as afishing or roving inquiry, AO has to act as areasonable and prudent man on the basis ofinformation secured by him that there is acase for reopening so as to form a reason tobelieve that income has escaped assessmentbut at the same time, in order to assume thejurisdiction under section 147 of the Act isnot the ultimate result of inquiry but thetest is whether the AO entertain a bona fidebelief upon the definite informationpresented before him and the jurisdiction to reopen the assessment cannot be exercised onmere rumor or suspicion. Therefore, in thefacts of the case the AO could not haveissued the impugned notice under section 148of the Act considering the loan and advancesgiven by the petitioner out of sale proceedsof the immovable property for a short period which ultimately has been received back bythe assessee, so as to verify the debitentries representing the short period of loan. The assessee has disclosed all thematerial facts in the return which wasprocessed under section 143(1) of the Act andtherefore, formation of belief of the AO thatincome of Rs 50 lakhs is chargeable to tax,has escaped the assessment for AY 2012-2013by reason of failure on part of the assesseeto file true and correct return cannot besustained. 12.On perusal of the reasons recorded, itis apparent that there is no new independentmaterial available with the Assessing Officerwhich is relied upon to issue the impugnednotice under section 148 of the Act. Theimpugned notice is issued only on analysis ofthe materials made available by the which ultimately has been received back bythe assessee, so as to verify the debitentries representing the short period of loan. The assessee has disclosed all thematerial facts in the return which wasprocessed under section 143(1) of the Act andtherefore, formation of belief of the AO thatincome of Rs 50 lakhs is chargeable to tax,has escaped the assessment for AY 2012-2013by reason of failure on part of the assesseeto file true and correct return cannot besustained. 12.On perusal of the reasons recorded, itis apparent that there is no new independentmaterial available with the Assessing Officerwhich is relied upon to issue the impugnednotice under section 148 of the Act. Theimpugned notice is issued only on analysis ofthe materials made available by the petitioner assessee during the course ofregular assessment. The reasons recordedthough discloses it is as per the informationreceived, analysis made and inquiry conductedby the Assessing Officer on the basis ofverification of case record and return ofincome, it appears that there is no newmaterial available with the Assessing Officerand therefore, in facts of the case, theAssessing Officer could not have assumed anyjurisdiction to reopen the assessment whenthe assessee has disclosed all material factsrelevant for the assessment. 13.It is therefore apparent that theAssessing Officer has issued notice under section 148 of the Act only to make a rovinginquiry into the facts which are already onrecord and in absence of any tangible newmaterial to show that the income has escapedthe assessment, the assessing officer couldnot have assumed jurisdiction to reopen theassessment though completed under section143(1) of the Act. 14.For the foregoing reasons, the impugnednotice dated 25.03.2019 issued under section148 of the Act by the respondent exercisingthe powers to reopen the assessment for theAssessment Year 2012-2013 is illegal and hereby quashed and set aside. As a consequence, order dated 18.09.2019 of the Assessing Officer disposing of the objectionsof the petitioner against the impugned notice is also quashed and set aside. 15.The petition succeeds and is accordinglyallowed.Rule is made absolute to theaforesaid extent. No order as to costs. (N.V.ANJARIA, J) RAGHUNATH R NAIR (BHARGAV D. KARIA, J)