Sca/20337/2018 Of Kkp Marketing (I) Ltd v. Dy. Commissioner Of Income Tax

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 20337 of 2018 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE J.B.PARDIWALASd/-andHONOURABLE MS. JUSTICE NISHA M. THAKORESd/-==========================================================1Whether Reporters of Local Papers may be allowedNoto see the judgment ?2To be referred to the Reporter or not ?No3Whether their Lordships wish to see the fair copyNoof the judgment ?4Whether this case involves a substantial questionNoof law as to the interpretation of the Constitutionof India or any order made thereunder ? 1Whether Reporters of Local Papers may be allowedNoto see the judgment ?2To be referred to the Reporter or not ?No3Whether their Lordships wish to see the fair copyNoof the judgment ?4Whether this case involves a substantial questionNoof law as to the interpretation of the Constitutionof India or any order made thereunder ?==========================================================KKP MARKETING (I) LTD. VersusDY. COMMISSIONER OF INCOME TAX ==========================================================Appearance:MR SN DIVATIA(1378) for the Petitioner(s) No. 1M R BHATT & CO.(5953) for the Respondent(s) No. 1========================================================== CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALAandHONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 22/03/2022 ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) Constitution of India, the writ applicant has prayed for thefollowing reliefs; “(A) to issue a writ of certiorari or in the nature ofcertiorari or any other appropriate writ, orders ordirections quashing and setting aside the impugnednotice dated 29.03.2018 (Annex.-A) issued by theRespondent proposing to reopen the completedassessment of the Petitioner for A.Y.2011-12 and theorder of objection dt.08.12.2018 (Annexure-B) aswell as the reassessment order, if any passed inconsequence to the impugned notice. (B)to call for the records of the proceedings, lookinto them and be pleased to issue a writ of certiorarior any other appropriate writ, order or directionquashing the impugned notice as well as the order ofobjection dt.08.12.2018 (Annexure-B) (C ) pending the hearing and final disposal of thispetition to maintain status quo in the matter and askthe Respondent and its subordinate not to take anyaction or to do anything in furtherance andpursuance of this impugned notice. (D)To allow this petition with cost. (E)to pass any further or other orders as theHon’ble Court may deem proper in the interest ofjustice and in the circumstances of the case.’ 2.The writ applicant (assessee) seeks to challenge thelegality and validity of the notice issued by the respondentdated 29.03.2018 under Section 148 of the Income TaxAct, 1961 (for short “the Act, 1961”) whereby therespondent has proposed to reopen the assessment whichwas earlier finalized under Section 143(3) read with Section 153A of the Act for A.Y.2011-12. 3.The reasons for reopening as assigned by theAssessing Officer are as under; “1.The assessee is a Company, engaged in landdevelopment business incorporated on 24.05.2010. Asearch action u/s.132 of the Act was carried out atthe premises of the assessee on 30.07.2013.Proceedings u/s.153A of the Act was initiated byissuing of notice dated 27.05.2014, which was dulyserved upon the assessee. The assessee wasrequired to file return of income within 30 days of thereceipt of the notice. The assessee filed a letterdated 03.07.2014, requesting this office to treat thereturn filed by it u/s.139(1) on 18.09.2011 showingincome of Rs. NIL for the AY 2011-12 as return filedin response to notice u/s.153A. Order u/s.143(3) r.w.s153A of the Income Tax Act, 1961 was passed on14.03.2016 determining total income at Rs.NIL. “1.The assessee is a Company, engaged in landdevelopment business incorporated on 24.05.2010. Asearch action u/s.132 of the Act was carried out atthe premises of the assessee on 30.07.2013.Proceedings u/s.153A of the Act was initiated byissuing of notice dated 27.05.2014, which was dulyserved upon the assessee. The assessee wasrequired to file return of income within 30 days of thereceipt of the notice. The assessee filed a letterdated 03.07.2014, requesting this office to treat thereturn filed by it u/s.139(1) on 18.09.2011 showingincome of Rs. NIL for the AY 2011-12 as return filedin response to notice u/s.153A. Order u/s.143(3) r.w.s153A of the Income Tax Act, 1961 was passed on14.03.2016 determining total income at Rs.NIL. 2.For the A.Y.2012-13, proceedings u/s.153A ofthe Act was initiated by issuing of notice dated27.05.2014, which was duly served upon theassessee. The assessee was required to file return ofincome within 30 days of the receipt of the notice.The assessee filed a letter dated 03.07.2014,requesting this office to treat the return filed by itu/s.139(1) on 23.09.2012 showing income of Rs. NIL(for the AY 2012-13), as return filed in response tonotice u/s.153A, Order u/s.143(3) r.w.s. 153A of theIncome Tax Act, 1961 was passed on 14.03.2016,determining total income of Rs.27,04,82,253/-.Following additions were made to the returnedincome: Being aggrieved by the said order, the assessee haspreferred an appeal before CIT(A)-11, Ahmedabad.The CIT(A) has vide its order No.CIT(A)-11/C.C-2/RAJ/42-R/2016-17 dtd. 07.03.2018 decided the appeal.While deciding the appeal, CIT(A) has directed thatsome of the transactions pertains to AY 2012-13 andbalance transactions pertains to AY 2011-12 and thesame must be considered in AY 2011-12 in respect ofaddition made on account of profit from project KKPTownship and Global City. He further directed thatthe explained investment in plot No.409, pertains toAY 2011-12 and the same should be taxed in AY2011-12. it is worth to mention here that in respectof unexplained investment in Plot No.409, theassessee has never submitted the documents beforethis office and the same was submitted before theCIT(A) first time. 3.ANALYSIS OF INFORMATION COLLECTED/RECEIVED During the course of assessment proceedings, theassessee has nowhere tried to explain the contentsof the seized materials. It merely took the stand thatthe project has yet not started. No copies ofpurchase deeds were produced. Therefore, in theabsence of details, the addition has been in theA.Y.2012-13. On perusal of the appellate order forthe AY 2012-13, it is noticed that the assessee hassubmitted, the data/details of purchase deed andalso working of year wise receipt and payment forthe A.Y.2012-13 before the CIT(A). Accordingly, theCIT(A) has quantify the addition and restricted it to Rs.3,05,70361/-. 4.ENQUIRIES MADE BY THE AO AS A SEQUEL TOTHE INFORMATION COLLECTED/RECEIVED. Proft from project KKP Township Since, the assessee has during the course ofassessment proceedings not furnished completedetails/data, profit from the K.K.P Township projectwas taxed in the A.Y.2012-13 amounting toRs.9,76,38,216/-. The CIT(A) has in his order in parano.5.3 has worked out profit of this project on thebasis of details/data filed by the assessee. He hasworked out the profit at Rs.2,77,14,778/-. For thebalance of Rs.6,99,23,438/- (97638216-27714778),he has given direction to tax the same in therelevant assessment year. Since, out of profit ofRs.9,76,38,216/-, CIT (A) has taxed Rs.2,77,14,778/-in A.Y.2012-13, balance of 6,99,23,438/- is requiredto brought to tax in the A.Y.2011-12. -Proft from Global City: Proft from project KKP Township Since, the assessee has during the course ofassessment proceedings not furnished completedetails/data, profit from the K.K.P Township projectwas taxed in the A.Y.2012-13 amounting toRs.9,76,38,216/-. The CIT(A) has in his order in parano.5.3 has worked out profit of this project on thebasis of details/data filed by the assessee. He hasworked out the profit at Rs.2,77,14,778/-. For thebalance of Rs.6,99,23,438/- (97638216-27714778),he has given direction to tax the same in therelevant assessment year. Since, out of profit ofRs.9,76,38,216/-, CIT (A) has taxed Rs.2,77,14,778/-in A.Y.2012-13, balance of 6,99,23,438/- is requiredto brought to tax in the A.Y.2011-12. -Proft from Global City: Since, the assessee has during the course ofassessment proceedings not furnished completedetails/data, profit from the Global City was taxed inthe A.Y.2012-13 amounting to Rs.4,33,13,025/-. TheCIT(A) has in his order at pg no.47 directed that as itis mentioned in the seized paper (page no.19) thatthe period cover is 01.04.2010 to 25.06.2010, theincome should be taxed in the A.Y.2011-12 relevantto F.Y.2010-11. However, he subsequent to thatquantify the same at Rs.28,55,583/- for the F.Y.2011-12 relevant to A.Y.2012-13. Therefore, balance ofRs.4,04,57,442/- (43313025-2855583) is to taxed inthe A.Y.2011-12. Unexplained investment in plot no.409 As regarding addition made on account ofunexplained investment in plot no.409 amounting to Rs.24,33,308/-, CIT (A) has stated that the assesseehas filed/placed copies of sale deeds in respect ofthe said plots and the same is found to be registeredin the F.Y.2010-11 (these are in the form ofadditional evidences and not referred to this officefor comment). On the basis of CIT(A)’s findings, theamount of Rs.24,33,308/- ha to be taxed in theA.Y.2011-12 relevant to F.Y.2010-11. 5.FINDINGS OF THE AO The CIT(A) has while deciding the appeal for theA.Y.2012-13(orderno.CIT(A)-11/C.C-2/RAJ/42-R/2016-17 dtd. 07.03.2018) hasdirected that some of the transactions pertains to AY2012-13 and balance transactions pertains to AY2011-12 and the same must be considered in AY.2011-12 in respect of addition made on account ofprofit from project KKP Township and Global City. Hefurther directed that the unexplained investment inplot no.409, pertains to AY 2011-12 and the sameshould be taxed in AY 2011-12. It is worth to mentionhere that in respect of unexplained investment inplot no.409, the assessee has never submitted thedocuments before this office and the same wassubmitted before the CIT(A) first time. From the above, it can easily be concluded that theassesseee failed to offer correct income for taxationfor the relevant year (i.e. 2011-12). As discussed inpara no.4 supra, the following amount has escapedassessment:- (I)Profit from KKP Township Rs.6,99,23,438/- (ii)Profit from Global City Rs.4,04,57,442/- (iii)Unexplained investment inPlot No.409 Rs.24,33,308/- _________________ Rs.11,28,14, 188/- Total 6.BASIS OF FORMING REASON TO BELIEVE ANDDETAILS OF ESCAPEMENT OF INCOME Proft from project KKP Township: Since, the assessee has during the course ofassessment proceedings not furnished completedetails/data, profit from the K.K.P Township projectwas taxed in the A.Y.2012-13 amounting toRs.9,76,38,216/-. The CIT(A) has in his order at inPara No.5.3 has worked out profit of this project onthe basis of details/data filed by the assessee. He hasworked out the profit at Rs.2,77,14,778/-. For thebalance of Rs.6,99,23,438/- (97638216-27714778),he has directed that the same should be taxed in therelevant assessment year. Since out of the profit ofRs.9,76,38,216/-, CIT(A) has taxed Rs.2,77,14, 778/-in A.Y.2012-13, balance of Rs.6,99,23,438/- (pertainsto AY 2011-12) is required to brought to law in theA.Y.2011-12. Proft from Global City: Since, the assessee has during the course ofassessment proceedings not furnished completedetails/data, profit from the K.K.P Township projectwas taxed in the A.Y.2012-13 amounting toRs.9,76,38,216/-. The CIT(A) has in his order at inPara No.5.3 has worked out profit of this project onthe basis of details/data filed by the assessee. He hasworked out the profit at Rs.2,77,14,778/-. For thebalance of Rs.6,99,23,438/- (97638216-27714778),he has directed that the same should be taxed in therelevant assessment year. Since out of the profit ofRs.9,76,38,216/-, CIT(A) has taxed Rs.2,77,14, 778/-in A.Y.2012-13, balance of Rs.6,99,23,438/- (pertainsto AY 2011-12) is required to brought to law in theA.Y.2011-12. Proft from Global City: Since, the assessee has during the course ofassessment proceedings not furnished completedetails/data, profit from the Global City was taxed inA.Y.2012-13 amounting to Rs.4,33,13,025/-. TheCIT(A) has in his order at pg no.47 directed that as itis mentioned in the seized paper (page no.9) that theperiod cover is 01.04.2010 to 25.06.2010, theincome should be taxed in the A.Y.2011-12 relevantto F.Y.2010-11. However, he subsequent to thatquantify the same at Rs.28,55,583/-, for theF.Y.2011-12 relevant to A.Y.2012-13. Therefore,balance of Rs.4,04,57,442/- (43313025-2855583) isto taxed in the A.Y.2011-12. Unexplained investment in plot no.409 As regarding addition made on account ofunexplained investment in plot no.409 amounting toRs.24,33,308/-, CIT(A) has stated that the assesseehas filed/placed copies of sale deeds in respect of thesaid plots and the same is found registered in theF.Y.2010-11 (these are in the form of additional evidences not referred to this office for comment).On the basis of CIT(A)’s findings, an amount ofRs.24,33,300/- has to be taxed in the A.Y.2011-12relevant to F.Y.2010-11. 7.FINDINGS OF THE AO ON THE TRUE AND FULLDISCLOSURE OF THE MATERIAL FACTS NECESSARYFOR ASSESSMENT UNDER PROVISO TO SECTION 147 In this case there are large number of incriminatingmaterials found during search, which revealed thatthe assessee was full fledged into land developmentand plot selling business. However, the assessee hasthroughout the assessment proceedings deniedhaving carried out such transactions. The years of activities are spread amongst couple ofyears however, A.Y.2012-13 is the year in whichlarge chunk of the transactions has taken place.Hence the incomes from the projects were workedout for the A.Y.2012-13 year under consideration.This has to be done because the assessee hasnowhere cooperated in the assessment proceedings,It has not given any bifurcation of expenses andreceipts. The seized materials are largely inconsolidated form for various years. The CIT(A) has while deciding the appeal for the AY2012-13 (order no.CIT(A)-11/C.C-2/RAJ/42-R/2016-17dtd. 07.03.2018), has directed that some of thetransactions pertains to AY 2012-13 and balancetransactions pertains to AY 2011-12 and the samemust be considered in AY 2011-12 in respect ofaddition made on account of Profit from project KKPTownship and Global City. He further directed thatthe unexplained investment in plot no.409, pertainsto AY 2011-12 and the same should be taxed in AY2011-12. It is worth to mention here that in respectof unexplained investment in plot no.409, theassessee has never submitted the documents beforethis office and the same was submitted before theCIT(A) first time. The assessee has during the course of appellateproceedings filed details of receipt and payments forthe A.Y. 2012-13 and on the basis of which the CIT(A)has confirmed the additions in part (i.e. pertains toA.Y.2012-13) and directed to the balance in relevantassessment year. Therefore, as discussed in parano.6 following amount has escaped assessment forthe AY 2011-12. (I)Profit from projectKKP Township KKP Township The assessee has during the course of appellateproceedings filed details of receipt and payments forthe A.Y. 2012-13 and on the basis of which the CIT(A)has confirmed the additions in part (i.e. pertains toA.Y.2012-13) and directed to the balance in relevantassessment year. Therefore, as discussed in parano.6 following amount has escaped assessment forthe AY 2011-12. (I)Profit from projectKKP Township KKP Township (ii)Profit from Global City (iii)Unexplained investment inplot no.409plot no.409 Rs.6,99,23,438/-Rs.4,04,57,442/- Rs.24,33,308/- _________________TotalRs.11,28,14,188/- 8.APPLICABILITY OF THE PROVISIONS OF SECTION147/151 TO THE FACT OF THE CASE. In this case, a search action u/s.132 of the Act wascarried out at the premises of the assessee on30.07.2013. Proceedings u/s.153A of the Act wasinitiated by issuing of notice dated 27.05.2014, whichwas duly served upon the assessee. Assessmentu/s.143(3) r.w.s. 153A was finalised on 14.03.2016.Since 4 years from end of the relevant year expiredin this case, the requirements to initiate proceedingsu/s.147 of the Act are reason to believe that incomefor the year under consideration has escapedassessment because of failure on the part of theassessee to disclose fully and truly all materials factsnecessary for its assessment for the assessment yearunder consideration. It is pertinent to mention herethat reasons to believe that income has escapedassessment for the year under consideration havebeen recorded above n para no.4. I have carefullyconsidered the assessment records containing thesubmissions made by the assessee in response tothe various notices issued during the assessmentproceedings and have noted that the assessee hasnot fully and truly disclosed the following material facts necessary for its assessment for the year underconsideration. (I)Profit from project KKP Township (ii)Profit from Global City (iii)Unexplained investment inplot no.409plot no.409 Rs.6,99,23,438/- Rs.4,04,57,442/-Rs.24,33,308/- Total _________________ Rs.11,28,14,188/- It is evident from the above facts that the assesseehad not truly and fully disclosed material factsnecessary for its assessment for the year underconsideration thereby necessitating reopeningu/s.147 of the Act. It is true that the assessee has filed a copy of auditedP&L A/c and balance sheet along with return ofincome, however, the requisite full and truedisclosure ofall material facts necessary forassessment has not been made as noted above. It ispertinent to mention here that through the assesseehas filed written omission, the requisite materialfacts noted above in the reasons for reopening areembedded in such a manner that material evidencecould not be discovered by the AO and could havebeen discovered with due diligence, accordingly,attracting provisions of Explanation 1 of section 147of the Act. It is evident from the above discussion that in thiscase, the issues under consideration were neverexamined by the AO during the course of regularassessment. This fact is corroborated from thecontents of notices issued by the AO u/s.143(2);detailed notice 142(1) dtd. 27.07.2015; final showcause notice 18.02.2016 and corresponding ordersheet entries recorded during the 143(3)proceedings. It is important to highlight here thatmaterial facts relevant for the assessment on theissue(s) under consideration were not filed during the course of assessment proceeding and is not a part ofaudited P&L A/C; balance sheet etc.” 4.To the aforesaid, objections were lodged by the writapplicant on 13.10.2018. Broadly, the objections lodgedare as under; “1.There is no reason to believe for escapement ofsame income after assessing income in any of theone assessment year. 2.There is no additional or new evidences inpossession of the A.O. to form reason to believe. course of assessment proceeding and is not a part ofaudited P&L A/C; balance sheet etc.” 4.To the aforesaid, objections were lodged by the writapplicant on 13.10.2018. Broadly, the objections lodgedare as under; “1.There is no reason to believe for escapement ofsame income after assessing income in any of theone assessment year. 2.There is no additional or new evidences inpossession of the A.O. to form reason to believe. 3.Reopening based on mere change of opinionwith respect to year of assessment year, particularlyafter finalising assessment u/s.143(3) r.w.s 153A ofthe year intended to be re-opened cannot beconsidered as valid reason to reopen assessment. 4.According to section itself, (Provided (also) thatthe Assessing Officer may assess or reassess suchincome, other than the income involving matterswhich are the subject matters of any appeal,reference or revision, which is chargeable to tax andhas escaped assessment. 5.Reopening on the basis of finding of other isinvalid and bad in law. 6.Reopening beyond 4 years is time barred andinvalid.” 5.The aforesaid objections came to be disposed of bythe Assessing Officer vide order dated 08.12.2018 asunder; “The case was reopened by issue of notice u/s.148.The assessee vide its letter dated 28.04.2018 received in this office on 28.04.2018 has files itsreturn of income in response to the notice u/s.148.Further the assessee had asked for the reasons forreopening and issuance of notice u/s.148 vide letterdated 18.08.2018 received in this office on20.08.2018. Accordingly, reasons for reopeningprovided to the assessee. The assessee vide letterdated 13.10.2018 received in this office on06.12.2018 has raised objection to reopening of theassessment for A.Y.2011-12. Assessee stated that assessment u/s.143(3) wascompleted in this case. There is no fresh materialwhich may have lead the AO to reason to believe thatincome has escaped assessment and it is simplybased on account of change of opinion. Assesseealso relied on certain case laws, in support of hisclaim. 2.The contention of the assessee is notacceptable. In this case assessment u/s.143(3) r.w.s.153A was completed on 14.03.2016 determining thetotal income at Rs.Nil. The case was reopened andnotice u/s.148 was issued on 23.03.2018 i.e, within 6years from the end of the relevant A.Y after takingprior approval of Pr. Commissioner of Income Tax,Central, Ahmedabad. 3.During the course of assessment proceedings,the assessee has nowhere tried to explain thecontents of the seized materials. It merely took thestand that the project has yet not started. Theassessment was completed u/s.143 r.w.s 153A of theAct on 14.03.2016. Subsequently, it was noticed thatassessee earned profit from various projects andmade unexplained investment in immovableproperty during the F.Y.2010-11 remain to taxed. Totax the above profit in relevant period the case wasreopened u/s.147. Further, the reopening was madewithin 6 years from the end of the relevantassessment year. 4.The AO should have only reason to believe about the escapement of income. Furtherexplanation 2 to section 147 contains list of variousevents, which can be deemed to be cases whereincome chargeable to tax has escaped assessmentand this list indicates that if in the case of anassessee, income has been made the subject ofexcessive relief under this Act or excessive allowancehave been computed, it would amount toescapement of income from assessment. It is furtherto be noted that the reopening have been madewithin six years from the end of the relevantassessment year. If the AO prima facie finds ordiscovers that the case falls in any of the clauses ofexplanation 2, then those cases will be deemed casesof income that has escaped assessment and withoutanything more beyond such findings or discovery hecan initiate the proceedings under section 147 of theAct. 5.The Hon’ble Supreme Court in the case ofCentral Provinces Manganese Ore. Co. Ltd. In whichheld that, two conditions are required to conferjurisdiction on the Income Tax Officer under section147(a) of the Income Tax Act, 1961. The first is thatthe Income Tax Officer must have reason to believethat income chargeable to income tax has beenunder assessed and the second that such underassessment has occurred by reason of omission orfailure on the part of the assessee to disclose fullyand truly all material facts necessary for itsassessment for the year 1953-54. In the presentcase, during the course of assessment proceedings,the assessee has nowhere tried to explain thecontents of the seized materials. It merely took thestand the project has yet not started. 6.The Hon’ble High Court of Punjab & Haryana inthe case of Coca Cola India Ltd. vs. ACIT (2009) thatrequirement of section 147 is fulfilled if AO canlegitimately form an opinion that income chargeableto tax has escaped assessment and forming such abelief any relevant material can be considered. 7.The Hon’ble Supreme Court in the case ofPhoolchand Bajranglal vs. ITO (1993) 203 ITR 456(SC) has laid down that Courts have held that whilethere must exist reasons for holding a belief of ofescapement of income, the question whether thereasons were adequate or sufficient is not for theCourt to decide. 8.The Hon’ble Supreme Court in the case ofRaymond Woollen Mills (199) 236 ITR 34 (SC) hasheld that at the stage of reopening, only prima facieescapement is required, whether the same hasescaped assessment or not is the matter to bedecided during the course of assessmentproceedings. In this regard I would like to furtherstate that merits of the case could be decided onlybased on documents and evidences, which will befurnished during the course of reassessmentproceedings and based on law prevailing at thattime. Hence you are requested to cooperate with thereassessment proceedings. 9.In view of the above, the objections raised bythe assessee challenging the reopening of theassessment proceedings are hereby rejected anddisposed off accordingly.” 6.Being dissatisfied with the aforesaid, the writapplicant is here before this Court with the present writapplication. 7.We have heard Mr. Divatia, the learned counselappearing for the writ applicant and Ms. Kalpana Raval,the learned senior standing counsel appearing for theRevenue. 8.It appears from the materials on record that the writapplicant-Company was incorporated on 24.05.2010 and filed its return for the assessment year 2011-2012 on18.09.2011. A search was conducted under section 132Aof the Act at the premises of the writ applicant on30.07.2013, which was followed by issuance of noticeunder Section 153A which proceedings culminated in anassessment order dated 14.03.2016 passed under Section153A read with section 143(3) of the Act. Orders werepassed for the assessment year 2010-11 till assessmentyear 2014-15. For the assessment year 2012-13, theincome was assessed at Rs.27,04,82,253/-. Such orderwas carried in appeal before the Commissioner, who videhis order dated 07.03.2018 while partly allowing theappeal of the assessee also directed the AssesesingOfficer to initiate appropriate proceedings for intimationof appropriate proceedings by the AO for the assessmentyear 2011-12. 9.Accordingly, after recording reasons, the AssessingOfficer issued the impugned notice dated 29.03.2018under section 148 of the Act for the Assessment Year2011-12. In the reasons, the Assessing Officer has clearlystated that the documents had been produced for the firsttime before the CIT(A), which reveal the existence ofuncleared income. 9.Accordingly, after recording reasons, the AssessingOfficer issued the impugned notice dated 29.03.2018under section 148 of the Act for the Assessment Year2011-12. In the reasons, the Assessing Officer has clearlystated that the documents had been produced for the firsttime before the CIT(A), which reveal the existence ofuncleared income. 10.Section 147 of the Act authorizes the re-opening ofany assessment of a previous year. Section 148, whichcontains the conditions for re-opening assessments,including the limitation period within which notices can be issued, by its proviso, enacts that: “Provided that no notice under this section shall beissued unless there is information with the AssessingOfficer which suggests that the income chargeable totax has escaped assessment in the case of theassessee for the relevant assessment year and theAssessing Officer has obtained prior approval of thespecified authority to issue such notice.” 11.Almost six decades back, the Supreme Court, in itsdecision in the case of Calcutta Discount CompanyLtd. vs. Income Tax Officer, reported in 1961 (2) SCR241 had underscored the obligation of every assessee tomake a true and full disclosure and said that: “There can be no doubt that the duty of disclosing all the primary facts relevant to the decision of thequestion before the assessing authority lies on theassesses.” 12.The Supreme Court further held that once the duty isdischarged, it is upto the assessing officer to inquirefurther and draw the necessary inferences whilecompleting the assessment. 13.As to what can be the valid grounds for re-opening anassessment has been the subject matter of severaldecisions of the supreme court. In Income Tax Officer,Calcutta & Ors. vs. Lakhmani Mewal Das, 1976 (3)SCR 956, the Supreme Court held that the “reasons tobelieve” must be based on objective materials, and on areasonable view. The court held as follows: “The grounds or reasons which lead to the formationof the belief contemplated by Section 147(a) of theAct must have a material bearing on the question ofescapement of income of the assessee fromassessment because of his failure or omission todisclose fully and truly all material facts. Once thereexist reasonable grounds for the Income-tax Officerto form the above belief, that would be sufficient toclothe him with jurisdiction to issue notice. Whetherthe grounds are adequate or not is not a matter forthe Court to investigate. The sufficiency of groundswhich induce the income-tax Officer to act is,therefore, not a justiciable issue. It is, of course, opento the assessee to contend that the Income-taxOfficer did not hold the belief that there had beensuch non-disclosure. The existence of the belief canbe challenged by the assessee but not thesufficiency of reasons for the belief. The expression"reason to believe" does not mean a purelysubjective satisfaction on the part of the Income-taxOfficer. The reason must be held in good faith. Itcannot be merely a pretence. It is open to the Courtto examine whether the reasons for the formation ofthe belief have a rational connection with or arelevant bearing on the formation of the belief andare not extraneous or irrelevant for the purpose ofthe section. To this limited extent, the action of theIncome-tax Officer in starting proceedings in respectof income escaping assessment is open to challengein a Court of law.” 14.In Phool Chand Bajrang Lal & Ors. vs. Income Tax Officer & Ors., 1993 Supp (1) SCR 28, afterreviewing the previous case law, and concluding that avalid re-opening is one, preceded by specific, reliable andrelevant information, and that the sufficiency of suchreasons is not subject to judicial review- the only caveatbeing that the court can examine the record, if suchmaterial existed, it was held that the facts disclosed in the return, if found later to be unfounded or false, can alwaysbe the basis of a re-opening of assessment: 14.In Phool Chand Bajrang Lal & Ors. vs. Income Tax Officer & Ors., 1993 Supp (1) SCR 28, afterreviewing the previous case law, and concluding that avalid re-opening is one, preceded by specific, reliable andrelevant information, and that the sufficiency of suchreasons is not subject to judicial review- the only caveatbeing that the court can examine the record, if suchmaterial existed, it was held that the facts disclosed in the return, if found later to be unfounded or false, can alwaysbe the basis of a re-opening of assessment: “appears to us to be, to ensure that a party cannotget away by willfully making a false or untruestatement at the time of original assessment andwhen that falsity comes to notice, to turn around andsay "you accepted my lie, now your hands are tiedand you can do nothing". It would be travesty ofjustice to allow the assessee that latitude.” 15.A three judge Bench, of the Supreme Court, in theCommissioner of Income Tax, Delhi v. Kelvinator ofIndia Ltd., 2010 (1) SCR 768, after considering itsprevious decisions, re-stated the position of law as follows: “5....where the Assessing Officer has reason tobelieve that income has escaped assessment,confers jurisdiction to re-open the assessment.Therefore, post-1st April, 1989, power to re-open ismuch wider. However, one needs to give a schematicinterpretation to the words "reason to believe"..… Section 147 would give arbitrary powers to theAssessing Officer to re-open assessments on thebasis of "mere change of opinion", which cannot beper se reason to re-open. 6. We must also keep in mind the conceptualdifference between power to review and power to re-assess. The Assessing Officer has no power toreview; he has the power to re-assess. But re-assessment has to be based on fulfillment of certainpre-condition and if the concept of "change ofopinion" is removed, as contended on behalf of theDepartment, then, in the garb of re-opening theassessment, review would take place. 7. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by theAssessing Officer. Hence, after 1st April, 1989,Assessing Officer has power to re-open, providedthere is "tangible material" to come to the conclusionthat there is escapement of income fromassessment. Reasons must have a live link with theformation of the belief.” 16.It is therefore, clear that the basis for a valid re-opening of assessment should be the availability oftangible material, which can lead the AO to scrutinize thereturns for the previous assessment year in question, todetermine, whether a notice under Section 147 is calledfor. 17.Prima facie, it appears that the profit derived by thewrit applicant from the KKP Township Project was taxed inthe A.Y.2012-13 to the tune of Rs.9,76,38,216/-. Accordingto the Assessing Officer, the writ applicant, during thecourse of the assessment proceedings under Section 153Aof the Act, had not furnished complete details/informationin relation to the KKP Township Project. No bifurcation ofthe expenses and receipts were furnished by the writapplicant. Out of the profit of Rs.9,76,38,216/-, an amountof Rs.6,99,23,438/- pertains to A.Y.2011-12. 18.In the same manner, so far as the Global City Projectis concerned, the profit was taxed in the year A.Y.2012-13to the tune of Rs.4,33,13,025/-. From the aforesaidamount, the profit of Rs.4,04,57,442/- relates to A.Y.2011-12.So far as the unexplained investment in Plot No.409is concerned, it appears that the writ applicant had not filed any sale deeds before the Assessing Officer duringthe course of the original assessment proceedings underSection 153A of the Act. The sale deeds were produced,for the first time, in the form of additional evidence duringthe proceedings before the CIT(A). 18.In the same manner, so far as the Global City Projectis concerned, the profit was taxed in the year A.Y.2012-13to the tune of Rs.4,33,13,025/-. From the aforesaidamount, the profit of Rs.4,04,57,442/- relates to A.Y.2011-12.So far as the unexplained investment in Plot No.409is concerned, it appears that the writ applicant had not filed any sale deeds before the Assessing Officer duringthe course of the original assessment proceedings underSection 153A of the Act. The sale deeds were produced,for the first time, in the form of additional evidence duringthe proceedings before the CIT(A). 19.All these facts were not before the Assessing Officerat the time of finalization of the search assessment. It isa settled position of law that the adequacy of the reasonsprovided by the Assessing Officer fall outside the reviewpowers and remains within the domain of the AssessingOfficer at this stage of the proceedings where only apreliminary finding under section 147/148 has been made.It is necessary to reiterate that we are at the stage of thevalidity of the notice under section 148/147. The inquiryat this stage is only to see whether there are reasonablegrounds for the Income Tax Officer to believe and notwhether the omission/failure and the escapement ofincome is established. It is necessary to keep thisdistinction in mind. (See Shri Krishna (P.) Ltd. vs. ITO(1996) 221 ITR 538/87 Taxman 315). 20.Having regard to the materials on record it cannot besaid that there is a total non-application of mind on thepart of the Assessing Officer while recording the reasonsfor reopening of the assessment. It also cannot be saidthat his conclusion was merely based on the observationsand information received from the Investigation Wing. TheAssessing Officer could be said to have applied his mind to the same. The Assessing Officer could not be said to havemerely concluded without verifying the facts that it is thecase of reopening of the assessment. We do not find meritin the vociferous submission of the learned counselappearing for the writ applicant that the contents of thereasons recorded by the Assessing Officer for thereopening of the assessment is merely an introductionabout the investigations conducted by the InvestigationWing, the modus operandi of the entry provided, thesumming up of inquiry of the Investigation Wing, theinformation received from the Investigation Wing etc. Wehave examined the belief of the Assessing Officer to alimited extent to look into whether there was sufficientmaterial available on record for the Assessing Officer toform a reasonable belief and whether there was a live linkexisting of the material and the income chargeable to taxthat escaped assessment. The case on hand is not onewhere it could be argued that the Assessing Officer, onabsolutely vague or unspecific information, initiated theproceedings of reassessment without taking the pains toform his own belief in respect of such materials. 21.In the result, this application fails and is herebyrejected. (J. B. PARDIWALA, J) (NISHA M. THAKORE,J)