Shilp Realty Private Limited v. Income Tax Officer, Ward 4(1)(3), Ahmedabad

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 13025 of 2021 FOR APPROVAL AND SIGNATURE: HONOURABLE MS. JUSTICE SONIA GOKANI andHONOURABLE MR. JUSTICE RAJENDRA M. SAREEN ========================================================== 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 ? ========================================================== SHILP REALTY PRIVATE LIMITED Versus INCOME TAX OFFICER, WARD 4(1)(3), AHMEDABAD ==========================================================Appearance:MR B S SOPARKAR(6851) for the Petitioner(s) No. 1MRS MAUNA M BHATT(174) for the Respondent(s) No. 1,2========================================================== CORAM: HONOURABLE MS. JUSTICE SONIA GOKANI andHONOURABLE MR. JUSTICE RAJENDRA M. SAREEN Date : 04/10/2021 CAV JUDGMENT (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1 This petition is preferred challenging the notice dated 19.03.2021 issued by the respondent No.1 under section148 of the Income Tax Act directing the petitioner to furnishthe return of income for the Assessment Year 2013-14alleging the same to be bad in law. The petitioner alsoquestions the order disposing of objections on 27.07.2021by respondent No.2 as contrary to law and without anyjurisdiction. 2 Brief facts are as follows:- 2.1 The petitioner filed return of income for the year 2013-14 on 11.09.2013 declaring the total loss of Rs.37,922/-. Thecase was not selected for scrutiny nor scrutiny assessmentwas framed. case was not selected for scrutiny nor scrutiny assessmentwas framed. 2.2 Respondent No.1 issued notice under section 148 on19.03.2020 for reopening the assessment for AssessmentYear 2013-14. The petitioner filed the return, in response tothe notice and reasons for reopening were supplied on26.06.2020. According to the petitioner, these reasons aremisconceived and baseless.19.03.2020 for reopening the assessment for AssessmentYear 2013-14. The petitioner filed the return, in response tothe notice and reasons for reopening were supplied on26.06.2020. According to the petitioner, these reasons aremisconceived and baseless. 2.3 Various objections have been raised on 25.07.2020 and the request was made to the respondent to drop thereassessment proceedings. reassessment proceedings. 2.4 After about more than a year on 27.07.2021, respondentNo.2 disposed of the objections and rejected the resistanceNo.2 disposed of the objections and rejected the resistance 2.5 3 by such objections in totality. It is urged and alleged that theofficer did it in a hurry without dealing with the contentionsof the petitioner. The impugned notice issued, thereafter,under section 148 on 19.03.2020 as also the order passed against the preliminary objections dated 27.07.2021 both are under challenge. The prayers sought for are as follows:- “7.The Petitioner, therefore, prays that this Hon’bleCourt be pleased to issue a writ of mandamus or a writ inthe nature of mandamus or a writ of certiorari or a writ in thenature of certiorari or any other appropriate writ, direction ororder and be pleased to: (a)quash and set aside the impugned notice dated19.03.2020 at Annexure-’A’ and the impugned order dated27.07.2021 at Annexure-”F” to this Petition; (b) pending the admission, hearing and final disposal of thispetition, to stay implementation and operation of the noticeat Annexure-’A’ and the impugned order dated 27.07.2021at Annexure-”F” to this petition and stay further proceedingsfor assessment for A.Y. 2013-14; (c)any other and further relief deemed just and properbe granted in the interest of justice; “7.The Petitioner, therefore, prays that this Hon’bleCourt be pleased to issue a writ of mandamus or a writ inthe nature of mandamus or a writ of certiorari or a writ in thenature of certiorari or any other appropriate writ, direction ororder and be pleased to: (a)quash and set aside the impugned notice dated19.03.2020 at Annexure-’A’ and the impugned order dated27.07.2021 at Annexure-”F” to this Petition; (b) pending the admission, hearing and final disposal of thispetition, to stay implementation and operation of the noticeat Annexure-’A’ and the impugned order dated 27.07.2021at Annexure-”F” to this petition and stay further proceedingsfor assessment for A.Y. 2013-14; (c)any other and further relief deemed just and properbe granted in the interest of justice; (d)to provide for the cost of this petition.” In response to the notice issued by this Court, learned Senior Standing Counsel Ms. Mauna Bhatt appeared and she has sought time to file the reply. However, consideringthe urgency and apprehension that the assessment may be framed in the interregnum, we have chosen to here both thesides finally. The respondents chose to place on record the material to substantiate the reasons recorded for reopening of the assessment with a request that the same can be perusedconfidentially as it also has a wider ramification. We have heard Mr. Bandish Soparkar, learned advocatefor the petitioner. According to him, the reasons recordedsuffer a serious statutory illegality, as there is noindependent application of mind by the Assessing Officer. It is a borrowed satisfaction received from ADIT(Investigation),Kolkata. There is nothing to indicate that therespondent examined the veracity of the information andthere is a breach of statutory provision of recording thereasons and to have personal belief and satisfaction afterinvestigation and on application of independent mind. Thereasons do not show as to how the petitioner is held to be abeneficiary, as no money has been received by petitionerfrom M/s. Shubhshree Barter Pvt. Ltd. According to the petitioner, no income has escapedassessment and information received from ADIT, Kolkata isabout one M/s.Shubhshree Barter Pvt. Ltd. where highvalue transactions have been noticed. It is seen that fundshave been received through RTGS mode and are paid alsothrough RTGS. From the fund trail, it is seen that they havebeen layered through several companies and the petitioneris one of the beneficiaries for an amount of Rs. 1 crore. 5.2 According to learned advocate, the petitioner received aloan of Rs. 1 crore each from Signet Vyapaar PrivateLimited and Wonder Procon Private Limited, who arealready taxed and hence, there is no income, which hasescaped assessment as transaction is genuine, the identityof the parties is known and the creditors have thecreditworthiness of providing loans. It is urged that therecannot be any addition of income and the reasons recordedare fundamentally wrong.loan of Rs. 1 crore each from Signet Vyapaar PrivateLimited and Wonder Procon Private Limited, who arealready taxed and hence, there is no income, which hasescaped assessment as transaction is genuine, the identityof the parties is known and the creditors have thecreditworthiness of providing loans. It is urged that therecannot be any addition of income and the reasons recordedare fundamentally wrong. 5.3 5.3 He further has urged that it is settled position that “therehas to be a reason to believe and not a reason to suspect”.Respondent No.1 does not have any reason to believe but itis acting on a mere suspicion. It can be also be seen fromthe basis of the order disposing the objections, whichreveals that if the assessee has sufficient material of not tobelieve the genuineness of the transactions, it should comeon the platform of assessment set by Assessing Officer andthere is no escapement of income on account of allegedtransaction. Thus, when the reopening is only to verify thegenuineness of transaction, it is a suspicion that they arenot genuine and, hence, there is no reason to believe andnotice is bad.has to be a reason to believe and not a reason to suspect”.Respondent No.1 does not have any reason to believe but itis acting on a mere suspicion. It can be also be seen fromthe basis of the order disposing the objections, whichreveals that if the assessee has sufficient material of not tobelieve the genuineness of the transactions, it should comeon the platform of assessment set by Assessing Officer andthere is no escapement of income on account of allegedtransaction. Thus, when the reopening is only to verify thegenuineness of transaction, it is a suspicion that they arenot genuine and, hence, there is no reason to believe andnotice is bad. The main emphasis is about the order of disposing of the objections. According to the petitioner, it is not a speakingorder. The petitioner has raised various objections andrespondent has simply brushed them aside without dealingthem. The judgement of the Apex Court in GKNDriveshafts (INDIA) Ltd. vs. ITO, [2003] 259 ITR 19 andthe decision of this Court in the case of Ashish Bohra vs.ITO, [2021]129 taxmann.com 52(Gujarat) have held thatdisposing of the objection is not an empty formality and therespondent has to apply the mind and pass a speakingorder dealing with the objections of the petitioner. Learned counsel for the respondent has relied on thedecision of This Court in the case of Divya JyotiDiamonds (P.) Ltd. vs. Income Tax Officer, [2021] 128taxmann.com 419(Gujarat). She has strongly objected toany indulgence by this Court, at this juncture on the groundthat it is not for the Court to see as to whether the notice,which has been given and the subjective satisfactionarrived at by the Assessing Officer will result into theaddition of income. The writ jurisdiction is not to beexercised unless the Court finds that the very assessmentof jurisdiction on the part of the Assessing Officer iserroneous. She also has urged that section 147 permits thereopening of assessment to Assessing Officer on his forming a belief that income chargeable to tax has escapedassessment and Assessing Officer is authorised to reopenbeyond the period of four years, if he believes that theassessee fails to furnish the return under section 139 of theAct and he also fails to disclose fully and truly all materialfacts necessary for such assessment. She relied on the decision of Assistant Commissioner of Income Tax vs. Rajesh Jhaveri Stock Brokers P. Ltd.,[2007] 291 ITR 500(SC) and the decision of this Court inthe case of Yogendrakumar Gupta vs. ITO, [2014] 46taxmann.com 56(Gujarat). After we concluded the hearing of the matter in the evening,due to paucity of time when the same was fixed on the verynext day morning for pronouncement, noticing the urgencymade-out by the learned counsel for the petitioner, it wasintimated to the Court that the assessment order hadalready been passed on 28[th] September, 2021 and thesame had been intimated to the petitioner by way of an e-mail of which he was not aware till 1[st] October, 2021. Mrs.Mauna Bhatt, learned Senior Standing Counsel also wasnot made aware and according to her, this being thefaceless assessement regime, she also was notcommunicated this aspect. 7.1 Accordingly, we had permitted the draft amendment to the After we concluded the hearing of the matter in the evening,due to paucity of time when the same was fixed on the verynext day morning for pronouncement, noticing the urgencymade-out by the learned counsel for the petitioner, it wasintimated to the Court that the assessment order hadalready been passed on 28[th] September, 2021 and thesame had been intimated to the petitioner by way of an e-mail of which he was not aware till 1[st] October, 2021. Mrs.Mauna Bhatt, learned Senior Standing Counsel also wasnot made aware and according to her, this being thefaceless assessement regime, she also was notcommunicated this aspect. 7.1 Accordingly, we had permitted the draft amendment to the petitioner, which has been carried-out, where the additional prayers sought for, are as follows : “(aa) quash and set aside the impugned assessment orderdated 28.09.2021 at Annexure-H to this petition. (aaa) pending the admission, hearing and final disposal ofthis petition, to stay implementation and operation of theassessment order and notice of penalty at Annexure-H tothis petition and stay recovery of tax for A.Y. 2013-14;” 8 In the aforementioned background, we notice that this is achallenge to the reopening of notice issued under section148 of the Act after the period of four years in case ofassessee for the relevant Assessment Year, the provisions of sections 147 and 148 deserve reproduction: “[Income escaping assessment. 147. If any income chargeable to tax, in the case of anassessee, has escaped assessment for any assessmentyear, the Assessing Officer may, subject to the provisionsof sections 148 to 153, assess or reassess such income orrecompute the loss or the depreciation allowance or anyother allowance or deduction for such assessment year(hereafter in this section and in sections 148 to 153 referredto as the relevant assessment year). Explanation.—For the purpose of assessment orreassessment or recomputation under this section, theAssessing Officer may assess or reassess the income inrespect of any issue, which has escaped assessment, andsuch issue comes to his notice subsequently in the courseof the proceedings under this section, irrespective of thefact that the provisions of section 148A have not beencomplied with.] [Issue of notice where income has escapedassessment. 148. Before making the assessment, reassessment orrecomputation under section 147, and subject to theprovisions of section 148A, the Assessing Officer shallserve on the assessee a notice, along with a copy of theorder passed, if required, under clause (d) of section 148A,requiring him to furnish within such period, as may bespecified in such notice, a return of his income or theincome of any other person in respect of which he isassessable under this Act during the previous yearcorresponding to the relevant assessment year, in theprescribed form and verified in the prescribed manner andsetting forth such other particulars as may be prescribed;and the provisions of this Act shall, so far as may be, applyaccordingly as if such return were a return required to befurnished under section 139: Provided that no notice under this section shall be issuedunless there is information with the Assessing Officer whichsuggests that the income chargeable to tax has escapedassessment in the case of the assessee for the relevantassessment year and the Assessing Officer has obtainedprior approval of the specified authority to issue such notice. Explanation 1.—For the purposes of this section and section148A, the information with the Assessing Officer whichsuggests that the income chargeable to tax has escapedassessment means,— (i) any information flagged in the case of the assessee forthe relevant assessment year in accordance with the riskmanagement strategy formulated by the Board from time totime; Provided that no notice under this section shall be issuedunless there is information with the Assessing Officer whichsuggests that the income chargeable to tax has escapedassessment in the case of the assessee for the relevantassessment year and the Assessing Officer has obtainedprior approval of the specified authority to issue such notice. Explanation 1.—For the purposes of this section and section148A, the information with the Assessing Officer whichsuggests that the income chargeable to tax has escapedassessment means,— (i) any information flagged in the case of the assessee forthe relevant assessment year in accordance with the riskmanagement strategy formulated by the Board from time totime; (ii) any final objection raised by the Comptroller and AuditorGeneral of India to the effect that the assessment in thecase of the assessee for the relevant assessment year hasnot been made in accordance with the provisions of thisAct. Explanation 2.—For the purposes of this section, where,— (i) a search is initiated section 132 or books of account,other documents or any assets are requisitioned undersection 132A, on or after the 1st day of April, 2021, in thecase of the assessee; or (ii) a survey is conducted under section 133A, other thanunder sub-section (2A) or sub-section (5) of that section, onor after the 1st day of April, 2021, in the case of theassessee; or (iii) the Assessing Officer is satisfied, with the prior approvalof the Principal Commissioner or Commissioner, that anymoney, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April,2021, belongs to the assessee; or (iv) the Assessing Officer is satisfied, with the prior approvalof Principal Commissioner or Commissioner, that any booksof account or documents, seized or requisitioned undersection 132 section 132A in case of any other person on orafter the 1st day of April, 2021, pertains or pertain to, or anyinformation contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have informationwhich suggests that the income chargeable to tax hasescaped assessment in the case of the assessee for thethree assessment years immediately preceding theassessment year relevant to the previous year in which thesearch is initiated or books of account, other documents orany assets are requisitioned or survey is conducted in thecase of the assessee or money, bullion, jewellery or othervaluable article or thing or books of account or documentsare seized or requisitioned in case of any other person.Explanation 3.—For the purposes of this section, specifiedauthority means the specified authority referred to in section151.] It is thus quite clear that the Assessing Officer, if has a reason to believe that the assessee has, in a particularyear, not disclosed fully and truly all material factsnecessary for his assessment of that year and that hasresulted into the income chargeable to having escapedassessment, even notwithstanding any omission or failureas provided in Clause A of section 147 on the part of theassessee, the Income Tax Officer in consequence of theinformation in his possession, has a reason to believe thatincome chargeable to tax has escaped assessment for anyAssessment Year, subject to the provisions of sections 148 to 153, he can assess or reassess the income or recompute the loss for the concerned Assessment Year. It is thus quite clear that the Assessing Officer, if has a reason to believe that the assessee has, in a particularyear, not disclosed fully and truly all material factsnecessary for his assessment of that year and that hasresulted into the income chargeable to having escapedassessment, even notwithstanding any omission or failureas provided in Clause A of section 147 on the part of theassessee, the Income Tax Officer in consequence of theinformation in his possession, has a reason to believe thatincome chargeable to tax has escaped assessment for anyAssessment Year, subject to the provisions of sections 148 to 153, he can assess or reassess the income or recompute the loss for the concerned Assessment Year. In the case of Dishman Pharmaceuticals & ChemicalsLtd. vs. Deputy Commissioner of Income-tax (OSD)(No.1), [2013] 30 taxmann.com 67(Gujarat), the Courthas held that Assessing Officer must have a reason tobelieve that the income chargeable to tax had escapedassessment and the same has occasioned on account ofeither failure on the part of the assessee to make return ofhis income or to disclose fully and truly all material facts.The reasons recorded, of course, need to reflect thesatisfaction of both these conditions. As per this decision,the Court held that there is no set formula as to how thereason is to be recorded. What is important is not thelanguage, but the contents of the reasons, which wouldhave a material bearing and the reasons also must emergefrom records supplied and not by way of additional affidavit.Since the very purpose of bringing of section 147 on astatute book is to ensure that the party cannot get away bymaking a false or untrue statement at the time of originalassessment and when any falsehood is noticed, it is notpermissible for the party to say that even though it had toconveyed the lies, the hands of the Assessing Officer are 11 11.1 tied, since he had accepted the lies. In the case of Phoolchand Bajranglal vs. ITO, [1993](203) ITR 456, there was a question of assessment beyondthe period of four years. The assessee had filedconfirmatory letters from the company in support of the loantransactions. It was alleged that the interest paid to theCalcutta Company though was permitted by the AssessingOfficer, for nearly 05 years on the basis of samecommunication from the ITO based at Calcutta, thegenuineness of the loan transactions had been questioned.The Managing Director admitted that the company atCalcutta was a mere name lender and no amount had beenadvanced during the three consecutive assessment years.When the reassessment proceedings were initiated allegingthat the fresh inference was impermissible for theAssessing Officer to draw, the Court held that it was a caseof acquiring fresh information specific in nature and relatingto the concluded assessment and the same revealed thefalsehood of the statement of the assessee at the time oforiginal assessment. (203) ITR 456, there was a question of assessment beyondthe period of four years. The assessee had filedconfirmatory letters from the company in support of the loantransactions. It was alleged that the interest paid to theCalcutta Company though was permitted by the AssessingOfficer, for nearly 05 years on the basis of samecommunication from the ITO based at Calcutta, thegenuineness of the loan transactions had been questioned.The Managing Director admitted that the company atCalcutta was a mere name lender and no amount had beenadvanced during the three consecutive assessment years.When the reassessment proceedings were initiated allegingthat the fresh inference was impermissible for theAssessing Officer to draw, the Court held that it was a caseof acquiring fresh information specific in nature and relatingto the concluded assessment and the same revealed thefalsehood of the statement of the assessee at the time oforiginal assessment. The Court held that subsequent information on the basis ofwhich the Income Tax Officer acquired the reason to believethat income chargeable to tax has escaped on account ofwhich the Income Tax Officer acquired the reason to believethat income chargeable to tax has escaped on account of the omission on the part of the assessee to fully and trulydisclose primary facts, which were otherwise relatable,specific and relevant. The reopening was permitted. In the case of Rajesh Jhaveri Stock Brokers P.Ltd.B(supra), the Court held that the Assessing Officermust have a reason to believe that “the income chargeableto tax has escaped assessment for a particular year fornon-disclosure of the true and full material facts must not besuch at the time of recording reasons that the same shouldconclusively lead to adding of income.” In the case of Yogendrakumar Gupta (supra), this Courthas considered various decisions of reopening on this very issue to hold thus: “18. As mentioned hereinabove, we had called for theoriginal file, which had revealed new, valid and tangibleinformation supporting Assessing Officer's opinion receivedfrom DCIT, Kolkata, based on the material found during thesearch by the CBI, where Basant Marketing Pvt. Ltd. is saidto be a dummy company of one Shri Arun Dalmia. What hasbeen emphasised by the learned Senior Counsel appearingfor the petitioner is that the Assessing Officer had attemptedto fill in the gap by terming the amount received from BasantMarketing Pvt. Ltd. as "accommodation entry", which shecould not have done without further inquiry/ verification. Yetanother contention emphasised by the learned SeniorCounsel is that the post notice correspondence made afterthe reasons recorded could not have added anything whichwas lacking in the reasons themselves. He urged that inabsence of any statement given by any Director of BasantMarketing Pvt. Ltd. stating that the assessee received andobtained accommodation entry in the form of loans andadvances, the reasons lack basis. The Director Mr.Dalmiaof Basant Marketing Pvt. Ltd. as contended also does not reveal anywhere and, therefore, it is premature on the partof the Assessing Officer to so record the reasons. It isfurther urged that the affidavit of Rishabh Dalmia stating onoath that the loan transactions with the petitioner aregenuine for having been carried out only through cheques,prima facie vindicates that the entire exercise is based onsuspicion. The entire thrust, therefore, is that issuance ofnotice is nothing but a fishing inquiry. 19. As discussed at length while adverting to the law, thatsufficiency of reasons recorded by the Assessing Officerneed not be gone into by this Court. Of course, theAssessing Officer when forms his belief on the basis ofsubsequent new and specific information that the incomechargeable to tax has escaped assessment on account ofomission on the part of the assessee to make full and truedisclosure of primary facts, he may start reassessmentproceedings as fresh facts revealed the non-disclosure fulland true. Such facts were not previously disclosed or it canbe said that if previously disclosed, they exposeuntruthfulness of facts revealed. 19. As discussed at length while adverting to the law, thatsufficiency of reasons recorded by the Assessing Officerneed not be gone into by this Court. Of course, theAssessing Officer when forms his belief on the basis ofsubsequent new and specific information that the incomechargeable to tax has escaped assessment on account ofomission on the part of the assessee to make full and truedisclosure of primary facts, he may start reassessmentproceedings as fresh facts revealed the non-disclosure fulland true. Such facts were not previously disclosed or it canbe said that if previously disclosed, they exposeuntruthfulness of facts revealed. 20. The Assessing Officer required jurisdiction to reopenunder section 147 read with section 148 of the Act, wherethe information must be specific and reliable. As held by theApex Court in the case of Phul Chand Bajrang (supra),since the belief is that of the Income-tax Officer, thesufficiency of reasons for forming the belief, is not for theCourt to judge but is open to an assessee to establish thatthere exists no belief or that the belief is not at all a bonafide one or based on vague, irrelevant and non-specificinformation. To that limited extent, the Court may look atthe view taken by the Income-tax Officer and can examinewhether any material is available on record from which therequisite belief could be formed by the Assessing Officerand whether that material has any rational connection or alive link with the formation of the requisite belief. It is alsoimmaterial that at the time of making original assessment,the Assessing Officer could have found by further inquiry orinvestigation as to whether the transactions were genuine ornot. If on the basis of subsequent valid information, theAssessing Officer forms a reason to believe on satisfyingtwin conditions prescribed under section 147 of the Act thatno full and true disclosure of facts was made by theassessee at the time of original assessment and, therefore,the income chargeable to tax had escaped assessment, hisbelief and the notice of reassessment based on such belief/opinion needs no interference. In the present case, sinceboth the necessary conditions have been duly fulfilled, sufficiency of the reasons is not to be gone into by thisCourt. The information furnished at the time of originalassessment, when by subsequent information received fromthe DCIT, Kolkata, itself found to be controverted, theobjection to the notice of reassessment under section 147of the Act must fail. At the costs of ingemination, it needs tobe mentioned that at the time of scrutiny assessment, aspecific query was raised with regard to unsecured loansand advances received from the said company namely,Basant Marketing Pvt. Ltd. based at Kolkata. These beingthe transactions through the cheques and drafts, therewould arise no question of the Assessing Officer notaccepting such version of the assessee and not treatingthem as genuine loans and advances. Furnishing the detailsof names, addresses, PANs, etc. also would lose itsrelevance if subsequently furnished information, which hasbeen made basis for issuance of notice impugned,concludes that Basant Marketing Pvt. Ltd. is merely adummy company of one Shri Arun Dalmia, which providedthe accommodation entries to various beneficiaries.” 14 Adverting to the facts on hands, as could be noticed from thechronology of events, the reasons recorded are as follows: “2.Brief details of information collected/received by theAO and Analysis of Information collected/received: 14 Adverting to the facts on hands, as could be noticed from thechronology of events, the reasons recorded are as follows: “2.Brief details of information collected/received by theAO and Analysis of Information collected/received: The information received from ADIT (Inv.), Unit-1(3),Kolkata that enquiry was conducted in the case of M/s.Shubhshree Barter Pvt. Ltd. During the course of enquiry, itrevealed that M/s. Barter Pvt. Ltd. Maintained an accountno.912020028827335 in Axis Bank, Airport Branch, Kolkatadeclared profile of the customer is trade in shares andsecurities. The account was opened on 04-06-2012.Sudden surge of high value transaction was noticed from31-12-2012. Multiple high value RTGS credit was noticedregularly from entities such as Tree House Education andAccessories Pvt. Ltd. Amounting to Rs.2.49 crores whichfollowed by frequent transfer in favour of Wonder ProconPvt. Ltd and RTGS debit in favour of entities such asTejaswini Tradecom Pvt. Ltd, Afsons Indian Pvt. Ltd. MotiveVincom Pvtl.Ltd. Credit received in the account isimmediately moved out from the account keeping minimalbalance most of the time. 2.1Summon u/s. 131 of the Income tax Act, 1961 wasissued to M/s. Subhshree Barter pvt. Ltd. On 24-09-2019for furnishing P & L account, balance sheet & Audit Reportof M/s. Subhshree Barter pvtl Ltd, Bank account statementof A/c No.9120200228827335, explanation of credit & debittransactions in the said account along with ledgers ofconcerned parties in the books and supportingevidences.Summon was also served on e-mail, e-filling a/cas well as posted to the address available in ITBA but noreply has been received till date. 2.2.Further, on verification of the bank statements of thesaid bank account, it has been found that the bank accountof M/s. Subhshree Barter Private limited A/c.No.912020028827335 gets credited through RTGS/transfers from various entities and debits are made throughRTGS/transfers to different entities. 2.3From the bank statements collected, it appears thatfunds are credited through RTGS/transfers in the said bankaccounts and then routed through banking channel before itreached to desired destination. This is a common practiceof jama-kharchi companies in Kolkata. These are operatordriven transaction which resulted into entry received by thebeneficiary companies in the books. For obtaining entries inthe books, beneficiary provide cash to operator which isdeposited in its bank accounts or deposited in the bankaccounts of some other entities followed by transfer toaccounts of different concerns and finally these funds aretransferred to the account of beneficiary entities. 2.4It is seen from the fund trail that funds have beenlayers through several companies before it has finally beentransferred to beneficiary companies. The detail ofbeneficiary companies/concerns emerged out of thesetransactions are given as under:- From the above, it is clear that during the F.Y.2012-13, theaforementioned companies/concerns have broughtunaccounted money in the books via money launderingthrough banking channel. Further, it is evident from theabove that the assessee i.e. Shilp Reality Pvt.Ltd. Is alsoone of the beneficiaries in whose account the fund ofRs.1,00,00,000/- has been transferred to its bank accountthrough various entities. Since in this case only return of income has been filed and no assessment has been madeu/s. 143(3), the genuiness of the credit entry in the bankaccount of Rs.1,00,00,000/- as well as credit worthiness ofthe person from whom the amount was received remainsunexplained. 3.Analysis of information collected/received: From the above, it is clear that during the F.Y.2012-13, theaforementioned companies/concerns have broughtunaccounted money in the books via money launderingthrough banking channel. Further, it is evident from theabove that the assessee i.e. Shilp Reality Pvt.Ltd. Is alsoone of the beneficiaries in whose account the fund ofRs.1,00,00,000/- has been transferred to its bank accountthrough various entities. Since in this case only return of income has been filed and no assessment has been madeu/s. 143(3), the genuiness of the credit entry in the bankaccount of Rs.1,00,00,000/- as well as credit worthiness ofthe person from whom the amount was received remainsunexplained. 3.Analysis of information collected/received: The assessee Shilp Reality Pvt.Ltd. Is also one of thebeneficiaries in whose account the fund of Rs.1,00,00,000/- hasbeen transferred to its bank account through various entities.Since int his case only return of income has been filed and noassessment has been made u/s. 143(3), the genuineness of thecredit entry in the bank account of Rs.1,00,00,000/- as well ascredit worthiness of the person from whom the amount wasreceived remains unexplained. 4.Findings of the AO:As discussed in above paras, it is clear that assessee hasobtained unsecured loan of Rs.1,00,00,000/- from various entitieswhich is unexplained unsecured loan. Therefore, there is anescapement of income to the above extent. In view of the above, I have reason to believe that theincome chargeable to tax has escaped assessment to thetune of Rs.1,00,00,000/-. Therefore, I am satisfied that it isfit case for the re-opening of assessment u/s. 147 of the I.T.Act. 5.Basis of forming reason to believe and details ofescapement of income As discussed in para-2, 3 & 4 above.” 14.1 According to the Assessing Officer there is no order under section 143(3) of the Act and only return of income has been processed under section 143 of the Act and as four years have elapsed, on initiating the proceedingsunder section 147, he has formed a reason to believethat the income has escaped the assessment. 15 Objections have been raised on 25.07.2020. The detailed objections have been raised for initiating allreassessment proceedings. These are required to bedealt with in accordance with law, as it is not an ordealreassessment proceedings. These are required to bedealt with in accordance with law, as it is not an ordeal but a substantive requirement. 15.1 While disposing the objections, he writes thus: “In connection with the scrutiny assessment in your case forthe A.Y.2013-14, Vide your letter dated 27.07.2020, youhave simply objected the reopening of the assessment u/s.148 of the Income Tax Act, 1961. However, prejudiced tothe same, it is stated that, the case was reopened on thebasis of tangible information wherein conclusive evidencewas gathered that you have escaped income chargeable totax during the F.Y. 2012-13. Genuineness of the transactions will be found outonly during the assessment or after the assessment iscompleted. There is sufficient reason to believe thatthe income has escaped assessment and that thereasons for reopening of the assessment arecorrectly recorded and the reassessmentproceedings are rightly initiated. Thus in view of theabove, the objection raised is hereby rejected. only during the assessment or after the assessment iscompleted. There is sufficient reason to believe thatthe income has escaped assessment and that thereasons for reopening of the assessment arecorrectly recorded and the reassessmentproceedings are rightly initiated. Thus in view of theabove, the objection raised is hereby rejected. Genuineness of the transactions will be found outonly during the assessment or after the assessment iscompleted. There is sufficient reason to believe thatthe income has escaped assessment and that thereasons for reopening of the assessment arecorrectly recorded and the reassessmentproceedings are rightly initiated. Thus in view of theabove, the objection raised is hereby rejected. only during the assessment or after the assessment iscompleted. There is sufficient reason to believe thatthe income has escaped assessment and that thereasons for reopening of the assessment arecorrectly recorded and the reassessmentproceedings are rightly initiated. Thus in view of theabove, the objection raised is hereby rejected. Further, if the assessee has sufficient materials onhand to prove the genuineness of the saidtransactions, then the assessee should come to theplatform of assessment set by the assessing officer toprove that there is no escapement of income onaccount of the alleged transactions. Hence, there isno case for the assessee at this stage to object thereopening process, which is done strictly inaccordance with the law.hand to prove the genuineness of the saidtransactions, then the assessee should come to theplatform of assessment set by the assessing officer toprove that there is no escapement of income onaccount of the alleged transactions. Hence, there isno case for the assessee at this stage to object thereopening process, which is done strictly inaccordance with the law. In view of the above, the objection raised by you ishereby disposed of. The assessment proceedingsare therefore, valid and further, this is to intimate youto comply with the requirement of documents andevidences as required during the assessmentproceedings for the A.Y. 2013-14. The reason for re-opening in your case is already provided to you Videletter dated 26.06.2020.” 15.2 This has been done after one year and the order is self- explanatory. This Court in the case of BanaskanthaDistrict Oilseeds Growers Co-op. Union Ltd. vs.Assistant Commissioner of Income-tax, [2015] 59taxmann.com 328(Gujarat), noticed that on the request ofDistrict Oilseeds Growers Co-op. Union Ltd. vs.Assistant Commissioner of Income-tax, [2015] 59taxmann.com 328(Gujarat), noticed that on the request of assessee, the Assessing Officer communicated the reasonsrecorded for reopening of the assessment and assesseesubmitted the details objections against the reopening, hedid not dispose of the objections earlier and the samesimultaneously, while the passing the assessment order. 15.3 The Court had referred to GKN Driveshafts (INDIA) Ltd.(supra), where it held that the Assessing Officer is bound todispose the preliminary objections against reopening byspeaking order before the proceeding with the assessmentin respect of the assessment year on which such notice hasbeen issued and this is a mandatory requirement.(supra), where it held that the Assessing Officer is bound todispose the preliminary objections against reopening byspeaking order before the proceeding with the assessmentin respect of the assessment year on which such notice hasbeen issued and this is a mandatory requirement. 15.4 What has been held by this Court is as under: 15.3 The Court had referred to GKN Driveshafts (INDIA) Ltd.(supra), where it held that the Assessing Officer is bound todispose the preliminary objections against reopening byspeaking order before the proceeding with the assessmentin respect of the assessment year on which such notice hasbeen issued and this is a mandatory requirement.(supra), where it held that the Assessing Officer is bound todispose the preliminary objections against reopening byspeaking order before the proceeding with the assessmentin respect of the assessment year on which such notice hasbeen issued and this is a mandatory requirement. 15.4 What has been held by this Court is as under: “We see no justifiable reason to interfere with the orderunder challenge. However, we clarify that when a noticeunder Section 148 of the Income tax Act is issued, theproper course of action for the noticee is to file returnand if he so desires, to seek reasons for issuing notices.The assessing officer is bound to furnish reasons withina reasonable time. On receipt of reasons, the noticee isentitled to file objections to issuance of notice and theassessing officer is bound to dispose of the same bypassing a speaking order. In the instant case, as thereasons have been disclosed in these proceedings, theassessing officer has to dispose of the objections, if filed,by passing a speaking Order before proceeding with theassessment in respect of the abovesaid five assessmentyears.” 15.5 The Court directed the Assessing Officer to dispose of the objections raised by the petitioner by passing a speakingorder before proceeding with the assessment in respect oforder before proceeding with the assessment in respect of 16 the Assessment Year for which the notice had been issuedand communicate the outcome of the same. and communicate the outcome of the same. This Court in the case of Divya Jyoti Diamonds (P.) Ltd.(supra) noticed that the assessee had raised variousobjections and requested the Revenue to drop thereassessment proceedings. The objections raised by theassessee, since were not properly dealt with by theAssessing Officer and when he passed a mechanical orderwithout application of his mind, the Court remanded thematter back to the Assessing Officer for afresh decision.The Court took note of the decision of GKN Driveshafts(INDIA) Ltd.(supra) as also the decision of the Delhi HighCourt in the case of SABH Infrastructure Ltd. vs. Asstt.CIT, [2017] 398 ITR 198(Delhi), where it has held whileconsidering the assessee’s objection to the reopening theassessment that the assessment is not a mechanical ritual.It is a quasi judicial function and the order disposing theobjection should deal with each objection and give a properreason for conclusion. Order should reflect properapplication of mind. (supra) noticed that the assessee had raised variousobjections and requested the Revenue to drop thereassessment proceedings. The objections raised by theassessee, since were not properly dealt with by theAssessing Officer and when he passed a mechanical orderwithout application of his mind, the Court remanded thematter back to the Assessing Officer for afresh decision.The Court took note of the decision of GKN Driveshafts(INDIA) Ltd.(supra) as also the decision of the Delhi HighCourt in the case of SABH Infrastructure Ltd. vs. Asstt.CIT, [2017] 398 ITR 198(Delhi), where it has held whileconsidering the assessee’s objection to the reopening theassessment that the assessment is not a mechanical ritual.It is a quasi judicial function and the order disposing theobjection should deal with each objection and give a properreason for conclusion. Order should reflect properapplication of mind. As is quite clear from what has been mentionedhereinabove that at Annexure-F what all the respondentAssessing Officer has opined that the case is reopened onhereinabove that at Annexure-F what all the respondentAssessing Officer has opined that the case is reopened on As is quite clear from what has been mentionedhereinabove that at Annexure-F what all the respondentAssessing Officer has opined that the case is reopened onhereinabove that at Annexure-F what all the respondentAssessing Officer has opined that the case is reopened on the basis of tangible information and the conclusiveevidence has been gathered that the assessee hasescaped the income chargeable to tax during the FinancialYear 2012-13 and the Assessment Year 2013-14.According to him, genuineness of the transaction will befound out only during the assessment or after theassessment is completed. There is a sufficient reason tobelieve that the income has escaped assessment and thereasons for reopening the assessment are correctlyrecorded. We could notice that this order lacks any reason,although there is no requirement for elaborate reasons, buta speaking order needs to really speak th