Surani Steel Tubes Limited v. The Income Tax Officer,Ward-1

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/SPECIAL CIVIL APPLICATION NO. 13245 of 2021 With R/SPECIAL CIVIL APPLICATION NO. 13324 of 2021 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE J.B.PARDIWALA andHONOURABLE MS. JUSTICE NISHA M. THAKORE ========================================================== 1Whether Reporters of Local Papers may be allowedYESto see the judgment ?to see the judgment ?2To be referred to the Reporter or not ?YES3Whether their Lordships wish to see the fair copyNOof the judgment ?3Whether 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 ?of law as to the interpretation of the Constitutionof India or any order made thereunder ? ==========================================================SURANI STEEL TUBES LIMITED VersusTHE INCOME TAX OFFICER,WARD-1 ========================================================== Appearance:MR TUSHAR HEMANI FOR MS VAIBHAVI K PARIKH(3238) for the Petitioner(s) No. 1MR MR BHATT FOR M R BHATT & CO.(5953) for the Respondent(s) No. 1========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALAandHONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 03/01/2022 ORAL JUDGMENT (PER : HONOURABLE MS. JUSTICE NISHA M. THAKORE) 1.The petitioner herein has invoked extraordinary writjurisdiction under Article 226 of the Constitution of India and has prayed for issuance of writ to quash and set aside the impugnednotice dated 30.03.2021 (A.Y. 2015-16) and 31.03.2021 (A.Y.2014-15) issued under Section 148 of the Income Tax Act, 1961(for short “the Act”). The petitioner has also prayed for direction tostay the operation of said notice issued by the respondentAuthority. 2.This Court had passed the following order on 14.09.2021 inSpecial Civil Application No.13245 of 2021: “1. The challenge in this petition is made to the reopeningof the income tax assessment of the petitioner for the A.Y.2014- 15 under Section 148 of the Income-Tax Act, 1961by challenging the notice dated 31st March, 2021 with thefollowing prayers: “(a) quash and set aside the impugned notice atAnnexure-A to this petition; Annexure-A to this petition; (b) pending the admission, hearing and finaldisposal of this petition, to stay the implementationand operation of the notice at Annexure-A to thispetition and stay the further proceedings for theAssessment Year 2014-15; disposal of this petition, to stay the implementationand operation of the notice at Annexure-A to thispetition and stay the further proceedings for theAssessment Year 2014-15; (c) any other and further relief deemed just andproper be granted in the interest of justice;proper be granted in the interest of justice; (d) to provide for the cost of this petition.” 2. According to the petitioner, the reopening is beyond theperiod of four years where there is a requirement for theAssessing Officer to form a reason that the incomechargeable to the tax has escaped assessment. Thereasons supplied to the assessee are very vague. Thescrutiny assessment has taken place at earlier point oftime and in absence of any new material or the sourcefrom which he has formed this belief also is missing. Thisis nothing according to the petitioner but the change ofopinion of the Assessing Officer. 3. We have heard Mr. Tushar P. Hemani, learned SeniorAdvocate assisted by Ms. Vaibhavi Parikh, learned advocate for the petitioner, who has drawn the attentionof ours to the order dated 14th July, 2021 rejecting theobjections against the reopening towards that none of thefactual aspect has been dealt with or the aspect of thedetailed order has been passed. He also has furtherurged that it is a borrowed satisfaction as could be culled-out from the material. 3. We have heard Mr. Tushar P. Hemani, learned SeniorAdvocate assisted by Ms. Vaibhavi Parikh, learned advocate for the petitioner, who has drawn the attentionof ours to the order dated 14th July, 2021 rejecting theobjections against the reopening towards that none of thefactual aspect has been dealt with or the aspect of thedetailed order has been passed. He also has furtherurged that it is a borrowed satisfaction as could be culled-out from the material. 4. Issue Notice returnable on 28 th September, 2021. Ona query raised by the Court, it is noticed that after theorder dated 14th July, 2021, no notice so far has beenissued on the part of the Assessing Officer. Before 28thSeptember, 2021 if any notice is received, the learnedadvocate for the petitioner shall be at liberty to make arequest for early hearing of the matter. Without insistingfor any Civil Application for the said purpose, the officeshall place the matter.” 3.At the outset, we clarify that in both these matters, thepetitioner – assessee is same, in fact, the record reveals that boththese matters have identical or almost similar facts and similarquestion of law is involved and therefore, we treat Special Civil Application No.13245 of 2021 as the lead matter. Since thechallenge relates to notice issued u/s. 148 of the act upon thesame assessee Company of two assessment years, we decideboth these matters by this common oral order. 4.Before dealing with the controversy involved, it would beappropriate to reproduce the facts of the case summarized asunder: 4.1The petitioner Company is incorporated under theCompanies Act and is engaged in the business of manufacturingof ERW-MS pipe. The petitioner during the course of its business,has made several purchases, sales and had also at the same timeavailed certain loans, which is reflected in annual account of the petitioner. 4.2The petitioner Company had regularly filed return of incomeat the end of each relevant assessment year thereby declaring itstotal income. It is contended by the petitioner that during thefinancial year 2013-14, the relevant assessment year 2014-15 wasselected for scrutiny assessment whereby Assessing Officer hadissued notice dated 15.06.2015 in exercise of power conferredunder Section 148(1) of the Income Tax Act, thereby calling uponthe petitioner Company to furnish various details which includes (i)the details related to copy of return of income provided and profitand loss account and balance sheet; (ii) mismatch in salesturnover reported in Audit Report; and (iii) the details of unsecuredloans along with documentary evidences; (iv) details of purchaseand sales exceeding Rs. One Lakh from a single party and (v) thedetails of interest received and interest paid by the petitioner. 4.3In response to the aforesaid notice dated 15.06.2016, thepetitioner Company had filed detailed reply dated 23.06.2016,whereby the petitioner Company had responded to almost all theissues raised in the notice dated 15.06.2016. 4.4It is the case of the petitioner that the petitioner Companyonce again furnished various other details and information videletter dated 15.07.2016, whereby the petitioner Company had alsosubmitted relevant documents in support of the issues raised. 4.5However, subsequently, the Assessing Officer had issuednotice under Section 142(1) of the said Act dated 04.11.2016thereby calling upon the petitioner Company to furnish furtherdocumentary evidence, more particularly, with respect to 4.3In response to the aforesaid notice dated 15.06.2016, thepetitioner Company had filed detailed reply dated 23.06.2016,whereby the petitioner Company had responded to almost all theissues raised in the notice dated 15.06.2016. 4.4It is the case of the petitioner that the petitioner Companyonce again furnished various other details and information videletter dated 15.07.2016, whereby the petitioner Company had alsosubmitted relevant documents in support of the issues raised. 4.5However, subsequently, the Assessing Officer had issuednotice under Section 142(1) of the said Act dated 04.11.2016thereby calling upon the petitioner Company to furnish furtherdocumentary evidence, more particularly, with respect to unsecured loans with identity proof with a copy of return of incomefiled as well as confirmation of sundry creditors duly signed alongwith details of PAN No. The Assessing Officer had also calledupon the petitioner Company to furnish the bank statements anddetails as well as details of assets and to produce book ofaccounts along with bills / vouchers in response to the aforesaidnotice dated 04.11.2016. The petitioner vide letter dated15.11.2016, had drawn the attention of the Assessing Officer wasdrawn to the fact that the relevant documents are alreadyproduced on earlier occasion and had further placed on record thedetails as sought for, more particularly, with regard to theunsecured loans along with identity proof of the parties from whomunsecured loans were availed and had also placed on record thedetails of PAN No. of the creditors outstanding as on 31.03.2014. 4.6Having considered the aforesaid material as well as afterhearing the assessee, the Assessing Officer had passedassessment order under Section 143(3) of the Income Tax Act,1961, vide order dated 16.11.2016 and the total income of theassessee was determined at Rs. 85,440/-, whereby the AssessingOfficer had disallowed the expenses claimed by the petitionerCompany and at the same time, was added to be total income ofthe assessee treating the same has incurred for non businesspurpose. 4.7Though the case of the petitioner Company for the relevantassessment year was subjected to the scrutiny and the order waspassed under Section 143(3) of the Income Tax Act. Therespondent Authority for the reasons recorded in the notice issuedunder Section 143(2) read with Section 147 of the Income Tax Act,found it appropriate to reopen the assessment in the case of the petitioner Company for A.Y. 2014-15, by issuing notice dated04.05.2021. 4.8Aforesaid notice under Section 143(2) read with Section 147of the Income Tax Act was duly served upon the petitionerCompany and in response to the reopening notice, the petitionerCompany had lodged the objections vide letter dated 27.05.2021,whereby the attention of the Assessing Officer as regards theallegations of accommodation entries by way of “bogus sales /purchaser/ fictitious loans” were sought to be absolutely vague,scanty and non-specific inasmuch as no basic details with regardto the information received for “nature of transaction and clarity” asregard to the “name of the person” with regard to the so calledtransaction was reflected in the impugned notice of reopening. 4.9The Assessing Officer after taking into consideration theaforesaid objection raised by the petitioner Company againstreopening, had rejected the said objection vide order dated14.07.2021 without disclosing the basic detail with regard to theinformation received by the investigating agency, nature oftransaction relating to the escapement of income otherwisechargeable to tax and clarity as regards the name of the personwith whom said transaction was related. 4.9The Assessing Officer after taking into consideration theaforesaid objection raised by the petitioner Company againstreopening, had rejected the said objection vide order dated14.07.2021 without disclosing the basic detail with regard to theinformation received by the investigating agency, nature oftransaction relating to the escapement of income otherwisechargeable to tax and clarity as regards the name of the personwith whom said transaction was related. 5.Learned senior advocate Mr. Tushar Himani appearing withlearned advocate Ms. Vaibhavi Parikh for the petitioner, hasargued that the Assessing Officer has broadly relied upon“information” provided by the Investigation Wing, who have foundthat the assessee has entered in financial transaction and hasmade high value transaction of Rs. 26,42,027/- and has availedaccommodation entry by way of bogus sales / purchases / fictitiousloans etc., however, on detailed reading of reasons for reopening assigned in the notice dated 04.05.2021 as well as the orderrejecting the objection against reopening dated 14.07.2021 thesame is silent in respect to the basic details as to the person withwhom said transactions of the petitioner Company have beenfound to be dubious or with regard to the “basic details ofinformation received” as well as with regard to the “nature oftransaction”. Mr. Hemani vehemently submitted that the reasonssupplied by the Assessing Officer are vague, which is furtherreflected from the impugned order of the Assessing Officerrejecting the objections wherein none of the factual aspect asraised by the petitioner has been dealt with by the AssessingOfficer. It is further submitted that the reopening assessment isbased on “borrowed satisfaction” as can be reflected from thereasons supplied as well as bare reading of the order passed bythe Assessing Officer rejecting the objection. Learned senioradvocate Mr. Himani has further relied upon the decision of thisCourt in the case of Kantibhai Dharamshibhai Narola Vs.Assistant Commissioner of Income Tax, Ward 3(2)(4) reportedin [2021] 125 taxmann.com 348 (Gujarat). Learned senioradvocate has further drawn attention of this Court with regard tothe law culled out by this Court in the case of reopeningassessment under Section 147 of the Act as produced in para 32reads as under: “32. The law as regards the reopening of the assessmentunder Section 147 of the Act 1961 is well-settled. (i) The Court should be guided by the reasons recorded forthe reassessment and not by the reasons or explanationgiven by the Assessing Officer at a later stage in respect ofthe notice of reassessment. To put it in other words, havingregard to the entire scheme and the purpose of the Act, thevalidity of the assumption of jurisdiction under Section 147can be tested only by reference to the reasons recorded under Section 148(2) of the Act and the Assessing Officer isnot authorized to refer to any other reason even if it can beotherwise inferred or gathered from the records. TheAssessing Officer is confined to the recorded reasons tosupport the assumption of jurisdiction. He cannot recordonly some of the reasons and keep the others upto hissleeves to be disclosed before the Court if his action is everchallenged in a court of law. (ii) At the time of the commencement of the reassessment proceedings, the Assessing Officer has to see whetherthere is prima facie material, on the basis of which, thedepartment would be justified in reopening the case. Thesufficiency or correctness of the material is not a thing to beconsidered at that stage. (iii) The validity of the reopening of the assessment shall have to be determined with reference to the reasonsrecorded for reopening of the assessment. (iv) The basic requirement of law for reopening and (ii) At the time of the commencement of the reassessment proceedings, the Assessing Officer has to see whetherthere is prima facie material, on the basis of which, thedepartment would be justified in reopening the case. Thesufficiency or correctness of the material is not a thing to beconsidered at that stage. (iii) The validity of the reopening of the assessment shall have to be determined with reference to the reasonsrecorded for reopening of the assessment. (iv) The basic requirement of law for reopening and assessment is application of mind by the Assessing Officer,to the materials produced prior to the reopening of theassessment, to conclude that he has reason to believe thatincome has escaped assessment. Unless that basicjurisdictional requirement is satisfied-a postmortem exerciseof analysing the materials produced subsequent to thereopening will not make an inherently defectivereassessment order valid. (v) The crucial link between the information made available to the Assessing Officer and the formation of the beliefshould be present. The reasons must be self evident, theymust speak for themselves. (vi) The tangible material which forms the basis for the belief that income has escaped assessment must beevident from a reading of the reasons. The entire materialneed not be set out. To put it in other words, somethingtherein, which is critical to the formation of the belief mustbe referred to. Otherwise, the link would go missing. (vii) The reopening of assessment under Section 147 is apotent power and should not be lightly exercised. It certainlycannot be invoked casually or mechanically. (viii) If the original assessment is processed under Section 143(1) of the Act and not Section 143(3) of the Act, theproviso to Section 147 will not apply. In other words,although the reopening may be after the expiry of four years from the end of the relevant assessment year, yet it wouldnot be necessary for the Assessing Officer to show thatthere was any failure to disclose fully or truly all the materialfacts necessary for the assessment. (ix) In order to assume jurisdiction under Section 147 where assessment has been made under sub-section (3) ofsection 143, two conditions are required to be satisfied; (i) The Assessing Officer must have reason to believethat the income chargeable to tax has escapedassessment; (ii) Such escapement occurred by reason of failure on the part of the assessee either (a) to make a return ofincome under section 139 or in response to the noticeissued under sub-section (1) of Section 142 or Section148 or (b) to disclose fully and truly all the materialfacts necessary for his assessment for that purpose. (x) The Assessing Officer, being a quasi judicial authority isexpected to arrive at a subjective satisfaction independentlyon an objective criteria. (xi) While the report of the Investigation Wing might constitute the material, on the basis of which, the AssessingOfficer forms the reasons to believe, the process of arrivingat such satisfaction should not be a mere repetition of thereport of the investigation. The reasons to believe mustdemonstrate some link between the tangible material andthe formation of the belief or the reason to believe that theincome has escaped assessment. (xii) Merely because certain materials which is otherwise tangible and enables the Assessing Officer to form a beliefthat the income chargeable to tax has escapedassessment, formed part of the original assessment record,per se would not bar the Assessing Officer from reopeningthe assessment on the basis of such material. Theexpression “tangible material” does not mean the materialalien to the original record. (xiii) The order, disposing of objections or any counteraffidavit filed during the writ proceedings before the Courtcannot be substituted for the “reasons to believe”. (xiv) The decision to reopen the assessment on the basis of (xii) Merely because certain materials which is otherwise tangible and enables the Assessing Officer to form a beliefthat the income chargeable to tax has escapedassessment, formed part of the original assessment record,per se would not bar the Assessing Officer from reopeningthe assessment on the basis of such material. Theexpression “tangible material” does not mean the materialalien to the original record. (xiii) The order, disposing of objections or any counteraffidavit filed during the writ proceedings before the Courtcannot be substituted for the “reasons to believe”. (xiv) The decision to reopen the assessment on the basis of the report of the Investigation Wing cannot always becondemned or dubbed as a fishing or roving inquiry. Theexpression “reason to believe” appearing in Section 147suggests that if the Income Tax Officer acts as a reasonable and prudent man on the basis of the informationsecured by him that there is a case for reopening, thenSection 147 can well be pressed into service and theassessments be reopened. As a consequence of suchreopening, certain other facts may come to light. There isno ban or any legal embargo under Section 147 for theAssessing Officer to take into consideration such factswhich come to light either by discovery or by a fuller probeinto the matter and reassess the assessee in detail ifcircumstances require. (xv) The test of jurisdiction under Section 143 of the Act isnot the ultimate result of the inquiry but the test is whetherthe income tax officer entertained a “bona fide” belief uponthe definite information presented before him. Power underthis section cannot be exercised on mere rumours orsuspicions. (xvi) The concept of “change of opinion” has been treated as a built in test to check abuse. If there is tangible materialshowing escapement of income, the same would besufficient for reopening the assessment. (xvii) It is not necessary that the Income Tax Officer should hold a quasi judicial inquiry before acting under Section147. It is enough if he on the information received believesin good faith that the assesee's profits have escapedassessment or have been assessed at a low rate. However,nothing would preclude the Income Tax Officer fromconducting any formal inquiry under Section 133(6) of theAct before proceeding for reassessment under Section 147of the Act. (xviii) The “full and true” disclosure of the material factswould not include that material, which is to be used fortesting the veracity of the particulars mentioned in thereturn. All such facts would be expected to be elicited bythe Assessing Officer during the course of the assessment.The disclosure required only reference to those materialfacts, which if not disclosed, would not allow the AssessingOfficer to make the necessary inquiries. (xix) The word “information” in Section 147 means “instruction or knowledge derived from the external sourceconcerning the facts or particulars or as to the law relatingto a matter bearing on the assessment. An informationanonymous is information from unknown authorship butnonetheless in a given case, it may constitute information (xviii) The “full and true” disclosure of the material factswould not include that material, which is to be used fortesting the veracity of the particulars mentioned in thereturn. All such facts would be expected to be elicited bythe Assessing Officer during the course of the assessment.The disclosure required only reference to those materialfacts, which if not disclosed, would not allow the AssessingOfficer to make the necessary inquiries. (xix) The word “information” in Section 147 means “instruction or knowledge derived from the external sourceconcerning the facts or particulars or as to the law relatingto a matter bearing on the assessment. An informationanonymous is information from unknown authorship butnonetheless in a given case, it may constitute information and not less an information though anonymous. This is nowa recognized and accepted source for detection of largescale tax evasion. The non-disclosure of the source of theinformation, by itself, may not reduce the credibility of theinformation. There may be good and substantial reasons forsuch anonymous disclosure, but the real thing to be lookedinto is the nature of the information disclosed, whether it isa mere gossip, suspicion or rumour. If it is none of these,but a discovery of fresh facts or of new and importantmatters not present at the time of the assessment, whichappears to be credible to an honest and rational mindleading to a scrutiny of facts indicating incorrect allowanceof the expense, such disclosure would constituteinformation as contemplated in clause (b) of Section 147.(xx) The reasons recorded or the material available onrecord must have nexus to the subjective opinion formed bythe A.O. regarding the escapement of the income but then,while recording the reasons for the belief formed, the A.O.is not required to finally ascertain the factum of escapementof the tax and it is sufficient that the A.O had cause orjustification to know or suppose that the income hadescaped assessment [vide Rajesh Jhaveri Stock Brokers(P.) Ltd.'s case (supra)]. It is also well settled that thesufficiency and adequacy of the reasons which have led tothe formation of a belief by the Assessing Officer that theincome has escaped the assessment cannot be examinedby the court.” Thus, it was submitted that the Assessing Officer is bound torecord the reasons to support the assumption of the jurisdictionand he cannot record only some of the reasons and keep theothers upto his sleeves to reserve, if the action is challenged in theCourt of law. It is further submitted that the tangible material whichforms the basis for the belief that income has escaped assessmentmust be evident from a bare reading of the reasons supplied. Itwas further submitted that even in the case of the report ofInvestigation Wing, the Assessing Officer is under obligation todemonstrate some link between the tangible material with the income having escaped assessment which should be reflected inthe reasons so supplied. In absence of the aforesaid settled legalprocedure being not followed, it can be presumed that therespondent Authority has no valid grounds to assume thejurisdiction for reopening. income having escaped assessment which should be reflected inthe reasons so supplied. In absence of the aforesaid settled legalprocedure being not followed, it can be presumed that therespondent Authority has no valid grounds to assume thejurisdiction for reopening. 6.Per contra, learned Senior Advocate Mr. Manish Bhattassisted by learned advocate Mr. Karan Sanghani for therespondents has referred to and relied upon the affidavit-in-replyfiled by the Income Tax Officer, Ward -1, Gandhinagar and hasvehemently objected the grant of any relief so prayed for by thepetitioner Company. Principally responding to the aforesaidarguments canvassed by the learned advocate for the petitionerCompany, has submitted that the respondent has received specificinformation from Investigating agency, more particularly withregard to the assessee Company wherein it was reported thatduring the investigation whereby search and survey operation wascarried out at the business premise of one Dishman Group ofCompany. The present petitioner had entered into dubioustransaction for the amount of Rs.26,42,027/- and had availedaccommodation entry by way of bogus sales / purchases / fictitiousloans. It was further submitted that pursuant to the outcome ofsuch inquiry and upon detailed analysis of the new materialscollected during such search and survey, it transpired that thetransactions related to the assessee Company though were notconclusively proved but the Assessing Officer not only afterconsidering the aforesaid information provided the InvestigationWing but upon appreciation of material available on record, wassatisfied that the said amount of Rs.26,42,027/- was required to bebrought under the taxnet. Learned senior advocate for theRevenue Department has further tried to refer to and relied upon the original file records in support of the aforesaid submission,however, aforesaid stand of the Revenue Department was neverforming part of any reasons supplied or the order disposing theobjections passed by the Assessing Officer neither is forming partof the affidavit in reply placed on record. This Court when inquiredfrom the learned senior advocate about the same, learned senioradvocate Mr. Bhatt has fairly conceded that the the same beingpapers related to investigation carried out by the investigatingagency are not placed on record, however, the same may bepermitted to be perused by the petitioner Company, if Courtdirects. It is further submitted by the learned senior advocate forthe Department that though there is no specific reference to thename of Disman Group of Company nor there being any referenceto any particular dubious transaction as submitted by therespondent Authority in the case of the petitioner Company, theoriginal file of the Assessing Officer reflects that the AssessingOfficer has assumed jurisdiction for reopening the assessmentunder Section 147 of the Income Tax Act only after analyzing theinformation supplied by the Investigation Wing as well as afterappreciation of tangible material which is forming part of theoriginal record. It is further submitted that though the reasonssupplied does not disclose specific material and evidence, thereexist sufficient material on original file for the Assessing Officer tosatisfy himself on the existence of the condition precedent i.e.“reason to believe” to reach at the conclusion to reopen theassessment. Even otherwise at the stage of assumption, all theaspects of the petitioner Company shall be verified and after givingsufficient opportunity to the petitioner Company, case against thepetitioner Company shall be finalized. Thus, it was submitted thatthe respondent is justified in its action and has further prayed tosummarily dismiss the petition. 7.Having heard the learned advocates appearing for therespective parties and having perused the material placed onrecord. The only question, which arises for consideration of thisCourt is whether the Assessing Officer was justified in issuing theimpugned notices dated 30.03.2021/31.03.201 in reopening theassessment in exercise of powers conferred under Section 147 ofthe Income Tax Act merely on the basis of information requiredfrom Investigation Wing and that too, based on search and surveycarried out at premises of 3[rd] party? 8.The powers to reopen completed assessment under Section147 of the Income Tax Act, 1961 is conferred upon the AssessingOfficer, if he has reason to believe that any income chargeable totax has escaped assessment for Assessment Year. A bare readingof Section 147 of the Income Tax Act lays down the conditionprecedent of “reason to believe” of the Assessing Officer to invokethe power under Section 147. It is well settled position of law thatsuch belief that the income has escaped assessment has to be onthe sole reasonable belief of the Assessing Officer himself andcannot be an opinion and / or belief of some other authority. ThisCourt as well as the Supreme Court have on number of occasionsheld that a third party information is only an “information” and doesnot constitute “reason to believe” until and unless the third partyinformation is subject to investigation and on the basis thereof, theAssessing Officer records independent reasons before issuingnotice under Section 148 of the Act. Thus, it is expected of theAssessing Officer that though the information / material is receivedfrom other sources, the Assessing Officer is required to considerthe material on record in case of assessee by applying hisindependent mind and upon appreciation of such information / material on record, the Assessing Officer is further expected toform his independent opinion to arrive at satisfaction whichconstitutes “reason to believe” that income of the assessee, whichotherwise was chargeable to tax has escaped the assessment forany assessment year. It is equally established principle of law thatsuch reason to believe of the assessing authority, who disclosethat the Authority alone had applied his independent mind, has torecord his satisfaction and further such satisfaction has to be“independent” and not borrowed or a dictated satisfaction. 9.In the facts of the present case, the assessee was calledupon to show cause as to why the income chargeable to tax forA.Y. 2014-15/A.Y. 2015-16 should not be reopened in terms ofpower conferred upon Assessing Officer under Section 148 readwith Section 147 of the Income Tax Act. It is not in dispute that the assessment year underreconsideration are assessment years 2014-15 / 2015-16 and theimpugned notice are dated 31.03.2021/30.03.2021, which isissued beyond the period of 4 years. In fact, the scrutinyassessment under Section 143(3) of the Act was made on16.11.2016 determining the total income amounting to Rs.85,440/-.Attention of the respondent Assessing Officer of the aforesaid facthas been drawn by the petitioner assessee by filing objection,however, the Assessing Officer has taken shield off “information”supplied by the Investigation Wing to form “reason to believe”during relevant assessment year. In particular, it is recorded by theAssessing Officer that the assessee has entered in financialtransaction and made high value transaction of Rs.26,42,027/- andavailed accommodation entry by way of bogus sales / purchases/fictitious loan, which has resulted into escapement of income and has thereby rejected the objection raised by the assessee againstreopening of assessment. This Court has closely gone through theorders rejecting the objection against reassessment as well as hasalso examined the reasons recorded by the Assessing Officer forreopening of the assessment in the case of the petitioner for AY2014-15/A.Y. 2015-16. The reasons recorded by the AssessingOfficer in so far as A.Y. 2014-15 is concerned are reproduced asunder: “1.The assessee is an Company. The assessee has e-filed his return of income for A.Y. 2014-15 on 28.11.2014declaring current year loss of Rs.1,30,17.641/-. Theassessee’s case has selected / pushed through Insight Portalfor reopening of assessment u/s. 147 of the Income Tax Act,1961 for F.Y. 2013-14 relevant to A.Y. 2014-15. 2.In this case information has been received wherein ithas been stated that the assessee has made high valuetransaction of RS.26,42,027/- availed accommodation entriesby way of bogus sales/purchases/fictitious loans etc. 3.An information was received that during the yearunder consideration as per details available on records, it isnoticed that the assessee has made Purchase transactionsof Rs.26,42,027/- and availed accommodation entries by wayof bogus sales/purchases/fictitious loans etc. 4.Analyzing of the information, it is seen that during theinvestigation by investigation wing found that the assesseehas made transaction of Rs.26,42,027/- and availedaccommodationentriesbywayofbogussales/purchases/fictitious loans etc. As a outcome of enquiry/perusal and analysis of details available on records, it isnoticed that the genuineness of the transaction is notconclusively proved. After considering the materials availableon records, I am satisfied that the said amount ofRs.26,42,027/- is required to be brought under the tax net. 5.From the information received, it is noticed that duringthe F.Y. 2013-14 relevant to A.Y. 2014-15, the assessee hasmade transaction of Rs.26,42,027/- and availed accommodation entries by way of bogus sales/purchases/fictitious loans etc. 6.As per the information, it is seen that during F.Y. 2013-14 relevant A.Y. 2014-15, the assessee has madetransaction of RS.26,42,027/- and availed accommodationentries by way of bogus sales/purchases/fictitious loans etc.In view of the above, I have reason to believe that the incomechargeable to tax to the extent of More than 1 lakh for theyear under reference has escaped the assessment within themeaning to section explanation 2(a) of 147 of the I.T. Act,1961. I am, therefore, satisfied that the above assessee hasnot fully and truly disclosed his income for the assessmentunder the provisions of Section 147 of the Income Tax Act,1961. 7.No information of assets located outside India isavailable. 8.In this case a return of income was filed for the yearunder consideration and scrutiny assessment u/s. 143(3) ofthe Act was made on 16.11.2016 determining the totalincome amounting to Rs.85,440/-.” 10.This Court has also taken into consideration the affidavit-in-reply filed by the Income Tax Officer, Ward -1, Gandhinagar. Onappreciation of contents of the same, we could note that the entirebase for reopening assessment is on the premise that there was“information” supplied by the Investigation Wing and the AssessingOfficer has made cursorily reference to high value transaction ofRs.26,42,027/- as well as also referred to accommodation entryentered upon by the petitioner Company by way of bogus sales /purchases / fictitious loans etc. Thus, it appears that the reasonsfor reopening of the assessment in the case of petitioner Companyfor annual assessment year 2014-15/2015-16 by the AssessingOfficer is based on the borrowed satisfaction and the AssessingOfficer has not applied his independent mind to arrive at theconclusion that there was failure on the part of the assessee to disclose fully and truly all material facts. In fact, the AssessingOfficer is under obligation to arrive at such conclusion that theassessee has failed to disclose all material facts and has to formindependent opinion resulting into “reason to believe” with regardto escapement of income chargeable to tax in case of thepetitioner. During the course of hearing, learned Senior Advocatefor the Department has tried to improvise by referring to theoriginal file of the Department to emphasize that there is tangiblematerial on record to show that the petitioner Company has madepurchase transaction of Rs.26,42,027/- and has availedaccommodation entry by way of bogus sales / purchases / fictitiousloans etc. with Disman Group of Company. In our opinion, inabsence of specific details as regards particulars of nature oftransaction basic details of information, clarity with regard to nameof person with whom such transaction has been entered into, goesto the very root of the matter. The sole object of providing reasonsfor reopening of the assessment is to prima facie supply therelevant material to the assessee to meet with his case and at thesame time, it reflects the basic ingredients of “reason to believe”for Assessing Officer to assume the jurisdiction under Section 147and 148 of the Income Tax Act. At the same time, such non-recording of specific details lead us to belief that without properapplication of mind, the Assessing Officer has solely andmechanically relying upon the information received fromInvestigation Wing, has issued impugned notice. Thus we are notconvinced with the manner in which satisfaction is arrived at by therespondent, as recorded in the reasons supplied to the petitionerCompany, for assuming jurisdiction to reopen the assessment ofrelevant A.Y. 2014-15/2015-16. 11.In our opinion, the condition precedent for resorting to the reopening of assessment under Section 147 of the Act are notsatisfied in the present case. In overall view of the matter, we arenot convinced with regard to the satisfaction arrived at by therespondent Assessing Officer to make out the case for reopeningof assessment under Section 147 of the Act for relevant A.Y. 2014-15/2015-16. 12.In the result, both the writ applications succeeds and ishereby allowed. The impugned notices dated 31.03.2021 /30.03.2021 are hereby quashed and set aside. (J. B. PARDIWALA, J) Y.N. VYAS (NISHA M. THAKORE,J)