Vedanta Limited v. Assistant Commissioner Of Income Tax, Circle 26(1) & Anr

$~36. * IN THE HIGH COURT OF DELHI AT NEW DELHI + Date of Decision: 20.12.2019 % W.P.(C) 13036/2019 VEDANTA LIMITED ..... Petitioner Through: Mr. Sachit Jolly, Mr. Rohit Garg and Mr. Vasudevan G, Advocates. versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 26(1) & ANR. ..... Respondents Through: Ms. Vibhooti Malhotra, Advocate. CORAM: HON'BLE MR. JUSTICE VIPIN SANGHI HON'BLE MR. JUSTICE SANJEEV NARULA VIPIN SANGHI, J. (ORAL) C.M. No. 53160/2019 1.Exemption allowed, subject to all just exceptions. 2.The application stands disposed of. W.P.(C) 13036/2019 and C.M. No. 53159/2019 3.The petitioner has preferred the present writ petition to assail the notice dated 31.03.2019 issued to the petitioner under Section 148 of the Income Tax Act in respect of the Assessment Year 2012-13, and the proceedings arising therefrom. The petitioner also seeks a restraint against W.P.(C) 13036/2019 the respondents from proceeding with the framing of assessment under Section 147/ 148 of the Act. 4.The notice dated 31.03.2019 under Section 148 of the Act is addressed to the petitioner M/s Vedanta Limited as the successor of M/s Sterlite Industries Private Limited (SIPL). The petitioner was provided with the reasons for re-opening the assessment. The crux of the reasons is that SIPL had received an amount of Rs. 90.32 crores in the FY 2011-12 from Moral Alloys Private Limited (hereinafter referred to as Moral), and investigation had shown that Moral was heavily engaged in the activity of providing accommodation entries, thus giving rise to the belief that SIPL’sincome chargeable to tax had escaped assessment. The reasons, inter alia, state that the Assessing Officer had received information on 28.03.2019 from the Office of ADIT (Inv.) (HQ-2) in respect of the, prima facie, beneficiaries in the case of Moral. The notice extracts the summary of the said investigation report, wherein it is stated that Moral in an effective period of four years (FY 2011-12 to 2014-15) had shown turnover of Rs.856 Crores in its bank accounts, details whereof were disclosed in the report. After its incorporation in September 2010, Moral had declared its activity as trading in metals at its address at Darya Ganj, New Delhi. Moral had opened an account on 23.08.2011 with Axis Bank, Sadar Bazar Branch, New Delhi. Cash deposits and cash withdrawals in the said account were to the tune of Rs.93 Lakhs and Rs.21 Lakhs respectively. 5.The said report disclosed that the outflows from the said account of Moral were exact equivalent to the inflows in the said account, and on the same day. The outflows observed from the said account were to similar –entities only. A large number of debits to companies like SIPL which merged in the petitioner, were also noticed in the account. After every withdrawal, the account was left with minimum balance. The trend of transactions in the account of Moral raised suspicion. The account showed exceptionally high turnover in a short span of time by recording two and four transactions with the same group of industries in a similar trend. The ITR profile of Moral, tabulated in the information received by the Assessing Officer, was as follows: 6.The statements of two bank accounts of Moral were investigated. In respect of Account No.911020042960662 opened on 23.08.2011, for FY 2011-12, the total inflow and outflow were found to be Rs.2,89,11,30,738/- and Rs.2,87,58,32,620/- respectively. Almost all funds credited in the bank accounts were transferred further to other entities and accounts on the same day, leaving minimal balance. 7.Another bank account of Moral with Punjab National Bank was also examined by requisition of the bank account statement. The same disclosed total inflow of Rs.25.10 Crores and outflow of Rs.24.98 Crores. This account also showed similar trend of activity, namely, the amounts were 6.The statements of two bank accounts of Moral were investigated. In respect of Account No.911020042960662 opened on 23.08.2011, for FY 2011-12, the total inflow and outflow were found to be Rs.2,89,11,30,738/- and Rs.2,87,58,32,620/- respectively. Almost all funds credited in the bank accounts were transferred further to other entities and accounts on the same day, leaving minimal balance. 7.Another bank account of Moral with Punjab National Bank was also examined by requisition of the bank account statement. The same disclosed total inflow of Rs.25.10 Crores and outflow of Rs.24.98 Crores. This account also showed similar trend of activity, namely, the amounts were transferred out to other entities on the same day on which the account was credited with monies. During the Financial Year 2011-12, SIPL received Rs.90,32,00,000/-, which the petitioner claims to be the sale proceeds. The investigation report also notices the ITR profile of SIPL for the Assessment Year 2012-13. 8.Significantly, the investigation report states that summons were issued to Moral on 13.03.2019 to furnish a detailed note of its business activity carried out during the period 2011-12 to 2015-16 and to explain the very low income offered by it for taxation despite very large turnover/ gross sales during the said period, along with supporting documents and other relevant details. The investigation report states that the Inspector, OCM Cell-2 was deputed to serve the summons on the registered address of Moral as per its latest ITR; “however, though the address was there, no entity in the name of Moral Alloys Pvt. Ltd. ever existed at the said address. Subsequently, summonses were issued to Sh. Deepak Bansal and Nitin Kumar, directors of the company at their residential address (as per their latest ITRs) on 13.03.2019 and Inspector, OCM Cell-2 was deputed to serve the said summonses, but they also could not be traced out at the said addresses and no one in the vicinity had ever heard about them. Further, MCA data of Moral Alloys Private Limited and KYC documents submitted to the bank were analysed but address provided in those were the same addresses as provided in its latest ITR”. (emphasis supplied) 9.The extract of the investigation report contained in the notice further states that inquiries were made from those entities, whose gross taxable income for the Financial Year 2011-12 was miniscule despite having substantial turnover and dealings with Moral. Summonses were issued to such entities, namely M/s Brilliant Metals Pvt. Ltd., M/s Progressive Alloys (India) Pvt. Ltd, M/s Unnati Alloys Pvt. Ltd., M/s JBN Impex Private Limited, M/s Forward Minerals & Metals Private Limited, M/s Bafna Metals Put Ltd, M/s Misawa Impex Pvt. Ltd, M/s Durga Enterprises and M/s QNS Metals. However, in most cases, summonses could not be served because these entities were not found to exist at their respective addresses. –M/s Brilliant Metals Pvt. Ltd. though found at the given address, had only one person/ Caretaker. On inquiry, he states that no business activity had ever been undertaken on that premises. Investigation further found that the two Directors of Moral were also the Directors of M/s Forward Minerals & Metals Private Limited and M/s Unnati Alloys Pvt. Ltd. 10.The Investigation Report, relied upon by the Assessing Officer, further reveals that Moral has share holding in M/s Brilliant Metals Pvt. Ltd., M/s Progressive Alloys (India) Pvt. Ltd, M/s Unnati Alloys Pvt. Ltd. and M/s JBN Impex Private Limited. Moral also had undertaken transactions with the said four companies during the financial year 2011-12. The income shown by majority of these entities in their ITR for assessment years 2012-13 were miniscule, compared to the volume of their banking transactions with Moral Alloys Private Limited and also the turnover reported by them in their ITRs.. Investigation also showed that Moral had transferred substantial amounts, inter alia, to SIPL, which merged with the petitioner, to the tune of Rs. 90.32 crores during the financial year 2011-12. The two entities with whom Moral had the highest money transactions were M/s Unnati Alloys Pvt. Ltd. and M/s Misawa Impex Pvt. Ltd. The amounts credited into the account of Moral, as depicted from the account of Moral, in respect of both these entities were almost equal. Moreover, the amounts credited into the account of Moral from these two entities were further transferred to other entities on the same day and the accounts of Moral were left with minimal balance. The Investigation Report contained the analysis in respect of the ITR of Moral for the Assessment Year 2012-13. The same has been extracted by the Assessing Officer in his reasons and it reads as follows: “7. ….. ….. ….. > Total sales/gross receipt of business and purchases shown by Moral Alloy Pvt. Ltd for FY 2011-12 were Rs 608.95 Cr and 608.21 Cr respectively. > Balance sheet of Moral Alloys Pvt Ltd for AY 2012-13 does not support any significant loan advanced by Moral Alloy (loan advanced worth Rs 2.03 Cr only) or received by it (Rs zero) as on the year end date. Therefore, transactions done by Moral Alloys Pvt Ltd with above mentioned entities vide para 5 appear to be mainly in the nature of sale and purchase. > Moral Alloys Pvt Ltd claimed very less operational expenses for FY 2011-12 against huge revenue from sales of Rs 608.95 Cr. It claimed Employee benefit expenses- Rs 5.39 lac, depreciation expense- Rs 1.37 lac, Rent- Rs 1.63 lac, Commission paid-Rs 11.87 lac, and cost freight- Rs 20.73 lac only. Its total paid .up capital is only Rs 1.0 Lac and fixed assets are only Rs 2.22 Lac for A Y 2012- 13. These facts further corroborate that it has/had no genuine business. > It is also evident from ITRs of both the directors of Moral Aloys Pvt Ltd for A Y 2012-13 that no salary income was shown by them. 8. In view of the above, ITR profile done vide para 6 & 12 and comparative chart tabulated vide para 11 & 12 it becomes clear that Moral Aloys Pvt Ltd and other entities such as Brilliant Metals Pvt. Ltd, Progressive Alloys (India) Pvt. Ltd, Unnati Alloys Pvt. Ltd., JBN Impex Private Limited, Forward Minerals & Metals Private Limited, SWift: VanijaPvt Ltd, Bafna Metals Pvt Ltd, Misawa Impex Pvt. Ltd, Durga Enterprises and ONS Metals, etc. are involved in similar nature of activity of giving and taking non-genuine accommodation entries. Other entities identified are prim a facie beneficiaries are ultimate beneficiaries of these sham transactions/ non -genuine entries.”(emphasis supplied) 11.The Assessing Officer proceeded to analyse the information collected/ received. The said analysis is elaborate. Since one of the primary submissions advanced by learned Senior counsel for the petitioner is that the Assessing Officer has not independently applied his mind, and he has proceeded on the borrowed conclusions contained in the Investigation Report, we deem it appropriate to set out, in extenso, the analysis undertaken by the Assessing Officer; the enquiries made by the Assessing Officer; the findings of the Assessing Officer, and; the reasons for formulation of his belief. The same reads as follows: “3. Analysis of information collected/received: 11.The Assessing Officer proceeded to analyse the information collected/ received. The said analysis is elaborate. Since one of the primary submissions advanced by learned Senior counsel for the petitioner is that the Assessing Officer has not independently applied his mind, and he has proceeded on the borrowed conclusions contained in the Investigation Report, we deem it appropriate to set out, in extenso, the analysis undertaken by the Assessing Officer; the enquiries made by the Assessing Officer; the findings of the Assessing Officer, and; the reasons for formulation of his belief. The same reads as follows: “3. Analysis of information collected/received: 3.1 I have perused and analyzed the information available with this office. The following facts emerged from the inputs which are mentioned above:- The assessee M/s Sterlite Industries Pvt. Ltd. (now merged into Vedanta Ltd.) is one of the beneficiary in case of Moral Alloys Pvt. Ltd. and has received accommodation entries from Moral Alloys Pvt. Ltd. The assessee has received accommodation entries to the tune of Rs. 90,32,00,000/- from round routing of funds through Moral Alloys Pvt. Ltd. In the investigation report mentioned above the modus operandi of cash deposit and cash withdrawal has been duly noted. After each withdrawal account was left with minimal balance. There is exceptionally high turnover. Further summons issued to Moral Alloys Pvt. Ltd, by the Investigation Wing has not been complied in law and spirit as discussed above. Several round routing of funds have been established in the investigation report, Further, field investigation have shown that it is appearing as bogus company. I have perused the above detailed information received from the Investigation Wing and after analysing the above information I am satisfied that the assessee has received accommodation entries from Moral Alloys Pvt. Ltd. This receipt of accommodation entries from the above Company was not known to the AO at the time of completion of original assessment, hence, no inquiry was conducted on this issue. 4. Enquiries made by AO as sequel to information collected/received: 4.1 The above report was received on 29.03.2019 and it has been perused thoroughly. It is evident that the assessee has received accommodation entries and as a result of which income of Rs.90,32,00,000/- has escaped assessment within the meaning of Section 147. 5. Findings of AO: 5.1 In view of the facts discussed above, I have reasons to believe that the income of Rs.90,32,00,000/-, chargeable to tax, has escaped assessment and re-assessment proceeding u/s 147 for the AY 2012-13 is required to be initiated u/s 147. 6. Reasons for formation of belief: 6.1 The reasons for the formation of belief that the income chargeable to tax amounting to Rs,90,32,00,000/- has escaped assessment have been discussed in details in the above paragraphs 3.4 and 5. This office was in possession of credible information that Moral Alloys Pvt. Ltd., in an effective period of 4 years (FY 2011-12 to 2014-15) has made turnover of Rs. 856 crores in its bank account no. 9110200042960662. Cash deposits and cash withdrawals in the said account were Rs. 93 lacs and Rs. 21 lacs respectively. As per the information, the said account was opened on 23.08.2011 in Axis Bank, Sadar Bazar Branch, New Delhi. The assessee company was incorporated in September, 2010 and declared its activity as trading in metals with address registered as "205, Ajeet Bhawan, Gali no, 214697/6, Ansari Road, Daryaganj, Delhi-11 0006". The outflows in the said account were exact equivalent to inflows and on the same day. The outflows observed in the account were observed to the similar entities only. A large no, of debits to companies like Sterlite Industries Limited was also noticed in the account. After every withdrawal, the account was left with minimal balance. Though account had witnessed transactions with entities into the same line of activity, trend of transactions raised the suspicion. As per the information, the said account was opened on 23.08.2011 in Axis Bank, Sadar Bazar Branch, New Delhi. The assessee company was incorporated in September, 2010 and declared its activity as trading in metals with address registered as "205, Ajeet Bhawan, Gali no, 214697/6, Ansari Road, Daryaganj, Delhi-11 0006". The outflows in the said account were exact equivalent to inflows and on the same day. The outflows observed in the account were observed to the similar entities only. A large no, of debits to companies like Sterlite Industries Limited was also noticed in the account. After every withdrawal, the account was left with minimal balance. Though account had witnessed transactions with entities into the same line of activity, trend of transactions raised the suspicion. Account had seen exceptionally high turnover in a short span of time and that too, by recording to and fro transactions with the same group of entities in a similar trend. In this back ground enquiry has been done for FY 2011-12 only and findings are discussed below accordingly. 3. The ITR profiling of Moral Alloys Private Limited is tabulated below: profiling of the directors is as follows: Deepak Bansal (AQOPB3529R) 9. To investigate the matter, the bank accounts statement of Moral Alloys Pvt. Ltd. was requisitioned; 10. It is found from these accounts that major funds were further transferred to the following entities during FY 2011- 12. 5. The ITR profiling of the aforementioned entities that have major credit and debit entries in the bank accounts of Moral Alloys Pvt Ltd., as mentioned above, are as follows: STRELITE INDUSTRIES PVT. LTD. (AABCS4955Q) 5. In furtherance of the investigation, summons was issued to Moral Alloys Pvt Ltd. on 13.03.2019 to furnish a detailed note on its ·business activity carried out during 2011-12 to 2015-16, explanation for offering very low income for taxation despite very high turnover/ gross sales during the said period with supporting documents along with other relevant details. The Inspector, OCM Cell-2 was deputed to serve the summons at its registered address as per latest ITR; however, though the address was there, no entity in the name of Moral Alloys Pvt. Ltd. ever existed at the said address. Subsequently, summonses were issued to Sh. Deepak Bansal and Nitin Kumar, directors of the company at their residential address (as per their latest ITRs) on 13.03.2019 and Inspector, OCM Cell-2 was deputed to serve the said summonses, but they' also could not be traced out at the said addresses and no one in the vicinity had ever heard about them. Further, MCA data of Moral Alloys Private Limited and KYC documents submitted to the bank were analysed but address provided in those were the same addresses as provided in its latest ITR. From the ITR profiling done, as per Para 6, those entities were chosen for further enquiries whose GTI for FY 2011-12 were miniscule though their turnover was substantial with Moral Alloys Pvt Ltd and summonses were issued (ITI of OCM Cell-2 was deputed to serve the summonses) to these prim a facie non-genuine/ accommodation entry parties (based in Delhi NCR). These entities are Brilliant Metals Pvt. Ltd, Progressive Alloys (India) Pvt. Ltd, Unnati Alloys Pvt. Ltd., JBN Impex Private Limited, Forward Minerals & Metals Private Limited, Bafna Metals Pvt Ltd, Misawa Impex Pvt. Ltd, Durga Enterprises and ONS Metals. However, in most cases, summonses could not be served because though the addresses were found, no such entities ever existed at their respective addresses. In the case of Brillaint Metals Pvt Ltd, the existence of the entity was found at the given address and only one person (caretaker type) was there. Summon was served upon him. On enquiry, it was found that there has been no business activity ever on that premises. 7. The Inspector, OCM Cell-2 was deputed to serve the said summons at his residential address (as per his latest ITR); however, he could also not be traced at that address and no one in the vicinity had ever heard about him. 8. From further enquiry, it has been found that both the directors of Moral Alloys Private Limited are also directors in the below mentioned companies: It is pertinent to note that Moral Alloys Private Limited also had banking transactions with the aforementioned companies. Further, Sh. Nitin Kumar, Director of assessee company has a proprietorship concern, namely Durga Enterprises, which also had banking transactions with Moral Alloys Private Limited. Summonses were issued to all these entities but could not be delivered as the entities were found to be non-existent at those addresses. It is found form the Balance sheet of Moral Alloys Private Limited for A Y 2012- 13 that Moral Alloys Pvt. Ltd had shareholdings in Brilliant Metals Pvt Ltd, Progressive Alloys Pvt Ltd, JBN Impex Pvt. Ltd and Unnati Alloys Pvt Ltd. The transactions done by Moral Alloys Pvt Ltd with these entities are tabulated below for FY 2011-12- Transactions done by Moral Alloys Pvt Ltd with these entities 9. From the ITR profile, as mentioned in Table A at para 6, it is observed that the income shown by majority of these entities in their ITRs of AY 2012-13 are miniscule as compared to the volume of their banking transactions with Moral Alloys Private Limited and also the turnover reported by them in their ITRs. Therefore, comparison between transactions made by these entities with Moral Alloys Put Ltd and their GTI for AY 2012-13 has been drawn and the same is tabulated below- Parties to whom funds were further TRANSFERRED (i.e. from whom purchases have been claimed by Moral Alloys Private Limited or other credits in the nature of unsecured loan, etc. have been given by Moral Alloys Private Limited to them) from the bank accounts of Moral Alloys Private Limited during FY 2011-12- Summary of total transaction done by thesebeneficiaries and intermediaries with Moral Alloy Pvt Ltd during FY 2011·12· 5. As the two biggest intermediary entities which transferred funds to Moral Alloys Pvt Ltd during FY 2011-12 were Unnati Alloys Pvt Ltd and Misawa Impex Private Limited, their bank account statements (as found from examination of bank statements of Moral Alloys Pvt. Ltd) were requisitioned, analysed and major findings are as follows- It is seen from both the above bank statements that almost all fund credited in the bank account is transferred further to other entities on the same day and accounts are left with minimal balance. 12. In furtherance of the investigation, ITR of Moral Alloys for AY 2012-13 has been analysed and found following facts- > Total sales/ gross receipt of business and purchases shown by Moral Alloy Pvt Ltd for FY 2011-12 were Rs 608.95 Cr and 608.21 Cr respectively. > Balance sheet of Moral Alloys Pvt Ltd for AY 2012-13 does not support any significant loan advanced by Moral Alloy (loan advanced worth Rs 2.03 Cr only) or received by it (Rs zero) as on the year end date. Therefore, transactions done by Moral Alloys Pvt Ltd with above mentioned entities vide para 5 appear to be mainly in the nature of sale and purchase. > Moral Alloys Pvt Ltd claimed very less operational expenses for FY 2011- 12 against huge revenue from sales of Rs 608.95 Cr. It claimed Employee benefit expenses- Rs 5.39 lac, depreciation expense- Rs 1.37 lac, Rent- Rs 1.63 lac, Commission paid-Rs 11.87 lac, and cost freight- Rs 20.73 lac only. Its total paid up capital is only Rs 1.0 Lac and fixed assets are only Rs 2.22 Lac for A Y 2012-13. These facts further corroborate that it has/ had no genuine business. > It is also evident from ITRs of both the directors of Moral Aloys Put Ltd for AY 2012-13 that no salary income was shown by them. > Moral Alloys Pvt Ltd claimed very less operational expenses for FY 2011- 12 against huge revenue from sales of Rs 608.95 Cr. It claimed Employee benefit expenses- Rs 5.39 lac, depreciation expense- Rs 1.37 lac, Rent- Rs 1.63 lac, Commission paid-Rs 11.87 lac, and cost freight- Rs 20.73 lac only. Its total paid up capital is only Rs 1.0 Lac and fixed assets are only Rs 2.22 Lac for A Y 2012-13. These facts further corroborate that it has/ had no genuine business. > It is also evident from ITRs of both the directors of Moral Aloys Put Ltd for AY 2012-13 that no salary income was shown by them. 13. In view of the above, ITR profile done vide para 6 & 12 and comparative chart tabulated vide para 11 & 12 it becomes clear that Moral Aloys Pvt Ltd and other entities such as Brilliant Metals Pvt. Ltd, Progressive Alloys (India) Pvt. Ltd, Unnati Alloys Pvt. Ltd., JBN Impex Private Limited, Forward Minerals & Metals Private Limited, Swift: Vanija Pvt Ltd, Bafna Metals Pvt Ltd, Misawa Impex Pvt. Ltd, Durga Enterprises and ONS Metals, etc. are involved in similar nature of activity of giving and taking non-genuine accommodation entries. Other entities identified are prim a facie beneficiaries are ultimate beneficiaries of these sham transactions/non-genuine entries. The assessee M/s Sterlite Industries Pvt. Ltd. (now merged into Vedanta Ltd.) is one of the beneficiary in case of Moral Alloys Pvt. Ltd. and has received accommodation entries from Moral Alloys Pvt. Ltd. The assessee has received accommodation entries to the tune of Rs. 90,32,00,000/- from round routing of funds through Moral Alloys Pvt. Ltd. In the investigation report mentioned above the modus operandi of cash deposit and cash withdrawal has been duly noted. After each withdrawal account was left with minimal balance. There is exceptionally high turnover. Further summons issued to Moral Alloys Pvt. Ltd. by the Investigation Wing has not been complied in law and spirit as discussed above. Several round routing of funds have been established in the investigation report. Further, field investigation have shown that it is appearing as bogus company. I have perused the above detailed information received from the Investigation Wing and after analysing the above information I am satisfied that the assessee has received accommodation entries from Moral Alloys Pvt. Ltd. This receipt of accommodation entries from the above Company was not known to the AO at the time of completion of original assessment, hence, no inquiry was conducted on this issue. The above report was received on 29.03.2019 and it has been perused thoroughly. It is evident that the assessee has received accommodation entries and as a result of which income of Rs.90,32,00,000/- has escaped assessment within the meaning of Section 147. In view of the facts discussed above, I have reasons to believe that the income of Rs:90,32,00,000/- , chargeable to tax, has escaped assessment and re-assessment proceeding u/s 147 for the AY 2012-13 is required to be initiated u/s 147. Discussion on "change of opinion" It is pertinent to mention that though assessment has been completed u/s 143(3) in the above case but there was no formation of opinion by the AO on the above issues as no specific questionnaire on the above issues were raised by the AO nor there was any submission on the above issues by the assessee. Thus, it is not a case of change of opinion as for the change of opinion there has to be an opinion first. The Hon'ble Delhi High Court has held in case of Commissioner of Income-tax-VI, New Delhi v. Usha International Ltd. [2012] 25 taxmann.com 200 (Delhi) (FB) has held in respect of principle of "change of opinion" that when specific query is raised by the AO and it is answered by the assessee then it will be termed as 'change of opinion'. The relevant extract of the above judgment is reproduced below:- 13. It is, therefore, clear from the aforesaid position that: The Hon'ble Delhi High Court has held in case of Commissioner of Income-tax-VI, New Delhi v. Usha International Ltd. [2012] 25 taxmann.com 200 (Delhi) (FB) has held in respect of principle of "change of opinion" that when specific query is raised by the AO and it is answered by the assessee then it will be termed as 'change of opinion'. The relevant extract of the above judgment is reproduced below:- 13. It is, therefore, clear from the aforesaid position that: (1) Reassessment proceedings can be validly initiated in case return of income is processed under Section 143(1) and no scrutiny assessment is undertaken. In such cases there is no change of opinion; (2) Reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and is decided in favour of the assessee. Reassessment proceedings in the said cases will be hit by principle of "change of opinion". {3} Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons. The Hon'ble Apex Court in case of CIVIL APPEAL NO. 2732 OF 2007Income Tax Officer Ward No. 16(2) Versus M/s TechSpan India Private Ltd. & Anr. Has held that- If the assessment order is non-speaking, cryptic or perfunctory in nature, it may be difficult to attribute to the assessing officer any opinion on the questions that are raised in the proposed reassessment proceedings. Every attempt to bring to tax, income that has escaped assessment, cannot be absorbed by judicial intervention on an assumed change of opinion even in cases where the order of assessment does not address itself to a given aspect The above judgement is squarely applicable in case of assessee as the AO in the original assessment has nowhere discussed the above issue. Fresh material/information In this case fresh facts/materials regarding the escapement of income was received from the Investigation Wing as discussed above. The Hon'ble Madras High Court in case of M/s. SUN Direct TV Pvt. Ltd. v ACIT (W.P. No.44311 of 2016, 10.10.2018) has held “–that if the assessment is finalised, the reopening in respect of the escaped assessments can be made if any new materials or suppression of materials are identified." The Hon'ble Apex Court has held in case of M/s Larsen & Toubro Ltd. v. State of Jharkhand & Others CIVIL APPEAL NO. 5390 OF 2007 that Audit Objection is an "information" . The Hon'ble jurisdictional Delhi High Court in case of FIS GLOBAL BUSINESS SOLUTIONS INDIA PVT. LTD. v. Pr. CIT-3 W.P.(C) 12277/2018, C.M. APPL.47539/2018 has also held that Audit Objection is "information" for the purpose of Section 147. No "full and true disclosure" in the original assessment proceeding There was no full and true disclosure by the assessee as the assessee failed to disclose that it has received accommodation entries from the above Company. Explanation to Section 147 of the Income Tax Act is reproduced below:- "Production before the Assessing officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso.” In case of Sri Krishna (P) Ltd. v. ITO [1996] 221 ITR 538/87 Taxman 315 (SC) it has been held by the Hon'ble Apex Court, in the context of "full and true disclosure" that:- No "full and true disclosure" in the original assessment proceeding There was no full and true disclosure by the assessee as the assessee failed to disclose that it has received accommodation entries from the above Company. Explanation to Section 147 of the Income Tax Act is reproduced below:- "Production before the Assessing officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso.” In case of Sri Krishna (P) Ltd. v. ITO [1996] 221 ITR 538/87 Taxman 315 (SC) it has been held by the Hon'ble Apex Court, in the context of "full and true disclosure" that:- "Every disclosure is not and cannot be treated to be a full and true disclosure. A disclosure may be a false one or true one. It may be a full disclosure or it may not be. A partial disclosure may often be a misleading one. What is required is a full and true disclosure of all material facts necessary for making assessment for that year. This calls for examination of the decisions of the court analyzing and elucidating section 147 and 148. The obligation on the assessee to disclose the material facts - or what are called primary facts- is not a mere disclosure but a disclosure which is full and true. A false disclosure is not a true disclosure. The disclosure must not only be true but must be full „fully and truly'. A fake assertion, or statement, of material fact, therefore, attracts the jurisdiction of the ITO under section 147.” In case of Honda Siel Power Products Ltd. vs. The Deputy Commissioner of Income Tax ,and Anr., W.P.(C) No. 9036/2007, decision dated 14th February, 2011, the jurisdictional High Court has held that :- "10. ...... The term "failure" on the part of the assessee is not restricted only to the income-tax return and the columns of the income-tax return or the tax audit report. This is the first stage. The said expression "failure to fully and truly disclose material facts" also relate to the stage of the assessment proceedings, the second stage. There can be omission and failure on the part of the assessee to disclose fully and truly material facts during the course of the / assessment proceedings. This can happen when the assessee does not disclose or furnish to the Assessing Officer complete and correct information and details it is required and under an obligation to disclose. Burden is on the assessee to make full and true disclosure. " In Kantamani Venkata Narayana and Sons v. First Addl. ITO [1967] 63 ITR 638, the Hon'ble Apex Court has held that from a mere production of the books of account, it could not be inferred that there had been full disclosure of the material facts necessary for the purposes of assessment. The terms of the Explanation, declared the court, were too plain to permit an argument that the duty of the assessee to disclose fully and truly all material facts would stand discharged when he produces the books of account or evidence which has a material bearing on the assessment. The Hon'ble Court has observed that:- ''It is the duty of the assessee to bring to the notice of the Income tax Officer particular items in the books of account or portions of documents which are relevant. Even if it be assumed that from the books produced, the Income- tax Officer, if he had been circumspect, could have found out the truth, the Income-tax Officer may not on that account be precluded from exercising the power to assess income which had escaped assessment. " Thus, neither this is a case of "change of opinion." nor there ""was a full and true disclosure by the assessee. Therefore, I have reason to believe that Rs.90,32,00,000/- has escaped assessment and its unexplained. It is evident that income chargeable to tax has escaped assessment for this year ''It is the duty of the assessee to bring to the notice of the Income tax Officer particular items in the books of account or portions of documents which are relevant. Even if it be assumed that from the books produced, the Income- tax Officer, if he had been circumspect, could have found out the truth, the Income-tax Officer may not on that account be precluded from exercising the power to assess income which had escaped assessment. " Thus, neither this is a case of "change of opinion." nor there ""was a full and true disclosure by the assessee. Therefore, I have reason to believe that Rs.90,32,00,000/- has escaped assessment and its unexplained. It is evident that income chargeable to tax has escaped assessment for this year by the reasons of the failure on the part of the assessee to disclose fully and truly all material facts. Therefore it is a fit case for the issuance of notice u/s 148 of the Act for the financial year 2011- 12 relevant to assessment 2012·13. 7. Applicability of the provisions of section 147/151: 7.1 In this case return of income was filed for the year under i.e. A.Y.2012-13 at an income of Rs. 519,60,75,070/- on 30.11.2012and the only requirement to initiate proceedings u/s 1417 is reason to believe which have been recorded above. In this case, return was filed and regular assessment u/s 143(3) was made on 03.05.2016. It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for his assessment for the year under consideration thereby necessitating reopening u/s 147 of the Act. It is true that the assessee has filed a copy of annual report and audit P&L A/c and balance sheet alongwith return of income where various information/material were disclosed. However, the requisite full and true disclosure of all material facts necessary for assessment has not been made as noted above. It is pertinent to mention here that even though the assessee has produced books of accounts, annual report, audited P&L and balance sheet or other evidence as mentioned above, the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the AO and could have been discovered with due diligence. It is evident from the above discussion that in this case, the issues under consideration were never examined by the AO during the course of regular assessment/reassessment. In view of above, provisions of clause(c) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment.” (emphasis supplied) 12.When the matter came up before this Court for preliminary hearing on 12.12.2019, the submission advanced on behalf of the petitioner was that the Investigation Report relied upon by the Assessing Officer drew a distinction –between entities who had genuinely transacted business with Moral during the financial year 2011-12, and who had not. It was argued that so far as SIPL is concerned, the Investigation Report itself found the sales undertaken by it to Moral to be genuine. It was argued that merely because Moral may have had transactions with others, which may raise doubts about their genuineness, is no reason to suspect all transactions undertaken by Moral, including those with SIPL, and that SIPL is only concerned with its transactions with Moral, and nothing more. 13.In the light of the aforesaid submission, we directed the Revenue, who was represented on advance notice, to produce the Investigation Report before this Court in a sealed cover on the next date of hearing. The matter was adjourned to 19.12.2019 for the said purpose. On 19.12.2019, it was further adjourned to 20.12.2019, when it was heard. 13.In the light of the aforesaid submission, we directed the Revenue, who was represented on advance notice, to produce the Investigation Report before this Court in a sealed cover on the next date of hearing. The matter was adjourned to 19.12.2019 for the said purpose. On 19.12.2019, it was further adjourned to 20.12.2019, when it was heard. 14.Ms. Malhotra, learned senior standing counsel produced the Investigation Report, which is referred to, and forms the basis of the impugned notice, in a sealed cover. The same was opened and report perused by us. A perusal of the said Investigation Report reveals that there is no such distinction sought to be made with regard to SIPL, or any other entity, in the said report. The said Investigation Report does not carve out SIPL as an exception, and does not state that the transactions undertaken between Moral and SIPL were found to be genuine, unlike the other transactions undertaken by Moral with other entities named in the Investigation Report. On the contrary, the said Investigation Report highlights SIPL as one of the entities in whose account, large amounts have been transferred by Moral during the financial year 2011-12. Paragraph 5 of the said Investigation Report contains the said tabulation, enlisting the entities to whom funds were transferred by Moral. We find that SIPL is the recipient of the highest amount from Moral, as found in the said tabulation, of Rs. 90.32 crores. A perusal of the Investigation Report extracts whereof are contained in the reasons for re-opening, belies the submission of learned counsel for the petitioner that the transactions undertaken by Moral were found to be partly genuine, if not completely genuine. 15.The submission of learned counsel for the petitioner that the Assessing Officer has acted on the basis of borrowed wisdom contained in the Investigation Report is also meritless. We have consciously extracted the discussion/ analysis found in the reasons recorded by the Assessing Officer to justify the re-opening of the re-assessment. The Assessing Officer states that he has perused and analysed the investigation report. The mere fact that SIPL has accounted for all the receipts from Moral in its books of accounts, and has also offered the same to tax, can never be a –defence when a serious allegation of the transactions undertaken by SIPL with Moral not being genuine, has been raised. Ms. Malhotra has pointed out that the sale transactions allegedly undertaken by SIPL with Moral in the financial year 2011-12 were all exempted from payment of other taxes and, consequently, the possibility of the said transactions being sham, and merely paper transactions, is accentuated. 16.In Assistant CIT Vs. Rajesh Jhaveri Stock Broker Pvt. Ltd., (2008) 14 SCC 208, the Supreme Court has held that the expression „reason‟ in Section 147 of the Act means a “cause” or “justification”. The Assessing Officer can be said to have reason to believe that income has escaped assessment, if he has a cause or justification to know, or suppose, that income has escaped assessment. 17.In Sri Krishna Pvt. Ltd. V. Income Tax Officer, (1996) 87 Taxman 315 (SC), it was emphasised that the enquiry at the stage of finding out whether the reassessment notice is valid, is only to see whether there are –reasonable grounds for the Income Tax Officer to believe and not that the omission and escapement of income is established. 16.In Assistant CIT Vs. Rajesh Jhaveri Stock Broker Pvt. Ltd., (2008) 14 SCC 208, the Supreme Court has held that the expression „reason‟ in Section 147 of the Act means a “cause” or “justification”. The Assessing Officer can be said to have reason to believe that income has escaped assessment, if he has a cause or justification to know, or suppose, that income has escaped assessment. 17.In Sri Krishna Pvt. Ltd. V. Income Tax Officer, (1996) 87 Taxman 315 (SC), it was emphasised that the enquiry at the stage of finding out whether the reassessment notice is valid, is only to see whether there are –reasonable grounds for the Income Tax Officer to believe and not that the omission and escapement of income is established. –18.We have dealt with similar submissions as advanced by learned counsel for the petitioner, in several other decisions recently. It is obvious that whenever an assessee takes or provides accommodation entries, one part of the transaction would appear to be completely transparent; through banking channels, and the recipient of the funds would disclose the same in –his returns and offer the same to tax if such receipts constitute income liable to tax. The mere disclosure of a part of the transaction in its records by the assessee is not sufficient to establish the genuineness of the transaction. In RDS Project Limited Vs. Asst. Commissioner of Income Tax New Delhi & Anr., W.P.(C.) No. 11274/19 decided on 23.10.2019, the petitioner’s assessment was sought to be re-opened under Section 148 of the Act on the premise that it had received funds from two entities viz. M/s –Shail Investment Pvt. Ltd. and M/s New Delhi Credits Pvt. Ltd. two companies promoted by one Tarun Goyal. We rejected the challenge to the re-opening while observing as follows: “38. We are not suggesting that all monetary transactions of a person/ entity indulging in the activity of providing accommodation entries, would justify the entertainment of a –belief, that the taxable income of the third parties with whom such monetary transactions are undertaken, has escaped assessment. This is because, the person/ entity found to be indulging in the activity of providing accommodation entries, may have entered into some genuine transactions as well. It would be essential for the Assessing Officer of such third party/ parties to find a live-link, i.e. a link which is actionable between the person/ entity indulging in the activity of providing accommodation entries and such third party/ Assessee. The person who has undertaken such financial transaction(s) with such a person/ entity (the bogus entry provider), cannot avoid further scrutiny of such a transaction by laying a challenge to the re-opening of the assessment under Section 147/148 of the Act when the re-opening is, otherwise, within the period of limitation. 39. In the present case, the live-link between the said material information, and the formation of the belief that taxable income has escaped assessment is the fact that the petitioner, admittedly, received Rs. 4.10 crores from M/s Shail –Investments Pvt. Ltd. and M/s New Delhi Credits Pvt. Ltd. each. This live-link is actionable as it was found and acted upon within the period of limitation under the proviso to Section 147 of the Act. 40. No doubt, on the one hand, sanctity of concluded assessment proceedings needs to be protected, and an assessee should be protected against undue harassment by the taxation authorities by resort to re-opening of the concluded assessment. However, when subsequently, it comes to light that the assessee has had financial/ monetary dealings with dubious –entities/ persons such as bogus accommodation entry 40. No doubt, on the one hand, sanctity of concluded assessme