Gujarat HC allows re-opening of assessment as there was enough material before AO [Read Judgment]

Re-Assessment - Information from Investigation - Jurisdiction - Gujarat High Court - Taxscan

The Gujarat High Court allowed the reopening of assessment as there was enough material before AO and the assessment was not solely based on the information received from the investigation wing.

The writ applicant assessee, Hiteshkumar Babulal Ramani had filed his return of income declaring total income of Rs.8,56,000 and same was processed under Section 143 (1) of the Act and thus, accepted without any scrutiny.

Survey under Section 130 A of the Act was conducted in the case of Aphrodite Infra Pvt. Ltd, Surat and back up of computer, laptop and mobiles were taken in Hard Disk and the gadgets were impounded. After verification of the back up data, the authority found one undisclosed bank account of the writ applicant bearing Account with the Prime Cooperative Bank Ltd. at Surat.

During the course of survey, the statement of the writ applicant was recorded under Section 133 of the Act, wherein, he admitted that the alleged bank account was maintained by him and the same was opened and closed.

The Investigation Wing, Surat had reported the aforesaid facts to the respondent authority. After receiving the information, the respondent had verified the return of income and other documents related to the undisclosed bank account and the information was found correct as there was credit entries of Rs.85,11,543­, which was not reflected in the Income Tax return as this amount is chargeable to tax and has escaped assessment within the meaning of Section 147 of the Act.

Based on the reasons for re­-opening, the impugned notice seeking to re-open the assessment of the writ applicant for the assessment year 2014­15 came to be issued.

The writ applicant contended that after submitting the bank statement etc at the time of filing return of income and had disclosed the facts relatable to the bank account.

The court said that it was the duty of the assessee to bring to the notice of the respondent with regard to transactions made in the bank account which were relevant for the assessment for that year. Merely submission or production of books of accounts or other documents is not sufficient. It is profitable to refer the explanation 1 of Section 147 of the Act, which explains that, the production before the Assessing Officer of the 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 foregoing proviso.

The division bench of Justice J.B.Pardiwala and Justice Ilesh J Vora held that it cannot be said that there was no material before the Assessing Officer to re­open the assessment and he proceeded mechanically based on the sole information received from the Investigation Wing and the impugned notice is without jurisdiction and contrary to Section 147 of the Act. Therefore, the court was satisfied that there was enough material before the Assessing Officer and he was justified to re­open the assessment for the year under consideration.

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