Ambuj Foods Pvt. Ltd. V. Principal Commissioner Of Income Tax And Others

/50/2022

AI Insights

M/S Ambuj Foods Pvt. Ltd. challenged a notice issued by the Deputy Commissioner of Income Tax, Faizabad, under Section 148 of the Income Tax Act, 1961, which proposed to reassess the company's income for the assessment year 2015-16. The notice was based on information that the company had allotted a significant number of equity shares at a premium, which had not been adequately disclosed during the original assessment. The National Faceless Assessment Centre rejected the company's objections to the notice, leading to the filing of the writ petition. The High Court dismissed the petition, agreeing with the Income Tax Department that the reassessment was justified due to the discovery of new material facts post the original assessment, which indicated that the share transactions were not genuine and involved unaccounted money.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 796165 (HC-LUCKNOW)
• Appeal Type: Others
• Pronouncement Date: 11-04-2022
• Assessment Year: misc
• Other Referred Cases: Raymond Woolen Mills Ltd. Versus I.T.O., Phool Chand Bajrang Lal v. ITO, Srikrishna (P) Ltd. v. ITO, New Delhi Television Ltd. versus DCIT, CIT v. Marico Ltd., CIT v. Techspan India (P) Ltd., CIT v. Kelvinator of India Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: MANISH MISRA
• Assessee Lawyers: PRADEEP AGRAWAL
• Keywords: Accommodation entries; Bogus companies; Income Tax; Reassessment; Share capital; Share premium; Writ petition
• Section: 147; 148; 143(3); 142(1); 143(2); 143(1); 133(6)

Judgement Text

"Judgment reserved on 28.03.2022 Judgment delivered on 11.04.2022 Case : WRIT TAX No. - 50 of 2022 Petitioner : M/S Ambuj Foods Pvt. Ltd. Through Director Respondent : Principal Commissioner Of Income Tax And Others Counsel for Petitioner : Pradeep Agrawal Counsel for Respondent : Manish Misra, Hon'ble Devendra Kumar Upadhyaya, J. Hon'ble Subhash Vidyarthi, J. (Per Hon'ble Subhash Vidyarthi J) 1. Heard Sri Pradeep Agarwal assisted by Sri. Amar Mani Tiwari, Advocate, the learned Counsel for the petitioner and Shri Manish Misra, learned Counsel for the respondents. 2. By means of this Writ Petition filed under Article 226 of the Constitution of India, the petitioner has challenged the validity of a notice dated 31.03.2021 issued by the DCIT Circle Faizabad under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') proposing to assess/reassess the petitioner’s income/loss for the assessment year 2015-16 and directing the petitioner to submit a return for the said assessment year. The petitioner has also challenged the order dated 03-03-2022 passed by the National Faceless Assessment Centre, rejecting the objections filed by the petitioner in response to the aforesaid notice. 3. The petitioner’s case is that it had filed its return for the Assessment Year 2015-16 on 02-09-2015 declaring a total income of Rs.3,49,140/-, which was processed on 10-10-2015 under Section 143 (1) of the Act. The case was selected for scrutiny and notices under Section 143 (2) and Section 142 (1) were issued alongwith a questionnaire asking for certain details. The questionnaire inter alia demanded production of all the share capital details of the petitioner’s share-holders alongwith PAN and mode of payment for obtaining shares in his name or in the name of family members, and also the details of share premium receipts. The petitioner submitted a reply giving the details of all investor companies to whom shares were allotted. The matter of increase in share capital was examined during assessment proceedings under Section 143 (3) of the Act and nothing adverse came out from the information submitted in response to the questionnaire. By means of an order dated 01-06-2017, the petitioner was assessed for a total income of Rs.3,49,140/-. 4. On 30-03-2021, the A.O. issued a notice under Section 148 of the Act for the Assessment Year 2015-16, stating that he had reason to believe that the petitioner’s income chargeable to tax has escaped assessment within the meaning of Section 147 of the Act. 5. It is stated in the reasons provided for re-opening of assessment that an information was flagged by the Directorate of Income Tax (System) on the Insight Portal that the petitioner has allotted 1,20,000 equity shares to the shareholders @100 per share (face value Rs.10/- and premium Rs,90/-) during F.Y. 2014-15 and has collected a premium of Rs.1,08,00,000/-. The petitioner did not provide the details of shareholders even though several opportunities were granted to it. After completion of assessment proceedings, information was received from I & CI Wing, on the basis whereof the A.O. had reason to believe that the premium of Rs.1,08,00,000/- collected by the petitioner was chargeable to tax but it has escaped assessment. 6. On 27-11-2021, the petitioner submitted its objections against the notice under Section 148 of the Act mainly on the grounds that the petitioner’s case was selected for scrutiny under CASS for the reason “Large Share premium received during the year”. The matter of increase in share capital was thoroughly examined during the assessment proceedings under Section 143 (3). All the necessary details as required by the A.O. had been submitted by the petitioner and there was no failure on its part to disclose truly and fully all material facts necessary for completion of the assessment. The issue of increase in share capital had already been examined by the A.O. in depth and no adverse inference could be drawn. The assessment under Section 143 (3) was made on 01-06-2017 and more than four years have passed from the end of the relevant assessment. Therefore, the notice was barred by the First Proviso appended to Section 147 of the Act. 7. The petitioner further stated that the notice dated 22-09-2017 issued under Section 133 (6) of the Act was received by it on 05-10- 2017 and it had duly replied the notice giving complete name and address of the investor companies along with details of share application money received and it is wrongly mentioned in the notice that the petitioner did not provide the details of shareholders even after several opportunities. The notice itself stated that the case for A.Y. 2015-16 was selected for scrutiny under CASS for the reason “Large Share premium received during the year” and it is apparent that the increase of share capital has already been examined by the A.O. and re-opening of the case under Section 148 on the same issue is not valid. It is stated in the reasons for issuance of the notice that information had been received from I & CI Wing, but what information was received was not brought to the knowledge of the petitioner. The issue of increase in share capital has been independently examined by the I & CI Wing vide notice dated 22-05- 2017 and the petitioner has complied with all the requirements of the notice. No new information was in possession of the A.O. which would form the basis of issuance of the notice under Section 148 of the Act. 8. On 03-03-2022, the National Faceless Assessment Centre passed an order rejecting the petitioner’s objections stating that the original assessment for A.Y. 2015-16 was only a limited scrutiny assessment to verify the applicability of Section 56 (2) (vii b) of the Act, which means to verify any difference in aggregate consideration received on issue of shares when compared with Fair Market Value of the shares and consider the same as income under Section 56 of the Act. There is no scope for verifying the identity, genuineness and creditworthiness of the shareholders in a limited scrutiny assessment. As was mentioned in the notice under Section 148, an information was given by the Directorate of Income Tax (System) on the Insight Portal, that the petitioner had allotted 1,20,000 equity shares to the shareholders @ Rs.100/- per share (face value Rs.10/- and premium Rs.90/-) during F.Y. 2014-15 and it had collected a premium of Rs.1,08,00,000/-. In spite of being granted several opportunities, the petitioner did not provide the details of shareholders and, therefore, the genuineness and creditworthiness of the shareholders could not be established and hence appropriate remedial action as per the provisions of the Act was recommended. 9. The order further stated that in the letter of ITO (I & CI) dated 04-06-2019, it has been stated that a notice dated 07-05-2018 was issued to the petitioner under Section 133 (6) of the Act, which was delivered to the petitioner on 12-05-2018, but the petitioner did not comply with the notice. Thereafter another notice dated 31-05-2018 was issued, but the petitioner did not comply with this notice also. Thus the issue of increase in share capital and share premium, the verification of identity of investors, genuineness of transactions and creditworthiness of shareholders was not examined either in limited scrutiny assessment or by ITO (I & CI) Wing and it is a new issue which has formed the basis of reason for issuance of the notice under Section 148 of the Act. 10. Before proceeding to examine the rival contentions advanced on behalf the contesting parties, it would be appropriate to have a look at some pronouncements of the Hon’ble Supreme Court explaining the scope of interference while examining the validity of a notice issued under Section 148 of the Act in a Writ Petition under Article 226 of the Constitution of India. In Raymond Woolen Mills Ltd. Versus I.T.O., (1999) 236 ITR 36 (SC) the Hon’ble Supreme Court has held that at the stage of the notice of reopening of the assessment, the Court has only to see whether there is prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. 11. Again, in Raymond Woollen Mills Ltd. v. ITO, (2008) 14 SCC 218, the Hon’ble Supreme Court reiterated that while examining the validity of a notice issued under Section 148 of the Income Tax Act, “we do not have to give a final decision as to whether there is a suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage.” 12. In light of the aforesaid pronouncements of the Hon’ble Supreme Court we proceed to examine the rival submissions advanced on behalf of the parties so as to ascertain as to whether there was prima facie some material on the basis of which the Department could reopen the case, without going into the sufficiency or correctness of the material. 13. Mr. Pradeep Agrawal, the learned Counsel representing the petitioner, has submitted that after completion of assessment for the A.Y. 2015-16 on 01-06-2017, no new or fresh tangible material had come to knowledge of the A.O. for initiating the proceedings under Section 147 / 148 of the Act and, therefore, the initiation of the proceedings after expiry of more than four years from the end of the Assessment Year is illegal and beyond jurisdiction. He has further submitted that the petitioner had duly replied the questionnaire issued by the A.O on 20-04-2017 and had submitted all the necessary documents in reply to the queries raised by the A.O. The initiation of re-assessment proceedings amount to a review of the existing material. Section 148 uses the words “reasons to believe” and not “reasons to suspect” and the provisions of Section 147 / 148 cannot be used for making a roving or fishing enquiry on a vague or remote information in absence of any specific averment that the income has escaped assessment. 14. The petitioner also submitted that similar nature of transactions with the same parties were conducted in A.Y. 2012-13 by M/s Arohul Foods Pvt. Ltd., a sister concern of the petitioner, and the proceedings under Section 148 were initiated against M/s Arohul Foods Pvt. Ltd., but the same were quashed by the ITAT, Lucknow Bench vide order dated 11-08-2021 passed in ITA No. 236 / Lkw / 2020. 15. Per contra, Sri. Manish Mishra, the learned Counsel for the Income Tax department, has submitted that the petitioner had not made a true and full disclosure of all material facts. On 20-04-2017, the A.O. had sent a notice under Section 142 (1) of the Act alongwith a questionnaire and point no. 7 of the same directed the petitioner to produce all the share capital details of the petitioner’s shareholders alongwith PAN and mode of payment for obtaining shares and also the details of share premium received during the relevant year, but the petitioner did not provide this information. Although the petitioner had disclosed that it had received Rs.1,08,00,000/- as share capital and share premium, but the facts which have been discovered by the Investigation Wing, could not be established by the A.O. During investigation, the companies were found to be mere paper companies having no existence and real business. All the companies through which the entire share business has been dealt with by the petitioner have been found to be bogus shell companies, through which the operators provide accommodation entries for routing the unaccounted money of the petitioner company through banking channels in such a manner as makes it prima facie appear as a genuine transaction, though actually it is not and it causes taxable income escaping assessment. The A.O. had completed the assessment under Section 143 (3) on the basis of facts available on record at that time and the A.O. could not examine the facts which were discovered later on and, therefore, the case has been re-opened on the basis of fresh material on record. 16. Regarding the petitioner’s contention based on the judgment passed by ITAT in Arohul Foods Pvt. Ltd. matter, the respondents have stated that the said order has not been accepted by the department and an appeal under Section 260 A of the Act has been already been filed before this Court. 17. In Phool Chand Bajrang Lal v. ITO, (1993) 4 SCC 77, the Hon’ble Supreme Court held that: - “25. From a combined review of the judgments of this Court, it follows that an Income Tax Officer acquires jurisdiction to reopen assessment under Section 147(a) read with Section 148 of the Income Tax Act, 1961 only if on the basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons which he must record, to believe that by reason of omission or failure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings, any part of his income, profit or gains chargeable to income tax has escaped assessment. He may start reassessment proceedings either because some fresh facts come to light which were not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since, the belief is that of the Income Tax Officer, the sufficiency of reasons for forming the belief, is not for the Court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the Court may look into the conclusion arrived at by the Income Tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income Tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief. It would be immaterial whether the Income Tax Officer at the time of making the original assessment could or, could not have found by further enquiry or investigation, whether the transaction was genuine or not, if on the basis of subsequent information, the Income Tax Officer arrives at a conclusion, after satisfying the twin conditions prescribed in Section 147(a) of the Act, that the assessee had not made a full and true disclosure of the material facts at the time of original assessment and therefore income chargeable to tax had escaped assessment.” (Emphasis supplied) 18. In Srikrishna (P) Ltd. v. ITO, (1996) 9 SCC 534, the Hon’ble Supreme Court held that: - “Now, what needs to be emphasised is that 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 false assertion, or statement, of material fact, therefore, attracts the jurisdiction of the Income Tax Officer under Sections 34/147. Take this very case: the Income Tax Officer says that on the basis of investigations and enquiries made during the assessment proceedings relating to the subsequent assessment year, he has come into possession of material, on the basis of which, he has reasons to believe that the assessee had put forward certain bogus and false unsecured hundi loans said to have been taken by him from non-existent persons or his dummies, as the case may be, and that on that account income chargeable to tax has escaped assessment. According to him, this was a false assertion to the knowledge of the assessee. The Income Tax Officer says that during the assessment relating to subsequent assessment year, similar loans (from some of these very persons) were found to be bogus. On that basis, he seeks to reopen the assessment. It is necessary to remember that we are at the stage of reopening only. The question is whether, in the above circumstances, the assessee can say, with any justification, that he had fully and truly disclosed the material facts necessary for his assessment for that year. Having created and recorded bogus entries of loans, with what face can the assessee say that he had truly and fully disclosed all material facts necessary for his assessment for that year? True it is that Income Tax Officer could have investigated the truth of the said assertion — which he actually did in the subsequent assessment year — but that does not relieve the assessee of his obligation, placed upon him by the statute, to disclose fully and truly all material facts. Indubitably, whether a loan, alleged to have been taken by the assessee, is true or false, is a material fact — and not an inference, factual or legal, to be drawn from given facts. In this case, it is shown to us that ten persons (who are alleged to have advanced loans to the assessee in a total sum of Rs 3,80,000 out of the total hundi loans of Rs 8,53,298) were established to be bogus persons or mere name- lenders in the assessment proceedings relating to the subsequent assessment year. Does it not furnish a reasonable ground for the Income Tax Officer to believe that on account of the failure — indeed not a mere failure but a positive design to mislead — of the assessee to disclose all material facts, fully and truly, necessary for his assessment for that year, income has escaped assessment? We are of the firm opinion that it does. It is necessary to reiterate that we are now at the stage of the validity of the notice under Sections 148/147. The enquiry at this stage is only to see whether there are reasonable grounds for the Income Tax Officer to believe and not whether the omission/failure and the escapement of income is established. It is necessary to keep this distinction in mind. 10. A recent decision of this Court in Phool Chand Bajrang Lal v. ITO, we are gratified to note, adopts an identical view of law and we are in respectful agreement with it. The decision rightly emphasises the obligation of the assessee to disclose all material facts necessary for making his assessment fully and truly. A false disclosure, it is held, does not satisfy the said requirement. We are also in respectful agreement with the following holding in the said decision” 19. From the reasons for initiating the process of re-assessment mentioned in the preceding paragraph, we find that although the petitioner had disclosed that it had received Rs.1,08,00,000/- as share capital and share premium, but the from the facts disclosed by the petitioner during assessment the A.O. could not ascertain that the companies were mere paper companies having no existence and real business. The questionnaire annexed to the notice dated 20-04-2017 issued under Section 142 (1) of the Act required the petitioner to produce all the share capital details of its shareholders alongwith PAN and mode of payment for obtaining shares, but while providing information in response to the notice, the petitioner did not disclose the mode of payment for obtaining shares. 20. We have noticed that the petitioner has himself annexed with the Writ Petition a copy of a notice dated 07-05-2018 issued by the ITO (Intelligence & Criminal Investigation) calling for information under Section 133 (6) of the Act, regarding details of the shareholders in the following format: - Sl . Name of the shareholde r Company Address PA N Amout Receive d Mode of Receipt Date of Receipt Accoun t Number in which the money was receive d No. of equity shares allotted during F.Y. 2014- 15 A copy of the reply sent by the petitioner has also been annexed with the Writ Petition, in which the following details have been furnished: - Sl Name and occupation of allottee Address of allottee Nation ality of allottee Number of shares allotted Total amount paid (Including premium) (In Rs.) Total amount to be paid on calls (Including premium outstandin g) (In Rs.) 1 Bluefox Merchants (P) Ltd. 2A, Ganesh Chandra Avenue, 7th Floor, Room No. 11, Kolkata – 700013 Indian 45,000 45,00,000 Nil 2 Bluefox Dealtrade (P) 42, B. B. Ganguly Indian 25,000 25,00,000 Nil Ltd. Street, 1st Floor, Kolkata 700012 3 Garima Dealtrade (P) Ltd. 42, B. B. Ganguly Street, 1st Floor, Kolkata 700012 Indian 15,000 15,00,000 Nil 4 Youthstar Dealtrade (P) Ltd. 42, B. B. Ganguly Street, 1st Floor, Kolkata 700012 Indian 20,000 20,00,000 Nil 5 Sangamyug Commercial (P) Ltd. 2A Ganesh Chandra Avenue, 7th Floor, Room No. 11, Kolkata - 700013 Indian 15,000 15,00,000 Nil Total 1,20,000 1,20,00,000 21. From a perusal of the above tables, it is apparent that the petitioner did not furnish the PAN of the companies, the mode of receipt of the amount and the account number in which the money was received even after receipt of a notice under Section 133 (6) of the Act. Thus it appears that the petitioner did not make a full and true disclosure of facts before the A.O. It has been discovered subsequently during investigation that all the companies through which the entire share business has been dealt with by the petitioner, are bogus shell companies, through which the operators provide accommodation entries for routing the unaccounted money of the petitioner company through banking channels so as to give it a prima facie appearance of a genuine transaction, though actually it is not. Thus they manage taxable income to escape assessment. The A.O. had completed the assessment under Section 143 (3) on the basis of the facts available on record at that time and the A.O. could not examine the facts which were discovered later on and, therefore, the case has been re-opened on the basis of fresh material on record. 22. Now we consider the next submission made on behalf of the petitioner, that the initiation of the proceedings under Sections 147 / 148 of the Act is based on a review of the existing material, which is not permissible in law. From the discussion made above, it is clear that during investigation carried out subsequent to the limited scrutiny assessment, it was found that all the companies through which the entire share business has been dealt with by the petitioner, are bogus shell companies, through which the operators provide accommodation entries for routing the unaccounted money of the petitioner company through banking channels, thereby causing taxable income escaping assessment. This fact could not be examined by the AO during the original assessment for want of a full and true disclosure of facts by the petitioner. Therefore, the A.O. did not examine the aforesaid issues and he did not form an opinion regarding the same during the limited scrutiny assessment proceedings. In such a situation, it is not a case of change of opinion or the drawing of a different inference from the same facts as were earlier available but the A.O. has acted on fresh information and it is not a review of the existing material. 23. The learned Counsel for the petitioner has placed reliance upon a judgment of the Hon’ble Supreme Court in the case of CIT v. Marico Ltd., (2020) 16 SCC 354 and has contended that if the query raised by the A.O. is replied and is not rejected in the assessment order, it would mean that the A.O. has accepted the view and the notice issued on the same issue would amount to have been issued on a mere change of opinion. It would be appropriate to reproduce the aforesaid judgment, which is as follows: - “1. Delay condoned. In the present matter, the assessment order was passed on 30-1-2018 as regards the Assessment Year 2014-15. 2. According to the record, certain queries were raised by the assessing officer on 25-9-2017 during the assessment proceedings which were responded to by the assessee vide letters dated 10-10-2017 and 21-12-2017. After considering said responses, the assessment order was passed on 30-1- 2018. 3. Subsequently, by notice dated 27-3-2019 issued under Section 148 of the Income Tax Act, the matter was sought to be re-opened. While accepting the challenge to the issuance of notice, the High Court in para 13 of its judgment observed as under: “13. Thus, we find that the reasons in support of the impugned notice is the very issue in respect of which the assessing officer has raised the query dated 25-9-2017 during the assessment proceedings and the petitioner had responded to the same by its letters dated 10-12-2017 and 21-12-2017 justifying its stand. The non-rejection of the explanation in the assessment order would amount to the assessing officer accepting the view of the assessee, thus taking a view/forming an opinion. Therefore, in these circumstances, the reasons in support of the impugned notice proceed on a mere change of opinion and therefore would be completely without jurisdiction in the present facts. Accordingly, the impugned notice dated 27-3-2019 is quashed and set aside.” 4. In the circumstances, we see no reason to interfere in the matter. This special leave petition is, accordingly, dismissed. Pending application(s), if any, also stand disposed of.” 24. In the aforesaid case, the Hon’ble Supreme Court declined leave to file appeal against the order passed by the High Court, without laying down any law. However, the meaning of the expression “change of opinion” has been explained by the Hon’ble Supreme Court in CIT v. Techspan India (P) Ltd., (2018) 6 SCC 685, in the following words: - “16. To check whether it is a case of change of opinion or not one has to see its meaning in literal as well as legal terms. The words “change of opinion” imply formulation of opinion and then a change thereof. In terms of assessment proceedings, it means formulation of belief by an assessing officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection. 17. It is well settled and held by this Court in a catena of judgments and it would be sufficient to refer to CIT v. Kelvinator of India Ltd. wherein this Court has held as under: (SCC p. 725, para 5-7) “5. … where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words “reason to believe”…. Section 147 would give arbitrary powers to the assessing officer to reopen assessments on the basis of “mere change of opinion”, which cannot be per se reason to reopen. 6. We must also keep in mind the conceptual difference between power to review and power to reassess. The assessing officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of “change of opinion” is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. 7. One must treat the concept of “change of opinion” as an in-built test to check abuse of power by the assessing officer. Hence, after 1-4- 1989, assessing officer has power to reopen, provided there is “tangible material” to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief.” 18. Before interfering with the proposed reopening of the assessment on the ground that the same is based only on a change in opinion, the court ought to verify whether the assessment earlier made has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable. 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 sought to be examined in the reassessment proceedings.” (Emphasis supplied) 25. In the present case, during the limited scrutiny assessment under Section 143 (3) the petitioner did not make a full and true disclosure of all the material facts and, therefore, the A.O. could not form any opinion regarding the fact that the companies through which the entire share business has been dealt with by the petitioner, are bogus shell companies, through which the operators provide accommodation entries for routing the unaccounted money of the petitioner company. This fact came to light only after investigation conducted subsequent to the limited scrutiny assessment and it was only thereafter that the A.O. had formed an opinion in this regard. Therefore, the present case would not fall in the category of “change of opinion”. 26. The learned Counsel for the petitioner has placed reliance on the following passages from the judgment of the Hon’ble Supreme Court in New Delhi Television Ltd. versus DCIT reported in (2020) 424 ITR 607 (SC): - “In our view, the assesse disclosed all the primary facts necessary for assessment of its case to the Assessing Officer, What the Revenue urges is that the Assessee did not make a full and true disclosure on certain other facts. We are of the view that the assesse had disclosed all primary facts before the Assessing Officer and it was not required to give any further assistance to the Assessing Officer any disclosure of other facts. It was for the Assessing Officer at this stage to decide what inference whould be drawn from the facts of the case. In the present case the Assessing Officer on the basis of the facts disclosed to him did not doubt the genuineness of the transaction set up by the Assessee.” “We are clearly of the view that the Revenue in view of its Counter Affidavit before the High Court that it was not relying upon the non disclosure of facts by the Assessee could not have been permitted to orally urge the same. Even otherwise we find that the Assessee had fully and truly disclosed all material facts necessary for its assessment and, therefore, the Revenue cannot take the benefit of the exgtended period of limitation of 6 years.” “Revenue has failed to show non disclosure of facts the notice having been issued after a period of four years is required to be quashed.” 26. However, in the same judgment, after referring to the earlier judgments in the cases of Clagett Brachi Co. Ltd. versus CIT, (1989) Supp. (2) SCC 182, Phool Chand Bajrang Lal versus ITO, (1993) 4 SCC 77 and Ess Kay Engineering Co. P. Ltd. versus CIT, (2001) 10 SCC 189, the Hon’ble Supreme Court held that: - “subsequent facts which come to the knowledge of the Assessing Officer can be taken into account to decide whether the assessment proceedings should be re-opened or not. Information which comes to the notice of the Assessing Officer during proceedings for subsequent assessment years can definitely form tangible material to invoke powers vested with the Assessing Officer under Section 147 of the Act. The material disclosed in the assessment proceedings for the subsequent years as well as the material placed on record by the minority shareholders form the basis for taking action under section 147 of the Act. At the stage of issuance of notice, the Assessing Officer is to only form a prima facie view. In our opinion the material disclosed in assessment proceedings for subsequent years was sufficient to form such a view. We accordingly, hold that there were reasons to believe that income had escaped assessment in this case.” 27. Thus in New Delhi Television Ltd. versus DCIT (Supra), the Hon’ble Supreme Court has reiterated the well-established principle that subsequent facts which come to the knowledge of the Assessing Officer can be taken into account to decide whether the assessment proceedings should be re-opened or not. 28. Regarding a transaction which is discovered to be bogus after completion of assessment, the Hon’ble Supreme Court held in Phool Chand Bajrang Lal v. ITO, (1993) 4 SCC 77, as follows: - 19. In the present case, as already noticed, the ITO, Azamgarh, subsequent to completion of the original assessment proceedings, on making an enquiry from the jurisdictional ITO at Calcutta, learnt that the Calcutta Company from whom the assessee claimed to have borrowed that loan of Rs 50,000 in cash, had not really lent any money but only its name, to cover up a bogus transaction and after recording his satisfaction as required by the provisions of Section 147 of the Act proposed to reopen the assessment proceedings. The present is, thus, not a case where the Income Tax Officer sought to draw any fresh inference, which could have been raised at the time of original assessment on the basis of the material placed before him by the assessee relating to the loan from the Calcutta Company and which he failed to draw at that time. Acquiring fresh information, specific in nature and reliable in character, relating to the concluded assessment which goes to expose the falsity of the statement made by the assessee at the time of original assessment is different from drawing a fresh inference from the same facts and material which was available with the ITO at the time of original assessment proceedings. The two situations are distinct and different. Thus, where the transaction itself on the basis of subsequent information, is found to be a bogus transaction, the mere disclosure of that transaction at the time of original assessment proceedings, cannot be said to be disclosure of the “true” and “full” facts in the case and the ITO would have the jurisdiction to reopen the concluded assessment in such a case. It is correct that the assessing authority could have deferred the completion of the original assessment proceedings for further enquiry and investigation into the genuineness to the loan transaction but in our opinion his failure to do so and complete the original assessment proceedings would not take away his jurisdiction to act under Section 147 of the Act, on receipt of the information subsequently. The subsequent information on the basis of which the ITO acquired reasons to believe that income chargeable to tax had escaped assessment on account of the omission of the assessee to make a full and true disclosure of the primary facts was relevant, reliable and specific. It was not at all vague or non-specific. (Emphasis supplied) 29. Now we proceed to consider the next submission advanced on behalf of the petitioner, that the case of M/s Arohul Foods Pvt. Ltd., which is a sister concern of the petitioner, was re-opened under Section 148 of the Act for A.Y. 2012-13 on similar issues and re- opening of the case in the matter of M/s Arohul Foods Pvt. Ltd. was quashed by the ITAT, Lucknow Bench vide order dated 11-08-2021. The respondents have stated in the Counter affidavit that the department has not accepted the order of the ITAT and has challenged the order by filing an appeal under Section 260 A of the Act. Even otherwise, an order passed by the ITAT would not be relevant when the validity of the re-assessment is being examined by this Court in a Writ Petition. Therefore, this submission of the petitioner is also rejected. 30. The last submission advanced on behalf of the petitioner is that the proceedings initiated after a lapse of more than four years are barred by the First Proviso appended to Section 147 of the Act. Section 147 of the Act, as it stood at the relevant time, was follows: - “147. Income escaping assessment.— If the Assessing Officer, has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of Section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: ………… Explanation 1.—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.” (Emphasis supplied) 31. As is evident from the discussions made in the preceding paragraphs of this judgment, the facts regarding the petitioner’s dealings with shell companies for routing its own unaccounted money into its books of accounts had not been truly and fully disclosed by the petitioner during the original assessment and scrutiny assessment. The petitioner did not furnish complete information regarding its share transactions, particularly the information regarding the mode of receipt of amount for share transfer, the date of receipt of the amount and the account number in which the money was received. Therefore, the present case falls within the exception carved out in the First proviso, “unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assesse to disclose fully and truly all material facts necessary for his assessment, for that assessment year and the bar of initiating re-assessment proceedings after a lapse of four years since the original assessment contained in the First Proviso appended to Section 147 of the Act, would not apply to the present case. Therefore, the submission to this effect made by the learned Counsel for the petitioner cannot be accepted. 32. Keeping into view the scope of power of judicial review while scrutinizing a notice issued under Section 148 of the Act as explained in Raymond woolen Mills Ltd. (1) and (2) and Phool Chand Bajarang Lal and Srikrishna (Supra), while examining the validity of the notice issued under Section 148 of the Income Tax Act, we do not have to give a final decision as to whether there is a suppression of material facts by the assessee or not and the sufficiency or correctness of the material need not be considered at this stage. In the instant case, the notice under Section 148 of the Act has been issued by the assessing officer after receipt of information and conducting an investigation and after forming a reason to believe that the petitioner did not truly and fully disclose all the material facts at the time of limited scrutiny assessment, and it has been discovered subsequently during investigation that all the companies through which the entire share business has been dealt with by the petitioner, are bogus shell companies, through which the operators provide accommodation entries for routing the unaccounted money of the petitioner company through banking channels in a manner which prima facie makes it appear as a genuine transaction, though actually it is not. Thus taxable income amounting to Rs.1,08,00,000/- has escaped assessment. We are satisfied that there is prima facie material available on record before the assessing officer for issuing a notice for reassessment. The notice under Section 148 as well as the order dated 03-03-2022 passed by the National Faceless Assessment Centre rejecting the petitioner’s objections against issuance of the notice, do not suffer from any such illegality as to warrant interference by this Court in exercise of its Writ Jurisdiction. 33. The Writ Petition lacks merits and is, accordingly, dismissed. No order as to costs. Order Date : 11-04-2022 pks (Subhash Vidyarthi, J.) (Devendra Kumar Upadhyaya, J.) Digitally signed by PANKAJ KUMAR SRIVASTAVA Date: 2022.04.12 10:13:57 IST Reason: Location: High Court of Judicature at Allahabad, Lucknow Bench "