M/S VACMET INDIA LTD.,AGRA V. DY.CIT.,CIRCLE-2(3)(1), JHANSI

ITA 333/AGR/2019

• Counselvise Citation: [2024] 138 COUNSELVISE.COM (IT) 9606 (ITAT-AGRA)
• Duration Of Justice: 5 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-09-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 21-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUKESH KUMAR JAIN
• Assessee Lawyers: S.KANCHUN KAUSHAL; RAVI SHARMA
• Keywords: Set aside; Difference of opinion; Change of opinion; Reassessment proceedings; Period of limitation; Reopening of assessment; Principle of natural justice; Accommodation entries; Wrong claim; Assessment record; Competent authority; Reason to believe; Charitable institution; Time period of passing order; Tangible material; Borrowed satisfaction; Bogus
• Section: 147; 148; 143(3); 153; 208; 133(6); 13; 139; 73; 2(22)(e); 191; 115JB; 72; 145(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA Before M.Balaganesh, Accountant Member & Shri Prakash Chand Yadav, Judicial Member ITA No.333/Agr/2019: Asst.Year : 2011-2012 M/s.Vacmet India Limited 4/117-2A, Church Road Civil Lines, Agra – 282 002. vs. The Deputy Commissioner of Income-tax, Circle 2(3)(1) Jhansi. (Appellant) (Respondent) Revenue by: Sri.Sukesh Kumar Jain, CIT-DR Assessee by: S/Sri.Kanchun Kaushal, AR, Ravi Sharma, Advocate, Ms.Shruti Khimta & Ms.Supriya Mehta, ARs Date of Hearing : 24.09.2024 Date of Pronouncement: 05.11.2024 O R D E R Per Prakash Chand Yadav, JM : Present appeal of the assesse is arising from the order of Ld CIT(A) dated 13.08.2019 and relates to assessment year 2011-2012. We hereby adjudicate the assessee’s appeal ITA No.333/Agr/2019, since it relates to the validity of the present proceedings. Facts of the Case:- 2. Facts of the case are that the assessee is a limited company engaged in the manufacture and sale of polyester films, BOPP films, Holographic films, etc. For AY 2011-12, it had e-filed its return of income on 28.09.2011 declaring total 2 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 2 income of Rs 76,81 ,74.750/-. Thereafter, the case was selected for scrutiny and the assessment was completed under section 143{3) on 19.11.2013 at the returned income. On receipt of information from investigation wing, alleging that the assessee had taken accommodation entries from two entities namely M/s. Perfect Polychem Pvt. Ltd. and M/s. Star Technologies (India), reasons for escapement of taxable income were recorded by the A.O. After obtaining the statutory approval under section 151 (1) of the Act, a notice under section 148 was issued to the assessee on 29 03.2018. This notice was issued in respect of escapement of taxable income of Rs.21,74,57,391/- which pertained to Rs.21,63,75,513/- received by the assessee during the year as sale consideration from M/s. Star Technologies (India). 3. In response to the said notice, return of income declaring total income of Rs. 76,81,74,750/- was e-filed by the assessee company on 26 04.2018 The assessee's objections to the initiation of reassessment proceedings were settled by the DC Circle 2(3)(1), Jhansi Vide his letter dated 13.12 2018. During the re-assessment proceedings, the A O made inquiries in respect of the issues identified in the ‘reasons' and after rejecting the assessee’s books of account under the provisions of section 145(3) of the Act vide the impugned order, its returned Income has been enhanced the A.O. by making two additions to its returned income. These additions have been made by the A.O. after taking directions from the jurisdictional Addl, CIT under the provisions of section 144A of the Act. The first addition of Rs.74,14,88,205/- has been made by estimating the assessee's sale as Rs.600 crores (instead of approximately Rs. 439.77 crores disclosed in its books of account) and applying the GP rate of 35% on the enhanced sales. The second addition of Rs.10,84,73,775/- has been made by the A.O by treating the entire sales made by it to M/s. Star Technologies (India) as sham and in actuality, assessee’s own unaccounted money that was introduced by it in its books of account the form of sales. Thus, the assessee company was assessed at the assessed income of Rs.161,81,36,730/- in place of the returned income of Rs.76,61,74,750/-. 3 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 3 4. Aggrieved with the order of the AO, the assessee preferred appeal before the CIT(A), who vide its order dated 08.08.2019 partly allowed the appeal of the assessee. The Ld CIT(A) affirmed the jurisdiction of the AO under section 148. However, deleted the additions on merits. Both revenue and assessee have filed appeal against the order of the Ld CIT(A) before us. 5. The assessee has raised following grounds of appeals. “1. That the CIT(A) erred on facts and in law in upholding the validity of reassessment proceedings under section 148 of the Act by the Ld. Assessing Officer which are arbitrary, bad in law, without jurisdiction and completely contrary to the facts on record. 2. That the CIT(A) erred in facts and in law in upholding the re-assessment proceedings under section 148 of the Act by the Ld. Assessing Officer even when the additions made by him in his re-assessment order are at variance with the reasons recorded for re-opening of assessment. 3. That the CIT(A) erred in fact and in law in upholding the reassessment proceedings u/s 148 of the Act by the Ld. Assessing Officer ignoring and rejecting the appellant specific ground that from the initiation of proceedings till the assessment completed the AO has been not able to convert the reason recorded into evidence. The proceedings came to be commenced on the suspicion of ADIT(Inv.) and concluded with the suspicion of the AO. Suspicion howsoever strong cannot prevails over evidence brought on records by the appellant. 4. That the CIT(A) erred in fact and in law in upholding the re-opening of assessment proceedings by the Ld. Assessing Officer under the provisions of Section 147/148 of the Act without forming a prima facie opinion merely acting mechanically on account of the information received from the ADIT-Delhi and the Investigation Wing and forming reasons on the basis of mere surmises and suspicion. 4 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 4 5. That the CIT(A) erred on facts and in law upholding the re-opening of assessment proceedings beyond a period of 4 years from the end of AY 2011-12 where assessment was completed under section 143(3) of the Act, without establishing that the Appellant failed to disclose truly and fully all material facts necessary for assessment. 6. That the CIT(A) erred on facts and in law upholding the re-opening of assessment proceedings where initiation of re- assessment proceedings were based on mere change of opinion of the Ld. Assessing Officer. 7. That the CIT(A) erred in fact and in law in upholding the conclusion of reassessment proceedings by the Ld. Assessing Officer under the provisions of Section 147/144 of the Act without giving proper and reasonable opportunity to the Appellant of being heard and/or disposing off the objections/ submissions made by the Appellant thus violating the principles of natural justice. 8. That the CIT(A) erred in fact and in law in upholding the conclusion of reassessment proceedings by the Ld. Assessing Officer under the provisions of Section 147/144 of the Act without providing the Appellant copies of alleged incriminating materials relied upon by him and/or affording any opportunity whatsoever to cross-examine/object to such alleged incriminating material based on which the reasons for initiating reassessment proceedings were allegedly formed by the Ld. Assessing Officer. 9. That the CIT(A) erred on facts and in law in upholding the re-opening of assessment proceedings by the Assessing Officer without proper approval/ satisfaction of authorities as required under section 151 of the Act. 10. The above grounds are independent and without prejudice to one another. The Appellant prays leave to add, amend, alter, delete or forego any of the grounds either before or during the course of hearing.” 5 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 5 6. Certain dates which goes to the root of the matter are as under: - 6 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 6 7 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 7 8 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 8 6.1 The assessee has raised 9 grounds of appeal and basically challenged the initiation of re-assessment proceedings on following grounds: a) The AO has not applied his mind to the material coming from investigation wing before the assumption of jurisdiction u/s 148 of the Act. In this regard, the assessee has drawn the attention of the bench towards the reasons recorded which are reproduced hereunder: “The assessee, M/s. VACMET INDIA LIMITED, AAACV5120B, e-filed its return of income for the AY 2011-12 on 28.09.2011 declaring total income of Rs.76,81,74,750/-. Thereafter, the case was manually selected for scrutiny and assessment u/s 143(3) of the Income Tax Act was completed on 19.11.2013 at returned income e. It is reported that during the year under consideration, the company was engaged in manufacturing of metalised/lacqured polyester film, paper & BOPET film. 2. The undersigned is in possession of information in the case of assessee, forwarded by the Asst. Director of Income-tax (Inv.)-Unit 4(1) New Delhi vide F.No.ADIT(Inv.)/Unit 4(1)/STR/2016-17/181 dated 25.3.2017. As per report, it reported that various concerns were involved in providing accommodation entries. The persons/concerns involved used to deposit the unaccounted cash of beneficiaries and returned it through RTOS/banking channels. For the purpose beneficiary parties issued (bogus) bills to these concerns but no 9 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 9 goods/items was physically delivered anywhere. The following entities which were involved in providing accommodation entries are mentioned in the STR: Sl.No. Name of entity PAN and its detail ITR filed upto Latest address 1. Akash Ganga Trading Co. ANGPK7069N Ward- 58(5), Delhi 2016-17 371, Onkar Nagar, Tri Nagar Delhi 110035 2. J K. Sales Corp., PE BBVPS7885J Ward- 44(1) 2013-14 BT/25, Ground Floor, Vishnu Garden Delhi-18 3. BPS International BBVPS7885J Ward- 44(1), Delhi 2013-14 B5/25, Ground Floor, Vishnu Garden, Delhi 18 4. Star Technologies India BEEPS3838B Ward- 40(4), Delhi 2011-12 4596/14, Jai Mata Market Tri Nagar Delhi 110035 5. Delight Enterprise ALFPP2408K Ward- 56(4), Delhi 2016-17 5/48, Gali No.5, Kabir Nagar, Near Durga Puri Chowk, Delhi 110 001 [e-mail] 7. Prime Enterprises AMZPS0445C Ward- 29(3)(2), Mumbai 2015-16 Room No.4, Nainbai Niwas J.N. Road, Mulund, West Mumbai (Maharashtra) 400080 [e-mail] 8. Aries Trade Sales Agency PE AERPC4210K -- 10/14, Flat No.A-3, Moon Star Apartment, Sec-3, Rajender Nagar, Near Jindal Market, Ghaziabad Further, efforts were made by investigation wing, to identify beneficiaries of the above accommodation entry providers from the bank accounts obtained. The list of the main beneficiaries include name M/s. Vacmet (India) Ltd., the assessee. During the inquiries, summons were issued to the assessee and it was found that sales had been shown to M/s. Star Technologies (India) during FY 2010-11 & 2011-12 and to M/s. Perfect Polychem Pvt. Ltd. during FY 2012-13 by the assessee company. It is reported that M/s. Vacmet (India) Pvt. Ltd. (AAACV5120B) had taken accommodation entries from M/s. Perfect Polychem Pvt. Ltd. and M/s. Star Technologies (India). 3. the complete report was carefully perused, analysed by undersigned and it was verified with the facts available in assessment record of the assessee company for the year. Further, to provide an opportunity to explain the transactions with above mentioned entities, after due approval as per the Act a notice u/s 133(6) of the Income tax Act, 1961 dated 18.1.2018 was issued and duly served upon the assessee. In compliance to the notice, it is submitted that during the year assessee has made sales of Rs.21,63,75,513/- to M/s. STAR TECHNOLOGIES (INDIA) DELHI 4596/14, Jai Mata Market Tri Nagar Delhi 110035. As it is evident that the sales to the above mentioned concern was made only to take accommodation entries and no physical delivery of the goods was made. The assessee has also received payments through RTGS from M/s. Star Technologies (India) Delhi. 10 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 10 4. Therefore, in view of above, there is sufficient reason to believe by any prudent person that M/s. STAR TECHNOLOGIES (INDIA) DELHI, having address as 4596/14, Jaimata Market Tri Nagar Delhi 110 035 was involved in providing accommodation entries and M/s. VACMET INDIA LIMITED is one of the beneficiaries of the accommodation entries provided by M/s. Star Technologies (India) Delhi. During the financial year, the assessee issued bills and made transactions of Rs.21,63,75,513/- with the above concern. As per modus operandi admitted by one entry provider, M/s. Star Technologies (India) Delhi has paid assessee’s own unaccounted cash through RTGS/banking channels. 5. In the light of above facts and circumstances, it is clear that transactions of Rs.21,63,75,513/- with M/s. STAR TECHNOLOGIES (INDIA) DELHI which are credits in the books of accounts of M/s. VACMET INDIA LIMITED are non genuine. These are mere accommodation entries arranged to bring unaccounted money of M/s. VACMET INDIA LIMITED into its books of accounts and the same is to be taxed under the specific provisions of the Act. 6. Hence, I am satisfied that the exact nature and source of amount of Rs.21,63,75,513/- which is credited in the books of accounts of M/s. VACMET INDIA LIMITED through M/s. STAR TECHNOLOGIES (INDIA) DELHI is not ascertainable. In view of these facts, the above amount is unexplained income of the assessee company under the specific provisions of sec.68 of the IT Act and the commission paid for arranging the above transaction @0.50% which works out to be Rs.10,81,878/- is also unexplained expenses under the provisions of sec.69C of the Act. Aggregate of the above, Rs.21,74,57,391/- remained unexplained and is liable to be taxed as undisclosed income of M/s. VACMET INDIA LIMITED for the year. 7. It is apparent that assessee had not made full and true disclosure of credits in books account neither at the stage of filing of its return nor at the stage of assessment proceedings u/s 143(3) of the Act. The disclosure must be complete and true. On these scores, assessee is found in default. Since, 4 years from the end of the relevant year has expired in this case, the requirements to initiate proceeding u/s 147 of the Act are reason to believe that income for the year under consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for the assessment year under consideration. Further, I have carefully considered the assessment records containing the submissions made by the assessee in response to various notices u/s 142(1) of the Act dated 11.10.2013 issued and order sheet entries dated 18.10.2013 and 15.11.2013 during the assessment proceedings and have noted that the assessee has not fully and truly disclosed the true and correct nature of the receipts/credits from M/s. STAR TECHNOLOGIES (INDIA) DELHI in its books of accounts. It is established from the above 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 audited P7L a/c and balance sheet along with 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 A/c 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 11 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 11 Assessing Officer and could have been discovered with due diligence, accordingly attracting provisions of Explanation 1 of section 147 of the Act. 8. Therefore, I have reason to believe that an income of Rs.21,74,57,391/- has escaped assessment in the case of M/s. VACMET INDIA LIMITED for AY 2011-12 and income chargeable to tax to the extent of Rs.21,74,57,391/- has escaped from assessment within the meaning of section 147 of the IT Act, 1961 for the AY 2011-12 which is liable to be assessed to tax. 9. It is also evident from the above discussion that in this case, the issue under consideration was never examined by the AO during the course of regular assessment/reassessment. This fact is corroborated from the contents of notices issued by the AO u/s 143(2)/142(1) and order sheet entries dated 18.10.2013 and 15.11.2013 recorded during the 143(3) of the Act proceedings. It is important to highlight here that material facts relevant for the assessment on the issue(s) under consideration were not filed during the course of assessment proceeding and the same may be embedded in annual report, audited P&L A/c, balance sheet and books of account in such a manner that it would require due diligence by the AO to extract these information. For aforestated reasons, it is not a case of change of opinion by the AO. In this case more than four years have lapsed from the end of assessment year under consideration. Hence, necessary sanction to issue notice u/s 148 has been obtained separately from Principal Commissioner of Income tax-2 Agra as er the provisions of section 151 of the Act.” 6.2 Referring to the above reasons, the assessee has pointed out that during the year under consideration, the assessee has not received any entry from M/s. Perfect Polycom Pvt. Ltd. as alleged by the AO in the reasons recorded and hence, the AO has mentioned wrong facts in the reasons recorded, which will prove that there is complete non-application of mind by the AO. Drawing the attention of the bench towards the reasons recorded, the assessee further contended that the amount of escaped income mentioned in the reasons recorded i.e. Rs.21,63,75,573/- is also incorrect because finally the AO has assessed only Rs.10,84,73,775/- on account of alleged bogus accommodation entries. The main contention of the assessee is that this material difference in the income finally assessed and income alleged to have been escaped would prove beyond doubt that there was complete non-application of mind by the AO before assuming jurisdiction u/s 147 of the Act. b) CIT has accorded mechanical sanction 6.3 The next point of contention of the assessee is that ld. CIT who has granted the approval u/s 151 of the Act has also granted the approval in a mechanical 12 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 12 manner without even examining the material on the basis of which, the AO has assumed jurisdiction u/s 147 of the Act. The ld. Counsel for the assessee has taken us to the sanction accorded by the CIT, while approving the reasons and contended that the ld. CIT has used the phrase “I am satisfied” which, according to us is not the permissible way of granting sanction u/s 151 of the Act. The ld. CIT before granting the approval ought to have scrutinized the investigation report as well as the material coming into the possession of AO before granting the sanction. The counsel for the assessee has placed reliance upon the judgement in the case of CIT Vs. Goyanka Lime reported in 56 taxmann.com 390 (MP), Arjun Singh Vs. ADIT reported in 246 ITR 363 (MP) and PCIT Vs. N.C. Cables in ITA No.335/2015 dated 11.1.1017 (Del. HC). Similarly, the assessee has so many judgements for buttressing his argument. c) Change of opinion- 6.4 The counsel for the assessee next contended that the reassessment jurisdiction has been assumed in this case merely on the basis of change of opinion as evident that on the same set of facts which were there before the Jurisdictional AO at the time of original assessment, the impugned action of the reassessment has been initiated. Counsel for the assessee, taking us through the relevant pages of the paper book contended that during the course of original proceedings, u/s 143(3) of the Act, the then AO has examined the issue of sales pertaining to M/s. Star Technology and after receiving the replies of the assessee and thorough investigation, the then AO has taken a plausible view and has not added any amount vis-à-vis transactions pertaining to Star Technology Ltd. Therefore, it is the contention of the counsel for the assessee that it is a case of mere change of opinion, which is not permissible in law. Various judgements have been cited by the counsel for the assessee including the judgement of Hon’ble Supreme Court in the case of CIT Vs. Kelvinator reported in 187 Taxmann 312 (SC). d) No failure on the part of assessee to disclose material facts: - 6.5 Lastly, it was contended by the counsel for the assessee that once the assessment is completed u/s 143(3) of the Act, then reassessment after 4 years can only be permitted if there is failure on the part of assessee to disclose the 13 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 13 material facts fully and truly. The counsel for the assessee pointed out that in this case, the assessee has not only disclosed the material facts to the AO in the original proceedings, rather to the investigation wing also on 15.1.2013 and thereafter on 28.1.2013, which material was thoroughly examined by the investigation wing and thereafter by the AO on 19.11.2013 as evident from the page from 212 to 213 of paper book and pages 82 to 100 of the paper book. The counsel for the assessee contended that in the present case, while recording the reasons, the ld. AO failed to point out as to what material facts the assessee ha not been able to disclose at the time of original proceedings and hence, the assumption of jurisdiction in the present case on this score would have to be quashed. Counsel for the assessee relied upon the judgement of Hon’ble Supreme Court in the case of NDTV Vs. DCIT reported in 116 Taxman.com 151(SC) and argued that assumption of jurisdiction after the expiry of 4 years from the end of relevant assessment year is not permissible when there is no failure on the part of assessee to disclose the material facts fully and truly. e) Case of borrowed satisfaction: - 6.6 The counsel for the assessee has also argued on the aspect of borrowed satisfaction by the AO, which inter-alia include the submissions made by counsel as discussed in para 5.1 of this order. To buttress his arguments, the counsel for the assessee has taken us through Page number-138 of the Main Paper book, which a letter written by the office of DCIT to the ACIT dated 27.12.2018( reasons recorded on 29.03.2018), and contended that perusal of this internal correspondence of the officer to investigating unit would prove beyond doubt that the AO, when assumed the jurisdiction of 148 he was not in possession of the alleged material, and hence reliance on investigation wing report without the alleged material i.e. STR and other papers, it is a case of borrowed satisfaction. And therefore the assumption of jurisdiction is bad in law. Ld Counsel has referred to number of judgments on this aspect. 6.7. Ld DR appearing on behalf of the revenue vehemently contended that there was a concrete information with the department that the assessee has made bogus sale to one of the entity as mentioned in the reasons recorded. The Ld 14 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 14 CIT(DR) further contended that at the time of assumption of jurisdiction of 147 the AO has to record his prime-facie opinion and he is not under obligation to conclusively prove the escapement of income. It is the contention of the Ld DR that there was tangible material with the AO. It has further been argued that investigation wing is also part of Income Tax Department and the report of Investigation constitute material to the AO and the comments made therein would be a guiding factor for the AO for assuming the jurisdiction of 147 and hence the averment that it is a case of borrowed satisfaction is incorrect. The Ld. DR has also filed the following written submissions: - “Through these appeals, the assessee has challenged the re-opening and contented that the same is not in accordance with law. 2. At the outset, it is submitted that all the issues raised by assessee in the present appeals are the same as were raised at the time of first appeal, the Ld. CIT (A) has dealt with all these issues in detail and upheld the re-opening by rejecting the assesse’s contentions. The Hon’ble bench is requested to consider the reasoning of the CIT(A) and uphold the re-opening. 3. Further arguments are in the succeeding paragraphs. General 4. Undisputed facts in brief are that the assessments u/s 143(3) for these 3 years were earlier completed. The issue of bogus sales was not before the AO at that the time of original assessments. Thereafter, information was received from Investigation Wing, Delhi that the assessee had taken accommodation entries from (i) M/s Perfect Polychem P Ltd (in AY 2013-14); and, (ii) Star Technologies (India)(AY 2011-12). In furtherance of this information, the AO conducted independent inquiries by issuing notice u/s 133(6) to the assessee. The AO based on the information received from Investigation Wing and considering the details filed u/s 133(6) drew his independent satisfaction and formed his own belief that certain income has escaped assessment. The reasons thus recorded did not proceed only on the information supplied by the Investigating Wing. The Assessing Officer having applied his mind and processed such information and also material collected independently, formed his belief with fresh, cogent and tangible material on record that the income chargeable to tax has escaped assessment. Requisite statutory sanction of the PCIT/ Addl. CIT was duly obtained u/s 151 of the Act. Copy of reasons recorded were supplied to the assessee and its objections thereon were duly considered and decided in accordance with Hon’ble Apex Court decision in the case of GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC). Thus, in short, the notices for reopening of assessment proceedings under section 148, are valid and the assessment records show that AO has justified \"reasons to believe\" that the income of the assessee may have escaped assessment, with tangible material on record. 5. On similar facts, Hon'ble Supreme Court decision in ACIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500 has held that Section 147 authorises and permits the assessing officer to assess or reassess income chargeable to tax, if he has reason to believe that income for any assessment year has escaped assessment. It was further pointed out that the word \"reason\" in the phrase \"reason to believe\" would mean cause or justification. If the assessing officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that income had escaped assessment. The expression cannot be read to mean that the assessing officer should finally ascertain the fact by legal evidence or conclusion. 15 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 15 It was further pointed out that at that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is the reason to believe, but not the established fact of a statement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. With regard to the effect of the information furnished by the investigation wing, the Court held that the assessee therein being a beneficiary of the entry operators who were well known across the country, it cannot be said in any way that even if four years have been passed it is not open to the authority to reopen the assessment. The relevant portion of the decision is quoted herein below: “On the basis of aforesaid proposition laid by series of decisions, we are of the opinion that when the Authority is armed with the tangible material in the form of specific information received by the Investigation Wing, Ahmedabad is thoroughly justified in issuing a notice for reassessment. It is revealed from the said additional material available on hand a reasonable belief is formed by the Assessing Authority that income of the petitioner has escaped assessment and therefore, once the reasonable belief is formulated by the Authority on the basis of cogent tangible material, the Authority is not expected to conclude at this stage the issue finally or to ascertain the fact by evidence or conclusion, we are of the opinion that function of the assessing authority at this stage is to administer the statute and what is required at this stage is a reason to believe and not establish fact of escapement of income and therefore, looking to the scope of Section 147 as also Sections 148 to 152 of the Act, even if scrutiny assessment has been undertaken, if substantial new material is found in the form of information on the basis of which the assessing authority can form a belief that the income of the petitioner has escaped assessment, it is always open for the assessing authority to reopen assessment. From the reason which are recorded, it clearly emerges that the petitioner is the beneficiary of those entries by Kayan brothers, who are well known entry operators across the country and this fact has been unearthed on account of the information received by DGIT Investigation Branch and therefore, it cannot be said in any way that even if four years have been passed, it is not open for the Authority to reopen the assessment. In the present case, there was independent application of mind on behalf of the assessing authority in arriving at the conclusion that income had escaped assessment and therefore, the contentions raised by the petitioner are devoid of merits. Dealing with the contentions of the petitioner that the information received from DGIT, Investigation Branch, Ahmedabad, can never be said to be additional information. We are of the opinion that the information which has been received is on 26-3-2015 from the DGIT, Investigation Branch, Ahmedabad, whereby it has been revealed that present petitioner is also the beneficiaries of those Kayan brothers who are in the activity of entry operation throughout the country and therefore, it cannot be said that this is not justifiable material to form a reason to belief by the Authority and therefore, this being a case, the Authority is justified in issuing notice under section 148 of the Act to reopen the assessment and therefore, the challenge contained in the petition being devoid of merits, same deserves to be dismissed.” (Emphasis supplied) 6. Reliance is also placed on Hon’ble Supreme Court decision in Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC) wherein the Court held that in determining whether commencement of reassessment proceedings was valid it has only to be seen 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. 16 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 16 Relevant portion of the order is as below: “….We have only to seewhether there was prima facie some materialon 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. We are of the view that the court cannot strike down the reopening of the case in the facts of this case….” (Emphasis supplied) 7. The Apex Court in S. Narayanappa v. CIT [1967] 63 ITR 219, held that: \"if there are in fact some reasonable grounds for the Income-tax Officer to believe that there had been any non-disclosure as regards any fact, which could have a material bearing on the question of under-assessment that would be sufficient to give jurisdiction to the Income Tax Officer to issue the notice under S. 34. Whether these grounds are adequate or not is not a matter for the Court to investigate. In other words, the sufficiency of the grounds which induced the Income-tax Officer to act is not a justiciable issue. It is of course open for the assessee to contend that the Income-tax Officer did not hold the belief that there had been such non-disclosure. In other words, the existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief.” (Emphasis supplied) 8. In Ankit Agrochem (P.) Ltd. v. JCIT (2018) 253 Taxman 141 (Raj)(HC), the Hon’ble Rajasthan High Court held as under: “16. It is true that the reasons recorded or the material available on record must have nexus to the subjective opinion formed by the AO regarding the escapement of the income but then, while recording the reasons for belief formed, the AO is not required to finally ascertain the factum of escapement of the tax and it is sufficient that the AO had cause or justification to know or suppose that income had escaped assessment [vide Rajesh Jhaveri Stock Brockers (P.) Ltd.'s case (supra)]. It is also well settled the sufficiency and adequacy of the reasons which have led to formation of a belief by the Assessing Officer that the income has escaped the assessment cannot be examined by the court.” (Emphasis supplied) 9. The Hon’ble Gujarat High Court in Pr. CIT v. Gokul Ceramics [2016] 241 taxman 1 (Guj.), made following observations in para 9:- \"….At this stage the Assessing Officer was not required to hold conclusively that additions invariably be made. He truly had to form a bona fide belief that income had escaped assessment. \" (Emphasis supplied) 10. Similarly, where unsecured loans are there – on subsequent information discovered as bogus- Reassessment was held to be justified by Hon’ble Himachal Pradesh High Court in Virbhadra Singh v. DCIT[2017] 88 taxmann.com 888 (Himachal Pradesh). It held that the Court was not required to go into the sufficiency of material which led to the formation of reasons to belief, more so, when reasons were relevant and emanated from the record and were also germane for just adjudication of facts in issue. Reopening justified as the assessee failed to disclose “fully and truly” all “material facts” 17 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 17 11. It is contended that reopening of the concluded assessment u/s 147 after 4 years was not permissible in this case as the assessee had fully and truly disclosed all “material facts” at the time of original assessment. 11.1 The proviso to Section 147(1) of the Act mandates that proceedings under section 148 of the Act can only be initiated if there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment. The proviso to Section 147 of the Act is reproduced below:- “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. .. .. Explanation1.-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) 11.2 It is submitted that it was informed by the Investigation Wing subsequent to the original assessment that the sales shown to have been made to M/s Perfect Polychem P Ltd (in AY 2013-14) and (ii) Star Technologies (India)(AY 2011-12) were in-fact accommodation entries. The assessee had not disclosed the true and correct nature of the receipts/credits from these parties while filing return/ at the time of assessment. Even though the assessee had produced books of accounts annual report, audited P&L A/c and balance sheet etc. at the time of original assessment, no “full and true” disclosure of “all material facts” was made about the true and correct nature of transactions with these 2 parties. Therefore, proviso to Section 147 and Explanation 1 thereto are clearly attracted in this case. 11.3 Reliance is placed on the decision of the Hon’ble Supreme Court in Malegaon Electricity Co. (P.) Ltd. v. CIT [1970] 78 ITR 466 where the court observed: \"It is true that if the Income-tax Officer had made some investigation, particularly if he had looked into the previous assessment records, he would have been able to find out what the written down value of the assets sold was and consequently he would have been able to find out the price in excess of their written down value realised by the assessee. It can be said that the Income-tax Officer if he had been diligent could have got all the necessary information from his records. But that is not the same thing as saying that the assessee had placed before the Income-tax Officer truly and fully all material facts necessary for the purpose of assessment. The law casts a duty on the assessee to 'disclose fully and truly all material facts necessary for his assessment for that year'.\" [Emphasis supplied] 11.4 Hon’ble Delhi High Court in Honda Siel Power Products Ltd. v. DCIT [2011] 197 Taxman 415 (Delhi) upheld the reopening explaining omission and failure on the part of assessee to disclose fully and truly material facts. It held: 18 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 18 “12. The law postulates a duty on every assessee to disclose fully and truly all material facts for its assessment. The disclosure must be full and true. Material facts are those facts which if taken into accounts they would have an adverse affect on assessee by the higher assessment of income than the one actually made. They should be proximate and not have any remote bearing on the assessment. Omission to disclose may be deliberate or inadvertent. This is not relevant, provided there is omission or failure on the part of assessee. The latter confers jurisdiction to reopen assessment.” (Emphasis supplied) This decision has been affirmed by Hon’ble Supreme Court [2012] 206 Taxman 33 (SC). 11.5 Reliance is also placed on Hon’ble Allahabad High Court decision in EMA India Ltd. v. ACIT, [2009] 226 CTR 659 (Allahabad) where it held that mere production of account books before Assessing Officer would not amount to disclosure within meaning of Explanation1 to section 147, since same could have been discovered by Assessing Officer only with due diligence. Relevant portion is as under: “34. To put it differently, if material evidence is not writ large on the document but is embedded in some voluminous records/books of account requiring a careful scrutiny and delving deep into it to notice the necessary material, it is quite possible that having regard to the nature of the documents, material evidence cannot be discovered from such records despite due diligence and the case would attract application of the said Expln. 1 to hold that mere production of the books of account or the documents, etc., without pointing out the relevant entries therein, does not amount to disclosure within the meaning of s. 147(a) of the Act” 11.6 Similarly, Hon’ble Kerala High Court in CIT v. Tata Ceramics Ltd. [2018] 92 taxmann.com 124 (Kerala) has held that the assessee does not discharge his duty by merely producing the books of account or other evidence. He has to further bring to the notice of the AO particular items in the books of account or portions of document which are relevant. Even if it is assumed that, from the books produced, the AO could have found out the truth, he is not on that account precluded from exercising the power to reassess the escaped income. 11.7 Hon’ble Gujarat High Court in PushpaUttamchand Mehta v. ITO [2022] 447 ITR 476 (Guj.) clarified the rationale of “full and true disclosure” in paragraph 14 as under: \"14. In Phool Chand Bajrang Lal v. ITO [1993] 69 Taxman 627/203 ITR 456 (SC), after reviewing the previous case law, and concluding that a valid re-opening is one, preceded by specific, reliable and relevant information, and that the sufficiency of such reasons is not subject to judicial review-the only caveat being that the court can examine the record, if such material existed, it was held that the facts disclosed in the return, if found later to be unfounded or false, can always be the basis of a re- opening of assessment: 'appears to us to be, to ensure that a party cannot get away by willfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn around and say \"you accepted my lie, now your hands are tied and you can do nothing\". It would be travesty of justice to allow the assessee that latitude.' 11.8 Further reliance in this regard is placed on following decisions:  Kantamani Venkata Narayana & Sons v. ITO [1967] 63 ITR 638 (SC);  Sowdagar Ahmed Khan v. ITO [1968] 70 ITR 79 (SC);  ITO v. LakhmaniMewalDas [1976] 103 ITR 437 (SC); 19 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 19  Jiyand Ram Ahuja v. PCIT [2022] 142 taxmann.com 53 (MP HC);  Rakesh Agarwal v. ACIT[1996] 86 TAXMAN 37 (DELHI HC);  Dishman Pharmaceuticals & Chemicals Ltd. v. DCIT [2013]30taxmann.com 67 (Gujarat HC);  Consolidated Photo &Finvest Ltd. v. ACIT [2006] 281 ITR 394(Del.). Re-opening not based on “borrowed satisfaction” 12. The assessee has relied upon PCIT vs. Shodiman Investments Pvt. Ltd, ( 2018) 93 taxmann.com 153 (Bom.)(HC) to contend that the AO had acted on “borrowed satisfaction”. In Shodiman Investments (supra), the AO had issued reassessment notice merely on the basis of intimation regarding reopening notice from DDIT (Inv.), without any further inquiry. Therefore, the Court held that notice has to be issued by Assessing Officer on his own satisfaction and not on borrowed satisfaction. 13. Whereas the case at hand is one where there was definite information from the Investigation Wing – further inquiries were carried out by the AO – AO reached to a conclusion that assessee had indulged in obtaining accommodation entries which gave rise to reason to believe that income chargeable to tax had escaped assessment. Therefore, reassessment notice was based on an independent belief of the AO after application of his own mind based on cogent and tangible material that income chargeable tax had escaped assessment. It was not a case of borrowed satisfaction.Reliance is placed on Hon'ble Supreme Court decision in Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra) case. 14. Further reliance is placed on following case laws where re-opening in similar circumstances based on information received from Investigation Wing/ other enforcement agencies was found to be justified. 14.1 Hon'ble Delhi High Court in Experion Developers (P.) Ltd. v. ACIT, 422 ITR 355 (Delhi)upheld reassessment notice issued on basis of information received from DIT (Investigation) that a parent company of assessee at Singapore had made an investment of huge amount in assessee company but said investing company did not appear to be carrying out any regular business activities and was floated to act as a conduit to funnel funds into Indian companies. 14.2 In case of Central Provinces Manganese Ore Co. Ltd. v. ITO, [1991] 191 ITR 662 (SC), the Hon’ble Apex Court noted that in case of the assessee, the Customs authorities found that the assessee was systematically under- voicing the value of manganese as compared with the prevailing market price. The Income Tax Officer on coming to know about the proceedings before the Customs Collector in this respect issued notice for reopening of the assessment. In the reasons that the Assessing Officer relied on the facts as found by the Customs Authorities that the assessee had under-voiced goods during export. Under such circumstances, upholding the validity of the notice for reopening, the Supreme Court held and observed as under:— \"8. So far as the first condition is concerned, the Income Tax Officer, in his recorded reasons, has relied upon the fact as found by the Customs Authorities that the appellant had under invoiced the goods it exported. It is not doubt correct that the said finding may not be binding upon the income tax authorities but it can be a valid reason to believe that the chargeable income has been under assessed. The final outcome of the proceedings is not relevant. What is relevant is the existence of reasons to make the Income Tax Officer believe that there has been under assessment of the assessee's income for a particular year. We are satisfied that the first condition to invoke the jurisdiction of the Income Tax Officer under Section 147(a) of the Act was satisfied.\" 20 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 20 14.3 Hon’ble Gujarat High Court in Jayant Security & Finance Ltd. v. ACIT (2018) 254 Taxman 81 (Guj.) held that initiation of reassessment proceedings on basis of information received from Investigation wing that assessee had received certain amount as a loan from a company, working as entry operator and earning bogus funds to provide advances to various person, was justified. 14.4 Hon’ble Gujarat High Court in PurvibenSnehalbhaiPanchhigar vs. ACIT, [2018] 409 ITR 124 (Guj) where assessee filed his return claiming capital gain arising from sale of shares of company 'T' as exempt under section 10(38), held that AO was justified in initiating reassessment proceedings on basis of information received from Investigation Wing that company 'T' was a shell company and shares of said company were basically used for providing bogus claim of long-term or short-term capital gain. 14.5 In Ankit Agrochem (P.) Ltd. v. JCIT (2018) 253 Taxman 141 (Raj)(HC), the Hon’ble Rajasthan High Court held that reassessment on the basis of information from DIT informing that the assessee had received share application money from several entities which were only engaged in business of providing bogus accommodation entries to beneficiary concerns, reassessment on basis of said information was justified. 14.6 Similarly reassessment was held to be justified by Hon’ble Himachal Pradesh High Court in Virbhadra Singh v. DCIT[2017] 88 taxmann.com 888 (Himachal Pradesh) where information was received from the Deputy Director of Income Tax (Investigation), Faridabad that unsecured loans are bogus. 14.7 In AGR Investment Ltd.v. Additional CIT, [2011] 333 ITR 146 (Delhi), Hon’ble Delhi High Court upheld the validity of reopening of assessment where the notice was based on information received from Directorate of Investigation that the assessee was beneficiary of bogus accommodation entries. 14.8 Hon’ble Madras High Court in case of Sterlite Industries (India) Ltd. v. ACIT [2008] 302 ITR 275 (Mad) upheld the notice for reopening which was based on information from Enforcement Directorate showing possible inflation of purchases made by the assessee. Reopening NOT based on any Change of Opinion 15. The assessee has contended that the assessment could not be reopened in terms of Section 147 of the Act as sales were accepted at the time of original assessment and the re-opening in this case is on mere change of opinion. 16. It is submitted that “change of opinion” will only involve issues which were already been considered and decided in original assessment proceedings. It is settled law that if new facts, material or information comes to the knowledge of the Assessing Officer, which was not on record and available at the time of the assessment order, the principle of \"change of opinion\" will not apply and would justify initiation of reassessment proceedings. Undisputedly, at the time of original assessment the fact of obtaining accommodation entries in the garb of sales were not a subject matter of assessment, therefore it can-not be said that the AO had earlier formed any “opinion” on this matter. Re-opening in this case is not based on re appreciation of same facts that were existing at the time of original assessment. Thus, clearly it was not a case of change of any opinion. 17. It is settled law that the words \"change of opinion\" implies formulation of opinion and then a change thereof. If the AO has earlier made assessment for the same Assessment Year expressing an opinion of a matter either expressly or by necessary implication, then only, it would be a case of \"change of opinion\". 17.1. It is relevant to refer to recent decision of Hon’ble Kolkata High Court in PCIT v. ITC Ltd. [2024] 163 taxmann.com 294 (Calcutta) upholding this principle of law. “18. Applying the settled position of law on facts of the present case on the question of \"change of opinion\" as discussed above, we hold that the original assessment order 21 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 21 under Section 143(3) of the Act, 1961 is totally silent on liability of the assessee to tax under Section 115JB of the Act, 1961. He neither noticed the provisions of Section 115JB nor formed any opinion with regard to liability to tax of the assessee on book profit. The assessment order was non-speaking and cryptic. Therefore, reassessment proceedings initiated by the assessing officer under Section 147 of the Act, 1961, is not based on change of opinion. The finding of the ITAT in the impugned order to hold that the reassessment proceedings initiated by the assessing officer was based on change of opinion, is perverse and unsustainable in law.” (Emphasis supplied) 17.2 In ClaggettBrachi Co. Ltd. v. CIT [1984] 44 Taxman 186/177 ITR 409 (SC), Hon’ble Supreme Court held as follows:- \"7. Two points have been urged before us by learned counsel for the assessee. It is contended that the Income Tax Officer has no jurisdiction to take proceedings under sections 147 and 148 of the Income Tax Act because the conditions prerequisite for making the reassessments were not satisfied. The re-assessments were made with reference to clause (b) of section 147 of the Act, and apparently the Income Tax Officer proceeded on the basis that in consequence of information in his possession he had reason to believe that income chargeable to tax had escaped assessment for the two assessment years. From the material before us it appears that the Income Tax Officer came to realise that income had escaped assessment for the two assessment years when he was in the process of making assessment for a subsequent assessment year. While making that assessment he came to know from the documents pertaining to that assessment that the overhead expenses related to the entire business including the business as commission agents and were not confined to the business of purchase and sale. It is true, as the High Court has observed, that this information could have been acquired by the Income Tax Officer if he had exercised due diligence at the time of the original assessment itself. It does not appear, however, that the attention of the Income Tax Officer was directed by anything before him to the fact that the overhead expenses related to the entire business. The information derived by the Income Tax Officer evidently came into his possession when taking assessment proceedings for the subsequent year. In the circumstances, it cannot be doubted that the case falls within the terms of clause (b) of section 147 of the Act, and that, therefore, the High Court is right in holding against the assessee.\" 17.3 In Phool Chand Bajrang Lal v. ITO [1993] 69 Taxman 627/203 ITR 456 (SC), the Apex Court held as follows:- \"19...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 22 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 22 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.\" 17.4 In Ess Ess Kay Engg. Co. (P.) Ltd. v. CIT [2002] 124 Taxman 491/[2001] 247 ITR 818 (SC), the Apex Court held as follows:— \"This is a case of reopening. We have perused the documents. We find there was material on the basis of which the Income Tax Officer could proceed to reopen the case. It is not a case of mere change of opinion. We are not inclined to interfere with the decision of the High Court merely because the case of the assessee was accepted as correct in the original assessment for this assessment year. It does not preclude the Income Tax Officer from reopening the assessment of an earlier year on the basis of his findings of fact made on the basis of fresh materials in course of assessment of the next assessment year. The appeal is dismissed. No order as to costs.\" (Emphasis supplied) 17.5 Reliance is also placed upon OPG Metals &Finsec Ltd. v. CIT [2013] 358 ITR 144 (Delhi) to the effect that where information regarding all transactions, including undisclosed investments, was not subject matter of earlier reassessment proceedings and there was fresh material for AO, it would not be a case of change of opinion. 17.6 Hon'ble Delhi High Court in Experion Developers (P.) Ltd. v. ACIT, 422 ITR 355 (Delhi)held as under: 33. As already discussed above, in the present case, new facts, material or information have come to the knowledge of the Assessing Officer by way of the report of DIT (Intelligence and Criminal Investigation) with regards to the doubtful source of the investments made into the petitioner companies. At the time of original assessment, the Assessing Officer was not aware of or in possession of information which could have indicated that the introduction of share capital from outside India has been routed through a doubtful entity. DIT (I&CI) Delhi had also made detailed enquiries regarding origin of funds which were used for introduction of share capital and premium. This information was received much later after the original assessment had been completed, and is germane and relevant to the subjective opinion formed by the AO in regard to escapement of income. In the present case, the AO's reasons to believe are fortified with the tangible material in the form of specific information received by the Investigation Wing. Thus, the AO is downright justified in issuing the notice for reassessment. It is revealed from the said material available on record that a reasonable belief was formed by the Assessing Officer that income of the petitioner has escaped assessment and therefore, once the reasonable belief is articulated and expressed by the AO on the basis of cogent tangible material, he was not expected to arrive at a final conclusion thereon at the stage of issuance of notice. At this stage, having regard to the scope of section 147 as also sections 148 to 152, we are of the opinion that AO's decision is to be governed by the mandate of the statute that requires him to have \"reason to believe\", and not to conclusively establish the fact of escapement of income. Therefore, even if scrutiny assessment has been undertaken in the first place, if significant new material is found in the form of information, the assessing officer can form a belief that the income of the petitioner has escaped assessment, and reopen assessment. It is also trite law that for cases relating to inter alia, share application money, three vital aspects have to be considered by the Assessing Officer, namely (i) the identity of the investors; (ii) the credit worthiness of the investors; and 23 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 23 (iii) the genuineness of the transaction. Ex-facie, the order of assessment which was passed by the Assessing Officer under section 143(3), does not indicate that all these aspects were gone into. Today, there is serious doubt relating to credit-worthiness of the share applicant/investor, in view of the investigation report noted above and clarity can only come in by way of reassessment. Therefore, the recorded reasons are not mere change of opinion.” (Emphasis supplied) 17.7 Hon’ble Madras High Court in KarurKongu Charitable Trust v. CIT 2023] 147 taxmann.com 73 (Madras) upheld re-opening of assessment on ground that there was unaccounted investment and undisclosed income paid for acquiring land from trustees as the AO while making original assessment made no reference either to issue of undervaluation of land or sources of funds for cost of construction of building. It held that there was no formation of opinion on above issues for proceedings to be hit by restriction of reassessment not being permitted on ground of change of opinion. 17.8 Hon’ble Karnataka High Court in Jindal Naturecare Ltd. v. ACIT, [2022] 140 taxmann.com 603 (Karnataka) upheld re-opening where assessee made donations to 'H' for scientific research and claimed deduction under section 35(1)(ii) and subsequent to assessment orders it came to knowledge of AO that income had escaped assessment because 'H' was engaged in bogus donation transaction through various brokers, as AO's subjective prima facie opinion was based on enquiry into affairs of 'H', this was not a case of 'change of opinion' and, thus, reopening was justified. 17.9In Yuvraj vs. Union of India (2009) 315 ITR 84. (Bom.), Hon’ble High Court held that where during original assessment completed under section 143(3), issue as to whether gain from sale of right to purchase of a plot was capital gain or casual income was not addressed, reopening of assessment to treat long-term gain as casual income could not be said to be based on change of opinion. Thus, point not decided while passing assessment order under section 143(3) is not a case of change of opinion. Proper legal sanction u/s 151 of the act was obtained 18. The assessee has contended that while approving the action of the AO, the CIT has recorded the phrase “I am satisfied” and this process of approval has been carried out in a mechanical manner which is not legally valid. 18.1 The fact is that on the proposal of AO, duly forwarded by the Addl. CIT, the PCIT in AYs 2011-12, and 2012-13 has recorded in her own handwriting “IN VIEW OF THE REASONS RECORDED BY THE A.O., I AM SATISFIED THAT THIS IS A FIT CASE FOR ISSUE OF NOTICE u/s 148” (p. 119-120 of Assessee’s Main Paper Book in AY 2011-12) Similarly, Additional CIT has recorded in her own handwriting in AY 2013-14 as follows: “Yes. I am satisfied that this is a fit case for issue of notice u/s 148 in view of reasons recorded by AO.” (p. 116 of Assessee’s Main Paper Book in AY 2013-14) 18.2 It is submitted that based on the investigations carried out by the Inv. Wing and independent material gathered by the AO, it was a clear case that the assessee had obtained accommodation entries in the garb of sales, therefore the said facts constituted the tangible material to form the belief that income assessable to tax has escaped assessment. In the facts and circumstances of the case when there was no possibility of any second view then considering those reasons recorded by the AO, the approval granted by the PCIT/ Addl. CIT in their own handwriting clearly showing that they have duly considered the reasons recorded by the AO, is valid and proper. 24 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 24 18.2 In this regard, the assessee has relied upon old case laws. Even though earlier view was that merely writing \"I am satisfied\" is not sufficient to meet the jurisdictional requirement of section 151. However, subsequent decisions have taken different view. 18.3 Hon'ble Delhi High Court in Experion Developers (P.) Ltd. v. ACIT, 422 ITR 355 (Delhi)took a contrary view that Pr. Commissioner was not required to provide elaborate reasoning to arrive at a finding of approval when he was satisfied with reasons of reopening recorded by Assessing Officer. “ 42. …..there is no requirement to provide elaborate reasoning to arrive at a finding of approval when the Principal Commissioner is satisfied with the reasons recorded by the AO.” 18.4 Similarly, in Virbhadra Singh v. DCIT [2017] 88 taxmann.com 888 (HP) where the competent authority was in agreement with the reasons assigned by the Assessing Officer, so placed before him, which came to be considered and sanction accorded with proper application of mind, by recording \"I am satisfied that it is a fit case for issuance of notice u/s 148\", the issuance of notice under section 147/148 was held to be valid. 18.5 In the case of Sonia Gandhi v. ACIT [2018] 407 ITR 594 (Delhi), Hon’ble Delhi Court relied upon the decision of Delhi High Court in CIT v. Meenakshi Overseas (P.) Ltd. [IT Appeal No. 651 of 2015, dated 11-1-2016] in upholding sanction granted by Addl. CIT by way of \"Yes, I am satisfied\". The relevant extract is reproduced below: 49. As far as the question of satisfaction recorded by the Principal Commissioner, under Section 151 (1) is concerned, the legal requirements were spelt out by the Division bench ruling in Meenakshi Overseas (P.) Ltd. (supra), in the following terms: \"For the purpose of Section 151(1) of the Act, what the Court should be satisfied about is that the Additional CIT has recorded his satisfaction \"on the reasons recorded by the Assessing Officer that it is a fit case for the issue of such notice\". In the present case, the Court is satisfied that by recording in his own writing the words: \"Yes, I am satisfied\", the mandate of Section 151(1) of the Act as far as the approval of the Additional CIT was concerned, stood fulfilled.\" (Emphasis supplied) 18.6 Hon'ble Calcutta High Court in Prem Chand Shaw (Jaisawal) v. ACIT, (2016) 383 ITR 597 (Cal) upheld sanction u/s 151 where “the Additional CIT granted approval by merely affixing his signature without recording any satisfaction” (para 13 of order) by taking a view that it is not necessary to record satisfaction in so many words. It held that the sanctioning authority is not required to give reasons when it agrees with the finding of the authorities below when reasons on the basis of which sanction was sought for could not be assailed. 22. …. The mere fact that the Additional Commissioner did not record his satisfaction in so many words would not render invalid the sanction granted under Section 151(2) when the reasons on the basis of which sanction was sought for could not be assailed. Even an appellate authority is not required to give reasons when it agrees with the finding unless statute or rules so requires. We are supported in our view by the Judgment of the Apex Court in R.P. Bhatt v. Union of India AIR 1986 SC 1040. In R.P. Bhatt (supra) the Apex Court relied on judgment rendered by a Constitutional Bench in the case of Som Datt Datta v. Union of India AIR 1969 SC 414 wherein their lordships held as follows: \"Apart from any requirement imposed by the statute or statutory rule either expressly or by necessary implication, there is no legal obligation that the statutory tribunal should give reasons for its decision. There is also no general principle or any rule of natural justice that a statutory tribunal should always and in every case give reasons in support of its decision.\" 25 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 25 (Emphasis supplied) 18.7 In Surat Singh v. ITO [IT Appeal No. 8211(Delhi) of 2018, dated 26-5-2020]; Hon’ble ITAT Delhi has found reopening as justified on the noting of JCIT “yes satisfied, it is a fit case for issue of notice under section 148” “16. ….. …. The identical issue arose in before honourable Delhi High Court in case of Sonia Gandhi V The Asst Commissioner of income tax [2018] 97 taxmann.com 150 (Delhi)/[2018] 257 Taxman 515 (Delhi)/[2018] 407 ITR 594 (Delhi) wherein it was held as under:- \"49. As far as the question of satisfaction recorded by the Principal Commissioner, under Section 151 (1) is concerned, the legal requirements were spelt out by the Division bench ruling in Meenakshi Overseas (P.) Ltd. (supra), in the following terms: \"For the purpose of Section 151(1) of the Act, what the Court should be satisfied about is that the Additional CIT has recorded his satisfaction \"on the reasons recorded by the Assessing Officer that it is a fit case for the issue of such notice\". In the present case, the Court is satisfied that by recording in his own writing the words: \"Yes, I am satisfied\", the mandate of Section 151(1) of the Act as far as the approval of the Additional CIT was concerned, stood fulfilled.\" ….\" In view of this, we dismiss the argument of the assessee that there is no proper sanction recorded by the approving authority while sanctioning the action of the learned assessing officer under section 147 of the act.” (Emphasis supplied) Statement of Vijay Goyal obtained after issue of notice u/s 148 19. During oral arguments, Ld. AR raised an additional contention that the statement of Sh Vijay Goyal, Director of Perfect Polychem P. Ltd, one of the accommodation entry providers, recorded by Investigation Wing, Delhi was obtained after issue of notice u/s 148 which vitiates the re-opening as there was no material on the date of recording of reasons by the AO. 19.1 It is submitted that this argument is not tenable in view of the fact that the statement of ShGoyal, which established that he was an accommodation entry provider, was duly captured in the Investigation Report dated 25.03.2017 of ADIT (Inv.), Delhi and inferences were drawn therefrom in the said report (p. 1-4 of Departmental Paper Books). Thus, the obtaining of statement subsequently is inconsequential and does not serve the case of the assessee. Conclusion 20. In view of the overall detailed submissions made above, it is submitted that the issue of notice u/s 148 in all three assessment years was in accordance with the mandate of law. The Hon’ble ITAT is humbly requested to uphold the action of the department and dismiss the appeals of the assessee.” 7. We have heard the rival submissions and considered the facts and circumstances of the case. We observe that it is an admitted fact that the assessment in this case has been completed u/s 143(3) of the Act by the department vide order dated 19.11.2013. It is pertinent to observe that before the commencement of original assessment proceedings, the investing wing has also conducted through enquiries from 15 January 2013 to 28 January 2013, as 26 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 26 evident from Page number 82 of the Main Paper book. The investigation wing had also enquired about the alleged transactions from the assessee. During the course of original assessment proceedings, the assessee in order to prove the sale transactions with M/s Star Technologies, has filed voluminous documents such as VAT records, excise records etc before the then assessing officer. All these facts, have not been controverted by the Ld DR. These facts would prove beyond doubt that in original assessment proceedings there has been no failure on the part of assessee to disclose fully and truly all the material facts. Once it is clear that the present reassessment proceedings are initiated after the expiry of four years from the end of relevant assessment year, in terms of the proviso to section 147 as it stood at the relevant time, the burden is on AO to establish with cogent material that there was failure on the part of assessee to disclose fully and truly all material facts necessary for assessment. And if the AO could not be able to discharge that burden then entire reassessment proceedings stands vitiated. In the present case it is evident from the uncontroverted facts on record, that there is no failure of the part of assessee to disclose material facts fully and truly. Therefore, in our humble opinion the jurisdiction assumed by the AO is bad in law. There is jungle of decisions on this issue. However certain land mark judgments, which are eye-opener are referred herein below for the sake of appreciation. 1.1 Multiscreen Media pvt Ltd- Writ petition number-8709 of 2009 dated 17 Feb 2010- Bombay High Court- It is a case where original assessment proceedings were reopened under section 143(3). Thereafter, the revenue reopened the case of the assessee after the expiry of four years from the end of the relevant assessment year, the assessee challenged the action of AO before the High Court by way of writ. After hearing the parties at length Hon’ble Bombay High Court observed as under: - The notice issued by the Assessing Officer under section 148 does not state that there was a failure on the part of the assessee to fully and truly disclose all material facts necessary for the assessment for assessment year 2002-03. The assessment was sought to be reopened after the expiry of a period of four years from the end of the relevant assessment year. In such a case the jurisdictional condition precedent stipulated by the proviso to Section 147 is a failure on the part of the assessee to fully and truly disclose all material facts necessary for 27 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 27 assessment for that assessment year consequent upon which income chargeable to tax has escaped assessment. That has not been fulfilled. The notice does not even purport to state so. The ground furnished in the notice for reassessment would at the highest indicate that according to the Assistant Commissioner of Income Tax, allocation of expenses as between the petitioner and the foreign principal ought to have been originally considered by the Assessing Officer when the order of assessment was passed under section 143(3). That however would not give a valid reason to reopen the assessment beyond a period of four years, even assuming that the Assessing Officer had erred in not doing so, unless there was a failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment. Absent the existence of the jurisdictional condition precedent, assessment cannot be reopened beyond a period of four years after the expiry of the relevant assessment year, as has been done in the present case. In the circumstances, the notice for reassessment is liable to be quashed and set aside solely on the ground that the Revenue has failed to establish the existence of the jurisdictional condition precedent to the exercise of the power to reopen an assessment beyond a period of four years of the expiry of the relevant assessment year. 1.2 Parikh Petrol Chemical Agencies vs ACIT-266 ITR 196( Bom)- wherein discussing the purport of explanation-2 of 147 the Hon’ble Bombay High Court observed as under- the decision of this Court relied upon by Mr. Dastur in the case of Ipca Laboratories Ltd. (supra) is squarely applicable to the present case wherein it is held that, if there is no failure on the part of the assessee to disclose fully and truly all material facts, then the deeming provision contained in Expln. 2 to s. 147 has no application. In the present case, admittedly, the assessment is sought to be reopened after four years from the end of asst. yr. 1994-95 and since the conditions set out in under s. 147 of the IT Act are not fulfilled, the notice issued for reopening the assessment must be held to be invalid and without jurisdiction. Under the circumstances, when the notice impugned in the petition itself is without jurisdiction, the plea of the Revenue that the petition suffers from delay and laches cannot be sustained 1.3 Atma Ram Properties Vs DCIT 208 Taxman 408(Del)- In this case the AO failed to apply the provisions of section 2(22)(e) during original assessment proceedings and reopened the assessment after four years. Hon’ble Delhi High Court allowing the petition of the assessee observed as under:- No doubt s. 2(22)(e) of the Act is not mentioned in the order sheet or in the assessment order but this does not help the case of the Revenue for the reason that the assessee cannot be faulted. If the AO had failed to apply legal provisions/section of the Act, the fault cannot be attributed to the appellant assessee. The requirement is that the assessee should have failed or omitted to make full and true disclosure of material facts. The assessee is not required to disclose, State or explain the law. It cannot be said that the appellant-assessee had failed to make full and true disclosure of material facts. Full and true facts were stated by the assessee. Full and true details were furnished but as per the case of the Revenue there was a lapse on the part of the AO in not applying and 28 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 28 invoking s. 2(22)(e) of the Act. This lapse or error on the part of the AO cannot be attributed and regarded as a failure on the part of the assessee to make full and true disclosure of the material facts in the original assessment proceedings. The aforesaid error or failure of the AO in not applying s. 2(22)(e) could have been corrected by exercise of power of revision as the original order may have been erroneous and prejudicial to the interest of Revenue, but limitation period for exercise of the said power had expired. The said error in applying a provision cannot be corrected in the present case due to the factual matrix, by exercise of power under s. 147 of the Act 7. In the present case the DR has basically argued that information has come to revenue at a later stage that is after the completion of assessment proceedings. However, that ipso-facto does not establish that there is any failure on the part of the assessee to disclose truly and fully all the material facts. Receiving an adverse information against an assessee may be a starting point to trigger the steps of reassessment, and thereafter the AO has to establish with material the failure of an assessee to disclose the material facts. Ld DR, in his written submissions has further contended that the assessee failed to disclose truly and fully the material facts. However, he could not be able to controvert the factual situation. Ld DR has also relied upon the number of cases, we have carefully perused the case laws relied upon by the Ld DR and observe that the facts of those cases are completely different from the present case. It is pertinent to note that neither the investigation wing nor the AO have utter a single word about the excise and sale tax records (annexed in main paper book at Page number 205-210) documents filed by the assessee, these documents are third party evidences. It is settled position of law that no third party would come forward to oblige an assesse, with false evidence, as held by Hon’ble Allahabad High Court in the case of Sheo narian Duli Chand reported in 72 ITR 766(All). Further in the present case it is not any private person rather government agencies who have issued orders. We are conscious of the fact that the sale tax and excise records are not binding on income tax authorities but at the same time they have persuasive values and once they remain unrebutted then they have evidentiary value to judge the true and full disclosure of material facts. 29 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 29 8. Beside above judgments there are umpteen number of judgments wherein the Hon’ble Courts have held that after the expiry of four years, reassessment action can only be triggered if there is any failure on the part of assessee to disclose fully and truly all the material facts necessary for assessment. Therefore, we quashed the present reassessment proceedings on this ground without going into the other legal arguments of the assessee as the other grounds and arguments become academic, we deem it not to deal with them. 6. In result the appeal filed by the assessee is allowed. Order pronounced on this 05th day of November 2024. Sd/- (M.Balaganesh) Sd/- (Prakash Chand Yadav) Accountant Member Judicial Member Bangalore; Dated: 05.11.2024 Devadas G* Copy to: 1. The Appellant. 2. The Respondent. 3. The CIT(A) Concerned. 4. The DCIT concerned. Asst.Registrar 5. The Sr. DR, ITAT, Agra . ITAT, Agra 6. Guard File. Date Initial 1. Draft dictated on Sr.PS 2. Draft placed before author Sr.PS 3. Draft proposed & placed before the second member JM/AM 4. Draft discussed/approved by Second Member. JM/AM 5. Approved Draft comes to the Sr.PS/PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 30 ITA No 333/Agr./2019 M/s.Vacment India Private Limited. 30 7. Date of uploading the order on website 8. If not uploaded, furnish the reason 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the AR 10. Date on which file goes to the Head Clerk. 11. Date of dispatch of Order. 12. Draft dictation sheets are attached Sr.PS "