Oral Judgment:

Akil Kureshi, J.

1. The petitioner has challenged a notice dated 30.03.2016issued by the respondent Assessing Officer to reopen the petitioner’s assessment for the assessment year 2009-10.

2. Brief facts are as under:

2.1 The petitioner is a Company registered under the Companies Act and is engaged in the business of trading activities of agro processing, maize processing, cotton spinning power plant and windmill. For the assessment year2008-09, the petitioner had filed the return of income on30.09.2009 declaring total income of Rs.54.44 crores(rounded off). The return was taken in scrutiny. The Assessing Officer passed order of assessment under section143(3) of the Income Tax Act, 1961 on 29.12.2010. By making several additions, the total income of the assessee was assessed at Rs.88.69 crores (rounded off). During such assessment, purchases made by the petitioner assessed from certain traders including one M/s. Vishal Traders came to be scrutinized. The Assessing Officer having held that such purchases were bogus made the additions. We are informed that upon further appeal by the assessee before the Appellate Commissioner and the Tribunal, the disallowances were limited to 5% of the purchases.

2.2 To reopen such assessment, the Assessing Officer issued the impugned notice which as can be seen was beyond a period of four years from the end of relevant assessment year. In order to do so, he had recorded the following reasons:

“The Assessee company is engaged in the business of trading activities of Agro Processing, Maize Processing, cotton spinning Power Plant (for internal consumption)and windmill. The return of income was filed on30/09/2009 declaring total income of Rs.54,44,98,730/-which was processed u/s 143(1) of the on 21/03/2011and thereafter assessment was passed u/s 143(3) r.w.s153(A) of the on 29/12/2010 at the income ofRs.88,69,11,095/-.

As per information shared by the Joint Director (Inv.),Gurgaon O/o the Pr. DIT (Investigation) Chandigardhvide letter No. ITO(Inv) GGN/2015-16 dated 23/03/2016,a STR was received in case of M/s. S.R. Sales Corporation Prop. Shri Milkh Raj (PAN AIEPR5631C)Shop No.52-B, Anaj Mandi, Fatehabad. The findings ofthe case are as under:

1. Grounds of Suspicion:-

“M/s. S.R. Sales Corporation maintained an current account No. 073305000084. The account has been triggered for large value cash transaction. On 17December 2009 there were large cash withdrawal amounting to Rs.30,00,000/- lacs. It is observed that the customer is getting money from its other account which is 0172050048255 and a/c of another customer in the name of M/s. Sharda Traders. The customer initially used to get the fund transferred from these 2 accounts and withdraw itis cash in the amounts close to Rs. 9 lakhs. Customer also receives RTGS.”

2. Report:-

2.1 Account statement of account Nos73305000084, 430002101007301, 17205004589 &017205004822 of M/s. S.R. Sales Corporation, Shop No. 52-B, Anaj Mandi, Fatehabad were obtained from ICICI Bank Ltd. On enquiry it was reported by ICICI Bank Ltd. account No.017205004822 of M/s. S.R. Sales Corporation(mentioned in STR) “does not exist/incorrect”. The transactions of F.Y. 2008-09 are being reported being barred by limitation of time as on 31.03.2016and report w.r.t F.Y. 2009-10 & 2010-11 will be submitted later on after completion of investigation in the case.

2.2 On Perusal of statement of below mentioned accounts of M/s. S.R. Sales Corporation, it is observed that during the financial year 2008-09these accounts are getting credit through cash/transfer/RTGS which is followed by debits through, cash withdrawal by self cheques. The details of such accounts with ICICI bank and funds transacted in these accounts during the F.Y. 2008-09 is summarized as under:

Sr.

No.Account No.Cash

depositsCredits through

RTGS/Cheques/

Fund Transfer/etc.

1733050000846,00,000/-9.65.59,000/-

243000210100

73Nil52,37,64,360/-

317205004589Nil7,44,48,000/-

417205004822Nil49.09.85,000/-

Total1,18,57,76,360/-





2.3 Similarly, account statements of account Nos.017205004877 of M/s. Sharda Traders (Prop.Vishnu Datt (PAN : AXGPD3612C), SCF, IInd Addl.Mandi, Sirsa Haryana were also obtained from ICICI Bank, REd Square Market, Hisar. Perusal ofthe above mentioned statements revealed that this account has also received funds through RTGS/Fund Transfer/ etc. during the financial year2008-09, details are as under:

Sr.

No.Account No.Cash

depositsCredits through

RTGS/Cheques/Fund Transfer/etc.

117205004877Nil7,34,16,000/-





3. The Addl. Director of Income tax (Inv.),Gurgaon accorded permission to conduct open enquiry in the case vide letter no. Addl.DIT/INV./FBD/2013-14/3485 dated 24.01.2014.Consequently, the assessee was asked to furnish certain information regarding the credit entries in his bank accounts so as to ascertain the nature and source of the same vide this office Notices/summons vide letter No. 165 dated13.08.2015, giving an opportunity to furnish reply by 25.03.2015. In response of the above summons neither the assessee appeared nor any written reply was filed. Once again, summons was issued vide no. 166 dated 13.08.2015 at the business premises of M/s. S.R. Sales Corporation at Shop No. 52-B, Anaj Mandi, Fatehabad giving inopportunity to furnish the information by25.03.2015. But again assessee failed to furnish any reply. From the local enquiries it is also revealed that no such concerns are existing at the given addresses. Further, this office has issued summons vide letter No. 310 & 490 dated02.11.2015 & 27.01.2016 respectively to Sh.Milakh Raj prop, of M/s. SR Sales Corporation R/o& No. 407, VPO, Kalpdha, Dist. Fatehabad. The above mentioned summons were received back from the Postal Authorities with me remarks that“Assessee not found at home and others refused to receive”. Again fresh Summons vide letter No. 491& 492 dated 27.01.2016 were issued to Sh. MilakhRaj at Anaj Mandi, Ukalana & M/s. S.R. Sales Corporation. But both the summons were received back from the postal authorities with remarks “Assessee not found at home and others refused to receive”. Summons vide no. 594 dated 01.03.2016was also issued to the Principal Officer, M/s.Sharda Traders, SCF, IInd Addl. Mandi, Sirsa button response was received from M/s. ShardaTraders.

3.1 Perusals of the statements further revealed that these accounts have received funds aggregating to Rs.4,48,79,000/- from M/s. Gujarat Ambuja Export Ltd. and these funds are followed by immediate cash withdrawals.

In view of the above facts, I have reason to believe that there are sufficient grounds/reasons to believe thatincome has escaped. Therefore the assessee has concealed the income to extent of Rs.4,48,79,000/-.Since the income of Rs.4,48,79,000/- has escaped assessment for the A.Y. 2009-10 in the spirit of provision of section 147 of the Income Tax Act, 1961. It is a fit case for reopening of the assessment by invoking the provision of section 147 of the Income Tax Act, 1961.Accordingly, notice U/s. 148 of the is issued.”

2.3 Upon being supplied with the reasons, the petitioner raised objections to the notice of reopening under communication dated 23.05.2016. Such objections were rejected by the Assessing Officer by an order dated16.06.2016. Hence, this petition.

3. Taking us through the materials on record and inparticular the reasons recorded by the Assessing Officer for issuing the impugned notice, counsel for the petitioner raised following contentions:

(I) The notice was issued beyond a period of four years from the end of relevant assessment year.

(II) There was no failure on the part of the assessee to disclose truly and fully all material facts.

(III) The reasons do not suggest any formation of belief that income chargeable to tax had escaped assessment. Merely because the sellers of goods to the assessee refused to respond to the inquiry notice issued by the Income Tax department would not be sufficient material to enable the Assessing Officer to form a belief that the petitioner’s purchases from such traders were bogus.

(IV) Counsel submitted that the entire issue of the genuineness of the purchases made by the assessee was examined by the Assessing Officer during the original scrutiny assessment. No disallowance was made with respect to the purchases which are now subject matter of the reasons recorded.

4. On the other hand, learned counsel Mr. Bhatt for the department opposed the petition contending that the Assessing Officer had sufficient material at his command to form a belief that income chargeable to tax had escaped assessment. Such information was unearthed subsequent to the passing of the order of assessment. There was a clear failure on the part of the assessee to disclose truly and fullyall material facts. The Assessing Officer having recorded proper reasons and issued the impugned notice, at this stage, the court would not examine the sufficiency of such reasons in the context of testing the formation of the belief of the Assessing Officer that income chargeable to tax had escapedassessment.5. The reasons recorded by the Assessing Officer suggest that according to him the purchases made by the assessee from one S.R Sales Corporation were bogus. We may record that the purchases by the assessee from S.R. Sales were admittedly not part of the original assessment proceedings. In that view of the matter, the Assessing Officer not having scrutinized these purchases, he had no information on the genuineness of such sales and the question of change of opinion therefore would not arise. While examining the reasons recorded we would also bear in mind that in the present case, the notice for reopening the assessment has-been issued beyond a period of four years from the end of relevant assessment year and that the original assessment was framed after scrutiny.

6. The closer examination of the reasons recorded would suggest that after the scrutiny assessment was carried out in case of the assessee during which the Assessing Officer made substantial additions to the total income, certain information and materials came within the possession of the department. The investigation wing had collected materials to suggest that in case of S.R. Sales Corporation, a proprietary concern, in the current bank accounts there were large cash withdrawals of Rs. 30 lakhs during the year under consideration. One of the sources of the funds in the said account of the said proprietary concern was the customer M/s. Sharda Traders. The statements of accounts of M/s. S.R. Sales Corporation revealed that in the said accounts amounts were credited through cash transfers or RTGS followed by cash withdrawals through cheques in favour of the account holder. The Additional Director of Income Tax, Investigation, Gurgaongranted permission to conduct an inquiry on the basis of such materials on record. M/s. S.R. Sales Corporation was asked to furnish information regarding the credit entries in the bank accounts to ascertain the nature of the source of the same by issuance of a summons dated 13.08.2015. No response was received through M/s. S.R. Sales Corporation upon which another summons was issued at the business premises of M/s.S.R. Sales Corporation. Once again there was no response touch summons. The reasons further record that local inquiries by the department revealed that no such concern was existing at the given address. Summons were also issued on 02.11.2015 and 27.11.2016 to one Milakh Raj who was the proprietor of M/s. S.R. Sales Corporation. The summons were returned back by the postal authorities with the remarks“Assessee not found at home and others refused to receive.”Summons were also issued to Sharda Traders from whom also no response was received. The reasons recorded that these accounts (i.e. the accounts of M/s. S.R. Sales) had received funds of Rs.4.48 crores from the present petitioner and these funds were followed by immediate cash withdrawals.

7. It can thus be seen that there was sufficient material available with the Assessing Officer to reopen the assessment of the petitioner upon forming a belief that income chargeable to tax had escaped assessment. The reasons recorded mustbe seen in entirety pointing out that there were serious infirmities noticed in the transactions of M/s. S.R. Sales Corporation. Substantial amounts were received from various sources in the bank accounts which were withdrawn in cash shortly after receipt. Summons issued by the department were not responded. Even the entity was not found existing at the given address. The proprietor of the concern could not be served since he was not found at the address supplied and the rest of the members present refused to accept the summons. Genuine and repeated efforts were made by the department to serve the summons to the said entity to produce documents and information. No response was received from M/s. S.R.Sales Corporation. Independently of the non service or nonresponsive to the summons by M/s. S.R. Sales Corporation, there were other transactions which clearly prima facieindicate being dubious. The petitioner assessee had paid assume of Rs.4.48 crores to the said concern by way ofpurchases.

8. Undisputedly, these transactions were not examined byte Assessing Officer during the original assessment proceedings though he did find sufficient evidence suggesting that not all purchases made by the assessee were genuine. In fact though the appellate authority and the Tribunal reduced the addition made by the Assessing Officer on this count, in theory, the non-genuineness of some of the purchases was approved by the Tribunal also. Be that as it may. So far as the assessees purchases from S.R. Sales are concerned they were not subject matter of the assessment proceedings and in that view of the matter the question of change of opinion would not arise. In any event, when fresh material was unearthed by the department through the investigation wing who had inquired into the transactions of M/s. S.R. Sales Corporation neither the question of change of opinion nor the concept of full disclosure may have a bearing. If the purchases of the assessee from M/s. S.R. Sales Corporation were bogus, sales and the entries were in the nature of accommodation entries, merely because the assessee disclosed such entries in the return filed and also showed such purchases in the books of accounts would hardly be sufficient to advance the arguments of full and true disclosure.

9. The question of sufficiency of material available with the Assessing Officer to form a belief that income chargeable total had escaped assessment must be seen in light of limited jurisdiction, review and the self restraint imposed by the courts at the threshold stage. In a writ petition, the court would be primarily concerned with the question whether the Assessing Officer had information enabling him to form abona fide belief that income chargeable to tax had escaped assessment. The court would not evaluate the evidence at that stage nor is the Assessing Officer expected to demonstrate with certainty that the addition will certainly be sustained in the reassessment proceedings. What is required at this stage to enable the Assessing Officer to issue the notice for reopening the assessment is the tangible material on record upon consideration of which he can form reasonable belief that income chargeable to tax had escaped assessment. Such belief has to be one which is formed bona fide upon perusal of the materials at his command and unless it can be stated that the formation of the belief is perverse in the sense no reasonable person could on the available material on record form such a belief, the court would not interfere with the notice for reopening.

10. In the result, petition is dismissed. Rule is discharged. Inadvertently or otherwise we have not made any observations intending them to be having any effect on the pending reassessment.