HITESHKUMAR BABULAL RAMANI vs. ASSISTANT COMMISSIONER OF INCOME TAX

During the course of survey U/s. 133A of the IT Act on 02.12.2016 in the case of Aphrodite Infra Pvt. Ltd. Avenue 77, F.P 77, Deside L.P.Savani School, Canal Road, Vesu, Surat, back up of coimputer, laptop,  mobiles etc were taken in Hard Disk and the same was impounded as per Annexure A5. In which, back up data and whatsapp   images   taken   from   mobile   of Shri   Hitesh   Babulal   Ramani   were   stored and it is seen from the same that Shri Hitesh   Babulal   Ramani   had   maintained   a bank   account   No.10021001006771   with Prime   Co.Op   Bank   Ltd,   Bhulka   Bhavan Branch, Surat during F.Y. 2013­14 which was not reflected either in the books or in the return of income of Shri Hitesh B.   Ramani.   Accordingly,   statement   of Shri   Hitesh   Babulal   Ramani   was   taken u/s.   131   of   the   IT   Act   on   20.01.2017 during   post   search   inquiry.   Page   No.15 and 16 of the seized annexure is related to bank statement for the F.Y. 2013­14 of   book   account   No.10021001006771   with Prime   Coop.   Bank   Ltd.,   Bhulka   Bhavan Branch,   Surat   of   Hitesh   B.   Ramani.   On being   asked   about   page   No.15   &   16, assessee   has   stated   that   the   same   is bank statement  of his Prime  Coop.  Bank Ltd,   Bhulka   Bhavan   Branch,   A/c. No.10021001006771. 3. On   further   verification   by   the Investigation wing, it is observed that Shri Hitesh Babulal Ramani has not shown his Prima Coop. Bank Ltd. Bhulka Bhavan Branch,     A/c.   No.10021001006771   in   his books for A.Y. 2013­14. The account has been   closed   on   22.10.2013. The   total credit entries  for the F.Y. 2013­14 of his Prime Coop. Bank Ltd. Bhulka Bhavan Branch, A/c. No. A/c. No.10021001006771 comes to Rs.85,11,543/­.

After   the   receipt   of   the   information regarding   the   undisclosed   bank   account of Hitesh Babulal Ramani, his return of income   and   other   details   were   verified by this office. On physical verification of   the   return   of   income   and   other documents   i.e.   ITS   details,   AIR information   etc.,   the   undisclosed   bank account   reported   by   the   Investigation Wing of the Department was found to be undisclosed   bank   account   of   the assessee.   As   is   evident   from   the statement   recorded   from   Hitesh   B. Ramani, wherein he has also stated that bank account with Prime Coop. Bank Ltd. Having   A/c.   No.10021001006771,   is   not show   n   in   the   return   of   income,   the credit   appearing   in   the   bank   statement at   Rs.85,11,543/­   becomes   unaccounted income of the assesse. Thus, it is clear that income

Being   aggrieved   with   the   proceedings   of   re­ opening   of   the   assessment   undertaken   by   the respondent,   the   writ   applicant   has   come   up before   this   Court   by   filing   this   writ application.

We have heard Mr. Hardik Vora, learned counsel appearing for the writ applicant and Mrs. Mauna M. Bhatt, the learned Standing Counsel appearing for the respondents.

Mr.  Hardik  Vora, learned counsel appearing for the   writ   applicant   has   raised   the   following contentions: a) The action of the respondent to re­open of the   assessment   for   the   year   under consideration   and   issuance   of   the   impugned notice are absolutely bad in law and against the provisions of the statute. b) It was submitted that, Assessing Officer has mainly relied upon the information received from   the   Investigation   Wing,   Surat,  while recording the reasons for re­opening of the assessment as the documents like computation of income, statement of bank account and the income earned from the alleged bank account had already been submitted with the return of income filed earlier. Therefore, no any new   materials   available   to   the   Assessing Officer while forming the belief that, the income   has   escaped   assessment.   It   was submitted that, the Assessing Officer ought to     have   applied   his   mind   with   regard   to bank accounts and other documents which were already available with him. In this regard, it   was   submitted   that,   had   it   verified   by the  Assessing  Officer,   then   he   would   have found   the   facts   of   the   bank   account. Therefore,   while   recording   the   reasons   for re­opening of the assessment,  the Assessing Officer   [Writ   Petition   No.3344/2018] [2019 TIOL 2298­HC­AHM­IT] to further submit that,  the assessee is not under legal duty to   disclose   about   the   undisclosed   bank account as there is no any separate column for   such   disclosure   in   the   ITR   and therefore, omission to disclose the account cannot lead to the re­assessment. d) It   was   contended   that,   most   of   the transactions of the account maintained with the Prime Coop. Bank Ltd., were done through cheque   and   all   the   entries   of   said transactions   were   reflected   in   the   bank statement.   Therefore,   the   reasons   for   re­ opening   of   the   assessment   that   the   writ applicant   failed   to   disclose   the   alleged bank account and the amount mentioned in the account was unaccounted income are factually incorrect.

In   view   of   the   above   contentions,   learned counsel appearing for the writ applicant submits that present petition deserves consideration and hence, the same may kindly be allowed.

Mrs. Mauna Bhatt, the learned Standing Counsel appearing for the Revenue has vehemently opposed this   writ   application   and   urged   that,  after receiving the information, the Assessing Officer had physically verified the return of income and other   details   with   regard   to   bank   account   as reported   by  the   Investigation   wing   and  it  was found  correct   in  respect   to  credit   entries   to the tune of Rs.85,11,543/­ and thereafter, the Assessing   Officer   has   applied   his   mind independently  and   had   formed   the   opinion   that the   income   chargeable   to   tax   has   escaped assessment.   She   further   pointed   out   that,   by opening and closing the bank account in the same financial year involving huge cash transactions itself   is  a  sufficient   reason  to   believe   that the   income   has   escaped   assessment.   Therefore, considering   the   reasons   for   re­assessment   and non­disclosure   of   the   material   facts,   the procedure  for   reassessment   having   been   rightly initiated.   In   view   of   the   above,   above,   she urged   that,  the   writ   application   may   not   be entertained.

Considering the submissions canvassed by learned counsel   for   both   the   sides   and   perusing   the materials placed on record of this case, it is an   undisputed   fact   that,   the   writ   applicant being   an   individual   assessee   had   filed   his return of income for the A.Y 2014­15 declaring total income of Rs.8,56,600/­ and the same was accepted without any scrutiny by the department. It is also an undisputed fact that during the course of search in the case of Aphrodite Infra Pvt. Ltd., undisclosed bank account of the writ applicant

At this stage, we may refer to the settled law with   regard   to   re­opening   of   the   assessment. Section   147   of   the   Act  deals   with   the   income escaping assessment. As per Section 147 of the Act,  if   the   Assessing   Officer   has   reason   to believe  that, any income chargeable to tax has escaped assessment for any assessment year, he may subject to the provisions of Sections 148 to 153 of the Act, assess or re­assess such income and   also   any   other   income   chargeable   to   tax, which has escaped assessment and which comes to his   notice   subsequently   in   the   course   of   the reassessment  proceedings.  As   per   the   first proviso, where an assessment under Section 143 or   under   Section   147   has   been   made   for   the relevant   assessment   year,   no   action   shall   be taken   under   Section   143   after   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 failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under Section 142(1) of the Act   or   Section   148   or   to  disclose   fully   and truly   all   material   facts   necessary   for   his assessment for that assessment year.  Therefore, before   re­opening   of   the   assessment,   two conditions are required to be satisfied viz. (I) the  Assessing  Officer   must   have   reason   to believe   that   the  income  chargeable   to  tax  has escaped   assessment   and   (ii)  he   must  also   have reason to believe that such escapement occurred by reason of either failure on the part of the assessee   to   make   return   of   his   income   or omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year.

After having heard the learned counsel appearing for the respective parties and considering the material   on   record,   the   issue   arise   in   the present case, whether before re­opening of the assessment,   reasonable   belief   formed   by   the Assessing  Officer with regard to escaped income is based on the some material or not ?

We   have   perused   the   reasons   for   re­opening, wherein, the  Assessing  Officer had specifically recorded that, “the bank account maintained with Prime Coop. Bank was not reflected either in the books   or   in   the   return   of   income   and   upon physical verification of the IT return and other documents like ITS details, AIR information, the undisclosed   bank   account   as   reported   by   the Investigating   Wing,   wherein,   credit   of Rs.85,11,543/­ which was unaccounted and finally came to the conclusion that, the income to the tune   of   Rs.85,11,543/­   has   escaped   assessment for the F.Y.2013­14.”