M/S JINDAL ALUMINIUM LTD.,,BANGALORE vs. DCIT, BANGALORE

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE

BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER

ITA No.919/Bang/2014 Assessment year : 2005-06

M/s. Jindal Aluminium Ltd., Vs. The Deputy Commissioner of Jindal Nagar, Tumkur Road, Income tax, Bangalore – 560 073. Circle 11(5), PAN: AAACJ 4324M Bangalore. APPELLANT RESPONDENT

Appellant by : Shri S. Parthasarathi, Advocate Respondent by : Shri Harinder Kumar, CIT(A)-3

Date of hearing : 26.07.2017 Date of Pronouncement : 28.09.2017 O R D E R Per Sunil Kumar Yadav, Judicial Member This appeal is filed by the assessee against the order of CIT(Appeals) inter alia on the following grounds:-

“1. The condition precedent for re-opening being absent, the re-opening of the assessment u/s.147 of the Act as confirmed by the learned CIT (Appeals) is bad in law. 2. On the facts and in the circumstances of the case, the learned CIT (Appeals) erred in holding that the assessing officer had reason to believe to justify the reopening and accordingly erred in upholding the reassessment as done by the assessing officer without appreciating that there was no income escaped assessment under the head 'capital gains' as alleged and the

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transactions between the Appellant and the Government and the Appellant with 3rd parties were transparent and there was no material to suggest that the Appellant had received more than what was declared over and above the registered sale price. 3. The learned CIT (Appeals) ought to have appreciated that there was no obligation on the part of the Appellant to declare the transaction in the return of income when the transaction did not result in any income/loss and accordingly he ought to have refrained from upholding reopening of the assessment as made by the assessing officer. 4. The learned CIT (Appeals) ought to have appreciated that the assessment was originally reopened on account of the claim made for deduction under Section 80-IA of the Act and thereafter after the conclusion of the said assessment, the same was once again reopened for the alleged omission of capital gain which was without any material and was only on surmise and as such the reassessment proceedings were invalid and the learned CIT (Appeals) has erred in upholding such reassessment. 5. The learned CIT (Appeals) ought to have appreciated that transfer of land has been duly reflected in the fixed assets schedule and the assessment originally stood concluded under Section 143(3) of the Act and consequently by applying the provisions of Section 147 of the Act to reopen the assessment was barred by time and accordingly the learned CIT (Appeals) ought to have cancelled the reassessment as done by the assessing officer as barred by time. 6. The learned CIT (Appeals) ought to have appreciated that there was no material to suggest that the Appellant had received more than what was declared and accordingly the estimation of sale consideration for computation of capital gain as made by the assessing officer was without jurisdiction and upholding of the same by the learned CIT (Appeals) was invalid and liable to be cancelled. 7. The learned CIT (Appeals) ought to have appreciated that the provisions of Section 142A of the Act have no application in the case of the Appellant. 8. The learned CIT (Appeals) ought to have appreciated that estimation of value of the property was not conclusive for

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reopening the assessment under Section 147 of the Act as held by the Hon'ble Supreme Court and consequently the reassessment based upon such value was opposed to law and accordingly he ought to have cancelled the reassessment. 9. The learned CIT (Appeals) ought to have appreciated that the capital gain as computed by the assessing officer was without jurisdiction and there being no material to suggest that the Appellant had received consideration more than what was recorded and the computation of capital gain as made was opposed to law and the capital gain as computed and as assessed is liable to be deleted. 10. The learned CIT (Appeals) erred in relying upon various case law to uphold the reassessment as done by the assessing officer, as all the case law relied upon were distinguishable and not applicable to the facts of the case of the Appellant. 11. Without prejudice, the additions as confirmed by the learned CIT (Appeals) is arbitrary, excessive and unreasonable and ought to be deleted in full. 12. For these and other grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed.”

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Thereafter the case was selected for scrutiny and assessment order u/s.

143(3) was passed on 28.12.2007 accepting the returned income.

disclose the correct sale consideration in respect of property at Delhi, as a

result of which action for reopening the case u/s. 147 was taken by issuing

a notice u/s. 148 of the Act on 30.03.2012. In response thereto, the

assessee requested the AO to treat the return filed on 28.10.2005 as filed

in compliance of the notice u/s. 148 of the Act. Accordingly, reassessment

was framed u/s. 143(3) r.w.s. 147 of the Act vide order dated 25.03.2013

determining total income at Rs.32,38,19,999 due to addition of

Rs.23,67,63,798 considering the unaccounted sale consideration relating to

sale of property at Delhi.

information that in the assessment concluded in the case of purchaser of

immovable property sold by the assessee during the year ended 31.3.2005,

the short term capital gain arising from the sale of immovable property had

not been shown by the assessee in its return of income for the AY 2005-06.

Therefore, the AO initiated the proceedings u/s. 147 of the Act by issuing

notice u/s. 148 of the Act. On the basis of information received, the AO

has recorded the reasons for reopening of the assessment and in the

reasons he has mentioned that in profit & loss account of the assessee, no

reference was made with regard to sale of immovable property and the

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profits earned by the assessee on the sale and transfer of land during the

impugned assessment year. He has also observed that in the computation

of total income, the assessee did not mention any such transaction of the

transfer having taken place in the relevant previous year or about any

capital gains arising from such transactions. The sale deed was entered

and lands were transferred by the assessee through Shri Anil Kumar Gupta

and Shri Susheel Kumar Gupta on 19.05.2004 as appearing from the

registered sale deed. On the basis of these observations, the AO has

recorded that there is reason to believe that income chargeable to tax for

AY 2005-06 has escaped assessment by the reason of failure on the part

of the assessee to disclose fully and truly all material facts necessary for

his assessment for AY 2005-06.

before the CIT(Appeals), but the CIT(Appeals) rejected the same. Now the

assessee has preferred an appeal before the Tribunal and questioned the

validity of reopening of the assessment.

validity of reopening of the assessment as raised before the CIT(Appeals).

The CIT(Appeals) has recorded the submissions raised by the assessee in

his order. On the other hand, the ld. DR placed heavy reliance upon the

order of CIT(Appeals).

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“For the assessment year 2005-06, the assessee company filed the return of income on 28.10.2005 declaring a total income of Rs.8,70,55,300/- after claiming a deduction of Rs.4,51,83,841/- u/s. 80IA of the Act. The case was processed u/s 143(1) on 09.01.2007. Further the case was selected for scrutiny and the order u/s 143(3) was passed on 28.12.2007 by accepting the return income. 2. Subsequently, it was noticed that certain income chargeable to tax has escaped assessment in as much as the assessee's claim of deduction under section 80IA of Rs. 4,51,83,841/- was wrong and the assessee has claimed excessive relief by way of deduction. The reasons were: a. Assessee had four units of windmill out of which three were profit making and one was incurring losses. b. As per Section 80IA(5), the quantum of deduction is to be computed by treating the eligible business as the only source of income and the deduction is for the total profit of the eligible business. Thus, after calculating the total profits and losses of all the units, the profit of the eligible business works out to loss of Rs. 3.4 crores. 3. Approval of the Addl. CIT, Range 11, Bangalore was taken and a notice u/s. 148 of the Act dated 23.03.2010 was issued. The order u/s. 143(3) r,w.s. 147 of the Act was passed on 30.12.2010 by assessing the income at Rs.13,22,39,/42/- after disallowing the deduction of the assessee u/s. 801A. 4. It has now been noticed that certain income chargeable to tax has escaped assessment due to assessee's failure to disclose

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fully and truly all material facts necessary for his assessment for A Y 2005-06. The details are as under: 5. During the FY 2004-05, an area of 694 sq. meters of the property located at 21/31-A, Mall Road, Delhi has been sold by M/s. Jindal Aluminium Ltd. and M/s Jindal Pipes Ltd to Shri Anil Kumar Gupta (PAN No. AAHPG2966J) and his wife with address at- 21/4672, Ansari Road, Daryaganj , Delhi. By the sale deed dated 19.05.2004, it has been seen that the total cost of this transaction is Rs. 1 crore out of which M/s. Jindal Aluminium Ltd has received Rs. 50 Lakh (Rs.10 Lakhs in FY 2003-04 and Rs.40 lakhs in FY 2004-05) and M/s. Jindal Pipes Ltd. has received Rs. 50 lakh. 5.1 In a similar transaction, the assessee company and M/ s. Jindal Pipes Ltd had sold an area of about 690 sq. meters of the property at 21/ 31-A, Mall Road, Delhi to an individual by name Shri Sushi! Kumar Gupta (PAN No. AAGPG2698L) and his wife with address at- 21/4672, Ansari Road, Daryaganj, Delhi for value of Rs. 1 crore. Sale proceeds to the extent of Rs. 40 lakhs were received during F Y 2004-05 and Rs. 10 lakhs were received during F Y 2003-04. 6. On a perusal of the Profit and Loss account of the assessee company, it is seen that the assessee has shown income under the following heads for AY 2005-06: a) Net sales-Rs.339,02,40,217 b) Other income-RsA,79,00,338; the subconstituents being; interest income of Rs.3.55 crores and miscellaneous income of Rs.1.23 crores. c) Increase in stock-Rs.3,31 ,38,497, 7. There is no mention of the sales proceeds and about the profits earned by the assessee on the sale and transfer of the land during the previous year relevant to A Y 2005-06 in the Profit and Loss account and the returns of income furnished. Further, the computation of total income does not mention about any such transaction of transfer having taken place during the relevant previous year or about any capital gains arising from such a transaction. The sale deeds were entered into and the lands were transferred by the assessee to Shri Anil Kumar Gupta and Shri

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Susheel Kumar Gupta on 19th May, 2004, as is evident from the registered sale deeds. 7.1 As per the provisions of Section 45(1) of the- Income Tax Act, the profits or gains arising to the assessee from a transfer of capital asset effected in the previous year shall be chargeable to income tax under the head "Capital Gains", and shall be deemed to be the income of the previous year in which the transfer took place. Considering the facts of the case, the assessee was bound to disclose the transactions of transfer and the profits arising from such transfers in AY 2005-06, as the transfers had taken place in FY 2004-05. But the assessee has failed to disclose the same either in the return of income or during the course of scrutiny assessment proceedings. The assessee has also not disclosed the information during the course of proceedings u/s 147 which had taken place later. Therefore the sales consideration received by the It would not be out of place to put on record, whether it is material or not for the purpose of making the reassessment u/s 147 of the Act, that the assessments u/s 153A(1)(b) have been made in the hands of the purchasers/transferees, wherein there is a dispute between the A. 0. and the assessee regarding the fair market value of the underlying assets as on the date of the transfer. From the facts and circumstances of the case discussed above, I have reason to believe that the income chargeable to tax for A Y 2005-06 has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material ,facts necessary for his assessment for A.Y. 2005-06."

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the return of income or computation of income, the assessee has not disclosed any sale proceeds or the profits earned by the assessee on the sale and transfer of the land during the previous year relevant to AY 2005- 06. On receipt of this information with regard to sale, the AO has verified the records and he has noticed that the assessee has not disclosed these facts either in the return of income or in the computation of income. He formed a belief that on account of non-furnishing of this information, the income has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for the AY 2005-06.

“3.4 A perusal of the reasons recorded reveals that during the - Financial year 2004-05 M/s Jindal Aluminium Ltd (the appellant) and M/s Jindal Pipes Ltd have sold a property located at 21/31A, Mall Road, Delhi admeasuring 694 sq.meters to Shri Anil Kumar Gupta and his wife by a sale deed dated 19/05/2004 at a total consideration of Rs. 1 crore. Out of which, the appellant company received Rs.10

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Lakhs in the financial year 2003-04 and Rs.40 Lakhs during the financial year 2004-05 and M/s Jindal Pipes Ltd has received Rs.50 lakhs. 3.5 Similar transaction entered into by the appellant company and M/s Jindal Pipes Ltd with Shri. Sushil Kumar Gupta and his wife for the property at 21/31A Mall Road, Delhi admeasuring 690 sq.meters for a consideration of Rs.l crores and appellant received its shares of sale proceeds of Rs.10 lakhs during the financial year 2003- 04 and Rs.40 lakhs during the financial year 2004-05. As the property at 21/31A was transferred during the previous year relevant to the assessment year 2005-06, however in the profit and loss account and computation for the assessment year 2005-06, the profit earned on sale of aforesaid property was not disclosed in the return of income. In view of the above, the appellant has omitted to disclose these transaction and profit arising on transfer of the property was not offered for taxation. Thus there was failure on the part of the appellant to disclose fully and truly all material facts and hence the AO having sufficient material to form a belief that escapement of income chargeable to tax. 3.6 In this connection it is relevant to quote certain case laws which strengthen the above findings - i) Kalyanji Mavji & Co Vs CIT (1976) 102 ITR 287 (SC) Section 34(1) contemplates two categories of cases for reopening the previous assessment: (1) where there has been an omission or failure on the part of the assessee to make a return of his income under section 22 or to disclose fully and truly all material facts necessary for his assessment; and (2) where there has been no such omission on the part of the assessee but the ITO on the basis of information in his possession finds that income chargeable to tax has escaped assessment for any year. It is, therefore, manifest that the first category deals with cases where an assessee is himself in default and the second category deals with cases where there is no fault on the part of an assessee but where the income chargeable to tax has actually escaped assessment for one reason or the other and the ITO comes to know about the same. The following tests and principles would apply to determine the applicability of section 34(1)(b) to the following categories of cases:

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(1)where the information is as to the true and correct state of the law derived from relevant judicial decisions; (2)where in the original assessment the income liable to tax has escaped assessment due to oversight, inadvertence or a mistake committed by the ITO. This is obviously based on the principle that the taxpayer would not be allowed to take advantage of an oversight or mistake committed by the taxing authority; (3)where the information is derived from an external source of any kind. Such external source would include discovery of new and important matters or knowledge of fresh facts which were not present at the time of the original assessment; (4)where the information may be obtained even from the record of the original assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law. If these conditions are satisfied then the ITO would have complete jurisdiction to reopen the original assessment. It is obvious that where the ITO gets no subsequent information, but merely proceeds to reopen the original assessment without any fresh facts or materials or without any enquiry into the materials which form part of the original assessment, section 34(1)(b) would have no application. ii) Sohan Singh Vs CIT (1986) 158 ITR 174(Delhi) In the instant case, the assessee had not disclosed to the ITO his connection with the business of the firm. In the light of the information received by him, the ITO had reason to believe that this business belonged to the assessee and as such he had also reason to believe that the income therefrom had escaped assessment in the hands of the assessee by reason of the omission or failure on the part of the assessee to disclose facts relating to business in the course of assessment proceedings. The eventual conclusion arrived at by the Tribunal that the impugned income earned purportedly by the firm was really the income of the assessee, which had become final, also supported the inference that there had been a failure on the part of the assessee to disclose primary facts necessary for his assessments. Therefore, it was clear that the provisions of section 147(a) were attracted to the instant case and the assessments were appropriately reopened by recourse to section 147(a).

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iii) Smt. Shashi Jain Vs ITO (1997) 228 ITR 682(A11) No notice was required to be given before the issuance of notice under section 148. It could not be accepted that the impugned notices had, been issued by the Assessing Officer without there being any reason to believe that any income chargeable to tax had escaped the assessment. However, the petitioner would have opportunity to contest the correctness' of the valuer's report during the course of assessment proceedings in pursuance of the notices under section 148. iv) Ess Ess Kay Engg Co (P) Ltd Vs CIT (2001) 247 ITR 818(SC) There was material on the basis of which the ITO could proceed to reopen the case, it was not a case of mere change of opinion. The Supreme Court was not inclined to interfere with the decision of the High Court merely because the case of the assessee had been accepted as correct in the original assessment for the assessment year in question. It does not preclude the ITO to reopen the assessment of an earlier year on the basis of his findings of fact made on the basis of fresh materials in the course of assessment of the next assessment year. Therefore, the appeal was to be dismissed v) ITO Vs GUrinder Kaur (2006) 102 ITD 189 (ITAT-Delhi) Another wing of the, Income-tax department, which was entrusted with the task-of-collecting information relevant to the detection of tax evasion. The Assessing Officer could not be said to have merely suspected that income had escaped assessment. He was bound to give prima facie credence to the information coming from his own department, though from another wing. He could not brush it aside or ignore it on the ground that it was a mere allegation. The letter constituted material on the basis of which the Assessing Officer could hold the requisite 'belief It had a rational connection or live link with the formation of the belief that income chargeable to tax had escaped assessment in the hands of the assessee. It was not a mere pretence nor was it based on mere gossip or rumour. It was a belief bona fide held No doubt, the Dy. Commissioner of the concerned range had asked the Assessing Officer to examine the issue and discuss it with him for further investigation, but simply because the Assessing Officer chose to issue the notice under section 148 without adhering to the directions of the Dy. Commissioner, it could not be said that the Assessing Officer had proceeded to adopt a short-cut without

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forming the requisite belief. It is the satisfaction of the Assessing Officer, who is empowered to issue the notice under section 148, that is relevant and in arriving at the same, he is not bound by the directions of the superiors. It has to be remembered that at the stage of recording reasons and issuing notice under section 148, it is only expected of the AO to reach a prima facie conclusion that income chargeable to tax had escaped assessment. At that stage, he is not expected to build a fool-proof or cast-iron case against the assessee before proceeding to issue the notice. He is not expected to make a complete investigation before issuing the notice. Therefore, there was no force in the submission of the assessee that the Assessing Officer had not held any enquiry into the veracity of the letter received from the CIB or had not conducted an investigation to check the allegation in the letter before "issuing the notice. [para 191 vi) Jagjit Pal Singh Anand Vs CIT (2010) 320 ITR 106 (Delhi) In Raymonds Woollen Mills Ltd v. /TO [1999) 236 ITR 34 , the Supreme Court has held that in determining whether the commencement of the reassessment proceedings was valid, it was only to be seen that there was a prima facie some material on the basis of which the department could reopen the case. The sufficiency and correctness of the material is not a thing to be considered at this stage. In the instant case, there was a material on record on the basis of which the Assessing Officer had formed opinion that there was escapement of income in the case of the assessee for the year under consideration. Therefore, the Tribunal was justified in upholding the action of the Assessing Officer in assuming jurisdiction by initiating proceedings under section 147 [Para 12]. vii) CIT Vs Medical Trust Hospital (1010) 325 ITR 191 (Ker) Assessing Officer is free to refer building for valuation and valuation report is certainly a specialized information which can constitute basis for reopening when investment valued by approved valuer is over and above cost declared by assessee; hence, same constitutes basis for reopening. viii) CIT Vs Rinku Chakraborthy (2011) 242 CTR 425 (Kar) From the aforesaid judgments it is clear that, though the word 'opinion' is deleted and is now substituted by the words 'reason to believe', the concept of change of opinion is not obliterated w.e.f. 1st April, 1989 after substitution of s. 147 of the IT Act, 1961 by the

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Direct Tax Laws (Amendment) Act, 1987. However, where in the original assessment the income liable to tax has escaped assessment due to oversight and in advance or a mistake committed by the ITO, the [TO has the jurisdiction to reopen the original assessment. It is not necessary that for such reopening of such assessment the information is to be derived from external source of any kind or disclosure of new and important matters subsequent to the original assessment. Even if the information is obtained from the record of the original assessment after a proper investigation from the materials on record or the facts disclosed thereby or from any enquiry or research into facts or law, reassessment is permissible. Income may escape assessment as a result of lack of vigilance of the ITO or due to perfunctory performance of his duties without due care and caution. Even in a case where a return has been submitted to the ITO who erroneously fails to tax a part of the assessable income, it is a case of the said part of the income as having escaped assessment and the AO has jurisdiction under s. 147 to reopen the assessment and bring to tax the income that has escaped assessment. A taxpayer cannot be allowed to take advantage of any of those lapses, as ultimately if such a advantage is allowed, it would be prejudicial to the interests of the Revenue and public interest. ix) Yesh Raj Films. (P) Ltd (2012) 204 Taxman 306 (Delhi) The reopening of the assessment in the instant case is admittedly within a period of four years from the end of the relevant assessment years. When the reopening takes place within a period of four years from the relevant assessment year, the powers of the Assessing Officer are substantially wider than when a reopening is beyond a period of four years. Nonetheless, the power to reopen an assessment cannot be exercised arbitrarily even within a period of four years, for the Act does not confer upon the Assessing Officer a power to review an assessment once made. A mere change of opinion cannot justify reopening of assessment, but where the Assessing Officer can demonstrate that there was tangible material on the basis of which he had formed the belief that income had escaped assessment, that would furnish jurisdiction to him to reopen assessment. In the instant case, the Assessing Officer had tangible material on the basis of which he has formed a reason to believe that income has escaped assessment. The tangible material consists of material that came into the possession of the department following a survey operation which took place under section 133A. During the course of

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the survey, certain documents came to be impounded. The Assessing Officer noted that during the course of the proceedings for the assessment year 2007-08 extracts, of the books of account which were found in an impounded CD. were taken for the period relevant to the assessment years to which these proceedings relate. These were verified with the financial statements filed with the return of income. Discrepancies have been revealed in respect of three heads in particular.' (I) difference in interest income; (II) difference in miscellaneous receipts; and (Ili) cash payments disallowable under section 40A(3), being payments in excess of Rs. 20,000. x) AG Holdings (P) ltd ITO (2012) 21 Taxmann.Com 34(Delhi) Be that as it may, even if it is assumed for the sake of argument that those particulars were furnished along with the original return Of income filed on 23-3-2005, they cannot be said to be full and true, having regard to the report of the investigation wing on the basis of which the assessment has been reopened. In the report there is specific information that the assessee-company had received an amount from 'Q' The report also mentions that this is an accommodation entry given by the said company to the assessee- company. The relevant bank account particulars, instrument number, etc., have all been reported. In the light of these particulars, it is not possible to accept the claim that the particulars allegedly filed by the assessee along with the return of income are full and true: The investigation report is a pointer and costs grave doubts on basis of evidence/material on the genuineness of the share contribution. For the purpose of enabling the revenue to reach a prima facie belief that income chargeable to tax had escaped assessment, the details given in the investigation report are relevant. No doubt, there is distinction between the relevancy and the sufficiency of the materials on the basis of which reasons are recorded or reopening the assessment. It is settled legal position that whereas the relevancy of the materials leading to the belief are justiciable, the sufficiency of those material is not. Even on an objective analysis, it cannot be said that the materials on the basis of which the revenue formed the belief were irrelevant. At the time of issuing the notice to reopen the assessment, the Assessing Officer is only expected to form a prima facie or tentative belief that income chargeable to tax had escaped assessment. Whether the addition has to be made or not is a matter to be decided on merits in the course of the reassessment proceedings. The Court is

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only concerned with the preliminary stage of recording reasons and issuing notice to reopen the assessment. The materials available before the Assessing Officer were wholly relevant for the formation of the belief that income chargeable to tax had escaped assessment on account of the failure of the assessee-company to furnish full and true particulars regarding the receipt of share capital from 'Q'. Xi) Indian Home Pipe Co. Ltd Vs ACIT (2012) 348 ITR 439(Born) Full and true disclosures must mean what the statute says. These disclosures cannot be garbled or hidden in the crevices of the documentary material which has been filed by the assessee with the Assessing Officer. The assessee must act with candour and the disclosure must be full and true. A full disclosure is a disclosure of all material facts which does not contain any hidden material or suppression of fact. A true disclosure is a disclosure which is truthful in all respects. Just as the power of the revenue to reopen an assessment beyond a period of four years is restricted by the conditions precedent spelt out in the proviso to section 147, equally an assessee who seeks the benefit of the proviso to section 147 must make a full and true disclosure of all primary facts. The assessee in the instant case did refer to the fact that the capital gains had resulted from the transfer of a capital asset and in the course of the computation did provide for the cost of acquisition notionally as of 1- 4-1981. An exemption was claimed u/s 54EC. All the necessary facts on the basis of which the claim to an exemption are founded must be disclosed. As the assessee failed to do so, the revenue in the instant case would be justified in reopening the assessment on the ground that income has escaped assessment. Clause (c) of Explanation 2 to section 147 provides for cases where income chargeable to tax is deemed to have escaped assessment. Among those cases are cases where an assessment has been made but (i) income chargeable to tax has been under assessed; or (ii) such income has been assessed to a lower rate; or (iii) such income has been made the subject of excessive relief under the Act; or (iv) an excessive loss or depreciation allowance or any other allowance under the Act has been computed. The Assessing Officer in the instant case has not exceeded his jurisdiction in reopening the assessment. The writ petition is, accordingly, dismissed.

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xii) Export Credit Guarantee Corporation of India Ltd (2013) 30 Taxamann.Com 211(Bom) that the Assessing Officer must be deemed to have accepted what he has plainly overlooked or ignored in the assessment order would be to stretch the interpretation of section 147 to a point where the provision would cease to have meaning and content. Such an exercise of excision by judicial interpretation is impermissible. When an assessment is sought to be reopened within a period of four years from the end of the relevant assessment year, the test to be applied is whether there is tangible material to do so. What is tangible is something which is not illusory, hypothetical or a matter of conjecture. Something which is tangible need not be something which is new. An Assessing Officer who has plainly ignored relevant material in arriving at an assessment, acts contrary to law. If there is an escapement of income in consequence, the jurisdictional requirement of section 147 would be fulfilled on the formation of a reason to believe that income has escaped assessment. The reopening of the assessment within a period of four years is, in these circumstances, within jurisdiction. At this stage, the. test to be applied is whether there was reason. to believe that income had escaped assessment and whether the Assessing Officer had tangible material before him for the formation of that belief A reason to believe is what is relevant, not an established fact of the escapement of income. 3.7 In a nut shell, the sub and substance of the case laws cited above are that for the purpose of enabling the AO to reach a prima facie belief that income chargeable to tax had escaped assessment, no doubt there is distinction between the relevancy and the sufficiency of the material on the basis of which reasons are recorded for reopening of the assessment. It is settled position that whereas the relevancy of the material leading to the belief are justifiable, the sufficiency of those material is not. Even on an objective analysis, it cannot be said that the materials on the basis of which the AO formed the belief were irrelevant. At the time of issuing notice to re-open the assessment, the AO is only expected to form a prima facie or tentative belief that income chargeable to tax had escaped assessment. Whether the addition has to be made or not is a matter to be decided on merit in the course of the re-assessment proceedings. At the time of issuing of notice u/s 148 he is not expected to build a full proof or cast-iron case against the appellant before proceeding to use the notice. He is

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not expected to make a complete investigation before issuing the notice. Therefore, there was no force in the submission of the appellant that mere DVO's report cannot constitute reason to believe that income has escaped assessment. 3.8 It is also relevant to mention that the buyers of the parcel of the land at 21/31A, Mall Road, Delhi Shri A.K.Gupta and Shri S.K. Gupta were assessed to tax at Central Circle-11, Faridabad. During the assessment proceedings, the Assistant Commissioner of Income- tax, central Circle-II Faridabad referred the transaction to the DVO and vide report dated 22/12/2010, the DVO arrived at the value of the sold land at Rs.77,777/- per sq. meter and accordingly income was assessed in the hands of the buyers. After the completion of assessment, the ACIT, Central Circle-II, Faridabad forwarded the information to the DCIT, Circle-11(5), Bangalore (the AO). This is definite information coming to the possession of the AO from another AO of the Department. The AO cannot be said to have merely suspected that income had escaped assessment. He is bound to give prima facie evidence to the information coming from the department though from another AO. He cannot brush it aside or ignore it on the ground that it is a mere allegation. The information received from the ACIT, Central Circle-II, Faridabad constitute material on the basis of which the AO can hold the requisite "belief". It has a rational connection or live link with the formation of the belief that income chargeable to tax has escaped assessment in the hands of the appellant. It is not a mere pretence nor is it based on mere gossip or rumour. It is a bonafide fact, the AO had relied on the sale deed dated 19/05/2004 and the information received from the ACIT, Central Circle-. II, Faridabad which contained a clear transactions in regard to the sale of property to third parties and understatement of sale consideration as per DVO's 'report. These information in my view constitutes relevant material (tangible material) for the formation of the belief not mere suspicion that income chargeable to tax has escaped assessment in the appellant's case. Thus the AO was justified in issuing notice u/s 148 of the Act. Therefore, this ground of appeal is rejected.”

ITA No.919/Bang/2014 Page 19 of 19

Pronounced in the open court on this 28th day of September, 2017.

Sd/- Sd/-

( JASON P. BOAZ ) ( SUNIL KUMAR YADAV) Accountant Member Judicial Member

Bangalore, Dated, the 28th September, 2017.

/ Desai Smurthy /

Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file

By order

Senior Private Secretary ITAT, Bangalore.