INCOME TAX OFFICER 12(3)(3), MUMBAI v. MANHATTAN IMPEX PRIVATE LIMITED, MUMBAI

ITA 639/MUM/2018 | 2008-2009
Pronouncement Date: 08-03-2021 | Result: Dismissed

Appeal Details

RSA Number 63919914 RSA 2018
Assessee PAN AAECM6220F
Bench Mumbai
Appeal Number ITA 639/MUM/2018
Duration Of Justice 3 year(s) 1 month(s) 7 day(s)
Appellant INCOME TAX OFFICER 12(3)(3), MUMBAI
Respondent MANHATTAN IMPEX PRIVATE LIMITED, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 08-03-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 08-03-2021
Last Hearing Date 18-03-2019
First Hearing Date 19-01-2021
Assessment Year 2008-2009
Appeal Filed On 01-02-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI RAJESH KUMAR ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE JUDICIAL MEMBER ITA NO. 639 /MUM/201 8 : A.Y : 200 8 - 0 9 INCOME TAX OFFICER 12 (3)( 3 ) ROOM NO.224 2 ND FLOOR AAYAKAR BHAVAN M. K. ROAD MUMBAI 400 020 VS. M/S. MANHATTAN IMPEX PVT. LTD. G-7 UNIQUE HOUSE CARDINAL GRACIOUS ROAD CHAKALA ANDHERI EAST MUMBAI 400 099 PAN : AAECM6220F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GAURAV KABRA A.R. RESPONDENT BY : SHRI SAJIT V. NAIR D.R. DATE OF HEARING : 19/01/2021 DATE OF PRONOUNCEMENT : 08/03/2021 O R D E R PER RAJESH KUMAR AM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 20 MUMBAI (IN SHORT THE CIT(A)) DATED 31.03.2016 PERTAINING TO ASSESSMENT YEAR 2008-09. 2. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE O RDER OF LD. CIT(A) WHEREIN THE LD. CIT(A) HAS QUASHED THE JURIS DICTION EXERCISE UNDER SECTION 147 OF THE ACT BY THE AO AS BAD IN LAW. 2 ITA NO. 639/MUM/2018 M/S. MANHATTAN IMPEX PVT. LTD. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME DURING THE YEAR. SINCE THE ASSESS EE HAS NOT FILED ANY RETURN OF INCOME THE AO SELECTED THE CASE OF THE ASSESSEE UNDER SCRUTINY UNDER SECTION 147 READ WITH SECTION 148 OF THE ACT BY ISSUING NOTICE DATED 24.03.2015 WHICH WAS COMPLIED WITH BY THE ASSESSEE BY FILING A RETURN OF INCOME ON 10.10.2015 DECLARING NIL INCOME. THE REASONS RECORD ED FOR REOPENING ASSESSMENT UNDER SECTION 148(2) OF THE AC T ARE REPRODUCED AS UNDER FOR THE SAKE OF READY REFERENCE : IN THIS CASE THE ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE INFORMATION GATHERED FROM ROC IT IS NOTICED THAT THE ASSESSEE HAS RECEIVED SHARE PREMIUM TO THE TUNE OF RS.1 12 4 1 000/- DURING THE F.Y. 2007-08 RELEVANT TO A.Y. 2008-09. FURTHER THE SHARE PREMIUM IS ALSO NOT VERIFIABLE F ROM THE RECORD AS THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME FOR THE ABOVE MENTIO NED ASSESSMENT YEAR AND THEREFORE I HAVE REASON TO BELIEVE THAT INCOME CHA RGEABLE TO TAX AS INDICATED ABOVE TO THE TUNE OF RS.1 12 41 000/- HAS ESCAPED ASSESSM ENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT 1961. THEREFORE I AM SATISFIED THAT THIS IS A FIT CASE TO ISSUE NOTICE U/S 148 R.W.S. 147 OF THE INCO ME-TAX ACT 1961. 4. THE AO FRAMED THE ASSESSMENT UNDER SECTION 143(3 ) READ WITH SECTION 147 OF THE ACT VIDE ORDER DATED 09.03. 2016 BY MAKING AN ADDITION OF RS.4 79 90 000/- BEING UNEXP LAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 5. THE ASSESSEE HAS CHALLENGED THE REOPENING OF ASS ESSMENT UNDER SECTION 147 OF THE ACT BEFORE LD. CIT(A) WHO AFTER TAKING INTO ACCOUNT THE CONTENTIONS AND PLEAS OF THE ASSES SEE ALLOWED THE APPEAL ON JURISDICTIONAL ISSUE BY OBSERVING AND HOLDING AS UNDER: 5.4.1 DECISION ON GROUND NO. 1 & 2: 5.4.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPE LLANT. AS PER PARA 4 OF THE ASSESSMENT ORDER THE REASONS RECORDED FOR REOPENIN G THE ASSESSMENT ARE AS UNDER: 3 ITA NO. 639/MUM/2018 M/S. MANHATTAN IMPEX PVT. LTD. 'IN THIS CASE THE ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE INFORMATION GATHERED FROM ROC I T IS NOTICED THAT THE ASSESSEE HAS RECEIVED SHARE PREMIUM TO THE TUNE OF RS.1 12 41 000/- DURING THE F.Y. 2007-08 RELEVANT TO A.Y.2008-09. FURTHER THE SHARE PREMIUM IS ALSO NOT VERIFIABLE F ROM THE RECORD AS THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME FOR THE ABOVE MENTIONED ASSESSMENT YEAR AND THEREFORE I HAVE REASON TO BEL IEVE THAT INCOME CHARGEABLE TO TAX AS INDICATED ABOVE TO THE TUNE OF RS.1 12 41 000/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 14 1 OF THE INCOME-TAX ACT 1961. THEREFORE I AM SATISFIED THAT THIS IS A FIT CASE TO ISSUE NOTICE U/S. 148 R.W.W. 147 OF THE INCOME-TAX ACT 1961. 5.4.3 IN THIS CASE THE AO FOUND THAT THE GENUINENES S OF THE APPELLANT'S CLAIM OF HAVING RECEIVED PREMIUM OF RS. 1 12 41 000/- DURING THE F.Y. 2007-08 WAS NOT VERIFIABLE. BASED ON THIS FACT THE AO FORMED HIS B ELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. 5.4.4 IT IS NOBODY'S CASE THAT ALL CASES WHERE THE ASSESSEES DECLARE RECEIPT OF PREMIUM ARE CASES WHERE INCOME ESCAPES ASSESSMENT . THEREFORE IN THIS CASE THE AO COULD NOT HAVE LOGICALLY INFERRED THAT INCOME HAD ESCAPED ASSESSMENT BASED ON THE INFORMATION THAT THE APPELLANT HAD CLAIMED T O HAVE RECEIVED PREMIUM. THE AO DID NOT BRING ANY MATERIAL ON RECORD TO MAKE A P RIMA FACIE CASE THAT THE PREMIUM SHOWN IS BOGUS. THEREFORE THERE WAS NO MAT ERIAL BEFORE THE AO BASED ON WHICH THE AO COULD HAVE FORMED THE REASON TO BELIEV E THAT INCOME HAS ESCAPED ASSESSMENT. THUS IT WAS A MERE SUSPICION OF THE AO THAT PROMPTED HIM TO INITIATE ASSESSMENT PROCEEDINGS UNDER SECTION 147 WHICH IS NEITHER COUNTENANCED NOR SUSTAINABLE IN LAW. 5.4.5 THE HON'BLE SUPREME COURT IN THE CASE OF ITO VS. LAKHMANI MEWAL DAS 103 ITR 437 (SC) HELD AS UNDER: 'AS STATED EARLIER THE REASONS FOR THE FORMATION O F THE BELIEF MUST HAVE A RATIONAL CONNECTION WITH OR RELEVANT BEARING ON THE FORMATION OF THE BELIEF. RATIONAL CONNECTION POSTULATES THAT THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF THE IN COME-TAX OFFICER AND THE FORMATION OF HIS BELIEF THAT THERE HAS BEEN ESCAPEM ENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT IN THE PARTICULAR YEAR BEC AUSE OF HIS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. IT IS NO DOUBT TRUE THAT THE COURT CANNOT GO INTO THE SUFFICIENCY OR ADEQUACY OF THE M ATERIAL AND SUBSTITUTE ITS OWN OPINION FOR THAT OF THE INCOME-TAX OFFICER ON T HE POINT AS TO WHETHER ACTION SHOULD BE INITIATED FOR REOPENING ASSESSMENT . AT THE SAME TIME WE HAVE TO BEAR IN MIND THAT IT IS NOT ANY AND EVERY MATERIAL HOWSOEVER VAGUE AND INDEFINITE OR DISTANT REMOTE AND FAR-FETCHED WHICH WOULD WARRANT THE FORMATION OF THE BELIEF RELATING TO ESCAPEMENT OF T HE INCOME OF THE ASSESSEE FROM ASSESSMENT. THE FACT THAT THE WORDS 'DEFINITE INFORMATION' WHICH WERE 4 ITA NO. 639/MUM/2018 M/S. MANHATTAN IMPEX PVT. LTD. THERE IN SECTION 34 OF THE ACT OF 1922 AT ONE TIME BEFORE ITS AMENDMENT IN 1948 ARC NOT THERE IN SECTION 147 OF THE ACT OF 196 1 WOULD NOT LEAD TO THE CONCLUSION THAT ACTION CANNOT BE TAKEN FOR REOPENIN G ASSESSMENT EVEN IF THE INFORMATION IS WHOLLY VAGUE INDEFINITE FAR-FETCHE D AND REMOTE. THE REASON FOR THE FORMATION OF THE BELIEF MUST BE HELD IN GOO D FAITH AND SHOULD NOT BE A MERE PRETENCE' 5.4.6 THEREFORE I AGREE WITH THE AR THAT THERE WAS NO NEXUS BETWEEN THE MATERIAL RECEIVED AND THE REASON TO BELIEVE FORMED BY THE AO . THEREFORE IN MY VIEW THE REOPENING OF THE ASSESSMENT IS BAD IN LAW . I THEREFORE ALLOW THE GROUND OF APPEAL NO. 1 & 2. 6. THE LD. D.R. SUBMITTED THAT IN THIS CASE THE AS SESSEE HAS NOT FILED ANY RETURN OF INCOME. THE AO ON THE BASIS OF INFORMATION FROM ROC FOUND THAT THE ASSESSEE HAS RE CEIVED HUGE SHARE APPLICATION MONEY DURING THE YEAR AND ISSUED SHARES OF RS. 10/- EACH AT A PREMIUM OF RS. 90/- AND ALSO AT RS. 390/-THEREBY INCREASING ITS SHARE CAPITAL AND SHARE PREMIUM BY A GGREGATE AMOUNT OF RS. 4 79 90 000/-. THE LD. D.R. ARGUED TH AT IN THIS CASE THE AO HAS TANGIBLE AND FRESH MATERIAL TO FORM A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THE LD. D.R. WHILE REFERRING TO THE REASONS RECORDED SUBMITTED THAT IT IS CLEARLY MENTIONED IN THE REASONS RECORDED UNDER SECTION 148(2) OF THE AC T THAT SHARE PREMIUM TO THE TUNE OF RS.1 12 41 000/- WAS RECEIVE D BY THE ASSESSEE DURING THE YEAR. THE LD. D.R. SUBMITTED T HAT IT HAS BEEN CLEARLY RECORDED IN THE REASON THAT THE SAID P REMIUM IS NOT VERIFIABLE AS THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME AND NEEDS PROPER VERIFICATION AND THEREAFTER THE AO FOR MED THE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMEN T. THE LD. D.R. THEREFORE PRAYED THAT THE LD CIT(A) HAS WRON GLY ALLOWED THE APPEAL OF THE ASSESSEE ON THIS JURISDICTIONAL ISSUE BY HOLDING THAT THERE IS NO NEXUS BETWEEN THE MATERIAL AND REASONS TO BELIEVE AND THE GROUND NO. 1 RAISED BY THE REVENUE MAY KIND LY BE 5 ITA NO. 639/MUM/2018 M/S. MANHATTAN IMPEX PVT. LTD. ALLOWED. THE LD. DR PRAYED THAT IN VIEW OF THESE FACTS AND CIRCUMSTANCES ESPECIALLY INDEPENDENT AND TANGIBLE M ATERIALS RECEIVED FROM ROC THE LEGAL GROUND RAISED BY THE REVENUE MAY KINDLY BE ALLOWED BY SETTING ASIDE THE ORDER OF L D. CIT(A) ON THIS ISSUE. 7. THE LD AR ON THE OTHER HAND STRONGLY OPPOSED THE ARGUMENTS OF THE LD DR AND VEHEMENTLY SUBMITTED B EFORE THE BENCH THAT REOPENING OF ASSESSMENT PROCEEDINGS OF T HE ASSESSEE WAS DONE WITHOUT VALID AND LAWFUL JURISDICTION BY T HE AO AND THEREFORE THE ASSESSMENT PROCEEDINGS AS WELL AS THE CONSEQUENT ASSESSMENT FRAMED BY THE AO ARE VOID AB-INITIO AND BAD IN LAW. THE LD. A.R. WHILE TAKING US THROUGH THE REASONS RE CORDED FOR REOPENING THE ASSESSMENT CONTENDED THAT THE REASONS TO BELIEVE AS RECORDED BY THE AO UNDER SECTION 148(2) OF THE A CT HAVE ONLY STATED IN THE LAST PARA THAT ASSESSEE HAS RAISED SH ARE PREMIUM TO THE TUNE OF RS. 1 12 41 000/- AND ALL THESE FACTS A ND INFORMATION NEED VERIFICATION. THUS IN VIEW OF THESE FACTS T HE AO HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND THEREFORE THE CASE IS REQUIRED TO BE REOPENED UNDER SECTION 147 OF THE ACT TO TAX THE SAID ESCAPE D INCOME. THE LD. A.R. VEHEMENTLY ARGUED BEFORE THE BENCH THAT TH E RECOURSE CAN NOT BE HAD TO THE PROVISIONS OF SECTION 147 OF THE ACT JUST FOR MAKING VERIFICATION OF FACTS AND INFORMATION WHICH HAVE BEEN RECEIVED BY THE AO. THE LD. A.R. CONTENDED THAT T HE AO IS REQUIRED TO FORM A BELIEF ON THE BASIS OF SAID INFO RMATION RECEIVED THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT FAILING WHICH THE AO HAS NO JURISDICTION TO INITIATE THE P ROCEEDINGS 6 ITA NO. 639/MUM/2018 M/S. MANHATTAN IMPEX PVT. LTD. UNDER SECTION 147 READ WITH SECTION 148 OF THE ACT. THE LD. A.R. ARGUED THAT THE AO IS REQUIRED TO FORM A REASONABLE BELIEF THAT THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMEN T ON THE BASIS OF INFORMATION AVAILABLE TO HIM WHICH IS MISS ING IN THE INSTANT CASE AS IS APPARENT FROM THE REASONS REPROD UCED ABOVE. THE AO HAS RESORTED TO THE PROVISIONS OF SECTION 14 7 OF THE ACT TO MERELY VERIFY THE INFORMATION RECEIVED FROM ROC AN D THEREFORE THE NOTICE ISSUED UNDER SECTION 148 FOR VERIFICATIO N OF INFORMATION RECEIVED IS INVALID AND UNSUSTAINABLE IN THE EYES OF LAW. THE LD. A.R. ARGUED THAT AO CAN NOT BE ALLOWED TO TAKE RECO URSE UNDER SECTION 147 OF THE ACT TO UNDERTAKE FISHING OR ROBB ING ENQUIRY OR TO SEEKING TO VERIFY CLAIMS AS IF IT WERE A SCRUTIN Y ASSESSMENT. THEREFORE THE LD. A.R. SUBMITTED THAT IF VERIFICAT ION IS PROPOSED IN THE REASONS RECORDED THE SAME CAN NOT BE A SUBS TITUTE FOR REASON TO BELIEVE WHICH EMPOWERS THE AO TO REOPEN T HE ASSESSMENT ON THE GROUND THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE LD. A.R. THEREFORE ARGUED BEFORE THE BENCH THAT THERE IS NO FORMATION OF BELIEF OR FINDI NG BY THE AO THAT INCOME HAS ESCAPED ASSESSMENT AND THEREFORE TH E ASSESSMENT PROCEEDINGS AS WELL AS THE CONSEQUENT AS SESSMENT ORDER ARE BAD IN LAW AND HAS RIGHTLY BEEN HELD SO B Y LD CIT(A). IN DEFENCE OF HIS ARGUMENTS THE LD. A.R. RELIED ON A SERIES OF DECISIONS AS UNDER: 1. PCIT V MANZIL DINESHKUMAR SHAH (406 ITR 326 )(GUJ) 2. SLP DISMISSED BY THE HON'BLE SUPREME COURT AGAINST THE JUDGMENT OF THE HON'BLE GUJRAT HIGH COURT IN THE CASE OF PCIT V MA NZIL DINESHKUMAR SHAH 3. INDUCTOTHERAN (INDIA) P. LTD. V DCIT (356 ITR 481) (GUJARAT) 4. CHHUGAMAL RAJPAL V S P CHALIHA AND ORS. LTD. (416 I TR 435) (SC) 5. NIVI TRADING LTD V UNION OF INDIA (375 ITR 308) (BO MBAY HC) 6. CIT V MANIBEN LALJI SHAH (283 ITR 453) (BOMBAY HC) 7. CIT V BATRA BHATIA COMPANY (321 ITR 526) (DELHI HC) 8. SWATIK SAFE DEPOSIT & INVESTMENT LTD. VS. ACIT (265 TAXMAN 164) (BOMBAY HC) 7 ITA NO. 639/MUM/2018 M/S. MANHATTAN IMPEX PVT. LTD. 9. NUPOWER RENEWABLE PVT. LTD. VS. ACIT WPNO.3618 OF 2 018 DATED 07.03.2019 (BOMBAY HC) 8. THE LD. A.R. THEREFORE PRAYED THAT IN VIEW OF THE RATIO LAID DOWN BY THE APEX COURT AND VARIOUS HIGH COURTS THE ASSUMPTION OF JURISDICTION UNDER SECTION 147 OF THE ACT FOR VERIFICATION OF FACTS/INFORMATION RECEIVED FROM ROC IS BAD IN LAW AND SO IS THE CONSEQUENT ASSESSMENT FRAMED U/S 143( 3) R.W.S. 147 OF THE ACT WHICH HAS RIGHTLY BEEN DECIDED BY T HE LD. CIT(A) IN FAVOUR OF THE ASSESSEE BY HOLDING THE PROCEEDING UNDER SECTION 147 IS BAD IN LAW AND THEREFORE PRAYED BEFORE THE B ENCH THAT APPEAL OF THE REVENUE ON THIS LEGAL ISSUE MAY KINDL Y BE DISMISSED. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE IMPUGN ED ORDER AND THE REASONS RECORDED UNDER SECTION 148(2) OF THE AC T. WE NOTE THAT IN THIS CASE THE ASSESSEE HAS RAISED SHARE CAP ITAL AND SHARE PREMIUM TO THE TUNE OF RS.4 79 90 000/-. THE AO HA S RECORDED THE REASONS AS REQUIRED U/S 148(2) OF THE ACT TO R EOPEN THE ASSESSMENT AFTER RECEIVING INFORMATION FROM ROC AND RECORDED IN THE CONCLUDING PARA OF THE REASONS THAT FACTS AND INFORMATION AS TO RECEIPT OF SHARE PREMIUM TO THE TUNE OF RS.1 12 41 000/- BY THE ASSESSEE ARE NOT VERIFIABLE AS THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME. FOR THE SAKE OF CONVENIENCE AND R EADY REFERENCE THE SAID PARAS ARE EXTRACTED AGAIN AS UND ER: IN THIS CASE THE ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE INFORMATION GATHERED FROM ROC IT IS NOTICED THAT THE ASSESSEE HAS RECEIVED SHARE PREMIUM TO THE TUNE OF RS.1 12 4 1 000/- DURING THE F.Y. 2007-08 RELEVANT TO A.Y. 2008-09. FURTHER THE SHARE PREMIUM IS ALSO NOT VERIFIABLE F ROM THE RECORD AS THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME FOR THE ABOVE ME NTIONED ASSESSMENT YEAR AND 8 ITA NO. 639/MUM/2018 M/S. MANHATTAN IMPEX PVT. LTD. THEREFORE I HAVE REASON TO BELIEVE THAT INCOME CHA RGEABLE TO TAX AS INDICATED ABOVE TO THE TUNE OF RS.1 12 41 000/- HAS ESCAPED ASSESSM ENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT 1961. THEREFORE I AM SATISFIED THAT THIS IS A FIT CASE TO ISSUE NOTICE U/S 148 R.W.S. 147 OF THE INCO ME-TAX ACT 1961. 10. THUS WE NOTE THAT THE AO HAS MENTIONED IN THE R EASONS RECORDED THAT THE FACTS AND INFORMATION AS REGARDS SHARE PREMIUM ARE NOT VERIFIABLE AS NO RETURN OF INCOME H AS BEEN FILED BY THE ASSESSEE AND CONSIDERING THESE FACTS HE HA S REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT AND ACCORDINGLY INITIATED PROCEEDINGS UNDER SECTIO N 147 OF THE ACT. WE FIND MERIT IN THE CONTENTIONS AND ARGUMENT S OF THE LD. A.R. THAT THE AO HAS NOT FORMED ANY INDEPENDENT BEL IEF OR RECORDED A FINDING THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT BUT MERELY STATED IN THE REASON TO BELIE VE THAT THESE FACTS AND INFORMATION NEED PROPER VERIFICATION AND HENCE REOPENED THE CASE IN ORDER TO CARRY OUT THE VERIFIC ATION OF THESE FACTS WHICH ARE NOT PERMISSIBLE UNDER THE ACT. THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY A SERIES OF DECISIO NS AS REFERRED TO DURING THE HEARING BY THE LD COUNSEL OF THE ASSE SSEE AND ARE DISCUSSED HEREUNDER: (A) IN THE CASE OF PCIT VS MANZIL DINESH KUMAR SHAH (SUPRA) THE HONBLE GUJRAT HIGH COURT HAS HELD THA T FORMATION OF INDEPENDENT OPINION BY THE AO IS MANDA TORY CONDITION AND MERE MENTIONING OF NEED FOR DEEP VERI FICATION OF INFORMATION RECEIVED IS NOT A VALID GROUND FOR R EOPENING. THE HON'BLE COURT HAS HELD THAT REOPENING OF ASSESS MENT COULD NOT BE PERMITTED FOR FISHING OR ROBBING ENQUI RY AS IT WOULD NOT SATISFY THE REQUIREMENT OF THE AO HAVING REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPE D 9 ITA NO. 639/MUM/2018 M/S. MANHATTAN IMPEX PVT. LTD. ASSESSMENT. IN THIS CASE THE AO HAS RECORDED TH AT I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2009-10 DUE TO OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR AS SESSMENT AND THUS THE CASE NEEDS TO BE REOPENED AS THE INFOR MATION RECEIVED BY THIS OFFICE NEEDS DEEP VERIFICATION. T HE HONBLE COURT HAS HELD THAT HAD THE AO ON THE BASIS OF INFO RMATION MADE AVAILABLE TO HIM AND UPON APPLYING HIS MIND TO SUCH INFORMATION FORMED A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT THE COURT WOULD HAVE RIGHTL Y ALLOWED HIM TO REASSESS THE INCOME BUT IN THE PRESE NT CASE HE RECORDED THAT INFORMATION REQUIRED DEEP VERIFICA TION AND LATER RECONSTITUTION OF MANDATORY WORDS THAT HE BEL IEVED THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMEN T WOULD NOT CURE THIS FUNDAMENTAL DEFECT. THE HONBL E SUPREME COURT HAS DISMISSED THE SPECIAL LEAVE PETIT ION FILED BY THE REVENUE IN THE ABOVE CASE AS REPORTED IN (20 19) 101 TAXMANN.COM 259 (SC) WHEREIN THEREBY UPHOLDING THE VIEW TAKEN BY THE HONBLE GUJARAT HIGH COURT IN THE ABOV E CASE. (B) IN THE CASE OF INDUCTOTHERAN (INDIA) P. LTD. V DCIT (SUPRA) THE HONBLE GUJARAT HIGH COURT HAS HELD THA T THE REASSESSMENT NOTICE IS NOT PERMISSIBLE MERELY FOR VERIFICATION OF CLAIM MADE UNDER SECTION 80HHC OF T HE ACT. THE RELEVANT EXTRACT OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IS REPRODUCED BELOW: 18. REVERTING TO THE FACTS OF THE PRESENT CASE WE NOTICE THAT IN TWO OUT OF THE FOUR REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING THE 10 ITA NO. 639/MUM/2018 M/S. MANHATTAN IMPEX PVT. LTD. ASSESSMENT HE STATED THAT HE NEED TO VERIFY THE CL AIMS. IN THE SECOND GROUND HE HAD RECORDED THAT THE ADMISSIBILITY OF T HE BAD DEBTS WRITTEN OFF REQUIRED TO BE VERIFIED. IN THE FOURTH GROUND ALSO HE HAD RECORDED THAT THE ADMISSIBILITY OF ROYALTY CLAIM WAS REQUIRED TO BE V ERIFIED. WE ARE IN AGREE- MENT WITH THE CONTENTION OF THE COUNSEL FOR THE PET ITIONER THAT FOR A MERE] VERIFICATION OF THE CLAIM THE POWER FOR REOPENING OF ASSESSMENT COULD NOT BE EXERCISED. THE ASSESSING OFFICER IN THE GUISE OF PO WER TO REOPEN AI ASSESSMENT CANNOT SEEK TO UNDERTAKE A FISHING OR R OVING INQUIRY AND SEE] TO VERIFY THE CLAIMS AS IF IT WERE A SCRUTINY ASSESSME NT. (C) IN THE CASE OF CHHUGAMAL RAJPAL V S P CHALIHA A ND ORS. LTD. (SUPRA) THE HONBLE SUPREME COURT HAS HE LD THAT THE AO MUST HAVE PRIMA FACIE GROUNDS FOR ISSUING NO TICE U/S 148. THE OPERATIVE PART IS REPRODUCED AS UNDE R: HELD (I) THAT THE INCOME-TAX OFFICER HAD NOT EVEN COME TO A PRIMA FADE CONCLUSION THAT THE LOAN TRANSACTIONS TO WHICH HE R EFERRED WERE NOT GENUINE TRANSACTIONS : HE APPEARED TO HAVE ONLY A VAGUE FEE LING THAT THEY MIGHT BE BOGUS TRANSACTIONS. SUCH A CONCLUSION DID NOT FULFI L THE REQUIREMENTS OF SECTION 151(2). UNDER THAT SECTION HE HAD TO GIVE R EASONS FOR ISSUING A NOTICE UNDER SECTION 148. HE SHOULD HAVE SOME PRIMA FACIE GROUNDS BEFORE HIM FOR TAKING ACTION UNDER SECTION 148. HIS CONCLUSION THA T THERE WAS A CASE FOR INVESTIGATING THE TRUTH OF THE ALLEGED TRANSACTIONS WAS NOT THE SAME THING AS SAYING THAT THERE WERE REASONS FOR THE ISSUE OF THE NOTICE. THE COMMISSIONER HAD MECHANICALLY ACCORDED PERMISSION. THE IMPORTANT SAFEGUARDS PROVIDED IN SECTIONS 147 AND 151 WERE LIGHTLY TREATED BY THE OF FICER AND THE COMMISSIONER. THE INCOME-TAX OFFICER COULD NOT HAVE HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT BY REASON OF THE APPELLANT-FIRM'S FAILURE TO DISCLOSE MATERIAL FACTS AND IF THE COMMISSIONER HAD READ THE REPORT CAREFULLY HE COULD NOT HAVE COME TO THE CONCLUSION THAT THIS WAS A FIT CASE FOR ISSUING A NOTICE UNDER SECTION 148. THE NOTICE ISSU ED UNDER SECTION 148 WAS THEREFORE INVALID. THUS THE COURT OBSERVED THAT AO HAS RECORDED IN HIS REPORT THAT THERE IS A CASE FOR INVESTIGATION AS TO THE TRUTH OF THE ALLEGED BOGUS TRANSACTIONS AND COURT HELD THAT THIS DOES NOT MEET THE REQUIREMENTS TO ISSUE NOTICE UNDE R SECTION 148 OF THE ACT. 11 ITA NO. 639/MUM/2018 M/S. MANHATTAN IMPEX PVT. LTD. (D) IN THE CASE OF NIVI TRADING LTD V UNION OF INDI A (SUPRA) & OTHERS (SUPRA) THE HONBLE BOMBAY HIGH COURT HAS HELD THAT IF MORE DETAILS ARE SOUGHT OR SOME VERIFICATIO N IS PROPOSED THAT CAN NOT BE A SUBSTITUTION FOR REASON WHICH LED THE AO TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE COURT HAS HELD AS UNDER: HELD ALLOWING THE PETITION THAT THE RETURN OF IN COME WAS FILED. THERE WAS A PROCESSING AND VERIFICATION THEREOF. IN THE RETURN OF INCOME AND ON THE RES- PONDENTS' OWN SHOWING ON ITS VERIFICATION THE LONG -TERM CAPITAL GAINS AND DIVIDEND INCOME IN THE SUM CAME TO BE DISCLOSED AND EQUALLY ANOTHER SUM (RS. 1 21 33 429) AS GIFT. THE REVENUE PROCEEDED ON THE FOOTING THAT THESE SHARES WERE GIFTED WITHOUT CONSIDERATION. IT WAS TH IS FACT WHICH IT WANTED TO VERIFY AND PARTICULARLY WHETHER THE VALUE OF THESE SHARES HAD BEEN COMPUTED ON THE MARKET VALUE. THE TAX AUTHORITIES DID NOT ST ATE THAT ANY INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT: ALL THAT THE REVENUE DESIRED WAS VERIFICATION OF CERTAIN DETAILS AND PERTAINING TO T HE GIFT. THAT WAS NOT FOUNDED ON THE BELIEF THAT ANY INCOME WHICH WAS CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AND HENCE SUCH VERIFICATION WAS NECESS ARY. THAT BELIEF WAS NOT RECORDED. THE NOTICE OF REASSESSMENT WAS NOT VALID. (E) IN THE CASE OF CIT V MANIBEN LALJI SHAH (SUPRA) THE HONBLE BOMBAY HIGH COURT HAS HELD THAT THE REOPENI NG OF ASSESSMENT UNDER SECTION 147 TO SCRUTINIZE THE INVE STMENT MADE IN THE FLAT PURCHASED IS NOT VALID AS THE AO O NLY SEEKS TO FIND OUT THE SOURCE OF FUNDS AND SAME DOES NOT C ONSTITUTE ANY REASON FOR BELIEF THAT INCOME HAS ESCAPED ASSES SMENT SO AS TO INVOKE SECTION 148 OF THE ACT AND ACCORDIN GLY THE APPEAL OF THE REVENUE WAS DISMISSED. (F) IN THE CASE OF CIT V BATRA BHATIA COMPANY (SUPR A) THE HONBLE DELHI HIGH COURT HAS HELD WHILE DISMISSING THE APPEAL OF THE REVENUE THAT LD. CIT(A) AS WELL AS TR IBUNAL HAD GIVEN A CONCURRENT FINDING THAT THERE WAS NO MA TERIAL 12 ITA NO. 639/MUM/2018 M/S. MANHATTAN IMPEX PVT. LTD. BEFORE THE AO ON THE BASIS OF WHICH THE AO WOULD HA VE HAD A BELIEF THAT AGRICULTURAL LAND SOLD BY THE ASSESSE E WAS A CAPITAL RECEIPT WITHIN THE MEANING OF SECTION 2(14) OF THE ACT AND EXPRESSION OF THE AO REQUIRES MUCH DEEPER SCRU TINY INDICATED THAT HE WAS MERE EMBARKING ON MERE PRESUMPTIONS WITHOUT ANY BELIEF MUCH LESS BELIEF BA SED ON REASON AND MATERIAL AND THUS THE REASSESSMENT WAS N OT VALID. 11. IN VIEW OF THE RATIO LAID DOWN IN THE VARIOUS D ECISIONS AS DISCUSSED ABOVE VIS-A-VIS FACTS OF THE ASSESSEE CAS E WE ARE OF THE CONSIDERED VIEW THAT THE AO HAS NOT FORMED A PRIMA FACIE AND INDEPENDENT BELIEF IN THE REASONS RECORDED THAT INC OME HAS ESCAPED ASSESSMENT BUT INITIATED PROCEEDINGS U/S 1 47 OF THE ACT FOR CARRYING OUT THE VERIFICATION OF FACTS/INFORMAT ION QUA THE SHARE PREMIUM RAISED BY THE ASSESSEE. UNDER THESE FACTS AND CIRCUMSTANCES WE ARE IN FULL AGREEMENT WITH THE FI NDING OF THE LD. CIT(A) HOLDING THE PROCEEDINGS UNDER SECTION 14 7 OF THE ACT AS INVALID UNDER THESE FACTS AND CIRCUMSTANCES THE ORDER OF LD. CIT(A) IS REQUIRED TO BE UPHELD ON THE JURISDICTI ONAL ISSUE. CONSEQUENTLY THE LEGAL GROUND RAISED BY THE REVENUE IS DISMISSED. 12. IN THE OTHER GROUNDS OF APPEAL THE REVENUE HAS RAISED THE DELETION OF ADDITION OF RS.4 79 90 000/- BY LD. CIT (A) WHICH HAS BEEN MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 13 ITA NO. 639/MUM/2018 M/S. MANHATTAN IMPEX PVT. LTD. 13. SINCE WE HAVE UPHELD THE ORDER OF LD. CIT(A) ON JURISDICTIONAL ISSUE THE GROUNDS RAISED ON MERIT B Y THE REVENUE ARE NOT BEING ADJUDICATED. 14. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.03.2021. SD /- SD/- SD/ - SD/ - ( PAVAN KUMAR GADALE ) JUDICIAL MEMBER (RAJESH KUMAR) ACCOUNTANT MEMBER MUMBAI DATE : 08.03.2021 *KISHORE* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R F BENCH MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T MUMBAI