1. In these petitions, the petitioners have assailed two notices dated 7 December 2012 issued by the Assessing Officer under Section 148 of the Income Tax Act ("the Act") seeking to reopen assessment for A.Y. 2006-07 and A.Y. 2007-08 respectively. The petitioners have also challenged the order dated 12 June 2012 rejecting the petitioners' objection to the reasons in support of the impugned notices dated 7 December 2012.
2. The reasons recorded in support of both the impugned notices for Assessment Year 2006-07 and 2007-08 are identical and read as under :â
"The assessee company is engaged in trading of various industrial products viz. Crucibles, graphites, spare parts of industry equipments safety equipments, safety masks etc. The suppliers of trading goods of the company both foreign as well as domestics. The clients of the company include Indian Ordinance authorities, DRDO BARC apart from other private corporate.
During the scrutiny proceedings in the past assessment years as well as pending scrutiny proceedings for assessment year 2008-09 (pending with Addl. CIT), it is noticed that certain suppliers were found as bogus and additions are made on the issue. For A.Y.2007-08 addition on GP from bogus sales turnover as well as investment in bogus purchase amounting to Rs. 4.76 crores was made and the case is pending before CIT(A).
Verification of the suppliers indicated one party M/s. Saileela Trading P. Ltd. from which the assessee had shown purchase worth Rs.14.5 crores for A.Y. 2008-09.This supplier has been proved as bogus biller during the course of various searches/survey by Mumbai investigation Wing.
Knowing this fact as well as the status of additions made in the past assessment years, it was decided to undertake action u/s. 133A of the I.T. Act to find out further evidences strengthening the bogus purchase transactions. The result of survey clearly brings out findings supporting and strengthening the evidences regarding the bogus purchase transactions done by the assessee company from year to year. A rough working of Rs. 35 crores (from A.Y. 2005-06 to A.Y. 2010-11) worth of purchase are found to be from the parties which are non existent/bogus billers. The chart annexed shows the year wise amount of bogus transactions done by the assessee. Hence, accordingly I have reason to believe that income chargeable to tax for A.Y. 2005-067 has escaped assessment.
Issue notice u/s. 148."
3. On 12 June 2012, the Assessing Officer rejected the objections of the petitioners by separate orders for Assessment Year 2006-07 to 2007-08. In particular the objections to lack of jurisdiction on the basis that there is a change of opinion was considered in the following manner.
(Extracted portion of the order)
"Accordingly, in the course of statements recorded u/s.131 of the IT Act, 1961, some of the parties denied of having any transaction with the assessee and admitted of issuing bogus purchase bills by passing the accommodation entires in their books of account. None of the suspected companies were fond doing business at the addresses given in the books of account of the assessee company, purchase bills impounded during the course of survey proceedings indicates that there are no delivery challans, lorry nos. Transport details mentioned on the purchase bills from suspected companies. These findings brought on record as result of survey proceedings and assessment proceedings for A.Y 2008-09 clearly gives new set of facts for purchases from suspected parties in A.Y. 2006-07. Hence, reopening of assessment is supported by facts and concrete findings and not mere change of opinion".
4. At the very outset, Mr. Mistry, learned Senior Counsel appearing for the petitioners pointed out that the reasons disclosed in support of both the impugned notices are identical and similar to the reasons which have been disclosed in support of another notice dated 7 December 2012 issued to the petitioner seeking to reopen the assessment for A.Y. 2005-06. The notice dated 7 December 2012 in respect of A.Y. 2005-06 was also a subject matter of challenge in this Court being W.P. No.2860 of 2012. This Court by an order dated 18 June 2014 passed in W.P. No. 2860 of 2012 refused to entertain the petition. However according to Mr. Mistry, learned Senior Counsel for the petitioners the decision rendered by this Court in W.P. No.2860 of 2012 on 18 June 2014 is in applicable to the present facts on account of the following :â
(a)Â Â The present impugned notices have been issued within 4 years from the end of the relevant assessment year, unlike the notice in earlier Writ Petition No. 2860/2012 which was issued beyond the period of 4 years. Therefore, failure to disclose fully and truly all facts necessary for assessment was the subject matter of consideration in the earlier petition which would not arise in this case.
(b)Â Â During the proceedings for assessment under Section 143(3) of the Act in both A.Y. 2006-07 and 2007-08 complete details were sought for and supplied in respect of the parties from whom goods were purchased unlike in proceeding under Section 143(3) of the Act in A.Y. 2005-06. Therefore, in Writ Petition No. 2860/2012 this Court had come to a conclusion that there was no occasion in Section 143(3) proceedings for the Assessing Officer to apply his mind in respect of purchases made from Rahul Industries as the same was never called for or submitted. Therefore, it is submitted that for the years under consideration i.e. A.Y. 2006-07 and 2007-08 there is admittedly a change of opinion on the part of the Assessing Officer in issuing the impugned notices beyond jurisdiction; and
(d) The reasons as disclosed to the petitioners for both A.Y. 2006-07 and 2007-08 are bereft of particulars. Therefore, the reasons do not indicate the basis of reason to believe on the part of the Assessing Officer that income chargeable to tax has escaped assessment.
For all the above reasons it is submitted that these petitions need to be allowed.
3. Mr. Suresh Kumar, learned Counsel for the revenue in support of the impugned notices in both the petitions submits as under:â
(a)Â Â In these petitions the assessment proceedings sought to be reopened is less than four years as compared to the notice being beyond four years in A.Y.2005-06 and the challenge to the same in W.P. No. 2860/2012 was not entertained. It must follow that the test to acquire jurisdiction in cases of reopening for less than four years would be far less strict as compared to notices seeking to reopen assessment proceeding beyond four years.
(b)Â Â The impugned notices came to be issued, as in subsequent scrutiny proceeding for A.Y. 2008-09 and survey proceedings the respondent revenue received information that purchases claimed by the petitioners were alleged to be bogus. These bills issued in favour of the petitioner now informed to be bogus was not a subject matter of consideration during the assessment proceedings under Section 143(3) of the Act. Thus there was no change of opinion. In view of the above, it is submitted that the petitions be dismissed.
4. We have considered the rival submissions. We are considering the facts in these two petitions independently of the decision rendered by us in W.P. 2860/2012 on 18 June 2014 challenging the reassessment notice for A.Y. 2005-06 However, it must be pointed out that in W.P. No.2860/2012 the assessment sought to be reopened was for a period of more than 4 years from the end of the relevant assessment year. Therefore a higher degree of satisfaction is required in cases where the assessment sought to be reopened is beyond four years from the end of the relevant assessment year than in these cases where the assessment sought to be opened is within a period of four years from the end of the relevant assessment year. In the present proceedings seeking to reopen the assessment for A.Y. 2007-07and 2007-08 after completion of assessment proceedings under Section 143(3) of the Act, the revenue received information during the course of survey proceedings under Section 153A of the Act and during the assessment proceeding for A.Y. 2008-09 that certain purchases during the subject assessment years 2006-07 and 2007-08 were under bogus bills. During the course of assessment proceedings under Section 143(3) of the Act for A.Y. 2006-07 and 2007-08 the Assessing officer asked the petitioners for complete details of their purchases and the address of the sellers and the details as sought for by the revenue were furnished by the petitioners. However, it is only subsequently that the revenue has learnt during the survey proceedings and the assessment proceedings for A.Y. 2008-09 that purchases from certain sellers as intimated in the chart annexed to the reasons furnished to the petitioners were allegedly bogus. In this view of the matter, during the original assessment proceedings the Assessing Officer had proceeded on the basis that the purchase details furnished by the petitioners including the bills of purchase are genuine. The information obtained subsequent to the assessment indicates that certain purchase details may not be genuine. Therefore, the occasion to consider the genuineness of the purchase bill was never a subject matter of scrutiny in the proceedings under Section 143(3) of the Act for A.Y. 2006-07 and 2007-08. We are of the view that subsequent information received by the revenue would call for investigation. So far as submission of lack of particulars in the grounds furnished to the petitioner is concerned, we find that the chart annexed to the reasons did indicate the names of the sellers, year of purchase and quantum of purchase alleged to be bogus.
5. In the above circumstances, we do not interfere with the impugned notices dated 7 December 2012 for reassessment under Section-148 of the Act. We however, make it clear that our observations are prima facie observations made in the context of deciding whether or not the exercise of our jurisdiction under Article-226 of the Constitution of India. The Assessing officer will not be influenced in any manner by the observations made in this petition and pass orders in reassessment proceedings on merits including the submissions of the petitioner that the Assessing Officer does not have jurisdiction to issue the impugned notices.
All contentions of the parties are left open.
6. Accordingly, both the petitions are dismissed at the stage of admission. No order as to costs.