Case: Debashu Services Private Limited Vs. Deputy Commissioner of Income Tax, Circle 1 & Others

P.R. Bora, J.1. Rule. Rule is made returnable forthwith with the consent of the learned counsel for the parties.2. Validity of a notice under Section 148 of the Income Tax Act, 1961 served on the petitioner company, whereby reassessment has been ordered is challenged by it in these two writ petitions. Notice in Writ Petition No.2005/2013 relates to reassessment for A.Y. 2006 2007 whereas notice in Writ Petition No. 6606/2013 pertains to the reassessment for A.Y. 2008 2009. Since grounds of challenge in both the writ petitions are same, they are being decided by this common Judgment.3. Petitioner is a private limited company duly registered under the provisions of the Companies Act, 1956. It is a regular assessee under the Income Tax Act, 1961 (for short the Act). The petitioner company is the authorized dealer for spare parts of Kirloskar Pumps and does exclusive supply to mines of Western Coalfields Limited and South Eastern Coalfields Limited.4. Petitioner company had filed income tax return for the assessment year 2010 2011 under Section 139(D) of the Act showing taxable income Rs.80,54,340/- for the said year. The said return was processed under Section 143(1) of the Act and subsequently it was also subjected to scrutiny under Section 143(3) vide order dated 20/3/2013 passed by the Assessing Officer. In the scrutiny so carried out, the Assessing Officer disallowed the expenditure of Order Procurement Charges (OPC), being commission paid to agents, amounting to Rs.1,62,92,870/. As averred in the petition the said expenditure was disallowed by the Assessing Officer holding that no services were rendered by the agents and no such services were ever required in the course of business of the petitioner company. The said Assessing Officer thereafter issued notice dated 28/3/2013 under Section 148 of the Act calling upon the petitioner to deliver the return in prescribed form for the A.Y. 2006 2007. Similar notice of the even date was also issued for A.Y. 2008 2009. The petitioner company gave reply to the said notices and also requested the respondents to clarify for what reasons the notices under Section 148 of the Act were issued to the petitioner. Respondent no.2 along with covering letter dated 08/08/2013 communicated to the petitioner reasons for reopening the assessment under Section 147 and issuance of notices under Section 148 of the Act. The reasons so communicated by the respondent no.2, reveal that according to the Assessing Officer the Order Procurement Charges to the tune of Rs.1,12,60,843/- for A.Y.2006 2007 and Rs.1,19,59,063/- for A.Y. 2008-2009 cannot be accepted as business expenditure and to that extent the income had escaped assessment.5. Being aggrieved by the notices so issued under Section 148 of the Act and being dissatisfied with the reasons stated for issuance of such notices, the petitioner has filed the present writ petitions.6. On 11/12/2013 this Court issued notice in both the matters. On 15th January, 2014 further order was passed by this Court directing the parties to maintain status-quo as on the said date. The record further shows that on 28th February, 2014 the Court had directed the respondents 1 and 2 to place necessary documents along with reasons and order sheet on record for proper consideration of the matter. The record further shows that on 12th March, 2014 when the matters came up for haring, it was observed by this Court that the reasons supplied to the petitioner on 8/8/2013 do not carry any date and also do not show the signature of Assessing Officer who recorded the said reasons. It was also observed that the copy of the reasons placed on record was carrying date on it in handwriting. In such circumstances, the respondents were permitted to file additional affidavit giving the necessary clarifications. The respondents have accordingly filed the additional affidavit. The petitioners have also filed reply affidavit to the clarification so issued.7. The petitioner has assailed the impugned notices whereby reassessment has been ordered for A.Y. 2006 2007 and A.Y. 2008 2009 on the following grounds:-(i) that no reasons were recorded before issuance of impugned notices dated 28/3/2013. It is a fatal defect and the impugned notices deserve to be set aside and quashed on this ground alone.(ii) that the period of four months consumed by the respondents to supply the reasons for issuance of the notices under Section 148 of the Act to the petitioner raises serious doubts about the validity of the reasons so provided and there is every reason for the petitioner to believe that reasons so supplied were tailored to substantiate the contents of the notices dated 28/3/2013.(iii) that the impugned notices are the outcome of different opinion formed by the Assessing Officer issuing notices and mere change of said opinion cannot be a ground for reopening the assessment.(iv) That the facts revealed to the Assessing Officer during the assessment proceedings for the A.Y.2010-2011 is not an information as contemplated under Section 147 of the Act on the basis of which assessment for A.Y. 2006-2007 and A.Y. 2008-2009 can be reopened.(v) that the impugned notices are based on the suspicion and not on any reasonable belief.(vi) that there is no direct nexus or live link between the material coming to the notice of the Assessing Officer for the assessment 2010 2011 and the formation of belief relating the escapement of income for the assessment year 2006 2007 and 2008 2009, in absence of which the reasons put forth by the Assessing Officer cannot be the basis for reopening the assessment.(vii) that merely because some of the facts are similar to that of the assessment year 2010 2011, the assessment for the year 2006 2007 and 2008 2009 cannot be reopened.(viii) that there is no tangible material in the hands of Assessing Officer on the basis of which the assessment of 2006 2007 and 2008 2009 have been sought to be reopened. 8. Shri Dawda the learned counsel for the petitioner made elaborate submissions on each of the aforesaid grounds and submitted that the impugned notices deserve to be quashed and set aside.9. To substantiate his contention that the reasons must be recorded before any notice under Section 148 of the Act is issued to the assessee, the learned counsel relied upon the judgment of the Gauhati High Court in the case of Eveready Industries India Ltd. V/s. Joint Commissioner of Income Tax and Ors. reported at (2000) 243 ITR 540 (Gau.). The learned counsel invited our attention to the following observations made in para 6 of the said judgment....... A bare reading of s.147 would show that in all cases where the AO intends to take action under s.147 of the Act, he must have reason to believe that any income chargeable to tax has escaped assessment for any assessment year. From the language of s.147, it is clear that the power of the AO under s. 147 is to be exercised subject to the provisions of s.148 of the Act. Under subs.(1) of s.148, the AO is required to serve on the assessee a notice before making assessment, re-assessment or recomputation under s. 147 of the Act Subs. (2) of s. 148, however, provides that before issuing any notice under subs. (1) of s. 148, the AO has to record his reasons for doing so. The reasons to be recorded by the AO under subs. (2) of s. 148 must relate to his belief under s.147 that any income chargeable to tax has escaped assessment for any assessment year. Thus the reasons for the belief of the AO that any income chargeable to tax has escaped assessment for any assessment year must exist and must be recorded before any notice under s.148(1) is issued to the assessee and before making any assessment, reassessment or recomputation under s. 147. The first question for decision in this writ petition, therefore, is whether before issuing the impugned notice, dt. 30th Oct., 1988/2nd Nov., 1998, under s. 148, the AO had reason to believe that any income of the company chargeable to tax has escaped assessment for the asst. yr. 1991-92.10. The learned counsel submitted that in the instant petitions only a four line notice dated 28/3/2013 came to be served upon the petitioner without any reasons in support thereof. The learned counsel further submitted that the reasons supplied to the petitioner on 08.08.2013 did not carry any date and also do not show signature of the officer who recorded it. The learned counsel brought to our notice that only after a demand made by the petitioner through his Chartered Accountant that the reasons were supplied to it for reopening of the assessment for A.Y.2006 2007 and 2008 2009. Learned counsel further submitted that reasons were supplied to the petitioner undisputedly after four months of the issuance of notices under Section 148 of the Act. The learned counsel submitted that though the respondents have attempted to explain the delay occurred in supplying the reasons for reopening the assessment, the reasons so given are apparently unacceptable and unconscionable. The learned counsel further submitted that from the record there is every reason to believe that no reasons were recorded before issuance of the notices dated 28/3/2013. The learned counsel submitted that the non-compliance of the aforesaid mandatory requirement alone is sufficient to quash and set aside the impugned notices.11. Shri Parchure, the learned counsel appearing for the respondents, strongly opposed the submissions made by Shri Dawda. The learned counsel submitted that before issuance of the notices dated 28/3/2013 the reasons were duly recorded by the Assessing Officer. The learned counsel submitted that the previous approval was also obtained by the competent officer before issuance of the impugned notices. The learned counsel further submitted that the reasons for reopening the assessment for the year 2006 2007 and 2008 2009 were recorded prior to the issuance of notice under Section 148 of the Act. He further submitted that the said reasons are recorded on I.T.D. system (on line system of the Income Tax Department). The learned counsel submitted that therefore there is no signature on the note or on the print of the reasons so recorded. The learned counsel further submitted that the approval of the higher authority was also taken on line through I.T.D. system before issuance of the notice and notice under Section 148 was also generated on line. The learned counsel took us through the screen shots filed on record at Annexures A and B along with the further additional affidavit filed on behalf of the respondents on 3/4/2014. The learned counsel submitted that the delay which has occurred in supplying the reasons to the petitioner for reopening the assessment have been duly explained by the respondents. The learned counsel submitted that no prejudice has been caused to the petitioner because of the delay which has occurred in supplying the reasons for reopening of the assessment. The learned counsel further submitted that the sufficient material has come to the knowledge of the Assessing Officer who assessed the income for A.Y. 2010 2011 justifying his decision to re-open the assessment for A.Y. 2006 2007 and 2008 2009.12. It is not in dispute that though the notices under Section 148 of the Act whereby the reassessment has been ordered for A.Y. 2006 2007 and 2008 2009, were issued on 28/3/2013 and appears to have been served on the petitioner on the same day, the reasons for reopening assessment under Section 148 as recorded by the Assessing Officer were provided to the petitioner on 8/8/2013 i.e. after the period of more than four months. Section 148(2) of the Act requires that the Assessing Officer shall before issuing any notice under said Section record his reasons for doing so. Respondents have placed on record the copy of screen shots along with their further additional affidavit filed on 3/4/2014. In the said affidavit sworn by respondent no.1 he has clarified that prior to issuance of the impugned notices under Section 148 of the Act the reasons were recorded on I.T.D. system i.e. on line system of Income Tax Department. It has been further explained that since reasons were on line recorded there is no signature below the reasons so recorded. The respondents have further clarified that the Assessing Officer has to record the reasons for reopening the assessment both manually as well as on I.T.D. system. It is further clarified that the approval of the higher authorities is also obtained on line. It is further mentioned that the notice under Section 148 is also generated on line. We have carefully perused the copies of screen shots placed on record as Annexures A and B which clearly demonstrate that they were generated on 28/3/2013. The petitioners have not disputed the screen shots so placed on record by the respondents. There is, therefore, no reason to disbelieve that the same were generated on 28/3/2103. It is, thus, evident that the reasons were recorded on 28/3/2013 i.e. on the date on which the notices were issued to the petitioner under Section 148 of the Act.13. Though Section 148(2) of the Act mandates recording of reasons before issuance of the notice under Section 148(1) of the Act, there seems no requirement that the notice shall be accompanied with the reasons so recorded. Having regard to the evidence on record and more particularly the screen shots dated 28/3/2013 the objection raised by the petitioner that the reasons were subsequently recorded after issuance of the notices dated 28/3/2013 must be rejected.14. Secondly, though the reasons were admittedly supplied to the petitioner after the period of more than four months of issuance of notices dated 28/3/2103, once it is established that the reasons were recorded prior to issuance of notices dated 28/3/2013, the delay occurred in supplying the reasons does not assume much significance. Moreover, the respondents have provided the reasons for occurrence of the delay. We do not find any falsity in the reasons so provided. Further as has been submitted by the respondents no prejudice has been caused to the petitioner on account of delay caused in supplying the reasons for reopening the assessment.15. As mentioned hereinbefore according to the petitioner the facts revealed to the Assessing Officer during the assessment proceedings for A.Y. 2010-2011 is not an information as contemplated under Section 147 of the Act on the basis of which the assessment for A.Y. 2006-2007 and 2008-2009 can be reopened. To substantiate this contention Shri Dawda, the learned counsel for the petitioner invited our attention to the observations made by the Honble Apex Court in the case of Commissioner of Income Tax V/s. A. Raman and Company reported at (1968) 67 ITR 11 which are reproduced in the judgment of this Court in case of Ramkrishna Ramnath V/s. Income Tax Officer reported at (1970) 77 ITR 995 (Bom.) to the effect that:expression information in the context in which it occurs means instructions or knowledge derived from an external source concerning facts or particulars or as to the law relating to the matter bearing on the assessment.The learned counsel submitted that in the aforesaid matter the petitioners therein had sought to impeach the validity of the notice under Section 148 on two grounds : (1) that the information which is relied upon by the I.T.O. for issuing the notice under s. 148 must be information which he has obtained aliunde and not merely by looking at his own order made in proceedings for a subsequent year; and (2) that the information on which the issue of the said notices is founded must relate to the particular year to which the notices themselves relate. The learned counsel submitted that both the grounds canvassed by the petitioner in the said case were accepted by the Court and the notices impugned in the said case were set aside and quashed. The learned counsel submitted that in view of interpretation given by the Honble Apex Court of the expression information, the facts used in the instant case for issuance of notice under Section 148 of the Act cannot be held as information since it is not the information extrinsic or from elsewhere but from looking to his own order passed by the Assessing Officer in the proceedings for the subsequent year i.e. A.Y. 2010 2011. The learned counsel submitted that from the information which is related to a subsequent assessment year the respondents have sought to resort to the proceedings under Section 147 against the petitioner in respect of earlier years and as such even prima facie it cannot be said that there was any reason to believe that the income chargeable for tax had escaped assessment in the years to which the impugned notices relate.16. After having gone through the text of the judgment it appears to us that interpretation made by the Honble Apex Court in the case of Commissioner of Income Tax V/s. A. Raman and Company that information means instructions or knowledge derived from an external source cannot be construed as implying that the source must be outside the record. In the earlier part of the said judgment, it is observed that:information must, it is true, have come into possession of Assessing Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an investigation of the material on record or the facts disclosed thereby or from other enquiry or research into facts of law but was not in fact obtained, the jurisdiction of the Income Tax Officer is not affected.Above observations lay down that the information may be gathered from the assessment record itself. Information as to subsequent events which brings to light material circumstances unknown but existing at the date of original assessment would equally justify a reassessment under Section 147 of the Act.17. In case of Associated Stone Industries V/s. Commissioner of Income Tax, Jaipur reported at 1997 (3) S.C. 323 the Honble Supreme Court has held that:-it is now fairly settled that the information obtained by the Income Tax Officer need not be one outside the record; it may be one obtained from the assessment records already available. The law on this point has been laid down in Salem Provident Fund Society Ltd. v. C.I.T. (42 ITR 547) and United Mercantile Co. Ltd. v. C.I.T. (64 ITR 218) . These decisions have been quoted with approval by a Constitution Bench of this Court in Anandji Haridas & Co. v. S.P. Kasture (AIR SC 565). At page 573, the Court observed thus:"In Salem Provident Fund Society Ltd. Commr. of lncome Tax, Madras (1961) 42 ITR 547 (Mad) a division Bench of the Madras High Court interpreting the scope of the words information which has come into his possession found in Sec. 34 of the Indian Income Tax Act, observed thus: We are unable to accept the extreme proposition that nothing that can be found in the record of the assessment which itself would show escape of assessment or underassessment, can be viewed as information which led to the belief that there has been escape from assessment or underassessment. Suppose a mistake in the original order of assessment is not discovered by the Income Tax Officer himself on further scrutiny but it is brought to his notice by another assessee or even by a subordinate or a superior officer, that would appear to be information disclosed to the Income Tax Officer. If the mistake itself is not extraneous to the record and the informant gathered the information from the record, the immediate source of information to the Income Tax Officer in such circumstances is in one sense extraneous to the record. It is difficult to accept the position that while what is seen by another in the record is `information what is seen by the Income Tax Officer himself is not information to him. In the latter case he just informs himself. It will be information his possession within the meaning of section 34. In such cases of obvious mistakes apparent on the face of the record of assessment, that record itself can be a source of information, if that information leads to a discovery or belief that there has been an escape of assessment or underassessment.18. The Gujarat High Court in the case of Commissioner of Income Tax V/s. Ratanlal Lallubhai reported at 112 ITR 1978 985 has given the legal position with regard to the meaning of information required by Section 147 of the Act for reassessment of income which has escaped assessment which is as follows:-(i) "information" must be instructive knowledge concerning a matter bearing on the assessment received after the completion of the original assessment;(ii) the "information" may be as to the correct state of facts or of law relating to the taxable income;(iii) such "information" must be capable of arousing or suggesting ideas or notions not before existent in the mind of the Income-tax Officer;(iv) it must be of such a nature as to acquaint, enlighten or instruct the mind of the Income-tax Officer for the first time concerning a matter pertaining to the taxable income so that he could form a reasonable belief that there has been an escapement of assessment of tax which requires to be set right by taking steps for reopening the assessment;(v) a mere change of opinion on the part of the Income-tax Officer would not be sufficient and it would not constitute "information";(vi) "information" as to any fact bearing of the assessment may be received from any external source, that is to say, from any person who knows the fact or it may be obtained even from the record of the original assessment proceedings;(vii) "information" not amounting to change of opinion as to the correct state of law may be received from research of law made by the Income-tax Officer or it may be received from an external source;.The external source from which it may be received must necessarily be of a limited character. It must be a statement or expression of the correct state of the law by a person, body or authority competent and authorized to pronounce upon the law, so that it is invested with some definiteness and authority. The report of an administrative authority like the audit department cannot constitute information for the purpose of section 147(b) of the Act for initiating reassessment proceedings.19. Having regard to the law laid down by the Honble Apex Court in the case of Associated Stone Industries V/s. Commissioner of Income Tax, Jaipur (cited supra) and considering the legal position as explained by the Gujarat High Court referred to hereinabove, we have no hesitation in holding that the facts which were revealed to the Assessing Officer who carried out the assessment for A.Y. 2010 2011 was the information as is contemplated by Section 147 of the Act leading the said officer to form a belief that the income had escaped the assessment for the A.Y. 2006 2007 and 2008 2009. 20. Now, it has to be seen whether the information received to the Assessing Officer is relating to A.Y. 2006-2007 and 2008-2009. Relying on two decisions of this Court both of the Division Bench, first in the matter of Ramkrishna Ramnath V/s. Income Tax Officer (supra) and the other in the case of Rabo India Finance Ltd v Deputy Commissioner of Income Tax and others, reported at (2012) 346 ITR 528 (Bom) , the learned counsel for the petitioner submitted that for ordering the reassessment under Section 147 of the Act the information must relate to the assessment year to which the notice relates. The learned counsel further submitted that the reasons recorded in the instant case for reopening of the assessment clearly demonstrate that the opinion recorded by said officer that the order procurement charges claimed by the assessee for A.Y. year 2006 2007 and 2008 2009 are not genuine and not allowable under Section 37 of the Act is based on the information relating to A.Y. 2010 2011 and not to the assessment year to which the notices relate. The learned counsel taking us through the reasons so recorded and more particularly to a sentence therein that the facts of the case are similar to that of assessment year 2010 2011 submitted that there was no material available pertaining to A.Y. 2006 2007 and 2008 2009 for ordering reassessment of the income tax returns submitted for the said years. The learned counsel further submitted that merely because the persons to whom the order procurement charges are paid in A.Y. 2010-2011 are not felt genuine by the Assessing Officer who assessed the income for the said year no conclusion can be drawn that the Order Procurement Charges paid to the same persons in A.Y. 2006-2007 and 2008-2009 would also not be genuine. The learned counsel submitted that the circumstances existing in a later year may not exist in a previous year and as such the Assessing Officer could not possibly have any reason to believe that the income chargeable to tax had escaped assessment in A.Y. 2006-2007 and 2008-2009. The learned counsel pointed out that in the case of Ramkrushna Ramnath (Supra) also the I.T.O. had sought to resort to proceeding under Section 147(b) on the basis of information relating to a subsequent year and that was the reason that the Division Bench quashed the said notice.21. Shri Parchure, the learned counsel for the respondent resisted the submissions so advanced on behalf of the petitioners. He submitted that the impugned notices are based on the information relating to the assessment years to which the notices relate though the said information is received to the Assessing Officer during the assessment proceedings for A.Y.2010-2011. 22. On examining the material on record in light of the observations made and the law laid down in the Judgments relied upon by the learned counsel for the petitioner, it is difficult to agree with the submissions made on behalf of the petitioner. On perusal of the reasons given by the respondents for reopening the assessment for A.Y. 2006 2007 and 2008 2009, it cannot be said that there was no information with the Assessing Officer relating to the said assessment years. No doubt the information is received to the said officer during the course of the assessment proceedings for A.Y. 2010 2011. However the said information does not seem to be restricted only to A.Y. 2010 2011. Material on record shows that petitioner company has debited the order procurement charges amounting to Rs.1,16,92,870/- in the assessment year 2010 2011 and the deduction of the said amount was claimed under Section 37(1) of the Act as business expenditure. In the scrutiny, since the Assessing Officer did not find the claim so made by the petitioner acceptable, he conducted further enquiry, recorded statements of some of the witnesses under Section 131 of the Act, collected certain other necessary information and while doing so it was noticed by him that the names of persons to whom the order procurement charges were paid in A.Y. 2006 2007 as well A.Y. 2008 2009 figure in the list of 34 persons in the return of A.Y. 2010 2011. It was further noticed by him that out of said 34 persons 5 persons/representatives outrightly denied that they had provided any services to the petitioner company. It was also found that there were cognizable discrepancies in their statement and said persons were not holding any expertise or qualification for order procurement. It was further noticed by him that Diwakar Dahat (H.U.F.) and Anil Asarkar (H.U.F.) did never provide any services to the assessee company though their names were figured in the list of agents for A.Y. 2006 2007, 2008 2009 and 2010 2011. In this background, the impugned notices came to be issued.23. Thus, a very specific information was revealed to the said officer that Diwakar Dahat (H.U.F.) and Anil Asarkar (H.U.F.) had never provided any services to the assessee company. The information that Diwakar Dahat (H.U.F.) and Anil Asarkar (H.U.F.) did never provide any services to the assessee company cannot be said to be restricted only to A.Y. 2010 2011. It extends to A.Y. 2006 2007 and A.Y. 2008 2009 also. The other fact recorded by the Assessing Officer that on his making a query, the officers of W.C.L. and S.E.C.L. informed that the mode of order procurement as was claimed by the agents allegedly employed by the petitioner firm for procuring orders was completely wrong, also cannot be said to be relating only to A.Y. 2010 2011 and appears equally relevant for A.Y. 2006 2007 and A.Y. 2008 2009.24. Now it has to be seen that whether the information so received to the Assessing Officer can be said to be sufficient to form a reasonable belief that in the assessment made in A.Y. 2006 2007 and 2008 2009 some income had escaped the assessment. As mentioned earlier, it is the contention of the petitioner that there was no tangible material in the hands of the Assessing Officer nor an iota of evidence supported by any finding on the basis of which assessment for A.Y. 2006 2007 and 2008 2009 can be reopened. It has also been contended that without any definite information to indicate that no services were actually rendered by the agents to the petitioner company during A.Y. 2006 2007 and 2008 2009 no belief could be reasonably entertained that the O.P.C. to the tune of Rs.1,12,60,843/- and Rs.1,19,59,063/- have escaped the assessment for the respective years merely on the basis of the fact that in the opinion of the Assessing Officer who assessed the income for the A.Y. 2010 2011 the said agents did not render any services to the petitioner.25. The reasons supplied by the respondents for reopening of the assessment of A.Y. 2006 2007 and 2008 2009 reveal that during the assessment proceedings for A.Y. 2010 2011 it was seen that assessee has debited the Order Procurement Charges of Rs.1,62,92,780/-. This Order Procurement Charges were paid to 34 persons for procuring orders from W.C.L. and S.E.C.L. Out of these 34 persons 5 persons/representatives outrightly denied that they had rendered services to the assessee company. Even in the case of other agents, who are stated to have provided services to the company, it was found that there were lot of discrepancies in their statements. These persons do not hold any expertise or qualification for procuring orders. It was also noted that on verification from M/s. W.C.L. It was found that the mode of order procurement claimed by the agents was completely wrong. Para 3 of the reasons say that the list of the agents to whom the Order Procurement Charges were paid for A.Y. 2006 2007 and 2008 2009 included the names of M/s. Diwakar Dahat (H.U.F.) and Anil Asarkar (H.U.F.). The note further states that during the assessment proceedings for A.Y. 2010 2011 the Kartas of both the above mentioned firms stated that they never provided any services to the petitioner company. It is, further mentioned that around 25 agents are same to whom petitioner had claimed to have paid O.P.C. during A.Y. 2010 2011. After noting all these facts, the Assessing Officer recorded a finding that he has reason to believe that the Order Procurement Charges claimed by the assessee for A.Y. 2006 2007 and 2008 2009 are not genuine and not allowable under Section 37 of the Act.26. We have already held that information revealed to the Assessing Officer during the assessment proceedings for A.Y. 2010 2011 that M/s. Diwakar Dahat (H.U.F.) and Anil Asarkar (H.U.F.) had never provided any services to the assessee company, equally relate to and has material bearing for A.Y. 2006 2007 and 2008 2009. The respondents have filed on record copies of statements of the said agents i.e. M/s. Diwakar Dahat (H.U.F.) and Anil Asarkar (H.U.F.). We have carefully perused the said statements. In his statement recorded by the Assessing Officer Shri Diwakar Dahat has clearly stated that he never did the order procurement work for Debashu Services Private Limited i.e. present petitioner. In the statement of Anil Asarkar he has also stated that he did never work for the petitioner company. We find it worth to reproduce the relevant portion from the statement of Shri Anil Asarkar which has been recorded in question answer form, which reads thus:-Q.8 It is seen from the details submitted by M/s. Debashu Services Pvt. Ltd. that you HUF and your wife have received order procurement charges of Rs.5,82,049/- and Rs.4,16,560/- respectively for A.Y. 2010 11. Please explain if no work has been carried out then why this payment was received by you.Ans. As mentioned above we have not done any work of order procurement for DSPL. We used to receive cheques from DSPL and give back the same amount in cash back to them.Q.9 Please explain to whom this cash was given.Ans. This cash was given from time to time to different persons related to DSPL on their instructions.Q.10. Please give the name of these persons.Ans. I do not know the name of these persons.Q.11. For how many years you have been receiving cheques from DSPl and giving them back the cash.Ans. As I remember, we started this practice from F.Y. 2006-07.27. The information, received to the Assessing Officer from the statement of Anil Asarkar as reproduced hereinabove, is sufficient to draw a prima facie inference that Anil Asarkar (H.U.F.) might not have worked for the petitioner company and further that it was receiving the cheques from the petitioner company and giving them the cash back from the financial year 2006 2007. We do not wish to make any comment on the veracity of the statement so given by said Shri Asarkar. We have reproduced the said statement only for the limited purpose that some information became available to the Assessing Officer relating to the assessment year 2006 2007 and 2008 2009. It appears to us that the information, which was received to the Assessing Officer as above, was sufficient for him to reasonably believe that the income had escaped assessment for the respective assessment years.28. The information which the Assessing Officer obtained at his own from the enquiries made with W.C.L. and S.E.C.L. is also relevant. W.C.L. has categorically denied any possibility of such manner of order procurement as claimed by the assessee. The Assessing Officer has stated that in response to the queries made by him the information was received to him from the General Manager (M.M.) of W.C.L. on 1/2/2013 that the process of order procurement in these organizations is quite different than what has been claimed by the assessee. It was further informed by W.C.L. that there was no practice of suppliers to have agents for procurement of order of material and no such agents were allowed by W.C.L. It was also informed that no outside agent or any outsider can generate enquiry from mine level. The denial from W.C.L. of any possibility of the order procurements in the manner as claimed by the assessee was also sufficient to believe that the order procurement charges claimed by the assessee company may not be genuine.29. We again clarify that we are not expressing any opinion regarding the truthfulness of the information so received to the Assessing Officer. We are only on the point that such information was received to the Assessing Officer which made him to believe that the Order Procurement Charges claimed by the assessee for A.Y. 2006 2007 and 2008 2009 may not be genuine. Looking to the material which has come on record, contention of the petitioner that there was no tangible material for issuing notice for reassessment of A.Y. 2006 2007 and 2008 2009 cannot be accepted. The Honble Apex Court in the case of Commissioner of Income Tax V/s. A. Raman and Company has explained that the Court may in the exercise of its powers ascertain whether the I.T.O. had in his possession any information and may also determine whether form the information the I.T.O. may have reason to believe that income chargeable to tax had escaped assessment. However, if the I.T.O. has information from which it may be stated, prima facie, that he had reason to believe that income chargeable tax had escaped assessment, it is not open to the High Court to exercise powers under Article 226 of the Constitution to set aside or vacate the notice for reassessment on a reappraisal of evidence.30. The information which we have discussed hereinbefore, received to the Assessing Officer, during the assessment proceedings for A.Y. 2010 2011 was prima facie sufficient to believe that the income chargeable to tax for the concerned years had escaped assessment. The Assessing Officer has firmly recorded his said opinion for issuing the notices under Section 148 of the Act and as held by the Honble Supreme Court in the case of Commissioner of Income Tax V/s. A. Raman and Company the notice so issued cannot be set aside by the High Court on reappraisal of the evidence so received to the Assessing Officer. Secondly, as held by the Honble Supreme Court in I.T.O. Vs Lakhmani Mewal Das, reported at 1976 CTR (SC) 220, the Court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the ITO on the point whether action should be initiated for reopening assessment. In the instant case we reiterate that Assessing Officer has expressed his satisfaction over the material received to him during the assessment proceedings for the A.Y. 2010 2011 for reopening the assessment of A.Y. 2006 2007 and 2008 2009. It is not the case of the petitioner that the reason for formation of the belief by the concerned Assessing Officer is not in good faith or for some extraneous reasons. We, therefore, do not find any force in the objections raised by the petitioner in this regard.31. The petitioner has also raised an objection that the assessment cannot be reopened on the basis of mere change of opinion. As has been submitted by the learned counsel for the petitioner the issuance of impugned notices is an outcome of a change of opinion on the part of the Assessing Officer who subsequently carried out the assessment for A.Y.2010-2011. Such course is impermissible according to the learned counsel and sufficient to set aside the impugned notices. To urge this contention the learned counsel has relied upon the Judgment of the Division Bench of this Court in the matter of NYK Line (India) Ltd Vs Deputy Commissioner of Income Tax, reported at (2012) 346 ITR 361 (Bom) , wherein, it is held that An assessment cannot be reopened on the basis of a mere change of opinion; the test is that there should be tangible material to come to a conclusion that there is an escapement of income from assessment; a mere change of opinion on the part of the AO in the course of assessment for a subsequent assessment year would not by itself legitimize the reopening of an assessment for an earlier year.The learned counsel submitted that in the case of Rabo India Finance Ltd. Vs Deputy Commissioner of Income Tax & others (supra) also the notice under Section 148 was set aside on the ground that later a different view was taken by the successor officer on the same facts which clearly amounts to a change of opinion which cannot form the basis to reopen the assessment of the assessee. The learned counsel has also placed the reliance on the Judgment of the Apex Court in the case of Commissioner of Income Tax Vs Kelvinator of India Ltd, reported at (2010) 320 ITR 561 (SC) , in para 4 of which the Honble Supreme Court has held that 4. On going through the changes, quoted above, made to s.147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, reopening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the AO to make a back assessment, but in s. 147 of the Act (w.e.f. 1st April, 1989), they are given a go by and only one condition has remained, viz., that where the AO has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post 1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words reason to believe falling which, we are afraid, s.147 would gave arbitrary powers to the AO to reopen assessments on the basis of mere change of opinion, which cannot be per se review and power to reassess. The AO has no power to review; he has the power to reassess. But reassessment has to be based on fulfillment of certain pre-condition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of change of Opinion as an inbuilt test to check abuse of power by the AO. Hence, after 1st April, 1989, AO has power to reopen, provided there is Tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have to s. 147 of the Act, as quoted the belief. Our view gets support form the changes made to s. 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words reason to believe but also inserted the word opinion in s. 147 of the Act. However, on receipt of representations form the companies against omission of the words reason to believe, Parliament reintroduced the said expression and deleted the word opinion on the ground that it would vest arbitrary powers in the AO.32. In light of the facts of the present petitions, we find Mr. Dawdas reliance on the above Judgments to be entirely misplaced. In Rabo India Finance Ltd. Vs Deputy Commissioner of Income Tax & others (supra) the assessee had placed all the material before Assessing Officer and where there was a doubt even that was clarified by the assessee, however, Assessing Officer while passing the original assessment did not give any finding in that regard. In that background, the Division Bench held that it was not open for the successor Assessing Officer to reopen the assessment and take a different view on the same facts which clearly amounts to change of opinion. In NYK Line (India) Ltd Vs Deputy Commissioner of Income Tax, the assessee, for A.Y.2006-2007 had made a disclosure in the notes, forming part of the accounts, of the nature of payments required to be made to foreign principle on account of container detention charges. The statutory auditors had also included a note in the report in that regard. Moreover the course of assessment proceedings the assessee had addressed a comprehensive letter making a full disclosure of facts. Since, the AO did not find any justification to reject the claim of the assessee in respect of the container detention charges there was no specific discussion in the course of order. The officer who carried out the assessment for the subsequent year i.e. A.Y. 2007-2008 reached to a different conclusion in respect of the container detention charges claimed by the assessee and hence directed reopening of the assessment of the A.Y. 2006-2007. In such background, the Division Bench held that a mere change of opinion in the course of a subsequent assessment year would not by itself legitimize the reopening of an assessment for an earlier year.33. In the present case facts are quite distinguishable. It is not the case of the petitioner that material which is now being considered by the Assessing Officer and more particularly that some of the agents to whom the order procurement charges were shown to have been paid never did any work of order procurement for the assessee, was there before the Assessing Officer and was considered by him at the time of framing the original assessment and that later a different view has been taken by the said officer. Both the Judgments therefore cannot lend the petitioner any assistance. Insofar as the decision of the Honble Apex Court in the case of Commissioner of Income Tax Vs Kelvinator of India Ltd is concerned, the discussion therein is purely academic and not on facts.34. It was also argued by Shri Dawda the learned counsel for the petitioner that the respondents have attempted to supplement the reasons recorded by the AO by filing affidavits subsequently. The learned counsel pointed out that the reasons which were provided to the petitioner were unsigned and undated and subsequently an effort has been made to provide the necessary explanation by filing certain affidavits. The learned counsel further submitted that in the affidavits subsequently filed the respondents have attempted to provide some material particulars which were lacking in the notice served upon the petitioner and the reasons supplied to it. He submitted that such course is impermissible To substantiate his contention the learned counsel placed his reliance on the Judgment of the Division Bench of this Court in Hindustan Lever Ltd Vs R.B. Wadkar, reported at (2004) 268 ITR 332 (Bom) . The learned counsel emphasized on the following observations made in para 20 of the said judgment:20. The reasons recorded by the AO nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the AO to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the AO to reach to the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the AO to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of the mind of the AO. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide the link between conclusion and evidence. The reasons recorded must be based on evidence. The AO, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish the vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the AO cannot be supplemented by filing an affidavit or making an oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches the Court, on the strength of affidavit or oral submissions advanced.Looking to the facts of the present case the observations recorded and the view taken by the Division Bench as above may also not be of any help to advance the case of the petitioner further. The Devision Bench of this Court set aside the impugned notices in the said cases on the ground that the reasons recorded by the A.O. were nowhere stating that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year and the second reason for setting aside the notices was that the impugned notices were beyond the period of 4 years from the end of A.Y. 1996 1997. It was also recorded by the Court that the A.O. had no jurisdiction to reopen the assessment proceedings which were concluded on the basis of assessment under Section 143(3) of the Act. In the present matters we have already noticed that the reasons which were communicated to the petitioner along with covering letter dated 8/8/2013 contain sufficient particulars. Moreover, in the reasons so communicated, the A.O. has expressly mentioned that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of those assessment years.35. The decision of the Honble Apex Court in Chhugmal Rajpal V/s. S.P. Chaliha and Ors. reported at (1971) 79 ITR 306 (SC) was also pressed in service by the learned counsel for the petitioner to urge that in the impugned reassessment notices under Section 148, since, the A.O. has not set out any reason for coming to the conclusion that it is a fit case to issue notice, both the notices are liable to be quashed. On the face of the contents of the impugned notices the argument so made by the petitioner is liable to be rejected. We have already noted that in the reasons supplied to the petitioner the A.O. has clearly recorded his opinion that he has reason to believe that the income has escaped assessment by the reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment.36. After having thoroughly considered the pleadings of the parties the resulting position according to us is:(i) that the reasons were recorded before issuance of the impugned notices;(ii) that no malafides seen in the delay caused in communicating the said reasons;(iii) that the facts revealed to the Assessing Officer during the assessment proceedings for A.Y. 2010 2011 is an information contemplated by Section 147 of the Act;(iv) that the information so revealed pertains to the assessment years to which the impugned notices relate;(v) that the said information has direct nexus and/or live link with the tax liability for A.Y. year 2006 2007 and A.Y. 2008 2009;(vi) that the material in the hands of A.O. is prima facie sufficient for him to form a belief that income had escaped assessment of the assessment years to which the impugned notices relate and therefore, reassessment is needed;(vii) that the issuance of impugned notices is not an outcome of change in opinion of the successor Assessing Officer but is based on tangible material received to him during the assessment proceedings of the subsequent year.37. The other two objections raised by the petitioner, first about the competence of respondent no.1 to issue the impugned notice and the other that the impugned action is beyond the period of limitation are kept open to be agitated before the appropriate authority.38. In view of the above, we do not find any fault with the impugned notices. It does not appear to us that the respondents have committed any illegality in initiating an action against the petitioner of reopening the assessment for A.Y. 2006 2007 and A.Y. 2008 2009. No case is made out by the petitioner to interfere in the action so initiated.

Decision:
0[ds]Looking to the facts of the present case the observations recorded and the view taken by the Division Bench as above may also not be of any help to advance the case of the petitioner further. The Devision Bench of this Court set aside the impugned notices in the said cases on the ground that the reasons recorded by the A.O. were nowhere stating that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year and the second reason for setting aside the notices was that the impugned notices were beyond the period of 4 years from the end of A.Y. 1996 1997. It was also recorded by the Court that the A.O. had no jurisdiction toreopen the assessmentproceedings which were concluded on the basis of assessment under Section 143(3) of the Act. In the present matters we have already noticed that the reasons which were communicated to the petitioner along with covering letter dated 8/8/2013 contain sufficient particulars. Moreover, in the reasons so communicated, the A.O. has expressly mentioned that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of those assessment years.35. The decision of the Honble Apex Court in Chhugmal Rajpal V/s. S.P. Chaliha and Ors. reported at (1971) 79 ITR 306 (SC) was also pressed in service by the learned counsel for the petitioner to urge that in the impugned reassessment notices under Section 148, since, the A.O. has not set out any reason for coming to the conclusion that it is a fit case to issue notice, both the notices are liable to be quashed. On the face of the contents of the impugned notices the argument so made by the petitioner is liable to be rejected. We have already noted that in the reasons supplied to the petitioner the A.O. has clearly recorded his opinion that he has reason to believe that the income has escaped assessment by the reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment.36. After having thoroughly considered the pleadings of the parties the resulting position according to us is:(i) that the reasons were recorded before issuance of the impugned notices;(ii) that no malafides seen in the delay caused in communicating the said reasons;(iii) that the facts revealed to the Assessing Officer during the assessment proceedings for A.Y. 20102011 is ancontemplated by Section 147 of the Act;(iv) that the information so revealed pertains to the assessment years to which the impugned notices relate;(v) that the said information has direct nexus and/or live link with the tax liability for A.Y. year 20062007 and A.Y. 20082009;(vi) that the material in the hands of A.O. is prima facie sufficient for him to form a belief that income had escaped assessment of the assessment years to which the impugned notices relate and therefore, reassessment is needed;(vii) that the issuance of impugned notices is not an outcome of change in opinion of the successor Assessing Officer but is based on tangible material received to him during the assessment proceedings of the subsequent year.37. The other two objections raised by the petitioner, first about the competence of respondent no.1 to issue the impugned notice and the other that the impugned action is beyond the period of limitation are kept open to be agitated before the appropriate authority.38. In view of the above, we do not find any fault with the impugned notices. It does not appear to us that the respondents have committed any illegality in initiating an action against the petitioner of reopening the assessmentfor A.Y. 20067 and A.Y. 20082009. No case is made out by the petitioner to interfere in the action so initiated.