Ankit Financial Services Ltd. Vs DCIT (Gujarat High Court)
The Gujarat High Court considered a petition challenging a notice issued under Section 148 of the Income Tax Act for reopening the assessment for Assessment Year (AY) 2010-11. The notice was issued within four years from the end of the relevant assessment year.
The petitioner, engaged in the business of investment and financing, had filed a return declaring nil income. The return was accepted under Section 143(1) of the Act. Subsequently, the Assessing Officer (AO) issued a notice under Section 148 on the ground that income chargeable to tax had escaped assessment. The reasons for reopening were supplied to the assessee, who filed objections contending that the reassessment proceedings were based on conjectures, borrowed information, and statements of persons with whom the assessee had no connection.
Initially, the petitioner challenged the notice on the ground of non-compliance with Section 151 of the Act, alleging that the requisite approval had not been obtained. However, the Revenue demonstrated that approval from the Commissioner had been obtained before issuance of the notice. The petitioner conceded that this ground did not survive.
The principal challenge thereafter was that the reopening was based solely on information received from the Principal Director of Income Tax (Investigation), Ahmedabad, and therefore represented “borrowed satisfaction” rather than an independent belief of the AO. The petitioner argued that there was no tangible material available with the AO and that the assessment could not be reopened merely on the basis of information gathered during a search conducted in the case of Shri Pravinkumar Jain.
