# M/S Ambuj Food Pvt. Ltd v. Principal Comm. Of Income Tax & Ors

- **Citation:** (2022) 4 ILRA 957
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022-04-11
- **Case number:** Writ-Tax No. 48 of 2022
- **Bench:** Devendra Kumar Upadhyaya, Subhash Vidyarthi
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-ambuj-food-pvt-ltd-v-principal-comm-of-income-tax-ors-48381
- **Pages:** 14

## Headnote

A. Tax Law - Reassessment - Income Tax
Act, 1961 - Sections 148, 143(1), 143(2) &
142(1) - At the stage of the notice of
reopening of the assessment, the Court
has only to see whether there is prima
facie some material on the basis of which
the Department could reopen the case.
The sufficiency or correctness of the
material is not a thing to be considered at
this stage. (Para 14)

The detailed discussion made by in the
assessment order of the petitioner for the A.Y.
2012-13, it was established that the companies
listed (at sl. Nos. 3 to 5 in the chart given) are
shell companies used solely for providing
accommodation entries and during the A.Y.
2013-14,
the
petitioner
had
routed
its
undisclosed funds amounting to Rs. 95,00,000/-
through entry providers and absorbed it in its
books of accounts. It is amply evident that the
transactions shown by the petitioner (as given
in the chart) are not genuine transactions and
accommodation entries of pre-arranged share
application
money
and
share
premium
aggregating to Rs. 95,00,000/- was obtained by
the petitioner with the help of a syndicate of
operators by way of loopholes of the system in
A.Y. 2013-14. In this way, the unaccounted
money of the petitioner amounting to Rs.
95,00,000/- was routed to its books of accounts.
(Para 20)
958 INDIAN LAW REPORTS ALLAHABAD SERIES
It would be immaterial whether the
Income Tax Officer at the time of making
the original assessment could or, could
not have found by further enquiry or
investigation, whether the transaction
was genuine or not, if on the basis of
subsequent information, the Income Tax
Officer arrives at a conclusion, after
satisfying the twin conditions prescribed
in Section 147(a) of the Act, that the
assessee had not made a full and true
disclosure of the material facts at the time
of original assessment and therefore
income chargeable to tax had escaped
assessment. (Para 21)

B. The obligation on the assessee to
disclose the material facts -- or what are
called, primary facts -- is not a mere
disclosure but a disclosure which is full
and true. A false disclosure is not a true
disclosure. The disclosure must not only
be true but must be full -- "fully and
truly". (Para 22)

True it is that Income Tax Officer could
have investigated the truth of the said
assertion--which he actually did in the
subsequent assessment year--but that
does not relieve the assessee of his
obligation,
placed
upon
him
by
the
statute, to disclose fully and truly all
material facts. (Para 22)

At the stage of the validity of the notice
u/Ss. 148/147, the enquiry is only to see
whether there are reasonable grounds for
the Income Tax Officer to believe and not
whether the omission/failure and the
escapement of income is established. It is
necessary to keep this distinction in mind.
(Para 22)

The facts regarding the petitioner's dealings
with shell companies for routing its own
unaccounted money into its books of accounts
had not been trul

## Text

_Characters 0–39,797 of 46,085. This is a partial read: ask again with offset=39797 for what follows._

4 All. M/S Ambuj Food Pvt. Ltd. Vs. Principal Comm. Of Income Tax & Ors.
957
provisions of the VAT Act are applicable
upon the respondents to claim any benefit
or
non-taxable,
the
respondents
are
required to produce all the documents,
forms, books of account, etc. as prescribed
under the Act.

16. In the event of failure by the
respondents, the levy of tax cannot be said
to be unjustified, but the Tribunal, in the
case in hand, has just referred to the
provisions and passed the impugned order
deleting levy of tax upon the respondents
without verifying any books of account or
material.

17. In view of the aforesaid facts &
circumstances of the case, the impugned
orders passed by the Tribunal are set aside.
The matter is remanded back to the
Tribunal to reconsider the matter afresh in
the light of the observations made above
and decide the same in accordance with
law.

18. The revisions are allowed. The
question of law is answered accordingly.

19. It is expected that since the matter
is very old, the Tribunal may take all
possible effort to decide the same within a
period of three months from the date of
receipt of a copy of this order.

20. The revisionist undertakes to
serve the copy of this order within a a
month from today. In the event of failure on
the part of the revisionist, the benefit of this
order shall not be accorded to the
revisionist.
----------
(2022)04ILR A957
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 11.04.2022

BEFORE

THE HON'BLE DEVENDRA KUMAR
UPADHYAYA, J.
THE HON'BLE SUBHASH VIDYARTHI, J.

Writ-Tax No. 48 of 2022

M/S Ambuj Food Pvt. Ltd. ...Petitioner
Versus
Principal Comm. Of Income Tax & Ors.
 ...Respondents

Counsel for the Petitioner:
Pradeep Agrawal

Counsel for the Respondents:
Manish Misra

A. Tax Law - Reassessment - Income Tax
Act, 1961 - Sections 148, 143(1), 143(2) &
142(1) - At the stage of the notice of
reopening of the assessment, the Court
has only to see whether there is prima
facie some material on the basis of which
the Department could reopen the case.
The sufficiency or correctness of the
material is not a thing to be considered at
this stage. (Para 14)

The detailed discussion made by in the
assessment order of the petitioner for the A.Y.
2012-13, it was established that the companies
listed (at sl. Nos. 3 to 5 in the chart given) are
shell companies used solely for providing
accommodation entries and during the A.Y.
2013-14,
the
petitioner
had
routed
its
undisclosed funds amounting to Rs. 95,00,000/-
through entry providers and absorbed it in its
books of accounts. It is amply evident that the
transactions shown by the petitioner (as given
in the chart) are not genuine transactions and
accommodation entries of pre-arranged share
application
money
and
share
premium
aggregating to Rs. 95,00,000/- was obtained by
the petitioner with the help of a syndicate of
operators by way of loopholes of the system in
A.Y. 2013-14. In this way, the unaccounted
money of the petitioner amounting to Rs.
95,00,000/- was routed to its books of accounts.
(Para 20)
958 INDIAN LAW REPORTS ALLAHABAD SERIES
It would be immaterial whether the
Income Tax Officer at the time of making
the original assessment could or, could
not have found by further enquiry or
investigation, whether the transaction
was genuine or not, if on the basis of
subsequent information, the Income Tax
Officer arrives at a conclusion, after
satisfying the twin conditions prescribed
in Section 147(a) of the Act, that the
assessee had not made a full and true
disclosure of the material facts at the time
of original assessment and therefore
income chargeable to tax had escaped
assessment. (Para 21)

B. The obligation on the assessee to
disclose the material facts -- or what are
called, primary facts -- is not a mere
disclosure but a disclosure which is full
and true. A false disclosure is not a true
disclosure. The disclosure must not only
be true but must be full -- "fully and
truly". (Para 22)

True it is that Income Tax Officer could
have investigated the truth of the said
assertion--which he actually did in the
subsequent assessment year--but that
does not relieve the assessee of his
obligation,
placed
upon
him
by
the
statute, to disclose fully and truly all
material facts. (Para 22)

At the stage of the validity of the notice
u/Ss. 148/147, the enquiry is only to see
whether there are reasonable grounds for
the Income Tax Officer to believe and not
whether the omission/failure and the
escapement of income is established. It is
necessary to keep this distinction in mind.
(Para 22)

The facts regarding the petitioner's dealings
with shell companies for routing its own
unaccounted money into its books of accounts
had not been truly and fully disclosed by the
petitioner during the original assessment and
scrutiny assessment, though the information
was embedded in the records produced before
the A.O. and could be found out on a detailed
scrutiny and investigation. On the basis of
information received subsequently, the A.O. has
formulated a reason to believe that the
petitioner's
income
amounting
to
Rs.
95,00,000/- has escaped assessment and this
reason cannot be said to have been formulated
on the basis of information already available
before the A.O. (Para 23)

C. Words and Phrases - "change of
opinion" - The words "change of opinion"
imply formulation of opinion and then a
change thereof. In terms of assessment
proceedings, it means formulation of belief by
an assessing officer resulting from what he
thinks on a particular question. It is a result of
understanding, experience and reflection. (Para
25)

Before interfering with the proposed reopening
of the assessment on the ground that the same
is based only on a change in opinion, the court
ought to verify whether the assessment earlier
made has either expressly or by necessary
implication expressed an opinion on a matter
which is the basis of the alleged escapement of
income that was taxable.

Every attempt to bring to tax, income that
has
escaped
assessment,
cannot
be
absorbed by judicial intervention on an
assumed change of opinion even in cases
where the order of assessment does not
address itself to a given aspect sought to
be
examined
in
the
reassessment
proceedings. (Para 25)

In the present case, during the original
assessment the A.O. had not formed any
opinion w.r.t. the facts regarding routing of
funds in the garb of share premium, which
surfaced from the information received from
the ADIT (InVs), Unit-6, Kolkata, the ACIT,
Circle-3(2), New Delhi and the ITO (InVs),
Unit-4, Kolkata. It was after receipt of this
information, that the A.O. examined the
records and found that the petitioner had
received funds to the tune of Rs. 95,00,000/-
by way of routing funds materialized by M/s.
Radha Fincom Pvt. Ltd. & others, which were
found to be merely paper concerns having no
existent and real business. In this way, the
unaccounted
money
of
the
petitioner
amounting to Rs. 95,00,000/- was routed to its
books of accounts. (Para 24, 26)
4 All. M/S Ambuj Food Pvt. Ltd. Vs. Principal Comm. Of Income Tax & Ors.
959
D. The bar of initiating re-assessment
proceedings after a lapse of four
years since the original assessment
contained
in
the
First
Proviso
appended to S.147 of the Act, would
not apply to the present case. The
facts regarding the petitioner's dealings
with shell companies for routing its own
unaccounted money into its books of
accounts had not been truly and fully
disclosed by the petitioner during the
original
assessment
and
scrutiny
assessment. Therefore, the present case
falls within the exception carved out in
the First proviso, "unless any income
chargeable
to
tax
has
escaped
assessment for such assessment year
by reason of the failure on the part of
the assessee to disclose fully and
truly all material facts necessary for
his assessment, for that assessment
year
and
the
bar
of
initiating
reassessment proceedings after a lapse of
four years since the original assessment
contained in the First Proviso appended to
Section 147 of the Act, would not apply to
the present case.

The fact that information was embedded in
the records produced before the A.O. and
could be found on a detailed scrutiny and
investigation, would not make it a true and
full disclosure and as per the Explanation 1
appended to S.147 of the Act. (Para 28,
29)

In the instant case, the notice u/s 148 of
the Act has been issued by the assessing
officer after receipt of information and
conducting
an
investigation
and
after
forming a reason to believe that the
petitioner did not truly and fully disclose all
the material facts because of which income
amounting to Rs. 95,00,000/- has escaped
assessment. There is prima facie material
available on record before the assessing
officer
for
issuing
a
notice
for
reassessment. (Para 30)

Writ petition dismissed. (E-4)

Precedent followed:

1. Raymond Woolen Mills Ltd. Vs I.T.O., (1999)
236 ITR 36 (SC) (Para 14)

2. Raymond Woollen Mills Ltd. Vs ITO, (2008)
14 SCC 218 (Para 15)

3. Phool Chand Bajrang Lal Vs ITO, (1993) 4
SCC 77 (Para 21)

4. Srikrishna (P) Ltd. Vs ITO, (1996) 9 SCC 534
(Para 24)

5. CIT Vs Techspan India (P) Ltd., (2018) 6 SCC
685 (Para 25)

Present petition challenges the validity of
notice dated 31.03.2021, issued by the
DCIT Circle Faizabad and order dated
03.03.2022,
passed
by
the
National
Faceless Assessment Centre, rejecting the
objections filed by the petitioner.

(Delivered by Hon'ble Subhash Vidyarthi, J.)

1. Heard Sri Pradeep Agarwal assisted
by Sri. Amar Mani Tiwari, Advocate, the
learned Counsel for the petitioner and Shri
Manish Misra, learned Counsel for the
respondents.

2. By means of this Writ Petition filed
under Article 226 of the Constitution of India,
the petitioner has challenged the validity of a
notice dated 31.03.2021 issued by the DCIT
Circle Faizabad under Section 148 of the
Income Tax Act, 1961 (hereinafter referred to
as the 'Act') proposing to assess/reassess the
petitioner's income/loss for the assessment
year 2013-14 and directing the petitioner to
submit a return for the said assessment year.
The petitioner has also challenged the order
dated 03-03-2022 passed by the National
Faceless Assessment Centre, rejecting the
objections filed by the petitioner in response
to the aforesaid notice.

3. The petitioner's case is that, it had
filed its return for the Assessment Year
960 INDIAN LAW REPORTS ALLAHABAD SERIES
2013-14 on 05-08-2013 declaring a total
income of Rs.3,65,440/-, which was
processed on 19-05-2014 under Section
143 (1) of the Act. The case was selected
for scrutiny and notices under Section 143
(2) and Section 142 (1) were issued
alongwith a questionnaire asking for certain
details.
The
questionnaire
inter
alia
demanded production of all the share
capital details of the petitioner's shareholders alongwith PAN and mode of
payment for obtaining shares in his name or
in the name of family members, and also
the details of share premium receipts. The
petitioner
submitted
a
reply
giving
statement of income and complete address
of sundry creditors alongwith the details of
all investor companies to whom shares
were allotted. The petitioner stated that
shares were allotted at a premium to some
companies. There is no bar in the
Companies Act against issuance of shares
at a high premium, and there was no such
bar in the Income Tax Act.

4. The petitioner submitted that if the
shares were issued at fair market value,
there was no question of any addition and
there was no contravention. The fair market
value of the shares could be calculated as
per formula given in Rule 110 A of the Act,
as per which, the fair market value of the
company's share works out to be Rs.206.50.
The shares were issued at the fair market
value
and,
therefore,
there
was
no
contravention of law.

5. It has also been submitted by the
petitioner that the matter of increase in
share
capital
was
examined
during
assessment proceedings under Section 143
(3) of the Act and by means of an order
dated 10-11-2014, the petitioner was
assessed for a total income of Rs.3,75,440/-
. Nothing adverse came out from the
information submitted in response to the
questionnaire
and
an
addition
of
Rs.10,000/-
only
was
made
to
the
petitioner's income on account of internally
vouched expenses debited in Profit & Loss
account.

6. On 31-03-2021, the A.O. issued a
notice under Section 148 of the Act for the
Assessment Year 2013-14, stating that he
had reason to believe that the petitioner's
income chargeable to tax has escaped
assessment within the meaning of Section
147 of the Act.

7. The reasons for re-opening of
assessment states that on the basis of
information received from the ADIT (Inv.),
Unit - 6, Kolkata, the ACIT, Circle - 3 (2),
New Delhi and the ITO (Inv.), Unit - 4,
Kolkata, regarding routing of funds in the
garb of share premium, the A.O. examined
the returns of other assesses and found that
the petitioner had received funds to the tune
of Rs.95,00,000/- (Rs.4,75,000/- towards
share capital and Rs.90,25,000/- towards
share premium thereon) by way of routing
funds materialized by M/s Radha Fincom
Pvt. Ltd. & others in A.Y. 2013-14 As per the
departmental
database
of
bogus
shell
companies, accommodation entry providers
and operators, the company was merely a
paper concern having no existent and real
business. Finally the cases of these assessees
for A.Y.2012-13 were re-opened under
Section 147 of the Act and after a detailed
and in-depth analysis of the information in
possession of the office, it was established
that the petitioner had routed its own money
in the garb of shares application money and
share premium through a number of shell
companies operating from Kolkata.

8. In the course of analysis, the
financial data of succeeding years was also
4 All. M/S Ambuj Food Pvt. Ltd. Vs. Principal Comm. Of Income Tax & Ors.
961
examined, which revealed that all these
shares were transferred in the names of the
Directors and Institutions related to the
Directors of the petitioner company in F.Y.
2015-16, as per details tabulated below: -

Date
of
Allot
ment
Co
mp
any
na
me
Shares
issued
Tran
sferr
ed on
Tran
sferr
ed to

1
30032013
Tru
thf
ul
Der
vco
n
Pvt.
Ltd
.
12,500
18082014
Rahu
l
Dalm
ia
Bene
ficiar
y
Trust
2
30032013
We
lkin
Inv
est
me
nts
Pvt.
Ltd
.

12,500
18082014
Rahu
l
Dalm
ia
Bene
ficiar
y
Trust
3
30032013
Pun
am
Ch
and
Mo
di
Pai
nts
Pvt.
Ltd
.
7,500

18082014
Rahu
l
Dalm
ia
Bene
ficiar
y
Trust

4
30032013
Gy
an
Dar
sha
2,500
01122014
Rahu
l
Dalm
ia
n
Co
mo
dea
l
Pvt.
Ltd
.
Bene
ficiar
y
Trust
5
30032013

Ra
dha
Fin
co
m
Ltd
,
12,500
01122014
Rahu
l
Dalm
ia
Bene
ficiar
y
Trust

Tot
al
47,500

9. From the detailed discussion made
in the assessment order of the petitioner for
the A.Y. 2012-13, it was established that
the companies listed at sl. nos. 3 to 5 are
shell companies used solely for providing
accommodation entries and during the
A.Y.2013-14, the petitioner had routed its
undisclosed
funds
amounting
to
Rs.95,00,000/- through entry providers and
absorbed it in its books of accounts. It is
amply evident that the transactions shown
by the petitioner as given in the above chart
are
not
genuine
transactions
and
accommodation entries of pre-arranged
share
application
money
and
share
premium aggregating to Rs.95,00,000/- was
obtained by the petitioner with the help of a
syndicate of operators by way of loopholes
of the system in A.Y. 2013-14. In this way,
the unaccounted money of the petitioner
amounting to Rs.95,00,000/- was routed to
its books of accounts.

10. On 01-09-2021, the petitioner
submitted its objections against the notice
under Section 148 of the Act mainly on the
962 INDIAN LAW REPORTS ALLAHABAD SERIES
grounds that the assessment was completed
under Section 143 (3) and more than four
years have passed from the end of the
relevant assessment. Therefore, as per the
Proviso appended to Section 147 of the
Act, no action under Section 147 of the Act
could be initiated unless any income
chargeable to tax has escaped assessment
because of the fault of the assesse to
disclose truly and fully all material facts
necessary for the assessment. The issue of
share capital had already been examined by
the A.O. in depth and no adverse inference
could be drawn. Therefore, the notice was
barred by the first Proviso to Section 147 of
the Act. The petitioner further stated that its
case was completed under Section 143 (3)
and the replies and supporting documents
of the petitioner were already submitted
during scrutiny. The assessment cannot be
re-opened on the basis of re-examination of
the documents already on record, as it
would amount to a change of opinion.

11. The petitioner also submitted that
the case of the petitioner as well as that of
M/s Arohul Foods Pvt. Ltd., which is a
sister concern of the petitioner, was reopened under Section 148 of the Act for
A.Y. 2012-13 on similar issue, where reopening of the case in the matter of M/s
Arohul Foods Pvt. Ltd. was quashed by the
ITAT, Lucknow Bench vide order dated
11-08-2021.

12. On 03-03-2022, the National
Faceless Assessment Centre passed an
order rejecting the petitioner's objections
stating that in the assessment order, the
A.O. has not mentioned anything about the
verification of the issue of introduction of
new share capital and share premium.
Subsequently, based on the information
gathered during the course of assessment
for A.Y. 2012-13, on examination of the
petitioner's balance sheet for A.Y. 2013-14,
it was found that the petitioner had received
funds to the tune of Rs.95,00,000/- as given
in the chart below, by way of routing of
funds materialized by M/s Radha Fincom
Pvt. Ltd. and others: -

Name of
share
holder
Address
Shar
es
issue
d
Amount
received
1 Truthful
Dervcon
Pvt. Ltd.

7,
Ganesh
Chandra
Avenue
12,5
00
25,00,00
0/-
2 Welkin
Investm
ents Pvt.
Ltd.
P-38,
Princep
Street,
1st
Floor,
Room
No.
1,
Kolkata
12,5
00
25,00,00
0/-

3 Punam
Chand
Modi
Paints
Pvt. Ltd.
71,
Canning
Street,
Kolkata
-
700001

7,50
0
15,00,00
0/-
4 Gyan
Darshan
Comode
al
Pvt.
Ltd.
133,
Canning
Street,
Kolkata,
700001
2,50
0
5,00,000
/-
5 Radha
Fincom
Ltd,

133,
Canning
Street,
Kolkata,
700001
12,5
00
25,00,00
0/-

Total
47,5
00
95,00,00
0/-

13. It was also stated in the order
rejecting objections that during A.Y. 2013-
4 All. M/S Ambuj Food Pvt. Ltd. Vs. Principal Comm. Of Income Tax & Ors.
963
14
the
petitioner
had
received
Rs.25,00,000/- from M/s Radha Fincom
Pvt. Ltd. as share capital and share
premium. It was reported from the end of
the ADIT (Inv.) Unit-6, Kolata that M/s
Radha Fincom has generated funds mainly
from Ankush Sales Pvt. Ltd., the core
company, which was the main distributor
of funds after receiving it through channel
of companies, which at terminal deposited
the amount in their accounts in cash. It was
revealed in examination of documents
submitted during assessment proceedings
that M/s Radha Fincom had also received
funds from M/s Ankush Sales Pvt. Ltd.
Thus, there was tangible material in
possession of the A.O. with regard to
transactions entered into by the petitioner
with bogus shell companies providing
accommodation entries in guise of share
capital and share premium. For the
aforesaid
reasons,
the
petitioner's
objections against the notice under Section
148 of the Act have been rejected by the
National Faceless Assessment Centre.

14. Before proceeding to examine the
rival contentions advanced on behalf the
contesting parties, it would be appropriate
to have a look at some pronouncements of
the Hon'ble Supreme Court explaining the
scope of interference while examining the
validity of a notice issued under Section
148 of the Act in a Writ Petition under
Article 226 of the Constitution of India. In
Raymond Woolen Mills Ltd. Versus
I.T.O., (1999) 236 ITR 36 (SC), the
Hon'ble Supreme Court has held that at the
stage of the notice of reopening of the
assessment, the Court has only to see
whether there is prima facie some material
on the basis of which the Department could
reopen the case. The sufficiency or
correctness of the material is not a thing to
be considered at this stage.

15. Again, in Raymond Woollen
Mills Ltd. v. ITO, (2008) 14 SCC 218, the
Hon'ble Supreme Court reiterated that
while examining the validity of a notice
issued under Section 148 of the Income
Tax Act, "we do not have to give a final
decision
as
to
whether
there
is
a
suppression of material facts by the
assessee or not. We have only to see
whether there was prima facie some
material on the basis of which the
Department could reopen the case. The
sufficiency or correctness of the material is
not a thing to be considered at this stage."

16. In light of the aforesaid
pronouncements of the Hon'ble Supreme
Court we proceed to examine the rival
submissions advanced on behalf of the
parties so as to ascertain as to whether there
was prima facie some material on the basis
of which the Department could reopen the
case, without going into the sufficiency or
correctness of the material.

17. Mr. Pradeep Agrawal, the learned
Counsel representing the petitioner, has
submitted that the petitioner had fully and
truly disclosed the entire material during
the assessment proceedings and there is no
fresh
material
for
initiation
of
the
proceedings. Drawing attention of the
Court to the averments made in paragraph 5
of the order disposing off the petitioner's
objection, wherein it is stated that the A.O.
has not mentioned anything about the
verification on the issue of introduction of
new share capital and share premium, he
has submitted that the A.O. committed an
error, for which the petitioner is being
penalized by making the re-assessment.
The initiation of the proceedings under
Sections 147 / 148 of the Act is based on a
review of the existing material, which is
not permissible in law. The proceedings
964 INDIAN LAW REPORTS ALLAHABAD SERIES
initiated after a lapse of more than four
years are barred by the First Proviso
appended to Section 147 of the Act. The
provisions of Sections 147 / 148 of the Act
cannot be invoked for making a roving or
fishing inquiry on a vague or a remote
information pertaining to the earlier year in
absence of any specific averment that the
income has escaped assessment.

18. Per contra, Sri. Manish Mishra,
the learned Counsel for the Income Tax
department,
has
submitted
that
the
petitioner had not made true and full
disclosure of all material facts and a mere
production of the account books and other
material before the A.O., from which the
material facts could be discovered by the
A.O., would not necessarily amount to full
and true disclosure within the meaning of
Explanation 1 appended to Section 147 of
the Act. The Directorate of Income-tax
(System) flagged an information on the
insight portal of the A.O. that the petitioner
had routed its own money in the garb of
share
application
money
and
share
premium through a number of shell
companies operating from Kolkata. From
an examination of the petitioner's balance
sheet for the A.Y. 2013-14, it was found
that the company had received funds to the
tune of Rs.95,00,000/- by way of routing of
funds materialized by M/s Radha Fincom
Pvt. Ltd., which was one among the shell
companies through which the share capital
and share premium had been collected by
the petitioner and which transaction was
proved as bogus during the previous A.Y.
Although the issue of share capital was
examined by the A.O. during scrutiny, but
some facts emerged subsequently, upon the
information received from the I & CI wing
after
completion
of
the
assessment
proceedings under Section 143 (3) of the
Act. The A.O. has issued the process of reassessment under Section 147 / 148 of the
Act as on the basis of information received
subsequent to the original assessment, he
had reason to believe that the amount of
Rs.95,00,000/- received by the petitioner,
which was chargeable to tax, had escaped
assessment.

19. The reasons recorded by the A.O.
for initiating the process of re-assessment
state that on the basis of information
received from the ADIT (Inv.), Unit - 6,
Kolkata, the ACIT, Circle - 3 (2), New
Delhi and the ITO (Inv.), Unit - 4, Kolkata,
regarding routing of funds in the garb of
share premium, the A.O. examined the
returns of other assessees and found that
the petitioner had received funds to the tune
of Rs.95,00,000/- by way of routing of
funds materialized by M/s Radha Fincom
Pvt. Ltd. & others in A.Y. 2013-14 As per
the departmental database of bogus shell
companies, accommodation entry providers
and operators, the company was merely a
paper concern having no existent and real
business. Finally the case of these assessees
for A.Y.2012-13 were re-opened under
Section 147 of the Act and after a detailed
and in-depth analysis of the information in
possession of the office, it was established
that the petitioner had routed its own
money in the garb of shares application
money and share premium through a
number of shell companies operating from
Kolkata.

20. The reasons supplied further state
that from the detailed discussion made by
in the assessment order of the petitioner for
the A.Y. 2012-13, it was established that
the companies listed at sl. nos. 3 to 5 in the
chart given in para 8 above, are shell
companies used solely for providing
accommodation entries and during the
A.Y.2013-14, the petitioner had routed its
4 All. M/S Ambuj Food Pvt. Ltd. Vs. Principal Comm. Of Income Tax & Ors.
965
undisclosed
funds
amounting
to
Rs.95,00,000/- through entry providers and
absorbed it in its books of accounts. It is
amply evident that the transactions shown
by the petitioner as given in the chart given
in para 8 are not genuine transactions and
accommodation entries of pre-arranged
share
application
money
and
share
premium aggregating to Rs.95,00,000/- was
obtained by the petitioner with the help of a
syndicate of operators by way of loopholes
of the system in A.Y. 2013-14. In this way,
the unaccounted money of the petitioner
amounting to Rs.95,00,000/- was routed to
its books of accounts.

21. In Phool Chand Bajrang Lal v.
ITO, (1993) 4 SCC 77, the Hon'ble
Supreme Court held that: -

"25. From a combined review of the
judgments of this Court, it follows that an
Income Tax Officer acquires jurisdiction to
reopen assessment under Section 147(a)
read with Section 148 of the Income Tax
Act, 1961 only if on the basis of specific,
reliable and relevant information coming to
his possession subsequently, he has reasons
which he must record, to believe that by
reason of omission or failure on the part of
the assessee to make a true and full
disclosure of all material facts necessary
for his assessment during the concluded
assessment proceedings, any part of his
income, profit or gains chargeable to
income tax has escaped assessment. He
may start reassessment proceedings either
because some fresh facts come to light
which were not previously disclosed or
some information with regard to the facts
previously
disclosed
comes
into
his
possession which tends to expose the
untruthfulness of those facts. In such
situations, it is not a case of mere change
of opinion or the drawing of a different
inference from the same facts as were
earlier available but acting on fresh
information. Since, the belief is that of the
Income Tax Officer, the sufficiency of
reasons for forming the belief, is not for the
Court to judge but it is open to an assessee
to establish that there in fact existed no
belief or that the belief was not at all a
bona fide one or was based on vague,
irrelevant and non-specific information. To
that limited extent, the Court may look into
the conclusion arrived at by the Income
Tax Officer and examine whether there was
any material available on the record from
which the requisite belief could be formed
by the Income Tax Officer and further
whether that material had any rational
connection or a live link for the formation
of the requisite belief. It would be
immaterial whether the Income Tax Officer
at the time of making the original
assessment could or, could not have found
by further enquiry or investigation, whether
the transaction was genuine or not, if on
the basis of subsequent information, the
Income Tax Officer arrives at a conclusion,
after
satisfying
the
twin
conditions
prescribed in Section 147(a) of the Act, that
the assessee had not made a full and true
disclosure of the material facts at the time
of original assessment and therefore
income chargeable to tax had escaped
assessment."

 (Emphasis supplied)

22. In Srikrishna (P) Ltd. v. ITO,
(1996) 9 SCC 534, the Hon'ble Supreme
Court held that: -

"Now, what needs to be emphasised is
that the obligation on the assessee to
disclose the material facts -- or what are
called, primary facts -- is not a mere
disclosure but a disclosure which is full
and true. A false disclosure is not a true
966 INDIAN LAW REPORTS ALLAHABAD SERIES
disclosure. The disclosure must not only be
true but must be full -- "fully and truly". A
false assertion, or statement, of material
fact, therefore, attracts the jurisdiction of
the Income Tax Officer under Sections
34/147. Take this very case: the Income
Tax Officer says that on the basis of
investigations and enquiries made during
the assessment proceedings relating to the
subsequent assessment year, he has come
into possession of material, on the basis of
which, he has reasons to believe that the
assessee had put forward certain bogus
and false unsecured hundi loans said to
have been taken by him from non-existent
persons or his dummies, as the case may
be, and that on that account income
chargeable to tax has escaped assessment.
According to him, this was a false assertion
to the knowledge of the assessee. The
Income Tax Officer says that during the
assessment
relating
to
subsequent
assessment year, similar loans (from some
of these very persons) were found to be
bogus. On that basis, he seeks to reopen the
assessment. It is necessary to remember
that we are at the stage of reopening only.
The question is whether, in the above
circumstances, the assessee can say, with
any justification, that he had fully and truly
disclosed the material facts necessary for
his assessment for that year. Having
created and recorded bogus entries of
loans, with what face can the assessee say
that he had truly and fully disclosed all
material facts necessary for his assessment
for that year? True it is that Income Tax
Officer could have investigated the truth of
the said assertion -- which he actually did
in the subsequent assessment year -- but
that does not relieve the assessee of his
obligation, placed upon him by the statute,
to disclose fully and truly all material facts.
Indubitably, whether a loan, alleged to
have been taken by the assessee, is true or
false, is a material fact -- and not an
inference, factual or legal, to be drawn
from given facts. In this case, it is shown to
us that ten persons (who are alleged to
have advanced loans to the assessee in a
total sum of Rs 3,80,000 out of the total
hundi
loans
of
Rs
8,53,298)
were
established to be bogus persons or mere
name-lenders
in
the
assessment
proceedings relating to the subsequent
assessment year. Does it not furnish a
reasonable ground for the Income Tax
Officer to believe that on account of the
failure -- indeed not a mere failure but a
positive design to mislead -- of the assessee
to disclose all material facts, fully and
truly, necessary for his assessment for that
year, income has escaped assessment? We
are of the firm opinion that it does. It is
necessary to reiterate that we are now at
the stage of the validity of the notice under
Sections 148/147. The enquiry at this stage
is only to see whether there are reasonable
grounds for the Income Tax Officer to
believe
and
not
whether
the
omission/failure and the escapement of
income is established. It is necessary to
keep this distinction in mind.

10. A recent decision of this Court in
Phool Chand Bajrang Lal v. ITO, we are
gratified to note, adopts an identical view
of law and we are in respectful agreement
with it. The decision rightly emphasises the
obligation of the assessee to disclose all
material facts necessary for making his
assessment
fully
and
truly. A
false
disclosure, it is held, does not satisfy the
said requirement. We are also in respectful
agreement with the following holding in the
said decision"

 (Emphasis supplied)

23. From the reasons for initiating the
process of re-assessment, we find that the
aforesaid facts regarding the petitioner's
4 All. M/S Ambuj Food Pvt. Ltd. Vs. Principal Comm. Of Income Tax & Ors.
967
dealings with shell companies for routing
its own unaccounted money into its books
of accounts had not been truly and fully
disclosed by the petitioner during the
original
assessment
and
scrutiny
assessment, though the information was
embedded in the records produced before
the A.O. and could be found out on a
detailed scrutiny and investigation. On the
basis of information received subsequently,
the A.O. has formulated a reason to believe
that the petitioner's income amounting to
Rs.95,00,000/- has escaped assessment and
this reason cannot be said to have been
formulated on the basis of information
already
available
before
the
A.O.
Therefore, the submission to this effect
made by the learned Counsel for the
petitioner cannot be accepted.

24. Now we consider the next
submission made on behalf of the
petitioner, that the initiation of the
proceedings under Sections 147 / 148 of
the Act is based on a review of the
existing material, which is not permissible
in law. From the discussion made above, it
is clear that the fact that the petitioner had
routed its undisclosed funds amounting to
Rs.95,00,000/- through entry providers
and absorbed it in its books of accounts by
way of accommodation entries of prearranged share application money and
share premium with the help of a
syndicate of operators and thus an
unaccounted money of the petitioner
amounting to Rs.95,00,000/- was routed to
its books of accounts, had not been
examined by the AO during the original
assessment for want of a full and true
disclosure of facts by the petitioner.
Therefore, the A.O. did not examine the
aforesaid issues and he did not form an
opinion regarding the same during the
original assessment proceedings.

25. The meaning of the expression
"change of opinion" has been explained by
the Hon'ble Supreme Court in CIT v.
Techspan India (P) Ltd., (2018) 6 SCC
685, in the following words: -

"16. To check whether it is a case of
change of opinion or not one has to see its
meaning in literal as well as legal terms.
The words "change of opinion" imply
formulation of opinion and then a change
thereof.
In
terms
of
assessment
proceedings, it means formulation of belief
by an assessing officer resulting from what
he thinks on a particular question. It is a
result of understanding, experience and
reflection.

17. It is well settled and held by this
Court in a catena of judgments and it
would be sufficient to refer to CIT v.
Kelvinator of India Ltd. wherein this Court
has held as under: (SCC p. 725, para 5-7)

"5. ... where the assessing officer has
reason to believe that income has escaped
assessment, confers jurisdiction to reopen
the assessment. Therefore, post-1-4-1989,
power to reopen is much wider. However,
one
needs
to
give
a
schematic
interpretation to the words "reason to
believe"....
Section
147
would
give
arbitrary powers to the assessing officer to
reopen assessments on the basis of "mere
change of opinion", which cannot be per se
reason to reopen.

6. We must also keep in mind the
conceptual difference between power to
review and power to reassess. The
assessing officer has no power to review;
he has the power to reassess. But
reassessment has to be based on fulfilment
of certain precondition 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.
968 INDIAN LAW REPORTS ALLAHABAD SERIES

7. One must treat the concept of
"change of opinion" as an in-built test to
check abuse of power by the assessing
officer. Hence, after 1-4-1989, assessing
officer 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 a live link with the formation of the
belief."

18.
Before
interfering
with
the
proposed reopening of the assessment on
the ground that the same is based only on a
change in opinion, the court ought to verify
whether the assessment earlier made has
either
expressly
or
by
necessary
implication expressed an opinion on a
matter which is the basis of the alleged
escapement of income that was taxable. If
the assessment order is non-speaking,
cryptic or perfunctory in nature, it may be
difficult to attribute to the assessing officer
any opinion on the questions that are
raised in the proposed reassessment
proceedings. Every attempt to bring to tax,
income that has escaped assessment,
cannot be absorbed by judicial intervention
on an assumed change of opinion even in
cases where the order of assessment does
not address itself to a given aspect sought
to be examined in the reassessment
proceedings."

 (Emphasis supplied)

26. In the present case, during the
original assessment the A.O. had not
formed any opinion in respect of the facts
regarding routing of funds in the garb of
share premium, which surfaced from the
information received from the ADIT (Inv.),
Unit - 6, Kolkata, the ACIT, Circle - 3 (2),
New Delhi and the ITO (Inv.), Unit - 4,
Kolkata. It was after receipt of this
information, that the A.O. examined the
records and found that the petitioner had
received funds to the tune of Rs.95,00,000/-
by way of routing funds materialized by
M/s Radha Fincom Pvt. Ltd. & others,
which were found to be merely paper
concerns having no existent and real
business. In this way, the unaccounted
money of the petitioner amounting to
Rs.95,00,000/- was routed to its books of
accounts.

27. Regarding the submission of the
learned Counsel for the petitioner, that
assessment of the petitioner as well as that
of M/s Arohul Foods Pvt. Ltd., which is a
sister concern of the petitioner, was reopened under Section 148 of the Act for
A.Y. 2012-13 on similar issue, where reopening of the case in the matter of M/s
Arohul Foods Pvt. Ltd. was quashed by the
ITAT, Lucknow Bench vide order dated
11-08-2021, it has been stated in the
Counter affidavit that the department has
not accepted the order of the ITAT and has
challenged the order by filing an appeal
under Section 260 A of the Act. Even
otherwise, an order passed by the ITAT
would not be relevant when the validity of
the re-assessment is being examined by this
Court in a Writ Petition.

28.

Regarding
the
petitioner's
submission that the proceedings initiated
after a lapse of more than four years are
barred by the First Proviso appended to
Section 147 of the Act, we find that Section
147 of the Act, as it stood at the relevant
time, was as follows: -

"147. Income escaping assessment.--
If the Assessing Officer, has reason to
believe that any income chargeable to tax
has escaped assessment for any assessment
year, he may, subject to the provisions of
Sections 148 to 153, assess or reassess
such income and also any other income
chargeable to tax which has escaped
4 All. M/S Ambuj Food Pvt. Ltd. Vs. Principal Comm.