ORDER : BHARGAV D. KARIA, J. 1. Special Civil Application No.14346 of 2019 is filed by the Petitioner Private Limited Company challenging the notice for re-opening under Section 148 of the Income Tax Act, 1961 (for short ‘the Act’) dated 25th March, 2019 for A.Y. 2012-13. Whereas, Special Civil Application No.18746 of 2019 is filed by the Petitioner Firm challenging notice dated 25th March, 2019 for A.Y. 2012-13. 2. Both these matters were heard together and are being disposed of by this common judgment and order, as Partner of the partnership firm M/s.Nagindas Kasturchand & Bros. and the Director of M/s.Newage Fire Fighting Co. Ltd. are common and the reasons recorded by the Assessing Officer for re-opening of the assessment also pertains to the same issue. 3. The brief facts of the case are as under. Facts of Special Civil Application No.14346/2019 3.1 The petitioner company filed return of income on 24th September, 2012 for A.Y. 2012-13 declaring total income of Rs.60,35,670/-. The case of the petitioner company was selected for scrutiny and assessment order dated 30th March, 2015 under Section 143(3) of the Act for A.Y. 2012-13 was passed assessing total income at Rs.74,42,564/-. 3.2 It appears that a survery was conducted by the Income Tax Authorities in case of the partnership firm (petitioner of Special Civil Application No.18746 of 2019). During the course of survey, statement of one of the partners of the petitioner firm who is also Director of the petitioner company viz. Shri Jignesh Shah, was recorded under Section 133(A) of the Act by the survey team. 3.3 The Respondent – Assessing Officer thereafter issued a notice under Section 148 of the Act to the petitioner company as well as partnership firm for re-opening of the assessment for A.Y. 2012-13 on 25th March, 2019. 3.4 The petitioner company filed return of income on 15th April, 2019 pursuant to the aforesaid notice for re-opening and sought reasons recorded by the Assessing Officer for re- opening of the assessment. 3.5 The Respondent – Assessing Officer provided the reasons recorded for re-opening of the case on 24th April, 2019, against which objections were filed on 27th May, 2019 by the petitioner company. The Respondent – Assessing Officer disposed of the objections by order dated 30th May, 2019 rejecting the same. 3.5 The Respondent – Assessing Officer provided the reasons recorded for re-opening of the case on 24th April, 2019, against which objections were filed on 27th May, 2019 by the petitioner company. The Respondent – Assessing Officer disposed of the objections by order dated 30th May, 2019 rejecting the same. The petitioner company filed further objections on 11th June, 2019 which were also rejected on 19th June, 2019 by the Respondent – Assessing Officer. 3.6 Being aggrieved, the petitioner company has preferred this petition. 4. Facts of Special Civil Application No.18746 of 2019. 4.1 The petitioner firm filed return of income on 28th September, 2012 for A.Y. 2012-13 declaring total income at Rs.56,84,130/-. 4.2 Pursuant to the survey conducted, referred to hereinabove on 04th February, 2019, notice under Section 148 of the Act was issued to the petitioner firm on 25th March, 2019, which was replied and objections were also rejected by the Respondent – Assessing Officer. The petitioner firm, therefore, preferred this petition. 5. Learned advocate Mr.K.M. Parikh for both the petitioners submitted that the reasons recorded by the Assessing Officer in case of the petitioner company and firm are based upon the statement of the Partner/Director Shri Jignesh Shah recorded during the course of survey action on 04th February, 2019 in case of the petitioner firm. It was, therefore, submitted that merely relying upon the statement of Shri Jignesh Shah, in absence of any material on record, the Respondent – Assessing Officer was not justified in re-opening of the assessment for the year under consideration. 5.1 It was submitted that the statement recorded under Section 133(A)(3)(iii) of the Act is not a statement on oath and has no evidentiary value. Learned advocate Mr.Parikh referred to the statement of Shri Jignesh Shah as reflected in the reasons recorded to point out that such statement has not been recorded on oath and the words “oath administered by” and “oath taken by” has been struck-off on the first page of statement recorded by the survey team. Learned advocate Mr.Parikh referred to the statement of Shri Jignesh Shah as reflected in the reasons recorded to point out that such statement has not been recorded on oath and the words “oath administered by” and “oath taken by” has been struck-off on the first page of statement recorded by the survey team. 5.2 It was submitted that the statement of Shri Jignesh Shah was relied upon to re-open the assessment, more particularly answers to question Nos.12 to 16 which have been reproduced in the reasons recorded, however there is no reference to any material or evidence found during the course of survey or even cited in questions raised and only on the basis of the answers given by Shri Jignesh Shah, re-opening is made with regard to the income shown in the hands of the petitioner firm though fire fighting systems which have been provided by the petitioner company. It was submitted that during the course of survey, loose papers numbering 433 were impounded by the survey team, however not a single impounded material even remotely connects, belongs or pertains to the petitioner company and it appears that the questions raised are based on data, details, facts available in the return of income already filed by the assessee and which were available with the Department prior to the survey operations. 5.3 Learned advocate Mr.Parikh, in support of his submissions, relied on the decision in case of S. Khader Khan Son reported in 352 ITR 480 (SC) to submit that no addition could be made on the basis of the statement made by the assessee unless there was corroborative material found during the course of survey, which unequivocally support the statement made by the assessee. It was submitted that on perusal of the reasons recorded, it is apparent that the entire re-opening action has been initiated on the basis of the statement. 5.4 Further reliance was placed on the decisions in case of CIT v. M.P. Scrap Traders [372 ITR 507 (Guj)], CIT v IBS Infonet (P) Ltd. [394 ITR 538 (Del)], Gajjam Chinna Yellappa [370 ITR 671 (AP)] and Krishna Developers [2017 TaxPub (DT) 1247 (Ahd-Trib)]. It was, therefore, submitted that in view of the settled legal position, the statement of Shri Jignesh Shah recorded as Partner of the Partnership Firm cannot be made basis for re-opening of the assessment of the petitioner company. It was, therefore, submitted that in view of the settled legal position, the statement of Shri Jignesh Shah recorded as Partner of the Partnership Firm cannot be made basis for re-opening of the assessment of the petitioner company. It was also submitted that the statement was recorded as Partner of the Firm and not as a Director of the Company. 5.5 Learned advocate Mr.Parikh referred to and relied upon the Instructions F.No.286/2/2003- IT (Inv. II) dated 10th March, 2003 issued by the Central Board of Direct Taxes as well as letter F.No. 286/98/2013-IT (INV. II) dated 18th December, 2014 of the Central Board of Direct Taxes on the subject of Section 132-Search and Seizure, wherein it is stated that the assessee is not required to be coerced for admission of undisclosed income and emphasised upon the need to focus on gathering evidences during search/ survey and strictly avoid obtaining admission of undisclosed income under coercion/undue influence. It was, therefore, submitted that the Assessing Officer cannot and should not travel beyond his jurisdiction. 5.6 It was further submitted that the assessment of the petitioner company was completed under Section 143(3) of the Act and all the material facts were fully and truly disclosed by the petitioner company during the course of assessment. It was, therefore, submitted that as per the Proviso to Section 147 of the Act, no re- opening could have been initiated after four years in absence of any tangible material having live nexus with the reasons recorded. It was, therefore, submitted that the impugned notice issued for re-opening is without jurisdiction and is liable to be quashed and set aside. 5.6.1 In support of his submissions, learned advocate Mr.Parikh referred to and relied upon the following decisions:- (i) Dhirendra Hansraj Singh reported in 2018 TaxPub (DT) 3815 (Guj-HC), (ii) Sandesh reported in 2018 TaxPub (DT) 0996 (Guj-HC), (iii) Dhruv Dipakbhai Panchal reported in 2018 TaxPub (DT) 0971 (Guj-HC), (iv) Hitesh Outsourcing Services reported in 2018 TaxPub (DT) 5110 (Guj-HC) : (208) 408 ITR 2019, (v) Jaydeep Cotton Fibres reported in 2018 TaxPub (DT) 4633 (Guj-HC), (vi) Cadila Healthcare reported in 2017 TaxPub (DT) 4232 (Guj-HC) : (2017) 250 TAXMAN 0374, and (vii) ALPS Technologies (P) Ltd. reported in 2017 TaxPub (DT) 1217 (Guj-HC). 5.7 It was further submitted that the Respondent – Assessing Officer could not have assumed the jurisdiction in absence of any reasonable belief recorded in the reasons with regard to escapement of income. Reliance was placed on the decision of the Apex Court in the case of Commissioner of Income Tax v. M/s.Sun Engineering Works (P.) Ltd. reported in 198 ITR 297 (SC) and M/s.Phool Chand Bajrang Lal v. Income-Tax Officer reported in 203 ITR 456 (SC). 5.8 It w as submitted that the very basis of forming the reasonable belief of escapement of income did not exist or did not survive and therefore, notice under Section 148 of the Act is required to be considered as an invalid notice. Reliance was placed on the decision in case of CIT v. Shardaben K. Modi reported in 365 ITR 169 (Guj) wherein it is held that in absence of any independent material, statement of the son of the assessee recorded during the survey would not form a valid basis for re-opening the assessment of the assessee in the facts of the said case. 5.9 Reliance was also placed on the decision in case of Synbiotics Ltd. v. ACIT reported in 370 ITR 119 (Guj) wherein it is held that the very basis of the Assessing Officer to uphold a belief that income chargeable to tax had escaped assessment lacked validity and the issuance of notice under Section 148 of the Act was not valid. Reliance was also placed on the decision of Vinodbhai Shamjibhai Ravani v. DCIT reported in 393 ITR 491 (Guj) wherein it is held that since there was no tangible material available with the Assessing Officer to form a reasonable belief, formation of opinion was based on surmises and conjectures which could not be the basis for re-opening of the assessment. 5.10 Reliance was also placed on the decision of CIT v. Monarch Educational Society reported in 387 ITR 416 (Del) wherein it was held that reassessment order was unsustainable in law if the reason of addition did not form part of the reasons to believe recorded by the Assessing Officer for re-opening of the assessment under Section 147 of the Act. Learned advocate for the petitioner also placed reliance on the decision of Siddhi Vinayak Transport v. ACIT reported in 362 ITR 72 (Guj). Learned advocate for the petitioner also placed reliance on the decision of Siddhi Vinayak Transport v. ACIT reported in 362 ITR 72 (Guj). It was, therefore, submitted that the impugned notice for re-opening may be ordered to be quashed and set aside. 5.11 With regard to challenge to the notice in case of firm so far as Special Civil Application No.18746 of 2019 is concerned, it was submitted by learned advocate Mr.Parikh that though the assessment for A.Y. 2012-13 in case of firm was under Section 143(3) of the Act, the same analogy would apply with regard to re- opening relying on the statement of the partner of the firm. It was reiterated that on perusal of the questions and answers recorded in the statement of Shri Jignesh Shah, it is apparent that the same would not relate to any specific asset or document found during the course of survey nor such statement is supported by any corroborative evidence. It was submitted that bad debts claimed in the return of income cannot be said to be bona fide as the petitioner firm has claimed the bad debts under Section 36(2) of the Act in previous years and subsequent years also. 5.12 It was, therefore, submitted that there is no escapement of income only on the allegation that loan amounting to Rs.01,78,70,000/- appearing in the tax audit report for F.Y. 2011-12 is not genuine loan of the assessee as no interest has been paid on them. It was submitted that reasons recorded are not supported by any corroborative material found during the course of survey operations and the conclusion arrived at by the Assessing Officer is based on the suspicion, surmises and conjectures and without verifying the correctness of the factual position. It was pointed out from the objections raised before the Assessing Officer that 18 of the 22 depositors appearing in the audit report are old depositors as all of them had opening balance and 21 of them were paid interest, from which TDS was duly deducted. It was further pointed out that assessment for immediately preceding two years i.e. Assessment Years 2010-11 and 2011-12 were finalised under Section 143(3) of the Act and no addition under Section 68 were made in those years wherein such depositors were reflected in the account of the petitioner firm. It was further pointed out that assessment for immediately preceding two years i.e. Assessment Years 2010-11 and 2011-12 were finalised under Section 143(3) of the Act and no addition under Section 68 were made in those years wherein such depositors were reflected in the account of the petitioner firm. It was, therefore, submitted that the same depositors continued to be depositors in A.Y. 2013-14 and 2014-15 and these two asessment years were also finalised under Section 143(3) of the Act and deposits were scrutinised and accepted as genuine borrowings of the petitioner firm. 5.13 It was, therefore, submitted that the conclusion arrived at by the Assessing Officer that income has escaped the assessment, is without any basis. It was submitted that even in the order rejecting the objections filed by the petitioner firm, the Respondent – Assessing Officer has failed to consider the reply tendered by the petitioner firm and only relied upon the statement of the Partner Shri Jignesh Shah who was asked to furnish copy of I.T. Returns, relevant bank statements of loan creditors to substantiate that the loan is genuine, whereas in the reply, Shri Jignesh Shah has stated that the same would be furnished on or before 15th February, 2019 and as the same was not furnished, two letters were issued to furnish the same, but it was never furnished. It was, therefore, submitted that such assessment on part of the Respondent – Assessing Officer is without any basis inasmuch as record clearly shows that depositors have continued prior to A.Y. 2012-13 and subsequent thereto and in such circumstances, it cannot be said that there was escapement of any income. 5.14 It was, therefore, submitted by learned advocate Mr.Parikh for the petitioners that notice under Section 148 of the Act is liable to be quashed and set aside as the same is issued without any jurisdiction, merely relying on the statement of the Partner of the petitioner firm Shri Jignesh Shah. 5.14 It was, therefore, submitted by learned advocate Mr.Parikh for the petitioners that notice under Section 148 of the Act is liable to be quashed and set aside as the same is issued without any jurisdiction, merely relying on the statement of the Partner of the petitioner firm Shri Jignesh Shah. 5.15 Learned advocate Mr.Parikh also referred to and relied upon the additional affidavit of the petitioner company filed in support of the petitioner to place on record ledger account of brokerage/commission earned by the partnership firm from various international companies from time-to-time so as to demonstrate that the income shown by the partnership firm actually belonged to the partnership firm and attempt on part of the Respondent – Assessing Officer to show that the income of the petitioner company was shifted to the partnership firm was without any basis. It was pointed out that petitioner partnership firm was earning commission income on supply of fire fighting systems to various companies. It was further submitted that even the assessment order for the A.Y. 2010-11 which is placed on record clearly shows that such income was considered as income of the partnership firm only and the same was taxed in the hands of the partnership firm. 6. On the other hand, learned senior standing counsel Mr.Karan Sanghani appearing for the Respondent – Assessing Officer submitted that the reasons recorded in case of the private limited company as well as partnership firm are based upon the material available on record as well as statement which is in consonance with the statement recorded under Section 133(A)(3) of the Act. It was submitted that answers to question Nos.12 to 16 given by Shri Jignesh Shah are self- explanatory and clearly shows that income of the company was shifted to partnership firm as there were common partners and directors. It was also pointed out from the answer to question No.16 that the partnership firm and the private limited company are having same rate of tax and therefore, it would not make any difference as the work is performed by the company and brokerage commission also belongs to the company but the same was offered as income of the partnership firm, however as there is no tax difference in tax rate, there is no loss to the department also. It was also pointed out that the firm has claimed bad debts under Section 36(2) and to set off such bad debts, income of the company of brokerage is shown as income of the partnership firm and therefore, there is escapement of the income at the hands of the company and as held by the Apex Court, right person is required to be taxed. 6.1.1 In support of his submission, reliance is placed on the following averments made by the respondent in case of the petitioner company. “From the aforesaid, it is clear that NKB is engaged in the business of cotton and deliberately shown the brokerage income in the profit and loss account despite having been not carried out any work so as ensure less or no tax liability in the Petitioner Company. Shri Jignesh Shah, Director of the Petitioner Company clearly admitted that the work was carried out by the Petitioner Company and the brokerage income belonged to the Petitioner Company. I humbly submit that statement recorded of a person who is the managing director of the company can constitute tangible material. The assessing officer independently applied mind to the above tangible material and has formed reason to believe that the brokerage income has escaped assessment owing to failure on part of the Petitioner to fully and truly disclose all material facts necessary for assessment. Reliance is placed on the decision of the Hon'ble Supreme Court in the case of ITO Vs. Selected Dalarband Coal Co. Pvt. Ltd. [217 ITR 597] wherein it was held as under: "....whether the facts stated in the letter are true or not is not the concern at this stage. It may well be that the assessee may be able to establish that the fact stated in the said letter are not true but conclusion can be arrived only after making the necessary enquiry. At the stage of issue of notice the only a question is whether there was relevant material as stated above, on which a reasonable person could have formed the requisite belief". I humbly submit that since formation of belief is in the realm of subjective satisfaction, the assessing officer cannot be made to conclusively prove that the reopening would lead to additions. I submit that sufficiency of reasons cannot be gone into at this stage. I humbly submit that since formation of belief is in the realm of subjective satisfaction, the assessing officer cannot be made to conclusively prove that the reopening would lead to additions. I submit that sufficiency of reasons cannot be gone into at this stage. This is a case where the Petitioner failed to disclose the said brokerage income in the profit and loss account which has led to escapement of taxable income. III. With reference to paragraghs 19(G) and (H), the reliance placed by the Petitioner on the decisions of the Hon'ble Apex court as well as the Hon'ble High Courts are entirely misplaced in as much as the said judgments lay down a proposition that additions cannot be made solely on the basis of statement. The said judgments do not deal with aspect of reopening and nowhere lay down a proposition that statement cannot be made the basis for reopening. IV. With reference to paragraph 19(1), the contention that the reopening has been resorted to for making a roving and fishing inquiry is baseless and denied. I humbly submit that the Petitioner has grossly failed to disclose the brokerage income as enumerated hereinabove. Moreover, it is not the case of the Petitioner that there was no failure on its part to disclose truly and fully all material facts for assessment. The Petitioner having admitted the factum of its failure to disclose truly and fully all material facts, the impugned notice is legal and valid. V. With reference to paragraphs 19(J) to 22, the Petitioner has reiterated its contentions which are denied therefore, the same are not dealt with to avoid repetition. The submissions made in the foregoing paragraphs are reiterated. The assessing officer has exhaustively dealt with the objections raised by the Petitioner and therefore, the grievance with regard to disposal of objections is self serving. VI. With reference to paragraphs no.23 to 24, the Petitioner has contended that brokerage income once having been taxed in the hands of NKB cannot be taxed in the hands of the Petitioner to avoid double taxation. The said contention is baseless in view of the Hon'ble Supreme Court's decision in the case of ITO v. Ch. Atchaiah (218 ITR 239) wherein it was held as under: “…. We are of the opinion that under the present Act, the ITO has no option like the one he had under the 1922 Act. The said contention is baseless in view of the Hon'ble Supreme Court's decision in the case of ITO v. Ch. Atchaiah (218 ITR 239) wherein it was held as under: “…. We are of the opinion that under the present Act, the ITO has no option like the one he had under the 1922 Act. He can, and he must, tax the right person and the right person alone. By 'right person', we mean the person who is liable to be taxed, according to law, with respect to a particular income. The expression 'wrong person' is obviously used as the opposite of the expression 'right person'. Merely because a wrong person is taxed with respect to a particular income, the Assessing Officer is not precluded from taxing the right person with respect to that income. This is so irrespective of the fact which course is more revenue…….. Where beneficial to a the person is taxed wrongfully, he is, no doubt, entitled to be relieved of it in accordance with law but that is a different matter altogether. The person lawfully liable to be taxed can claim no immunity because the Assessing Officer [Income Tax Officer] has taxed the said income in the hands of another person contrary to law..." In view of the above, the Petitioner cannot contend that the brokerage income belonging to the Petitioner cannot be taxed owing to the same having been taxed in the hands of NKB. VII. I humbly submit that the Petitioner has also contended that NKB and Petitioner are taxed at the same rate and therefore, the same is tax neutral. The aforesaid contention is baseless and denied. The concept of tax neutrality is not applicable in view of the following: (i) The petitioner company's income (without the said escaped income) during the year was Rs.60,35,670/-, on which he paid taxes @30% plus surcharge. (ii) In the case of NKB-partnership firm, the taxable income during the year (after including the said commission income of Rs.1,78,52,202/-) was of Rs.56,25,688/- which means that the firm had huge losses which on account of their bad debts of Rs.2,12,72,899/- and this commission income got adjusted against such bad debts. Therefore, the transaction is not tax neutral. (iii) Further, even otherwise there is no tax neutrality between firm and company. Therefore, the transaction is not tax neutral. (iii) Further, even otherwise there is no tax neutrality between firm and company. In the case of a firm, the Profit after taxes gets directly credited to the parties account without any further incidence of tax. Whereas in the companies, the Profit after taxes can be distributed to the shareholder only through Dividends, which attracted Dividend Distribution Tax @ 15%. Therefore, even if the basic tax rate may be same or similar, the overall tax liability is very much different between a company and a firm.” 6.1.2 Referring to the above averments in the affidavit-in-reply, it was submitted that the notice was issued for re-opening by the Assessing Officer by rightly forming belief that income has escaped the assessment. 6.2 In case of petitioner partnership firm also, the Assessing Officer has come to the conclusion that there is escapement of income as there is a wrong claim of the bad debts which requires further scrutiny as there was no scrutiny assessment of the partnership firm for the year under consideration. 6.3 It was, therefore, submitted that if the petitioner firm has failed to explain the claim of bad debts after ten years, as no transactions have been done in relation to the cotton bales and what action was taken for recovery of debts is not available on record and petitioner firm has failed to explain the same. It was further submitted that on perusal of the reasons, even the unsecured loans reflected in the accounts of the petitioner firm have not been substantiated by any evidence even though opportunity was given to Shri Jignesh Shah while recording statement followed by two letters. It was, therefore, submitted that Respondent – Assessing Officer was justified in re-opening of the assessment. 6.3.1 In support of his submission, reliance was placed on the following averments in the affidavit-in-reply filed by the Respondent – Assessing Officer. “From the aforesaid, it is clear that Petitioner Firm, in First instance it claimed bad debt in return of income and but has provided any corroborative evidence that substantiate their efforts to collect bad debt and Petitioner Firm's Partner Shri Jignesh Shah answered in circumlocutory way without any cognitive evidence. Hence it is apparent from the statement and ledger account and further non-submission of evidences that Petitioner Firm wrongly claimed bad debt to evade statutory tax liability. Hence it is apparent from the statement and ledger account and further non-submission of evidences that Petitioner Firm wrongly claimed bad debt to evade statutory tax liability. I humbly submit that statement recorded of a person who is the partner can constitute tangible material in support of the falsified entries as explained by the partner of the Petitioner Firm and passed by the Petitioner Firm in its books during the Assessment Year 2012-13. The assessing officer independently applied mind to the above tangible material and has formed reason to believe that the Bad Debts expenditure was claimed during the Assessment Year 2012-13 in a tactful manner without producing any documents as agreed by the partner of the Petitioner Firm and deficient responses to notices dated 26.02.2019 and 28.02.2019. Reliance is placed on the decision of the Hon'ble Supreme Court in the case of ITO Vs. Selected Dalarband Coal Co. Pvt. Ltd. [2171TR 597] wherein it was held as under: "....whether the facts stated in the letter are true or not is not the concern at this stage. It may well be that the assessee may be able to establish that the fact stated in the said letter are not true but conclusion can be arrived only after making the 78 necessary enquiry. At the stage of issue of notice the only a question is whether there was relevant material as stated above, on which a reasonable person could have formed the requisite belief". I humbly submit that since formation of belief is in the realm of subjective satisfaction, the assessing officer cannot be made to conclusively prove that the reopening would lead to additions. I submit that sufficiency of reasons cannot be gone into at this stage. This is a case where the Petitioner Firm had already admitted that the Expenses of M/s Vishal trading were wrongfully added to the debtors and subsequently the same were claimed as Bad Debts only during Assessment Year 2012-13 which has led to escapement of income. Further the flow of entries of Bad Debts Claim by the Petitioner Firm was never found to be bonafide and was claimed in a timely manner just to evade any huge statutory tax liability. Further the flow of entries of Bad Debts Claim by the Petitioner Firm was never found to be bonafide and was claimed in a timely manner just to evade any huge statutory tax liability. The following table shows such flow of entries: - A.Y. Other Income Bad Debts 2008-09 2,05,65,493/- 1,77,11,074/- 2009-10 2,57,80,578/- 2,53,94,197/- 2010-11 3,65,85,918/- 3,00,15,750/- 2011-12 1,29,05,886/- 1,70,32,892/- 2012-13 3,05,63,318/- 2,12,72,899/- 2013-14 3,04,23,562/- 3,98,74,880/- 2014-15 2,87,77,224/- -- 2015-16 4,24,30,580/- 2,81,27,349/- 2016-17 4,75,41,316/- 4,43,62,559/- 2017-18 7,89,88,218/- 7,86,62,118/- 2018-19 4,27,04,802/- 2,93,09,161/- On Perusal of the above table, it is clearly evident that the Petitioner Firm has claimed Bad Debts every year according to its sweat wish and on receipt of Other Income every Year. The Assessing Officer had formed a prima facie belief after recording and verifying statement and documents of the partner of the Petitioner Firm that Bad Debts were claimed for the Assessment Year 2012-13 to the tune of Rs.2,12,72,899/- even without producing the copy of ledger account of the Debtor M/s Kongrar Textiles Ltd whose amount has been claimed as Bad Debt to the tune of Rs.2,12,72,899/-. It is also pertinent to note that this claim of Bad Debts also includes fraudulent claim of Expense of Rs.3,85,000/- which was never pertaining to the debtor Kongrar Textiles amounting to Rs.2,12,72,8997/-.” 7. Having heard learned advocates for the respective parties and having considered the facts of the case, it would be germane to refer to the reasons recorded by the Assessing Officer in case of the petitioner company as well as petitioner firm in both the petitions as under. Reasons recorded in case of the company “1. The assessee company is engaged in the business manufacturing and sales of fire safety equipment's. The assesse has filed his Return of Income for the A.Y. 2012-13 on 24/09/2012 declaring total income of Rs. 60,35,670/-. Thereafter, the case was selected for scrutiny under CASS and assessment order u/s 143(3) was passed on 30/03/2015 and the income was assessed at Rs.74,42,564/-. 2. During the survey action on 04/02/2019 in the case of M/s Nagindas Kasturchand & Bros. (herein after referred as 'NKB) the statement of the partner of the firm Shri Jignesh Shah was recorded u/s 133A(3) (iii) of the 1.T. Act. The relevant part of question and their reply is reproduced as under: "Ques 12-During F.Y. 2011-12 your partnership firm Nagindas Kasturchand and Brothers (NKB) has shown brokerage income of Rs. (herein after referred as 'NKB) the statement of the partner of the firm Shri Jignesh Shah was recorded u/s 133A(3) (iii) of the 1.T. Act. The relevant part of question and their reply is reproduced as under: "Ques 12-During F.Y. 2011-12 your partnership firm Nagindas Kasturchand and Brothers (NKB) has shown brokerage income of Rs. 1,77,20,977/-in its Profit and Loss account. Please give complete details of the same. Answer 12- This brokerage income is received by our firm Nagindas Kasturchand& Bros. in lieu of supply of Fire Fighting equipment to the Vema Lift Oy Co. of Finland and Goods to AMC Ahmedabad. Ques 13: Have you done the above referred liaisoning work before and after this? Please give details regarding the same. Answer 13: We have performed this type of work around year 2007-08 and not done after 2011-12. Ques 14: Your business is of cotton and besides this in F.Y. 2011-12 you have done liasoning work and shown brokerage income from it. Hence, please explain how you have performed such work without experience? Answer 14: Here at Nagindas Kasturchand& Bros. we are having cotton business only. But, I have talked to my staff and on the basis of their experience we have done this work. Along with this firm, I am director in Newage Fire Fighting Company Ltd. and this company is involved in manufacturing of Fire Fighting Equipment. So, the staff of Newage Fire Fighting Company Ltd. have enough experience to carry out this work that is why we have performed this work. Ques 15- In response to question no. 13 you have said that the brokerage income received from Vena Lift Oy Co. Finland, how you came in contact of this company and before doing this work have you ever done any correspondence? Please explain. Answer 15: Any conversation done with Vema Lift Oy Company Finland and AMC Ahmedabad was with our sister concern Newage Fire Fighting Co. Ltd. in which I am a director. Hence, I cannot provide you the copy of the correspondence but I have shown this income in Nagindas Kasturchand& Bros. Ques 16. Prima facie it seems that whatever correspondence done regarding the liasioning work was with Newage Fire Fighting Co. Ltd. and the work was also done by it. So, why you have offered this income in NKB? Please explain. Answer 16-NKB is a firm and Newage Fire Fighting Co. Ques 16. Prima facie it seems that whatever correspondence done regarding the liasioning work was with Newage Fire Fighting Co. Ltd. and the work was also done by it. So, why you have offered this income in NKB? Please explain. Answer 16-NKB is a firm and Newage Fire Fighting Co. Ltd. is a company and the tax rate is same in both so it does not matter. This work is performed by Newage Fire Fighting Co. Ltd. and brokerage income is also belongs to Newage Fire Fighting Co. Ltd. but we have offered this income in NKB but there is no difference in tax rate and there is no loss to the department also. Therefore, this income is shown in NKB firm. I will produce copy of the correspondence done by Newage Fire Fighting Co. Ltd. by 15/02/2019. I being the director of Newage Fire Fighting Co. Ltd. states that this whole work is performed by Newage Fire Fighting Co. Ltd. and this brokerage income belonged to Newage Fire Fighting Co. Ltd. but I am also a partner in NKB that is why I have offered this income in NKB". 3. In this respect, the partner of the firm NKB has only furnished the copy of debit invoice issued to Vema Lift Oy Co., Finland & foreign remittance received in the hand of NKB but failed to furnished the correspondence done with Vema Lift Oy Co., Finland & Ahmedabad Municipal Corporation (AMC) alongwith copy of contract agreement for supply of fire fighting equipments with the above two parties. 4. Shri Jignesh Shah as director of M/s Newage Fire Fighting Co. Ltd. & partner of M/s NKB has confirmed that whole work is performed by Newage Fire Fighting Co. Ltd. and this brokerage income belongs to M/s Newage Fire Fighting Co. Ltd. Hence, it is established that brokerage income received from Vema Lift Oy Co., Finland belongs to M/s Newage Fire Fighting Co. Ltd. The contention of director/partner Shri Jignesh Shah is that there is no difference of tax rate, but it is observed from the I.T. Return of M/s NKB for the A.Y, 2012-13, that M/s NKB has claimed bad debts of Rs. 2,12,72,899/- to ensure that no tax liability on brokerage income of M/s Newage Fire Fighting Co. Ltd. has arrived. Ltd. The contention of director/partner Shri Jignesh Shah is that there is no difference of tax rate, but it is observed from the I.T. Return of M/s NKB for the A.Y, 2012-13, that M/s NKB has claimed bad debts of Rs. 2,12,72,899/- to ensure that no tax liability on brokerage income of M/s Newage Fire Fighting Co. Ltd. has arrived. The above planning is dubious and coated with colorful devices is not allowable as the intention of the assessce is mala-fide to evade the tax. 5. As per the provisions of Income Tax Act, the Assessing Officer has the right to tax the right person; namely the person who is liable to be taxed according to law with respect to a particular income and merely because a wrong person has been taxed with respect to a particular income the Assessing Officer is not precluded from taxing the right person with respect to that income. In this respect, it is worthwhile here to mention the judgment in the case of ITO v/s Ch. Atchaiah (1996) 218 ITR 239 /84 Taxman 630 (SC), wherein the Hon'ble Supreme Court observed as under:- "We are of the opinion that under the present Act, the Income Tax Officer has no option like the one he had under the 1922 Act. He can, and he must, tax the right person and the 'right' person alone. They observed that by" right person", means the person who is liable to be taxed accordingly to law with respect to a particular income. The expression "wrong person" is obviously used as the opposite of the expression "right person". Merely because a wrong person is taxed with respect to a particular income. It was held that this is so irrespective of the fact that which course is more beneficial to the revenue. It was observed that where a person is taxed wrongfully, he is entitled to be relieved to it in accordance with law but that is a different matter altogether and the person who is lawfully liable to be taxed cannot claim immunity because the Assessing Officer (Income Tax Officer) has taxed the said income in the hands of another person. It was observed that where a person is taxed wrongfully, he is entitled to be relieved to it in accordance with law but that is a different matter altogether and the person who is lawfully liable to be taxed cannot claim immunity because the Assessing Officer (Income Tax Officer) has taxed the said income in the hands of another person. The assessing officer is not precluded from taxing the right person with respect to that income." In view of the above facts of the case and aforesaid decision of the Hon'ble Supreme Court, the contention of the assessee that M/s. NKB had been taxed in respect of income accruing in the form of commission/brokerage has no relevance. The Hon'ble Supreme Court in the case of Chatchaiah (supra), held that merely because a wrong person' has been assessed, the Assessing Officer is not precluded from taxing the right person' and 'wrong person' cannot seek remedy as available under law. Therefore, if in law, income in question has to be taxed in hands of Company, it has to be taxed as such, and mere fact that said income was taxed in hands of the Firm wrongly, does not bar the Assessing Officer from taxing in the hands of Company. So on the ground of double taxation also, assessment on Company i.e. assessee, which is the right person, could not be held to be invalid.” Reasons recorded in case of Firm:- “1. The assessee firm is engaged in the business of trading of cotton of bales. The assesse has filed his Return of Income for the A.Y. 2012-13 on 28/09/2012 declaring total income of Rs.56,84,130/-. 2. During the survey action on 04/02/2019 in the case of M/s Nagindas Kasturchand & Bros. (herein after referred as 'NKB) the statement of the partner of the firm Shri Jignesh Shah was recorded u/s 133A(3)(iii) of the I.T. Act., the partner of the assessee firm Shri Jignesh Shah was asked to furnish the details of bad debts claimed on account of M/S Kongrar Textiles Limited amounting to Rs. 2,12,72,344/- during the FY 2011-12 relevant to A.Y.2012-13. In support of this, the assessee has only furnished the copy of ledger account from till 31/03/2011 and copy of invoice/bills. On verification of ledger Account, it is seen that the assessee has shown outstanding balance of Rs. 2,12,72,344/- during the FY 2011-12 relevant to A.Y.2012-13. In support of this, the assessee has only furnished the copy of ledger account from till 31/03/2011 and copy of invoice/bills. On verification of ledger Account, it is seen that the assessee has shown outstanding balance of Rs. 2,12,72,899 till 31/03/2011 but the assessee has failed to furnish the copy of ledger account M/s Kongrar Textiles Limited in his books as on 31/03/2012, therefore it is crystal clear that the bad debt has not been written off in the books but has been claimed as bad debts in the Income Tax Return for A.Y. 2012-13. 2.1 The assesse was asked to explain the claim of bad debts after 10 years as no transactions have been done in relation to sale of cotton bales and what action was taken for recovery of debts from M/s Kongrar Textiles Limited in last 10 Years. 2.2 In his statement, the assesse has stated that Shri Hemant S. Shah is my uncle and ex-partner in the firm had tried for the recovery of debts with cotton broker, Sri Hirabhai Mulani but no correspondence, e-mail or legal action has been taken for recovery of debts. Further, working partner Shri Jignesh Shah has stated that legal action has not been taken for the recovery of debts is not known to me. 2.3 Further, it is seen that the assesse has debited M/s Vishal Trading Company as brokerage for bill No. 8,9,& 10 on 30/03/2002 amounting to Rs. 3,85,000/- in the account of M/s Kongrar Textiles Limited in the F.Y. 2006-07 i.e. 20/02/2007 which is not in relation to the above debtor and also not related to F.Y 2006-07 as bills raised in F.Y. 2002-03 but assessee has artificially increased the debts to the extent of Rs. 3,85,000/-. 2.4 In his statement, the partner of the assesse firm has stated that after enquiring the three entries recorded in the books of M/s Kongrar Textiles Limited is not bonafide and are wrong and will be submitted later, but the assesse has failed to do so which clearly indicate that the assesse has claimed bad debts to that extent is not bonafide. 2.5 The assessee is also under an obligation to show at least prima-facie that debt has become bad. A bad debt as 'bad debts' which cannot be reasonably be collected. 2.5 The assessee is also under an obligation to show at least prima-facie that debt has become bad. A bad debt as 'bad debts' which cannot be reasonably be collected. The assesse has not claimed the above debts as bad in earlier 10 years whereas the nature of debts and possibility of non-recovery was already known by the assesse from last 11 years. How all of sudden such debts become bad which are beyond the admissible period of claiming such debts as bad by the assesse. 2.6 On Perusal of the case records it is seen that the assessee has claimed bad debts as under:- A.Y. Other Income Bad Debts 2008-09 2,05,65,493/- 1,77,11,074/- 2009-10 2,57,80,578/- 2,53,94,197/- 2010-11 3,65,85,918/- 3,00,15,750/- 2011-12 1,29,05,886/- 1,70,32,892/- 2012-13 3,05,63,318/- 2,12,72,899/- 2013-14 3,04,23,562/- 3,98,74,880/- 2014-15 2,87,77,224/- -- 2015-16 4,24,30,580/- 2,81,27,349/- 2016-17 4,75,41,316/- 4,43,62,559/- 2017-18 7,89,88,218/- 7,86,62,118/- 2018-19 4,27,04,802/- 2,93,09,161/- The above chart of bad debts clearly indicate that the all the above debtors are related to F.Y.2000-01& 2001-02, or even earlier, but the assessee has not claimed such debts as bad debts in earlier year, when it had been actually incurred but only in subsequent year separately against the other income earned, with is to avoid the carry forward loss up to next 8 assessment years. To verify the genuineness of bad debts, a notice u/s 133(6) issued to M/s Kongrar Textiles Limited but same is returned unserved, hence the genuineness of bad debts is not verifiable. 2.7 All this would indicate that when the assessee treats the debt as a bad debt in his books the decision which has to be a business or commercial decision and not whimsical or fanciful. The decision must be based on material that the debt is not recoverable. The decision must be bonafide. The difference between the position, pre- amendment and post amendment would be that the burden is no longer on the assessee and can be claimed in the year it is written off in the books of account as irrecoverable. The A.O. if he is to disallow the debt as a bad debt must arrive at a conclusion that the decision was not bonafide. The A.O. only in those circumstances and to that extent may interfere. 2.8 Considering the facts and circumstances of the case, the assesse decision for claiming the bad debts in this year is not bonafide. The A.O. if he is to disallow the debt as a bad debt must arrive at a conclusion that the decision was not bonafide. The A.O. only in those circumstances and to that extent may interfere. 2.8 Considering the facts and circumstances of the case, the assesse decision for claiming the bad debts in this year is not bonafide. Even though, the assesse has not provided the ledger account as a part of books of accounts wherein the debt is showing as irrecoverable i.e. bad debts. 3. UNSECURED LOAN 3.1 During the survey action, it is seen from tax audit report for F.Y. 2011-12 that the assessee has taken unsecured loans amounting to Rs. 1,78,70,000/- during the year and no interest paid thereon. 3.2 During the survey action, the partner of the assessee firm Shri Jignesh Shah was asked to furnish the copy of I.T. Return, relevant bank statement of loan creditors to substantiate that the loan is genuine. 3.3 In his statement dated 04/02/2019, Shri Jignesh Shah has stated that the same will be furnished on or before 15/02/2019. As the assesse firm has not furnished the above details, two letters were issued and duly served upon the assesse on 26/02/2019 & 28/02/2019 to furnish the same but assesse has failed to provide the aforesaid documents. 3.4 In view of the above, it is prima- facie clear that loan taken by the assesse firm amounting to Rs. 1,78,70,000/- during the year is not genuine nor it confirm to the requirement of section 68 of the Act. 4. In view of the above facts as stated above, I am satisfied and has reason to believe that taxable income of the assessee to A.Y. 2012-13 amounting to Rs.3,91,42,899/- [Rs.2,12,72,899/- Rs.1,78,70,000/-) has escaped assessment within the meaning of clause (b) to Explanation 2 of section 147 of the I.T. Act, 1961 and the assessment proceedings relating to A.Y. 2012-13 needs to be reopened to assess the correct income and as such, it is a fit case for issue of notice u/s 148 of the Income Tax Act 1961.” 8. On perusal of the above reasons recorded in case of the company as well as firm, it is not in dispute that the brokerage income of Rs.01,77,20,977/- is shown in the P&L account of the firm whereas the actual income belonged to the petitioner company as confirmed by Shri Jignesh Shah that the whole work was performed by the petitioner company. It is also not in dispute that the firm has claimed bad debts of Rs.02,12,72,899/- in the books of accounts and to ensure that no liability of tax arises in the case of the petitioner company, as the said brokerage income is credited in the books of account of the firm so that the same can be set off against the bad debts claimed by the petitioner firm. The Assessing Officer has, therefore, rightly relied on the decision of the Apex Court in the case of ITO v. Atchaiah reported in 218 ITR 239, as the right person i.e. firm is required to be taxed for the purpose of charging of income tax for doing work for M/s.Vema Lift Oy, Finland, as the entire brokerage income belongs to the petitioner company who has performed the work for the said company. 8.1 Therefore, the contention raised on behalf of the petitioner firm that it was regularly showing such brokerage income in the books of accounts would be a matter of scrutiny during the course of assessment proceedings by the Assessing Officer. As per the facts available on record in case of the petitioner company as well as firm, it is apparent that the company is not rightly taxed and the income to the tune of Rs.01,77,20,977/- prima facie has escaped assessment and therefore, the Assessing Officer was justified in assuming the jurisdiction for re-opening of the assessment. As per the facts available on record in case of the petitioner company as well as firm, it is apparent that the company is not rightly taxed and the income to the tune of Rs.01,77,20,977/- prima facie has escaped assessment and therefore, the Assessing Officer was justified in assuming the jurisdiction for re-opening of the assessment. 8.2 Similarly, in case of the petitioner firm also, there was no scrutiny assessment for the year under consideration and the issues which are raised by the Assessing Officer would prima facie justify the re-opening of the assessment and the reliance placed by the petitioner for assuming jurisdiction by the Assessing Officer to re-open the assessment would not be applicable in the facts of the case, more particularly, when it appears to be a fact not disputed on the basis of reply to the statement made by the partner of the firm that the entire brokerage income is belonging to the petitioner company as the work was done by the petitioner company for M/s.Vema Lift Oy, Finland. 9. Whether such statement can be relied upon or what is the evidentiary value of the same can be considered during the course of assessment proceedings which will be proceeded by the Assessing Officer after giving opportunity of hearing to the petitioner to lead the evidence including the cross-examination. 10. In view of the above, no interference is called for in the impugned notice for re-opening. Both the petitions are accordingly dismissed. Notice in both the petitions stands discharged. Interim relief, if any, stands vacated forthwith.