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2016 (3) TMI 971 - BOMBAY HIGH COURT

2016 (3) TMI 971 - BOMBAY HIGH COURT - [2016] 387 ITR 231 - Validity of reopening of assessment - accommodation entries - Held that:- We find that the reasons in support of the impugned notice indicates that the Assessing Officer has received definite information that one Mr. Praveen Kumar Jain and the companies controlled by him was in the business of providing accommodation entries. On receipt of the aforesaid information, the Assessing Officer called for the necessary information in regard to .....

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vely prove the same - In these facts, we see no reason to exercise our extraordinary writ jurisdiction and interdict the Revenue from proceeding further with the reassessment proceedings. Needless to state that during the reassessment proceedings, the petitioner would have occasion to establish that the loans taken from the eight entities referred to in the reasons were genuine loans before the Assessing Officer and also before the appellate authorities under the Act. - Decided against asses .....

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ons in support of the impugned notice as communicated to the Petitioner read as under:- "Reasons for Reopening Name of the assessee BRIGHTSTAR SYNTEX PRIVATE LIMITED PAN AABCB94971 A.Y. 2012-13 Shri Praveen Jain is one of the leading entry providers operating in Mumbai, including in providing accommodations entries like bogus purchases, sales, unsecured loans, share capital etc. A search and seizure action in the case of Shri Praveen Kumar Jain group was therefore carried out on 01.10.2013. .....

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he following transactions have been carried out by the assessee company during the A.Y. 2012-13: Name of the Investor Amount Nature of Transaction Alka Diamond Ind Ltd. 10,00,000/- Loans and Advances Duke Buiness P Ltd (JPK Trading I Pvt Ltd) 50,00,000/- Loans and Advances Atharv Business Private Limited (Faststone Trad (I) P Ltd) 75,00,000/- Loans and Advances Kush Hindustan Ent Ltd 10,00,000/- Loans and Advances Nakshatra Business P Ltd (Hema Trading Co P Ltd) 93,50,000/- Loans and Advances Ol .....

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ons to the reasons recorded in support of the impugned notice and pointed out that the assessment for the subject assessment year was done by an order dated 19th December, 2014 under Section 143(3) of the Act. It was also submitted that during the proceedings, the very parties which have been adverted to in the reasons in support of the impugned notice as being entities operated by one Mr. Praveen Kumar Jain Group from whom the Petitioner had received loans and advances was a subject matter of i .....

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loans taken by the petitioners from the 8 companies referred to in the reasons recorded in support of the impugned notice were not genuine being mere accommodation entries. 4. By an order dated 4th February, 2016 the Assessing Officer rejected the objections filed by the petitioner to the reasons recorded in support of the impugned notice inter alia by placing reliance upon the decisions of the Apex Cout in I.T.O. Vs. Lakhmani Mewal Das, 103 ITR 437 to hold that the expression "reason to be .....

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. Mr. Murlidharan, learned counsel for the petitioner challenges the impugned notice on the ground that it is without jurisdiction as evident from the reasons recorded in support of the notice for the following reasons : (a) The mere confession/statement by a person that he controlled companies which were providing accommodation entries is not sufficient to give the Assessing Officer reason to be believe that income chargeable to tax had escaped assessment. In support reliance was placed upon th .....

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ry same eight loan providers mentioned in the reasons in support of the impugned notice. The petitioner responded to the same by providing loan confirmation statements, which on examination were accepted. Thus, this is a case of mere change of opinion; and (c) Further reliance is also placed upon a document at Exhibit 'O' to the Petition where detailed reasons for doing scrutiny assessment for the A.Y. 2013-14 have been recorded. This document at Exhibit 'O' inter alia states tha .....

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a challenge to a reopening notice on the ground that it is without jurisdiction, the Court has to keep in mind that a settled position in law is not being disturbed as evident from the orders passed earlier, without any justification. However, the Court will certainly interfere where the reason to believe that income has escaped assessment, is a clear case of change of opinion i.e. the same material was subject to consideration in regular assessment proceedings or where the reopening is being d .....

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e chargeable to tax has escaped assessment and for that purpose ensure that the material is not vague and/or irrelevant. However at this stage i.e. on issue of reopening notice, the Assessing Officer is not required to have conclusive evidence that income chargeable to tax has escaped assessment but is only required to have reasonable belief of the same. The reasons recorded must on the basis of the material available establish a link between the material available and the conclusion. This shoul .....

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ar Jain and the companies controlled by him was in the business of providing accommodation entries. On receipt of the aforesaid information, the Assessing Officer called for the necessary information in regard to the accommodation entries made in respect of the assessees in his jurisdiction. Consequent thereto, the Assessing Officer found that the information received indicated that the eight companies mentioned in the reasons belonged to Mr. Praveen Kumar Jain group and formed the basis of his .....

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e certain persons appear to be namelenders and the reasons in support of the impugned notice clearly states that investigation with regard to the loans is necessary. Thus, the Court held that there was no prima facie view reflected in the reasons as the same was subject to investigation of the transaction to find its genuineness. Similarly the decision in Lakhmani Mewal Das (supra) was a case of a notice beyond four years from the end of the relevant assessment year. In that case one of the pers .....

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d assessment for that year. Reliance was also placed upon the decision of this Court in M/s. Rushab Enterprises (supra). We find the decision of this Court was rendered in the context of the assessment being reopened beyond a period of 4 years from the end of the relevant assessment year. In the facts of that case and on the basis of reasons recorded therein, the Court held that there was no basis for having reasonable belief that income chargeable to tax has escaped assessment. Albeit, the Cour .....

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tioner that during the regular assessment proceedings leading to the order dated 19th December, 2014 under Section 143(3) of the Act, the eight companies referred to in the reasons were a subject matter of examination and the petitioner had then provided evidence in the form of loan confirmation to establish its genuineness. Thus, it is submitted that this is a case of change of opinion. We find that the basis of the reopening notice is the statement of Mr. Praveen Kumar Jain. This statement pri .....

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Vs. ITO 203 ITR 456 " One of the purposes of Section 147 appears to us to be to ensure that a party cannot get away by willfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn round and say "you accepted my lie, now your hands are tied and you can do nothing." It would be travesty of justice to allow the assessee that latitude." 9. Thereafter, the petitioner sought to place reliance upon the reasons record .....

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