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2016 (3) TMI 974 - DELHI HIGH COURT

2016 (3) TMI 974 - DELHI HIGH COURT - TMI - Reopening of assessment - non-charging of interest from SPPL on the sum advanced - Held that:- Petitioner did disclose all the material facts necessary for the assessment. Apart from the fact that the return was picked up for scrutiny, a detailed questionnaire was issued, in which specific questions touching upon the said loan to SPPL were raised. The Petitioner replied to the said letter disclosing all the necessary information. Consequently, as far a .....

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pinion on that ground. - Decided in favour of assessee

Share capital received by the Assessee during the AY - Held that:- Even if the records are now to be produced before the Court and perused by it, it is not open for the Court to gather from the records the material/information which would support the reasons as communicated to the Petitioner by the DCIT. The court is therefore satisfied, that even in respect of the second reason for reopening the assessment, the mandatory requirem .....

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12th March 2014 issued by the Deputy Commissioner of Income Tax ( DCIT ), Circle-17(1) New Delhi under Section 148 of the Income Tax Act, 1961 ( Act ), seeking to reopen the assessment of the Petitioner for Assessment Year ( AY ) 2007-08. 2. The Assessee filed its return for the AY in question on 7th November 2007 declaring NIL income. The return was picked up for scrutiny. On 17th September 2008, notice under Section 143(2) of the Act was issued to the Assessee. This was followed by an elaborat .....

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ssee had made investment in the project of development of commercial shopping complex by SPPL on DDA land and that the Assessee s portion would be handed over to it upon completion of the project. The income arising from the complex would be treated as business income. 3. Another query was raised in respect of the share capital raised by the Assessee during the AY in question. By letter dated 5th November 2009 the Assessee submitted a reply in the prescribed format furnishing the details of the .....

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f the Act. On 8th May 2014, the DCIT, Circle-17(1) under Section 142(1) of the Act, required the Petitioner to furnish specified details/information, and enclosed along with it the reasons for reopening the assessment. 6. A perusal of the reasons shows that two broad issues has been adverted to: one concerns the sum of ₹ 1.45 crores advanced by the Assessee to the SPPL for booking the commercial plot with DDA. It was stated that Deputy Director of Income Tax (Investigation) [ DDIT (Inv.)] .....

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opening the assessment was the receipt by the Assessee of ₹ 1.8 crores towards share capital and premium from various companies. In this regard the reasons states that MCA/ITD database search and local enquiries revealed that these companies are defunct in nature, not found at the addresses given and many of them are in the strike off mode in MCA. It appears, prima facie, the assessee has taken accommodation entries from these defunct companies in the form of share capital and premium . Th .....

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and taken is that it appeared prima facie on the basis of the MCA/ITD database search and local enquiries that the companies from whom the Assessee had taken the share capital and premium were not found at the addresses given and many of them were in the "strike off mode" in the MCA, and prima facie the Assessee had taken accommodation entries. There is a virtual repetition in the counter affidavit of the reasons for reopening the assessment. 10. As far as the first broad reason for re .....

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e first ground for reopening of the assessment is concerned, the Court is satisfied that the precondition of the first proviso to Section 147 regarding failure on the part of the Assessee to fully and truly disclose the material facts, is not fulfilled. The mere fact that the assessment order may itself not advert to the fact that a questionnaire was issued and a reply was filed thereto by the Assessee would not ipso facto lead to an inference that the AO did not apply his mind and form an opini .....

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ie view on the basis of the material that was gathered and that it was only in the assessment proceedings that a further detailed examination was required to be undertaken whether there was, in fact, a true and full disclosure of the material facts by the Assessee. Reliance is placed on the decision of the Full Bench of this Court in CIT v. Usha International Ltd (2012) 348 ITR 485(Del.) and the decision of the Bombay High Court in Export Credit Guarantee Corporation of India Ltd. v. ACIT (2013) .....

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not require reference to and the proviso is not invoked . However, whether in fact there was a failure on the part of the Assessee to state true and correct facts would depend on the existence of some tangible material which can provide a live link to the formation of the belief that income escaped assessment. The statement that the MCA/ITD database search showed that the companies which had invested in the shares of the Assessee were in the defunct mode is vague inasmuch as it is not clear whet .....

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