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2016 (7) TMI 69 - GUJARAT HIGH COURT

2016 (7) TMI 69 - GUJARAT HIGH COURT - TMI - Reopening of assessment - Return accepted u/s 143(1) without scrutiny - Validity of notice issued u/s 148 - Held that:- AO had considered the objections of the petitioner and disposed them of on the basis of material on record. The sole ground of the petitioner therefore, must fail. - AO would have considerable latitude in issuing notice for re-opening if it is found that he had tangible material to form a belief that income chargeable to tax had esca .....

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The petitioner is a company registered under Companies Act. For the assessment year 2007-2008, the petitioner filed return of income on 15.11.2007. Such return was accepted without scrutiny in terms of section 143(1) of the Income Tax Act, 1961 ( the Act for short). To re-open such reassessment, the Assessing Officer issued the impugned notice. He has recorded following reasons for issuing notice for re-opening. Assessee has filed return of income on 15.11.2007 at total income of ₹ 13,22,0 .....

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oney, bogus sales and LTCG etc. Further from the statements of dummy directions/proprietors, it was revealed that they were used to sign different papers for nominal consideration given by Shri Pravin Kumar Jain, Pravin Kumar Jain himself is a direction in few concerns only. However, through various dummy directors/proprietors he controls, operates and manages a large number of concerns. All these concerns are not carrying out any genuine business. They do not have any physical stock of goods. F .....

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taken accommodation entries on unsecured loans from various concerns including those run and operated by Shri Pravin Kumar Jain. During the course of search action, Shri Jitu Jain the promoter of the group admitted in his statement recorded on oath under section 132(4) that the group had taken unsecured loans taken from two bogus entities viz. Faststone Trading Co.Pvt.Ltd. And New Planet Trading Co.Pvt.Ltd. Controlled by Shri Praveen Kumar Jain. Similarly, Subhalaxmi Group engaged in the busine .....

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vity of providing accommodation entries only. From the information received it is seen that the assessee has taken accommodation entries from the following accommodation entry operation, run, controlled and operated by Shri Pravin Kumar Jain. The details are as under: Sr. no. Name of hawala entry operator Amount Date Nature of transactions 1 Kunal Gems 6,34,00,000 20.09.2006 Bogus investment/s hare applications 2 Natasha Enterprises 3,13,90,000 21.02.2007 Bogus investment/s hare applications 3 M .....

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tion 147 of the I.T.Act, 1961. In order to bring to tax above mentioned escaped income as well as any other income which might have escaped assessment, found during the course of proceedings, notice under section 148 is issued. 2. Upon supplying reasons for re-opening, the petitioner raised objections under communication dated 19.2.2015. Such objections were however rejected by the Assessing Officer by an order dated 10.7.2015. Hence this petition. 3. While agreeing with the original assessment .....

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money of ₹ 12,61,70,000/- from the following three parties as under: Sr.No. Name of Hawala entry operator Amount Rs. Date Nature of transaction 1 Kunal Gems 6,34,00,000 20.09.2006 Bogus Investments/ share applications 2 Natasha Enterprises 3,13,80,000 21.02.2007 Bogus investments/ Share applications 3 Mohit International 3,13,80,000 10/01/07 Bogus investments/ share applications Total 12,61,70,000 3. The assessee has in fact received the share application money of ₹ 90,00,000 from t .....

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8 on the basis of such information is also erroneous and ill- conceived. In fact, there is no escapement of income so far as the assessee is concerned. You are therefore, requested to drop the proceedings and this may pleased be treated as objections to the reopening of the assessment. 4. Counsel also drew our attention to the relevant portion of the objections of the petitioner and the manner in which this objection was rejected by the Assessing Officer. 5. We have perused materials on record. .....

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of assessment. The distinction is also well brought out by the statutory provisions as they stood at different points of time. Under section 143(1)(a) as it stood prior to April 1,1 1989, the Assessing Officer had to pass an assessment order if he decided to accept the return, but under the amended provision, the requirement of passing of an assessment order has been dispensed with and instead an intimation is required to be sent. Various circulars sent by the Central Board of Direct Taxes spel .....

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n shall be deemed to be an intimation under section1 143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is significant that the acknowledgment is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any assessment is done by them ? The reply is an emphatic no . The intimation under section 143(1) (a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating .....

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ons raised by the petitioner regarding the share application money, it was stated as under: 6. The undersigned has gone through the objections filed by the assessee. The sole objection of the assessee is that the information on basis of which the reopening has been initiated is erroneous and ill conceived. As per the reasons recorded the company has received share application money from the three parties tabulated below. S.N Name of Hawala operator Amount Date Nature of transaction 1 Kunal Gems .....

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d 1500000 3 Total 9000000 Thus assessee has contended that the reason recorded for reopening is erroneous. 7. The contention of the assessee has been examined. The reopening of the assessee company's case for AY 2007-2008 is valid for following reasons: a. The three entities mentioned in the reasons recorded for reopening were run, controlled and operated by Shri Praveen Kumar Jain. During the search conducted by Mumbai Investigation wing on Shri Praveen Kumar Jain on 1.10.2013, it has been .....

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f the nature of bogus share capital, bogus unsecured loan or bogus sale/purchase entries. c. The assessee has nowhere denied that it has not made any transaction with the three concerns. The reason being that the accommodation entries must have been routed through Banking channel, for which the trail cannot be obliterated by the assessee. However, the accounting treatment of the same is in control of the assessee and it has accounted the transactions with the three entities in head other than Sh .....

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