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2016 (7) TMI 515 - GUJARAT HIGH COURT

2016 (7) TMI 515 - GUJARAT HIGH COURT - TMI - Reopening of assessment - accommodation entries receipt - Held that:- It may be also noted that while in the reasons recorded, it has been stated that M/s Glamour Sales Pvt. Ltd. is not existing at the given address and therefore, the identity and creditworthiness and genuineness of the transaction could not be established, whereas in the order disposing of the objections, the Assessing Officer has travelled much further and observed that M/s Glamour .....

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ales Pvt. Ltd. via its bank accounts. In this regard, it is by now well settled that the validity of the reopening has to be examined on the basis of the reasons recorded and the reasons recorded cannot be supplemented either by the order disposing of the objection or by filing an affidavit in that regard. - In the present case, the Assessing Officer has examined the claim and not made any additions and has not discussed anything therein. However, once he has examined such claim, it is not p .....

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the Act on a mere change of opinion is, therefore, clearly without jurisdiction. The impugned notice under section 148 of the Act, therefore, cannot be sustained. - Decided in favour of assessee. - Special Civil Application No. 20212 of 2015 - Dated:- 19-4-2016 - Harsha Devani And G. R. Udhwani, JJ. For the Petitioner : Mr Tushar P Hemani, Ms Vaibhavi K Parikh, Advocate For the Respondent : Mr Sudhir M Mehta, Advocate JUDGMENT ( Per Honourable Ms. Justice Harsha Devani ) 1. Rule. Mr. Sudhir Meh .....

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t, 1961 (hereinafter referred to as the Act ) whereby, he seeks to reopen the assessment of the petitioner for assessment year 2010-11. 4. The facts as appearing from the petition are that petitioner, a company, is engaged in the business of trading in dress material. The petitioner filed its return of income for assessment year 2010-11 on 14.10.2010, declaring total income at ₹ 10,33,540/-, which was processed under section 143(1) of the Act. The case was later on taken up for scrutiny an .....

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o, the petitioner filed its objections to the reasons recorded, which, however, came to be disposed of by a letter dated 24.07.2015. Since certain further points came to the knowledge of the petitioner as regards certain technicalities pertaining to the reopening, further objections came to be raised vide letter dated 12.08.2015. The petitioner also requested for certified copies of the order sheets of assessment for assessment year 2010- 11. The petitioner also filed further letters raising obj .....

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oner had claimed to have received share capital with premium, was not available at the given address and therefore, the identity and creditworthiness of that company and genuineness of the transaction could not be established. It was submitted that during the course of assessment proceedings, the then Assessing Officer found that the petitioner had received share application money from M/s Glamour Sales Pvt. Ltd., hence, by a letter dated 26.11.2012, the Assessing Officer called for the informat .....

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. It was submitted that after considering the details and the explanation furnished by the petitioner, the assessment came to be framed under section 143(3) of the Act assessing the total income of the petitioner at ₹ 12,06,671/- without making any addition in respect of the share application money received from M/s Glamour Sales Pvt. Ltd. 5.1 It was further submitted that in relation to assessment proceedings for assessment year 2012-13, the respondent issued a letter dated 05.02.2015, on .....

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nsaction with the petitioner and bank book, as desired by the then Assessing Officer. It was submitted that the petitioner in response to the show cause notice dated 19.02.2015 had brought to the notice of the respondent the fact that M/s Glamour Sales Pvt. Ltd. had furnished the requisite details to the respondent by placing on record postal receipt evidencing the fact as to furnishing of information by M/s Glamour Sales Pvt. Ltd. to the respondent. It was submitted that in the light of the rep .....

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r Sales Pvt. Ltd. and had examined the issue at length, hence, the reopening of the assessment is nothing but a change of opinion. 5.2 Referring to the order rejecting the objections filed by the petitioner, it was pointed out that the Assessing Officer has travelled much beyond the reasons recorded while rejecting the application made by the petitioner objecting to the reopening. Referring to the said order, it was submitted that it is nowhere stated therein that in the original proceedings, th .....

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omplied with and therefore, the identity of the company is proved, but has held that the argument of the petitioner is baseless and it cannot be said that a particular company is genuine even if the investor company is having PAN, filing income tax returns, having bank account and accounts are audited. It was pointed out that in connection with the submission of the petitioner that M/s Glamour Sales Pvt. Ltd. had in pursuance of the notice under section 133(6) of the Act, submitted the details c .....

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bmitted that in any case, the entire aspect was gone into in the assessment under section 143(3) of the Act and hence, the reopening being based upon a mere change of opinion, the assumption of jurisdiction on the part of the Assessing Officer is without authority of law. 5.3 In support of his submissions, the learned counsel placed reliance upon the decision of this court in the case of Gujarat Power Corporation Ltd. v. Assistant Commissioner of Income Tax, (2013) 350 ITR 266, for the propositi .....

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2) 346 ITR 245 (Guj.), for the proposition that it is settled legal position that if the reopening of assessment fails on account of nonexistence of reasons for such reopening, the revenue cannot either sustain such reopening or bring within the assessment proceedings any other head of escaped income not mentioned in the reasons for reopening. It was, accordingly, urged that the petition deserves to be allowed by setting aside the impugned notice. 6 Opposing the petition, Mr. Sudhir Mehta, learn .....

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ilable by M/s Glamour Sales Pvt. Ltd. to prove the genuineness of the transactions with the assessee company. Hence, after recording the reasons, notice was issued to the petitioner under section 148 of the Act. It was submitted that it is the case of the petitioner company that M/s Glamour Sales Pvt. Ltd. has submitted details in pursuance of the notice issued under section 133(6) of the Act during the course of assessment proceedings for assessment year 2012-13. However, on a perusal of the ca .....

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question of change of opinion would not arise. Reliance was placed upon the decision of Delhi High Court in the case of Commissioner of Income Tax v. Nova Promoters & Finlease (P) Ltd., (2012) 342 ITR 169, wherein the court held that the ratio of the Supreme Court in the case of Lovely Exports would not be applicable where the Assessing Officer is in possession of material that discredits and impeaches the particulars furnished by the assessee and also establishes the link between self-conf .....

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court. 7 Before adverting to the merits of the rival submissions, it may be germane to refer to the reasons recorded for reopening the assessment for assessment year 2010-11, which read as follows: In this case, the return of income was filed on 14.10.2010 declaring total income of ₹ 10,33,540/- and the same was assessed under section 143(3) of the I. T. Act, be accepting the same. [2] The assessee has claimed to have received share capital with premium from the following alleged investor .....

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tity and creditworthiness of that company and genuineness of the transaction could not be established. Therefore, the share capital and share premium amounting to ₹ 12,50,000/- is non-genuine. [4] In view of the above facts and material, I have reason to believe that income of the assessee to the extent of ₹ 12,50,000/- has escaped assessment within the meaning of section 147 of the Act for A.Y. 2011-12 on account of failure on part of the assessee to disclose all material facts in t .....

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is evident on a plain reading of the reasons recorded, according to the Assessing Officer, the assessee had claimed to have received share capital with premium from M/s Glamour Sales Pvt. Ltd. of a sum of ₹ 12,50,000/-. According to the Assessing Officer, during the assessment proceedings of assessment year 2012-13, it was unearthed that the investor company does not exist at the given address and therefore, identity and creditworthiness of that company and genuineness of the transaction .....

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t. Ltd. to furnish information/documents mentioned therein for the period from 01.04.2009 to 31.03.2010 relevant to assessment year 2010-11. In response thereto, M/s Glamour Sales Pvt. Ltd., by a communication dated 05.12.2012, submitted the details required by the Assessing Officer, which included the nature of the transaction with date and amount, mode of payment/receipt with date, copy of accounts of the petitioner as appearing in its books for the financial year 2009-10, copy of the bank sta .....

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section 143(3) of the Act assessing the total income of the petitioner at ₹ 12,06,671/- without making any addition in respect of the share capital money received from M/s Glamour Sales Pvt. Ltd.. Now, the Assessing Officer seeks to reopen the assessment on the ground that during the course of assessment proceedings of assessment year 2012-13, it is found that M/s Glamour Sales Pvt. Ltd. is not found at the given address and therefore, income to the tune of ₹ 12,50,000/- has escaped .....

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and was very much in existence at the address furnished by the petitioner. In the subsequent year, according to the Assessing Officer, M/s Glamour Sales Pvt. Ltd. was not found at the said address. This is based upon the fact that M/s Glamour Sales Pvt. Ltd. had not responded to the notice under section 133(6) of the Act during the course of the assessment proceedings for assessment year 2012-13. It may be noted that it is the specific case of the petitioner in the petition, which is supported b .....

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r consideration, M/s Glamour Sales Pvt. Ltd. had responded to the notice under section 133(6) of the Act and had furnished the necessary details. While in the assessment order, there is no discussion as regards the share capital including the share premium of ₹ 12,50,000/- received from M/s Glamour Sales Pvt. Ltd., the record of the case clearly shows that the Assessing Officer had called for such details and thereafter, did not make any addition in the assessment order. This court in the .....

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any additions and has not discussed anything therein. However, once he has examined such claim, it is not permissible to reopen the assessment even within four years on the very same grounds. It is evident that the Assessing Officer has, therefore, formed an opinion on the issue in question though not reflected in the assessment order passed under section 143(3) of the Act. Thus, reopening of the assessment to examine the very same claim is, therefore, clearly based upon a change of opinion. Th .....

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tion could not be established, whereas in the order disposing of the objections, the Assessing Officer has travelled much further and observed that M/s Glamour Sales Pvt. Ltd. of Kolkatta is a fictitious entity just created to give accommodation entries to beneficiaries on commission basis; that the above investor company is not actual one but it is a paper company created for giving benefit to the beneficiaries; that any transaction with such bogus company is considered to be non-genuine and th .....

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