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BIYANI IMPEX PRIVATE LIMITED Versus INCOME TAX OFFICER

2016 (9) TMI 559 - GUJARAT HIGH COURT

Reopening of assessment - complaint contained allegations of a private citizen [directors of the petitioner-company] - Held that:- What the Assistant Director communicated to the Assessing Officer in the present case was a private complaint making serious allegations of fraud and financial irregularities against the directors of the petitioner-company. Such allegations by itself would not make a valid ground to reopen the assessment unless coupled with some further reliable material. If the inve .....

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was annexed. As noted, a private complaint without any further investigation by the authorities surely not be a tangible material to enable the Assessing authority to form a belief that income chargeable to tax had escaped assessment. - Letter of Assistant Director (Investigation) also did not contain any further material regarding the allegations made by the complainant. In the said letter, he merely brought to the notice of the Assessing Officer that during investigation in connection wi .....

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ed any material regarding the irregularities of the assessee-company. The complaint contained allegations of a private citizen. The letter of the Assistant Director contained no further information on the issue of reliability of the allegations made in the complaint. Though this letter referred to some findings concerning the assessee during the investigation into the complaint, no such material was placed at the disposal of the Assessing Officer. - Assessing Officer stressed the need to ver .....

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se Department and evade their liability to pay income tax. - All along therefore, the Assessing Officer desired to reopen the assessment to verify whether there had been evasion of tax, surely a purpose for which, the power of reopening cannot be resorted to. - Decided in favour of assessee - SPECIAL CIVIL APPLICATION NO. 12627 of 2011 - Dated:- 7-9-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR BANDISH SOPARKAR WITH MRS SWATI SOPARKAR, ADVOCATE FOR THE RESPONDENT .....

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under Section 80HHC of the Income Tax Act,1961 ['the Act' for short]. The Assessing Officer selected the case for scrutiny. The assessment order was passed on 08.11.2006, in which, the Assessing Officer restricted the petitioner's claim for exemption under Section 80HHC of the Act to ₹ 4.54 lacs instead of ₹ 16.22 lacs claimed by the petitioner. To reopen such scrutiny assessment, the impugned notice came to be issued beyond a period of four years from the end of the rel .....

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e. The information received from Assistant Director of Income Tax (inv.) Unit-III, Surat that during investigations pertaining to a TEP against Jugal M. Biyani and Rajesh R Bansal, it was found that there is an allegation against M/s. Biyani Impex Pvt. Ltd. of claiming undue rebates from Central Excise Department. The matter is being followed up with the Central Excise Authotieis to obtain information on this issue. It is alleged that the Director of the company Biyani Impex Pvt. Ltd Shri Rajesh .....

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tions under letter dated 23.05.2011. The Assessing Officer, however, rejected such objections by an order dated 25.06.2011. The petitioner, thereupon, raised further objections under letter dated 19.07.2011 and, thereafter, filed the present petition. 4. Taking us through the reasons recorded by the Assessing Officer, counsel for the petitioner contended that there is no material on record on the basis of which, the Assessing Officer can form a belief that income of the petitioner-company charge .....

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e objection and the affidavit- in-reply filed in the present petition would reveal that the notice for reopening has been issued for a fishing inquiry without there being any material which would enable the Assessing Officer to form a belief that income chargeable to tax had escaped assessment. 5. On the other hand, learned counsel Mr. Sudhir Mehta opposed the petition contending that the report of the investigation wing would reveal that two of the directors of the petitioner-company had indulg .....

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received from the investigation wing. In the report, it was pointed out that the investigation was carried out on a private complaint against the directors of the petitioner-company. It was found that there are allegations against the company of claiming undue rebates from Central Exercise department. The matter was being followed up with the Central Exercise Authority to obtain information on the issue. The allegations were that the directors of the company had claimed rebate of crores of rupee .....

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tions against Shri Jugal Biyani and Shri Rajesh Bansal, two of the directors of the petitioner-company. The allegations include irregularities and declaration of stock of grey fabrics in import of natural silk. These allegations, however, are in connection with the companies other than the present petitioner. Insofar as the petitioner-company is concerned, this letter suggests that the said two persons have floated many firms, have earned undisclosed income by way of claiming rebate from the Exc .....

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ice that during investigations pertaining to a TEP against Jugal M Biyani and Rajesh R Bansal, it was found that there is an allegation against M/s. Biyani Impex Pvt. Ltd of claiming undue rebates from Central Excise Department. The matter is being followed up with the Central Excise Authorities to obtain information on this issue. Meanwhile, however, the relevant extracts of the TEP are being forwarded to you so that you may consider taking action, if any deemed necessary for AY 2004-05, u/s. 1 .....

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matter is being followed up with the Central Excise authorities to obtain information on the issue. However, since the issuance of notice for reopening was getting time barred on 31.03.2011, he suggested to the Assessing Officer to take prompt action. It was pursuant to this communication that the Assessing Officer recorded reasons and issued the impugned notice on 30.03.2011. 9. For several reasons, the notice cannot be sustained. Firstly, what the Assistant Director communicated to the Assessi .....

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Assessing Officer. Before the Assessing Officer there were only two documents. First was the said undated complaint inwarded in the department on 05.03.2008 and second was the covering letter of the Assistant Director of Income Tax (Investigation Wing) dated 28.03.2011 along with which the said private complaint was annexed. As noted, a private complaint without any further investigation by the authorities surely not be a tangible material to enable the Assessing authority to form a belief that .....

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e department. This letter was addressed on 28.03.2011. Notice under Section 148 of the Act was getting time barred on 31.03.2011. The Assessing Officer was, therefore, under time pressure. He mechanically issued the notice for reopening relying on these two documents. Neither of these two documents contained any material regarding the irregularities of the assessee-company. The complaint contained allegations of a private citizen. The letter of the Assistant Director contained no further informa .....

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er wing of the department, satisfied himself that income chargeable to tax had escaped assessment, the issue would have rested on different ground. In the present case, the Assessing Officer had no such material before him. He merely accepted the suggestion of the investigation wing that the assessee company had indulged in excise duty evasion. This is not even a case of the Assessing Officer having borrowed the satisfaction of the investigation wing. This is a case where the Assessing Officer h .....

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