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ORIENT NEWS PRINTS LTD Versus DEPUTY COMMISSIONER OF INCOME TAX CIRCLE- 3 (1) (1)

2017 (2) TMI 124 - GUJARAT HIGH COURT

Reopening of assessment - notice under Section 133 - Held that:- So far as submission on behalf of the Revenue that during the assessment proceedings the learned Assessing Officer did not hold any inquiry and called for the information from the concerned share applicants and/or did not issue any notice to the concerned share applicants under Section 133 of the IT Act is concerned, it is required to be noted that the assessee did furnish all the necessary details with respect to share applicants .....

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le. - In view of the above and for the reasons stated above, when it has been found that the reasons / grounds on which the assessment is sought to be reopened were already gone into in detail by the learned Assessing Officer while framing the scrutiny assessment and after raising the specific queries with respect to increase in the share capital, with respect to share application money and the income of the assessee from the trading in fabrics, only thereafter when the learned Assessing Off .....

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nt of learned Advocates appearing for respective parties, present petition is taken up for final hearing today. [2.0] By way of this petition under Article 226 of the Constitution of India, the petitioner - assessee has prayed for an appropriate writ, direction and order to quash and set aside the impugned notice dated 28.03.2016 issued under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as IT Act ) by the respondent - Assessing Officer, by which the learned Assessing Offic .....

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The case was selected for scrutiny and the notice under Section 142(1) of the IT Act was issued by which the learned Assessing Officer called various details with respect to the increase of share capital, share application money, expenditure incurred by the assessee. That the assessee submitted all the necessary details asked by the learned Assessing Officer more particularly with respect to the increase of share capital; with respect to share application money and even the expenditure incurred .....

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Officer has sought to reopen the assessment for the AY 2011-12 alleging inter alia that the income chargeable to tax has escaped assessment. That at the request of the assessee, the learned Assessing Officer has furnished the reasons recorded to reopen the assessment which are as under: 1. During the year, paid up capital of company was increased by ₹ 1,65,00,000 (20,99,00,000 - 19,34,00,000). In addition to this, the assessee also got share application money of ₹ 30,15,00,000 durin .....

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,00,00,000 2 Pawantar Agro Agencies Pvt Ltd Shop No.5, Rizvi Nagar Coop Housing Society, SV Road, Santacruz (W), Mumbai-54 3,00,000 3,00,00,000 3 Param Commodities Pvt Ltd Shop No.5, Rizvi Nagar Coop Housing Society, SV Road, Santacruz (W), Mumbai-54 3,00,000 3,00,00,000 4 Parmarth Agro Marketing Pvt Ltd Shop No.5, Rizvi Nagar Coop Housing Society, SV Road, Santacruz (W), Mumbai-54 3,00,000 3,00,00,000 5 Shri Visnukrupa Commodities Pvt Ltd 202, Sonalika, Behind Natraj Studio, Near Manjrekar Wadi .....

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nfirmation u/s 133 from these parties along with their bank statement corroborating the genuineness of purchase of shares, identity and genuineness of remained unsubstantiated. 11. As such ₹ 16,50,00,000 was required to be treated as income of assessee u/s 68 of the Act. 2. It was further noticed that share application money of ₹ 30,15,00,000 was received from 7 entities located at Kolkata which itself had received money from others as detailed below: Name of entity from which share .....

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ata Burnpur Power Pvt Ltd 2,00,00,000 Pears Mercantiles Pvt Ltd 262, Panchanantala road, Howrah Burnpur Power Pvt Ltd Drishti Suppliers Pvt Ltd Quest Financial Services Pvt Ltd 5,50,00,000 Wonderland Paper Suppliers Pvt Ltd 27, Netaji Subhash Road, Bally, Howrah Fastner Machinery Pvt Ltd 3,00,00,000 Cyrus Infocomm Pvt Ltd No.17, Ground Floor, Prabhat Center, Belapur, Navi Mumbai CottTex Fabrics Pvt Ltd 50,00,000 Anurodh Infrastructure Pvt Ltd 319,21, Jessore Road, Kolkata Pears Mercantiles Pvt L .....

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has no details at all. Pranjeevan Distributor Pvt Ltd from which Burnpur Power Pvt Ltd has stated to receive money as advance and Fastner Machinery Pvt Ltd from which Wonderland Paper Suppliers Pvt Ltd has stated to receive money as advance have no details. Dristi Suppliers Pvt Ltd which has advanced money to Quest Financial Services Pvt Ltd, Burnpur Power Pvt Ltd and Pears Mercantiles Pvt Ltd in AY Financial Services Pvt Ltd, Burnpur Power Pvt Ltd and Pears Mercantiles Pvt Ltd in AY 2011-12 (FY .....

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or copies of invoices are available on record. It was not clear that when the purchase was of paper only, how there was sale of shirting fabrics only. Incidentally, there was no opening / closing balance of any stock. As such, ₹ 1,43,22,938 was required to be treated as income of assessee. [3.2] That the assessee submitted his detail objections against the reasons recorded for reopening vide his communication dated 06.05.2016. It was the specific case on behalf of the assessee that the gr .....

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e learned Assessing Officer framed the assessment. Therefore, it was submitted that the reopening can be said to be on a mere change of opinion by the subsequent Assessing Officer which is not permissible. With respect to the ground No.3 it was specifically submitted that during the year under consideration, the business of the assessee was trading in fabrics and it was a typographical error in the P&L Accounts and by mistake it was stated to be paper purchase . Therefore, it was requested t .....

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gs is bad in law. [4.1] It is submitted that the impugned reassessment proceedings are merely on change of opinion by the subsequent Assessing Officer. It is submitted that from the reasons recorded it can be said that the learned Assessing Officer has sought to reopen the assessment for AY 2011-12 on three grounds / reasons i.e. (1) increase in share capital; (2) share application money and (3) with respect to the expenditure incurred / income from sales being sales of shirting fabrics of ͅ .....

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essing Officer and only thereafter the learned Assessing Officer framed scrutiny assessment under Section 143(3) of the IT Act. It is submitted that therefore, the impugned reopening is on a mere change of opinion of the subsequent Assessing Officer, which is not permissible. It is submitted that it is not the case on behalf of the learned Assessing Officer that on the basis of any new material collected subsequently, he has formed an opinion that income chargeable to tax has escaped assessment. .....

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alf of the Revenue has tried to oppose the present petition by submitting that in the assessment order the learned Assessing Officer has not discussed anything in detail with respect to the increase in the share capital and also with respect to the share application money. It is submitted that even no notices were sent to the respective share applicants as required under Section 133 of the IT Act, to satisfy himself with respect to the genuineness of the share applicants / share application mone .....

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the material on record that the income chargeable to tax has escaped assessment, the learned Assessing Officer is justified in reopening the assessment in AY 2011-12. Making above submissions and relying upon the decision of the Division Bench of this Court in the case of Praful Chunilal Patel vs M.J. Makwana, Assistant CIT reported in (1999)236 ITR 832, it is requested to dismiss the present petition. [6.0] Heard learned Advocates appearing on behalf of the respective parties at length. At the .....

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ssing Officer, specific queries were raised by the learned Assessing Officer with respect to increase in the share capital; with respect to share application money as well as the income of the assessee from trading in fabrics. It is the case on behalf of the assessee that only thereafter the learned Assessing Officer framed the scrutiny assessment under Section 143(3) of the IT Act. From the material on record it is found that during the scrutiny assessment, the learned Assessing Officer raised .....

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lso furnished the details of the sales made by the assessee, to the respective parties. Vide communication dated 06.09.2013 the assessee answered the specific queries with respect to the increase in the share capital as well as the share application money. With respect to the increase in the share capital, the assessee produced the confirmation letter from the party confirming the said investments; share application form; bank statement for the relevant period; acknowledgement for filling their .....

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nt under Section 143(3) of the IT Act. Therefore, subsequent reopening on the aforesaid grounds can certainly be said to be on a mere change of opinion by the subsequent Assessing Officer. As held by the Hon ble Supreme Court in the case of Kelvinator India Ltd. (Supra) and the Division Bench of this Court in the case of Gujarat Power Corporation Ltd. (Supra), on mere change of opinion by a subsequent Officer, the reopening of the concluded scrutiny assessment under Section 143(3) of the IT Act .....

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missible. Even otherwise on facts the said decision shall not be applicable to the facts of the case on hand. In the case before the Division Bench of this Court, it was found that the Assessing Officer subsequently found a glaring mistake for which the assessment was sought to be reopened. The Division Bench observed that though all the necessary materials were furnished by the assessee, when the Assessing Officer has subsequently found a mistake, the reopening is permissible within a period of .....

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