TMI Blog2017 (9) TMI 483X X X X Extracts X X X X X X X X Extracts X X X X ..... y proceedings, has not been addressed. - Writ petition are allowed. - Notice quashed - Decided in favor of assessee. - W.P.(C) 11214/2015, W.P.(C) 11782/2016, W.P.(C) 11791/2016 - - - Dated:- 30-8-2017 - S. Muralidhar And Prathiba M. Singh, JJ. For the Petitioner : Mr. S. Krishnan, Advocate For the Respondents : Mr. Zoheb Hossain, Senior standing counsel ORDER 1. These are three petitions under Article 226 of the Constitution seeking the quashing of the notices issued by Respondent No. 1, Assessing Officer ( AO ) under Section 148 of the Income Tax Act, 1961 ( Act ) and all proceedings consequent thereto. 2. The facts of the three petitions are more or less common. Therefore, these three writ petitions are being disposed of by this common order. 3. Each of the Petitioners is a Director of M/s. Scan Holdings (P) Limited ( SHPL ) which is engaged in the business of domestic and international trading in packaging material. 4. A common grievance in all three writ petitions is that the erstwhile auditor of SHPL, who is impleaded in these writ petitions as Respondent No. 2, has been addressing false and malicious communications about them for several year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible material for the AO to have formed reasons to believe that income had escaped assessment on the said score. It was found that even while considering objections to the reopening of the assessment the AO had failed to apply his mind to any of the facts or material presented by the Assessees thus rendering the entire exercise meaningless. 10. As far as the present writ petitions are concerned, they are in relation to AY 2009-10. In the case of Rajiv Agarwal and his wife Vijay Laxmi Agarwal, the date of the notices under Section 148 of the Act is 31st March 2016. In the case of Juhi Dixit (the Petitioner in W. P. (C) No. 11214 of 2015) who is also a director of SHPL, the date of the notice under Section 148 of the Act is 27th March 2015. 11. The reasons for the reopening in each case states that a Tax Evasion Petition ( TEP ) was received. In the case of Juhi Dixit, it is stated that TEP alleged that the Assessee received rent of ₹ 90,000 per month from SHPL from 1st January 2008 to 31st March 2008. The fact was that the Assessee had not let out the said property at all. It was alleged that by showing it as let out, the Assessee claimed deduction on interest on payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and the allotment was cancelled. This was because by an agreement dated 24th April 2008, the same property stood assigned to SHPL. On the basis of the said agreement, the Assessee had made payment of ₹ 1,45,25,137 to Brigade Group for the same property. It is further noted that the amount standing as advance was adjusted against the Directors salaries. From the chain of events, it was quite clear that there was no intention of advancing any sums to the Directors. The advances were paid by Directors acting on behalf of the company. The property was meant to be acquired by SHPL only. It was further claimed under the head Findings , it was noted that the contention of the Assessee was that there has been no violation of Section 2 (22) (e) and Section 194 of the Act . Yet it was recorded that the said facts needed verification in scrutiny and taxed accordingly. 14. Yet another reason given was that the Directors of the company have incurred ₹ 3 crore on construction/interior of residential house at A-123, Meera Bagh, Paschim Vihar, New Delhi, and yet no amount has been declared in book. The real source of that expenditure was the matter of investigation. The fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side by this Court, as noted hereinbefore. There was no independent inquiry or application of mind by the AO to the complaint and there was no basis to conclude that there had been escapement of income. 18. The objections filed by Rajiv Agarwal and Vijay Lakshmi Agarwal to the reopening of assessment are more or less similar. These objections were filed on 16th November 2016. Inter alia it was pointed out that the advances were for purchase of a property in the company s name, not for their benefit, and when the builder insisted on payment to him by SHPL, transactions were ratified and the advances were adjusted against salaries within the year itself. As working directors, each of them draw a salary, and advances on that account cannot partake the chartered of deemed dividend. Thus, there was no colour of escaped income in such a transaction. There was no basis for the AO to have formed reasons to believe that there was escapement of income. 19. Each of three objections were disposed of by the AO by separate orders - by order dated 28th November 2016 in the case of Rajiv Agarwal, by order dated 28th November 2016 in the case of Vijay Laxmi Agarwal and 30th November 2015 in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
