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Gujarat Ambuja Exports Ltd. Versus Deputy Commissioner of Income Tax - Circle - 2 (1) (1)

2017 (9) TMI 1035 - GUJARAT HIGH COURT

Reopening of assessment - sufficiency of material available with the Assessing Officer to form a belief that income chargeable to tax had escaped assessment - bogus purchases - Held that:- When fresh material was unearthed by the department through the investigation wing who had inquired into the transactions of M/s. S.R. Sales Corporation neither the question of change of opinion nor the concept of full disclosure may have a bearing. If the purchases of the assessee from M/s. S.R. Sales Corpora .....

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nd the self restraint imposed by the courts at the threshold stage. In a writ petition, the court would be primarily concerned with the question whether the Assessing Officer had information enabling him to form a bonafide belief that income chargeable to tax had escaped assessment. The court would not evaluate the evidence at that stage nor is the Assessing Officer expected to demonstrate with certainty that the addition will certainly be sustained in the reassessment proceedings. What is requi .....

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uch a belief, the court would not interfere with the notice for reopening. - Petition dismissed. - Special Civil Application No. 10745 of 2016 - Dated:- 11-9-2017 - MR. AKIL KURESHI AND MR. BIREN VAISHNAV, JJ. For The Petitioner : Mr Tushar P Hemani, Advocate And Ms Vaibhavi K Parikh, Advocate For The Respondent : Mrs Mauna M Bhatt, Advocate ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged a notice dated 30.03.2016 issued by the respondent Assessing Offic .....

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ssing Officer passed order of assessment under section 143(3) of the Income Tax Act, 1961 on 29.12.2010. By making several additions, the total income of the assessee was assessed at ₹ 88.69 crores (rounded off). During such assessment, purchases made by the petitioner assessee from certain traders including one M/s. Vishal Traders came to be scrutinized. The Assessing Officer having held that such purchases were bogus made the additions. We are informed that upon further appeal by the ass .....

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nsumption) and windmill. The return of income was filed on 30/09/2009 declaring total income of ₹ 54,44,98,730/- which was processed u/s 143(1) of the Act on 21/03/2011 and thereafter assessment was passed u/s 143(3) r.w.s 153(A) of the Act on 29/12/2010 at the income of ₹ 88,69,11,095/-. As per information shared by the Joint Director (Inv.), Gurgaon O/o the Pr. DIT (Investigation) Chandigardh vide letter No. ITO(Inv) GGN/2015-16 dated 23/03/2016, a STR was received in case of M/s. .....

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of another customer in the name of M/s. Sharda Traders. The customer initially used to get the fund transferred from these 2 accounts and withdraw it is cash in the amounts close to ₹ 9 lakhs. Customer also receives RTGS. 2. Report :- 2.1 Account statement of account Nos 73305000084, 430002101007301, 17205004589 & 017205004822 of M/s. S.R. Sales Corporation, Shop No. 52-B, Anaj Mandi, Fatehabad were obtained from ICICI Bank Ltd. On enquiry it was reported by ICICI Bank Ltd. account No. .....

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h/transfer/RTGS which is followed by debits through, cash withdrawal by self cheques. The details of such accounts with ICICI bank and funds transacted in these accounts during the F.Y. 2008- 09 is summarized as under: Sr. No. Account No. Cash deposits Credits through RTGS/Cheques/ Fund Transfer/etc. 1 73305000084 6,00,000/- 9.65.59,000/- 2 43000210100 73 Nil 52,37,64,360/- 3 17205004589 Nil 7,44,48,000/- 4 17205004822 Nil 49.09.85,000/- Total 1,18,57,76,360/- 2.3 Similarly, account statements o .....

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irector of Income tax (Inv.), Gurgaon accorded permission to conduct open enquiry in the case vide letter no. Addl. DIT/INV./FBD/2013-14/3485 dated 24.01.2014. Consequently, the assessee was asked to furnish certain information regarding the credit entries in his bank accounts so as to ascertain the nature and source of the same vide this office Notices/summons vide letter No. 165 dated 13.08.2015, giving an opportunity to furnish reply by 25.03.2015. In response of the above summons neither the .....

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02.11.2015 & 27.01.2016 respectively to Sh. Milakh Raj prop, of M/s. SR Sales Corporation R/o & No. 407, VPO, Kalpdha, Dist. Fatehabad. The above mentioned summons were received back from the Postal Authorities with me remarks that Assessee not found at home and others refused to receive . Again fresh Summons vide letter No. 491 & 492 dated 27.01.2016 were issued to Sh. Milakh Raj at Anaj Mandi, Ukalana & M/s. S.R. Sales Corporation. But both the summons were received back from .....

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. In view of the above facts, I have reason to believe that there are sufficient grounds/reasons to believe that income has escaped. Therefor the assessee has concealed the income to extent of ₹ 4,48,79,000/-. Since the income of ₹ 4,48,79,000/- has escaped assessment for the A.Y. 2009-10 in the spirit of provision of section 147 of the Income Tax Act, 1961. It is a fit case for reopening of the assessment by invoking the provision of section 147 of the Income Tax Act, 1961. Accordin .....

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otice was issued beyond a period of four years from the end of relevant assessment year. (II) There was no failure on the part of the assessee to disclose truly and fully all material facts. (III) The reasons do not suggest any formation of belief that income chargeable to tax had escaped assessment. Merely because the sellers of goods to the assessee refused to respond to the inquiry notice issued by the Income Tax department would not be sufficient material to enable the Assessing Officer to f .....

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ufficient material at his command to form a belief that income chargeable to tax had escaped assessment. Such information was unearthed subsequent to the passing of the order of assessment. There was a clear failure on the part of the assessee to disclose truly and fully all material facts. The Assessing Officer having recorded proper reasons and issued the impugned notice, at this stage, the court would not examine the sufficiency of such reasons in the context of testing the formation of the b .....

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ss of such sales and the question of change of opinion therefore would not arise. While examining the reasons recorded we would also bear in mind that in the present case, the notice for reopening the assessment has been issued beyond a period of four years from the end of relevant assessment year and that the original assessment was framed after scrutiny. 6. The closer examination of the reasons recorded would suggest that after the scrutiny assessment was carried out in case of the assessee du .....

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er M/s. Sharda Traders. The statements of accounts of M/s. S.R. Sales Corporation revealed that in the said accounts amounts were credited through cash transfers or RTGS followed by cash withdrawals through cheques in favour of the account holder. The Additional Director of Income Tax, Investigation, Gurgaon granted permission to conduct an inquiry on the basis of such materials on record. M/s. S.R. Sales Corporation was asked to furnish information regarding the credit entries in the bank accou .....

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h Raj who was the proprietor of M/s. S.R. Sales Corporation. The summons were returned back by the postal authorities with the remarks Assessee not found at home and others refused to receive. Summons were also issued to Sharda Traders from whom also no response was received. The reasons recorded that these accounts (i.e. the accounts of M/s. S.R. Sales) had received funds of ₹ 4.48 crores from the present petitioner and these funds were followed by immediate cash withdrawals. 7. It can th .....

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by the department were not responded. Even the entity was not found existing at the given address. The proprietor of the concern could not be served since he was not found at the address supplied and the rest of the members present refused to accept the summons. Genuine and repeated efforts were made by the department to serve the summons to the said entity to produce documents and information. No response was received from M/s. S.R. Sales Corporation. Independently of the non service or non res .....

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rity and the Tribunal reduced the addition made by the Assessing Officer on this count, in theory, the non-genuineness of some of the purchases was approved by the Tribunal also. Be that as it may. So far as the assessee's purchases from S.R. Sales are concerned they were not subject matter of the assessment proceedings and in that view of the matter the question of change of opinion would not arise. In any event, when fresh material was unearthed by the department through the investigation .....

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