9911796707
TMI Blog2018 (2) TMI 1534X X X X Extracts X X X X X X X X Extracts X X X X ..... to be passed on 1.1.2013 making no addition with respect to such share application money. 3. To reopen such assessment, the Assessing Officer issued impugned notice. In order to do so, he had recorded the following reasons : "The assessee has filed its return of income for FY. 200910 on 21/09/2010 declaring total income at Rs.. The assessment u/s 143[3] of the Act was completed on 15,14,993/and income as determined at Rs. 15,14,990/. In the case of the assessee, information have been received from the DDIT[Inv] Unit3( 1), Kolkata in reference to sharing of information of shell companies which have given accommodation entries for share premium in Surat based companies. Vide the referred communication, the DDIT[Inv] Unit3( 1), Kolkata has provided list of114 Kolkata based shell companies which have given accommodation entries in Surat based companies. It has also been stated by the DDIT[Inv] that master data of paper/shell companies maintained by th Kolkata Directorate which has been prepared/complied on the basis of statement of many entry operators/dummy directors recorded during various search & seizure operation/survey operations/investigations/Inquires was checked. On peru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ROSEBERRY DISTRIBUTORS PVT LTD 2, DIGAMBER JAIN TEMPLE ROAD, 1ST FLOOR, KOLKATA 700007 48500 485000 9215000 20. SK STOCK DEALERS PVT LTD2, DIGAMBER JAIN TEMPLE ROAD, 1ST FLOOR, KOLKATA 700007 65500 655000 12445000 724500 9945000 137655000 0n verification of the materials available on record and facts and circumstances of the case, it is seen that the assessee has shown to have received share capital/share premium amounting to Rs. 14,76,00,000/( share capital Rs. 99,45,000 + share premium Rs. 13,76,55,000). Since, the investor companies have been proved to be shell companies indulged in providing accommodation entries, the share capital/share premium claimed to have been received, from such companies by the assessee company is not genuine. Therefore, this amount is nothing but assessee company's own money introduced in the grab of share capital/share premium from the shell company and as such liable for taxation under the provisions of section 68 of the IT. Act. In view of the above facts, since the above companies are proved to be bogus/paper companies and were given accommodation entries to the assessee company by way of share capital and share p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended section 68 of the Act and in any case, the assessee had during the original assessment complied with the requirements of the proviso newly inserted to the said provision. 5) The counsel contended that the Assessing Officer has merely relied on the report of the investigation wing without independent application of mind. He has thus acted on borrowed satisfaction that income chargeable to tax has escaped assessment. In this respect counsel relied on judgment of Division Bench of this Court in case of Harikishan Sunderlal Virmani v. Deputy Commissioner of Incometax reported in (2017) 394 ITR 146 (Guj). 6. On the other hand, learned counsel Shri Nikunt Raval for the department opposed the petition contending that after the assessment was framed, the department received information suggesting that the transactions of share application money received in case of the assessee company were not genuine and were merely entries provided by different entities and in reality it was nothing but the assessee's own funds which were being introduced in the guise of share capital or share premium through shell companies. In that view of the matter, reopening even beyond the period of fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Aaspas Multimedia Limited v. Deputy Commissioner of Income tax, Circle1( 1) reported in (2017) 83 Taxmann.com 82 (Guj). 7. We have reproduced the reasons recorded by the Assessing Officer for reopening the assessment. In such reasons, he pointed out that the information was received from the investigation wing of the department at Calcutta regarding shell companies which had given accommodation entires for share premium to Surat based companies. A list of 114 Calcutta based companies was provided which had given accommodation entries to such Surat based companies. Statements of many entry operators and dummy Directors recorded during various search and seizure operation, survey operation and investigation were checked. The Assessing Officer thereupon proceeded to record that " On perusal of data so provided by the DDIT(Inv) Unit3( 1), Kolkatta, it is noticed that during the period under consideration, the assessee company has accepted share capital/share premium from the following entries/parties which have been proved to be shell companies based on the investigation conducted by the DDIT(Inv) Unit3( 1), Kolkatta". Underneath, he provided a list of 17 companies who had transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of failure on part of the assessee to disclose truly and fully all material facts. The Assessing Officer formed such a belief on the basis of such materials placed before him and upon perusal of such material. This is not a case where the Assessing Officer was reexamining the materials and the documents already on record filed by the assessee along with the return or subsequently, brought on record during the assessment proceedings. It is a case where entirely new set of documents and materials was placed for his consideration compiled in the form of report received from the investigation wing. Such material was perused by the Assessing Officer and upon examination thereof, he formed a belief that the petitioner company had received share application and share premium money from as many as 20 different investor companies who were found to be shell companies and indulging in giving accommodation entries. From our view point, the Assessing Officer had sufficient material at his command to form such a belief. Such materials did not form part of the original assessment proceedings and was placed before the Assessing Officer only after the assessment was completed. Since on the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the occasion would not arise to term this as the assessee not having disclosed fully and truly all the material facts necessary for assessment. However, in essence, if the unsecured loans obtained from Basant Marketing Pvt. Ltd. from the material supplied by them, the DCIT, Kolkata reveals that the same was as a result of accommodation entry in the form of loans and advances from Basant Marketing Pvt. Ltd. to the tune of Rs. 8.71 crore, the case of the assessee would surely be covered under the said provision of law as it would not amount to full and true disclosure on the part of the assessee. At this stage, the reasons recorded shall have to be regarded, which have been based on the information contained in the report of the DCIT, Kolkata, dated March 24, 2013, wherein it had been noticed that the assessee company obtained accommodation entry in the form of loans and advances from Basant Marketing Pvt. Ltd. and, therefore, the Assessing Officer based his reason to believe that the income chargeable to tax had escaped the assessment. xxx 17. In the post notice correspondence dated March 05, 2014, it has been stated by the Assessing Officer that Basant Marketing Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this stage, following the decision of the Delhi High Court in case of Acorus Unitech Wireless (P.) Ltd. (supra). Assumption of jurisdiction on the part of the Assessing Officer is since based on fresh information, specific and reliable and otherwise sustainable under the law, challenge to reassessment proceedings warrant no interference." 12. In case of Jayant Security and Finance Ltd. v. Assistant Commissioner of IncomeTax Circle1(1) [Special Civil Application No.18921/2017, order dated 12.2.2018], this Court observed as under : "8. The question of change of opinion and failure on the part of the assessee to disclose truly and fully all material facts, in the present case are closely connected. Undoubtedly, as noted earlier, the Assessing Officer during the original assessment had examined the transactions. However, such examination would necessarily be on the basis of disclosures made by the assessee in the return filed and during the scrutiny assessment. If the Assessing Officer has information to form a reasonable opinion that prima facie the entire transaction itself was sham and bogus, as reference to such transaction during the original assessment and raising certain qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief is within the realm of subjective satisfaction of the Assessing Officer." 14. Section 68 of the Act, as is well known, provides that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited maybe charged to incometax as the income of the assessee of that previous year. That the share application money received by the assessee from abovenoted companies was only by nature of accommodation entries and in reality, it was the funds of the assessee which was being rerouted. Undoubtedly. Section 68 of the Act would have applicability. Proviso added by the Finance Act 2012 with effect from 1.4.2013, does not change this pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anically on the investigation carried out by the Excise department and not formed his independent belief. Such a contention was rejected making the following observations : "9. It can thus be seen that the entire material collected by the DGCEI during the search, which included incriminating documents and other such relevant materials, was alongwith report and showcause notice placed at the disposal of the Assessing Officer. These materials prima facie suggested suppression of sale consideration of the tiles manufactured by the assessee to evade excise duty. On the basis of such material, the Assessing Officer also formed a belief that income chargeable to tax had also escaped assessment. When thus the Assessing officer had such material available with him which he perused, considered, applied his mind and recorded the finding of belief that income chargeable to tax had escaped assessment, the reopening could not and should not have been declared as invalid, on the ground that he proceeded on the showcause notice issued by the Excise Department which had yet not culminated into final order. At this stage the Assessing Officer was not required to hold conclusively that additions i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the Assessing Officer issued notice for reopening of the assessment. The question, therefore, arose whether the information contained in the letter of Directorate of Investigation could be said to be definite information and the Assessing Officer could act upon such information for taking action under Section 147(b) of the Act. In such background, the Supreme Court observed as under: "12. Ms. Gauri Rastogi, the learned counsel appearing for the respondents, has urged that the letter of Shri Bagai was received by the Income tax Officer on March 26, 1974 and on the very next day, that is, on March 27, 1974, he issued the impugned notice under Section 147(b) of the Act and that he did not have conducted any inquiry or investigation into the information sent by Shri Bagai. Merely because the impugned notice was sent on the next day after receipt of the letter of Shri Bagai does not mean that the Income Tax Officer did not apply his mind to the information contained in the said letter of Shri Bagai. On the basis of the said facts and information contained in the said letter, the Income Tax officer, without any further investigation, could have formed the opinion that there was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid. Inasmuch as, as a result of our order, the reassessment proceedings have not to go on we don not and we ought not to express any opinion on the merits." 13. In case of AGR Investment Ltd. vs. Additional Commissioner of Income Tax and anr (supra), a Division Bench of Delhi High Court considered the validity of reopening of assessment where the notice was based on information received from Directorate of investigation that the assessee was beneficiary of bogus accommodation entries. The Court while upholding the validity of reopening observed that sufficiency of reason cannot be considered in a writ petition. It was observed as under: "23 The present factual canvas has to be scrutinized on the touchstone of the aforesaid enunciation of law. It is worth noting that the learned counsel for the petitioner has submitted with immense vehemence that the petitioner had entered into correspondence to have the documents but the assessing officer treated them as objections ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
