TMI Blog2022 (12) TMI 1287X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the claim, the power of reopening of assessment could not be exercised and the AO cannot seek to undertake a fishing or a roving inquiry and seek to verify the facts which are already on record, as if it were a scrutiny assessment. Thus from reasons recorded to reopen the assessment, we are of the opinion that under the guise of reopening the assessment, the AO wants to have a roving inquiry. In absence of any tangible material to form an opinion that the income chargeable to tax has escaped assessment and in absence of any satisfaction recorded by the Assessing Officer by merely relying upon the information received from the Office of DCIT Central Circle 2(2), Mumbai, the impugned action of reopening the assessment while exercising power under section 148 of the Act cannot be sustained. - Decided in favour of assessee. - HONOURABLE MR. JUSTICE N.V.ANJARIA And HONOURABLE MR. JUSTICE BHARGAV D. KARIA MR TUSHAR HEMANI, SENIOR ADVOCATE WITH MS VAIBHAVI K PARIKH(3238) FOR THE PETITIONER(S) NO. 1 MR.VARUN K.PATEL(3802) FOR THE RESPONDENT(S) NO. 1 JUDGMENT ( PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA ) 1.Heard learned Senior Advocate Mr. Tushar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of Rs 12 lakh, short term capital gain of Rs 7,66,586/- and income from other sources of Rs. 36,845/-. 2. The information from the DCIT Central Circle 2(2), Mumbai has been received on 26.03.2018 through letter dated 19.03.2018 of the DCIT, Circle 2(1)(1), Vadodara. As per the information, shri Vijay R. Sanghvi, has obtained three accommodation entries of Rs. 70 lakh each (total 2.1 Cr) all on 02.02.2011 which were credited in CITI Bank NA, Vadodara in the bank account of shri Vijay R. Sanghvi. The said debits were made from bank account of Prraneta Industries Ltd. now known as Aadhar Venture India Ltd. 3. All three entries of Rs 70 lakh each totaling to Rs 2.1 Cr were obtained by shri Vijay R. Sanghvi on a single day on 2.2.2011 are not commensurate with the return filed by the assessee in ITR-2 for the A.Y. 2011-12. In return filed, bank account details are not mentioned. Besides salary income and other income shown, short term capital gain shown in the return is Rs 7,66,586/- only. Such huge amount of Rs 2.1 Cr received in case of an individual whose main source of income is salary income as director of a company prima facie show the transaction as non genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case the assessee has filed return of income for the year under consideration but no assessment as stipulated u/s. 2(40) of the Act was made and the return of income was only processed u/s. 143(1) of the Act. In view of the above, provisions of clause (b) of explanation 2 to 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s. 148 has been obtained separately from the Pr. CIT as per the provisions of section 151 of the Act. 3.7) The petitioner filed objections dated 31.08.2018 against the issuance of notice for reopening. 3.8) Respondent vide order dated 17.10.2018 rejected the objections raised by the petitioner against reopening the assessment. 3.9) Being aggrieved by the action of the respondent, the petitioner has preferred this petition. 4.Learned Senior Advocate Mr. Tushar Hemani for the petitioner submitted that the impugned order is patently bad, illegal, contrary to law and in gross violation of the fundame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat a person may receive funds temporarily from any person and repay it later and therefore, whatever may be the magnitude of such transaction, the Act does not provide that receipt of funds should be commensurate with the income. 4.4) Learned Senior Advocate Mr.Hemani submitted that reopening is not permissible for carrying out roving and/or fishing inquiry or investigation without there being a specific finding as to escapement of income. It was submitted that the Assessing Officer has reopened the assessment on suspicion as to escapement of some income chargeable to tax at the hands of the assessee and has not carried out further investigation. It was submitted that merely because some further investigations have not been carried out, which if made, could have led to detection of escapement of income, cannot be reason enough to hold a view that the income has escaped assessment and therefore, reopening of assessment is not tenable in eye of law. In support of his submission, reliance was placed on decision in case of Krupesh Ghanshyambhai Thakkar v. DCIT reported in (2017) 77 taxmann.com 293 (Gujarat). 4.5) Learned Senior Advocate thereafter relying upon the judgment in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the information from the DCIT Central Circle-2(2) Mumbai to the effect that the assessee had obtained three accommodation entries of Rs. 70 lakhs each, aggregating to Rs. 2.1 Crore on a single day on 2.02.2011 which were credited in Citi Bank account of the petitioner assessee from the established entry provider entity namely, Prraneta Industries Ltd. It was submitted that such a huge credit of Rs. 2.1 Crore received by the assessee on a single day does not commensurate with the return filed by the assessee for the assessment year under consideration. It was submitted that the Assessing Officer finding that the transaction of credits of Rs. 2.1 Crore are not genuine transaction arrived at satisfaction/reason to believe that income to the tune of Rs. 2.1 Crore has escaped assessment and therefore, the Assessing Officer issued the impugned notice under section 148 for reopening the assessment of the petitioner for the Assessment Year 2011- 2012. It was submitted that the Assessing Officer has categorically observed in the reasons for reopening that no scrutiny assessment under section 143(3) of the Act has been made in case of the petitioner and that provisions of clause(b) of explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e come to the conclusion that there are tangible material pointing to escapement of income. 5.7) Learned advocate Mr. Patel submitted that the issues agitated in this proceeding will be decided during the reassessment proceedings after conducting due inquiries and after giving the assessee an opportunity of being heard. The assessee can place its objections and contentions on merits of the case during the reassessment proceedings and therefore, this Court may not interfere at the notice stage. 6.Considering the submissions made by the learned advocates on both the sides, it appears that the impugned notice under section 148 of the Act, 1961 is issued only on the ground that as per the information received, three entries of Rs. 70 lakh each totalling to Rs. 2.1 Crore received on 2.02.2011 by the assessee was alleged unaccounted money routed through accommodation entries in the bank account and the returned income by assessee did not commensurate with the said transaction and therefore, there was escapement of income chargeable to tax at the hands of the assessee. 7.On perusal of the record, it appears that the petitioner had already mentioned bank details in the statement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fishing or a roving inquiry and seek to verify the facts which are already on record, as if it were a scrutiny assessment. Similar view was expressed by the Division Bench in case of Deep Recycling Industries v Dy.CIT (judgment dated 2.08.2016 passed in Special Civil Application No.3611/2013) as well as in case of Krupesh Ghanshyambhai Thakkar (supra). Applying the above decision to the facts of the present case as well as the reasons recorded to reopen the assessment, we are of the opinion that under the guise of reopening the assessment, the Assessing Officer wants to have a roving inquiry. Under the circumstances, in absence of any tangible material to form an opinion that the income chargeable to tax has escaped assessment and in absence of any satisfaction recorded by the Assessing Officer by merely relying upon the information received from the Office of DCIT Central Circle 2(2), Mumbai, the impugned action of reopening the assessment while exercising power under section 148 of the Act cannot be sustained. 11. In view of foregoing reasons, considering the facts of the case, the impugned notice under section 148 of the Act, 1961 is not tenable in law and is accordingly q ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
