TMI Blog2023 (1) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... n and this Court is of the clear opinion that authority is specifically seized with the power and it is examining the process which would not call for interference and we have absolutely no reason to interfere and so no reason as to why authority would not apply its independent mind while examining the issue and scrutinise the stand of petitioner. Hence, this Court is not inclined to interfere with the discretion being exercised by respondent authority. We have gone through the judgments which have been relied upon by petitioner in detail. We are of the opinion that background of facts is quite distinct and peculiar in nature to the present case on hand which would not permit us to just apply in a routine manner or as a straightjacket formula and as such, the judgments cited are of no assistance of the petitioner. We are of the opinion that petitioner has not made out any case calling for interference. Accordingly, petition stands dismissed. - R/SPECIAL CIVIL APPLICATION NO. 4945 of 2021 - - - Dated:- 12-1-2023 - HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR and HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI MR B S SOPARKAR(6851) FOR THE PETITIONER(S) NO. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and said objections in detail were submitted on 23.01.2021. However, without considering said objections in its proper perspective an order came to be passed by the respondent authority on 22.02.2021 disposing of objections and as such, under the circumstances, action sought to be initiated was quite in conflict with settled proposition of law and as such petitioner is said to have been constrained to approach this Court by way of present petition under Article 226 of the Constitution of India challenging the issuance of notice under Section 148 of the Act as well as order dated 22.02.2021. [3] Initially when petition came up for consideration, Coordinate Bench of this Court has entertained the petition and passed an order on 15.04.2021 and directed the authority not to pass any final order, which is reproduced hereunder:- Heard Mr. Saurabh Soparkar, the learned Senior Advocate assisted by Mr. Bandis Soparkar, the learned advocate appearing for the petitioner. What is challenged in this petition under Article 226 of the Constitution of India, is the notice under Section 148 of the Income Tax Act (hereinafter referred to as 'the Act' for short) dated 23.03.2020. Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 677, RMG Polyvinyl (I) Ltd., 396 ITR 5 and Surani Steel Tubes Limited in case of Special Civil Application No.13245 of 2021 and has reiterated his submission that on basis of borrowed satisfaction, no reopening of assessment is permissible. It has been further contended that here is the case in which the authorities are inclined to reopen the assessment after a period of four years from the end of assessment year and thereto there is no failure on the part of assessee to disclose true and correct facts. All facts regarding NSEL trade transactions were disclosed clearly by the petitioner assessee before the Assessing Officer during the original scrutiny as well as the DDIT (investigation) and as such, when there is no failure on the part of assessee to disclose reopening is impermissible beyond a period of four years and to substantiate his contentions, Mr. Soparkar, learned advocate has relied upon Intercontinental (India), (2016) 73 taxmann.com 232 (Gujarat) and Jivraj Tea Ltd., (2016) 386 ITR 298. [5.2] Yet another contention has also been raised by Mr. Soparkar, learned advocate contending action which is sought to be initiated is on the basis of change the opinion and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petition compilation has been subsequently dropped and after the entire process having been concluded after fulfledged inquiry / security, authorities surprisingly after unreasonable period has sought to reopen the assessment. When there is no failure on the part of petitioner assessee to disclose full particulars at this stage, no such step under Section 148 of the Act can be taken and as such by contending aforementioned circumstances, Mr. Soparkar, learned advocate has requested to grant the relief as prayed for in the petition. [6] As against this, Mr. Nikunt K. Raval, learned advocate appearing for the respondent authority has submitted that no doubt initially the scrutiny has been undertaken, but factum of accommodation entry was not examined in the manner in which it has been projected. In fact, when a specific information was received with regard to bogus accommodation entries and petitioner was found to be part thereof, it was found a necessity for authority to initiate step since assessee has failed to show that sums as indicated in the accommodation entries being part of their income and as such, assessee has not correctly disclosed the material facts and same bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. was found to be bogus, the Assessing Officer was requested to verify the genuineness of other transactions as well and though the details in specific forms were sought vide summons dated 12.12.2019, petitioner assessee has merely furnished the bank statements reflecting selected transactions and has not explained the source of investment / trades sufficiently and therefore, such unexplained investment / expenditure and the sale consideration are required to be added to the income and therefore on the basis of the inquiry report and upon perusal thereof it was found that assessee company had taken accommodation entries to the tune of Rs.3,15,97,353/- for the assessment year 2013 2014 and such amounts are based upon non-genuine entries. Hence, authority was justified in initiating the steps for reopening of assessment and such satisfaction is based upon minute details cannot be questioned by the petitioner by invoking extraordinary jurisdiction of this Court. [6.3] Mr. Raval, learned advocate has also submitted that it is not correct on the part of the petitioner to contend that on the very same basis and same material, reopening is sought to be initiated. In fact, judgments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e about M/s. N. K. Proteins Pvt. Ltd., petitioner was never involved and as such, he has reiterated that even order of disposing of objections is also suffering from the vice of non application of mind. Accordingly, the petition deserves to be allowed since no case is made out by revenue to sustain its actions. No other submissions have been made. [8] Having heard the learned advocates appearing for the parties and having gone through the material placed on record, we are of the opinion that following circumstances are not possible to be unnoticed emerging from records. [9] The main grievance of the petitioner is that for initiation of proceedings impugned, the authority merely on the basis of information received from the DDIT (Inv), Unit 2(3), Ahmedabad has inferred and formulated an opinion with regard to the trading transactions of the petitioner on NSEL platform. In the context of this, it appears that petitioner was asked to furnish the specific details with regard to trading transactions which the petitioner has undertaken and in response thereto, from the reply given by the petitioner, it appears that details of trading in commodity by assessee namely in prescribed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the details which were specifically asked for appears to have not been furnished as found by the authority. It is in the said reply conveyed that transactions for commodities of NSEL were carried through its brokers, namely, Dipal Finance and Chimanlal Popatlal Commodities Brokers Pvt. Ltd and the outstanding in the books, if any, as on 31.03.2013, 31.07.2013 and 31.03.2014 were shown as Sundry Debtors and then figure of Bad Debts is mentioned. In the context of said reply having been furnished, the authority was not satisfied with the same and on such has supplied to the petitioner the reasons for reopening of case for assessment year 2013-2014 vide communication dated 30.12.2020 and this has been given on the basis of information received from DDIT (investigation), Unit 2(3), Ahmedabad and said inquiry report has revealed and convinced the authority to reopen the assessment. Gist of the said reasons dated 30.12.2020 deserves to be reproduced hereunder:- 1.Information regarding large scale tax evasion money laundering (by brokers on the National Spot Exchange Ltd. (NSEL) was received in this office. On the basis of investigations carried out by various investigation agencie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment u/s. 143 for the A.Y. 2013-14 in the case of M/s. Tirupati Proteins Private Limited are as follows: 4.2.1 Shri Nilesh Patel Shri Nimish Patel are the main persons of the NK Proteins group. Shri Nilesh Patel is the Managing Director of N.K Proteins Ltd. N.K. Industries Ltd. Shri Nimish Patel is the Chairman Managing Director of N.K. Proteins Ltd N.K. Industries Ltd. During the course of survey conducted by investigation wing, statement of Shri Nilesh Patel was recorded u/ s. 133A of the Act. In the statement recorded, he explained in detail the trading activities carried out by N.K. Proteins Ltd. as well as its subsidiary concerns on the platform of National Spot Exchange Ltd. He stated that in the year 2008 M/s. N.K Proteins Ltd. became the member of National Spot Exchange Ltd. The subsidiary concerns of M/ s. N.K. Proteins Ltd., namely M/ s. N.K. industries, M/ s. N.K Corporation, M/ s. Tirupati Retail Pvt. Ltd. Tirupati Proteins P Ltd. and N.K. Corporation (Prop) etc. were involved in the trading activities with NSEL as clients of M/ s. N.K. Proteins Ltd. According to his statement, Shri Amit Mukherjee, Vice President of NSEL, approached him in F.Y. 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace through this account only. For the purpose of carrying out transactions with NSEL, they used to keep 3 to 5% of the value of the transaction as margin money in this account which is released only after the transaction is over. Likewise, for each and every transaction, sufficient margin money is required to be maintained in this account. In other words, trading through NSEL is possible only if there is sufficient margin money in the settlement account. In the case of N.K. Proteins Ltd. the settlement account is being maintained at HDFC Bank, Account No. 00990680014847. From this account, the assessee transfers the money to its Current account and Clients account, as per the requirement which are also maintained with HDFC Bank. 4.2.4 Regarding the position of stock as shown by NSEL in its website, Shri Nilesh Patel in his statement categorically admitted that in fact, physical delivery with respect to the purchase and sale of commodities, as shown in the books of assessee group never takes place and the investors and brokers are very well aware of this fact form the beginning. Only fictitious stock, was shown in the NSEL warehouse by creating paper evidence (Emphasis suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Nilesh Patel, has categorically admitted in their statement recorded on 22.08.2013 that they started trading on the platform of NSEL in the year 2008- 09 and the transactions used to take place only on paper as per the directions of the NSEL and there was no physical delivery of goods. The above facts clearly show that the profit/losses booked by the assessee in their respective books of account and declared in the returns of income during the above period are based on only paper transactions and there was no physical delivery of goods at any point of time. The entire gamut of transactions was not real transactions and institutionalized shape of the entire transactions was given to obtain funds from the investors on short term basis. These investors were assured for a handsome interest rate. The entire scheme collapsed when there was default on the part of the NSEL with the active connivance of the borrowers like M/s. N.K. Proteins Ltd. 4.3 As discussed above, the transactions carried out by NK Proteins ( and other such similar defaulters) on NSEL platform were mere paper transactions without any physical transfer of goods. On account of severe payment crises, the operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner on NSEL platform deserves to be added to its total income. The accommodation entry which has been stated to be of huge amount and the cumulative effect has satisfied the authority to reopen the assessment of the petitioner for the year 2013-2014, as indicated, and such opinion is generated on the basis of specific information and documentary evidence furnished by petitioner having found to be inadequate and on the basis of unexplained and unfurnished details by the petitioner respondent has formulated its opinion for reopening the assessment and in our considered opinion it cannot be said to be unjust or improper in any way more particularly when petitioner's unexplained particulars has resulted in respondent authority forming opinion to reopen the assessment. [11] In furtherance of this, the record indicates that order of disposal of objection, which has been passed is also a reasoned one. It cannot be said in any form that there appears to be any non application of mind or there being erroneous approach. It was categorically found by an authority that investor as well as brokers were well aware about the modus operadi of the firm in question namely of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent authority. Hence, peculiar background of these facts lead us to a situation of not exercising extraordinary jurisdiction. [12] It is trite law that extraordinary equitable jurisdiction would not be exercised to usurp the discretion of a statutory authority unless it is found that statutory authority would be unable to adjudicate. On account of any genuine reason if this Court finds that authority who is invested with the power has arrived at a particular satisfaction without any basis or contrary to material on record then would exercise its power. However, the satisfaction that is arrived at does not deserve to be substituted simply because petitioner has a different opinion or view. The authority is required to be given a free hand to examine and adjudicate the issue relating to this and there is no distinguishable case made out by the petitioner to allow the Court to invoke extraordinary jurisdiction. In the considered opinion of this Court, when petitioner is not remediless and right now has questioned the issuance of notice, petitioner would be under statutory obligation to cooperate with the authority in the adjudicating process. It is needless to state that when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n being exercised by respondent authority. We have gone through the judgments which have been relied upon by petitioner in detail. We are of the opinion that background of facts is quite distinct and peculiar in nature to the present case on hand which would not permit us to just apply in a routine manner or as a straightjacket formula and as such, the judgments cited are of no assistance of the petitioner. [15] At this stage, on the well recognized principle on exercise of extraordinary jurisdiction, we deem it proper to refer the proposition of law laid down by the Hon'ble Apex Court in the case of D. N. Jeevaraj versus Chief Secretary, Government of Karnataka and Others reported in (2016) 2 SCC 653 which is profitable to be taken note of. Hence, following are the observations which has led us to believe that this is not a fit case in which extraordinary jurisdiction deserves to be exercised. 41. This Court has repeatedly held that where discretion is required to be exercised by a statutory authority, it must be permitted to do so. It is not for the courts to take over the discretion available to a statutory authority and render a decision. In the present case, the Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
