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TMI Blog2025 (1) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... ditionally, the petitioner contends that the value of the transactions identified by the Assessing Officer (AO) as suggestive of the petitioner's income escaping assessment is less than Rs. 50,00,000/-. Thus, the impugned notice is beyond the period of limitation as specified under Section 149 (1) (a) of the Act. FACTUAL CONTEXT 3. The petitioner is a company incorporated under the Companies Act, 1956. The petitioner's former name was M/s Sonali Realtech Pvt. Ltd. However, the petitioner changed its name with effect from 30.09.2019 to its current name (M/s Sonansh Creations Pvt. Ltd.). 4. The petitioner states that it has been consistently filing its return of income for past several years. It had filed its return for the AY 2015-16 on 26.09.2015. 5. The AO had issued a notice dated 30.06.2021 under Section 148 of the Act calling upon the petitioner to deliver its return of income for the AY 2015-16 within a period of thirty days from the date of service of the said notice. The petitioner responded to the said notice by objecting to its issuance without following the procedure as prescribed under Section 148A of the Act. Thereafter, the petitioner filed a writ petition [being W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue a notice under Section 148 of the Act. The said order was served on the petitioner along with notice dated 30.07.2022 issued under Section 148 of the Act. SUBMISSIONS 11. The learned counsel appearing for the petitioner has challenged the impugned order and the impugned notice on, essentially, three fronts. First, he stated that the AO could not on the basis of the material available on record including the petitioner's response to the notice under Section 148A(b) of the Act, conclude that it had reasons to believe that the petitioner's income had escaped assessment for the AY 2015-16. Therefore, the impugned order was issued without jurisdiction. 12. Second, he submitted that the AO had not supplied the material on the basis of which the impugned order was passed, as directed by the Supreme Court in terms of its order dated 04.05.2022 passed in Union of India & Ors. v. Ashish Agarwal. 13. Third, he submitted that the impugned notice was issued at the behest of the superior authority without application of mind. The learned counsel for the petitioner contended that the documents furnished indicate that the AO had prepared a draft order holding that it was not a fit case for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uire entries in their books through banking system. He stated that there are several companies controlled by him wherein capital was built over time by taking entries and cash deposit. Whenever a client gives cash, they send an RTGS or cheque of an equal amount to his company from one of his dummy companies. It is shown as unsecured loan by JP's company to client's company; The client company also pays interest which ranges from 9-12% p.a and also deduct TDS on such payments. However, it is done only for statutory purposes and to make the transaction not look bogus. He was asked as to how and in which form cash was introduced in the entities controlled by JP in his statement recorded on 24/12/2019 at his business premises. He stated that cash was given to various individuals/entities related to him for deposit in their bank account from whom RTGS/NEFT were received in companies controlled by JP. It was then subsequently transferred to beneficiary parties in the form of loans and advances from whom cash was received in the first place. The cash also acquired form of share *capital and securities premium in JP related companies after layering of the same through few other entitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,128/- The aggregate of amount, as alleged, involved in respect of above said parties is Rs.47,39,128/, out of which transaction of Rs.9,89,128/- entered into with GMZ Commodities Private Limited is on account of profit on sale of shares. The said income is duly shown as income in the Profit and Loss Account and accordingly paid tax on said amount of Rs.989128/-. The copy of the Statement of Profit and Loss Account is already provided in our previous letter. In view of information/explanation herein given in earlier letter and also provided herein above, it is therefore, requested to your goodself that the proceedings initiated may kindly be dropped as the alleged amount is less than Rs. 50 Lacs. Thanking you, Yours faithfully For M/s Sonansh Creations Private Limited Sd/- Satish Kumar Chandnna Authorised Signatory" 19. Undisputedly, if the total value of transactions entered into by the petitioner, which was allegedly suggestive of the petitioner's income escaping assessment was less than Rs. 50,00,000/- during the FY 2014-15, no notice under Section 148 of the Act could be issued in respect of the AY 2015-16 on the said basis. In terms of clause (a) of Section 149 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of the proceedings under Section 148A of the Act, we are unable to accept that issuance of a notice under Section 148A(b) of the Act in the name of an entity, which had since amalgamated with the petitioner, would be fatal to the AO assuming jurisdiction by issuance of notice under Section 148 of the Act in the name of the petitioner. The nature and object of the said procedure is to enable an assessee to address objections to the information available with the AO on the basis of which it is suspected that the assessee's income had escaped assessment. The decision whether to issue a notice under Section 148 of the Act and assume jurisdiction to assess / re-assess the income under Section 147 of the Act is required to be taken on the basis of the record available with the AO including the response filed by the assessee. In the present case, the response of the petitioner clearly indicated that Tulsi had merged with the petitioner and therefore, the petitioner as a successor-in-interest would be liable for any dues of Tulsi. Admittedly, the reassessment proceedings of Tulsi's income for AY 2017-18 were now required to be initiated and continued in the name of the petitioner as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per clause (b) expires: Provided that the provisions of this section shall not apply in a case where,- (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee; or (d) the Assessing Officer has received any information under the scheme notified under section 135A pertaining to income chargeable to tax escapi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, which would establish that the petitioner had received any amount in excess of what had been claimed by the petitioner during the FY 2014-15. However, the learned counsel for the Revenue fairly stated that apart from the information available on the insight portal, there was no other material which would establish the same. 25. It is also material to note that it is not disputed that after receipt of the petitioner's response, the AO had on the basis of material on record found that it was not a fit case for issuance of the notice under Section 148 of the Act for the AY 2015-16. A noting to the said effect was also made in the relevant file. The relevant extract of the said noting is set out below: "Considering the above, it is found to be not a fit case to issue a notice u/s 148 of the Income-tax Act, 1961 for the A.Y. 2015-16." 26. The aforesaid conclusion was also approved by the Additional Commissioner of Income Tax. However, the Principal Commissioner of Income Tax (PCIT) did not agree with the same and found that it is a fit case for issuance of notice under Section 148 of the Act. The PCIT was of the view that the transactions as reported in insight portal needed furt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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