A/8, 2[Nd] Floor, Manu Bharti,212, S v. Road, Andheri (West),Mumbai – 400 058Versus

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 192 of 2016 Welcome Plywood Pvt. Ltd., A/8, 2[nd] floor, Manu Bharti,212, S. V. Road, Andheri (West),Mumbai – 400 058Versus 1. The Income-tax Officer, 11 (3)-4, 4[th] floor, Aayakar Bhavan, M.K. Road, Mumbai – 400 020 2. Commissioner of Income-tax, City 11,4[th] floor, Aayakar Bhavan, M.K. Raod, Mumbai – 400 020 3. Union of India,Through the Secretary, Department ofFinance, Ministry of Finance,Government of India, North Block,New Delhi – 100 001 ]]]]…Petitioner ]]]]]]]]]]] …Respondents … Mr. Madhur Agrawal i/by Mr. Atul K. Jasani for the petitioner.Ms. Sushma Nagaraj for the respondents. … CORAM : DHIRAJ SINGH THAKUR AND KAMAL KHATA, JJ. PRONOUNCED ON : 27TH JUNE, 2023 [PER: KAMAL KHATA, J.] 1.This Petition under Article 226 challenges notice under sec-tion 148 of the Income-tax Act, 1961 (‘Act’) dated 13[th] March2015 issued by Respondent No.1 proposing to reassess the incomefor the assessment year (‘AY’) 2009-10 and the order dated 30[th]December 2015, rejecting the objections raised by Petitioner chal-lenging the validity of the said notice. 2.The reasons for opening are as under: “ The return of income in this case for A.Y.2009-10 was e-filed by the assessee on30.09.2009 declaring total income at Rs. NIL/.A search and survey action was carried outby investigation wing in the case of ShriPraveen Kumar Jain and his groups on01.10.2013. The search action resulted into col-lection of evidences and other findings whichconclusively proved that Shri Praveen KumarJain through a web of concerns run and oper-ated by him, is engaged in providing accommo-dation entries of various nature like bogus unse-cured loans, bogus share application and bogussales (Purchase for the Beneficiaries) etc. Asper the information received, it is seen that thefollowing concern of Shri. Praveen Kumar Jainhas provided entries in respect of shares at apremium to the assessee as under:- Sr.Name of the Bogus ConcernPANF.Y.AmountofNo.Operated by Praveen Kumar Jaintransaction (Rs)1Khush Hindustan Ent. Ltd.AACCK3597M2008-0934,50,000Total34,50,000 As per the information, it is seen that the aboveparty has only issue accommodation entries to the as-sessee, which means that the assessee has enteredinto bogus transactions in the form of receipt of sharepremium. The total of such alleged share premium re-ceipts works out to Rs.34,50,000/- Thus I have reason to believe that the income of theassessee chargeable to tax has escaped assessmentfor the year under consideration and therefore it is afit case for issue of notice u/s.148 of the Income-taxAct, 1961.” 3.The Petitioner responded to the reasons giving all details and explanations. The relevant para is as under: “Kindly see the Balance Sheet of the companyas on 31/3/2009 and as at 31/3/2008. There is nochange whatsoever of the capital of Rs.60 lacs. Infact there is no premium which is alleged in the let-ter. It appears that this notice has been issuedwrongly to the assessee company as the companyhad never received any sum of Rs.34,50,000/- as al-leged on account of share premium.” 4.The Respondent No. 1 placed reliance on the judgement of the Supreme Court in the case of Raymond Woollen Mills (1999)236 ITR 34 (S.C) and rejected the objections of the Petitioner. 5.The criteria for reopening of assessment after a period offour years are no longer res integra in view of the judgement ofthis Court in the case of Ananta Landmark P. Ltd v Dy. CITwherein this Court held that where assessment was not sought tobe reopened on the ‘reasonable belief’ that income had escaped as-sessment on account of failure of assessee to disclose truly and 4.The Respondent No. 1 placed reliance on the judgement of the Supreme Court in the case of Raymond Woollen Mills (1999)236 ITR 34 (S.C) and rejected the objections of the Petitioner. 5.The criteria for reopening of assessment after a period offour years are no longer res integra in view of the judgement ofthis Court in the case of Ananta Landmark P. Ltd v Dy. CITwherein this Court held that where assessment was not sought tobe reopened on the ‘reasonable belief’ that income had escaped as-sessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of in-come, but was a case wherein assessment was sought to be re-opened on account of ‘change of opinion’ of AO the reopening wasnot justified. It is also held that where primary facts necessary forassessment are fully and truly disclosed the AO is not entitled toreopen the assessment on a change of opinion. It is held that whileconsidering the material on record, one view is conclusively takenby AO, it would not be open for the AO to reopen the assessmentbased on the very same material and take another view. 6.The Supreme Court in the case of ITO vs Lakhmani MewalDas[1] has held that “… the reasons for the formation of the belief musthave a rational connection with or relevant bearing onthe formation of the belief. Rational connection postu-lates that there must be a direct nexus or live link be-tween the material coming to the notice of the In-come-tax Officer and the formation of his belief thatthere has been escapement of the income of the as-sessee from the assessment in the particular year be-cause of his failure to disclose fully and truly all mate-rial facts.“The live link or close nexus which should be there be-tween the material before the Income-tax Officer.” 7.In the present case, the Respondent No. 1 has received infor-mation from the office of DGIT (Inv.) that Khush Hindustan Ent.Ltd. has issued accommodation entries to the Petitioner for finan- cial year 2008-09. However, even though the Petitioner has placed 1 [1976] 103 ITR 437 on record the Balance Sheet and pointed out that there is nochange in the capital of 60 lakhs and no sum has been received₹leave alone a sum of 34,50,000/- on account of share premium,₹the Respondents have sought to take a stand that at this stagethey are not required to look into the sufficiency and correctnessof the information and can consequently reopen the case. Upon abare perusal of the Balance sheet it is evinced that there is notransaction which would show a live link or nexus with the alleged-transaction viz. receipt of 34,50,000/- on account of share pre₹mium as alleged by the Respondent. Besides the Respondent hasfailed to aver the particulars of the information available whichhas led to the belief that income has escaped assessment. Thereappears no new tangible material available on record to concludethat income had escaped assessment. In our view it is clearly a‘change of opinion’. 8.We, therefore pass the following order- i.The impugned notice dated 13[th] March 2015 and theorder dated 30[th] December 2015, issued by Respondent No.1for AY 2009-10 are quashed and set aside;order dated 30[th] December 2015, issued by Respondent No.1for AY 2009-10 are quashed and set aside; ii.Rule made absolute in above terms. No costs. (KAMAL KHATA, J.) (DHIRAJ SINGH THAKUR, J.)