Renu Proptech Pvt. Ltd v. Assistant Commissioner Ofincome Tax

$~8 *IN THE HIGH COURT OF DELHI AT NEW DELHI +WPC 13045/2022 RENU PROPTECH PVT. LTD...... AppellantThrough: Mr Salil Aggarwal Senior Advocatewith Mr Madhur Aggarwal,Advocate. versus ASSISTANT COMMISSIONER OFINCOME TAX ..... RespondentThrough: Mr Puneet Rai, Senior StandingCounsel with Ms Adeeba Mujahid,Jr St. Counsel for Income Tax Dept.Along with Mr Nikhil Jain, Advocate. % Date of Decision: 9[th]September, 2022 CORAM: HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMEET PRITAM SINGH ARORA, J (Oral): 1.Present writ petition has been filed challenging the Order dated22[nd]June, 2022 passed under Section 148A(d) of the Income Tax Act,1961 (‘the Act’) and the Notice dated 22[nd]June, 2022 issued underSection 148 of the Act for the Assessment Year (‘AY’) 2016-17. 2.Learned Senior Counsel for the petitioner states that the impugned WPC 13045/2022 order has been passed without considering the Assessee's reply dated 6[th]June, 2022. He states that Rs.17.70 Crores, which is the income alleged tohave escaped assessment was in fact added in the income of the assesseeby the Assessing Officer (‘AO’) in the original assessment order passedunder Section 143(3) of the Act on 30[th]December, 2018. He states thatthe assessment order determined the taxable income of the assessee atRs.89,37,17,920/-, after making a total addition of Rs.88,30,29,000/-under Section 68 of the Act, which included the said sum of Rs.17.70Crores. He states that the said assessment order has been a subject matterof appeal before the Commissioner of Income Tax (Appeals) [‘CIT(A)’]and Income Tax Appellate Tribunal (‘ITAT’). The ITAT vide order dated26[th]April, 2021 in ITA No. 7653/Del/2019 allowed the appeal of theassessee and the additions were deleted. He therefore states that theinformation alleging that the assessee has received bogus or fictitiousshare capital from bogus companies of M/s BDR Builders andDevelopers Pvt. Ltd. amounting to Rs.17.70 Crores is not newinformation and is not relevant for initiating reassessment proceedings. 3.Learned Senior Standing Counsel for the Revenue, Mr. Puneet Raistates that the impugned reassessment notice has been initiated pursuantto the information dated 30[th]March, 2020, which has admittedly beenreceived after passing of the assessment order. He states there was noscrutiny undertaken of the share capital received by assessee from M/sBDR Builders and Developers Pvt. Ltd. during the course of the originalassessment proceedings and therefore no reliance can be placed on theprevious assessment proceedings. He states that the present case does not WPC 13045/2022 warrant any interference in writ jurisdiction as the Revenue’s contentionswith respect to assessee’s transactions, which as per information werefound to be bogus entries from bogus entities, is a matter of evidence andthe veracity of the said transactions cannot be determined in theseproceedings. 4.We have heard the learned counsel for the parties and perused thepaper book. This Court finds that the petitioner has not brought on recordany material on record to establish that the reassessment proceedings arebeing undertaken in an arbitrary manner. The respondent issued a showcause notice dated 23[rd]May, 2022, wherein it is stated that : “3......... In the present case, information was received on insight portal thatassessee company has taken bogus/fictitious share capital frombogus companies of M/s. BDR Builders and Developers Pvt Ltdamounting to Rs.17.70 Crores.” 4.We have heard the learned counsel for the parties and perused thepaper book. This Court finds that the petitioner has not brought on recordany material on record to establish that the reassessment proceedings arebeing undertaken in an arbitrary manner. The respondent issued a showcause notice dated 23[rd]May, 2022, wherein it is stated that : “3......... In the present case, information was received on insight portal thatassessee company has taken bogus/fictitious share capital frombogus companies of M/s. BDR Builders and Developers Pvt Ltdamounting to Rs.17.70 Crores.” The petitioner was provided with letter dated 30[th]March, 2022 of theDeputy Director of Income Tax (Investigation), New Delhi, along withthe Notice dated 23[rd]May, 2022 issued under Section 148A(b) of the Act.The said letter identified the petitioner herein with reference toinformation collated during a survey action carried out on the BDR Groupand enclosed the survey report for the review of the AO. The relevantextract of the said letter is reproduced hereinbelow:- “3.Several companies of the BDR Group have received huge fundsin the form of share premium from many dubious persons/entitiesover the years. The statement of dummy directors like Shri K CGupta and Shri Rajesh Verma were recorded during survey wherein they admitted that they were made directors in various companies byShri Rajesh Gupta/Shri Dinesh Gupta and they play no role in thesecompanies. Further, share capital and share premium in somecompanies were received from Shri Rohit Kumar, Shri Rajesh Vermaand Smt. Rekha Verma. Shri Rohit Kumar and Shri. Rajesh Vermaare the employees in the companies of BDR Group and Smt. RekhaVerma is wife of Shri Rajesh Verma. During the survey proceedings,statements (Refer Chapter-9) of these three persons were recordedon oath. All these three persons, in their statement, mentioned thatthey know nothing about the investments in the form of sharepurchase in various companies of BDR Group in their name. Theyused to sign documents including blank bank cheques on direction ofShri Dinesh Gupta/Shri. Rajesh Gupta. 3.1 The shares of various companies of BDR group were acquired bymany persons at price below than the FMV as per the provisions ofAct. In many cases such persons lack creditworthiness as well which”is discussed in details in subsequent chapters. (Emphasis supplied) 5.The present reassessment proceedings have been initiated inpursuance of the aforesaid letter and survey report, which, as per the AO,shows that the funds received by the assessee as share capital from M/sBDR Builders & Developers Pvt. Ltd. are not genuine. 6.As regards the petitioner’s contention that this precise issue ofsource of its share capital was examined during original assessmentproceedings prima facie appears to be incorrect. In fact, a perusal of theorder of CIT(A) reveals that while examining and verifying the veracity ofthe source of funds received by the petitioner herein from Rajesh GuptaHUF and Shri Sanchit Gupta, as share capital, the CIT(A) presumed thatthe funds received by the said shareholders from M/s BDR Builders andDevelopers Pvt. Ltd. were genuine and on the said assumption, the said WPC 13045/2022 additionsweredeleted.TheCIT(A),infact,reliedupontheconfirmations issued by M/s BDR Builders and Developers Pvt. Ltd. asvalid to arrive at the aforesaid finding in respect of Rajesh Gupta (HUF).The relevant portion of the order of the CIT(A) with respect to ShriSanchit Gupta reads as follows:- WPC 13045/2022 additionsweredeleted.TheCIT(A),infact,reliedupontheconfirmations issued by M/s BDR Builders and Developers Pvt. Ltd. asvalid to arrive at the aforesaid finding in respect of Rajesh Gupta (HUF).The relevant portion of the order of the CIT(A) with respect to ShriSanchit Gupta reads as follows:- “On careful examination of the explanation of the assesseesupported by documentary evidences and the findings of the A.O.it is seen that the AO has not pointed out any specific discrepancyin the nature and source of funds available to the shareholderamounting to Rs. 3,41,50,000/- which is claimed to have been usedfor making investment in the assessee company.The AO has notpointed out any discrepancy in the transaction of sale of sharesof BDR Builders & Developers Pvt Ltd. by the shareholder andhas also not found any discrepancy in the fact of having receivedback loan of Rs. 1.00 crore from Nishit Infratech Pvt. Ltd. Thesetransactions are duly verifiable from the bank statement of theshareholder also.Therefore, the nature and source of funds in the-hands of the shareholder to the extent of Rs. 3,41,50,000/ is foundto be duly explained in the absence of any material contrary to theclaim of the assessee. However, I agree with the A.O that the fundsreceived on sale of shares of a company who is a accommodationentry provider cannot be treated as explained fund.” (Emphasis supplied) 7.This Court therefore does not find any merit in the submission ofthe petitioner that the doubt cast on the genuineness of the amount ofRs.17.70 Crores infused by the shareholders of the assessee from theirreceipts from M/s BDR Builders and Developers Pvt. Ltd., which isalleged to be an entry provider of bogus capital, is not new information.During the course of earlier assessment proceedings, the authorities didnot suspect the funds received by assessee’s shareholders in itstransactions with M/s BDR Builders and Developers Pvt. Ltd. and relied WPC 13045/2022 upon the confirmations issued by the said company to hold it as genuine.The contention of revenue that M/s BDR Builders & Developers Pvt. Ltd.uses layered transactions and banking channels to provide bogus sharecapital from bogus companies and the assessee and its shareholders arebeneficiaries of the said transactions is factual and the same will have tobe examined by the AO. 8.The petitioner does not dispute that the funds received by it as sharecapital were raised by its shareholders from M/s BDR Builders andDevelopersPvt.Ltd.and therefore the genuineness ofthesaidtransactions cannot be determined in these proceedings. 9.The allegation of the petitioner, that its reply dated 02[nd]June, 2022was not considered by the AO, is incorrect. The said reply has been notedand dealt with in the impugned order. 10.This Court is of the view that the petitioner is challenging theimpugned order on merits. The veracity of the contention of Revenue thatM/s BDR Builders and Developers Pvt. Ltd. has provided bogus/fictitiouscapital to the petitioner herein cannot be examined in the writproceedings. The Supreme Court in Commissioner of Income Tax andOrs. v. Chhabil Das Agarwal, (2014) 1 SCC 603 has held that the Act of1961 provides complete machinery for assessment/reassessment of tax,the assessee is not permitted to abandon that machinery and invoke writjurisdiction of High Court under Article 226. 11.The present case does not fall under the exceptional grounds onwhich the writ jurisdiction of this Court can be invoked. Accordingly, the WPC 13045/2022 present writ petition along with the pending application is dismissed.However, this Court clarifies that the AO shall decide the matter on itsown merits without being influenced by any observation made in thepresent order. MANMEET PRITAM SINGH ARORA, J SEPTEMBER 09, 2022kv/pkv MANMOHAN, J WPC 13045/2022