Star Global Multi Ventures Pvt Ltd v. Assistant Commissioner Of Income Tax

$~73 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 16558/2024 and CM APPLs.70036-38/2024 STAR GLOBAL MULTI VENTURES PVT LTD .....Petitioner Through: Mr. Anand Chaudhuri, Mr. Kumail Abbas and Mr. Deepanshu Mehta, Advocates Abbas and Mr. Deepanshu Mehta, Advocates versus ASSISTANT COMMISSIONER OF INCOME TAX .....Respondent Through: Mr Aseem Chawla, SSC. CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MS. JUSTICE SWARANA KANTA SHARMA O R D E R% 02.12.2024 1.The petitioner (hereafter the Assessee) has filed the present petition, inter alia, praying as under: “a) Allow the present Writ Petition and grant Writ of Certiorari, Mandamus and/or any other appropriate Writ, direction or order to Respondent to quash/set-aside the impugned re-assessment proceedings u/s. 147/148 of the Income-tax A ct, 1961 qua subject Assessment Year 2020-21, the impugned notices issued u/s. 142(1) dated 29.06.2024, u/s. 143(2) dated 15.07.2024 of said Act, and u/s. 144 of the Act dated 17.10.2024, the impugned notice dated 28.03.2024 issued u/s. 148 of the said Act, the impugned order dated 28.03.2024 passed u/s. 148A(d) of the said Act, the impugned notice(s) dated 26.02.2024, 06.03.2024 and 20.03.2024 issued u/s. 148A(b) of the said Act, on account of Respondent’s lack of lawful jurisdiction and admitted absence/non-satisfaction of jurisdictional fact thereunder, in addition to other grounds taken vide the present petition; b) Grant the Petitioner any other relief(s) deemed just, fair and appropriate by this Hon’ble Court.” 2.The Assessee had filed its return of income under Section 139(1) of the Income Tax Act, 1961 (hereafter the Act) in respect of the assessment year (AY)2020-2021 on 15.02.2021, declaring a total income of Rs. 10,80,57,900/-. 3.Thereafter, on 08.12.2021, a search was conducted under Section 132 of the Act in respect of M/s Omkara/Areion Group and other related entities. 4.On 26.02.2024, the Assessing Officer (hereafter AO) issued a notice under Section 148A(b) of the Act setting out certain information, which according to the AO, was suggestive of the Assessee’s income escaping assessment. The annexure to the said notice mentions the information that a sum of ₹15,00,00,000/- was received from the Assessee in “Areion Special Situation Scheme-1 Fund”. It also mentions that the Assessee had paid an amount of ₹41,50,00,000/- towards unsecured loan. In addition, the Assessee had also taken an unsecured loan of ₹1,00,00,000/- from M/s Omkara/Areion Group. 5.The AO sent another notice dated 06.03.2024 providing further time to the Assessee to respond to the earlier notice dated 26.02.2024. 6.The Assessee responded to the said notice stating that no part of its income had escaped assessment of tax. The Assessee also raised objections to the effect that there was no explanation as to how the contribution to the fund had resulted in the revenue loss to the Income Tax Department. 7.On 20.03.2024, the AO sent yet another notice reiterating the information regarding contribution of ₹15,00,00,000/-. The AO also mentioned that the Assessee had repaid an amount of ₹42,50,00,000/- towards unsecured loan and the company had also taken ₹40,00,00,000/- as unsecured loan from M/s Omkara/Areion Group. The AO was of the view that the aforesaid transactions effected during the financial year, were suspicious and required to be verified. 8.The Assessee did not furnish any further response. 6.The Assessee responded to the said notice stating that no part of its income had escaped assessment of tax. The Assessee also raised objections to the effect that there was no explanation as to how the contribution to the fund had resulted in the revenue loss to the Income Tax Department. 7.On 20.03.2024, the AO sent yet another notice reiterating the information regarding contribution of ₹15,00,00,000/-. The AO also mentioned that the Assessee had repaid an amount of ₹42,50,00,000/- towards unsecured loan and the company had also taken ₹40,00,00,000/- as unsecured loan from M/s Omkara/Areion Group. The AO was of the view that the aforesaid transactions effected during the financial year, were suspicious and required to be verified. 8.The Assessee did not furnish any further response. 9.The AO, thereafter, passed an order dated 28.03.2024 under Section 148A(d) of the Act noting that the Assessee had acknowledged that it had made a contribution of ₹15,00,00,000/- for subscribing to the units of Areion Special Situation Scheme-1 during the Financial Year (FY) 2019-20. In addition, the AO also noted that additional information was found from the insight portal to the effect that the Assessee company had taken accommodation entries of unsecured loan of ₹40,00,00,000/- from dummy entities of M/s Omkara/Areion Group during the FY 2019-20. However, the petitioner had not responded to the said information. Accordingly, the AO concluded that it was a fit case for the issuance of notice under Section 148 of the Act. 10.It is the Assessee’s case that the information as available before the AO was not suggestive of the Assessee’s income escaping assessment, and therefore, the conclusion that it was a fit case for issuance of notice under Section 148 of the Act, is without jurisdiction. 11.Additionally, the Assessee also assails the jurisdiction of the AO for initiation of the proceedings under Section 148A of the Act on the ground that proceedings for initiation of reassessment proceedings were required to be issued by Faceless Assessing Officer (FAO) and not the Jurisdictional Assessing Officer (JAO). 12.Insofar as the issue whether JAO had the jurisdiction to issue notice under Section 148A(b) of the Act is concerned, the same is settled by the decision of the coordinate bench of this court in T.K.S. Builders Pvt. Ltd. vs Income Tax Officer Ward 25(3): (2024) 167 taxmann.com 759. 13.The contention that the AO did not have any information suggestive of the Assessee’s income escaping assessment, is unpersuasive. As noted above, the AO had set out three separate items of information in the notices issued under Section 148A(b) of the Act. The first related to the Assessee making a contribution of ₹15,00,00,000/-, which as noted above, was admitted. However, AO also noted that the Assessee had paid a sum of ₹41,50,00,000/-. In addition, the Assessee had also received a loan from M/s Omkara/Areion Group amounting to ₹1,00,00,000/-. It is also stated that the unsecured loan of ₹40,00,00,000/- is outstanding. The information available with the AO is also to the effect that the companies with whom the transaction was entered into were dummy companies. Clearly, the Assessee was required to explain the said entries including to establish that the transactions were genuine and the entities in question were creditworthy and no dummy entities. However, there appears to be no explanation as to details of the said transactions and the creditworthiness of the entities from the response furnished by the Assessee. 14.It is material to note that at the stage of issuance of notice under Section 148 of the Act, it is not necessary for the AO to determine that income had escaped assessment. All this is necessary is that the AO has information that indicates that an assessee’s income has escaped assessment. 15.The Assessee would have full opportunity to explain the entries during the assessment proceedings and the notices issued under Section 148A(b) of the Act are not determinative of the Assessee’s income 14.It is material to note that at the stage of issuance of notice under Section 148 of the Act, it is not necessary for the AO to determine that income had escaped assessment. All this is necessary is that the AO has information that indicates that an assessee’s income has escaped assessment. 15.The Assessee would have full opportunity to explain the entries during the assessment proceedings and the notices issued under Section 148A(b) of the Act are not determinative of the Assessee’s income chargeable to tax during the relevant assessment year. 16.It is also material to note that the petitioner had filed a return dated 19.06.2021 pursuant to the notice issued under Section 148 of the Act, thereafter, on 28.06.2024 the National Faceless Assessment Centre (NFAC) had informed the Assessee regarding the completion of the assessment proceedings under Section 144B of the Act and had also issued a notice dated 29.06.2024 under Section 143(2) of the Act. The same was also followed up by a notice dated 15.07.2024 under Section 142(1) of the Act and a show cause notice dated 17.10.2024 issued under Section 144 of the Act. The petitioner claims that it had filed its response to the show cause notice dated 17.10.2024 and thus the matter is pending before NFAC. 17.In the given circumstances, we find no merit in the present petition. The same is, accordingly, dismissed. Pending applications also stand disposed of. VIBHU BAKHRU, J DECEMBER 2, 2024/tr SWARANA KANTA SHARMA, JClick here to check corrigendum, if any