Wp/11809/2018 Of M/S. Jalaram Enterprises Pvt. Ltd v. Income Tax Officer Ward 15(2)(2)

Priya Soparkar 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.11809 OF 2018 M/s Jalaram Enterprises Private Limited … Petitioner V/s. Income Tax Officer… Respondent --- Ms.Ritika Agarwal for the Petitioner.Mr.Suresh Kumar for the Respondent. --- CORAM : AKIL KURESHI AND M.S.SANKLECHA, JJ. DATE : MARCH 01, 2019. P.C.:- 1.Petitioner has challenged a notice of reopening ofassessment for the assessment dated 27[th] March, 2018 issued bythe Assessing Officer to reopen the assessment of the petitionerfor the assessment year 2013-14. 2.Brief facts are as under:- Petitioner is a private limited company. For the assessmentyear in question, the petitioner had filed the return of incomeon which the Assessing Officer has passed order under Section 143(3) of the Income Tax Act, 1961 (“the Act” for short) on 9[th]March, 2016. To reopen such assessment, the Assessing Officerissued the impugned notice. In order to do so, he had recorded following reasons:- “1. The above mentioned assessee has filed thereturn of income for A.Y.2013-14 on 27.09.2013declaring total income of Rs.3,88,730/-. The saidreturn of income was processed u/s. 143(1) of theIT Act, 1961. Thereafter, the assessment was madeu/s 143(3) of the Act vide order dated 09.03.2016determining total income at Rs.29,23,980/. The Ld.CIT(A) vide order dated 02.06.2017 has grantedrelief of Rs.6,35,604/, which was disallowed u/s36(1)(iii) /24(b) of the Act. 2. As per the information received from theDDIT(Inv) Unit 7(4), Mumbai vide letter No.DDIT(INV)/Unit-7(4)/Information/ 2016-17 dated30.09.2016, the assessee M/s. Jalaram EnterprisesPrivate Limited (PAN : ) is one of thebeneficiaries of bogus entities which are controlledand operated by Mr.Vipul Vidhur Bhatt. A Search&Seizure action u/s 132 of the Act was carried out inthe case of Mr.Vipul Vidhur Bhatt and his otherrelated entities on 05.02.2016 and his statementwas recorded on 09.02.2016 u/s 132(4) of the Act.In the statement Mr.Vipul Vidhur Bhatt hasaccepted that he is an entry operator and all theentities are bogus companies, which are used byhim for providing accommodation entries to variousbeneficiaries for commission and also accepted thathe is a Director in these companies and all otherdirectors are dummy directors. As per the information received, during thefinancial year relevant to the assessment year underconsideration, M/s. Jalaram Enterprises Pvt. Ltd. has taken accommodation entries of Rs.40 lakhsfrom M/s. Dolex Commercial Pvt. Ltd. and Rs.15lakhs from M/s. Shyam Alcohol and Chemicals Ltd.,which are controlled and operated by Mr.VipulVidhur Bhatt. Further, information was received from IncomeTax Officer, Ward 1(1), Jaipur vide letter dated12/22.04.2016, wherein it has come to noticeduring the assessment proceeding in the case ofShri.Gaurav Garg for AY 2013-14, that M/s.Jalaram Enterprises Pvt. Ltd., Mumbai, has givenunsecured loans of Rs.51 lakhs to the aboveassessee during FY 2012-13. The genuineness ofthe said transaction needs to be examined. The extent of such accommodation entries takenmay be much more. This is because, the assesseemay have taken accommodation entries from othersuch bogus concerns, which needs to enquired.Thus, the assessee has entered in to suspicious andprima-facie bogus financial transactions, which hasbeen done to suppress its profit. Further, information was received from IncomeTax Officer, Ward 1(1), Jaipur vide letter dated12/22.04.2016, wherein it has come to noticeduring the assessment proceeding in the case ofShri.Gaurav Garg for AY 2013-14, that M/s.Jalaram Enterprises Pvt. Ltd., Mumbai, has givenunsecured loans of Rs.51 lakhs to the aboveassessee during FY 2012-13. The genuineness ofthe said transaction needs to be examined. The extent of such accommodation entries takenmay be much more. This is because, the assesseemay have taken accommodation entries from othersuch bogus concerns, which needs to enquired.Thus, the assessee has entered in to suspicious andprima-facie bogus financial transactions, which hasbeen done to suppress its profit. 3.Therefore, after taking approval, vide noticeu/s 133(6) of the I.T. Act, the Assessee-Companywas asked to file Computation of Income,computation u/s 115JB (if applicable),Form 3CEB(if any), full set of the IT return, Tax Audit Report,reconciliation of 26AS / CIB/ AIR/ OLTAS /ServiceTax / STT/ Sales- tax Return with Audited books,Audited Profit and Loss account and Balance Sheetalong with all its annexure for the financial yearrelevant to the assessment year, latest by27.03.2018 by 11.00 a.m. 4.In response to notice u/s.133(6), the assesseesubmitted its reply through e-mail on 27.03.2018 at1.36 p.m. The same has been perused. 5.Further, this office has also examined theevidence and fact of the case independently and itis found that, there is failure on the part of the assessee to disclose fully and truly all the materialfacts necessary for its assessment for the year underconsideration. Therefore, I have the reason tobelieve that the income chargeable to tax under theprovisions has escaped assessment to the extent ofRs.1.06 crores. 6.Therefore, there is sufficient material onrecord, on the basis of which, I have reason tobelieve that assessee has not made full and truedisclosure, resulting in escapement of incomechargeable to tax to the extent of 1.06 crores forA.Y.2013-14 within the meaning of section 147 ofthe I T Act. Hence, it is a fit case for initiation ofproceedings u/s. 147 of the I.T. Act, 1961 by issuingnotice u/s.148 of the Income Tax Act, 1961.” 3.Upon being supplied the reasons, the petitioner filedobjections before the Assessing Officer, the same having beenrejected, the present petition has been filed. 4.The reasons referred to two grounds on which the Assessing Officer had issued the impugned notice, one is that the assesseewas in the opinion of the Assessing Officer beneficiary of bogusaccommodation entries. The assessee had received sums of Rs.40lakhs and Rs.15 lakhs respectively from M/s Dolex CommercialPrivate Limited and M/s Shyam Alcohol and Chemicals Limited,both are believed to be bogus companies operated by one Priya Soparkar 512 wp 11809-18-c Mr.Vipul Vidhur Bhatt, who had in his statement during searchadmitted to be engaged in providing bogus accommodationentries. However, the case of the petitioner is that such summons were received by the petitioner during the period relevant to theassessment year 2010-11 and therefore, the action of the AssessingOfficer to reopen the assessment for the assessment year 2013-14 is bad in law. 5.Under similar circumstances, while disposing of assessee's petition being Writ Petition No.11811 of 2018, we had acceptedthe petitioner's such ground making following observations:- “6.We had examined the documents on record with thislimited question in mind. The reasons recorded by the AssessingOfficer refer to a notice issued by him under Section 133(6) ofthe Act, before recording the reasons and issuing notice ofreopening. The petitioner has produced written reply to suchnotice under Section 133(6) of the Act, in which the petitionerhad pointed out as under:- 5.Under similar circumstances, while disposing of assessee's petition being Writ Petition No.11811 of 2018, we had acceptedthe petitioner's such ground making following observations:- “6.We had examined the documents on record with thislimited question in mind. The reasons recorded by the AssessingOfficer refer to a notice issued by him under Section 133(6) ofthe Act, before recording the reasons and issuing notice ofreopening. The petitioner has produced written reply to suchnotice under Section 133(6) of the Act, in which the petitionerhad pointed out as under:- “4.In your captioned notice, you have alsoraised issue of alleged accommodation entries of40 lakh from M/s Dolex Commercial Pvt. Ltd.a ndRs.15 lakh from M/s Shyam Alcohol & ChemicalsLtd. We have to state as under:- raised issue of alleged accommodation entries of40 lakh from M/s Dolex Commercial Pvt. Ltd.a ndRs.15 lakh from M/s Shyam Alcohol & ChemicalsLtd. We have to state as under:- It is submitted that the above parties had lent usthe amounts as early as in FY 2009-10. The saidloans wee verified during assessment proceedingsof the company for the AY 2010-11 by ld. ACIT-CC-2 Mumbai. In response to direct inquiry madethe amounts as early as in FY 2009-10. The saidloans wee verified during assessment proceedingsof the company for the AY 2010-11 by ld. ACIT-CC-2 Mumbai. In response to direct inquiry made by the ld. ACIT then the captioned companies hadfiled complete details like confirmation, bankstatements and the return copies to prove thegenuineness, creditworthiness and existence ofparties. A copy of the submission made by the saidlenders before the ld. ACIT in assessmentproceedings for AY 2010-11 alongwith the copiesof bank statement and the return copy is enclosedherewith and is marked as Annexure-”A” and “B”respectively.” 7.As if this much was not enough, in the objections raised bythe petitioner to the notice of reopening of assessment, followingfurther ground was raised: “5.That vide submission dated 26/03/2018filed in response to your notice dated 23/03/2018u/s 133(6) for the impugned assessment year, theassessee has already submitted that the abovenamed parties had lent the amount as early as in FY2009-10 i.e. AY 2010-11. The said loans wereverified during the assessment proceedings of theassessee for AY 2010-11 by ld. ACIT, Central Circle2, Mumbai. In response to direct inquiries madethe ld. ACIT then the above named parties havefiled complete details like confirmation, bankstatements and return of income copies to prove thegenuineness, creditworthiness and existence ofparties. Copy of said letter dated 26/03/2018 alongwith annexures is annexed hereto and marked as“Exhibit A”. 6.That on perusal of the said letter dated26/03/2018 and annexures hereto, it can be notedthat the assessee has received amounts from abovementioned parties during AY 2010-11 which standsassessed. Thus, it is submitted that the “reasonsrecorded” for AY 2012-13, AY 2013-14 and AY2014-15 are factually erroneous and thus, thereopening deserves to be quashed. 7.That it is also submitted that the above factwas already on record of your ld. predecessor in response to notice issued u/s 133(6) prior torecording reasons u/s 148 of the Act. Thus, thereasons recorded de-hors the original assessmentrecord and subsequent inquiry u/s.133(6) of theAct is wholly without jurisdiction.” 6.That on perusal of the said letter dated26/03/2018 and annexures hereto, it can be notedthat the assessee has received amounts from abovementioned parties during AY 2010-11 which standsassessed. Thus, it is submitted that the “reasonsrecorded” for AY 2012-13, AY 2013-14 and AY2014-15 are factually erroneous and thus, thereopening deserves to be quashed. 7.That it is also submitted that the above factwas already on record of your ld. predecessor in response to notice issued u/s 133(6) prior torecording reasons u/s 148 of the Act. Thus, thereasons recorded de-hors the original assessmentrecord and subsequent inquiry u/s.133(6) of theAct is wholly without jurisdiction.” 8.While disposing of the objections, the Assessing Officer didnot clearly meet with this opposition of the petitioner. Heinstead, gave a rather general disposal to this ground. Thepetitioner has also produced with this petition, correspondenceentered into by the petitioner with the Assessing Officer duringthe assessment for the assessment year 2010-11, in which thepetitioner had supplied full details of the said receipts from thesaid two entities. Clearly therefore, the petitioner has built up astrong case to establish that the receipts in question neverrelated to the present assessment year. The Assessing Officersimply cannot take shelter under the ground that all theseaspects can be examined under the reassessment proceedings.When the very foundation of the reassessment is missing, it wouldbe impermissible for the Assessing Officer to carry on thereassessment based on such notice. 9.In the result, only on this ground, impugned notice isquashed. Petition is allowed and disposed of. ” 6.Facts being identical, we adopt the same course in thepresent petition also. This leaves us the additional ground made by the Assessing Officer in the reasons which is of the assesseehaving given unsecured loan of Rs.51 lakhs to one Shri GauravGarg during this year. In this context, the Assessing Officer has only referred to such transaction and thereafter recorded that - “The genuineness of said transaction needs to be examined.” In clear terms, the Assessing Officer has not indicated any prima Priya Soparkar 8 12 wp 11809-18-c facie ground why such transaction was not genuine and wouldgive rise to escapement of income chargeable to tax. It is wellsettled that for mere verification the Assessing Officer cannotreopen assessment. It is often stated that reopening of theassessment cannot be resorted to for carrying out fishing inquiries. 7.For such reasons, impugned notice is quashed. Petitionallowed and disposed of accordingly. (M.S.SANKLECHA,J.) (AKIL KURESHI,J.)….