Wp/11810/2018 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.11810 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 2014-15. 2.Brief facts are as under:- Petitioner is a private limited company. Petitioner had filedreturn of income for the said assessment year, on which theAssessing Officer passed order under Section 143(3) of the Act on 30[th] November, 2016. To reopen such assessment, theimpugned notice came to be issued. In order to do so, theAssessing Officer had recorded following reasons: “1.The assessee company has filed the return ofincome for A.Y.2014-15 on 21.09.2014 declaringtotal income of Rs.6,69,326/ The said return ofincome was processed u/s.143(1) of the IT Act,1961. Thereafter, the assessment was made u/s143(3) of the Act vide order dated 30.11.2016determining total income at Rs.21,21,640/-, whichhas been upheld in the appellate order of Ld. CIT(A)dated 02.06.2017. 2. As per the information received from the DDIT(lnv) 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 statement wasrecorded on 09.02.2016 u/s 132(4) of the Act. Inthe statement Mr.Vipul Vidhur Bhatt has acceptedthat he is an entry operator and all the entities arebogus companies, which are used by him forproviding accommodation entries to variousbeneficiaries for commission and also accepted thathe is a Director in these companies and all otherdirectors are dummy directors. 3.As per the information received, during thefinancial year relevant to the assessment year underconsideration, M/s. Jalaram Enterprises Pvt. Ltd. hastaken accommodation entries of Rs.40 lakhs fromM/s. Dolex Commercial Pvt. Ltd. and Rs.15 lakhsfrom M/s. Shyam Alcohol and Chemicals Ltd., which are controlled and operated by Mr.Vipul vidhurBhatt. The extent of such accommodation entriestaken may be much more. This is because, theassessee may have taken accommodation entriesfrom other such bogus concerns, whichneeds to enquired. Thus, the assessee has enteredinto suspicious and prima- facie bogus financialtransactions, which has been done to suppress itsprofit. 4. Therefore, after taking approval, vide notice u/s 133(6) of the I.T. Act, the Assessee-Company wasasked to file Computation of Income, computationu/s 115JB (if applicable),Form 3CEB (if any), full setof the IT return, Tax Audit Report, reconciliation of26AS CIB / AIR / OLTAS /Service Tax / STT / Sales-tax Return with Audited books, Audited Profit andLoss account and Balance Sheet along with all itsannexure for the financial year relevant to theassessment year, latest by 27.03.2018 by 11.00 a.m 5. 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. 4. Therefore, after taking approval, vide notice u/s 133(6) of the I.T. Act, the Assessee-Company wasasked to file Computation of Income, computationu/s 115JB (if applicable),Form 3CEB (if any), full setof the IT return, Tax Audit Report, reconciliation of26AS CIB / AIR / OLTAS /Service Tax / STT / Sales-tax Return with Audited books, Audited Profit andLoss account and Balance Sheet along with all itsannexure for the financial year relevant to theassessment year, latest by 27.03.2018 by 11.00 a.m 5. 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. 6. Further, this office has also examined theevidence and fact of the case independently and it isfound that, there is failure on the part of theassessee 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.55,00,000/. 7. Therefore, there is sufficient material on record,on the basis of which, I have reason to believe thatassessee has not made full and true disclosure,resulting in escapement of income chargeable to taxto the extent of 55,00,000/- for A.Y.2014-15 withinthe meaning of section 147 of the IT Act. Hence, it isa fit case for initiation of proceedings u/s. 147 of the Priya Soparkar I.T. Act, 1961 by issuing notice u/s. 148 of theIncome Tax Act, 1961.” 3.Short ground raised by the petitioner was that thetransaction in question to which the Assessing Officer has made areference in the reasons recorded, did not take place during aperiod relevant to the assessment year in question. In thepetitioner's own case in Writ Petition No.11811 of 2018 we hadaccepted such grounds for quashing the notice impugnedtherein, 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:- 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 madeby the ld. ACIT then the captioned companies hadfiled complete details like confirmation, bankstatements and the return copies to prove thegenuineness, creditworthiness and existence of parties. 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: parties. 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 inresponse 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 the Priya Soparkar Act 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. ” 4.In the result, for the reasons recorded, impugned notice is quashed. Petition allowed and disposed of accordingly. (M.S.SANKLECHA,J.) (AKIL KURESHI,J.) ….