Wp/11811/2018 Of M/S Jalaram Enterprises Pvt. Ltd. , Vashi v. Income Tax Officer, Ward 15(2)(2), Mumbai

Priya Soparkar 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.11811 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 year 2012-13 issued by therespondent- Assessing Officer on 29[th] March, 2018. 2.Brief facts are as under:- Petitioner is a private limited company. For the assessmentyear 2013-14, petitioner had filed the return of income whichwas taken in scrutiny by the Assessing Officer. He passed orderunder Section 143(3) of the Income Tax Act, 1961(“the Act” for short) on 11[th] March, 2015. To reopen such assessment, he hadrecorded reasons which read as under: “1.The assessee company has filed the return ofincome for A.Y.2012-13 on 23.09.2012 declaringtotal income of Rs.62,070/. The tax payable u/s115JB of the Act on Book Profit of Rs.5,81,809/-was Rs.1,07,635/- which are more than the taxunder normal provisions of the Act. The said returnof income 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 11.03.2015determining the total income at Rs. 14,46,150/-,which has been revised to Rs.9,01,682/- vide orderdated 26.04.2017 giving effect to the appellate orderof CIT(A) dated 28.02.2017. 2. As per the information received from theDDIT(Inv) Unit 7(4), Mumbai vide letter No. DDIT(INV)/Unit-7(4)/Information/2016-17dated30.09.2016, the assessee M/s. Jalaram EnterprisesPrivate Limited (PAN: ) is oneof the beneficiaries of bogus entities which arecontrolled and operated by Mr.Vipul Vidhur Bhatt. ASearch & Seizure action u/s 132 of the Act wascarried out in the case of Mr.Vipul Vidhur Bhatt andhis other related entities on 05.02.2016 and hisstatement was recorded on 09.02.2016 u/s 132(4)of the Act. In the statement Mr. Vipul Vidhur Bhatthas accepted 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. 3. As per the information received, during thefinancial year relevant to the assessment year under consideration, 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. whichare 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, which needs toenquired. Thus, the assessee has entered in tosuspicious and príma-facie bogus financialtransactions, which has been done to suppress itsprofit. 4.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 AuditReport, reconciliation of 26AS/CIB/AIR/OLTASService Tax/STT/Sales-tax Return with Auditedbooks, Audited Profit and Loss account and BalanceSheet along with all its annexure for the financialyear relevant to the assessment year, latest by27.03.2018 at 11.00 a.m. 5. In response to notice u/s. 133(6), the assesseesubmitted its reply through e mail on 27.03.2018at 1.36 p.m.. The same has been perused 4.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 AuditReport, reconciliation of 26AS/CIB/AIR/OLTASService Tax/STT/Sales-tax Return with Auditedbooks, Audited Profit and Loss account and BalanceSheet along with all its annexure for the financialyear relevant to the assessment year, latest by27.03.2018 at 11.00 a.m. 5. In response to notice u/s. 133(6), the assesseesubmitted its reply through e mail on 27.03.2018at 1.36 p.m.. The same has been perused 6. Further, this office has also examined theevidence and fact of the case independently andit is found that, there is failure on the part of theassessee to disclose fully and truly all the materialfacts necessary for its assessment for the yearunder consideration. Therefore, I have the reasonto believe that the income chargeable to taxunder the provisions has escaped assessment to 7. 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 55,00,000/. forA.Y.2012-13 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 byissuing notice u/s. 148 of the Income Tax Act,1961.” 3.Upon being supplied the reasons, the petitioner raised objections before the Assessing Officer under a communicationdated 27[th] August, 2018. Such objections were rejected by theAssessing Officer by an order dated 6[th] September, 2018, uponwhich this petition has been filed. 4.According to the Assessing Officer the Petitioner wasbeneficiary of bogus accommodation entries to the extent ofRs.55 lakhs. This comprise of a sum of Rs.40 lakhs received bythe assessee from one M/s Dolex Commercial Private Limited andfurther sum of Rs.15 lakhs from M/s Shyam Alcohol andChemicals Limited, both the Assessing Officer believed were theentities controlled by one Mr.Vipul Vidhur Bhatt, who had during 512 wp 11811-18-c search and seizure operations given a statement that he was anentry operator and he operated through various bogus entities. 5.The case of the petitioner in brief in this petition is thatsuch sums were not received by the petitioner from said entitiesduring the current year. The petitioner would point out that thereceipts of Rs.40 lakhs and Rs.15 lakhs from such entities wereduring the period relevant to the year 2010-11. On this shortground, counsel for the petitioner had attacked the impugnednotice. 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 also raisedissue of alleged accommodation entries of 40 lakhfrom M/s Dolex Commercial Pvt. Ltd.a nd Rs.15 lakh from M/s Shyam Alcohol & Chemicals Ltd. We haveto state as under:- 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 also raisedissue of alleged accommodation entries of 40 lakhfrom M/s Dolex Commercial Pvt. Ltd.a nd Rs.15 lakh from M/s Shyam Alcohol & Chemicals Ltd. We haveto 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 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 dated23/03/2018 u/s 133(6) for the impugnedassessment year, the assessee has alreadysubmitted that the above named parties had lentthe amount as early as in FY 2009-10 i.e. AY2010-11. The said loans were verified during theassessment proceedings of the assessee for AY2010-11 by ld. ACIT, Central Circle 2, Mumbai.In response to direct inquiries made the ld. ACITthen the above named parties have filed completedetails like confirmation, bank statements andreturn of income copies to prove the genuineness, creditworthiness and existence ofparties. Copy of said letter dated 26/03/2018along with annexures is annexed hereto andmarked as “Exhibit A”. 6.That on perusal of the said letter dated26/03/2018 and annexures hereto, it can benoted that the assessee has received amountsfrom above mentioned parties during AY 2010-11 which stands assessed. Thus, it is submittedthat the “reasons recorded” for AY 2012-13, AY2013-14 and AY 2014-15 are factually erroneousand thus, the reopening deserves to be quashed.7.That it is also submitted that the abovefact was already on record of your ld.predecessor in response to notice issued u/s133(6) prior to recording reasons u/s 148 ofthe Act. Thus, the reasons recorded de-hors theoriginal assessment record and subsequentinquiry u/s.133(6) of the Act is wholly withoutjurisdiction.” 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 a Priya Soparkar 812 wp 11811-18-c strong 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. Priya Soparkar 812 wp 11811-18-c strong 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. (M.S.SANKLECHA,J.) (AKIL KURESHI,J.)….