Wtax/445/2022 Of Vineet Agarwal v. Assistant Commissioner Of Income Tax And 3 Others

Case :- WRIT TAX No. - 445 of 2022 Petitioner :- Vineet AgarwalRespondent :- Assistant Commissioner Of Income Tax And 3 OthersCounsel for Petitioner :- Suyash AgarwalCounsel for Respondent :- C.S.C.,Gaurav Mahajan Hon'ble Surya Prakash Kesarwani,J.Hon'ble Jayant Banerji,J. Heard Sri Dibyanshu Agarwal, learned counsel for the petitioner and Sri Praveen Kumar,learned Senior Standing Counsel for the Income Tax Department. This writ petition has been filed praying for the following relief: "(i) Issue a writ, order or direction in the nature of Certiorari quashing the impugned notice u/s148 of the Act bearing DIN & Notice No.ITBA/AST/S/148/2020-21/1032032829(1) dated31.03.2021 issued by the Respondent No. 1 in the petitioner's for A.Y.2013-14; case (ANNEXURE-10) (ii) Issue Writ, Order or direction in the nature of Certiorari quashing the order dated 16.12.2021passed by Respondent No. 3, rejecting the objection of the petitioner. (ANNEXURE- 13) (iii) Issue Writ, order or direction in the nature of Prohibition restraining the respondents fromcompleting the reassessment proceeding u/s 148 of the Act for A.Y.2013-14." The reasons supplied by the Assessing Authority to the petitioner for issuance of notice underSection 148 of the Income Tax Act, 1961, is reproduced below: "3. Analysis of information collected/received : A detailed investigation was carried out by the DDIT (Inv.), Unit -5, Delhi In respect ofaccommodation entries to book bogus long term capital gain by large number of assessees in 19scrips. The scrip Presha Metallurgy is one such scrip under investigation. From the detailedfindings given in the report, it is concluded that the share price of Presha Metallurgical Ltd. hasbeen manipulated and bogus profits and losses have been booked in the names ofclients/beneficiaries by trading in the scrip. From the detailed analysis of the trade data, it isobserved that various persons have booked profit and losses in the Scrip during various FYs. Inaddition to that, there are also cases of short sell beneficiaries in which sell value is a substantialamount but the buy value is NIL which goes to. how the purchases of these shares have been madethrough off the market transactions. In the case or the assessee Vineet Agarwal also, the shares ofMS Presha Metallurgical have been sold for Rs. 53,40,120/- whereas the buy vale has been shownas NIL. This goes to show that the shares were purchased through off market transactions. Thus,the assessee has a liberty to show the purchase price of the shares at a lower level by showingpurchases at an earlier date when the prices of the shares were low whereas same were purchasedjust a few days before the Sell Transaction. 4. Enquiries madeby the AO as sequal to information collected/ receive: As per the information, the assessee Vineet Agarwal is one of the beneficiaries who has beenprovided accommodation entry by way of short sell transactions in respect of scrip PreshaMetallurgicals Ltd. amounting to Rs. 53,40,120/- in the financial year 2012–13. After receiving the information, in order to verify the facts mentioned in the report regarding theassessee, the ITR filed by the assessee for A. Y. 2013-14 was downloaded from the e-fling portaland perused. It was found that during the year under consideration, the above transaction has notbeen disclosed in the return of income. However, since the accommodation entries are obtainedfrom the entry operators after remitting the amount to them in cash hence it is clear that in orderto obtained the accommodation entries of Rs. 53,40,120/- the assessee had first remitted thisamount to the entry operator in cash out or undisclosed income so that same can be received back 5. Finding of the AO: After receiving the information, in order to verify the facts mentioned in the report regarding theassessee, the ITR filed by the assessee for A. Y. 2013-14 was downloaded from the e-fling portaland perused. It was found that during the year under consideration, the above transaction has notbeen disclosed in the return of income. However, since the accommodation entries are obtainedfrom the entry operators after remitting the amount to them in cash hence it is clear that in orderto obtained the accommodation entries of Rs. 53,40,120/- the assessee had first remitted thisamount to the entry operator in cash out or undisclosed income so that same can be received back 5. Finding of the AO: On going through the information and on the perusal of ITR of the assessee for the A.Y. 2013-14, tis found that the assessee Sh. Vineet Agarwal is the beneficiary of shares transactions in the scripPresha Metallurgical Ltd., amounting to Rs. 53,40,120/ in the financial year 2012-13 and hasinvested this sum out of undisclosed income. As this undisclosed income is invested for the purposeof taking accommodation entry, hence it is also clear that through this transaction, the undisclosedincome of the assessee himself is being routed to bring it to the books of account without paymentof any taxes. 6. Basis of forming reasons : The report of the Investigation Wing clearly reveals that a number of entry operators are engagedin providing accommodation entries to various parties in the form of bogus LTCG claim. On thebasis of the analysis of the data, the Investigation Wing has furnished a detailed report as to thename, address PAN and bogus transactions of various assessees. The name of the assessee is alsoappearing in the list of the beneficiaries who has been provided accommodation entriesamounting to Rs.53,40,120/- by such entry operators through short sell transactions. An analysisof the ITR of the assessee also shows that he has not disclosed this transaction in the ITRHowever, it is clear that before obtaining the accommodation entry, the assessee had invested thesum of Rs. 53,40,120/- out of undisclosed income. Thus, the facts and circumstances of the caseand the detailed enquiry report of the Wing clearly reveal that the assessee was fully involved inaccepting bogus entries from Entry Operators in the form of bogus share transactions to avoid thepayment of due taxes and also concealed investment and claimed income as exempt income. On the basis of material available as discussed above, I am of the view that assessee hadintroduced his own undisclosed money in the garb of bogus transaction of Rs. 53.40,120-Accordingly. after considering the facts mentioned in the report and in view of the materialavailable on records, I have reasons to believe at income amounting to Rs 53,40,120/= hasescaped assessment in respect of the assessee in the A.Y. 2013-14." The objection of the petitioner has been rejected by the National Faceless Assessment Centre,Delhi by order dated 16.12.2021, as under: "5. I have gone through the assessee's objections and the same are dealt with as under:- a) On verification of the case of the assessee, it is noticed that Income of the assessee has writtenof Rs. 78,81,880/- instead of Rs. 7,94,644|/-. There is typographic mistake and the income of theassessee is Rs. 7,94,644/-, It is bona fide mistake which is accepted. b) As per asssessee Sr. 4 (b), he has shown Long Term Capital Gain in capital account not in ITRand stated that capital gain is exempted u/s 10(38). The objection of the petitioner has been rejected by the National Faceless Assessment Centre,Delhi by order dated 16.12.2021, as under: "5. I have gone through the assessee's objections and the same are dealt with as under:- a) On verification of the case of the assessee, it is noticed that Income of the assessee has writtenof Rs. 78,81,880/- instead of Rs. 7,94,644|/-. There is typographic mistake and the income of theassessee is Rs. 7,94,644/-, It is bona fide mistake which is accepted. b) As per asssessee Sr. 4 (b), he has shown Long Term Capital Gain in capital account not in ITRand stated that capital gain is exempted u/s 10(38). The assessee has to show correct and factual figure in the ITR and exemption can be allowed onlyafter filling the Retune of Income not just mentioned that the figure is shown in capital account onthe face of balance sheet which is the case of the assessee. Further for AY. 2013-14, asseessee hasfiled ITR-4 and shown income on presumptive basis. Assessee has not submitted any detail whichis required to verify. Hence, whether the assessee has shown correct income can't be ascertainwithout reopening the case. c) Assessee has shown short term investment in ITR of Rs. 409821/- in Equity Shares, includingshare application money, for A.Y. 2012-13 but it was not clear in which fund investment was made.Further in ITR-4 of AY. 2013-14, assessee has shown LTCG- NIL, and STCG of Rs. 54205/- whichis quite low of sale value of share of M/s Presha Metallurgical of Rs. 53,40,120/- d) Further as per the investigation report share of M/s Presha Metallurgical Ltd. has beenmanipulated and bogus profits and losses have been booked in the names of clients/beneficiariesby trading in the scrip, and assessee is one of the share holder of M/s Presha Metallurgical Ltdduring the tenure of share manipulation. e) It is the fact that the assessee has shares of M/s Presha Metallurgical and same was sold for Rs.53,40.120/- and transaction has not been disclosed in the return of income. In absence of thedetail from the assessee side in the ITR about the LTCG, the AO treated amount receipt, asaccommodation entries which is obtained from the entry operators after remitting the amount to them in cash on the basis of detailed investigation carried out by the DDIT (Inv.), Unit -5, Delhi,In respect of accommodation entries to book bogus long term captal gain by large number ofassessees. This is based on fact not on assumption. From above detail AO has clear reason to believe that income has escaped assessment, requiringre-opening the case." We have perused the reasons for belief to issue notice under Section 148 of the Act, 1961 asrecorded by the respondent as well as the order dated 16.12.2021 passed by the respondentNo.3. Perusal of the reasons recorded by the respondent No.1 for issuance of notice underSection 148 of the Act, 1961 indicates that the reasons recorded are not irrelevant and insteadit prima facie indicate escapement of income to tax. Under the circumstances, we do not find any good reason to interfere with the impugnednotice or the order rejecting the objection. For the reasons afore-stated, we do not find any merit in this writ petition. Consequently, thewrit petition fails and is hereby dismissed. Order Date :- 29.3.2022NLY