Case Law Details
Shrikant Phulchand Bhakkad Vs JCIT (Bombay High Court)
It was seen that the issue under consideration of the office had not been examined by the assessing officer while passing the assessment order. The transactions entered into by the assessee were non genuine and were carried out with a view to avoid paying tax. The assessee had set off the loss incurred from F & O Trading against profit booked from normal business activity. This is a text book case of tax avoidance. In the said communication it was further stated that, the information was being forwarded to the Pr. commissioner of Income Tax-1, Aurangabad as per the minutes of the Annual Conference of DIT and as proved by the Chairman DBDT, New Delhi, with a request to direct the jurisdictional assessing officer to take necessary remedial action in the case of the assessee for the assessment year 2015-2016 and for the assessment year 2016-2017. The said office had verified only two transactions of trading in script on test check basis. The jurisdictional assessing officer to be requested to verify all the transactions entered into by the assessee for determining the total tax liability of the assessee.
A perusal of the record indicates that, based on the said information received from the Income Tax Officer – (I&C), Aurangabad giving details, assessing officer issued notice U/Sec. 148 of the I. T. Act and for the reasons recorded by the assessing officer, a reference was made to the information received from Income Tax Officer (I&C), Aurangabad from insight portal. Based on the said information and after application of mind, the assessing officer recorded the reasons that as the case was selected for limited scrutiny issue, initially no additions were made. It appears that on the information available on record, assessing officer is of reasonable belief that the petitioner had entered into a sham transaction to obtain loss for the purpose of set off of his taxable income. In our view, there is no substance in the submissions made by Mr. Chandak, the learned counsel for the petitioner that, there was no application of mind on the part of the assessing officer while issuing notice U/Sec. 148 of the I. T. Act.
A perusal of the assessment order dated 25th December, 2018 for the assessment year 2016-2017 clearly indicates that, it is recorded in paragraph No. 2 that the case was selected for scrutiny under CASS for limited purpose to examine whether the share capital was genuine and from disclosed sources. Notices were accordingly issued to the petitioner for seeking various details. In paragraph No. 3 of the said order, the assessing officer in that context recorded a limited finding that the assessee had received share of profit and remuneration and interest on capital. The assessee had offerred profit and gains of business or profession of Rs. 57,86,473/- and income from other sources of Rs. 65,631/-. During the assessment proceedings, the assessee had furnished details asked for. However, in view of the case of the petitioner selected under CASS, the assessing officer could not go into other details furnished by the petitioner. Return of income as filed by the petitioner thus came to be accepted.
So far as the issue raised by the petitioner that, the Joint Commissioner of Income Tax Range – 1 while granting approval U/Sec. 151 of the I. T. Act on the proposal submitted by the assessing officer by order dated 31st March, 2021 did not apply mind is concerned, in our view, there is no substance in the submissions made by the learned counsel for the petitioner. A perusal of the said order indicates that, the Joint Commissioner of Income Tax was of the view that, he was satisfied that it was a fit case for issuance of notice U/Sec. 148 of the I. T. Act in view of the details and quantum of undisclosed transactions discussed by the assessing officer in the reasons recorded. The Joint Commissioner of Income Tax accordingly accorded sanction U/Sec. 151(2) of the I. T. Act for issuance of notice under section 148 of the I. T. Act.
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