Case Law Details
PCIT Vs Arshia Global Tradecom Private Limited (Calcutta High Court)
In the case on hand the reassessment proceedings, the assessee was unable to justify the genuineness of the transactions. The assessee failed to produce original cash memos and bills for the sales alleged to have been effected and to substantiate the cash deposit into their bank accounts. During the scrutiny assessment based on the information received from the investigation wing, notice under Section 142(1) was issued to the assessee requiring the assessee to provide details and produce the entities involved in the transaction mentioned in the reasons for reopening along with the details of the transactions. The assessing officer notes that the assessee submitted details and documents but failed to produce the Directors of those entities. The summons issued under Section 131 of the Act to the various entities for whom the assessee had transactions were not complied with as none appeared in response to such summons. Three entities appear to have submitted certain replies. Summons sent to five other entities were returned unanswered. The directors of the Companies did not appear and therefore the assessing officer concluded that the entities are mere paper/shell companies. Thereafter another show cause notice dated 11.12.2018 was issued to the assessee stating that in the current account of the assessee, total non-cash credit from 28.09.20 10 till 12.03.2011 is around Rs. 28,56,66,139/- and non-cash out flow is around Rs. 31,68,76,920/- and cash deposit of Rs. 3.41 crores was found. Therefore, the assessee was informed that as per notice dated 25.10.20 18 issued under Section 142(1) of the Act, the Directors of those entities were to be personally present but however they failed to respond to the said notices. Further, the assessing officer on deeper examination of the facts found that the source of funds of the assessee is from entities who have either not filed their return of income or shown very negligible net profit out of huge turn over. Further, the nature of transaction done by the assessee was examined and it was pointed out that funds which come through those paper entities to the assessee are immediately transferred to other paper entities and ultimately withdrawal of cash from their bank accounts. Therefore, the assessing officer concluded that the assessee has routed its own funds through the shell companies which would clearly indicate bogus billings. Therefore, the assessee was directed to show cause as to why the transactions should not be considered as unexplained cash credit in their hands. The assessee submitted their reply on 14.12.2018.The reply was considered and the assessing officer found that the assessee failed to substantiate the transactions in their ICICI Bank account. The genuineness of the transactions were not established by the assessee and the summons which were issued to those entities were also non complied with. These facts which were brought on record during the reassessment proceedings was reexamined by the CIT(A) who has also recorded its independent findings while upholding the order passed by the assessing officer. The CIT (A) not only considered the findings of the assessing officer but also examined the remand report and held that it has been established by detailed enquiry that the fund transferred into the account of the assessee were mostly from entry operators based companies who are only giving accommodation entries and similarly funds have been transferred from the assessee to the operators based companies who are also engaged in the business of providing accommodation entries and bogus billings. The CIT(A) also noted that during the scrutiny proceedings and remand proceedings none other directors of the said company appeared before the assessing officer and the assessing officer rightly identified nine shell companies who are providing bogus purchase bills and accordingly held that the assessee has deposited its own unaccounted cash in the bank account and confirmed the findings of the assessing officer. Unfortunately, the tribunal failed to examine any of the factual details which have been brought out by the assessing officer as well as the CIT(A) but merely went on the basis as to what are the conditions to be fulfilled in order to reopen the assessment. As pointed out earlier, reasons given by the learned tribunal to distinguish the decision in Peass Industrial Engineers is not tenable.
Thus, we are of the view that the order passed by the tribunal has ignored the crucial aspects of the matter which are relevant to the reopening of the assessment. Thus, we are of view that the order impugned calls for interference.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
1. This appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 (the Act) is directed against the order dated 18.11.2020 passed by the Income Tax Appellate Tribunal “C” Bench, Kolkata, (Tribunal), in ITA No. 2042/Kol/2019 for the assessment year 2011-2012.
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