Case Law Details
Navnidhi Dyeing And Printiing Mills Pvt. Ltd. Vs ACIT (Gujarat High Court)
Conclusion: Where the transaction itself, on the basis of the subsequent information, was found to be bogus transaction, the mere disclosure of that transaction at the time of original assessment proceedings could not be said to be disclosure of the ‘true’ and ‘full’ facts in the case and the Income Tax Officer would have the jurisdiction to re-open the concluded assessment in such a case.
Held: In the present case, AO had considered the materials on record which would, prima facie, suggest that during the year under consideration there was a huge hike in the amount of the share capital and share premium of assessee company. Assessee received the amount of share capital and share premium from the Kolkata based shell companies, namely, Prime Vyapaar Pvt. Ltd. and Asha Apartments Pvt. Ltd. respectively. AO, prima facie found, based on the materials on record and the information received, that total share capital of Rs.40 lakh was received during the year under consideration. On verification of the details of the investors companies, it was found, prima facie, that the same was controlled by one Kolkata based accommodation entry provider, namely Manoharlal Nangalia. In a statement recorded by the department, Manoharlal Nangalia was said to have admitted to the fact that his main business was to provide accommodation entries through shell companies to various beneficiaries in lieu of commission. Thus, AO had reasons to believe that income of the assessee to the extent of Rs.40,00,000/-had escaped assessment within the meaning of section 147. It was held that where the transaction itself, on the basis of the subsequent information, was found to be bogus transaction, the mere disclosure of that transaction at the time of original assessment proceedings could not be said to be disclosure of the ‘true’ and ‘full’ facts in the case and the Income Tax Officer would have the jurisdiction to re-open the concluded assessment in such a case. It was correct that the Assessing Officer could have deferred the completion of the original assessment proceedings for further inquiry and investigation into the genuineness to the transaction, but, his failure to do so and complete the original assessment proceedings would not take away his jurisdiction to act under Section 147 of the Act, on receipt of the information subsequently. The subsequent information, on the basis of which the Income Tax Officer acquired reasons to believe that the income chargeable to tax had escaped assessment on account of the omission of the assessee to make a full and true disclosure of the primary facts, was relevant, reliable and specific.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. By this writ-application under Article 226 of the Constitution of India, the writ-application has prayed for the following reliefs :
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