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 :
“(A) Issue a writ of certiorari and/or a writ of mandamus and/or any other writ, direction or order to quash and set aside the impugned notice dated 30.3.2018 under section 148 of the Income-tax Act, 1961 annexed hereto at Annexure-B along with preliminary order dated 23.10.2018 annexed hereto at Annexure-F for proceeding and completing reassessment proceedings.
(B) Pending admission, hearing and disposal of this petition, ad-interim relief be granted and the respondent be ordered to restrain from enforcing compliance of the impugned notice dated 30.3.2018 at Annexure-B and/or taking any other steps in this regard including reassessment order or implementation of preliminary order dated 23.10.2018 at Annexure-F and further notices issued for purpose of reassessment.
(B1) Your Lordships may be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction for quashing and setting aside the impugned assessment order dated 24.12.2018 under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 at Annexure-G collectively.
(B2) Pending admission, hearing and final disposal of the present petition, be pleased to stay the implementation, operation and execution of the impugned assessment order dated 24.12.2018 under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 at Annexure-G collectively.
(C) Award the cost of this petition.
(D) Grant such other and further reliefs as this Hon’ble Court deems fit.”
2. The subject matter of challenge in the present litigation is to the notice of re-opening issued under Section 148 of the Income Tax Act, 1961 (for short, ‘the Act’) for the Assessment Year 2011-12 in a case where the return of income was processed for the relevant year under Section 143(1) of the Act. Otherwise, the re-opening is beyond the period of four years. The reasons assigned by the Assessing Officer for re-opening are as under :
“The assessee company filed its return of income for A.Y. 2011-12 on 26.09.2011 declaring total income of Rs.19,38,960/-. In this case, there is no assessment as stipulated u/s.2(40) of the Act was made and the return of income was only processed u/s.143(1) of the Act.
2. In this case, during the year under consideration, there was a huge increase in share capital & premium of the assessee company. As per the details available, the assessee has received share capital and share premium from the following Kolkata based companies which were proved shell companies by income tax department during the various survey/search proceedings.
Thus, the assessee company has received total share capital money of Rs.40,00,000/- from Kolkata based shell companies during the year under consideration.
