Touch Comm Tech Private Limited Vs National E-Assessment Centre (Gujarat High Court)
The Gujarat High Court allowed the writ petition challenging the order passed under Section 148A(d) of the Income-tax Act reopening the assessment for Assessment Year 2013-14 and quashed the reopening proceedings. The petitioner contended that the Assessing Officer had reopened the assessment on the assumption that income of ₹70,00,000 had escaped assessment due to alleged accommodation entries without properly considering the credit and debit entries disclosed in the Return of Income and ledger accounts. According to the petitioner, the entries included opening balances of ₹20,00,000 and ₹25,00,000, while the debit and credit entries of ₹25,00,000 relating to another entity effectively resulted in a nil transaction. It was argued that once these entries were correctly considered, the alleged escaped income would fall below ₹50,00,000, making the reopening beyond the prescribed limitation impermissible.
The Revenue opposed the petition, submitting that material discovered during a search conducted on another person established the petitioner’s involvement in accommodation entries and that the routing of ₹25,00,000 back to the entry operator did not affect the taxability of the alleged amount of ₹70,00,000.
The High Court noted that the reopening was based on alleged accommodation entries of ₹70,00,000 but found this determination to be unsupported in view of the petitioner’s explanation and the ledger entries already available with the Revenue. The Court observed that the debit entries of ₹20,00,000 and ₹25,00,000 represented opening balances, while the debit and credit entries of ₹25,00,000 with another entity amounted to a nil entry. It further observed that the credit entry of ₹25,00,000 had been ignored by the Assessing Officer.
