Backbone Projects Limited Vs ACIT (Gujarat High Court)
The Gujarat High Court addressed a petition filed by Backbone Projects Limited challenging the reassessment proceedings initiated by the Assistant Commissioner of Income Tax (ACIT) for the Assessment Year (A.Y.) 2012-13. The petition challenged the notice dated March 27, 2019, issued under Section 148 of the Income Tax Act, 1961, and the subsequent order dated December 13, 2019, rejecting the assessee’s objections to the reopening.
Background and Reopening Basis
The assessee had originally filed its return for A.Y. 2012-13 on March 31, 2013, and the assessment was completed after scrutiny under Section 143(3) on March 16, 2015.
The reassessment was initiated based on subsequent, tangible information received by the Assessing Officer (AO) from two sources within the investigative wings:
1. DDIT (Investigation), Unit 1(2), Ahmedabad: Reported that the assessee was a beneficiary of accommodation entries totaling ₹20 lakhs for A.Y. 2012-13 from M/s. Kamdhenu Marketing (proprietor Manojbhai H. Patel), which provided bogus sales entries.
2. DDIT (Investigation), Unit 1(3), Ahmedabad: Reported that a search under Section 132 conducted on September 11, 2018, in the case of Shri Jignesh Shah, revealed that Shah was an accommodation entry provider. The report indicated the assessee had received accommodation entries totaling ₹1,05,00,000/- during F.Y. 2011-12 (relevant to A.Y. 2012-13) from M/s. Arihant Enterprise Ltd., controlled by Jignesh Shah.
Prior to issuing the notice under Section 148, the AO issued a notice under Section 133(6) on March 21, 2019, to the petitioner requesting information, but the assessee did not respond. Based on the total accommodation entries of ₹1,25,00,000/-, the AO formed the reason to believe that income had escaped assessment due to the assessee’s failure to disclose fully and truly all material facts.
