Necklace Diamond Vs ITO (Gujarat High Court)
Summary: Gujarat High Court allowed the writ petition filed by Necklace Diamond challenging the order dated 31.07.2022 passed under Section 148A(d) and the notice issued under Section 148 of the Income Tax Act, 1961 for AY 2017-18. The petitioner had filed its return on 01.08.2017 declaring total income of Rs.4,73,481/-, which was accepted without scrutiny. Subsequently, a notice under Section 148 dated 28.04.2021 and another notice under Section 148A(b) dated 30.05.2022 were issued. The allegation was that the petitioner had received an accommodation entry of Rs.1,33,72,000/- from Shripal Vrajlal Vora.
The material forming the basis of reopening originated from proceedings against Shripal Vora. A survey under Section 133A was conducted at his premises on 14.12.2016 and was subsequently converted into a search under Section 132 on 16.12.2016. According to the Revenue, incriminating documents seized during the search indicated that Shripal Vora was engaged in accommodation-entry transactions and that the petitioner was a beneficiary of transactions aggregating Rs.1,33,72,000/- during FY 2016-17.
The petitioner contended that since the reassessment was founded on incriminating material discovered during a search of another person, the appropriate statutory mechanism was Section 153C and not Sections 147/148. Reliance was placed on Paras Chandreshbhai Koticha vs. Income Tax Officer Ward – 1(2)(2). The Revenue opposed the petition and contended that reassessment under Section 148 was justified on the information and incriminating documents found during the search.
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