O3 Developers Private Limited Vs ITO (Gujarat High Court)
Reopening Invalid Where Alleged Accommodation Entries Lack Transactional Details; Section 148 Notice Set Aside for Fishing Inquiry Based on General Allegations; Reassessment Fails Where Portal Information Has No Live Nexus With Books of Account; Change of Name Not Enough, But Reopening Still Invalid Without Concrete Material
The petitioner challenged a notice dated 31.03.2021 issued under section 148 of the Income Tax Act, 1961 for reopening the assessment for Assessment Year (AY) 2017–18. The challenge was brought before the Gujarat High Court under Article 226 of the Constitution of India.
The petitioner had originally filed its return of income for AY 2017–18 on 31.10.2017, declaring total income of ₹58,50,620. The company was earlier known as Infimium Resources Investment Private Limited, and its name was changed to O3 Developers Private Limited with effect from 18.03.2019. A new PAN was issued on 30.04.2019, and the petitioner claimed that the change in name had been informed to the Income Tax Department.
Subsequently, the respondent issued a notice under section 148 seeking to reopen the assessment. Upon request, the reasons for reopening were supplied. The reasons stated that, based on information from the Insight Portal flagged by DGIT (Systems), the petitioner had allegedly received cash deposits and credit entries aggregating to ₹3,37,84,21,787 which did not commensurate with its declared income, indicating escapement of income. It was further alleged that the petitioner had obtained accommodation entries from Kushal Limited, Ahmedabad, an entity subjected to a search, and that seized materials and statements under section 132(4) suggested organized provision of bogus accommodation entries. On this basis, income was alleged to have escaped assessment.
