ITO Vs Anil Ghanshyam Kumawat (ITAT Surat)
Conclusion: Reassessment under section 147 was valid on reopening of already closed assessment and both Sections 147 and 153C could be used interchangeably based on the situation.
Held: In the instant case, assessee’s case was reopened on the basis of information received by AO that Investigation Wing Mumbai had carried out a search action of Shri Bhanwarlal Jain Group and his associates wherein incriminating materials were found which conclusively proved that Bhanwarlal Jain and his associates were dummy concern, were engaged in providing accommodation entries to various beneficiaries in the form of sale/purchase, loans etc. Assessee was identified as one of the concern person who had availed accommodation entries to the extent of Rs.80.98 crores from eleven bogus concern of Bhanwarlal Jain and his associates. AO after recording the reasons issued notice under section 148. Assessee had not challenged the validity of reopening, though for the first time, assessee had challenged the action of AO by taking plea that AO should have assessed assessee under section 153C and not section 147/148. AO made addition by disallowance @25% of purchases identified as bogus purchase. AO while making addition held that Bhanwarlal Jain in his statement under section 132(4) had admitted that his group were engaged in providing accommodation entries. Further notice under section 133(6) and summons issued under section 131 were issued to the parties from whom assessee has shown such purchases. AO recorded that all the parties were not found on the given addresses, which proved that purchases were shown from fictitious parties. AO disallowed purchases to the extent of 25%. Dissatisfied by the order, assessee filed for an appeal to CIT (Appeals)[CIT(A)]. It was held that there were a number of decisions by the Hon’ble jurisdictional and other High Courts in favour of revenue where reopening had been upheld when it was based on information from the investigation wing of the department. The Hon’ble Gujarat High Court in case of Anderson Biomet (P.) Ltd. vs. ACIT, 129 taxmann.com 135 (Guj.) held that where search and seizure under section 132 was carried out in case of ‘J’ and it was found that ‘J’ was managing and controlling multiple companies which involved in providing accommodation entries and documents unearthed during search showed that the petitioner company had taken accommodation entries from one of such concerns, since prima facie there was live link between material coming to the notice of AO and formation of his belief that there had bene escapement of income due to assessee’s failure to disclose fully and truly all materials facts, initiation of reassessment was justified. In case of Silverdale Inn (P.) Ltd. vs. ITO, 127 taxmann.com 679, the Hon’ble Gujarat High Court held that where AO issued reopening notice against assessee based on information received from NMS (Non-filler Monitoring System) that assessee had received cash deposit but had not disclosed same in its return, reopening notice was justified. In case of Jayant Security & Finance Ltd., 91 taxmann.com 181 (Guj.), it was held that initiation of reassessment proceedings on basis of information received from investigation wing that assessee received loan from entry operator, was justified. Moreover, in the case of Silverdale Inn (P.) Ltd. vs. ITO the respective courts upheld the validity of reassessment under 147 and issuance of notice under 148 was valid even when there was a search and seizure being conducted on the assessee. As a result the reassessment was held valid.
