Hemjay Construction Co. Pvt. Ltd. Vs ITO (Gujarat High Court)
The issue under consideration is whether the re-opening of the assessment u/s 147 based on information from investigation report is justified in law?
High Court states that having regard to the materials on record it cannot be said that there is a total non-application of mind on the part of the Assessing Officer while recording the reasons for reopening of the assessment. It also cannot be said that his conclusion was merely based on the observations and information received from the Investigation Wing. The Assessing Officer could be said to have applied his mind to the same. The Assessing Officer could not be said to have merely concluded without verifying the facts that it is the case of reopening of the assessment. HC have examined the belief of the Assessing Officer to a limited extent to look into whether there was sufficient material available on record for the Assessing Officer to form a reasonable belief and whether there was a live link existing of the material and the income chargeable to tax that escaped assessment. The case on hand is not one where it could be argued that the Assessing Officer, on absolutely vague or unspecific information, initiated the proceedings of reassessment without taking the pains to form his own belief in respect of such materials. In the overall view of the matter, HC are convinced that no case is made out by the writ applicant for interference. In the result, both the writ applications fail and are hereby rejected.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. Since the issues raised in both the captioned writ applications are the same and the parties are also the same, those were heard analogously and are being disposed of by this common judgment and order.
2. For the sake of convenience, the Special Civil Application No.19392 of 2018 is treated as the main matter.
3. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs;
“(i) This Hon’ble Court be pleased to issue a writ of Mandamus or Prohibition or any other appropriate writ, order or direction quashing the impugned 148 notice dated 29.03.2018 at Annexure-K and impugned order rejecting objection dated 22.11.2018 at Annexure-O.
(ii) Pending the hearing and final disposal of this application, this Hon’ble Court be pleased to stay the reassessment proceedings pursuant to notice under section 148 dated 03.2018 at Annexure-K.
(iii) This Hon’ble Court be pleased to grant any further or other relief as this Hon’ble Court deems just and proper in the interest of justice, and
(iv) This Hon’ble Court be pleased to allow this application with costs against the ”
4. The facts giving rise to this writ application may be summarized as under:
4.1 The writ applicant is an assessee. The assessee filed its return of income for the Y.2011-12, declaring the total income of Rs.14,00,432/- on 30th March, 2013. The same was processed under Section 143(1) of the Income Tax Act, 1961 ( for short “ the Act, 1961”) without any modification.
4.2 The case was selected for scrutiny assessment and a notice under Section 143(2) dated 12th August, 2013 was issued and served upon the assessee. The case was, thereafter, transferred to the office of the Income Tax Officer, Ward-2(1), Jamnagar from the office of the Deputy Commissioner of Income Tax, Central Circle-II, Rajkot on 3rd August, 2013.
4.3 A notice under Section 142(1) dated 16th September, 2013 was issued along with the questionnaire calling for certain specific details/information. In para-6 of the said notice dated 16th September, 2013, the Assessing Officer raised a specific query with regard to the unsecured loan transactions. The query reads thus:
“6. Furnish complete details (confirmations, creditworthiness proof) of new unsecured loans/deposits taken and squared up accounts during the year along with details regarding interest payment, if any, made to them and also copies of balance sheet, return of income filed and copy of bank statement for the year under consideration in support of your claim. Provide confirmation of all such loans including old loans etc.”
4.4 It is the case of the writ applicant that the specific query raised by the Assessing Officer with regard to the unsecured loan transactions was answered with supporting documentary evidence. It also appears that in the course of the proceedings of the original assessment under Section 143(3) of the Act, the notices dated 19th March, 2014 were issued under Section 133(6) of the Act,1961 to those parties who claimed to have given the unsecured loan to the writ applicant.
4.5 A notice under Section 148 of the Act, 1961 dated 29th March, 2018 came to be issued to the writ applicant.
4.6 The reasons assigned by the Income-tax Officer for reopening of the assessment under Section 147 of the Act, 1961 are as follows:
“1. The assessee is a company and has filed its return of income for the A.Y. 2011-12 on 30.03.2013 declaring total income at Rs.14,00,430/-. The assessment u/s. 143(3) of the Act was finalized accepting the returned income of Rs.14,00,430/-.
2. As per information received from the DDIT (Inv), Jamnagar, it is revealed that the assessee has taken unsecured loan aggregating to Rs.2,28,00,000/- during the year under consideration from five shell companies situated in Kolkatta details of which are as under:
