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2016 (6) TMI 899 - GUJARAT HIGH COURTReopening of assessment - failure to produce share application form details of shares allotted to the so called share holders and proof of attendance of Annual General Board Meeting of the said so called share holders. - Held that:- The Assessing Officer has recorded detailed reasons recording that during the survey proceedings, the company failed to produce share application forms, details of shares allotted to the share holders, proof of attendance of annual general meeting of the share holders etc. During such survey, the Director of company verified the identity of the so-called share holders and it was found that the company and its persons did not exist at the address available with the assessee-company. The assessee-company had forfeited the share capital and share premium but failed to produce any details to show the action taken by the company regarding forfeiture. It was on the basis of such reasons the Assessing Officer has recorded the reasons to believe that income chargeable to tax has escaped assessment. We do not find such reasons lacked validity or a live link with the material on record enabling the Assessing Officer to form such a belief. As held by the Supreme Court in case of Assistant Commissioner of Income Tax vs. Rajesh Jhaveri Stock Brokers P. Ltd. (2007 (5) TMI 197 - SUPREME Court ) at this stage, it is not necessary for the Assessing Officer to conclusively establish that income would be invariably taxed. The inquiry of the Court while examining notices for re-opening, where original assessment is not framed after scrutiny is necessarily extremely narrow. The question whether said income can be taxed in the hands of the assessee or the department can proceed only against the investors would also depend on various facts and circumstances and only on such an assertion the reopening proceedings cannot be terminated. Undoubtedly, when share investment is made by the large number of persons, the company, in whose shares such investments are made, cannot be held responsible for unaccounted investments of such investors even if so found to have been made since it would be unaccounted investment of the investors not of the company. Nevertheless, if it is found that the entire transaction of the so called investment is wholly bogus, routing unaccounted income of the company itself through large scale allotment of shares to bogus entities and so-called investors, the question of taxing the company itself may arise. - Decided against assessee.
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