2013 (1) TMI 544 - HC - Income Tax

Reopening of Assessment - about 90 companies were floated for the purpose of providing accommodation entries - all the companies are bogus - Held that - Persuading a letter circulated by the ACIT (Respondent No.2) to all the assessing officers of Range-14, which includes the assessing officer of the present petitioner dated 24.08.2009 a list of beneficiaries mentioned for the AY 2007-08 was found with the serial No.19 shows the petitioner as a beneficiary - the petitioner furnished a reply to the earlier questionnaire which had been issued on 18.02.2009 giving details of share capital raised by the petitioner. Those details included the sums received from the aforesaid alleged accommodation entry providers. Alongwith the said reply dated 09.11.2009, confirmations from the said parties were also furnished.A similar reply was again furnished on 27.11.2009. Despite the furnishing of these details, AO further issued notices under section 133(6) to the said companies directly, on 27-30.11.2009 which the said five parties responded, thus in the backdrop of these facts, it is difficult to believe the plea taken that the said information was neither available with the department nor did the assessee disclose the same at the time of assessment proceedings . There is nothing to show that the assessing officer did not receive the said information as it is apparently because he was mindful of the said information that he issued notices under section 133(6) directly to the parties to confirm the factum of application of shares and the source of funds of such shares - in favour of assessee.

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Legitimacy of the reopening of assessments under Section 147 of the Income Tax Act, 1961.
3. Examination of the objections raised by the petitioner against the notice and the subsequent order.

Issue-wise Detailed Analysis:

1. Validity of the Notice Issued Under Section 148 of the Income Tax Act, 1961:

The petitioner challenged the notice dated 30.08.2011 issued under Section 148 of the Income Tax Act, 1961, claiming it was invalid. The court noted that the primary allegation against the petitioner was being part of a racket providing bogus accommodation entries masterminded by Mr. Tarun Goyal. The purported reasons for issuing the notice stated that the information about these entries was not available with the department nor disclosed by the assessee during the original assessment proceedings. However, it was revealed that the assessing officer had issued a questionnaire on 18.02.2009 asking for details of share capital and share application money received, to which the petitioner responded on 09.11.2009 and 27.11.2009. The assessing officer had also issued notices under Section 133(6) to the concerned companies, which confirmed the transactions. Thus, the court found that the information was indeed available with the department, contradicting the reasons stated for issuing the notice under Section 148.

2. Legitimacy of the Reopening of Assessments Under Section 147 of the Income Tax Act, 1961:

The court examined whether the reopening of the assessment under Section 147 was justified. The purported reasons for reopening cited the search and seizure operation conducted at Mr. Tarun Goyal's premises, revealing that he operated several bogus companies providing accommodation entries. The petitioner was listed as a beneficiary of such entries amounting to Rs. 1,35,00,000/-. However, the court found that the information regarding these entries had been circulated to all assessing officers, including the petitioner's, on 30.04.2009. Despite this, the assessing officer completed the original assessment on 30.12.2009 after verifying the details provided by the petitioner and the confirmations from the concerned companies. The court concluded that the assessing officer had already applied his mind to the information during the original assessment, and thus, there was no basis for reopening the assessment under Section 147.

3. Examination of the Objections Raised by the Petitioner Against the Notice and the Subsequent Order:

The petitioner had filed objections against the notice under Section 148, which were rejected by a speaking order dated 03.08.2012. The court scrutinized the objections and the reasons for their rejection. It was evident that the rejection was based on the same grounds as the notice under Section 148, which the court found to be unsubstantiated. The court emphasized that the information was available with the department at the time of the original assessment and had been duly considered by the assessing officer. Therefore, the objections raised by the petitioner were valid, and the order rejecting them was not justified.

Conclusion:

The court concluded that the notice dated 30.08.2011 under Section 148 and the order dated 03.08.2012 rejecting the petitioner's objections were invalid. The information regarding the alleged bogus accommodation entries was available with the department and considered during the original assessment. Consequently, the reopening of the assessment under Section 147 was not justified. The court quashed the impugned notice and the subsequent order, along with all proceedings pursuant thereto, and allowed the writ petition with no order as to costs.

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