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TMI Blog2022 (4) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... asis for reopening the assessment in this case was the information from the material seized during search in cases of Shrish Chandrakant Shah and correlation with return of income of the assessee. Further, there was no scrutiny assessment done at the original assessment stage. As a matter of fact, M/s Garg Logistics filed its IDS application with a different Commissionerate which did not share information with the AO in the present case; he did not also call for any such information. Pravin Chandra Agrawal, the chairman of the assessee (M.R. Shah group) was queried with regard to the capital raised with high premium during a search, and post search inquiry. He submitted details of the IDS declaration by Garg Logistics Pvt Ltd to say that the amounts received toward share applications were genuine transactions. Clearly, in the present case, the High Court went wrong in holding that the department had shared confidential IDS information of Garg Logistics Pvt Ltd. AO utilized the material submitted by Pravin. P. Agrawal (the assessee s chairman) and correlated it with the ROC data filed by the assessee. Further, it is also apparent, that the AO s reasons to believe do not disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Mr. S. Guru Krishnakumar, Sr. Adv. Ms. Manisha T. Karia, AOR Mr. Sukhda Kalra, Adv. Mr. Adarsh Kumar, Adv. Ms. Nidhi Nagpal, Adv. Ms. Nupur Dhiren Mehta, Adv. JUDGMENT S. RAVINDRA BHAT, J. 1. Special leave granted. With consent of counsel for parties, the appeal was heard finally. The Commissioner of Income tax (hereafter the revenue ) appeals against a judgment of the Gujarat High Court Dated 14 August, 2018 in Special Civil Application No. 21028 of 2017 , which quashed a notice issued under Section 147/148, Income Tax Act (hereafter the Act ) seeking to re-open the respondent s assessment, for the assessment year (AO) 2010-11. The respondent is hereafter, referred to as the assessee . 2. The facts are that search proceedings were conducted- by the revenue, under the Act, at the office premises of one Shirish Chandrakant Shah on 09.04.2013 at Mumbai; during the course of the search, several materials- and documents, were seized. On analysis of such documents, the revenue was of opinion that Shirish Chandrakant Shah was providing accommodation entries, through various companies controlled and managed by him, and that the assessee was one of the beneficiaries of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are noted; Name of the Investor Amount of investment received by M R Shah Logistics Pvt Ltd as per form no. 2 file by it with ROC Amount claimed to be paid by Garg Logistics Pvt Ltd as per form no. 2 filed under IDS declaration Sangam Distributors Pvt Ltd. ₹ 20,00,000/- ₹ 10,00,000/- Fountain Commerce Pvt Ltd ₹ 25,00,000/- NIL Panorama Commercial Pvt Ltd. NIL ₹ 25,00,000/- Sanskar Distributors Pvt Ltd. ₹ 10,00,000/- ₹ 20,00,000/- 6. The reasons supplied by the AO further noted that he had completed the assessment in the case of Pradeep Birewar group and that a search took place in respect of that group along with various individuals who had obtained accommodation entries of long term capital gains (LTCG) in the shares of Ganesh Spinners Ltd. from Shirish Chandrakant Shah. It was found that Pradeep Birewar was an Ahmedabad based accommodation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e correlated with data of return of assessee filed for AY 2011-12 in which year assessee-company had receive One Time (OT) entry. Hence, this facts indicate that assessee company has been introducing its unaccounted receipt/income through accommodation entries. 2.2 It is also noticed that assessee company had received credit amount in its books but has failed to establish that the cash declared by Garg logistics Pvt Ltd under Income Declaration scheme was not actually the cash of the assessee-company. Assessee had only submitted Income Declaration Form no.2 of Garg Logistics Pvt Ltd and failed to provide documentary evidence of investment of cash declared by Garg Logistics Pvt Ltd in the assessee company. Even the list submitted by assessee had discrepancies with data submitted to registrar of companies as discussed in above para. In other words, the assessee has not been able to establish that the income admitted under IDS 2016 by Garg Logistics Pvt Ltd. went in the books of investor companies. It is worth to highlight that Investor companies are independent paper companies and they have provided entries independently and not through Garg Logistics Pvt Ltd. 2.3 Thus the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. 9. The High Court, by the impugned judgment, was of the opinion that the AO had no information to conclude that the disclosure by Garg Logistics was not from funds of that declarant but was in fact the unaccounted income of the assessee. The impugned order reasoned that the AO, after recounting the background history of the assessee and background of M.R. Logistics, shifted the burden on assessee to say that the share application money received by it was not its unaccounted income. This, according to the High Court, was erroneous. The impugned judgment was of the opinion that there was no tangible material or reason for the AO to reopen the assessment. The High Court also considered the scheme of Section 183 of the Finance Act, 2016 and noted that immunity was given in respect of amounts declared and brought to tax in terms of such a scheme. Therefore, the AO could not have relied upon the declaration made by the Garg Logistics to so conclude. The High Court also derived strength from the circular of the CBDT dated 01.09.2016, especially, the answer to Query no.10. Contentions of parties 10. It was argued on behalf of the revenue by the Additional Solicitor General (AS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case. 14. Learned senior counsel for the assessee, Mr. Guru Krishnakumar, urged that information of share investment of ₹ 6.25 crores by Garg Logistics made through different companies, but owned by it, was made in its declaration in the IDS. This information was not furnished to the AO and he could not, therefore, have legitimately concluded that such investment was not from the funds of Garg Logistics but was in fact assessee s unaccounted income. The AO s approach was contrary to the law in as much as in the very first instance, he sought to place the burden upon the assessee to prove that it was not in fact routing back its own cash through the investments made by the companies which Garg Logistics (P) Ltd owned up to be unaccounted income in its declaration. 15. It was argued, the reasons recorded that the assessee had received ₹ 6.25 crores as share premium and share capital during FY 2009-10 from various persons/ companies being accommodation entry providers which was untaxed and escaped assessment and that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for its AY 2010-2011, are not val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). Explanation.--For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 148A have not been complied with. . Section 148, which contains the conditions for re-opening assessments, including the limitation period within which notices can be issued, by its proviso, enacts that: Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice. 19. Long ago, in its decision reported as Calcutta Discount Company Ltd v Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Officer Ors 1993 Supp (1) SCR 28, after reviewing the previous case law, and concluding that a valid re-opening is one, preceded by specific, reliable and relevant information, and that the sufficiency of such reasons is not subject to judicial review- the only caveat being that the court can examine the record, if such material existed, it was held that the facts disclosed in the return, if found later to be unfounded or false, can always be the basis of a re-opening of assessment: appears to us to be, to ensure that a party cannot get away by wilfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn around and say you accepted my lie, now your hands are tied and you can do nothing . It would be travesty of justice to allow the assessee that latitude. 22. A three judge Bench, of this court, in Commissioner of Income Tax, Delhi v. Kelvinator of India Ltd 2010 (1) SCR 768 after considering the previous decisions, re-stated the correct position as follows: 5....where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re-open the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the amended provision, the requirement of passing of an assessment order has been dispensed with and instead an intimation is required to be sent. Various circulars sent by the Central Board of Direct Taxes spell out the intent of the Legislature, i.e., to minimize the Departmental work to scrutinize each and every return and to concentrate on selective scrutiny of returns. Followed in Deputy Commissioner of Income Tax v Zuari Estate Development and Investment Company Ltd 2015 (15) SCC 248 Thus, in the present case, the returns filed by the assessee were not examined, or scrutinized; only an intimation that it was filed, was issued by the AO. 25. The reasons to believe forming part of the Section 147- in this case, clearly point to the fact that the reopening of assessment was based on information accessible by the AO that a substantial amount of unaccounted income of promoters/directors was introduced in the closely held companies of the assessee group through Shirish Chandrakant Shah, alleged to be a Mumbai based accommodation entry provider- through Pradeep Birewar, another accommodation entry provider based at Ahmedabad. During the course of search at the offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total ₹ 6,25,00,000/- 27. The details of income declaration by Garg Logistics under the IDS scheme was submitted by Pravin. P. Agrawal (the assessee s chairman) in support of its claim of genuineness of receipt of share capital. However, as noticed earlier, the basis for reopening the assessment in this case was the information from the material seized during search in cases of Shrish Chandrakant Shah and correlation with return of income of the assessee. Further, there was no scrutiny assessment done at the original assessment stage. 28. As a matter of fact, M/s Garg Logistics filed its IDS application with a different Commissionerate Pr. CIT-2, Ahmedabad which did not share information with the AO in the present case; he did not also call for any such information. Pravin Chandra Agrawal, the chairman of the assessee (M.R. Shah group) was queried with regard to the capital raised with high premium during a search, and post search inquiry. He submitted details of the IDS declaration by Garg Logistics Pvt Ltd to say that the amounts received toward share applications were genuine transactions. Clearly, in the present case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ..nothing contained in any declaration made under section 183 shall be admissible in evidence against the declarant for the purpose of any proceeding relating to imposition of penalty Therefore, the protection given, is to the declarant, and for a limited purpose. However, the High Court proceeded on the footing that such protection would bar the revenue from scrutinizing the assessee s return, absolutely. Quite apart from the fact that the re-opening of assessment was not based on Garg Logistic s declaration, the fact that such an entity owned up and paid tax and penalty on amounts which it claimed, were invested by it as share applicant, (though the share applicants were other companies and entities) to the assessee in the present case, cannot by any rule or principle inure to the assessee s advantage. In similar circumstances, dealing with another scheme (the Kar Vivad Samadhan Scheme 1988, a previous tax amnesty scheme) this court had, in State, CBI vs. Sashi Balasubramanian Ors 2006 Supp (8) SCR 914 held as follows: an immunity is granted only in respect of offences purported to have been committed under direct tax enactment or indirect tax enactment, but by no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) thereof would not apply inasmuch as it starts with the term nothing contained in Sub-section (1) shall apply in relation to. What are the conditions which would make Sub-section (1) of Section 64 inapplicable is the income assessable for any assessment year for which a notice under Section 142 or 148 of the Income Tax Act has been served upon such person and the return has not been furnished before commencement of the Scheme and upon strict construction, it is possible to argue that the word such person must relate to that declaring which being a firm would not include within its purview its partners. But, in a case of this nature where fraud is alleged, we cannot be oblivious of the fact that each firm acts through its partner. A firm is the conglomeration of its partners, and is not a juristic person. In the instant case, the purported disclosure made by the firm relates to the same amount which has been disclosed by the partner. Even the source of income was found to be the same. As the income of a firm vis-a-vis its partners have a direct co-relation, in our opinion, while construing a statute granting immunity, it should not be construed in such a manner so as to frus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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