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TMI Blog2025 (1) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... wise, which was in excess of the amount as claimed by the petitioner in its response dated 31.05.2022. The contention that the AO is not required to form an opinion as to the correctness of the information available with it, is erroneous. AO is required to form an opinion as to whether there is any credible information to substantiate that the petitioner s assertion that the aggregate value of the transactions in question is less than Rs. 50,00,000/-, is incorrect. Clearly, at the stage of passing an order u/s 148A (d) AO was not required to form any conclusive view as to whether the entries in question represented income that had escaped assessment. The question whether the said entities are accommodation entries may be a contentious issue. The fundamental facts that the petitioner had transactions with the named companies of an aggregate value of Rs. 66,44,134/- was required to be determined on the basis of the record. Whilst, the petitioner had produced ledger accounts, the AO did not have any material to substantiate that deposits aggregating Rs. 66,44,134/- were made in the petitioner s bank account to contradict the same. The fundamental basis on which the petitioner s assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner responded to the said notice by objecting to its issuance without following the procedure as prescribed under Section 148A of the Act. Thereafter, the petitioner filed a writ petition [being W.P.(C) 518/2022] in this court challenging the issuance of the notice under Section 148 of the Act without following the procedure as prescribed under Section 148A of the Act. This court, following its earlier decision in Mon Mohan Kohli v. Assistant Commissioner of Income Tax and Ors. (2012) 441 ITR 207 , allowed the petition and set aside the said notice. 6. However, in view of the subsequent decision of the Supreme Court in Union of India Ors. v. Ashish Agarwal (2022) 444 ITR 1, the proceedings were revived. 7. The AO issued a fresh notice dated 25.05.2022 under Section 148A(b) of the Act calling upon the petitioner to respond to the information as available with the AO, which is suggestive of the petitioner s income escaping assessment. According to the AO, the petitioner was a party to the accommodation entries of a value of Rs. 66,44,134/-, from companies related to one Sh. Joginder Pal Gupta. 8. The petitioner responded to the said notice by a letter dated 30.05.2022 request ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout application of mind. The learned counsel for the petitioner contended that the documents furnished indicate that the AO had prepared a draft order holding that it was not a fit case for issuance of notice under Section 148 of the Act. However, the Principal Chief Commissioner had noted that it was a fit case for issuance of notice and accordingly, the impugned order was passed. 14. Lastly, it is submitted that the impugned notice has been issued beyond the stipulated period of three years under Section 149 (1) (a) of the Act. 15. The learned counsel appearing for the Revenue countered the aforesaid submissions. He submitted that the Revenue had information which was suggestive of the petitioner s income escaping assessment and it was not necessary to determine the correctness of the said information at the stage of passing an order under Section 148A (d) of the Act. He submitted that so long as there was some information suggesting that the petitioner s income had escaped assessment, the order for re-opening the assessment could not be faulted. REASONS AND CONCLUSION 16. The principal question to be addressed is whether the decision that it is a fit case for issuance of noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh was received in the first place. The cash also acquired form of share capital and securities premium in JP related companies after layering of the same through few other entities. M/s Sonali Realtech Pvt. Ltd. (Sonansh Creations Pvt. Ltd.) is one of the beneficiaries. As per information, information value involved in the case of M/s Sonali Realtech Pvt. Ltd. (Sonansh Creations Pvt. Ltd.) with Nimisha Marketing Services Pvt. Ltd., Anupam Buildmart Pvt. Ltd. and GMZ Commodities Pvt. Ltd. during F.Y. 2014-15 is Rs.66,44,134/-. 17. It is apparent from the above that the reassessment proceedings were proposed to be initiated on the basis that the petitioner was one of the beneficiaries of entries from three entities Nimisha Marketing Services Pvt. Ltd., Anupam Buildmart Pvt. Ltd., and GMZ Commodities Pvt. Ltd. during the financial year (FY) 2014-15. The value of the transactions with the said companies was quantified at Rs. 66,44,134/-. 18. On receipt of the said notice, the petitioner had sought further information and material on the basis of which it was suggested that the petitioner s income being the amount reflected by the aforesaid entries relating to the aforesaid entities, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act could be issued in respect of the AY 2015-16 on the said basis. In terms of clause (a) of Section 149 (1) of the Act, no notice under Section 148 of the Act can be issued if three years have elapsed from the end of the relevant assessment year unless the case falls under clause (b) of Section 149 (1) of the Act. Clause (b) of Section 149 (1) of the Act would be applicable only in cases where the income chargeable to tax which has escaped assessment, amounts to or is likely to amount to Rs. 50,00,000/- or more. Thus, the first and foremost question to be addressed is whether on the basis of material available on record, the AO could have concluded that the income chargeable to tax amounting to Rs. 50,00,000/- or more which had escaped assessment. 20. As noted above, the petitioner had provided ledger accounts of the three entities in question namely Nimisha Marketing Services Pvt. Ltd., Anupam Buildmart Pvt. Ltd. and GMZ Commodities Pvt. Ltd. Thus, unless the AO had any credible material that would controvert the same, issuance of notice under Section 148 of the Act for the AY 2015-16 would not be permissible. 21. In addition, it is also relevant to note that the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome for AY 2017-18 were now required to be initiated and continued in the name of the petitioner as a successor-in-interest and in terms of the scheme of amalgamation. Thus, the AO had rightly, based on the material on record, taken a decision to issue notice under Section 148 of the Act in the name of the petitioner. It is also material to note that the petitioner had responded to the information available with the AO on merits. Thus, this is not a case where the petitioner did not have the opportunity to address the information available with the AO. 19. The principal question to be addressed is whether the assumption of jurisdiction by the AO to initiate reassessment proceedings by issuance of impugned notice under Section 148 of the Act can be sustained on the basis of the record as available. 20. It is relevant to construe the import of Section 148A of the Act. Section 148A of the Act is set out below: 148A. Conducting inquiry, providing opportunity before issue of notice under section 148. - The Assessing Officer shall, before issuing any notice under section 148, (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notified under section 135A pertaining to income chargeable to tax escaping assessment for any assessment year in the case of the assessee. Explanation . For the purposes of this section, specified authority means the specified authority referred to in section 151. 21. It is apparent from the scheme of Section 148A of the Act that it prescribes a procedure for enabling the AO to take an informed decision whether to issue a notice under Section 148 of the Act for assessing/reassessing an assessee s income under Section 147 of the Act. At the first stage [Refer to clause (a) of Section 148A of the Act] , the AO is required to conduct an enquiry with respect to information that suggests income of the assessee chargeable to tax has escaped assessment. By its very nature, the said enquiry is a preliminary enquiry and it is not necessary that the said enquiry yields any conclusive result as to whether the assessee s income has escaped assessment. The limited threshold of the enquiry is to ascertain whether there is any information suggestive of the income escaping assessment. Once the AO has information, which suggests that an assessee s income has escaped assessment, it is necessary f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the transactions as reported in insight portal needed further examination, thus, it would be a fit case for issuance of notice under Section 148 of the Act. As observed earlier, this view is unsustainable. The AO is required to form an opinion as to whether there is any credible information to substantiate that the petitioner s assertion that the aggregate value of the transactions in question is less than Rs. 50,00,000/-, is incorrect. Clearly, at the stage of passing an order under Section 148A (d) of the Act, the AO was not required to form any conclusive view as to whether the entries in question represented income that had escaped assessment. The question whether the said entities are accommodation entries may be a contentious issue. However, the fundamental facts that the petitioner had transactions with the named companies of an aggregate value of Rs. 66,44,134/- was required to be determined on the basis of the record. Whilst, the petitioner had produced ledger accounts, the AO did not have any material to substantiate that deposits aggregating Rs. 66,44,134/- were made in the petitioner s bank account to contradict the same. The fundamental basis on which the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X
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