Court upholds notice under Income Tax Act Section 148 for reassessment, cites dubious transactions with Pranetta Industries.

The Court upheld the notice issued under Section 148 of the Income Tax Act, finding the reopening of the assessment justified due to dubious transactions with M/s Pranetta Industries Ltd. The Assessing Officer was directed to provide the petitioner with all relevant material and reconsider objections raised before proceeding with reassessment.

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Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Justification for reopening the assessment under Section 147 of the Act.
3. Adequacy of the material provided to the petitioner for raising objections.

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 29.03.2019 issued under Section 148 of the Income Tax Act, 1961, alleging escapement of income chargeable to tax for the assessment year 2012-13. The petitioner argued that the notice was not served to M/s Adhar Venture India Ltd. (formerly M/s Pranetta Industries Ltd.) at the correct address. The Court found that the notice under Section 133(6) of the Act was indeed sent to an incorrect address. However, the non-receipt of a response to this notice was not the sole reason for reopening the assessment. The primary reason was the information received from DCIT, Central Circle-2(2), Mumbai, indicating that M/s Pranetta Industries Ltd. was engaged in providing accommodation entries.

2. Justification for reopening the assessment under Section 147 of the Act:
The Court examined the reasons recorded by the Assessing Officer for reopening the assessment, which included the involvement of M/s Pranetta Industries Ltd. in providing bogus accommodation entries. The investigation report from DCIT, Central Circle-2(2), Mumbai, based on a search conducted under Section 132 of the Act, revealed that M/s Pranetta Industries Ltd. made investments in the petitioner company, which were part of accommodation entries. The Court referred to the Supreme Court's decision in Principal Commissioner of Income Tax (Central)- I v. NRA Iron & Steel Pvt. Ltd., which emphasized the onus on the assessee to prove the genuineness of transactions, identity, and creditworthiness of investors. The Court found that the Assessing Officer had reasonable grounds to believe that the petitioner’s income had escaped assessment due to dubious transactions with M/s Pranetta Industries Ltd.

3. Adequacy of the material provided to the petitioner for raising objections:
The petitioner contended that they were not provided with the material on which the reasons for reopening were based, thereby curtailing their right to raise objections. The Court noted that the right to raise objections and receive an order thereon is conferred by the Supreme Court in M/s GKN Driveshafts (India) Ltd Vs ITO. The Court set aside the order dated 30.08.2019 disposing of the petitioner’s objections and allowed the petitioner to raise objections in light of the documents provided by the respondent in Court. The Assessing Officer was directed to decide the objections within two weeks, and reassessment proceedings were to be stayed during this period.

Conclusion:
The Court upheld the notice dated 29.03.2019 under Section 148 of the Act, finding the reopening of the assessment justified based on the information received about the dubious nature of transactions with M/s Pranetta Industries Ltd. However, it directed the Assessing Officer to provide the petitioner with all relevant material and reconsider the objections raised by the petitioner before proceeding with the reassessment.

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