TaxTMI 
TaxTMI 
2018 (2) TMI 1534
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....which, the order of assessment under section 143(3) of the Income Tax Act came to be passed on 1.1.2013 making no addition with respect to such share application money. 3. To reopen such assessment, the Assessing Officer issued impugned notice. In order to do so, he had recorded the following reasons : "The assessee has filed its return of income for FY. 200910 on 21/09/2010 declaring total income at Rs.. The assessment u/s 143[3] of the Act was completed on 15,14,993/and income as determined at Rs. 15,14,990/. In the case of the assessee, information have been received from the DDIT[Inv] Unit3( 1), Kolkata in reference to sharing of information of shell companies which have given accommodation entries for share premium in Surat based companies. Vide the referred communication, the DDIT[Inv] Unit3( 1), Kolkata has provided list of114 Kolkata based shell companies which have given accommodation entries in Surat based companies. It has also been stated by the DDIT[Inv] that master data of paper/shell companies maintained by th Kolkata Directorate which has been prepared/complied on the basis of statement of many entry operators/dummy directors recorded during various search ....
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....0000 600000 11400000 17 MSV FISCAL SERVICES PVT LTD2, DIGAMBER JAIN TEMPLE ROAD 1ST FLOOR KOLKATA700007 68500 685000 13015000 18. RADIANT MERCHANDISE PVT LTD 2, DIGAMBER JAIN TEMPLE ROAD, 1ST FLOOR, KOLKATA 700007 61000 610000 11590000 19. ROSEBERRY DISTRIBUTORS PVT LTD 2, DIGAMBER JAIN TEMPLE ROAD, 1ST FLOOR, KOLKATA 700007 48500 485000 9215000 20. SK STOCK DEALERS PVT LTD2, DIGAMBER JAIN TEMPLE ROAD, 1ST FLOOR, KOLKATA 700007 65500 655000 12445000 724500 9945000 137655000 0n verification of the materials available on record and facts and circumstances of the case, it is seen that the assessee has shown to have received share capital/share premium amounting to Rs. 14,76,00,000/( share capital Rs. 99,45,000 + share premium Rs. 13,76,55,000). Since, the investor companies have been proved to be shell companies indulged in providing accommodation entries, the share capital/share premium claimed to have been received, from such companies by the assessee company is not genuine. Therefore, this amount is nothing but assessee company's own money introduced in the grab of share capital/....
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....that such investments are bogus. The Assessing Officer has not demonstrated any material at his command to form a belief that the income chargeable to tax had escaped assessment. 4) Our attention was drawn to the newly inserted proviso to section 68 of the Income Tax Act, 1961, to contend that the case of the assessee would be governed by preamended section 68 of the Act and in any case, the assessee had during the original assessment complied with the requirements of the proviso newly inserted to the said provision. 5) The counsel contended that the Assessing Officer has merely relied on the report of the investigation wing without independent application of mind. He has thus acted on borrowed satisfaction that income chargeable to tax has escaped assessment. In this respect counsel relied on judgment of Division Bench of this Court in case of Harikishan Sunderlal Virmani v. Deputy Commissioner of Incometax reported in (2017) 394 ITR 146 (Guj). 6. On the other hand, learned counsel Shri Nikunt Raval for the department opposed the petition contending that after the assessment was framed, the department received information suggesting that the transactions of sh....
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.... judgment of the Division Bench of this Court in case of Yogendrakumar Gupta v. Incometax Officer reported in (2014) 366 ITR 186 (Guj) in which the Court permitted reopening to the department which was based on similar transaction of bogus share application money. Counsel pointed out that the judgment in case of Yogendrakumar Gupta(supra) was followed later in case of M/s. Aaspas Multimedia Limited v. Deputy Commissioner of Income tax, Circle1( 1) reported in (2017) 83 Taxmann.com 82 (Guj). 7. We have reproduced the reasons recorded by the Assessing Officer for reopening the assessment. In such reasons, he pointed out that the information was received from the investigation wing of the department at Calcutta regarding shell companies which had given accommodation entires for share premium to Surat based companies. A list of 114 Calcutta based companies was provided which had given accommodation entries to such Surat based companies. Statements of many entry operators and dummy Directors recorded during various search and seizure operation, survey operation and investigation were checked. The Assessing Officer thereupon proceeded to record that " On perusal of data so provided by....
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....ne but would continue all through out during the assessment proceedings also. In this context, the materials on record would suggest that the Assessing Officer had received fresh information after the assessment was over prima facie suggesting that sizeable amount of income chargeable to tax in case of the assessee had escaped assessment and that such escapement was on account of failure on part of the assessee to disclose truly and fully all material facts. The Assessing Officer formed such a belief on the basis of such materials placed before him and upon perusal of such material. This is not a case where the Assessing Officer was reexamining the materials and the documents already on record filed by the assessee along with the return or subsequently, brought on record during the assessment proceedings. It is a case where entirely new set of documents and materials was placed for his consideration compiled in the form of report received from the investigation wing. Such material was perused by the Assessing Officer and upon examination thereof, he formed a belief that the petitioner company had received share application and share premium money from as many as 20 different invest....
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....se of Yogendrakumar Gupta(supra), the Court rejected a petition challenging the notice of reopening which was issued beyond a period of four years from the end of relevant assessment year, in which also one of the grounds was that the issue was previously scrutinised during the assessment proceedings. The Court observed as under : "16. Ostensibly, thus, there was disclosure and the occasion would not arise to term this as the assessee not having disclosed fully and truly all the material facts necessary for assessment. However, in essence, if the unsecured loans obtained from Basant Marketing Pvt. Ltd. from the material supplied by them, the DCIT, Kolkata reveals that the same was as a result of accommodation entry in the form of loans and advances from Basant Marketing Pvt. Ltd. to the tune of Rs. 8.71 crore, the case of the assessee would surely be covered under the said provision of law as it would not amount to full and true disclosure on the part of the assessee. At this stage, the reasons recorded shall have to be regarded, which have been based on the information contained in the report of the DCIT, Kolkata, dated March 24, 2013, wherein it had been noticed....
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....ther material forming the part of investigation carried out against Dalmias also needs to meet with negation, as the law requires supply of information on which Assessing Officer recorded her satisfaction, without necessitating supply of any specific documents. The proceedings initiated under section 147 of the Act would not be rendered void on nonsupply of such document for which confidentiality is claimed at this stage, following the decision of the Delhi High Court in case of Acorus Unitech Wireless (P.) Ltd. (supra). Assumption of jurisdiction on the part of the Assessing Officer is since based on fresh information, specific and reliable and otherwise sustainable under the law, challenge to reassessment proceedings warrant no interference." 12. In case of Jayant Security and Finance Ltd. v. Assistant Commissioner of IncomeTax Circle1(1) [Special Civil Application No.18921/2017, order dated 12.2.2018], this Court observed as under : "8. The question of change of opinion and failure on the part of the assessee to disclose truly and fully all material facts, in the present case are closely connected. Undoubtedly, as noted earlier, the Assessing Officer during the origi....
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....ause or justification. If the Assessing Officer has cause or If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. What is required is reason to believe but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief is within the realm of subjective satisfaction of the Assessing Officer." 14. Section 68 of the Act, as is well known, provides that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may....
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....assessment. We have recorded that the Assessing Officer had perused the materials placed for his consideration and thereupon, upon examination of such materials formed a belief that income chargeable to tax had escaped assessment. In case of Principal Commissioner of Incometax, Rajkot3 v. Gokul Ceramics reported in (2016) 241 Taxman 1 (Gujarat), similar contention was raised by the counsel for the assessee contending that the Assessing Officer had acted mechanically on the investigation carried out by the Excise department and not formed his independent belief. Such a contention was rejected making the following observations : "9. It can thus be seen that the entire material collected by the DGCEI during the search, which included incriminating documents and other such relevant materials, was alongwith report and showcause notice placed at the disposal of the Assessing Officer. These materials prima facie suggested suppression of sale consideration of the tiles manufactured by the assessee to evade excise duty. On the basis of such material, the Assessing Officer also formed a belief that income chargeable to tax had also escaped assessment. When thus the Assessing officer....
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....ied." 11. In case of Income Tax Officer vs Purushottam Das Bangur (supra) after completion of assessment in case of the assessee, the Assessing Officer received letter from Directorate of Investigation giving detailed particulars collected from Bombay Stock Exchange which revealed earning of share and price of share increased during period in question and quotation appearing at Calcutta Stock Exchange was as a result of manipulated transaction. On the basis of such information, the Assessing Officer issued notice for reopening of the assessment. The question, therefore, arose whether the information contained in the letter of Directorate of Investigation could be said to be definite information and the Assessing Officer could act upon such information for taking action under Section 147(b) of the Act. In such background, the Supreme Court observed as under: "12. Ms. Gauri Rastogi, the learned counsel appearing for the respondents, has urged that the letter of Shri Bagai was received by the Income tax Officer on March 26, 1974 and on the very next day, that is, on March 27, 1974, he issued the impugned notice under Section 147(b) of the Act and that he did not have....
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....done by the respondent over and above the figure disclosed by it in its returns. Whether the facts stated in the letter are true or not is not the concern at this stage. It may be well be that the assessee may be able to establish that the facts stated in the said letter are not true but that conclusion can be arrived at only after making the necessary enquiry. At the stage of the issuance of the notice, the only question is whether there was relevant material, as stated above, on which a reasonable person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid. Inasmuch as, as a result of our order, the reassessment proceedings have not to go on we don not and we ought not to express any opinion on the merits." 13. In case of AGR Investment Ltd. vs. Additional Commissioner of Income Tax and anr (supra), a Division Bench of Delhi High Court considered the validity of reopening of assessment where the notice was based on information received from Directorate of investigation that the assessee was beneficiary of bogus accom....