TaxTMI 
TaxTMI 
2022 (4) TMI 628
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.... Assessment Centre, rejecting the objections filed by the petitioner in response to the aforesaid notice. 3. The petitioner's case is that, it had filed its return for the Assessment Year 2013-14 on 05-08-2013 declaring a total income of Rs. 3,65,440/-, which was processed on 19-05-2014 under Section 143 (1) of the Act. The case was selected for scrutiny and notices under Section 143 (2) and Section 142 (1) were issued alongwith a questionnaire asking for certain details. The questionnaire inter alia demanded production of all the share capital details of the petitioner's share-holders alongwith PAN and mode of payment for obtaining shares in his name or in the name of family members, and also the details of share premium receipts. The petitioner submitted a reply giving statement of income and complete address of sundry creditors alongwith the details of all investor companies to whom shares were allotted. The petitioner stated that shares were allotted at a premium to some companies. There is no bar in the Companies Act against issuance of shares at a high premium, and there was no such bar in the Income Tax Act. 4. The petitioner submitted that if the shares were issued at fai....
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....hares were transferred in the names of the Directors and Institutions related to the Directors of the petitioner company in F.Y. 2015-16, as per details tabulated below: - Date of Allotment Company name Shares issued Transferred on Transferred to 1 30-03-2013 Truthful Dervcon Pvt. Ltd. 12,500 18-08-2014 Rahul Dalmia Beneficiary Trust 2 30-03-2013 Welkin Investments Pvt. Ltd. 12,500 18-08-2014 Rahul Dalmia Beneficiary Trust 3 30-03-2013 Punam Chand Modi Paints Pvt. Ltd. 7,500 18-08-2014 Rahul Dalmia Beneficiary Trust 4 30-03-2013 Gyan Darshan Comodeal Pvt. Ltd. 2,500 01-12-2014 Rahul Dalmia Beneficiary Trust 5 30-03-2013 Radha Fincom Ltd, 12,500 01-12-2014 Rahul Dalmia Beneficiary Trust Total 47,500 9. From the detailed discussion made in the assessment order of the petitioner for the A.Y. 2012-13, it was established that the companies listed at sl. nos. 3 to 5 are shell companies used solely for providing accommodation entries and during the A.Y.2013-14, the petitioner had routed its undisclosed funds amounting to Rs. 95,00,000/- through entry providers and absorbed it in its ....
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....4, it was found that the petitioner had received funds to the tune of Rs. 95,00,000/- as given in the chart below, by way of routing of funds materialized by M/s Radha Fincom Pvt. Ltd. and others: - S l Name of share holder Address Shares issued Amount received 1 Truthful Dervcon Pvt. Ltd. 7, Ganesh Chandra Avenue 12,500 25,00,000/- 2 Welkin Investments Pvt. Ltd. P-38, Princep Street, 1st Floor, Room No. 1, Kolkata 12,500 25,00,000/- 3 Punam Chand Modi Paints Pvt. Ltd. 71, Canning Street, Kolkata - 700001 7,500 15,00,000/- 4 Gyan Darshan Comodeal Pvt. Ltd. 133, Canning Street, Kolkata, 700001 2,500 5,00,000/- 5 Radha Fincom Ltd, 133, Canning Street, Kolkata, 700001 12,500 25,00,000/- Total 47,500 95,00,000/- 13. It was also stated in the order rejecting objections that during A.Y. 2013-14 the petitioner had received Rs. 25,00,000/- from M/s Radha Fincom Pvt. Ltd. as share capital and share premium. It was reported from the end of the ADIT (Inv.) Unit-6, Kolata that M/s Radha Fincom has generated funds mainly from Ankush Sales Pvt. Ltd., the core company, which was the main distributor of funds after receivi....
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....petitioner had fully and truly disclosed the entire material during the assessment proceedings and there is no fresh material for initiation of the proceedings. Drawing attention of the Court to the averments made in paragraph 5 of the order disposing off the petitioner's objection, wherein it is stated that the A.O. has not mentioned anything about the verification on the issue of introduction of new share capital and share premium, he has submitted that the A.O. committed an error, for which the petitioner is being penalized by making the re-assessment. The initiation of the proceedings under Sections 147 / 148 of the Act is based on a review of the existing material, which is not permissible in law. The proceedings initiated after a lapse of more than four years are barred by the First Proviso appended to Section 147 of the Act. The provisions of Sections 147 / 148 of the Act cannot be invoked for making a roving or fishing inquiry on a vague or a remote information pertaining to the earlier year in absence of any specific averment that the income has escaped assessment. 18. Per contra, Sri. Manish Mishra, the learned Counsel for the Income Tax department, has submitted that th....
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....nd in-depth analysis of the information in possession of the office, it was established that the petitioner had routed its own money in the garb of shares application money and share premium through a number of shell companies operating from Kolkata. 20. The reasons supplied further state that from the detailed discussion made by in the assessment order of the petitioner for the A.Y. 2012-13, it was established that the companies listed at sl. nos. 3 to 5 in the chart given in para 8 above, are shell companies used solely for providing accommodation entries and during the A.Y.2013- 14, the petitioner had routed its undisclosed funds amounting to Rs. 95,00,000/- through entry providers and absorbed it in its books of accounts. It is amply evident that the transactions shown by the petitioner as given in the chart given in para 8 are not genuine transactions and accommodation entries of pre-arranged share application money and share premium aggregating to Rs. 95,00,000/- was obtained by the petitioner with the help of a syndicate of operators by way of loopholes of the system in A.Y. 2013-14. In this way, the unaccounted money of the petitioner amounting to Rs. 95,00,000/- was route....
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....nal assessment and therefore income chargeable to tax had escaped assessment." (Emphasis supplied) 22. In Srikrishna (P) Ltd. v. ITO, (1996) 9 SCC 534, the Hon'ble Supreme Court held that: - "Now, what needs to be emphasised is that the obligation on the assessee to disclose the material facts - or what are called, primary facts - is not a mere disclosure but a disclosure which is full and true. A false disclosure is not a true disclosure. The disclosure must not only be true but must be full - "fully and truly". A false assertion, or statement, of material fact, therefore, attracts the jurisdiction of the Income Tax Officer under Sections 34/147. Take this very case: the Income Tax Officer says that on the basis of investigations and enquiries made during the assessment proceedings relating to the subsequent assessment year, he has come into possession of material, on the basis of which, he has reasons to believe that the assessee had put forward certain bogus and false unsecured hundi loans said to have been taken by him from non-existent persons or his dummies, as the case may be, and that on that account income chargeable to tax has escaped assessment. According to him, thi....
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....with it. The decision rightly emphasises the obligation of the assessee to disclose all material facts necessary for making his assessment fully and truly. A false disclosure, it is held, does not satisfy the said requirement. We are also in respectful agreement with the following holding in the said decision" (Emphasis supplied) 23. From the reasons for initiating the process of re-assessment, we find that the aforesaid facts regarding the petitioner's dealings with shell companies for routing its own unaccounted money into its books of accounts had not been truly and fully disclosed by the petitioner during the original assessment and scrutiny assessment, though the information was embedded in the records produced before the A.O. and could be found out on a detailed scrutiny and investigation. On the basis of information received subsequently, the A.O. has formulated a reason to believe that the petitioner's income amounting to Rs. 95,00,000/- has escaped assessment and this reason cannot be said to have been formulated on the basis of information already available before the A.O. Therefore, the submission to this effect made by the learned Counsel for the petitioner cannot be ....
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.... power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. 7. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the assessing officer. Hence, after 1-4- 1989, assessing officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief." 18. Before interfering with the proposed reopening of the assessment on the ground that the same is based only on a change in opinion, the court ought to verify whether the assessment earlier made has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable. If the assessment order is non-speaking, cryptic or perfunctory in nature, it may be difficult to attribute to the assessing officer any opinion on the questions that are raised in the proposed reassessment proceedings....
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....to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of Section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: ............ Explanation 1.-Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not ....