TaxTMI 
TaxTMI 
2022 (12) TMI 1460
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....consideration. 2. The assessing officer stated in the impugned notice that he had reasons to believe that the income chargeable to tax for the assessment year 2012-13 has escaped assessment within the meaning of Section 147 of the Income Tax Act, therefore, propose to re-open the assessment. 3. Noticing the facts, the assessee was a Company known as Arihant Tradecom Pvt. Ltd, which came to be amalgamated with the petitioner Company named as AIM Fincon Pvt. Ltd. with effect from 01.04.2013, that is, from assessment year 2014-15. Prior to the amalgamation, the assessee Arihant Tradecom Pvt. Ltd. was an independent entity and was assessed by the competent income tax officer. 3.1 The said assessee company had been holding 10,000 shares of one Highlight Agencies Pvt. Ltd. worth Rs. 50,00,000/-. It also held 8,000 shares of Imperial Barter Pvt. Ltd. having value of Rs. 40,00,000/- at the beginning of the financial year 2011-12, relevant to the assessment year 2012-13, which was the year under consideration. 3.2 The assessee Arihant Tradecom sold the shares during the year under consideration which included 5,000 shares of Highlight Agencies Pvt. Ltd. for an aggregate consider....
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....ing officer addressed to the petitioner Company by communication dated may be extracted, 2. Information was received from Dy. Commissioner of Income Tax, Central Circle - 3(1), Kolkata. The information included ledger account of Arihant Tradecom Pvt. Ltd. in the books of Subhdristi Complex Pvt. Ltd and other details. As per the information, a search and seizure operation u/s 132 of the Income-tax Act, 1961 was conducted at the business and residential premises of Sri Pavan Agarwal and his group companies at Kolkata on 13.09.2012, Sri Praveen Agarwal is one of the know entry operators of Kolkata. In his statement recorded on oath in course of search, Sri Praveen Agarwal accepted that he had registered a large number of paper companies with bogus share capital/premium, which have subsequently been sold for a commission. In his statement recorded in course of search, Sri Agarwal had also accepted that he had given entries of bogus expenses like commission, contractual expenses, professional charges etc. The sources of share capital/ share premium of sold companies were unexplained and shareholders had changed after the sale. 3.6.2 The assessing officer further sta....
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....m 01.04.2013, that the case of ATPL was selected for scrutiny and details including investments made by the assessee company in equity shares were also considered in the course of regular assessment. It was further stated that certain additions in respect of section 14A were made in assessment under section 143(3) of the Act, which was appealed before the Commissioner of Income Tax (Appeals)-III Kolkata and assessee was granted relief in that proceedings. It was stated that the issue of addition of expenses related to dividend income and investments was already examined. 3.7.1 It was further contended that inferences drawn from the statement of said Praveen Agarwal was only to serve the modus operandi of the said person doing billing by providing accommodation entry and nowhere in the statement of the said Praveen Agarwal, it was reflected that the transactions were entered into by him with the assessee company nor there was anything to suggest that such transactions were facilitated between ATPL or its group entities. It was contended that the ledger account of ATPL duly reflected transactions and there was no evasion of tax. It was contended that the conclusion was wrongly dra....
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....recorded, namely Mr.Praveen Agarwal. It was submitted that he was an entry provider. According to the learned senior counsel for the revenue, there was prima facie case for proceeding under sections 147 and 148 of the Act. He submitted that reopening was resorted to upon receipt of letter dated 11.03.2019 from the Deputy Commissioner of Income Tax, Kolkata for the assessment years 2012-13. 4.2.1 It was further submitted on behalf of the department that as per the provisions of the Act, if the income that skipped assessment was Rs.1 lakh or more, it may be permissible to issue notice under section 148 within 6 years from the end of the relevant assessment year. It was submitted that on such criteria, the impugned notice could not be said to be barred by limitation as it was issued within 6 years. 4.2.2 He submitted that there was failure on the part of the assessee to fully and truly disclose the material facts. For the above proposition, the decision of Aspas Multimedia Limited Vs. Deputy Commissioner of Income Tax, Circle [2018(405) ITR 512 (Guj)]. By relying on decision of the Supreme Court in Commissioner of Income Tax vs. Rajesh Jhaveri Stock Brokers (P) Ltd. [(2007) 161 ....
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.....6 It was therefore submitted to persuade the Court that the merger doctrine was made applicable as the order of the Commissioner in appeal did not touch the merits of the additions made and when the reopening was based on the belief of the assessing officer that the sale proceeds should be taxed as business income and not capital gains, it could not be said that the said subject matter was part of the order of the Commissioner (Appeals). 5. Having considered the facts, the contents in the reopening proceeding, the objections raised by the assessee and having appreciated the rival submissions, there is no gainsaying that the action of reopening was rested upon and was sought to be justified on the ground of statement of one Praveen Agarwal recorded under section 132 of the Acton 22.12.2012. It was the solitary ground for reopening the assessment of the petitioner. Now it could not be denied that the said fact was very much available with the department while framing the assessment under section 143(3) of the Act, which was done by order dated 23.03.2015. It could not be said that any new tangible material was found by the department subsequent to the framing of assessment under ....
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....ground for the Assessing Officer to reopen the concluded assessment. In Commissioner of Income Tax vs. Kelvinator of India Ltd. [(2010) 320 ITR 561 O(SC)], the supreme court observed that concept of change of opinion was an inbuilt test and it did not stand obliterated after substitution of section 147 in the Act by the Direct Tax Laws (Amendment) Act, 1987 and 1989. The Apex Court stated, "... prior to Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act with effect from 1st April, 1989, they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re-open the assessment. Therefore, post-1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opi....