IN THE HIGH COURT OF JUDICATURE AT BOMBAY
\nO.O.C.J.
\nWRIT PETITION NO. 3656 OF 2018
\nKalsha Builders Pvt Ltd .. Petitioner
\nVersus
\nAsst. Commissioner of Income Tax & Ors. .. Respondents
\n……………….
\n\uf0b7 Mr. Jitendra Jain a\/w Mr. Vagish Mishra, Mr. Samir Singh & Mr.
\nSiddesh Rajput i\/by Law Counsellors for the Petitioner
\n\uf0b7 Mr. Suresh Kumar for Respondent Nos. 1 and 2
\n……………….
\nCORAM : AKIL KURESHI &
\nS.C. GUPTE, JJ.
\nDATE : FEBRUARY 8, 2019.
\nP.C.:
\n1. Petitioner has challenged a notice of reopening of
\nassessment dated 28th\/29th March, 2 seeking to reopen the
\npetitioner’s assessment for the assessment year 2011-12.
\n2. Brief facts are as under:
\n2.1 Petitioner is a company registered under the
\nCompanies Act and engaged in the business of developing
\nreal estate. For the assessment year 2011-12, the petitioner
\nhad filed return of income which was taken in scrutiny by the
\nAssessing Officer. The Assessing Officer passed order under
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\nSection 143(3) of the Income Tax Act, 1961 (“the Act” for
\nshort) on 29.1.2014. To reopen such assessment, the
\nAssessing Officer issued the impugned notice. In order to do
\nso, he had recorded following reasons:
\n“Reasons for reopening of the assessment in case of M\/s.
\nKalsha Builders Pvt. Ltd. for A.Y. 2011-12 u\/s 147 of the Act.
\nIn this case the Assessee filled return of Income on 27.09.2011
\ndeclaring total income of Rs. 10,05,830\/-\/- The said return was
\nprocessed u\/s 143(1) on 7.1.2012 determining Total Income of
\nRs.10,05,830\/- and Order Passed u\/S 143(3) on 20.01.2014
\ndetermining Total Income of Rs. 3,14,72,770\/-.
\n2. A search action u\/S. 132 of the Income Tax Act, 1961 was carried
\nout at the residence and various premises of Shri. Shirish C. Shah
\nwho happened to be main person engaged in providing bogus
\naccommodation entries like LICG, Share capital with huge share
\npremium, turnover, Loan etc;
\n3. On verification of the impounded material, it is seen that M\/s.
\nPrabhav Industries Ltd., en entity controlled by Shirish C. Shah, has
\nmade investment of Rs. 3,00,00,000\/- to the above mentioned
\nassessee.
\n4. In order to overcome borrowed satisfaction notice u\/S. 133(6)
\nwas issued to M\/s. Prabhav Industries Ltd requiring it to provide
\nvarious details. However, till date no reply has been received.
\n5. Thus, as M\/s. Prabhav Industries Ltd., is engaged in providing
\naccommodation entries, investment made in the above said
\nassessee is nothing but unexplained cash credit.
\n6. In view of the above facts, I have reason to believe that
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\nincome chargeable to tax amounting to Rs. 3,00,00,000\/- has
\nescaped assessment for A.Y. 2011-12 in view of the provisions of
\nSection 147 of the Income Tax Act.”
\n2.2 Upon being supplied the reasons, the petitioner raised
\nobjections to the notice of reopening of assessment under
\nletter dated 16.5.2018. Such objections were rejected by the
\nAssessing Officer by an order dated 14.9.2018, hence, this
\npetition.
\n3. Taking us through the reasons recorded by the
\nAssessing Officer, learned counsel for the petitioner raised
\nfollowing contentions:-
\ni. The reasons do not demonstrate any live link
\nbetween the material available with the Assessing
\nOfficer and his formation of belief that the income
\nchargeable to tax had escaped assessment;
\nii. The entire issue on which reopening of assessment
\nis sought, was minutely examined by the
\nAssessing Officer during the scrutiny assessment.
\nThe impugned notice, is thus, based on change of
\nopinion;
\niii. There was no failure on the part of the assessee to
\ndisclose truly and fully all material facts. The
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\nreasons also do not suggest any such failure.
\n4. On the other hand, learned counsel Mr. Suresh Kumar
\nfor the Department submitted that the Assessing Officer had
\nrecorded proper reasons for issuing such notice. After the
\nassessment was completed, the Assessing Officer received
\ninformation prima facie suggesting that the petitioner had
\nnot made true disclosures. He had also issued inquiry notice
\nunder Section 133(6) of the Act to the concerned parties. On
\nthe basis of such materials, he formed an independent belief
\nthat the income chargeable to tax had escaped assessment.
\nIt is a writ large on the face of the reasons that there was
\nfailure on the part of the assessee to disclose truly and fully
\nall material facts. Merely because the Assessing Officer in
\nthe reasons has not repeated such words, would not be fatal
\nto the notice.
\n5. Having heard the learned counsel for the parties and
\nhaving perused the material on record, we find that in the
\nreasons, the Assessing Officer has referred to a search action
\nunder Section 132 of the Act carried out at the residence and
\nvarious premises of one Shirish C. Shah who was found to be
\nengaged in providing bogus accommodation entries such as
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\ncapital gain, share capital with huge share premium etc.
\nSuch material showed that one M\/s. Prabhav Industries who
\nwas an entity controlled by Shirish C. Shah had made
\ninvestment of Rs. 3 crore in the assessee company. The
\nAssessing Officer also recorded in such reasons that he had
\nissued notice under Section 133(6) of the Act to said Prabhav
\nIndustries asking for various details. Such notice remained
\nunreplied. On such basis, the Assessing Officer formed a
\nbelief that M\/s. Prabhav Industries was engaged in providing
\naccommodation entires and that the investment made by the
\nsaid Prabahv Industries in the assessee was in the nature of
\nassessee’s unexplained cash credit.
\n6. It is true that during the scrutiny assessment, this issue
\nhad come up for consideration before the Assessing Officer.
\nHe had raised multiple queries under a letter dated
\n17.7.2013 asking inter alia for furnishing details of
\nassessee’s share capital, increase in the assessee’s share
\ncapital and share premium account. The assessee had
\nreplied to such queries. After which further queries came to
\nbe raised by the Assessing Officer on 20.8.2013 in which
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\nthere was specific mention of the details of a sum of Rs. 3
\ncrore having been paid by M\/s. Prabahv Industries for
\npurchase of 1500 shares. The assessee was asked to provide
\nthe identity of such investor, its creditworthiness and
\ngenuineness of the transaction. The assessee having replied
\nto such queries raised in the order of assessment, the
\nassessee made no additions.
\n7. It is because of this, the assessee contended that the
\nAssessing Officer is precluded from raising same question all
\nover again by way of reassessment. The impugned notice
\nhaving been issued beyond the period of four years from the
\nend of relevant assessment year, the question of true and
\nfull disclosure by the assessee would also be an additional
\nfactor. However, when the Revenue suggests that the
\nassessee had indulged in the bogus accommodation entries
\nand therefore, said amount of Rs. 3 crore was nothing but
\nthe assessee’s unexplained cash credit, the issue of change
\nof opinion and true and full disclosure would merge almost to
\nthe extent of overlapping. In other words, if the Revenue can
\nprima facie show on the basis of additional material available
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\nwith the Assessing Officer after completing the scrutiny
\nassessment that the assessee had made a bogus claim,
\nmerely because the issue was examined by the Assessing
\nOfficer, would not preclude him from reopening the
\nassessment. Reference in this context can be made to the
\ndecision of the Supreme Court in the case of M\/s. Phool
\nChand Bajrang Lal & Anr. Vs. I.T.O.1. It is a case in which
\nduring the original scrutiny assessment, the question of
\ntransaction of loan given by the assessee was examined.
\nLater on, however, the Assessing Officer received information
\nsuggesting that the entire transaction was bogus. When the
\nquestion of validity of reopening of assessment came up for
\nconsideration before the Supreme Court, it was observed as
\nunder:-
\n“25. From a combined review of the judgments of this Court, it
\nfollows that an Income-tax Officer acquires jurisdiction to reopen
\nassessment under Section 147(a) read with Section 148 of the Income
\nTax Act, 1961 only if on the basis of specific, reliable and relevant
\ninformation coming to his possession subsequently, he has reasons
\nwhich he must record, to believe that by reason of omission or failure
\non the part of the assessee to make a true and full disclosure of all
\nmaterial facts necessary for his assessment during the concluded
\nassessment proceedings, any part of his income, profit or gains
\nchargeable to income tax has escaped assessment. He may start
\n1 (1993) 4 SCC 77
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\nreassessment proceedings either because some fresh facts come to
\nlight which where not previously disclosed or some information with
\nregard to the facts previously disclosed comes into his possession
\nwhich tends to expose the untruthfulness of those facts. In such
\nsituations, it is not a case of mere change of opinion or the drawing
\nof a different inference from the same facts as were earlier available
\nbut acting on fresh information. Since, the belief is that of the
\nIncome-tax Officer, the sufficiency of reasons for forming the belief,
\nis not for the Court to judge but it is open to an assessee to establish
\nthat there in fact existed no belief or that the belief was not at all a
\nbona fide one or was based on vague, irrelevant and non-specific
\ninformation. To that limited extent, the Court may look into the
\nconclusion arrived at by the Income Tax Officer and examine whether
\nthere was any material available on the record from which the
\nrequisite belief could be formed by the Income Tax Officer and further
\nwhether that material had any rational connection or a live link for the
\nformation of the requisite belief. It would be immaterial whether the
\nIncome-tax Officer at the time of making the original assessment
\ncould or, could not have found by further enquiry or investigation,
\nwhether the transaction was genuine or not, if one the basis of
\nsubsequent information, the Income-tax Officer arrives at a
\nconclusion, after satisfying the twin conditions prescribed in Section
\n147(a) of the Act, that the assessee had not made a full and true
\ndisclosure of the material facts at the time of original assessment and
\ntherefore income chargeable to tax had escaped assessment. The
\nHigh Courts which have interpreted Burlop Dealer’s case (Supra) as
\nlaying down law to the contrary fell in error and did not appreciate the
\nimport of that judgment correctly.
\n26. We are not persuaded to accept the argument of Mr. Sharma
\nthat the question regarding truthfulness or falsehood of the
\ntransactions reflected in the return can only be examined during the
\noriginal assessment proceedings and not at any stage subsequent
\nthereto. The argument is too broad and general in nature and does
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\nviolence to the plain phraseology of Sections 147(a) and 148 of the Act
\nand is against the settled law by this Court. We have to look to the
\npurpose and intent of the provisions. One of the purposes of Section
\n147, appears to us to be, to ensure that a party cannot get away by
\nwilfully making a false or untrue statement at the time of original
\nassessment and when that falsity comes to notice, to turn around
\nand say “you accepted my lie, now your hands are tied and you can
\ndo nothing”. It would be travesty of justice to allow the assessee that
\nlatitude.
\n27. In our opinion, therefore, in the facts of the present case the
\nIncome-tax Officer Azamgarh rightly initiated the reassessment
\nproceedings on the basis of subsequent information, which was
\nspecific, relevant and reliable, and after recording the reasons for
\nformation of his own belief that in the original assessment
\nproceedings, the assessee had not disclosed the material facts truly
\nand fully and therefore income chargeable to tax had escaped
\nassessment. He, therefore, correctly invoked the provisions of
\nSections 147(a) and 148 of the Act. The High Court was, thus, perfectly
\njustified in dismissing the writ petition. There is no merit in this appeal
\nwhich fails and is dismissed but with no order as to costs”
\n8. In this background, we may take stock of the reasons
\nrecorded by the Assessing Officer. After the assessment was
\ncompleted, the Assessing Officer was supplied information
\ncollected through search action at the residence and other
\npremises of Shirish C. Shah who was found to be the main
\nperson engaged in providing bogus accommodation entires.
\nThe material impounded during the search suggested that
\nPrabhav Industries was entirely controlled by Shirish C. Shah
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\nwhich had made investment of Rs. 3 crore in assessee
\ncompany. The notice issued by the Assessing Officer to
\nPrabhav Industries under Section 133(6) remained
\nunanswered. It was on the basis of such material, the
\nAssessing Officer formed a belief that the said sum of Rs. 3
\ncrore was nothing but the re-rooting of assessee’s
\nunexplained cash.
\n9. In facts of the present case, we do not find merits in
\nany of the contentions of the petitioner. Firstly, as noted,
\nmerely because the Assessing Officer had examined the
\ntransactions during the original assessment proceedings,
\nwould not preclude him from subsequent inquiry it is shown
\non the strength of additional material establishing prime
\nfacie that the disclosures made by the assessee were not
\ntrue. If the entire claim is bogus and so established to be,
\nthe assessee would fail the test of true and full disclosure.
\nRequirement of true and full disclosure runs through the
\nentire assessment and it does not end on filing of return.
\nThe search action against Shirish C, Shah provided certain
\ninformation which was also processed by the Assessing
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\nOfficer before forming the belief that income chargeable to
\ntax had escaped assessment.
\n10. Secondly, the entire reasons when read as a whole,
\nmore than sufficiently demonstrate the belief of the
\nAssessing Officer that the entire assessment goes on bogus
\nclaim of share application money having been received by
\nthe assessee company. Therefore, lack of true disclosures is
\nwrit large on the face of the reasons. Mere non recitation of
\nsuch expression would not invalidate the reasons or the fact
\nthat the reasons are based on allegations of lack of true and
\nfull particulars.
\n11. Learned counsel for the petitioner submitted that the
\nAssessing Officer had issued notice to Prabhav Industries
\nunder Section 133(6) of the Act which was replied and had
\nnot remained unreplied as suggested in the reasons. Firstly,
\nthis aspect has emerged in the rejoinder. Secondly, at this
\nstage, in a writ jurisdiction, we would not entertain such
\ndisputed question since it is well settled that sufficiency of
\nthe reasons at the end of the Assessing Officer to form a
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\nbelief that the income chargeable to tax had escaped
\nassessment would not be within the purview of examination
\nof writ court at this stage.
\n12. For the above reasons, the petition is dismissed.
\nInterim relief stands vacated.
\n[ S.C. GUPTE, J. ] [ AKIL KURESHI, J ]<\/p>\n","protected":false},"excerpt":{"rendered":"
Merely because the Assessing Officer had examined the transactions during the original assessment proceedings, would not preclude him from subsequent inquiry it is shown on the strength of additional material establishing prime facie that the disclosures made by the assessee were not true. If the entire claim is bogus and so established to be, the assessee would fail the test of true and full disclosure. Requirement of true and full disclosure runs through the entire assessment and it does not end on filing of return<\/p>\n