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2024 Supreme(Del) 910
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, SWARANA KANTA SHARMA, JJ.
Pr. Commissioner Of Income Tax -7 - Appellant
Versus
Sunlight Tour And Travels Pvt. Ltd.- Respondent
ITA 222 of 2022
Decided on : 12-11-2024
For the Appellant :Mr Aseem Chawla, Sr. Standing Counsel with Ms Monica Benjamin, Ms Priya Sarkar and Ms Pratistha Chaudhary, Advocates.
For the Respondent:Ms Kavita Jha, Sr. Advocate with Mr Vaibhav Kulkarni and Mr Udit Naresh, Advocates.
IMPORTANT POINT
The Assessing Officer must assess income that escaped assessment based on the reasons for reopening; independent assessment of other income requires a fresh notice.
Headnote:
(A) Income Tax Act, 1961 - Section 147 - Reopening of assessment - The Assessing Officer must assess or reassess the income which has escaped assessment and also any other income chargeable to tax which comes to his notice subsequently during the proceedings. (Paras 14, 17, 20)
(B) Jurisdiction - The Assessing Officer cannot independently assess other income if the income which was the basis for reopening is found not to have escaped assessment. (Paras 17, 20)
Facts of the case:
The Revenue appealed against the ITAT's order quashing the reopening of assessment under Section 147, which was based on alleged accommodation entries totaling Rs. 88,00,000/- received by the Assessee. The ITAT found no addition made on these grounds.
Findings of Court:
The court upheld the ITAT's decision, emphasizing that the AO must assess the income that was the basis for reopening and cannot assess other income without a fresh notice.
Issues: The main issues were whether the ITAT erred in quashing the AO's order and whether the addition made under Section 68 was justified.
Ratio Decidendi: The court ruled that the AO's jurisdiction is limited to the income that formed the basis for reopening the assessment, and if that income is found not to have escaped assessment, no other income can be assessed without a fresh notice.
Result: Appeal dismissed.
JUDGMENT :
VIBHU BAKHRU, J.
1. The Revenue has filed the present appeal under Section 260A of the Income Tax Act 1961 (hereafter the Act) impugning an order dated 15.11.2021 passed by the learned Income Tax Appellate Tribunal [ITAT] in ITA No. 5739/DEL/2016 captioned The Income-tax Officer Ward 24(3) New Delhi v. M/s Sunlight Tour & Travels Pvt. Limited. The Revenue had preferred the said appeal against the order dated 12.08.2016 passed by the Commissioner of Income Tax (Appeals) [hereafter the CIT(A)] partly allowing the Assessee’s appeal against an assessment order dated 26.03.2015 in respect of Assessment Year (AY) 2007-08, passed under Section 147 of the Act.
2. The assessment of the income chargeable to tax in the previous year relevant to AY 2007-08 was sought to be reopened by issuance of notice under Section 148 of the Act. The Assessing Officer (AO) found that there were reasons to believe that the income of the Assessee for the relevant year had escaped assessment. The relevant extracts of the reasons recorded by the AO for reopening the assessment are set out below.
“Reasons for issue of notice u/s 148 of the I.T.Act, 1961 in the case of M/s Sunlight Tour & Travels Pvt. Ltd. for the A.Y. 2007-08-reg.
Information about entry operators and their beneficiaries of Delhi has been received from the office of the DGIT (Inv.) 3rd Floor, Scindia House, Ballard Estates, Mumbai vide letter F.No. DGIT(Inv.)/Information/PJ/2013-14/ dated 07.03.2014 and F.No. Addl. DIT(Inv.)/U-IV/u/s 148/2013-14/335 dated 10.03.2014 along with detailed report giving working of entry operators with a list of beneficiaries. After making inquiries the Addl. Directors Income Tax, Unit-VI of Investigation in their report has established large amount of tax evasion in the transactions between entry operators and the beneficiaries, it is revealed from the list that the assessee company M/s Sunlight Tour & Travels Private Limited (termed as beneficiary) during the previous year 2006-07 relevant to A.Y 2007-08 had taken accommodation entries totaling Rs. 88,00,000/- from the persons/parties (termed as entry operators). This entry has been investigated by the Investigation Wing and found to be given as accommodation entry from entities operators and controlled by Praveen Kumar Jain. The details of which is mentioned below:
| Beneficiary’s Name | Amount | Entry Operator | Bank | Dated |
| M/s Sunlight Tour & Travels Private Limited | 24,00,000 | Vanguard Jewels Limited | United Bank of India | 23.09.2006 |
| M/s Sunlight Tour & Travels Private Limited | 31,00,000 | Alka Diamond Industries Limited | United Bank of India | 14.09.2006 |
| M/s Sunlight Tour & Travels Private Limited | 33,00,000 | Nakshatra Business Private Limited | United Bank of India | 29.08.2006 |
3. The Assessee had filed its return under Section 139 of the Act in the normal course which was picked up for scrutiny and an assessment order dated 29.05.2009 was framed under Section 143(3) of the Act determining the income of the Assessee at Rs.2,09,361/-. However, in view of the information available with the AO, the said assessment was reopened for the reasons as briefly noted above.
4. The Assessee objected to the reopening of the assessment on the ground that the information on the basis of which assessment was reopened, is erroneous. The Assessee claimed that there was no such transaction, whereby the Assessee had received sum of Rs.88,00,000/- from the entities, namely, M/s Vanguard Jewels Limited, M/s Alka Diamond Industries Limited, and M/s Nakshatra Business Private Limited as assumed by the learned AO. However, the Assessee’s objections were not entertained.
5. During the assessment proceedings, the AO did not make any addition of an amount of Rs.88,00,000/-. However, the AO noted that the balance sheet of the Assessee reflected an amount of Rs.6,01,00,000/- as security premium. According to the AO, the Assessee has failed to justi
