The assessee must establish the genuineness of transactions and identity of investors to prevent tax assessments on unexplained income, as reliance on mere banking transactions is insufficient.

JUDGMENT

Vipin Sanghi, J. (Oral)--The present petition under Article 226 of the Constitution of India is directed against the notice issued to the petitioner dated 31.03.2019 under Section 148 of the Income Tax Act, 1961 for re-opening the assessment for Assessment Year 2012-13 and order of the Assistant Commissioner of Income Tax Circle 20(2), Delhi, dated 04.09.2019, disposing of the objections preferred by the petitioner to the said notice..

2. The brief facts are as under:

(i) Petitioner is engaged in the business of carrying out civil construction and other similar contract works. It filed its return of income for A.Y. 2012-13 declaring total income at Rs.16,68,78,9601. The case was selected for scrutiny. An order of assessment was passed under Section 143(3) on 07.07.2014, where disallowance u/s 14A and 43B of the Income Tax Act were made.

(ii) A notice was issued to the petitioner/assessee on 31st March 2019 under Section 148 to reopen the assessment for the Assessment Year 2012-13. The reasons recorded by the A.O. for formation of his belief that income chargeable to tax had escaped assessment, in brief, were that M/s Shail Investment Pvt. Ltd. and M/S New Delhi Credits Private Limited are companies controlled by one Sh. Tarun Goyal, who is an accommodation entry provider. This fact had been established in proceeding relating to the said Sh. Tarun Goyal before the ITAT and the High Court. On perusal of bank statements and investigation report, it was found that the assessee company received Rs.4,10,00.000 - from M/S Shail Investment Pvt. Ltd. and Rs.4,10,00,000 - from M/S New Delhi Credits Private Limited during the previous year, relevant to the assessment year in question. Both these companies were amongst the 90 companies promoted by Sh. Tarun Goyal and registered at the same address at which the other companies engaged in providing accommodation entries were registered by Sh. Tarun Goyal. The assessment was reopened on the ground that the credit entries as received by the assessee remain unexplained and that the assessee had not disclosed its true income in its ITR.

(iii) The assessee preferred its objections to the said reopening, which were rejected vide order dated 04.09.2019. The said order has also been challenged in these proceedings.

(iv) The relevant extract from the reasons recorded by the A.O. read as follows:

"3. Analysis of Information Received

3.1 As per the information gathered by the investigation wing, it was found that M/s Shail Investments Private Limited was being operated by Sh. Tarun Goyal, an entry operator. A brief summary of the adjudications by the Hon'ble ITAT, New Delhi in the cases of Sh. Tarun Goyal and the shell companies operated by him are as below: