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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
BELA M. TRIVEDI, ASHOKKUMAR C. JOSHI, JJ.
SANJAY BAULAL SURANA - Appellant
Versus
THE ASSITANT COMMISSIONER OF INCOME TAX - Respondent
SPECIAL CIVIL APPLICATION NO. 20501 of 2019
Decided On : 11-08-2021
Constitution of India,1950 – Article 226 - section 148 of the Income Tax Act, 1961 – Section 131,143(3),147 and 148 - Agreements to sell – Property - Petitioner are that petitioner, who is an individual, had, during Financial Year relevant to Assessment Year derived income from house property, business income and income from other sources - During year under consideration, petitioner entered into Agreements to Sell in respect of Offices owned by him being Office for certain lakhs and received part consideration of certain lakh through RTGS and received part consideration through RTGS - Since, said offices were occupied by tenant and petitioner could not get same vacated, aforesaid agreements to sell came to be cancelled vide agreements respectively - Hence, case of petitioner for year under consideration was reopened - Against reasons accorded, petitioner, vide letter raised objections against reopening on factual as well as legal grounds, respondent authority disposed of said objections raised by petitioner vide order inter alia holding that reopening is justified and valid in the eyes of law - Being aggrieved, petitioner is before this Court by way of this petition - Whether materials would conclusively prove escapement is not concern at that stage.
Finding of the court: In case on hand also, the Assessing Officer has reason to believe that petitioner is a beneficiary of accommodation entry and basis for formation of such belief is several inquiries and the investigation by Investigation Wing, and report thereof - Reasons for the formation of the belief by Assessing Officer in instant case, appear to have a rational connection with or relevant bearing on the formation of belief that there has been escapement of the income of assessee from assessment in particular year because of his failure to disclose fully and truly all material facts – Court may reiterate the observation made by Apex Court in Raymond Woollen Mills Ltd. (supra) that, “at the time of recording the reason for satisfaction of AO, there should be prima facie some material on the basis of which, department could reopen the case - Sufficiency or correctness of the material is not a thing to be considered at this stage - It will be open to assessee to prove that assumption of fact made in notice was erroneous at time of assessment proceedings - Further, in the case of Ess Kay Engineering Co. (P) Ltd. v. Commissioner of Income Tax, 247 ITR 818 (SC), also it has been observed that Assessing Officer is not precluded from reopening assessment of an earlier year on the basis of fresh material discovered subsequently during the course of assessment of next assessment year.
Result: Petition dismissed.
JUDGMENT :
ASHOKKUMAR C. JOSHI, J.
1. This petition, under Article 226 of the Constitution of India, is filed by the petitioner – assessee seeking to quash and set aside the Notice dated 27.03.2019 issued by the respondent authority under section 148 of the Income Tax Act, 1961 (herein after referred to as “the Act”) for the Assessment Year 2013-14, as it has reason to believe that the income chargeable to tax for the assessment year under consideration has escaped assessment within the meaning of section 147 of the Act.
2. The facts of the case of the petitioner are that the petitioner, who is an individual, had, during the Financial Year 2012-13, relevant to Assessment Year 2013-14 (i.e. the year under consideration), derived income from the house property, business income and income from other sources. During the year under consideration, the petitioner entered into Agreements to Sell in respect of the Offices owned by him being Office Nos. HG- 12 and HG-13, situated in International Trade Center, Majura Gate Crossing, Ring Road, Surat, with Babylon Trading and Investment Pvt. Ltd., dated 23.08.2012 for Rs.70 lakh, and received part consideration of Rs.35 lakh through RTGS and with Gyaneshwar Vyapar Pvt. Ltd. dated 25.09.2012 for Rs.70 lakh and received part consideration of Rs.50 lakh through RTGS. Since, the said offices were occupied by the tenant and the petitioner could not get the same vacated, the aforesaid agreements to sell came to be cancelled vide agreements dated 10.11.2012 and 01.12.2012 respectively. Accordingly, amounts of Rs.36,40,384/- and Rs.51,61,096/- (principal + interest) were returned to the Babylon Trading and Investment Pvt. Ltd. and Gyaneshwar Vyapar Pvt. Ltd. respectively, by cheque No. 401374, debited to the petitioner’s account on 21.12.2012 and No. 401381, debited to the petitioner’s account on 29.12.2012, during the year under consideration. Thereafter, the petitioner filed his Return of Income (Rol) for the year under consideration on 31.10.2013 declaring the total income at Rs.31,52,550/-. The case of the petitioner for the year under consideration was selected for scrutiny assessment and various details were called by the then Assessing Officer, which were furnished by the petitioner. That, while framing assessment under section 143(3) of the Act vide order dated 25.01.2016, no addition came to be made. However, after a period of almost six years, the respondent authority issued notice dated 27.03.2019 under section 148 of the Act seeking to reopen the case of the petitioner for the year under consideration. In response to the said notice, the petitioner filed its Rol on 12.04.2019 and also requested to supply the reasons for reopening, which were supplied vide letter dated 07.05.2019. A perusal of the same revealed that the case of the petitioner was reopened on the count that the amounts received from the aforesaid companies during the year under consideration were nothing but an outcome of the accommodation entries. The case of the respondent was that, as per the information received from the DDIT (Inv.), Unit 1(3), Kolkata, a search and seizure action was carried out in the case of one Banka Group (a third party) on 21.05.2018 and it was found that the Banka Group is involved in the activity of providing accommodation entries through the various companies controlled and managed by it. The petitioner had received a sum of Rs.50,00,112/- from M/s. Gyaneshwar Vyapar Pvt. Ltd., which was alleged to be a company controlled and managed by the Banka Group and hence, the respondent was of the view that the said amount was the outcome of an accommodation entry. Further, as per the second information received from the DDIT (Inv.), Unit 4(2), Kolkata in respect of M/s. Babylon Trading and Investment Pvt. Ltd., the name of the said company appeared in the database of various shell companies controlled and managed by Gopal Banka and Manoharlal Nanglia (alleged entry operator). Since, the petitioner had
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