The Assessing Officer must independently verify information before reopening assessments; reliance on third-party information without application of mind invalidates the reopening process.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Heard learned Senior Advocate Mr. Tushar Hemani with learned advocate Ms. Vaibhavi K. Parikh for the petitioner and learned Senior Standing Counsel Mr. Varun K. Patel for the respondents.

2. Having regard to the controversy involved in this petition, which is in a narrow compass, with the consent of learned advocates for the respective parties, both the matters are taken up for final hearing.

3. Rule returnable forthwith. Learned Senior standing Counsel Mr. Varun K. Patel waives service of notice of rule on behalf of the respondents.

4. By these petitions under Article 226 of the Constitution of India, the petitioner has challenged the validity and legality of the notices dated 30th March, 2021 issued under Section 148 of the Income Tax Act, 1961 (for short “the Act”) for the Assessment Year 2016-17 and Assessment Year 2017-2018.

5.1 The brief case of the case are that the petitioner is a Company engaged in the business of trading of all types of bearings and its allied items.

5.2. The petitioner received the impugned notices. On receipt of the impugned notices, the assessee filed the return of income and also requested for the reasons recorded. The Assessing Officer provided the reasons recorded on 05.05.2021 for both the years. So far as Assessment Year 2016-17 is concerned the reasons recorded are as under:

“As per the information received from the credible sources that a search action u/s. 132 of the Income tax Act, 1961 was carried in the case of Jignesh Shah and Sanjay Shah. During the course of search action various incriminating documents were found and seized from the premises of Shri Jignesh Shah and Sanjay Shah. It is further worth to mention here that, on going through the information available in Insight Portal, it can be seen that, Investing Wing, Ahmedabad during the investigation found that both Jignesh Shah and Sanjay Shah are managing and controlling multiple companies and concerns which are not carrying out any genuine business activity. These concerns are involved into activity of providing accommodation entries of various kinds such as unsecured loans, share premium, bogus gains, contrived losses etc. Further, as per Inspector Report, various concerns were found to be non-existent at their addresses. Moreover, the directors of companies/persons in whose names the said concerns are registered, admitted by way of filing affidavits that the companies/concerns are not carrying out genuine business activities and are engaged into providing accommodation entries through Jignesh Shah and Sanjay Shah. On perusal of information so received from Investigation Wing, Ahmedabad, it is noticed that the assessee FILCO TRADE CENTRE PVT. LTD. (AAACF288N) is one of the beneficiaries who has availed/obtained accommodation entries to the tune of Rs. 6,90,006/- under various head from various concerns who has controlled and managed by Jignesh Shah and Sanjay Shah.

As per the information received from the credible sources that an enquiry was made on the basis of STR which is generated on the basis of routing of high value of funds by receiving and making RTGS in the bank accounts of proprietorship concerns controlled by M/s. Mahavir Sales Corporation. The accounts are opened during the F.Y. 2012-13 to 2015-16 maintained with RBL Bank Ltd, Ahmedabad. On analysis of the bank statement of the above entities, it is seen that the entire funds credited by way of RTGS or by transfer got immediately debited by transfer or by clearing on the same day. The balance in the account is very low or Nil at the end of the day. On perusal of the bank statements and on the basis of field enquires, it is seen that the accounts were used for rotating funds/layering purpose, it is further important to mention that some entities have made shown purchases of various items (it is pertinent to mention here that various unrelated items were purchased from these entities like cement, pharmaceuticals raw materials, machinery, food