CIT Vs. TITAN SECURITIES LTD

JUDGEMENT

(1.) This is an appeal by the revenue under section 260A of the Income Tax Act, 1961 (hereinafter referred to as "the said Act?). It is directed against the order dated 14.06.2011 passed by the Income Tax Appellate Tribunal ("Tribunal?, for short) in ITA No.2654/Del/2009 for the assessment year 2001-02. The following questions, stated to be the substantial questions of law have been proposed by the revenue: -

(2.) The assessee is a company. We are concerned with the assessment year 2001-02. A return of income was filed declaring income of Rs. 26,440/- which was first accepted under section 143(1). The return was later taken up for scrutiny and an assessment order under section 143(3) was passed on 30.03.2002 on an income of Rs. 41,290/-. Subsequently, the assessment was reopened on the basis of information received from the investigation wing of the income tax department and a notice on 28.03.2008 under section 148, was issued after duly recording the reasons and obtaining the sanction of the CIT as required by section 151 of the said Act. Though the notice was issued in March, 2008, there was no response from the assessee and, therefore, a notice under section 142(1) of the said Act was issued on 16.10.2008. There was no response to this notice nor to the subsequent show-cause notice issued on 03.11.2008. Finally the assessee contended before the assessing officer on 02.12.2008 and asked for the reasons for reopening the assessment. The reasons were provided to the assessee who filed its objections which were rejected by an order which was served on the assessee on 10.12.2008. On 20.12.2008, barely 10 days before the assessment was going to be barred by limitation, the assessee furnished the new addresses of the persons who subscribed to the share capital of the assessee-company. On account of the fact that hardly any time was left for the completion of the assessment, the assessing officer requested the assessee to produce the principal officers of the companies which allegedly subscribed to the share capital of the assesseecompany to the extent of Rs. 35 lakhs. The assessee, however, did not produce those persons but on 24.12.2008 sought to make its final submissions against the proposed additions of Rs. 35 lakhs.

(3.) The assessing officer thereafter noted that the companies who subscribed to the share capital were established entry operators who gave accommodation entries to several persons and this fact was also admitted by them in a sworn statement filed before the investigation wing. In letters written to their respective assessing officers in connection with the assessment proceedings for the assessment year 2001-02, these companies admitted to have provided accommodation entries to persons requiring the same in consideration of a commission. These letters are reproduced in the reassessment order. A specimen letter would suffice: - <FRM>JUDGEMENT_506_AD(DEL)3_2013_1.html</FRM>