YOGENDRAKUMAR GUPTA Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE present petition has been preferred under Article 226 of the Constitution of India challenging the notice of reopening issued under section 148 of the Incometax Act, 1961 (hereinafter referred to as 'the Act') in connection with the assessment year 200607 in the following factual background : 1.1 The petitioner for the said assessment year submitted a return of income reflecting his total income at Rs.64,65,144/. A notice under 143(2) of the Act followed by a notice under section 142(1) of the Act were issued on June 21, 2007 and September 19, 2008 respectively. In the said notices, details of unsecured loans received by the petitioner were required to be furnished. Yet another notice under section 143(2) of the Act dated September 19, 2008 had followed. All the details as directed by the respondent had been furnished, which included the details of unsecured loans vide communication dated November 27, 2008. 1.2 Yet another notice dated December 03, 2008 called for genuineness and creditworthiness of all the parties whose names appeared in the list of unsecured loans and deposits, which were required to be furnished along with complete address and PAN. The petitioner vide communication dated December 15, 2008 provided not only the addresses, PANs and details of the amount with dates, but the confirmation letters as well. After the entire exercise, scrutiny assessment under section 143(3) was completed on December 22, 2008 and the Assessing Officer made disallowances under section 14A and 94(7) of the Incometax Act, 1961 (hereinafter referred to as 'the Act'). The petitioner aggrieved by such order challenged the same before the CIT (Appeals) and the same is pending before the CIT (Appeals). 1.3 In the meantime, the impugned notice under section 148 of the Act dated March 28, 2013 came to be issued, beyond the period of four years from the end of relevant assessment year on the ground that the Assessing Officer had a reason to believe that the income had escaped the assessment, directing the petitioner to file the return within 30 days from the date of receipt of the notice since he proposed to assess the escaped income. 1.4 A request was made vide communication dated April 09, 2013 seeking a copy of the reasons recorded. However, it was insisted on the part of the respondent that the petitioner needs to file his return in response to the notice under section 148 of the Act and then only the reasons recorded under section 148(2) of the Act could be provided. Accordingly, the petitioner declared that the original return of income filed by him on December 31, 2006 be considered as return filed in response to such a notice. A notice under section 143(2) of the Act came to be issued on January 17, 2014 and the reasons were also furnished on February 18, 2014, which read as under : "As per information contained in the report of the DCIT, C.C., XXVIII, Kolkata forwarded vide letter No.CIT(C)Kol./ CBI/1213, dated 04/03/2013, it is noticed that assessee company has obtained accommodation entry in the form of Loans and Advances from Basant Marketing Pvt. Ltd. Kolkata. The assessee has taken accommodation entry of Rs.8,71,00,000/, in the form of Loans and advances from Basant Marketing Pvt. Ltd. Kolkata. Therefore I have reason to believe that an amount of Rs.8,71,00,000/has escaped the assessment within the meaning of section 147 of the IT Act." 1.5 Yet another correspondence dated March 05, 2014 for the post notice period deserves reproduction at this stage, which is in the form of a show cause notice, which reads as under : "During the year under consideration loans and advances of Rs.8,71,00,000/has been received by the assessee from M/S Basant Marketing Pvt. Ltd. As per the information received from DCIT (Central) XXVIII, Kolkata dated 12.02.2013 M/s Basant Marketing (P) Ltd has provided accommodation entries to various beneficiaries during the year and the assessee is one of them. Further it has been stated that M/s Basant Marketing (P) Ltd. is a dummy company of Arun Dalmiya on the basis of substantial material found during the search by CBI, Mumbai. Therefore you are required to show cause as to why the amount of Rs.8,71,00,000/received from M/s Basant Marketing (P) Ltd. during the year should not be treated as cash credit u/s 68 of the Income Tax Act, 1961." 1.6 The petitioner filed reply to the same by stating that he intended to file writ petition against the invalid notice. 1.7 The petitioner vide its letter dated March 13, 2014 requested the respondent to supply a copy of the letter received from the DCIT, Kolkata, on the basis of which she had formed the reason to believe. However, soon thereafter on March 14, 2014, the objections have been filed to the reasons recorded essentially challenging such notice on the ground that there was nothing to indicate that the petitioner had not fully and truly disclosed all the material facts necessary for assessment. It was the say of the petitioner that the original assessment got completed after scrutiny, where alleging the genuineness of the transactions, no additions have been made in respect of unsecured loans. It was also the say of the petitioner that the confirmation letters furnished pursuant to the notices issued along with substantiating documents also take away the very basis of such notice. The sworn affidavit of the Director of Basant Marketing Pvt. Ltd. also specifically stated that all the transactions of loans given to the petitioner were genuine and given through banking channels. We notice that there was no statement of CIT (Appeals) that the loans given to Basant Marketing Pvt. Ltd. are true and all loans given by Basant Marketing Pvt. Ltd. to the present petitioner are genuine. 1.8 It is averred by the petitioner that despite such eloquent objections backed by documentary evidence, the objections were disposed of by holding that the same were not tenable and, therefore, the present petition.

(2.) ON issuance of notice, the respondent appeared and filed an affidavitinreply inter alia urging that the alternative efficacious remedy is available by way of an appeal to the CIT (Appeals) and thereafter, to the Tribunal and, therefore, the present petition may not be entertained. 2.1 On merits, the fact is not controverted that after scrutiny, the return of the petitioner was finalised on December 22, 2008, where disallowances were made under section 14A and 94(7) of the Act. 2.2 It is, however, contended that on receipt of information by way of report of the DCIT (Central), XXVIII, Kolkata, on having found that the assessee had taken accommodation entries of Rs.8.71 crore in the form of loans and advances from Basant Marketing Pvt. Ltd., which was a dummy company engaged in money laundering business and, therefore, the Assessing Officer held that the income of the assessee chargeable to tax had escaped the assessment. 2.3 It is the say of the respondent that the Assessing Officer was in receipt of the information contained in the report of the DCIT, Kolkata dated March 04, 2014, which was in the nature of the tangible material and on the basis of such information, after due application of mind, the Assessing Officer recorded reasons for reopening the assessment. It is alleged that there is an omission or failure on the part of the assessee to disclose fully and truly all material facts, which were necessary for the assessment. On definite and reliable information, the Assessing Officer has formed an opinion and reasonable belief. However, no response was made to the subsequent show cause notice dated March 05, 2014. Accordingly, it is urged that the petition may not be entertained.

(3.) MR .Manish M. Bhatt, learned Senior Counsel appearing with the learned counsel Mrs.Mauna Bhatt for the Revenue, submitted that this is a case of the petitioner not furnishing truly and fully all material facts and, therefore, even if the original assessment has been concluded on scrutiny, the notice of reopening cannot be hampered at this stage. He further urged that on the basis of the information contained in communication of the DCIT, Kolkata, indicating that the petitioner obtained accommodation entry in the form of loans and advances from Basant Marketing Pvt. Ltd., Kolkata, the Assessing Officer on having reason to believe that the income chargeable to tax has escaped the assessment, the Court need not interfere. Reliance is placed on the following decisions : (1) Dishman Pharmaceuticals and Chemicals Ltd. v. Deputy Commissioner of Incometax (OSD), Ahmedabad, 2012 346 ITR 228 . (2) Phul Chand Bajrang Lal and another v. Incometax Officer and another, 1993 203 ITR 456.