PANKAJ HOSPITAL LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The petition under Article 226 of the Constitution is directed against a notice issued to the petitioner under Section 148 of the Income Tax Act, 1961 on 11 March 2013 by the Income Tax Officer-4(3), Agra for reopening the assessment for the Assessment Year 2006-07 under Section 147.

(2.) The assessee filed a return of income for the Assessment Year 2006-07. The case was selected for scrutiny. An order of assessment was passed under Section 143(3) on 2 December 2008 accepting a NIL return. A notice was issued to the assessee on 11 March 2013 under Section 148 and in response to the request made by the assessee for disclosure of reasons recorded under Section 148, the Assessing Officer issued the reasons on the basis of which the assessment was sought to be reopened. The reasons postulate that information was received from the Additional Director of Income Tax (Investigation) by the letter dated 6/8 April 2009 through the communication dated 27 January 2010 of the Additional CIT, Range 4, Agra that a search was conducted on the office premises of the Chartered Accountant, Tarun Goyal on 15 September 2008. During the course of search, it was admitted by the Chartered Accountant that he had created as many as 90 bogus private limited companies and firms for providing accommodation entries to the beneficiaries. The Directors of these companies were his employees who had worked in his office as peons and receptionists. A number of bank accounts were opened in the name of these companies and its employees in which huge cash deposits were made. Cheques were then issued to certain beneficiaries, disguising the transactions as genuine. The ADIT (Investigation) prepared a list of beneficiaries of such accommodation entries for the Assessment Years 2004-05 upto 2009-10. In this context, the reasons which have been recorded under Section 148 state that the petitioner-M/s. Pankaj Hospital Ltd. is one of the beneficiaries which had taken the benefit of accommodation entries during the Financial Year 2005-06 relevant to the Assessment Year 2006-07 from four bogus companies created by Tarun Goyal in lieu of cash deposits in equal amounts plus premium thereon. The total amount involved is Rs.2,21,50,000/-. Consequently the assessment was sought to be reopened on the ground that the petitioner had arranged accommodation entries of a total amount of Rs.2.21 crores from the aforesaid four bogus companies created by the Chartered Accountant in lieu of cash deposits of equal amounts plus premiums which were not disclosed to the Income Tax Department. On this basis, the assessment was sought to be reopened as there was reason to believe that the income had escaped assessment in the Assessment Year 2006-07. In pursuance of the judgment of the Supreme Court in G.K.N. Driveshafts (India) Ltd. Vs. Income Tax Officer, 2003 259 ITR 19 the objection which was raised by the assessee has been disposed of by the order dated 24 September 2013. The assessee has challenged the reopening of the assessment.

(3.) Learned counsel appearing on behalf of the petitioner submits that during the course of the assessment under Section 143(3), the Assessing Officer had issued a notice under Section 142 on 5 June 2008 requiring the assessee inter alia to furnish a disclosure in respect of the share applicants, the amounts received and the source, the mode in which payments were received together with confirmatory letters and PAN card details of the investors. It has been stated that in response thereto the assessee had by its letter (Annexure 3) made a disclosure including that in regard to the four companies which are now alleged to be bogus. Hence, it has been submitted that there was no failure on the part of the assessee to disclose fully and truly all the necessary facts relevant to the assessment and in view of the proviso to Section 147(1), the reopening of the assessment beyond the period of four years is contrary to law. Moreover, it has been urged that when a search had been conducted on the office of the Chartered Accountant in 2008, there was no justification for the department to wait for a period of more than four years before reopening the assessment.