$~14
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 14.02.2014
+ W.P.(C) 1608/2013 & CM Appl.3024/2013
RASALIKA TRADING AND INVESTMENT CO. PVT. LTD
..... Petitioner
Through Mr Rakesh Gupta, Mr Rishabh Kapoor
and Ms Khshbu Upadhyay, Advs.
versus
DEPUTY COMMISSIONER OF INCOME TAX AND ANR.
..... Respondent
Through Mr Rohit Madan, Adv.
CORAM:
MR. JUSTICE S. RAVINDRA BHAT
MR. JUSTICE R.V. EASWAR
S. RAVINDRA BHAT, J.: (OPEN COURT)
The petitioner in this case challenges the notice proposing
reassessment under section 147/148 of the Income Tax Act in respect of
assessment year 2005-06. The assessee, an investment and security
business company, had raised additional capital and offered shares at a
premium of Rs.90 per share during the concerned assessment year. The
regular assessment under section 143(3) was completed by an order
WP(C) 1608/2013 Page 1 of 8
framed on 24.12.2007. The notice proposing reassessment, in the present
case reads as follows :
"ANNEXURE 'A'
RASALIKA TRADING & INVESTMENT CO. PVT. LTD.
2005-06
In this case initiation was received from DIT
(Investigation), New Delhi which was circulated amongst the
Assessing officers of Delhi Charge vide F. No. CIT-I/2005-
06/2132 dated 13.03.2006. The information received
indicated that the assessee is amongst the beneficiaries of
bogus accommodation entries as under:
Bank Amount/ Date of Name of Bank a/c of Account
A/c in instruments receipt party from entry given No.
which no. whom
entry is received
received
IDBI, 3,00,000/ 10.06.2004 Ashiana Corpn 4028
KG 41708 Electronics Bank,
Marg Pvt. Ltd. Kamla
Nagar
IDBI, 3,00,000/ 29.08.2004 Ashiana Corpn 4028
KG 41704 Electronics Bank,
Marg Pvt. Ltd. Kamla
Nagar
IDBI, 3,00,000/ 10.06.2004 Paropkari Corpn 4029
KG 41710 Finstock Bank,
Marg Pvt. Ltd. Kamla
Nagar
IDBI, 2,00,000/ 24.06.2004 Paropkari Corpn 4029
KG 41719 Finstock Bank,
Marg Pvt. Ltd. Kamla
Nagar
WP(C) 1608/2013 Page 2 of 8
The information received also indicated that the bank
accounts of M/s Ashiana Electronics Pvt. Ltd. and M/s
Propkari Finstock Pvt. Ltd. were maintained and controlled
by one Shri Hari Om Bansal, who has in statement given on
oath on 12.04.2005 before the Investigation Wing admitted
that he had received cash in lieu of cheque or draft to
various persons through various bank accounts maintained
by him with the help of his associates.
In view of the reports received from the Investigation
Wing and the above facts and findings, it is clear that the
assessee company has not disclosed fully and truly all
material facts necessary for its assessment for the assessment
year under consideration. I am in possession of material that
discredits and impeaches the particulars furnished by the
assessee company and also establishes the link with the self-
confessed "accommodation entry providers", whose business
is to help assessee bring into their booms of accounts their
unaccounted money.
In view of the above facts, I have reason to believe that
the assessee had introduced its unaccounted/ disclosed
income routed through such bogus accommodation entries.
Thus, the Income chargeable to tax amounting to Rs.
11,00,000/ - during the A.Y. 2005-06 has escaped assessment
in the case and there has been a failure on the part of the
assessee to disclosed fully and truly all material facts
necessary for his assessment in the AY 2005-06. Hence, the
same is to be brought to tax under section 147 of the Income
Tax Act. It is a fit case for initiating proceedings u/ s 147 of
the Act. Sanction for issue of notice u/s. 148 as prescribed
u/s 151, to assessee such income may kindly be accorded.
(Signature of Officer)
Name: KEYUR PATEL
Designation: DCIT. Circle - 15(1), N.D."
WP(C) 1608/2013 Page 3 of 8
The petitioner urges that on the face of it the impugned notice and
subsequent proceedings are beyond the authority of law. It is urged that
the fresh or tangible material, on the basis of which recourse to section
148 is proposed, existed even when the original regular assessment was
completed. The learned counsel pointedly referred to the first sentence of
the impugned notice stating that the intimation or report of the DIT
(Investigation) was circulated to all concerned including AOs of Delhi
Charge on 13.3.2006. It was therefore urged that the reasons in support of
the notice were based upon material which was stale and therefore plainly
outside the jurisdiction conferred under section 148. Counsel relied upon
the decision of Supreme Court in CIT vs. Kelvinator (India) Ltd. (2010)
320 ITR 561. The learned counsel relied upon the response given during
the assessment proceedings particularly the letters dated 20.9.2007,
5.11.2007, 15.11.2007, 29.11.2007, 10.12.2007 and 17.12.2007. It was
submitted that the details of the share applicants, who had applied for
allotment, sought for by the AO in the regular assessment were furnished
to the AO. It was submitted that in these circumstances the reopening of
assessment proposed on the basis of the material said to have been
contained in the investigation report of 13.3.2006 was a matter that had
WP(C) 1608/2013 Page 4 of 8
been specifically enquired and gone into by the revenue. It was argued
that in these circumstances, the notice is illegal and liable to be quashed.
Counsel for the revenue submitted that the notice no doubt adverted
to an investigation wing report of 13.3.2006. However, counsel argued
that this report was not on the record when the assessment was completed
originally on 20.4.2007. In the counter affidavit the revenue stated as
follows :
"The contents of the para are correct and admitted to the
extent that the Respondents had passed the order after
application of mind and accepted the income declared by the
Assessee with no adverse finding but all this done on the
basis of material/documents disclosed by the Assessee. The
main reason for reopening the assessment was that the
Assessee has not disclosed full and true material and the
same has led to escapement of Income. So, the notice u/s 148
when issued after complying with all the legal formalities
cannot be bad in law. Moreover the earlier order passed u/s
143(3) cannot be made a basis for proving the reopening bad
in law when there was no disclosure of full and true material
by the Assessee before the Assessing authority."
The learned counsel relied upon the following averment made in
additional affidavit filed after the counter affidavit is filed. The additional
affidavit was filed by one Arun S. Bhatnagar, Commissioner of Income
WP(C) 1608/2013 Page 5 of 8
Tax, Delhi-V and affirmed on 16.12.2013. The relevant contents of the
said affidavit are as under :
"3. That after going through the original assessment
records, it has been noticed that letter dated 13.03.2006 was
not on record before the Assessing Officer when the original
assessment was framed on 24.12.2007.
4. The information regarding the letter dated 13.03.2006
was received by the office of DCIT, Respondent No.1 after
the proceedings u/s 143(3) were concluded and based on the
contents of the letter dated 13.03.2006, appropriate
proceedings have been initiated by the Department u/s
147/148 of the Income Tax Act, 1961."
Counsel for the revenue urged that in terms of Kelvinator (India) Ltd.
(supra) the reassessment proceedings were within jurisdiction and ought
not to be interfered with.
It is evident from the above discussion that the reassessment
proceedings were initiated by the impugned notice which expressly and
plainly states that "reasons to believe" are based upon the materials
contained in an investigation report of 13.3.2006. The notice itself does
not spell out that the report was not on the record when the original
assessment was completed on 24.12.2007 nor did the revenue even
suggest so in the counter affidavit filed in the proceedings. It is only in a
WP(C) 1608/2013 Page 6 of 8
subsequently filed additional affidavit that the position is sought to be
clarified. Clearly this Court refrains from making such an enquiry, at a
time when the AO has, in the first instance, failed to spell out clearly in
the section 148 notice itself that such report was not on record. In other
words "the reasons to believe" do not state that even in one sentence that
the investigation report of 13.3.2006 was not with the AO when he
completed the assessment. The material on record in fact suggests
otherwise; the nature of the queries put to assessee and the replies and
confirmation furnished to the AO in the course of the regular assessment
clarify that what excited the suspicion was indeed gone into by the AO
himself while framing the assessment under section 143(3). This Court is
fortified in its conclusions by the decision of the Supreme Court in
Commissioner of Police v. Goverdhan Das Bhanji AIR 1952 SC 16 where
it was held that public orders made by public authorities intended to have
effect on the public should be construed objectively with reference to the
language used rather than explanations subsequently offered. This
principle was reiterated in a somewhat different vein in MS Gill V. Chief
Election Commissioner, AIR 1978 SC 851 by the Supreme Court. Such
being the case this Court has no doubt that the impugned notice, in the
WP(C) 1608/2013 Page 7 of 8
circumstances of the case is based upon stale information which was
available at the time of the original assessment and in fact appears to have
been used by the AO at the relevant time i.e. during the completion of
proceedings under section 143(3). Therefore, the attempt to reopen the
proceedings under section 147/148 is really the result of a change of
opinion and thus beyond the pale of the AD's jurisdiction and falling
under the illustration spelt out in Kelvinator (India) Ltd. (supra).
Consequently, the impugned notice and all proceedings further thereto are
beyond the authority of law and are hereby quashed.
The writ petition is allowed in the above terms.
S. RAVINDRA BHAT, J
R.V.EASWAR, J
FEBRUARY 14, 2014
vld
WP(C) 1608/2013 Page 8 of 8
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