Subject: In support, the assessee also urged that the original assessment was done under
Referred Sections:
Section 147 of the Income Tax Act,
Section 143(3) of the Income Tax Act,
Referred Sections:
Income Tax Officer v. Techspan India Pvt. Ltd.
Commissioner of Income Tax v. Kelvinator of India Pvt. Ltd.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 23.07.2017
+ W.P.(C) 2158/2016
SHIV SAI INFRASTRUCTURE PVT.LTD. .... Petitioner
versus
DEPUTY COMMISSIONER OF INCOME TAX, & ANR.
..... Respondents
+ W.P.(C) 2383/2016
SHIV SAI INFRASTRUCTURE PVT.LTD. ..... Petitioner
versus
DEPUTY COMMISSIONER OF INCOME TAX, & ANR.
..... Respondents
Present: Dr. Rakesh Gupta, Mr. Somil Agarwal, Ms. Monika
Ghai, Mr. Rohit Kumar Gupta, Advs. for petitioner.
Mr. Sanjay Kumar with Mr. Rahul Chaudhary, Advocates for
respondents.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE A. K. CHAWLA
S. RAVINDRA BHAT, J. (ORAL)
This petition challenges the reassessment notices issued
by the Assessing Officer for the A.Y. 2008-09 and 2009-10.
The reassessment notice for the A.Y. 2008-09, which outlined
the "reasons to believe" in support of the d ecision to reassess
W.P.(C) 2158/2016 & W.P.(C) 2383/2016 Page 1 of 5
(which was also passed in identical terms for the subsequent
year) is extracted below:
"Reasons for reopening the case of M/s Shiv Sai
Infrastructure Pvt. Ltd. (PAN-AAJC85095B) For
A.Y. 2008-09, u/s 147/`148 of the Income Tax Act,
1961.
Information/documents alongwith relevant
details have been received from the office of
Director of Income Tax (Investigation), New Delhi
vide their letter F.No.DIT(Inv.)-II/U/s 148/2012-
13/196 dated 13.3.2013 and through Addl. CIT,
Range-8, New Delhi vide their letter F.No.
Addl.CIT/Range-8/2012-13/1020 dated 22.03.2013
that the above assessee, M/s Shiv Sai Infrastructure
Pvt. Ltd. has received and is a beneficiary of
accommodation entries provided by certain entry
operators. The Investigating Wing of the
department had carried out search and seizure
operations against the various group entry operator
which included Surendra Kumar Jain Group to
various beneficiary companies alongwith hundreds
of bogus companies of the group and many other
related entry providers. These search and seizure
operations unearthed the modus operandi of these
entry operators. The various companies which do
not have any business were being used for providing
accommodation entries to various assessee who
were rerouting their unaccounted cash through
these accommodation entries. The assessee would
pay cash to the entry providers. This cash would
then be deposited in the accounts of various bogus
companies and the transactions would be routed
through many bank accounts to cover the trail.
Then the assessee would be given cheque from one
of the many accounts which would be given the
colour of share application money or share capital
W.P.(C) 2158/2016 & W.P.(C) 2383/2016 Page 2 of 5
or share premium or loans or advance etc. In the
process, the entry operator would earn certain
commission. The searches by the Investigating
Wing against the entry operators resulted in
unearthing of large number of pass books, cheque
books, computer hard disks, signed blank cheques,
share transfer certificates and many other blank
signed documents. This information has been
provided by the Investigation Wing of the Income
Tax Department to the Assessing Officer.
ii. In the case of the above assessee, the following
accommodation entries have been taken:
S. Beneficiary PAN Amount Total
No.
1 M/s Shiv Sai AAJC 2,00,00,00 2,00,00,000
Infrastructure S5059 0
Pvt. Ltd. B
In view of the above, I am satisfied and I have
reason to believe that income of Rs.2,00,00,000/-
chargeable to tax has escaped assessment for A.Y.
2008-09, within the meaning of Section 147 of the
Income Tax Act, 1961."
The assessee complains that the impugned reassessment
notices are unsustainable in law because all the relevant
particulars relating to the share application moneys received by
it were disclosed to the Assessing Officer. In support, the
assessee also urged that the original assessment was done under
Section 143(3) of the Income Tax Act, 1961 (hereinafter
referred to as "the Act"). During the course of those
proceedings, the elaborate questionnaires dated 12.02.2010 and
31.01.2011 were replied to on 26.02.2010, 19.07.2010 and
26.08.2010, 07.09.2010, 09.11.2010, 12.11.2010, 25.11.2010
W.P.(C) 2158/2016 & W.P.(C) 2383/2016 Page 3 of 5
and 30.11.2010 (for A.Y. 2008-09 and A.Y. 2009-10). It is
submitted that the pointed queries with respect to the
genuineness, identity and creditworthiness of the share
applicants was provided including the bank statements for the
relevant years.
In respect of the impugned reassessment notice, it is
argued that the AO in the original assessment scrutiny orders
did not furnished any reasons why the materials furnished to
him, were acceptable. It is submitted that in these
circumstances, the assessee cannot complain that the reasons,
which impelled the Revenue to reopen assessments for these
two given years were contrary to law. Learned counsel relied
upon the decision in the case of Income Tax Officer v. Techspan
India Pvt. Ltd. (2018) 92 Taxmann.com 361 to say that where
no reasons are forthcoming in an assessment order that is
cryptic or perfunctory, the reassessment is justified.
The material on records show that in all the relevant
circumstances in which share application moneys were received
by the assessee, the circumstances were explained and all the
evidence in support of its contentions was furnished to the AO.
No doubt, the AO's orders do not reflect any reasoning, at the
same time, this Court is very mindful of the Full Bench ruling
of this Court which was upheld in Commissioner of Income Tax
v. Kelvinator of India Pvt. Ltd. (2011) 320 ITR 561 (SC); the
Court had then stated that if material is elicited from the
W.P.(C) 2158/2016 & W.P.(C) 2383/2016 Page 4 of 5
assessee by the AO who then chooses to provide either
perfunctory reasoning in part or no reasons, that such reasons
cannot be a ground for reassessment.
In the present case, this Court is of the opinion that apart
from that consideration, the reassessment notice is cast in over-
broad terms; it merely mentions that pursuant to the search and
seizure operations of a third party, some material came to light
and that yet other third parties were "Entry Operators",
providing bogus entries in the form of share application credit
to the petitioners. The identities of such bogus creditors or
Book Entry Operators has not been revealed even though it is
known nor are the exact amounts which are reflected in the
books of such Entry Operators disclosed as "reasons to
believe". In these circumstances, it is held that the impugned
reassessment notices cannot be sustained; they are hereby
quashed as are all further consequential proceedings.
The writ petitions are allowed in the above terms.
S. RAVINDRA BHAT, J
A. K. CHAWLA, J
JULY 23, 2018/akv
W.P.(C) 2158/2016 & W.P.(C) 2383/2016 Page 5 of 5
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