INCOME TAX ACT, 1961

Section 148

Reassessment - Notice under section 148 - Tangible information in AO's possession - Assessee alleged mere fishing enquiry on AO's part

AO received information from investigation wing as to assessee having received share capital of Rs. 40,00,000 from two Kolkata based shell companies. Accordingly, AO issued notice under section 148 as to reopen assessment. Assessee challenged the notice pleading that AO just proceededon the borrowed satisfaction and wished to make a fishing inquiry. Held: AO had considered the materials on record which would, prima facie, suggest that during the year under consideration there was a huge hike in the amount of share capital and share premium of assessee company. The assessee received the amount of share capital and share premium from Kolkata based shell companies, namely, Prime Vyapaar Pvt. Ltd. and Asha Apartments Pvt. Ltd. respectively. AO prima facie found, based on the materials on record and the information received, that total share capital of Rs. 40 lakh was received during the year under consideration. On verification of the details of investors companies, it was found, prima facie, that the same was controlled by one Kolkata based accommodation entry provider, namely, Manoharlal Nangalia. In a statement recorded by the department, 'M' admitted to the fact that his main business was to provide accommodation entries through shell companies to various beneficiaries in lieu of commission. The subsequent information, on the basis of which acquired reasons to believe that income chargeable to tax had escaped assessment on account of the omission of the assessee to make a full and true disclosure of primary facts, was relevant, reliable and specific. It was not at all vague or non-specific. For mere verification or for a fishing inquiry re-opening of assessment is not permissible. However, such was not the case. It could not be said to be a fishing inquiry. There was some tangible material as on date in the hands of AO, and AO, after due application of mind, recorded satisfaction of his own that income had escaped assessment. Therefore, section 148 was sustained as valid.

Relied:CIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 291 ITR 500 (SC) : 2007 TaxPub(DT) 1257 (SC), Dy. CIT & Anr. v. Zuari Estate Development and Investment Company Limited (2015) 373 ITR 661 (SC) : 2015 TaxPub(DT) 2254 (SC), Pr. CIT-3 v. Gokul Ceramics (2016) 241 Taxman 241 (Guj-HC) : 2016 TaxPub(DT) 3157 (Guj-HC) and Phool Chand Bajrang Lal v. ITO (1993) 203 ITR 456 (SC) : 1993 TaxPub(DT) 1453 (SC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2011-12

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