INCOME TAX ACT, 1961

Section 148

Reassessment - Notice beyond four years - Assessee pleading no failure to disclose fully and truly all material facts on account of mere production of account books during original assessment -

AO issued notice under section 148 after expiry of four years from the end of relevant assessment year on the ground of assessee having received Rs. 90 crores from M/s. Moral Alloys Private Limited alleged to be heavily engaged in providing accommodation entries. Assessee challenged the notice by way of writ petition as the ground that by way of furnishing of account books, etc., assessee had fully disclosed transactions undertaken with Moral and there was no suppression on the part of assessee and it could not be said that income chargeable to tax had escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment.Held: Mere production before AO of Account Books, or other evidence, from which material evidence could, with due diligence, have been discovered, would not necessarily amount to disclosure within the meaning of the First Proviso to section 147. AO while framing original assessment took the assessee for its word when it claimed that the transactions undertaken by it with Moral Alloys were genuine sale trnasactions. However, that fundamental premise stood shaken, since Moral had been found to be a completely tainted entity embroiled in very large scale dubious transactions of providing accommodation entries. If transactions undertaken by assessee with Moral Alloys were indeed not genuine, as reasonably believed by AO, it would not be correct to say that assessee had disclosed fully and truly all the mateiral facts. Also, reasons recorded by AO were elaborate and disclosed the extent of business undertaken by Moral to provide accommodation entries through a process of layering. Moral Alloys was not found at the given address and even other entities through whom process of layering was undertaken were not found. Assessee, admittedly, had received Rs. 90 crores from Moral and thus, writ petition was dismissed with costs of Rs. 1 lakhs to be paid to Delhi High court Advocates Welfare Trust.

Followed:Pr. CIT v. NRA Iron & Steel Pvt. Ltd. (2019) 412 ITR 161 (SC) decided on 5-3-2019 : 2019 TaxPub(DT) 1628 (SC) and RDS Project Ltd. v. Asstt. CIT & Anr. W.P.(C.) No. 11274/19 decided on 23-10-2019. Distinguished:CIT-6 v. Meenakshi Overseas Pvt. Ltd. (2017) 395 ITR 677 (Del) : 2017 TaxPub(DT) 1791 (Del-HC) and Signature Hotels (P) Ltd. v. ITO-Ward 8(4) & Anr. (2011) 338 ITR 51 (Del) : 2011 TaxPub(DT) 1992 (Del-HC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2012-13

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