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21-05-2019, BEST CYBERCITY (INDIA), Section 147, 148, HIGH COURT OF DELHI
Appeal No. - W.P.(C) 12360/2018 & CM Appl. No. 47877/2018
Asstt. Year - 2011-2012
PER : Dr. S. Muralidhar, J.:
1. The Petitioner challenges a notice dated 29th March, 2018 issued by the Income Tax Officer, Ward 4(3) (hereafter Assessing Officer, AO) under Section 147 read with Section 148 of the Income Tax Act, 1961 seeking to re-open the assessment for the Assessment Year (AY) 2011-2012 as well as the order dated 26th October, 2018 rejecting the Petitioner‟s objections to the re-opening of the assessment.
2. The Petitioner is a company engaged in real estate development and related services. It filed its return of income for the AY in question on 29th September, 2011 declaring a loss of Rs. 22,534/-. The return was picked up for scrutiny and a questionnaire dated 23rd October, 2012 was issued by the AO to the Petitioner inquiring about various aspects. Along with its reply dated 30th October, 2012 the Petitioner submitted all the relevant bank statements. A further reply was submitted on 6th November, 2012 stating that copies of the Audit Report, Balance Sheet, Profit and Loss Account (P & L Account) along with Schedule had already been placed on record. Details of an unsecured loan of Rs.40 crores obtained by the Petitioner from PACL India Limited („PACL‟) were also reflected in the accounts .
3. Another questionnaire was issued by the AO on 27th November, 2012 raising specific questions as regards PACL. The Petitioner submitted its reply on 25th January, 2013 furnishing details of the unsecured loan with confirmation of accounts. According to the Petitioner it informed the AO that it had a plan to undertake a joint venture with PACL for development of an IT park but the project did not materialize. Therefore, in the subsequent AY, the said amount was refunded to PACL. The statement of Petitioner‟s account with Axis bank for the AY in question was already on record. The bank statement for AY 2012-2013 along with the ledger account was also filed. By a further submission dated 2 nd February, 2013 the Petitioner submitted details of the deployment of funds along with copies of the ledger accounts, showing loans and advances, along with ledger account of PACL. According to the Petitioner direct enquiries under Section 133(6) were made by the AO from PACL during the assessment proceedings. Original assessment order
4. The AO passed an assessment order dated 28th March, 2013 for the AY in question accepting the Petitioner‟s return as filed. The order was a short one and reads as under:
“A search and seizure operation u/s 132 of the IT Act was carried out at the business premises of M/s Best group at H-8, Best Plaza, Netaji Subhash Place, Pitampura, New Delhi as well as on residential premises of the directors and their family members on 28th March, 2011. The group is carrying out the activities of real estate development and related services. The group is managed by Sh. Harjeet Singh, Sh. Anu Aggarwal and others M/s Best Cyber City (India) Private Limited is one of the companies of this group. Case of the assessee company was centralized with Central Circle-11, New Delhi. A notice under section 142(1) was issued on 11-10-2012. Thereafter a questionnaire issued under section 142(1) on 23-10-2012 of the Income Tax Act, 1961. The assessee company filed its return of income declaring loss of Rs. (22,534)/- for the Assessment Year 2011-12 on 20-11-2012.
2. Sh. Rajesh Arora, Chartered Accountant, Authorized Representatives, attended the assessment proceedings in compliance to notices under section 142(1) & 143 (2) of the Income Tax Act, 1961 from time to time. The details/information produced/furnished during the course of assessment proceedings has been examined and placed on record. The case was discussed with the assessee on various related issues and submissions put forth. After discussion income of assessee assessed at Nil Assessed. Allow credit of prepaid taxes. Charge interest as per law. Issue demand notice and challan.
3. This order has been issued with the approval of Additional Commissioner of Income Tax, Central Range-III, New Delhi, as per approval accorded vide F.No. Addl.CIT (CR)-111/2011-12/726 dated 28-3-13.”
5. More than four years thereafter, the impugned notice dated 29th March, 2018 under Section 148 of the Act seeking re-opening of the aforementioned assessment for AY 2011-2012 was issued by the AO. By a reply dated 23rd April, 2018 the Petitioner stated that its original return may be treated as the return filed pursuant to the above notice. The Petitioner also requested for copy of the reasons recorded. On 5th September, 2018 the AO supplied to the Petitioner a copy of the reasons recorded.
Reasons for re-opening
6. In Para 2.1 of the reasons, it was stated that during the course of assessment proceedings of a sister concern of the Petitioner i.e. Best International Projects Private Limited (BIPPL) for AY 2012-2013, it was noticed that a sum of Rs. 40 crores had been transferred from the account of PACL with Axis Bank to the account of the Assessee. It was observed that PACL “is well known for giving and taking accommodating entries”.
7. Para 3 of the reasons contained the analysis of the above information. According to the AO, the creditworthiness and genuineness of the above transaction remained unproved in the case of the Assessee in light of the financial position reflected in the returns and nature of the debit and credit entries reflected in the Bank account statements “in which transactions are squared up on daily basis or a day after day basis.” From statement of one Shri Annu Aggarwal, Director of Assessee it was clear that it had done no business activities ever since its incorporation and had no income for investment. It was further stated that the assessee had no business office premises either on rent basis or ownership basis. It had no fixed moveable assets and no staff to carry on day to day activities. It was then noted that