Ambuj Foods Pvt. Ltd. V. Principal Commissioner of Income Tax and Others

WTAX/23/2022

AI Insights

The case involves M/S Ambuj Foods Pvt. Ltd., which filed a writ petition against the Principal Commissioner of Income Tax and others, challenging the reassessment notice issued under Sections 147/148 of the Income Tax Act, 1961 for the assessment year 2013-14. The petitioner argued that the reassessment was initiated beyond the permissible period and constituted a change of opinion, which is not a valid ground for reopening an assessment. The respondents contended that new information regarding the routing of funds through shell companies justified the reassessment. The court directed the respondents to consider the petitioner's objections and issue a reasoned order.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 682058 (HC-LUCKNOW)
• Appeal Type: Others
• Pronouncement Date: 11-02-2022
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax vs. Kelvinator of India Limited (2010) 320 ITR 561 (SC), Vishnu Traders vs. State of Haryana 1995 Sup.(1) SCC 461
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: MANISH MISRA
• Assessee Lawyers: PRADEEP AGRAWAL
• Keywords: Change of opinion; Escaped assessment; Income Tax; Notice; Proceedings; Reassessment; Share capital; Share premium; Writ Certiorari
• Section: 147; 148; 143(3); 142(1); 143(2)

Judgement Text

"1/- Court No. - 5 Case :- WRIT TAX No. - 23 of 2022 Petitioner :- M/S Ambuj Foods Pvt. Ltd.Thru. Its Director Respondent :- Principal Comm. Of Income Tax And Others Counsel for Petitioner :- Pradeep Agrawal Counsel for Respondent :- Manish Misra Hon'ble Mrs. Sangeeta Chandra,J. Hon'ble Mohd. Faiz Alam Khan,J. 1. Heard learned counsel for the petitioner. 2. This petition has been filed with the following main prayer:- \"a)Issue a writ, order or direction in the nature of writ certiorari to quash the notice/proceedings u/s 147/148 dated 31.03.2021 for the reassessment under the Income Tax Act, 1961 for the A. Y. 2013- 14 as contained in Annexure No.1 to this Writ Petition after summoning the records. b) Issue a writ, order or direction in the nature of writ of certiorari to quash the consequential proceedings initiated by the Opp. Party No.2 and 3 on the basis of notice u/s 148 for the A. Y. 2013-14. c0 Issue a writ, order or direction in the nature of writ of mandamus directing the Opp. Parties not to proceed further in pursuance of notice u/s 148 of the Income Tax Act, 1961 for the A. Y. 2013-14 during the pendency of this Writ Petition before this Hon'ble Court failing which the Writ Petition will become infructuous. ***\" 3. It has been submitted by Sri Pradeep Agarwal, learned counsel appearing on behalf of the petitioner that the petitioner is an assessee to Income Tax on Permanent Account Number- 2/- AAJCA0501A and its books of accounts has been accepted up to the assessment year 2012-13. During the course of scrutiny, the assessment proceedings for the assessment year 2013-14, a notice under Section 142 (1) was issued alongwith the questionnaire by the assessing authority regarding the share capital and the share premium received and on several other issues. The petitioner submitted a detailed reply on 13.10.2014 giving complete address of the creditors as well as investors of the company to whom shares had been allotted. The reply dated 13.10.2014 was considered by the assessing authority in depth and nothing incriminating was found. The assessing authority completed the assessment for the year 2013-14 by an order dated 10.11.2014 and the returned income was accepted. On 31.03.2021, after completion of assessment on 10.11.2014, a re-assessment notice under Section 148 was issued for the year 2013-14 i.e. beyond four years from the end of assessment year since limitation expired on 31.03.2018. The petitioner has submitted a response to the notice under Section 148 on 28.04.2021 and sought the copy of reasons for initiating the proceeding under Section 148. Notice under Section 143 (2) was issued alongwith copy of reasons recorded for initiation of proceeding under Section 148 for the assessment year 2013-14. The petitioner has submitted detailed objections to the reasons recorded for reopening the assessment for the year 2013- 14 beyond the period of four years, on 01.09.2021, giving material evidence necessary and also stating that the returned income was accepted after scrutiny and no incriminating material was found by the Assessing Officer earlier in the reply of the company dated 30.10.2014. The objections were ignored without considering the decision of the Income Tax Appellate Tribunal dated 11.08.2021 as well as the decision of the Apex Court and of this Court on the 3/- settled issue as to when assessment can be reopened and the opposite party no.2 is now proceeding to assess the petitioner under Section 148 for the assessment year 2013-14. 4. It has also been submitted that the reasons given in the reply of the department amount to change of opinion and for change of opinion the proceedings under Section 147/148 of the Act cannot be initiated in view of the decisions of the Apex Court in the case of ‘Commissioner of Income Tax vs. Kelvinator of India Limited (2010) 320 ITR 561 (SC)’, which has been followed by this Court as well as other Courts of the country being a binding precedent. 5. Sri Manish Mishra, Advocate appears for all the opposite parties and he has referred to the Proviso to Section 147 of the Income Tax Act, which reads as under:- \"Provided- that where an assessment under sub section (3) of the Section 143 or this Section has been made for the relevant assessment year, no action shall be taken under this Section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason or the failure on the part of the assessee…. to disclose fully and truly all material facts necessary for his assessment, for that assessment year.\" 6. It has been submitted by Sri Manish Mishra on the basis of Annexure-03 of the petition that the petitioner had initially disclosed its income as only Rs. 3,65,000/- for assessment year 2013-14. Later on, during enquiry of shell companies information was collected by the then Assessing Officer himself and on the basis of information regarding routing of funds in the garb of share premium received from ADIT (Inv.) Unit 6, Kolkata and ACIT Single (2), New Delhi and ITO (Inv.) Unit 4, Kolkata in the cases 4/- of M/s Arohul Foods Pvt. Ltd. and some other assesses. Subsequent to such information received, the returns of other assesses falling under the jurisdiction of the opposite party no. 2 were also examined thoroughly on similar issues. On examination, it was found that the assessee companies have received funds to the tune of Rs. 95,00,000/- (share capital of Rs. 4,75,000/- and share premium thereon of Rs. 90,25,000/-) was by way of re- routing of funds by Ms. Radha Fincome Pvt. Limited & Others in financial year 2012-13, relevant to assessment year 2013-14. As per the departmental database of bogus shell companies, the accommodation entry providers and operators, the company was merely a paper concern having no existent & real business. As a result, cases of these assessees for financial year 2011-2012, relevant to assessment year 2012-13, were re-opened under Section 147 of the Income Tax Act. After the detailed analysis of the information in possession of the office, it was established that the assessee had routed its own money in the garb of shares/application money and share premium through a number of shell companies operating from Kolkata. After a detailed discussion on the assessment order for the assessment year 2012- 13, an order was passed by making total addition of Rs. 2,56,25,000/- under Section 143 (3)/147 of the Income Tax Act, 1961. 7. Sri Manish Mishra has also pointed out from page 60 of the paper book, the copy of the bank transaction of account of M/s Radha Fincom Private Limited. He has shown that on 02.02.2013 Rs.70,00,000/- was deposited in the account. He has pointed out from the copy of passbook of the petitioner that Rs.70,00,000/- was deposited and on 02.02.2013 itself withdrawal of Rs. 25,00,000/- was made for two companies M/s Ambuj Foods 5/- Private Limited and M/s Saket Foods Private Limited, Rs. 20,00,000/- was withdrawn for M/s Sapna Private Limited and Rs.10,00,000/-, was withdrawn on 06.02.2013 for M/s Suman Fashions Private Limited. 8. It has been submitted that the department collected information and on the basis of specific information, it has found that the income of the assessee has escaped assessment and therefore, notice was issued under Section 148 and proceedings initiated. 9. Sri Manish Mishra, has pointed out that it is only a notice that has been issued under Section 147/148 and proceedings have been initiated for reassessment by the opposite party no.2 and 3 for which no writ petition would lie as final decision is yet be taken by the department. 10. Learned counsel for the opposite party no. 2 and 3 has pointed out, the instructions issued by the Government of India, Department of Revenue, namely Central Board of Direct Taxes on 16.03.2021, wherein it has been specifically mentioned that if limitation in cases of escaped of income of the assessee had expired earlier for the assessment year 2013-14 to assessment year 2017-18, it shall be extended to 31.03.2021 and the notice under Section 148 has been issued to the petitioner on 31.03.2021 well within time. Learned counsel has also pointed out Sub-Clause (vi) of paragraph (B) of the said circular dated 15.03.2021. 11. Learned counsel for the petitioner in rejoinder has submitted that two Division Benches of this Court had entertained petitions on similar issues with regard to reopening of assessment in Writ Petition No. 31703 (MB) of 2018 M/s Mehrab Logistics and Aviation Limited, Gomti Nagar, Lucknow vs. Principal 6/- Commissioner of Income Tax-II, Ashok Marg, Lucknow and another in Writ Petition No. 19 (MB) of 2022 M/s Saket Foods Ltd. Chhawani Bazar Thru. Director Bahraich vs. Principal Commissioner of Income Tax and others, where this Court had invited the department to filed its counter affidavit and in the meantime the reassessment proceedings under Section 148 of the Income Tax Act for the relevant assessment years was to go on however final orders should not be passed till the date fixed for hearing by the Court. He prays for similar order claiming parity. 12. However, this Court finds the law as given in Vishnu Traders vs. State of Haryana 1995 Sup.(1) SCC 461 would not be applicable in the petitioners case, because this petition is being finally decided by us. Parity in interim orders can only be granted where writ petitions remain pending on similar facts. 13. This Court having considered the facts and more specifically the reasons given by the department in response to the request of the assessee, which have been referred to in detailed by us herein above, finds no good ground to interfere at this stage in the reassessment proceedings. The petitioner has already submitted two replies dated 28.04.2021 and 01.09.2021 to the department. 14. This petition is disposed of with a direction to the opposite parties to consider such objections and passed a reasoned and speaking order thereon within a period of three months from the date a copy of this order be produced before him. Order Date :- 11.2.2022 Darpan Sharma Digitally signed by DARPAN SHARMA Date: 2022.02.16 11:25:29 IST Reason: Location: High Court of Judicature at Allahabad, Lucknow Bench "