FARADAY ELECTRICALS PVT LTD V. ASST COMMISSIONER OF INCOME TAX and ANR

CW/14227/2017

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Faraday Electricals Pvt Ltd challenged a notice and subsequent order issued under Section 148 of the Income Tax Act, 1961, by the Assistant and Deputy Commissioner of Income Tax, Circle-2, Jaipur. The notice was issued following a search and survey operation on Praveen Jain, which uncovered that he was involved in providing accommodation entries, including bogus share application money/premium, which were linked to the petitioner. The petitioner argued that the notice was a review of a completed assessment, which was not permissible under Section 148. However, the court found that the notice was based on new material that came to light after the original assessment was completed, thus dismissing the petition.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 684533 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 01-12-2017
• Assessment Year: misc
• Other Referred Cases: Sabh Infrastructure Ltd. Vs. Asstt. Commissioner of Income Tax in W.P. (C) 1357/2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: NIKHIL SIMLOTE; MEENAL GHIYA
• Assessee Lawyers: PRAKUL KHURANA
• Keywords: Accommodation entries; Bogus share application; Income Tax Act; Notice under section 148; Review of assessment
• Section: 148

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR S.B. Civil Writ Petition No. 14227 / 2017 Faraday Electricals Pvt Ltd. Having Registered Office At 36- Gopal Bari, Ajmer Road, Through Abhinav Saboo S/o Mr. S.K. Saboo, Aged About 46 Years, R/o 36- Gopal Bari, Ajmer Road. ----Petitioner Versus 1. Asst. Commissioner of Income Tax, Circle-2, Jaipur 2. Dy. Commissioner of Income Tax, Circle-2, Jaipur ----Respondents _____________________________________________________ For Petitioner(s) : Mr. Prakul Khurana for Mr. Sanjay Jhanwar For Respondent(s) : Mr. Nikhil Simlote and Ms. Meenal Ghiya for Mr. RB Mathur _____________________________________________________ HON'BLE MR. JUSTICE M.N.BHANDARI Judgment 01/12/2017 By this writ petition, a challenge is made to the Notice dated 18.03.2017 under Section 148 of the Income Tax Act, 1961 (for short “the Act of 1961”) and also the impugned order dated 19.07.2017. Learned counsel for the petitioner submits that without new material or information, the Notice under Section 148 of the Act of 1961 was given. It was in regard to those entries for which even regular assessment was made and completed, that too, after making correspondence with the entities named in the Notice under Section 148 of the Act of 1961. The entire material was available at the time of assessment and having completed, a (2 of 4) [CW-14227/2017] Notice under Section 148 for the same entries is nothing but review of the assessment though not permissible under Section 148 of the Act of 1961. The reasons disclosed in the notice are unspecific and otherwise the petitioner was not served with the search and survey report of Praveen Jain. Accordingly, the impugned Notice as well as the order passed thereupon deserves to be set aside. A reference of the judgment of Delhi High Court in the case of Sabh Infrastructure Ltd. Vs. Asstt. Commissioner of Income Tax in W.P. (C) 1357/2016 decided on 25.09.2017 has been given. Therein in absence of supply of the material, the notice and subsequent order were held to be illegal. The judgment aforesaid applies to the facts of this court thus the impugned Notice as well as the order dated 08.06.2017 be set aside. I have considered submissions of learned counsel for the petitioner and perused the record. The petitioner was assessed and it was completed prior to information arising out of search and survey of Praveen Jain. In the search and survey, it was found that he was providing accommodation entries only and was not carrying out genuine business. Therein, certain entries were pertaining to the petitioner as well. On getting the aforesaid information, the Notice under Section 148 of the Act of 1961 was given. It was alleged that the (3 of 4) [CW-14227/2017] petitioner obtained accommodation entries in the form of bogus share application. The regular assessment was based on the material available at that time. The fact about the accommodation entries in the forum of bogus share application money/premium came to the notice only when search and survey was conducted on Praveen Jain and not prior to it. The earlier assessment was based on the material available then and not by treating it to be accommodation entries in the forum of bogus share application money/premium. In view of the above, it cannot be said to be a case of review of the assessment order. Learned counsel for the petitioner has alleged non- supply of the copy of search and survey report of Praveen Jain. I find that while giving reply to the Notice or prior to it, the petitioner did not ask for reply of the search and survey report rather addressed the Notice on merit, that too, by dealing with facts therein. If search and survey report was required then no one prevented him to call for the aforesaid information. A notice under Section 148 of the Act of 1961 needs to show basis and contain fact pertaining to escape income and it exist. The petitioner gave detailed reply on all the issues. He has elaborately disclosed all the issues and thereupon the impugned order was passed. I do not find it to be a case of review of the assessment rather the Notice under Section 148 of the Act of 1961 was served based on the fresh material. Finding no merit in the writ petition, (4 of 4) [CW-14227/2017] it is dismissed. (M.N.BHANDARI) J. sunita/62 "