Delhi High Court - Orders
Pr. Commissioner Of Income Tax ... vs M/S K.R. Pulp And Papers Ltd on 5 April, 2024
Author: Yashwant Varma
Bench: Yashwant Varma, Purushaindra Kumar Kaurav
$~17
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 529/2023
PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2
..... Appellant
Through: Mr. Sanjay Kumar, Ms. Easha,
Ms. Hemlata Rawat, Advs.
Versus
M/S K.R. PULP AND PAPERS LTD. ..... Respondent
Through: Mr. Gautam Jain, Mr. Manish
Yadav, Adv.
CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA
HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR
KAURAV
ORDER
% 05.04.2024 CM APPL. 47597/2023 Bearing in mind the disclosures made, the delay of 270 days in re-filing the appeal is condoned.
The application shall stand disposed of.
ITA 529/20231. Having heard learned counsels for respective parties, we find that the appeal would merit consideration on the following question of law:-
"C. Whether in the circumstances of the case and in law, the Ld. ITAT is correct in treating the assessment order passed under Section 147 read with Section 143(3) of the Income Tax Act, 1961 as void-ab-initio even though the Assessing Officer had formed his reason to believe for escapement of income based on enquiries conducted by the Department & statements of the Directors of the investors companies, thereby following the procedure laid down in This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 10/04/2024 at 21:29:34 the Act before issuing notice under Section 148 of the Income Tax Act, 1961?"
2. This, since Question C would cover all the aspects proposed to be canvassed on the present appeal. We note that prior to initiation of action under Section 147 of the Income Tax Act, 1961 ["Act"], the Assessing Officer ["AO"] had referred to copious material obtained from the Investigation Wing as also documents and materials gathered in the course of a search which was conducted in respect of different entities including the respondent-assessee.
3. We deem it apposite to extract the following from those reasons which were supplied to the respondent-assessee:-
"A search and seizure operation u/s 132 of the I.T. Act, 1961 was carried out in the case of Shri. Raj Gopal Agarwal, Sh Madho Gopal Agarwal, Sh. Gopal Agarwal and M/S. K R Pulp & Papers Ltd. group of companies at various residential and business premises in Delhi, Shahjahanpur and other places on 08.07.2015 by DDIT(inv.), Unit-2(3), New Delhi. During pre and post search proceedings it was found that the group companies have received share capital with exorbitant premium from large number of nondescript companies mainly based in Kolkata and Delhi from the period between 1.4.2008 to 31.3.2009. The enquiries were also got conducted by the Inspectors of the Investigation Wing at Delhi and Kolkata. Most of the entry providing companies were not found existing at the given offices in Kolkata. It was also found that all entry giving companies have been covered under various searches conducted by Kolkata Investigation Wing and all the companies were found bogus and non-existent. Further, in the statement of entry providers along with bogus directors, it has been admitted that they are in the business of providing accommodation entries. M/s K R Pulp and Paper Ltd. is one of them which has received share capital at exorbitant premium from large number of these non-descript companies mainly based in Delhi and Kolkata amounting to Rs.36,64,35,000/- in the financial year 2008-09. The Investigation Wing on the basis of enquiries conducted and information collected has sent name, address and amount of share capital provided to the assessee under consideration which are as under:
xxxx xxxx xxxx This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 10/04/2024 at 21:29:34 Since, on the basis of enquiries conducted and statements recorded, it has been established that the above companies are bogus and nonexistent, the share capital received by M/s K R Pulp and Paper Ltd. amounting to Rs.36,64,35,000/- in the F.Y. 2008-09 from these large number of non-descript companies is nothing but its own unaccounted income routed through these companies. Keeping in view all above, 1 have reason to believe that an amount at least of Rs.36,64,35,000/- has escaped assessment in the case of M/s K R Pulp and Paper Ltd. for the A.Y. 2009-10 within the meaning of Section 147/148 of Income Tax Act, 1961. The re- assessment proceedings in this case for A.Y. 2009-10 pertain to period beyond four years but before the expiry of six years from the date of issue of notice. In this case, since, the assessment has already been made u/s 143(3) of the I T. Act for A.Y. 2009-10 the first proviso to section 147 (as reproduced below) is applicable in this case as the assessee has not disclosed material facts, necessary during the course of assessment which now has that the share capital received by M/s K R Pulp and Paper Ltd. amounting to Rs.36,64,35,000/- in the F.Y. 2008- 09 from these large number of non-descript companies is nothing but its own unaccounted income routed through these companies."
4. The Income Tax Appellate Tribunal ["ITAT"], however, has and on a prima facie examination unjustifiably held as follows: -
"8.9 Since in the instant case the reopening has been made after a period of 04 years from the end of the relevant assessment year, the original assessment was completed under section 143(3) of the I.T. Act, 1961 and in the reasons recorded by the A.O. there is mere allegation of failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of assessment, but the reasons do not indicate how the assessee has failed to make full and true disclosure of all material facts, therefore, such reopening in our opinion is in violation of First proviso to Section 147 of the I.T. Act, 1961 in the light of the decisions of Hon'ble Delhi High Court cited (supra). The Ld. D.R. also could not controvert the finding given by the Ld. CIT(A) on this issue while quashing the reassessment proceedings. Since the order of the Ld. CIT(A) is based on judicial precedents including the decisions of Hon'ble jurisdictional Delhi High Court cited (supra) and the Ld. D.R. could not bring any material to controvert the findings given by the Ld. CIT(A) on this issue, therefore, we do not find any infirmity in the detailed order of the Ld. CIT(A) in quashing the re-assessment proceedings. We, therefore, uphold the same and the grounds raised by the Revenue on this issue are dismissed."
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 10/04/2024 at 21:29:34
5. We thus find that the appeal would merit further consideration. The appeal shall consequently stand admitted on aforenoted Question C.
6. List again on 16.08.2024.
YASHWANT VARMA, J.
PURUSHAINDRA KUMAR KAURAV, J.
APRIL 5, 2024/neha This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 10/04/2024 at 21:29:35