M/S. R.K. Bullion Through Partener Shri Jitesh Dhanwani vs. Asstt. Commissioner Of Income Tax Central

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WP/25417/2024HC Madhya Pradesh25 November 2024Bench: HON'BLE SHRI JUSTICE VIVEK RUSIA5 pages
For Petitioner: Yatish Kumar Laad
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the writ petition. It held that the order under Section 148A(d) was passed after giving the petitioner an opportunity to be heard. The order was based on the statement of Nikhil Soni, proprietor of M/s Vivek Jewellers, given during a search, where he admitted to providing accommodation entries to the petitioner through his business concerns, as reflected in seized documents. The Court found a prima facie case that accommodation entry of Rs. 6,39,29,700/- remained unexplained and had escaped assessment for AY 2017-18. The Court noted that the proceedings were within limitation as per the impugned order and that the entries were found in material collected during the demonetisation period search. The petitioner had not placed material regarding assessment proceedings of M/s Vivek Jewellers & JBL Group. The Court concluded that a detailed inquiry would be conducted under Section 148, where the petitioner would have ample opportunity to prove their case, and therefore, no case for interference was made out. The issue of whether the assessment reopening was valid based on third-party statements or the applicability of new sections was not explicitly decided on merits but implicitly rejected by dismissing the petition.

What were the facts?

The petitioner, M/s. R.K. Bullion, a partnership firm trading in gold and silver, filed its return for AY 2017-18 on 31.08.2017, disclosing income from M/s Vivek Jewellers. This return was accepted after scrutiny. Subsequently, searches were conducted at Jindal Bullion Limited (JBL Group) on 05.01.2017 and M/s Vivek Jewellers on 08.05.2019. Following these searches, notices under Section 153C were issued for AY 2015-16 and 2017-18. The petitioner was also issued a notice under Section 142(1) requesting ledger accounts and to show cause why books should not be rejected under Section 145(3). An order under Section 143(3) r/w 153C was passed on 30.12.2021, directing penalty notices. The petitioner then received a notice under Section 148A(b) alleging that Rs. 6,39,29,700/- received via RTGS from M/s Vivek Jewellers during demonetisation represented an accommodation entry and income escaped assessment for AY 2017-18. After the petitioner's reply, an order under Section 148A(d) was passed on 28.03.2024, recommending a notice under Section 148, which was subsequently issued. The petitioner filed a writ petition challenging these proceedings.

What were the issues?

1. Whether the reopening of assessment under Section 148A and issuance of notice under Section 148 is valid when based solely on third-party statements/records not binding on the petitioner, and when the search was conducted prior to the introduction of Section 148/148A w.e.f. 01.04.2021, especially after an assessment under Section 153 was already completed? Assessee's contentions: The reopening is invalid as it relies on third-party information. The notice under Section 148 cannot be issued as the search predates the introduction of new sections, and no fresh assessment can be made after a completed assessment under Section 153. Reliance was placed on *CIT v. Kelvinator of India Limited*, *Siemens Limited v. DCIT*, *Mahogany Logistics Services (P.) Limited v. ITO*, and *Tirupati Construction Company v. ITO*. Revenue's contentions: The writ petition is not maintainable as the petitioner has alternative remedies before the competent authority, appellate authority, and the ITAT. Reliance was placed on *Laxminarayan Patidar v. ITO*.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148,Section 139,Section 143(2),Section 143(3),Section 153C,Section 142(1),Section 145(3),Section 271(1)(c),Section 270A,Section 153

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF MADHYA PRADESH AT INDORE BEFORE HON'BLE SHRI JUSTICE VIVEK RUSIA & HON'BLE SHRI JUSTICE BINOD KUMAR DWIVEDI ON THE 25th OF NOVEMBER, 2024 WRIT PETITION No. 25417 of 2024 M/S. R.K. BULLION THROUGH PARTENER SHRI JITESH DHANWANI Versus ASSTT. COMMISSIONER OF INCOME TAX CENTRAL AND OTHERS Appearance: Shri Ashish Goyal, learned counsel for the petitioner. Shri Harsh Parashar, learned counsel for the respondent on advance copy. ORDER Per: Justice Vivek Rusia Heard on the question of admission & interim relief. 02. The petitioner has filed the present petition under Article 226 of the Constitution of India challenging the validity of order dated 28.03.2024 passed under Section 148A(d) of the Income Tax Act, 1961 (in short 'the Act'). The petitioner is also aggrieved by the notice issued under Section 148 of the Act for reassessment of income for the Assessment Year - 2017 - 18. 03. Facts of the case, in nutshell, are that the petitioner is a partnership firm engaged in the business of trading of gold, silver bullion and ornaments. The petitioner submitted the Income Tax Return under Section 1 WP-25417-2024 NEUTRAL CITATION NO. 2024:MPHC-IND:34458 Signed by: RAVI PRAKASH Signing time: 06-12-2024 18:00:06 Signature Not Verified

139 of the Act on 31.08.2017 disclosing the income received from M/s Vivek Jewellers. The said return was selected for scrutiny by issuing notice under Section 143(2) of the Act. The Assessing Officer examined all the documents and passed the assessment order dated 29.12.2019 accepting the return submitted by the petitioner. 04. A search and seizure operation under Section 132 of the Income Tax Act was conducted at the premises of Jindal Bullion Limited (JBL Group) on 05.01.2017, followed by notice under Section 153C of the Act dated 30.09.2020 for the Assessment Year - 2015 - 16 & 2017 - 18. Another search and seizure operation under Section 132 of the Act was also conducted in the premises of Nikhil Soni, Proprietor of M/s Vivek Jewellers on 08.05.2019. 05. The Central Circle 1, Indore Income Tax Department issued a notice under Section 142(1) of the Act calling upon the petitioner to furnish the ledger account copy of JBL Group, K J Sons Jewellers Private Limited and of M/s Vivek Jewellers for the year under consideration. The petitioner was also called upon to show cause and explain why your books of account be not rejected under Section 145(3) of the Act if 'Ty' ledgers are not found recorded in your books of account. 06. The petitioner submitted a detailed reply to the aforesaid notice, and thereafter, the Assessing Officer passed an order under Section 143(3) r/w section 153C of the Act on 30.12.2021 directing for issuance of penalty notice under Section 271(1)(c) of the Act for furnishing inaccurate particular of income of Assessment Year - 2016 - 17 and under Section 270A for 2 WP-25417-2024 NEUTRAL CITATION NO. 2024:MPHC-IND:34458 Signed by: RAVI PRAKASH Signing time: 06-12-2024 18:00:06 Signature Not Verified

Assessment Year - 2017 - 18 for misreporting of income. 07. Thereafter, the petitioner was served with the notice under Clause (b) of Section 148A of the Act because during the demonetisation period i.e. Financial Year - 2016 - 17, the bank account of M/s R.K. Bullion received RTGS credit amounting to Rs.6,39,29,700/- through the bank account of M/s Vivek Jewellers and the petitioner is one of the beneficiary of the accommodation entry provided by M/s Vivek Jewellers, proprietor Nikhil Soni and the income to the extent of Rs.6,39,29,700/- has escaped assessment from Assessment Year - 2017 - 18. 08. The petitioner submitted a detailed reply to the aforesaid notice, and thereafter, the final order was passed on 28.03.2024 because the assessee failed to explain the nature and source of Rs.6,39,29,700/- which has escaped assessment, and recommended for issuance of show-cause notice under Section 148 of the Act. Thereafter, a notice under Section 148 of the Act has been issued to the petitioner. Hence, the petitioner has approached this Court by way of this writ petition inter alia on the ground that the petitioner is being subjected to harassment again and again in respect of assessment proceedings. 09. Learned counsel for the petitioner submits that there cannot be reopening of assessment only on the basis of third party statement / record which is not binding on the petitioner. It is further submitted that the notice under Section 148 of the Act cannot be issued as the search was conducted before 05.01.2017. The petitioner had already been subjected to assessment under Section 153 of the Act and no infirmity was found, therefore, after 3 WP-25417-2024 NEUTRAL CITATION NO. 2024:MPHC-IND:34458 Signed by: RAVI PRAKASH Signing time: 06-12-2024 18:00:06 Signature Not Verified

introduction new section i.e. 148 / 148A w.e.f. 01.04.2021, no fresh assessment can be done. In support of the aforesaid contentions, learned counsel for the petitioner has placed reliance upon several judgments delivered in the cases of Commissioner of Income-tax, Delhi v/s Kelvinator of India Limited reported in (2010) 187 Taxman 312 (SC) , Siemens Limited v/s Deputy Commissioner of Income-tax reported in (2024) 160 taxmann.com 243 (Bombay), Mahogany Logistics Services (P.) Limited v/s Income Tax Officer reported in (2024) 166 taxmann.com 595 (Madras) and Tirupati Construction Company v/s Income Tax Officer reported in (2024) 165 taxmann.com 176 (Rajasthan), in which various High Courts have set aside the order passed under Section 148A(d) and notice issued under Section 148 of the Act. 10. Shri Harsh Parashar, learned counsel for the Income Tax Department submits that the present writ petition is not maintainable as the petitioner is having remedy to raise all these grounds before the competent authority, thereafter, he will have remedy to file an appeal before the appellate authority as well as before the Income Tax Appellate Tribunal. In support of the aforesaid contention, learned counsel has placed reliance upon a judgment delivered by Co-ordinate Bench in the case of Laxminarayan Patidar v/s Income Tax Officer & Another (Writ Petition No.13065 of 2022). Heard. 11. After giving opportunity of hearing to the petitioner, the order under Section 148A(d) of the Act has been passed by the respondents. The order is based on the statement of Nikhil Soni given on oath during the 4 WP-25417-2024 NEUTRAL CITATION NO. 2024:MPHC-IND:34458 Signed by: RAVI PRAKASH Signing time: 06-12-2024 18:00:06 Signature Not Verified

(VIVEK RUSIA) JUDGE (BINOD KUMAR DWIVEDI) JUDGE search. Nikhil Soni admits that he had provided accommodation entry to the present petitioner through his business concerns which is reflected from the diary (pages - 7 & 8) of LPS - 08, found and seized from the business premises of M/s Vivek Jewellers. Therefore, prima facie opinion was recorded that accommodation entry of Rs.6,39,29,700/- remained unexplained in the hand of assessee i.e. present petitioner which has escaped assessment from the Assessment Year - 2017 - 18. The petitioner is yet to explain the nature and source of the aforesaid income. The proceedings are within limitation as observed in para - 8 of the impugned order. 12. It is important to mention here that the aforesaid entries are found in the material collected in search and seizure during the demonetisation period. The petitioner has not placed any material in respect of assessment proceedings conducted against M/s Vivek Jewelers & Jindal Bullion Limited, therefore, detailed enquiry will be conducted under Section 148 of the Act by the authority, where the petitioner will get ample opportunity to prove his case. Hence, no case for interference is made out in the matter. 13. In view of the above, Writ Petition stands dismissed. Ravi

5 WP-25417-2024 NEUTRAL CITATION NO. 2024:MPHC-IND:34458 Signed by: RAVI PRAKASH Signing time: 06-12-2024 18:00:06 Signature Not Verified

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