M/S. ABHIJIT AMAR AGRO PVT. LTD. vs. THE PRINCIPAL COMMI.OF INCOME TAX and ANR.

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CW/13495/2017HC RajasthanRJHC01066935201728 November 201711 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that there was sufficient reason for the respondent authorities to believe that income may have escaped assessment. The Court applied the principles laid down in Supreme Court judgments such as "Raymond Woollen Mills Ltd. Vs. Income Tax Officer (236 ITR 34)" and "ITO Vs. Lakhmani Mewal Das (1976) 3 SCC 757". These judgments establish that the court's role at the stage of reopening is only to see if there was prima facie material for the Department to form a belief, not to assess the sufficiency or correctness of that material. The Court found that the impounded documents from the survey, the nature of the business as per the Memorandum of Association, and the subsequent actions taken under the Prohibition of Benami Property Transactions Act, including the provisional attachment of properties, constituted sufficient material to form a reasonable belief of escapement of income. Therefore, the reopening of assessments was justified.

What were the facts?

The petitioners, M/s Ayush Agrotech Private Limited and other associated companies, filed writ petitions challenging notices issued under Section 148 of the Income Tax Act, 1961, for reopening their assessments. The notices were issued by the Assistant Commissioner of Income Tax, Circle-1, Bikaner, based on information gathered during a survey of M/s. Akash Amar Agrotech Pvt. Ltd. on December 5, 2013. The survey revealed that the assessee companies sold land in the financial year 2009-10, claiming the income as exempt agricultural income. Investigations suggested the companies were involved in the business of sale and purchase of land, including agricultural land, which was also an object in their Memorandum of Association. The Revenue contended that impounded documents and post-survey investigations indicated potential tax evasion, stamp duty evasion, and benami properties.

What were the issues?

1. Whether the Assessing Authority had sufficient material to form a belief that income had escaped assessment, justifying the reopening of assessments under Section 147 of the Income Tax Act, 1961? Assessee's Contentions: The petitioners argued that the reopening of assessment was based on mere suspicion and not on tangible material. They relied on judgments like "Income Tax Officer Vs. Delhi Development Authority (2017) 395 ITR 677 (Delhi)" to assert that reopening after many years requires more than suspicion. They also cited "Chhugamal Rajpal Vs. S.P. Chaliha (1971) 79 ITR 603 (SC)" and "Bakulbhai Ramanlal Patel Vs. ITO (2011) 56 DTR 212 (Guj.)" to argue that Section 147 action is not permissible for mere exploratory investigations. Revenue's Contentions: The Revenue contended that the survey revealed documents indicating the assessee companies were involved in the business of sale and purchase of land, and their Memorandum of Association also listed this as an object. They further submitted that evidence related to tax evasion, stamp duty evasion, violation of Land Ceiling Acts, falsification of sale deeds, and benami properties was found. Show cause notices were issued under the Prohibition of Benami Property Transactions Act, and properties were provisionally attached.

Which sections of the Income-tax Act were involved?

Section 147,Section 148

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR S.B. Civil Writ Petition No. 13414 / 2017 M/s Ayush Agrotech Private Limited, A-21, IIIrd Floor, Room No. 5, Sadulganj, Bikaner Through Its Director Shri Ashok Kumar Modi S/o Late Shri Hanuman Prasad Modi, Aged 59 Years, Resident of A-21, Sadulganj, Bikaner. ----Petitioner Versus 1. The Principal Commissioner of Income Tax, Income Tax Department, Bikaner. 2. The Assistant Commissioner of Income Tax, Circle-1, Room No. 52, Income Tax Office, Rani Bazar, Bikaner. ----Respondents Connected With S.B. Civil Writ Petition No. 13412 / 2017 M/s Akhilesh Agrotech Private Limited, A-21, IIIrd Floor, Room No. 5, Sadulganj, Bikaner Through Its Director Shri Ashok Kumar Modi S/o Late Shri Hanuman Prasad Modi, Aged 59 Years, Resident of A-21, Sadulganj, Bikaner. ----Petitioner Versus 1. The Principal Commissioner of Income Tax, Income Tax Department, Bikaner. 2. The Assistant Commissioner of Income Tax, Circle-1, Room No. 52, Income Tax Office, Rani Bazar, Bikaner. ----Respondents S.B. Civil Writ Petition No. 13469 / 2017 M/s Ankit Agrochem Private Limited, A-21, IIIrd Floor, Room No. 5, Sadulganj, Bikaner Through Its Director Shri Avinash Modi S/o Shri Arun Kumar Modi, Aged About 37 Years, Resident of A-21, Sadulganj, Bikaner. ----Petitioner Versus 1. The Principal Commissioner of Income Tax, Income Tax Department, Bikaner. 2. The Assistant Commissioner of Income Tax, Circle-1, Room No. 52, Income Tax Office, Rani Bazar, Bikaner. (D.B. SAW/1126/2017 has been filed in this matter. Please refer the same for further orders) (Uploaded on 16/11/2023 at 12:41:23 PM) (Downloaded on 28/10/2026 at 12:25:25 AM) (2 of 11) [CW-13414/2017] ----Respondents S.B. Civil Writ Petition No. 13474 / 2017 M/s Akalvya Agrotech Private Limited, A-21, IIIrd Floor, Room No. 5, Sadulganj, Bikaner Through Its Director Shri Avinash Modi S/o Shri Arun Kumar Modi, Aged About 37 Years, Resident of A-21, Sadulganj, Bikaner. ----Petitioner Versus 1. The Principal Commissioner of Income Tax, Income Tax Department, Bikaner. 2. The Assistant Commissioner of Income Tax, Circle-1, Room No. 52, Income Tax Office, Rani Bazar, Bikaner. ----Respondents S.B. Civil Writ Petition No. 13475 / 2017 M/s Amar Pratap Agro Private Limited, A-21, IIIrd Floor, Room No. 5, Sadulganj, Bikarner Through Its Director Shri Ashok Kumar Modi S/o Late Shri Hanuman Prasad Modi, Aged About 59 Years, Resident A-21, Sadulganj, Bikaner. ----Petitioner Versus 1. The Principal Commissioner of Income Tax, Income Tax Department, Bikaner. 2. The Assistant Commissioner of Income Tax, Circle -1, Room No. 52, Income Tax Office, Rani Bazar, Bikaner. ----Respondents S.B. Civil Writ Petition No. 13495 / 2017 M/s Abhijit Amar Agro Private Limited, A-21, IIIRd Floor, Room No. 5, Sadulganj, Bikaner Through Its Director Shri Avinash Modi S/o Shri Arun Kumar Modi, Resident of A-21, Sadulganj, Bikaner. ----Petitioner Versus 1. The Principal Commissioner of Income Tax, Income Tax Department, Bikaner. 2. The Assistant Commissioner of Income Tax, Circle-1, Room No. (D.B. SAW/1126/2017 has been filed in this matter. Please refer the same for further orders) (Uploaded on 16/11/2023 at 12:41:23 PM) (Downloaded on 28/10/2026 at 12:25:25 AM) (3 of 11) [CW-13414/2017] 52, Income Tax Office, Rani Bazar, Bikaner. ----Respondents S.B. Civil Writ Petition No. 13499 / 2017 M/s Avijit Agro Private Limited, A-21, IIIrd Floor, Room No. 5, Sadulganj, Bikaner Through Its Director Shri Ashok Kumar Modi S/o Late Shri Hanuman Prasad Modi, Aged 59 Years, Resident of Sadulganj, Bikaner. ----Petitioner Versus 1. The Principal Commissioner of Income Tax, Income Tax Department, Bikaner. 2. The Assistant Commissioner of Income Tax, Circle-1, Room No. 52, Income Tax Office, Rani Bazar, Bikaner. ----Respondents S.B. Civil Writ Petition No. 13514 / 2017 M/s Anshu Biotech Private Limited, A-21, IIIrd Floor, Room No.5, Sadulganj, Bikaner Through Its Director Shri Avinash Modi S/o Shri Arun Kumar Modi, Aged About 37 Years, Resident of A-21, Sadulganj, Bikaner. ----Petitioner Versus 1. The Principal Commissioner of Income Tax, Range-1, Income Tax Department, Bikaner. 2. The Assistant Commissioner of Income Tax, Circle-1, Room No. 52, Income Tax Office, Rani Bazar, Bikaner. ----Respondents S.B. Civil Writ Petition No. 13503 / 2017 M/s Amar Pratap Agro Private Limited, A-21, IIIrd Floor, Room No. 5, Sadulganj, Bikaner Through Its Director Shri Ashok Kumar Modi S/o Late Shri Hanuman Prasad Modi, Aged About 59 Years, Resident of A-21, Sadulganj, Bikaner. ----Petitioner Versus 1. The Principal Commissioner of Income Tax, Income Tax Department, Bikaner. (D.B. SAW/1126/2017 has been filed in this matter. Please refer the same for further orders) (Uploaded on 16/11/2023 at 12:41:23 PM) (Downloaded on 28/10/2026 at 12:25:25 AM) (4 of 11) [CW-13414/2017] 2. The Assistant Commissioner of Income Tax, Circle-1, Room No. 52, Income Tax Office, Rani Bazar, Bikaner. ----Respondents S.B. Civil Writ Petition No. 15452 / 2017 M/s Ayush Agrotech Private Limited, A-21, IIIrd Floor, Room No. 5, Sadulganj, Bikaner Through Its Director Shri Ashok Kumar Modi S/o Late Shri Hanuman Prasad Modi, Aged About 59 Years, Resident of A-21, Sadulganj, Bikaner. ----Petitioner Versus 1. The Principal Commissioner of Income Tax, Income Tax Department, Bikaner. 2. The Assistant Commissioner of Income Tax, Circle-1, Room No. 52, Income Tax Office, Rani Bazar, Bikaner. ----Respondents S.B. Civil Writ Petition No. 15455 / 2017 M/s Abhijit Amar Agro Private Limited, A-21, IIIrd Floor, Room No. 5, Sadulganj, Bikaner Through Its Director Shri Avinash Modi S/o Shri Arum Kumar Modi, Aged About 37 Years, Resident of A-21, Sadulganj, Bikaner. ----Petitioner Versus 1. The Principal Commissioner of Income Tax, Income Tax Department, Bikaner. 2. The Assistant Commissioner of Income Tax, Circle-1, Room No. 52, Income Tax Office, Rani Bazar, Bikaner. ----Respondents S.B. Civil Writ Petition No. 15463 / 2017 M/s Abhijit Amar Agro Private Limited, A-21, IIIrd Floor, Room No. 5, Sadulganj, Bikaner Through Its Director Shri Avinash Modi S/o Shri Arun Kumar Modi, Aged 37 Years, Resident of A-21, Sadulganj, Bikaner. ----Petitioner Versus 1. The Principal Commissioner of Income Tax, Income Tax Department, Bikaner. (D.B. SAW/1126/2017 has been filed in this matter. Please refer the same for further orders) (Uploaded on 16/11/2023 at 12:41:23 PM) (Downloaded on 28/10/2026 at 12:25:25 AM) (5 of 11) [CW-13414/2017] 2. The Assistant Commissioner of Income Tax, Circle-1, Room No. 52, Income Tax Office, Rani Bazar, Bikaner. ----Respondents S.B. Civil Writ Petition No. 15464 / 2017 M/s. Ayush Agrotech Pvt. Limited, A-21, IIIrd Floor, Room No. 5, Sadulganj, Bikaner Through Its Director Shri Ashok Kumar Modi S/o Late Shri Hanuman Prasad Modi, Aged About 59 Years, Resident of A-21, Sadulganj, Bikaner. ----Petitioner Versus 1. The Principal Commissioner of Income Tax, Income Tax Department, Bikaner. 2. The Assistant Commissioner of Income Tax, Circle-1, Room No. 52, Income Tax Office, Rani Bazar, Bikaner. ----Respondents _____________________________________________________ For Petitioner(s) : Mr. Mahendra Gargiya, Mr. Neeraj Kumar Jain For Respondent(s) : Mr. K.K. Bissa _____________________________________________________ HON'BLE MS. JUSTICE NIRMALJIT KAUR

Judgment / Order 28/11/2017

All the above-mentioned writ petitions shall stand decided by this common order as the issue involved is identical. The writ petitions have been filed seeking quashing of the impugned notice dated 24.03.2017 as also the order rejecting the objections dated 7.7.2017. The petitioner assessee filed its return of income for the assessment year 2015-16 on 27.09.2015 which consisted of business income, short term capital gain and long term capital gain. The respondent No.2 issued notice dated 24.03.2017 stating (D.B. SAW/1126/2017 has been filed in this matter. Please refer the same for further orders) (Uploaded on 16/11/2023 at 12:41:23 PM) (Downloaded on 28/10/2026 at 12:25:25 AM) (6 of 11) [CW-13414/2017]

therein that they had reasons to believe that the petitioner’s income chargeable to tax for Assessment Year 2015-16 has escaped assessment and asked them to deliver a return in the prescribed form before the expiry of 30 days from the service. The petitioner submitted their objections to the notice. However, the objections submitted by the petitioner were rejected vide order dated 7.7.2017. While praying for setting aside the impugned notice and objections, learned counsel for the petitioners submitted that no reasons were recorded for issuing the notice. Further, their main object was to carry on agricultural, horticultural etc. and other objects of the Memorandum of Association were secondary in nature. The main object of the petitioner assessee as per MOA was to set up and operate biopark, research and development and training activities, undertake demonstrate activities related to farming practices, to carry on business of farming, horticultural, floriculture, tissue-culture, green houses, red-houses, red-houses, drip irrigation, dairies, sericulture, cultivation of all kinds of food- grains, seeds, oil-seeds, fruits, flowers, Zozoba, proprietors of orchards. The agricultural land purchases by the petitioner- assessee cannot be said to be its stock in trade. The land in question was classified as agriculture land in revenue record and after its purchase, actual cultivation has been carried out by the petitioner-assessee for raising grass for grazing cattles free of cost and there was no intention on the part of the petitioner-assessee to put the land for non-agricultural purpose. Merely because the (D.B. SAW/1126/2017 has been filed in this matter. Please refer the same for further orders) (Uploaded on 16/11/2023 at 12:41:23 PM) (Downloaded on 28/10/2026 at 12:25:25 AM) (7 of 11) [CW-13414/2017]

land in question was sold for profit, it cannot be held that the income arising from its sale was taxable as business income and not capital gain. It was further alleged that the respondent No.2 had rejected the objections in a mechanical manner by holding that the intention of the petitioner-assessee to sell the land would be considered at the time of assessment proceedings by taking into account the history of transaction, other business activities, mode of finance and other circumstantial evidence. The said notice could not have been sent on mere suspicion. There is no material to proceed against the petitioner – assessee. Reply has been filed. As per the reply, a notice dated 10.08.2017 was issued to the petitioners requiring them to submit their reply by 16.08.2017 which they failed to do. Yet another notice was issued on 20.09.2017 as per which, the reply was to be filed by 25.09.2017 but no compliance was made. Another order dated 30.10.2017 was issued and penalty too had to be imposed on the petitioner. Also, in case of any future grievance, the petitioner is free to approach the appellate forum. Thus, by filing this writ petition, the petitioners have by-passed all other efficacious and statutory remedies. Further, the evidence in possession of the Income Tax Department indicates that the petitioner and/or its sister concerns seems to be habitual defaulters of multiple laws, including blatant violations of the provisions of not only Income Tax Act, 1961 but also Prohibition of Benami Transaction Property (Transactions) Act, 1988, Rajasthan Tenancy Act, 1955, Indian Stamp Act, 1899 and that the (D.B. SAW/1126/2017 has been filed in this matter. Please refer the same for further orders) (Uploaded on 16/11/2023 at 12:41:23 PM) (Downloaded on 28/10/2026 at 12:25:25 AM) (8 of 11) [CW-13414/2017]

petitioner’s sister concerns seems to be involved in the activities of money laundering and tax evasion. The petitioner’s sister 103 ITR 437 (SC), Gangasharan & Sons Pvt. Ltd. 130 ITR 1 (SC), Sheo Nath Singh Vs. AAC (1971) 82 ITR 147 (SC), CIT possibilities of non-existent income. Applying the test as laid down in the judgments referred above, the question herein is as to whether the Assessing Authority has proceeded on mere suspicion or there is sufficient material for reopening the assessment. (D.B. SAW/1126/2017 has been filed in this matter. Please refer the same for further orders) (Uploaded on 16/11/2023 at 12:41:23 PM) (Downloaded on 28/10/2026 at 12:25:25 AM) (9 of 11) [CW-13414/2017]

Vide its letter dated 27.3.2017, the petitioners had requested the respondent No.2 to provide reasons for issuing the notice. The respondent No.2 immediately vide letter dated 10.04.2017 gave the reasons for issuing the notice under Section 148. The petitioners were informed that, “during the survey of M/s. Akash Amar Agrotech Pvt. Ltd. conducted on 5.12.2013 certain documents were impounded for further investigation. From the perusal of the said documents & post survey investigations, it is noticed that the assessee company has sold land in the financial year 2009-10 to various entities. The assessee company’s Return of Income for the relevant year has shown Agricultural Income of Rs.3,38,250/- in lieu of sale of the agricultural land which has been claimed as exempt income by it. It is noted from the available records, and material impounded during the survey, that the assessee company is involved in the business of sale and purchase of land. The investment, sale & purchase of the entity is also of land including agricultural land.” Moreover, it is not disputed that as per the memorandum of Association, one of the objects to be pursued by the Company on its Incorporation is also purchase, sell, acquire, get convert, develop, improve, hold with absolute or limited rights or on lease, sub lease or otherwise and to erect, construct, build, demolish, re- erect, alter, repair, furnish, maintain land, including agricultural land, building, farm houses, residential flats, commercial complexes...” The Assessing Authority observed that the entity sells and purchases land, including agricultural land, as one of the (D.B. SAW/1126/2017 has been filed in this matter. Please refer the same for further orders) (Uploaded on 16/11/2023 at 12:41:23 PM) (Downloaded on 28/10/2026 at 12:25:25 AM) (10 of 11) [CW-13414/2017]

main objects of the assessee company for which it was formed which is a business activity of the assessee company. The Apex Court in the case of Raymond Woollen Mills Ltd. Vs. Income Tax Officer :: 236 ITR 34 has held as under:- “We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case.” (1976) 3 SCC 757, the Apex Court ruled as under:- “The grounds or reasons which lead to the formation of the belief contemplated by section 147(a) of the Act must have a material bearing on the question of escapement of income of the assessee from assessment because of his failure or omission to disclose fully and truly all material facts. Once there exist reasonable grounds for the Income tax Officer to form the above belief that would be sufficient to clothe him with jurisdiction to issue notice. Whether the grounds are adequate or not is not a matter for the court to investigate.” Even in the reply filed in SBCWP No.13503/2017, the averment with regard to whether any incriminating material was found during the course of surveys or not, it was submitted that evidence related to huge amount of tax evasion, stamp duty evasion, violation of Land Ceiling Acts and other laws, falsification of facts in registered sale deeds, and evidences related to vast quantum of benami properties was found during the course of surveys. With a further information that Income Tax Department, (D.B. SAW/1126/2017 has been filed in this matter. Please refer the same for further orders) (Uploaded on 16/11/2023 at 12:41:23 PM) (Downloaded on 28/10/2026 at 12:25:25 AM) (11 of 11) [CW-13414/2017]

Jaipur, Rajasthan issued show cause notices to as many as 31 apparent benamidaars and their associated beneficial owners who are the sister concerns of the petitioner under the provisions of the Prohibition of Benami Property Transactions Act, and has provisionally attached 17 such properties on 12.11.2017 and 14 more properties on 24.11.2017 leading to a total of 31 such properties which prima – facie are benami properties. Thus, in the opinion of this Court, there was sufficient reason for the respondent authorities to believe that there may be escapement of income. In view of the above, no ground for interference is made out. The writ petitions are accordingly dismissed. (NIRMALJIT KAUR), J. Pdaiya/1-8, 51,68-71 Powered by TCPDF (www.tcpdf.org) Powered by TCPDF (www.tcpdf.org) (D.B. SAW/1126/2017 has been filed in this matter. Please refer the same for further orders) (Uploaded on 16/11/2023 at 12:41:23 PM) (Downloaded on 28/10/2026 at 12:25:25 AM)

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