DEPUTY COMMISSIONER OF INCOME TAX (CENTRAL) CIRCLE 1(2) vs. M/S M.R. SHAH LOGISTICS PVT. LTD

C.A. No.-002453-002453 - 2022Supreme Court2022 INSC 34928 March 2022Bench: HON'BLE THE CHIEF JUSTICE19 pages
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What did the Supreme Court hold?

The Supreme Court held that a declaration made under the Income Declaration Scheme (IDS) by one entity does not grant immunity from taxation to a non-declarant entity. The High Court erred in quashing the reassessment notice on this ground.

What were the facts?

The revenue sought to re-open the assessment of M/s. M. R. Shah Logistics Pvt. Ltd. for AY 2010-11 based on search materials indicating the company received accommodation entries. These entries were allegedly provided by Shirish Chandrakant Shah, and the assessee was believed to be a beneficiary through bogus companies.

What were the issues?

Whether a declaration under the Income Declaration Scheme (IDS) by one party provides immunity from reassessment for another party who did not make a declaration. Whether the materials seized during searches and statements recorded were sufficient to form a belief for reopening assessment.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(1),Section 132(4),Section 68

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Cause title — parties, addresses and appearances
1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO(s). ____________OF 2022 (ARISING OUT OF SPECIAL LEAVE TO APPEAL (C) NO. 22921/2019) DEPUTY COMMISSIONER OF INCOME TAX (CENTRAL) CIRCLE 1(2) ...APPELLANT (S) VERSUS M/S. M. R. SHAH LOGISTICS PVT. LTD. ...RESPONDENT(S)

JUDGMENT S. RAVINDRA BHAT, J.

1.

Special leave granted. With consent of counsel for parties, the appeal was heard finally. The Commissioner of Income tax (hereafter “the revenue”) appeals against a judgment of the Gujarat High Court1, which quashed a notice issued under Section 147/148, Income Tax Act (hereafter “the Act”) seeking to re-open the respondent’s assessment, for the assessment year (AO) 2010-11. The respondent is hereafter, referred to as “the assessee”.

2.

The facts are that search proceedings were conducted- by the revenue, under the Act, at the office premises of one Shirish Chandrakant Shah on 09.04.2013 at Mumbai; during the course of the search, several materials- and documents, were seized. On analysis of such documents, the revenue was of 1 Dated 14 August, 2018 in Special Civil Application No. 21

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