VIRAT SPINNERS PVT. LTD. vs THE INCOME TAX OFFICER
- Court
- Gujarat High Court
C/SCA/17358/2019 JUDGMENT DATED: 08/07/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 17358 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
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Approved for Reporting Yes No
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VIRAT SPINNERS PVT. LTD.
Versus
THE INCOME TAX OFFICER
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Appearance:
MR KETAN H SHAH(2705) for the Petitioner(s) No. 1
AADITYA D BHATT(8580) for the Respondent(s) No. 1
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CORAM: HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Date : 08/07/2026
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. The present writ petition has been filed by the petitioner
challenging the notice dated 25.03.2019 issued by the respondent under
the provisions of Section 148 of the Income Tax Act, 1961 (for short ‘the
Act’) for reopening the assessment for the Assessment Year (for short
‘A.Y.’) 2012-13. Pursuant to the notice, the petitioner filed a return of
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income on 31.03.2019.
2. Brief facts of the case are that the petitioner filed his regular return
of income for A.Y. 2012-13 on 29.08.2012. No assessment was made
under Section 143(3) of the Act. However, an intimation under Section
143(1) of the Act dated 17.05.2013 was made, wherein the return of
income has been accepted and no demand has been raised. Thereafter,
notice under Section 148 of the Act dated 25.03.2019 was issued to the
petitioner alleging that the income chargeable to tax has escaped
assessment. The petitioner accordingly filed a fresh return on 31.03.2019.
On demand of the petitioner, the reasons recorded as per the e-letter dated
09.04.2019 were supplied to the petitioner.
3. The petitioner, on receipt of such reasons, filed two objections on
24.04.2019 and again on 08.05.2019, which were disposed of by the
respondent vide order dated 13.05.2019. In the present petition, the
notice under Section 148 of the Act dated 25.03.2019 and the order dated
13.05.2019 rejecting the objections have been challenged.
4. Learned Advocate Mr.Ketan H. Shah has submitted that the
reopening is impermissible and illegal, since the respondent has not
provided any information pursuant to which the assessment was reopend.
He submitted that the information dated 01.03.2019 as well as the other
information mentioned in paragraph No.3.3 have not been supplied on the
ground that the same are confidential in nature. The statement of the entry
operator recorded under the provision of Section 133A of the Act has also
not been supplied.
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4.1 It is submitted that all this information and evidence are necessary
in order to challenge the contents and genuineness of the reopening, and
the same cannot be denied on the ground that it is confidential in nature.
It is further submitted that there is no iota of evidence on record to prove
that payment made by various entities, as mentioned in the impugned
notice, and the reasons recorded in the e-letter dated 09.04.2019, which
would show that the petitioner company is involved in providing
accommodation entries in any manner. It is also submitted that, in fact,
the reasons recorded are of 11.03.2019 and not of 09.04.2019, and the
original reasons recorded on 11.03.2019 have not been provided, though
specifically requested by the petitioner.
4.2 In support of his submissions, by placing reliance on the judgment
of the High Court of Bombay in the case of Technocrat Industries vs. J.C.
Shah, Second Income-Tax Officer, (1990) 52 Taxman 91 (Bombay) it is
submitted that the Assessing Officer is supposed to provide the material
and the information on which the reliance is placed. It is submitted that
the reopening is also premised on a very general and vague statement of
one Mr.Amit Dalmia recorded under Section 133A of the Act on
30.03.2015.
4.3 It is submitted that there is no specific finding or any material
which would suggest that the petitioner received the alleged
accommodation entries. It is submitted that Mr.Amit Dalmia was
controlling the affairs of M/s.Tribhuvan Dealtrade Pvt. Ltd., (for short
‘M/s.TDPL’) and that during a survey action on the premises of
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M/s.Intellect Stock Broking Ltd., it was found that bogus entries were
provided by them by way of bogus share capital, share premium, etc.
However, the Assessing Officer has not produced any material
connecting the present petitioner to such entities.
4.4 In support of his submissions, he has placed reliance on the
judgment of Supreme Court in case of Income Tax Officer Vs. Lakhmani
Mewal Das, (1976) 103 ITR 437 (SC). He submitted that the reopening of
the assessment, in the present case, is based on ‘reason to suspect’ and
not ‘reason to believe’, which is found in the provision of Section 147 of
the Act. Thus, it is urged that the reopening of the assessment along with
the order rejecting the objections be quashed and set aside.
5. In response to the foregoing submissions and opposing the present
writ petition, learned advocate Mr.Aaditya D. Bhatt appearing for the
revenue while pointing out the contents of the affidavit has submitted that
there is ample material which has been found during an investigation and
survey conducted at M/s.TDPL controlled by one Mr.Amit Dalmia
suggesting that the petitioner has been involved in providing the
accommodation entries. It is submitted that in his statement recorded
under Section 133A of the Act Mr. Amit Dalmia has admitted that he is
the authorized signatory of the Company - Shri Manas Taru Roy, who is a
dummy Director controlled by him. It is submitted that thus M/s.TDPL is
a shell company with whom the present petitioner has transacted and
hence it is urged that looking to the modus operandi of all the companies
which are mentioned in the impugned show cause notice and layering of
the transactions would require further assessment and hence it is urged
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that the writ petition may not be entertained, at this stage.
6. We have heard the learned advocates appearing for the respective
parties. The established facts are that the petitioner filed a return of
income for A.Y. 2012-13 on 29.08.2012. However, it appears that no
assessment was made under Section 143(3) of the Act. Despite there
being an intimation sent under Section 143(1) of the Act dated
17.05.2013, whereby the return of income has been accepted and no
demand has been raised. Thereafter, a notice under Section 148 of the Act
dated 25.03.2019 has been issued alleging escapement of income
requiring the petitioner to file a fresh return, which he did so on
31.03.2019. The petitioner raised various objections against the
reopening and ultimately the objections were rejected by the order dated
13.05.2019. The entire reopening against the petitioner is premised on the
investigation and survey done against M/s.TDPL and on the basis of the
statement made by one Mr.Amit Dalmia on 30.03.2015 under Section
133A of the Act at the office premises of M/s.Intellect Stock Broking Ltd.
It is alleged that Mr.Amit Dalmia, who manages the affairs and controls
M/s.TDPL, is involved in providing accommodation entries by layering
of transactions. The impugned notice in paragraph-3 refers to various
entities and the account numbers through which layering of transactions
has been done.
7. It is alleged that in the modus operandi of multiple layering of
funds, the assessee, i. e. the petitioner M/s.Virat Spinners Pvt. Ltd., has
taken an accommodation entry of Rs.50 lakhs. A perusal of the impugned
notice reveals that, except for the mentioning of the name of the
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petitioner and the bald allegation that it is the beneficiary of an
accommodation entry of Rs.50 lakhs from M/s.TDPL there is no material
discussed connecting the present petitioner to the various entities
mentioned therein. The petitioner, in its reply dated 24.04.2019 and
08.05.2019, categorically refuted the allegations and requested that to
provide the information or any tangible material connecting it with the
shell companies be provided. The petitioner has categorically dealt with
the layering of transactions as alleged in the notice and pointed out that
there is no name of the petitioner which can be found connecting it to the
account of M/s.TDPL. It was replied that, in the absence of any direct
nexus regarding the involvement of the petitioner in such transactions, it
cannot be presumed that there is an escapement of income. Further, the
petitioner also requested that the seized material and notings or any
incriminating documents be provided, as there was no evidence bearing
the signature of the petitioner emerging from the statement of Mr.Amit
Dalmia. It is thus alleged that only by suspecting the transactions of
various entities, the petitioner has been roped into for reassessment
proceedings. Thus, it was urged that the material collected during the
investigation be provided, neither the statement of Mr.Amit Dalmia has
been provided nor the details of the transactions have been given to the
petitioner so that it may accordingly deal with the same.
8. The request of the petitioner and the objections raised were
rejected by the respondent by order dated 13.05.2019. With regard to the
supply of information and relevant documents, it was stated that such
information received by the office is a confidential document having
information regarding a large number of other beneficiaries and therefore
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the same cannot be provided to the assessee. We find this reason assigned
by the Assessing Officer to be in violation of the principles of natural
justice as the material which is required to be used against the petitioner
has not been supplied to the petitioner, though specifically requested. On
this count alone, the impugned order is required to be quashed and set
aside. Moreover, it is also noticed by us that, the impugned notice as well
as the reasons recorded do not in any manner reveal any tangible material
connecting the petitioner with so-called accommodation entry taken
through Real Time Gross Settlement (for short ‘RTGS’) from M/s.TDPL
on 27.03.2012. Thus, the reopening of the assessment is premised on
suspicion, which cannot take the place of the ‘reason to believe’, which is
the quintessential requirement under Section 147 of the Act.
9. There is another aspect which is interesting to note, that the date of
the reasons mentioned at Annexure-B, which were supplied to the
petitioner, is 09.04.2019. The petitioner has categorically made a
statement that the actual reasons recorded are dated 11.03.2019 and the
same has not been supplied to the petitioner. While disposing of the
objections in the impugned order in paragraph No.4.8, it is accepted by
the Assessing Officer that the reasons were recorded by the Assessing
Officer on 11.03.2019 and not on 09.04.2019 as claimed by the petitioner
and the letter dated 09.04.2019 is the e-letter generated from the Income
Tax Business Application (for short ‘ITBA’) system. Despite the specific
averments made in the writ petition, the actual reasons recorded on
11.03.2019 have not been produced by the respondent.
10. Thus, on an overall appreciation of facts, we are of the opinion that
the reopening of the assessment is required to be quashed and set aside.
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The impugned notice dated 25.03.2019 and the impugned order dated
13.05.2019 are quashed and set aside. The writ petition is allowed .
Sd/-
(A. S. SUPEHIA, J)
Sd/-
(VAIBHAVI D. NANAVATI,J)
K.K. SAIYED/05
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