NDLI: Deputy Commissioner of Income Tax (central) Circle 1(2) Vs. M/s. M. R. Shah Logistics Pvt. Ltd.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Income Tax Act 1961
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4 Referred Case 5 Referred Case 6 Referred Case 7
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Income Tax Act,1961– ss. 147, 148, 143 – “Reasons to believe” – Finance Act, 2016 – Chapter IX- Income Declaration Scheme (IDS) – Search proceedings were conducted by Revenue at the office premises of one ‘SCS’ wherein several materials and documents were seized – Revenue was of the opinion that the assessee was also a beneficiary of the business (of accommodation entries provided by ‘SCS’) through bogus companies – This was based on the fact that many companies which invested amounts towards share capital on high premiums in the assessee’s company were also controlled and managed by ‘SCS’ – On the basis of the aforesaid opinion, the impugned notice u/s. 147/148 to re-assess the income of the assessee for AY 2010-2011 was issued – Notice quashed by High Court – On appeal, held: The basis for a valid re-opening of assessment should be availability of tangible material, which can lead the AO to scrutinize the returns for the previous assessment year in question, to determine, whether a notice u/s. 147 is called for – In the present case, the “reasons to believe” forming part of the s. 147, point to the fact that the reopening of assessment was based on information accessible by the AO that a substantial amount of unaccounted income of promoters/directors was introduced in the closely held companies of the assessee group through ‘SCS’, alleged to be a Mumbai based accommodation entry provider- through another accommodation entry provider based at Ahmedabad – The basis for reopening the assessment in this case was the information from the material seized during search in cases of ‘SCS’ and correlation with return of income of the assessee – Further, there was no scrutiny assessment done at the original assessment stage – Also, the declarant was Garg Logistic Pvt Ltd and not the assessee – Facially, s. 192 affords immunity to the declarant – Therefore, the protection given, is to the declarant, and for a limited purpose – However, the High Court proceeded on the footing that such protection would bar the revenue from scrutinizing the assessee’s return, absolutely – The re-opening of assessment was not based on Garg Logistic’s declaration, the fact that such an entity owned up and paid tax and penalty on amounts which it claimed, were invested by it as share applicant, (though the share applicants were other companies and entities) to the assessee in the present case, cannot by any rule or principle inure to the assessee’s advantage – High Court fell into error in holding that the sequitur to a declaration under the IDS can lead to immunity (from taxation) in the hands of a non-declarant – Impugned judgment set aside.Finance Act, 2016 – Chapter IX- Income Declaration Scheme – Scope and effect of – Discussed.
Judge	Hon'ble Mr. Justice S. Ravindra Bhat
Neutral Citation	2022 INSC 349
Petitioner	Deputy Commissioner Of Income Tax (central) Circle 1(2)
Respondent	M/s. M. R. Shah Logistics Pvt. Ltd.
SCR	[2022] 14 S.C.R. 1078
Judgement Date	2022-03-28
Case Number	2453

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