Adani Wilmar Limited vs ACIT – Gujarat High Court

Adani Wilmar Limited was selected for scrutiny, and assessment orders were passed under section 143(3). Thereafter, the Assessing Officer (AO) issued a notice under section 148 seeking to reopen the completed assessment on the basis of the information received on account of a search conducted at the premises of another person under section 132. In search it was found that the assessee was providing accommodation entries to the various beneficiaries with the help of approximately 39 shell or papers concerns, which do not exist at the address provided, and the assessee was one of the beneficiaries. Aggrieved by the order, the assessee filed a writ petition before the Gujarat High Court – Adani Wilmar Limited VS ACIT

The High Court held that it was apparent that the assessee was assessed under the provisions of section 115JB and paid tax at the rate specified under the said section. Adding the amount calculated by the AO towards the escaped income to the amount computed under the ordinary provisions of the Act, the aggregate amount would be less than the amount of tax paid by the assessee on being assessed under section 115JB.

Therefore, when the tax payable, as per the reasons recorded, is less than the amount paid by the assessee under the assessment framed under section 143(3), the question of any assessed income would not arise. Thus, the reasons recorded would indicate that, in fact, no income had escaped assessment to form such a belief.

The basic precondition for reopening the assessment under section 147, which is that the AO should have ‘reason to believe’ that income has escaped assessment, was not satisfied.

Therefore, the AO could not have assumed the jurisdiction to issue impugned notices under section 148, and the impugned notices and the proceedings to that effect cannot be sustained.

High Court Order:  Adani Wilmar Limited VS ACIT

“it appears that the notice under Section 142(1) of the Act dated 5.7.2019 clearly indicates the break-up of any other amount allowable as deduction, in which in reply the petitioner has submitted that the claim of Rs.99,72,603/- made towards the notional guarantee commission and the same is deemed to have been considered by the Assessing Officer while framing the assessment. Moreover, it is settled legal position that the reopening on the basis of Adani Wilmar Limited vs The Assistant Commissioner Of Income … on 15 April, 2024 the audit party objections is invalid and on bare perusal of the reasons recorded, it is apparent that there was no material available with the respondent – Assessing Officer to form a reason to believe that the income has escaped assessment. In such circumstances, the impugned notice issued under Section 148 of the Act is held NEUTRAL CITATION C/SCA/344/2022 JUDGMENT DATED: 15/04/2024 undefined to be without jurisdiction and accordingly, the same is quashed and set aside. Rule is made absolute to the aforesaid extent”