$~22
*    IN THE HIGH COURT OF DELHI AT NEW DELHI
                             Date of Judgment: 23.10.2018

+      W.P.(C) 10958/2017 & CM APPL. 44815/2017

       M/S KOLAHAI INFOTECH PVT. LTD.          ..... Petitioner
                     Through: Mr. Salil Kapoor, Ms. Soumya
                              Singh, Ms. Ananya Kapoor, Ms.
                              Pallavi Saigal & Mr. Sanat Kapoor,
                              Advocates.
                     versus

       INCOME TAX OFFICER                          ..... Respondent
                    Through:          Mr. Asheesh Jain, Sr. Standing
                                      Counsel, Income Tax Department.

CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE PRATEEK JALAN

S.RAVINDRA BHAT, J. (ORAL)

1.     The petitioner is aggrieved by the re-assessment notice issued under
Sections 142, 147 and 148 of the Income Tax Act, 1961 (hereinafter
referred to as the ,,Act). The respondent Revenue, on being asked to furnish
the "reasons to believe", upon which the impugned re-assessment notice
was furnished, did so. Pertinently, the reasons to believe supplied to the
petitioner, stated that according to information received by the Revenue the
on the basis of a survey conducted under Section 133 (A) of the Act in the
case of related company (Maruti Clean Coal & Power Ltd.) on 26.09.2016,
and the statement of one Rajesh Gulati, ex-Director, it held 2147944 shares
as on 01.04.2009, valued at 7,22,00,000/-. The re-assessment reasons also
recorded that in the subsequent financial year F.Y. 2010-11, the petitioner









W.P.(C) 10958/2017                                                  Page 1 of 4
acquired further shareholdings from other entities. The Revenue then set
out the corporate holding pattern of the petitioner and its related company
and later stated that :-
       "Keeping- in ­view the above facts and materials available on
       record and also in order to lift the corporate veil, consequential
       re-opening of the case of Kolahai Infotech Pvt. Ltd. may be done
       at your end in order to ascertain the genuineness of transactions
       and source of investment made by your assesses in Marauti
       Clean Coal & Power Ltd. during the relevant A.Y. 2010-11.
       4. The return of income of the assesse company has been
       downloaded from the ITD system and the same was examined in
       the light of information received from ACIT Circle 1(1) Raipur.
       I have carefully examined the above referred to information as
       received from ACIT Circle 1(1) Raipur along with the return of
       the assessee for A.Y. 2010-11. It is evident from the return that
       assessee had received share application money of
       7,42,20,000/- and issued, subscribed and paid up of
       1,00,000/- during the year under consideration and on perusal
       of the P&L account of the assessee for AY 2010-11 the assess
       has shown Nil income from Sales/Gross receipts of business,
       similarly closing and opening stocks is also shown as Nil.
       5. Considering the above referred credible information, ITR of
       the company, subsequent to the information, I have reason to
       believe that an amount of 7,42,20,000/- has escaped
       assessment in case the of M/s Kolahai Infotech Pvt. Ltd. the
       meaning of Section 147/148 of Income-tax Act, 1961."

2.     The petitioner contends that the statement of Mr. Rajesh Gulati,
which is mentioned in the reasons to believe, clearly shows that the share
holding, which excited the curiosity of the Revenue and led it to re-open the
concluded assessment - the assessment for A.Y. 2010-11 was the
shareholding related to F.Y. 2008-09. In other words, this emphasizes that
the petitioner company had the shares valued at 7,22,00,000/- in the
previous year. In these circumstances, the re-opening of assessment for the




W.P.(C) 10958/2017                                                    Page 2 of 4
subsequent year, was based on entirely erroneous conclusions.
3.     The Revenue contends that the re-assessment was based upon the
information received from the Commissioner of Income Tax, Raipur which
in turn has based upon survey initiated in the case of Maruti Clean Coal &
Power Ltd. The petitioners shareholding pattern in that company emerge s
from that survey. It was submitted that the Revenues case made out in the
re-assessment notice was that the corporate veil, created by the string of
companies with interlocking holding, needed to be unveiled and in these
circumstances, the AO did not process the complete information and rather
had to rely upon the broad nature of the facts revealed to him. It is
submitted that since the basis for the re-assessment notice was tangible
material outside of the record received by the Revenue, this Court ought not
to intervene in any manner whatsoever.
4.     Besides the petitioner, its subsidiary company Maruti Clean Coal &
Power Ltd. also received a similar re-assessment notice. The petitioner has
produced a copy of both re-assessment notice as well as objections filed.
Interestingly, the pattern of holdings of various group companies shown in
the re-assessment notice is different. In the case of the petitioner, the
intermediate holding company ACB (India) Power Ltd. has not been shown
as an intermediate holding company, whereas in the case of Maruti Clean
Coal, that company has been shown. Apart from this detail, the Court
notices that the information relating to the shareholding investment of Rs.
7.22 crores, for F.Y.2009-10, has been clearly revealed in the reasons to
believe.
5.     In these circumstances, the Revenue has hardly explained how and in
under what circumstances, it can proceed to re-open the assessment for the
subsequent year, F.Y. 2009-10 (A.Y. 2010-11). This Court is further of the







W.P.(C) 10958/2017                                                  Page 3 of 4
opinion that there is no material to support the Revenues premise that any
infusion of capital which was made on 01.04.2009, which could, if at all, be
found to be the only basis to form a valid reason as stated in the notice. In
the absence of such information, what emerges is that the investment of
7.22 crores in the equity capital of the petitioner were related quite
logically or naturally, to the previous year i.e. AY 2009-10 (FY 2008-09).
6.     In these circumstances, the re-opening of the assessment, cannot be
sustained even though the Revenue may be otherwise right in contending
that it was based upon tangible information. Clearly, the inaccuracy or
rather a mistake in this case, affected the validity of the notice.
7.     As a result of the above discussion, the impugned re-assessment
notice cannot be sustained, it is quashed as are all consequential
proceedings.
8.     The writ petition is allowed in the above terms.



                                                     S. RAVINDRA BHAT, J


                                                        PRATEEK JALAN, J
       OCTOBER 23, 2018
       pv




W.P.(C) 10958/2017                                                    Page 4 of 4