Akshar Properties vs Asst. Commissioner Of Income Tax And Ors
2026 Latest Caselaw 3514 Bom

Bombay High Court

Akshar Properties vs Asst. Commissioner Of Income Tax And Ors on 7 April, 2026

Author: B. P. Colabawalla

Bench: B. P. Colabawalla

    2026:BHC-AS:17964-DB


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                              IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                           CIVIL APPELLATE JURISDICTION

                                           WRIT PETITION NO.3306 OF 2022

                      Akshar Properties                                               .. Petitioner

                                Versus

                      Assistant Commissioner of Income Tax,
                      Central Circle-3(2), Mumbai, & Ors.                             .. Respondents

UTKARSH                    Ms. Ritika Agarwal a/w Gauri Bhosale i/b ACE Legal,
KAKASAHEB
BHALERAO                   Advocates for the Petitioner.
Digitally signed by
UTKARSH KAKASAHEB
BHALERAO
Date: 2026.04.17
                           Mr. Vipul Bajpayee, Advocate for the Revenue/Respondents.
12:03:55 +0530


                                               CORAM        : B. P. COLABAWALLA &
                                                              FIRDOSH P. POONIWALLA, JJ.

                                               DATE         : APRIL 07, 2026

                      P. C.

1. Rule. Respondents waive service. With the consent of

parties, Rule made returnable forthwith and heard finally.

2. The above Writ Petition is filed challenging the Notice

dated 30th March 2021 issued under Section 148 of the Income Tax Act,

1961 (for short "the IT Act"). The Assessment Year in question is

A.Y.2013-14. This Notice was issued prior to 1 st April 2021 and is

therefore governed by the provisions of Sections 147 and 148 prior to

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their amendment on 1st April 2021. In other words, this Notice has been

issued under the old regime.

3. The basic ground of challenge in the present case is that the

impugned notice issued under Section 148 is after a period of 4 years

from the end of A.Y. 2013-14, and since there was already an assessment

done in the Petitioner's case under Section 143(3), no notice could have

been issued unless there was a failure on the part of the Petitioner to

disclose fully and truly all material facts necessary for its assessment.

This proposition is canvassed on the basis of the 1 st proviso to Section

147 as it stood prior to 1st April 2021.

4. The facts of the present case lie in a very narrow compass.

For A.Y. 2013-14, the Petitioner filed its Return of Income on 1 st October

2013. The Petitioner's Return of Income for A.Y. 2013-14 was originally

selected for scrutiny by issuing a Notice under Section 143(2) of the IT

Act. During the course of the said original assessment proceedings, the

Assessing Officer called upon the Petitioner to file details of "unsecured

loans" availed of by the Petitioner during A.Y. 2013-14. In response to

the said Notice, vide its letter dated 22 nd March 2016, the Petitioner filed

the confirmation of the lenders as mentioned in the said letter.

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Thereafter, the said original assessment was concluded in the case of the

Petitioner by passing an Assessment Order dated 23 rd March 2016 under

Section 143(3) of the IT Act. The said Assessment Order accepted all the

unsecured loans and the Return of Income. In other words, the

Assessment Order dated 23rd March 2016 passed under Section 143(3),

made no addition on account of the "unsecured loans" and treated the

loans as genuine.

5. It appears that thereafter, Respondent No.1 sought to

reopen the assessment for A.Y. 2013-14 by issuing the impugned Notice

dated 30th March 2021 under Section 148 of the IT Act. In response to

the said Notice, the Petitioner filed its Return of Income on 27 th May

2021. Thereafter, Respondent No.1 vide its Notice dated 28 th June 2021

issued under Section 143(2) read with Section 147 of the IT Act,

provided the reasons for reopening the assessment. The said reasons

inter alia, state that information is received from DDIT (Inv.), Unit 4(1),

Thane, in a survey action undertaken under Section 133A on the

"Akshar Group" on 10th December 2020. As per the said information,

the Petitioner had taken unsecured loans amounting to Rs.5,20,71,836/-

from shell companies and the same are in the nature of accommodation

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entries. It is on this basis that reassessment proceedings were sought to

be initiated.

6. The Petitioner, vide letter dated 13 th July 2021, filed its

objections to the reasons recorded. In the said letter it was pointed out

by the Petitioner that the basis for forming an opinion that bogus

"unsecured loans" were obtained by the Petitioner, was not furnished,

and therefore requested for a copy of the information collected so that

the Petitioner could make an adequate response. It was further pointed

out that the Books of Accounts of the Petitioner were duly accepted

during the course of the scrutiny assessment proceedings for A.Y. 2013-

14 and that they had already submitted the loan confirmations of the

parties at the time of the scrutiny assessment. All in all, it was the case

of the Petitioner that the reassessment proceedings be withdrawn as

they have been invoked in a mechanical manner and the reasons

recorded for opening the reassessment was not based on any tangible

material furnished to the Petitioner.

7. After the aforesaid objections were submitted by the

Petitioner, Respondent No.3 (who is a person other than the one who

recorded the reasons for reopening), vide his order dated 27 th January

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2022 rejected the objections filed by the Petitioner. According to the

Petitioner, the aforesaid order disposing of the objections in fact now

seeks to improve upon the reasons recorded for reopening the

assessment, and which is impermissible in law. This is apart from the

fact that according to the Petitioner, even in the order disposing of the

objections, the details of the "unsecured loans" which were classified as

accommodation entries/bogus entries were not furnished to the

Petitioner.

8. It appears that thereafter, vide order dated 17 th February

2022 passed under Section 127 of the IT Act, the case of the Petitioner

was transferred to Respondent No.4. Respondent No.4, thereafter,

issued a notice dated 10th March 2022 under Section 142(1) calling for

various details of unsecured loans availed of by the Petitioner for A.Y.

2013-14. It is in this notice, for the first time, that Respondent No.4

mentioned the name of the lenders along with amounts, which

according to the Petitioner are also incorrect. Further, Respondent No.4

gave a new reason for treating the "unsecured loans" as unexplained

cash credit under Section 68 of the IT Act, namely, that the lenders at

Serial Nos.1 to 5 were based in Kolkata and operated by one Shri

Beniprasad Lahoti, who in turn had admitted that he had arranged

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accommodation loan entries for interested parties. Interestingly, now

the name of Ashwin Shah did not find mention in the said notice, and

which was referred to in the order rejecting the objections of the

Petitioner. However, once again the Respondents failed to provide

copies of the material on the basis of which the said reasons were

recorded, the disposal order was passed, and the Notice under Section

148(1) was issued. It is basically on this basis that the Notice under

Section 148 is challenged in the present Writ Petition.

9. In this factual backdrop, it is submitted by the Petitioner

that the reasons recorded do not disclose any failure on the part of the

Petitioner to disclose fully and truly all material facts so as to by-pass

the applicability of the first proviso to Section 147 of the IT Act. It is

submitted that the reasons recorded are based merely on a change of

opinion and reappraisal of the same material, as no new tangible

material has been brought on record by Respondent No.1 in the reasons

recorded on 28th June 2021 (Exhibit 'E' page 29 of the Paper Book).

Further it is submitted that the reasons recorded are vague and

incomplete as they failed to mention the name of entities which are

considered to be shell companies, and even the party wise amount of

unsecured loans is not mentioned. In other words, the material on

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which the reasons are recorded was not provided to the Petitioner. This

is apart from the fact that according to the Petitioner the reasons are

based on borrowed satisfaction without any independent application of

mind. For all these reasons, the Petitioner submits that the impugned

notice issued under Section 148 is unsustainable and has to be quashed

and set aside.

10. On the other hand, it is the Revenue's case that a search

action was conducted in the case of Shri Ashwin Kanji Shah under

Section 132 of the Act on 10th December 2020. From the documents

found and seized from his residence, it was found that Shri Ashwin

Kanji Shah is an entry operator, and he has also accepted the said fact.

During the course of the search action, it was also found that the

"Akshar Group" has taken accommodation entries in the form of

unsecured loans from Shri Ashwin Kanji Shah. Consequently, a survey

under Section 133A was conducted in the case of the "Akshar Group" on

10th December 2020 during which it was found that M/s. Akshar

Properties (the Petitioner) had taken unsecured loans from various

parties based in Kolkata and Mumbai. This information was flagged in

this case in accordance with the risk management strategy formulated

by the Board. By virtue of having obtained accommodation entries of

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unsecured loans of Rs.5,20,71,836/- the unaccounted income of the

Petitioner had been routed under the guise of unsecured loans. In other

words, after examining all these facts, the Respondents have

independently arrived at the opinion that income of the Petitioner has

escaped assessment and therefore reopening of the assessment was

found necessary. According to the Revenue, the reopening of the

assessment is based on a proper application of mind and independent

satisfaction. The reopening proceedings are not based on a change of

opinion or reappraisal of the same material. In these circumstances, it is

the case of the Revenue that no case is made out for entertaining the

above Writ Petition challenging the Notice issued under Section 148,

and the same be dismissed with costs.

11. We have heard the learned counsel for the parties and also

perused the papers and proceedings in the above Writ Petition. In the

facts of the present case, it is no disputed that for A.Y. 2013-14, the

Petitioner filed its Return of Income on 1 st October 2013. For this

assessment year the Petitioner's case was pulled up for scrutiny

assessment. During the original scrutiny assessment proceedings, the

Assessing Officer specifically inquired with the Petitioner with reference

to the unsecured loans and called for information from the Petitioner in

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that regard. It is also not in dispute that the information called for,

namely, copy of loan confirmations, was duly provided by the Petitioner

to the Assessing Officer. Once this material was made available with the

Assessing Officer, he passed his Assessment Order under Section 143(3)

and did not make any addition to the income of the Petitioner on

account of the "unsecured loans", which the Revenue now contends are

accommodation entries. It is only on 30 th March 2021 (i.e. beyond a

period of four years from A.Y. 2013-14) that the Assessing Officer has

issued the impugned notice under Section 148 of the IT Act. Hence the

present case is covered by the 1st proviso to Section 147 as it stood prior

to its amendment on 1st April 2021. The relevant portion of Section 147

reads thus:-

"Income escaping assessment.

147. If the Officer that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year):

Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148

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or to disclose fully and truly all material facts necessary for his assessment, for that assessment year."

12. The reasons for reopening the assessment of the Petitioner

for A.Y. 2013-14 have been set out in the notice dated 28 th June 2021

issued under Section 143(2) read with Section 147 of the IT Act (Exhibit

'E' at page 29 of the Paper Book). The reasons for reopening as set out in

the said notice are as under:-

"1. Reasons for reopening:-

The DDIT (Inv.), 4(1), Thane has informed that a survey u/s 133A was conducted in the case of Akshar Group on 10.12.2020. During the survey, it has been identified that the assessee has taken unsecured loans of Rs.5,20,71,836/- from shell companies providing accommodation entries. On verification of ITR for A.Y.2013-14, it is seen that there is substantial increase of unsecured loan amounting to Rs.16,40,62,152/- during the year. During the survey proceedings, it has been identified that assessee has taken bogus unsecured loans of Rs.5,20,71,836/-. Thus, the assessee has brought its unaccounted money in the books of account through accommodation entry of unsecured loans.

Hence, income chargeable to tax amounting to Rs.5,20,71,836/- has escaped assessment for F.Y.2012-13 relevant to A.Y.2013-14 by reasons of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, for A.Y.2013-14. I have reason to believe that an amount of Rs.5,20,71,836/- has escaped assessment for A.Y.2013-14, within the meaning of provisions of section 147 of the Income Tax Act, 1961, due to failure on the part of the assessee to disclose true and correct income."

13. As can be seen from the aforesaid reasons, the Assessing

Officer who sought to reopen the assessment, was of the opinion that

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during the survey conducted under Section 133A in the case of the

"Akshar Group" it was identified that the assessee had taken unsecured

loans of Rs.5,20,71,836/- from shell companies providing

accommodation entries. On verification of the ITR for A.Y.2013-14 it

was seen that there was a substantial increase of unsecured loans

amounting to approximately Rs.16.40 Crores during the year. During

the survey proceedings (in the case of the Akshar Group) it was

identified that the assessee had taken bogus unsecured loans of

Rs.5,20,71,836/-. It was on this basis that the Assessing Officer came to

the conclusion that the income chargeable to tax amounting to

Rs.5,20,71,836/- had escaped assessment for A.Y.2013-14 by reason of

the failure on the part of the assessee to disclose fully and truly all

material facts necessary for his assessment.

14. When one reads these reasons, we find that the reasons are

as vague as they can be. Firstly, the reasons do not record as to which of

the loans taken by the Petitioner are bogus unsecured loans. Secondly, it

does not even mention as to from whom these loans were taken. Apart

from merely stating that from the survey conducted under Section 133A

it has been identified that bogus unsecured loans of Rs.5,20,71,836/-

have been taken by the Petitioner, no further material is set out in the

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said notice. As mentioned earlier, the details of the unsecured loans

taken by the Petitioner were in fact inquired into by the Assessing

Officer whilst conducting the original scrutiny assessment proceedings.

All this information was provided by the Petitioner to the Assessing

Officer at that time. It is only after scrutinizing the details furnished by

the Petitioner that the Assessing Officer, in the original scrutiny

proceedings, passed an Assessment Order under Section 143(3) and did

not make any addition to the income of the Petitioner. In other words,

the Assessing Officer treated the unsecured loans as genuine and not as

bogus unsecured loans as is now sought to be alleged in the reasons

recorded for reopening the assessment.

15. It is true that further reasons have been given not only in

the order disposing of the objections of the Petitioner but also in the

notice issued under Section 142(1) dated 10 th March 2022, and which

notice was issued by Respondent No.4 after the transfer of proceedings

under Section 147 of the IT Act. However, reasons for reopening cannot

be improved upon as the matter progresses. This is wholly

impermissible in law. If one needs any precedent to support the

aforesaid proposition, it would be apposite to refer to the decision of

this Court in the case of Hindustan Lever Ltd. V/S R. B. Wadkar

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[(2004) 137 Taxman 479 (Bombay): (2004) 268 ITR 332

(Bombay)]. In this decision, this Court has in no uncertain term held

that the reasons recorded by the Assessing Officer are required to be

read as they were recorded by the Assessing Officer. No substitution or

deletion is permissible, and no addition can be made to those reasons.

Further, no inference can be allowed to be drawn on reasons not

recorded. It is for the Assessing Officer to disclose and open his mind

through the reasons recorded by him. He has to speak through his

reasons. The reasons recorded should be clear and unambiguous and

should not suffer from any vagueness. The reasons provide the link

between the conclusion and evidence, and in the event of a challenge to

the reasons, the Assessing Officer must be able to justify the same based

on material placed on record. He must disclose in the reasons as to

which fact or material was not disclosed by the assessee fully and truly

necessary for assessment of that assessment year, so as to establish the

vital link between the reasons and evidence. This vital link is the

safeguard against arbitrary reopening of a concluded assessment. The

reasons recorded by the Assessing Officer cannot be supplemented by

filing an affidavit or making oral submissions, otherwise, the reasons

which were lacking in material particulars, would get supplemented by

the time the matter reaches the Court, on the strength of affidavits or

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oral submissions advanced. The relevant portion of this decision reads

thus:-

"The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing Officer to reach the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. The reasons are the manifestation of the mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide the link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish the vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing an affidavit or making an oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches the court on the strength of the affidavit or oral submissions advanced."

16. Once this is the law laid down by this Court, we have to

examine the reasons recorded by the Assessing Officer on 28 th June

2021. Those reasons cannot be improved upon as the matter goes

forward. The reasons have to stand or fall by what is stated therein. As

mentioned earlier, these reasons are completely devoid of any material

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particulars with reference to the so-called bogus accommodation

entries/loans that were availed of by the Petitioner. The reasons only

mention a figure and give no other particulars as to from which entity

these so-called bogus accommodation entries/loans were taken. As

mentioned earlier, this is apart from the fact that in the original scrutiny

assessment proceedings the Assessing Officer categorically called upon

the Petitioner to furnish details of the unsecured loans availed of, and

only after examining the material produced by the Petitioner, the

Assessing Officer passed his Assessment Order under Section 143(3)

making no addition to the income of the Petitioner.

17. Despite all these facts, we independently asked the

Petitioner to file an additional affidavit in this Court annexing the

confirmation letters furnished to the Assessing Officer at the time of the

original scrutiny assessment proceedings. Those documents have now

been filed in the additional affidavit of the Petitioner dated 28 th June

2025. In this affidavit, not only has the Petitioner annexed the

confirmation letters that were submitted to the Assessing Officer during

the original scrutiny assessment proceedings, but have also annexed the

ledger accounts of the eight parties in the books of the Petitioner which

the Revenue contends are bogus entries, as well as the bank statement

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of the Petitioner showing the repayment. Having perused this material,

we find that in fact, the loans taken from these eight entities were not

only genuine loans because they were received by the Petitioner through

RTGS (i.e. banking channels), but all those loans have been repaid by

the Petitioner.

18. In view of the aforesaid discussion, we are unable to accept

the contention of the Revenue that there has been any failure on the

part of the assessee to disclose fully and truly all material facts necessary

for its assessment as contemplated under the first proviso to Section 147

of the IT Act. Accordingly, we find that the Notice issued under Section

148 is unsustainable. It is accordingly quashed and set aside.

19. Rule is made absolute in the aforesaid terms, and the Writ

Petition is also disposed of in terms thereof. However, there shall be no

order as to costs.

20. This order will be digitally signed by the Private Secretary/

Personal Assistant of this Court. All concerned will act on production by

fax or email of a digitally signed copy of this order.

[FIRDOSH P. POONIWALLA, J.] [B. P. COLABAWALLA, J.]

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