- (1.) We have heard Shri. Dhruv Agrawal, Senior Counsel assisted by Shri. Nikhil Agrawal for the petitioner. Shri. Dhananjay Awasthi appears for the Income Tax department. In the leading Writ Petition No. 167 of 2005 the petitioner has prayed for setting aside the assessment order dated 31.12.2004 passed by the Assistant Commissioner of Income Tax, Circle Saharanpur, for the assessment years 1998-99 to 2002-03. In the connected writ petitions the petitioner has challenged the orders of penalty dated 29.6.2005 under Section 271(1)(b) and Section 271(1)(c) of the Income Tax Act, 1961 for the assessment years 1998-1999 to 2002-03 consequential to the assessment orders of the corresponding assessment years, and for non-compliance of the notices dated 29.6.2005, under Section 142(1) of the Act dated 17.12.2004.
(2.) By an interim order dated 3.2.2005, the operations of the impugned assessment orders dated 31.12.2004, and the orders, by which penalties were imposed under Sections 271(1)(b) and 271(1)(c) of the Act pertaining to assessment years 1998-99 to 2002-2003, were stayed by this Court.
(3.) Brief facts giving rise to these writ petitions are that M/s. Shivji Palace Hotel and Club (P) Ltd., the petitioner-assessee was registered as a private limited company on 6.5.1997. At the time of its incorporation the company had authorized share capital of Rs. 85 lakhs divided into 8,50,000 equity shares of Rs. 10/- each. Shri. Dharam Pal, Shri. Sandip Grover, Shri. Surjit Singh and Shri. Rajinder Kaur were the Directors of the company. On 7.11.2001 Shri. Harjeet Singh Nalwa and Shri. Gurjeet Singh Nalwa purchased 1,50,000 equity shares each constituting 25% of the total paid up capital as on that date. Shri. Gurjeet Singh Nalwa further purchased 1,05,000 shares on 4.3.2002 together constituting 37.5% shares of the petitioner as on 4.3.2002. Shri. Harjeet Singh Nalwa and Shri. Gurjeet Singh Nalwa later on purchased further shares on 8.5.2003 increasing their stake in the company to 62.5%. They thus became the successors of the erstwhile shareholders on 8.5.2003. It is alleged that on due diligence they were informed by the then Managing Director of the company, that on the date of purchase of shares on 8.5.2003, there were no income tax dues outstanding against the company and that all the returns were filed in time.;