2022 (11) TMI 479 - HC - Income Tax

Reopening of assessment u/s 147 - bogus Input Tax Credit ( ITC ) on fake sale bills and the same was forwarded to beneficiary entities - Petitioner states that the Assessee has not transacted with M/s Nandi Traders and her Permanent Account Number (PAN) has been misused to register the impugned GST number - HELD THAT - The averments raised by the Petitioner give rise to factual pleas and the AO is competent to determine the veracity of the pleas raised by the Petitioner, which include the misuse of her PAN as well as the use of an illegal bank account. Petitioner s plea that the GST Number, which is registered at the premises in Libaspur, Delhi is not in her control or possession and the transactions under scrutiny which were undertaken by Superior International and M/s Nandi Traders were carried out in a bank account which is not operated by the Petitioner, are all factual pleas which will be determined by the AO during the assessment proceedings after examine the evidence. We are certain that during the reassessment proceedings the AO will duly consider and adjudicate all the pleas of the Petitioner, including the plea of the fraud in obtaining the GST Number and the bank account. The petition is disposed of with the liberty to the Petitioner to raise all her pleas and contentions before the Assessing Officer. We make it clear that we have not examined the merits of the controversy. The rights and contentions all parties are left open.

Summary

Issues:
1. Direction to quash reassessment proceedings for AY 2018-19.

Analysis:
The petitioner filed a writ petition seeking to quash the reassessment proceedings for the Assessment Year (AY) 2018-19. The Assessing Officer (AO) issued a show cause notice under Section 148A(b) of the Income Tax Act, 1961, based on information received from the Directorate of Investigation, Delhi. The information indicated discrepancies in the GST return filed by a third party, M/s Nandi Traders, which led to suspicions of fraudulent transactions involving the petitioner. The petitioner denied any transactions with M/s Nandi Traders and claimed that her PAN was misused to register the GST number in question. She reported the fraud to authorities, including the GST Officer and the police, and took legal steps to address the issue.

Further Details:
The petitioner's counsel argued that the petitioner had no involvement with M/s Nandi Traders and that her PAN was fraudulently used to obtain the GST number. The petitioner's lack of association with the alleged transactions was supported by the absence of any related transactions in her bank statements. The petitioner contended that the reassessment proceedings initiated by the AO based on the fraudulent transactions would unfairly harm her. The court examined the documents on record and acknowledged that the petitioner's claims raised factual issues that the AO should investigate, including the misuse of her PAN and the use of an unauthorized bank account.

Conclusion:
The court disposed of the petition, allowing the petitioner to present all her arguments and evidence before the Assessing Officer. It clarified that it had not assessed the merits of the case and left all rights and contentions open for both parties. The AO was directed to thoroughly consider and determine the petitioner's claims during the reassessment proceedings, including the allegations of fraud in obtaining the GST number and the associated bank account.