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2022 (12) TMI 763 - HC - Income Tax


Issues Involved:
1. Validity of information suggesting income chargeable to tax has escaped assessment.
2. Conduct of verification under Section 148A(a) of the Income Tax Act.
3. Consideration of the appellant's reply under Section 148A(c).
4. Supply of documents requested by the appellant.
5. Validity of sanction under Section 151 of the Income Tax Act.

Detailed Analysis:

1. Validity of Information Suggesting Income Chargeable to Tax Has Escaped Assessment:
The petitioner challenged the notice issued under Section 148A(b) of the Income Tax Act, asserting that there was no valid information suggesting income chargeable to tax had escaped assessment. The AO had relied on information from the INSIGHT portal indicating that M/s. Panveen Trading Private Limited had shown sales to the petitioner, which were allegedly part of bogus transactions aimed at passing irregular ITC. The court noted that the AO was in possession of credible information and tangible material indicating that the petitioner was a beneficiary of accommodation entries amounting to Rs. 2,20,00,275/-. The court held that the source of information is not relevant as long as there is tangible material against the appellant.

2. Conduct of Verification Under Section 148A(a) of the Income Tax Act:
The petitioner argued that the AO did not conduct verification under Section 148A(a) before issuing the notice. The court observed that the AO had sufficient information from the INSIGHT portal and other credible sources, which justified the issuance of the notice. The court relied on precedents indicating that at this stage, the sufficiency or correctness of the material is not to be considered, only the existence of some material is necessary.

3. Consideration of the Appellant's Reply Under Section 148A(c):
The petitioner contended that the AO did not consider its reply as required under Section 148A(c). The court found that the AO had considered the reply, which included a certificate from a Chartered Accountant denying any transactions with M/s. Panveen Trading Private Limited. The AO concluded that the petitioner's assertions were insufficient to counter the detailed information available, which indicated that the petitioner was involved in bogus transactions.

4. Supply of Documents Requested by the Appellant:
The petitioner requested copies of the information obtained from the INSIGHT portal and other documents. The court noted that the petitioner had not indicated that the absence of these documents hindered its ability to file an appropriate reply. The court found that the petitioner did not request a personal hearing, despite the opportunity provided in the notice.

5. Validity of Sanction Under Section 151 of the Income Tax Act:
The petitioner argued that the specified authority granted sanction under Section 151 in a routine manner without application of mind. The court observed that the AO had obtained prior approval from the competent authority, as required by the statute. The court found no evidence to suggest that the approval was granted without due consideration.

Conclusion:
The court concluded that there was prima facie material justifying the reopening of the assessment. The petitioner failed to provide sufficient evidence to counter the allegations of bogus transactions. The court dismissed the writ petition, upholding the validity of the notice issued under Section 148A and the subsequent proceedings.

 

 

 

 

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