2023 (9) TMI 118 - HC - Income Tax

Reopening of assessment u/s 147 - assessee has availed cash loan - unexplained expenditure and the income generated from the application of the loan so taken as unexplained income - HELD THAT - After setting out the statutory provisions it is stated that investigation report received from the office of the DDIT (investigation) shows that there are some remarks about potential borrowers/lenders and on verification of the documents it is seen that there are credible evidence of actual borrowings which are not potential in nature but suggest the fact of actual transaction. After examining and analyzing the information available on record and the data reported in the Insight Portal copy of which was shared with the assessee along with the show cause notice the assessing officer holds that it is evident that the assessee has availed cash loan to the tune of Rs. 40.70 crores through the finance broker Kaseras from different lenders such as Uma Shankar Kasera and the said amount falls in the ambit of the case where any amount is borrowed only on or any amount thereon is repaid to any person otherwise then through an account payee cheque drawn from a bank the amount so borrowed or repaid shall be deemed to be income of the person borrowing and repaying the amount aforesaid for the previous year in which the amount was borrowed or repaid as the case may be and the income generated from the application of the loan so taken as unexplained income. As it cannot be stated that the order passed under clause (d) of Section 148 is a non- speaking order nor the order to be branded as outcome of non-application of mind. To test the correctness of the order it is necessary that the disputed question of facts have to be thoroughly analyzed. There are several stake holders in the entire process which requires deeper probe into the matter and such an exercise cannot be done in exercise of writ jurisdiction. Therefore the learned single bench was fully justified in not entertaining the writ petition and leaving it upon to the appellant to agitate all issues in the reopening proceedings for which notice under Section 148 has been issued on April 07 2023. Appellant has not made out any case for interference with the order passed by the learned single bench. Accordingly the appeal fails and the same is dismissed.

Summary

Issues Involved:
1. Validity of the order under Section 148A(d) of the Income Tax Act, 1961.
2. Alleged procedural irregularities and violation of principles of natural justice.
3. Assessment of evidence and factual disputes in writ jurisdiction.

Summary:

1. Validity of the order under Section 148A(d) of the Income Tax Act, 1961:
The appellant challenged the order dated 07.04.2023 under Section 148A(d) and the consequential notice under Section 148 of the Act. The Single Bench rejected the appellant's contention, stating that the assessing officer found credible evidence of actual borrowings, not merely "potential" ones. The court noted that the assessing officer determined the appellant had availed cash loans of Rs. 40,70,00,000/- through finance brokers, which involved unexplained expenditure under Section 69C and violations of Sections 269SS and 269T of the Act. The court held that the order was based on substantial materials and evidence, and thus, it could not be interfered with in a writ petition.

2. Alleged procedural irregularities and violation of principles of natural justice:
The appellant argued that the assessing officer did not provide the recorded reasons or information forming the basis for the proceedings, violating the principles of natural justice. The appellant contended that no documents were furnished to them, and the inquiry required under Section 148A(b) was not conducted. The court, however, found that the assessing officer had enclosed the details of the inquiry and supporting documents with the notice dated 14.03.2023. The court concluded that the order was neither non-speaking nor procedurally irregular, and the principles of natural justice were not violated.

3. Assessment of evidence and factual disputes in writ jurisdiction:
The court emphasized that it could not act as an assessing officer to scrutinize facts and evidence in a writ petition. The factual disputes and evidence presented required a deeper probe, which was beyond the scope of writ jurisdiction. The appellant was advised to agitate all issues during the reopening proceedings initiated under Section 148 of the Act.

Conclusion:
The appeal was dismissed, and the order passed by the learned Single Bench was upheld. The court found no merit in the appellant's arguments and concluded that all issues should be addressed in the reopening proceedings.