2023 (11) TMI 46 - HC - Income Tax

Validity of reopening of assessment - allegation against the petitioner that it has received bogus entry from an entry provider i.e., one Mr Ramesh Kumar Bagri - HELD THAT - A mistake has been made in triggering reassessment proceedings against the petitioner as correspondence from the Office of the Deputy Director of Income Tax (Investigation). Unit-II. Faridabad, as now evident that during the financial year under reference, no transactions have been carried out by the assessee with Sh. Ramesh Kumar Bagri and his name was inadvertently mentioned by the Investigation Wing in the report due to similarity in the names. Thus reassessment against the petitioner cannot continue. Decided in favour of assessee.

Summary

Issues involved:
The judgment deals with reassessment proceedings initiated u/s 148A(d) of the Income Tax Act, 1961 for Assessment Year (AY) 2016-17 based on discrepancies in bank account numbers and alleged receipt of a large sum by Mr. Ramesh Kumar Bagri.

Relevant details for each issue:

1. Discrepancy in bank account numbers:
- The order dated 28.07.2022 under Section 148A(d) mentioned different account numbers for Mr. Ramesh Kumar Bagri, leading to confusion.
- The petitioner, represented by Mr. C.S. Aggarwal, provided certificates from Central Bank of India confirming no transactions with the mentioned account.
- The counter-affidavit admitted the mistake in quoting the wrong entity, Tirupati Trading Corporation, instead of the correct entities, Tirapati Trading Co. and Tirapati Trading Company.

2. Alleged receipt of a large sum by Mr. Ramesh Kumar Bagri:
- The order alleged that Mr. Bagri received a significant amount, but the petitioner presented certificates showing no such transactions.
- The certificates from Central Bank of India clarified that no payments were made to Mr. Bagri's account as mentioned in the order.
- The counter-affidavit acknowledged the error in associating Mr. Bagri with the petitioner due to name similarity, leading to the reassessment being deemed incorrect.

3. Legal proceedings and outcome:
- The court granted interim relief to the petitioner, staying the operation of the impugned order and notice until further orders.
- Despite the respondent's failure to file a counter-affidavit, the prepared document admitted the mistake and recommended discontinuation of reassessment.
- Consequently, the impugned order and notice were set aside, and the writ petition was disposed of in favor of the petitioner.
- The Registry was instructed to upload relevant documents for record-keeping, and parties were directed to act based on the digitally signed order.

This judgment highlights the importance of accurate information in initiating tax reassessment proceedings and the necessity for authorities to rectify errors promptly to ensure fair treatment of taxpayers.