2024 (6) TMI 543 - HC - Income Tax

Reopening of assessment u/s 147 - petitioner had taken accommodation entries from M/s Metal Impex, which was deemed a shell entity conducting high-value transactions for accommodation entries - HELD THAT - The respondents appear to have taken into consideration certain bank statements pertaining to M/s Metal Impex, Prop. Sh. Naveen Tayal Metal Impex with which the petitioner undisputedly had some dealings. It was alleged by the respondents that the aforesaid transactions were merely accommodation entries and on the basis whereof they proceeded to form the tentative opinion that income appeared to have escaped assessment. While responding to the aforesaid notice, all that the petitioner did was to call upon the respondents to produce the Suspicious Transaction Report STR or any other material on the basis of which those details may have been collated. In the reply there was neither a denial of the transactions having been entered into with M/s Metal Impex nor did the petitioner deem it appropriate to produce the GST invoices and other material which have been placed for our consideration along with the writ petition. Writ petitioner has failed to make out a case which may warrant interference under Article 226 of the Constitution. The writ petition stand dismissed.

Summary

Issues involved: Impugning order u/s 148A(d) of the Income Tax Act, 1961 and consequential notice u/s 148 of the Act based on alleged escaped income for Assessment Year 2017-18.

Impugned Order and Allegations: The writ petitioner challenged the order u/s 148A(d) of the Income Tax Act, 1961 dated 30 March 2024 and the consequential notice u/s 148 of the Act. The proceedings stemmed from a notice dated 21 March 2024 u/s 148A(b) alleging that income chargeable to tax for the Assessment Year 2017-18 had escaped assessment. The notice required the petitioner to show cause as to why a notice u/s 148 of the Income Tax Act, 1961 should not be issued.

Background and Allegations: The case of the assessee was flagged as a potential risk case as per the Risk Management Strategy formulated by the CBDT. The petitioner filed a return declaring income of Rs. 69.255 lakhs, which was processed under section 14(1)(a). It was revealed that the petitioner had taken accommodation entries from M/s Metal Impex, which was deemed a shell entity conducting high-value transactions for accommodation entries. An amount of Rs. 1,61,19,174/- was alleged to have escaped assessment for the AY 2017-18.

Contentions and Dismissal: The petitioner failed to refute the transactions with M/s Metal Impex or provide necessary documents in response to the notice. Consequently, the court held that the petitioner did not make a case warranting interference under Article 226 of the Constitution. The writ petition was dismissed, but the petitioner's rights and contentions could still be addressed before the Assessing Officer.