2024 (8) TMI 291 - HC - Income Tax

Reopening of assessment u/s 147 - petitioner had wrongly availed of Integrated Goods and Service Tax IGST refunds - HELD THAT - The allegation which stood laid related to the receipt of illegitimate refunds of IGST pertaining to AY 2020-21. However, on an ex facie examination of the information which appears at page no. 113 of our record, the disallowable expenditure was concerned only with Financial Years FYs 2017-18 and 2018-19 and thus corresponding to AYs 2018-19 and 2019-20. There was thus a complete absence of any material which could be said to have any bearing insofar as AY 2020-21 is concerned. We additionally take note of the detailed reply which was submitted by the writ petitioner in response to the original notice and which is dated 10 March 2023. As is manifest from a reading of the extracts forming part of that reply the aspect of refund was ultimately brought to a close and concluded in favour of the writ petitioner. Unable to sustain the impugned action of reassessment - Decided in favour of assessee.

Summary

Issues involved:
Challenge to reassessment action under Section 148 of the Income Tax Act, 1961 for Assessment Year 2020-21 based on alleged wrongful availing of Integrated Goods and Service Tax (IGST) refunds.

Analysis:
1. The petitioner challenged the initiation of a reassessment action under Section 148 of the Income Tax Act, 1961 for Assessment Year 2020-21, alleging wrongful availing of IGST refunds. The respondents proceeded based on the premise that the petitioner had wrongly availed IGST refunds, as per information provided under Section 148A(d) of the Act.

2. The notice alleged that the petitioner received illegitimate IGST refunds during the relevant period. However, upon examination, it was found that the disallowable expenditure related to Financial Years 2017-18 and 2018-19, not Assessment Year 2020-21. The material provided did not have any bearing on AY 2020-21, leading to a lack of evidence supporting the reassessment for the said year.

3. The petitioner submitted a detailed reply refuting the allegations and providing a breakdown of the IGST refunds claimed during the specified period. The reply clarified the legitimacy of the refunds claimed and highlighted the settlement of disputes with the GST Department regarding the refunds. The petitioner's response effectively countered the allegations of wrongful refund claims.

4. The Court observed that the facts of the case, as presented in the petitioner's reply, demonstrated that the IGST refund issue had been resolved in favor of the petitioner. The Court found no merit in the reassessment action based on the lack of evidence linking the alleged wrongful refunds to Assessment Year 2020-21.

5. Consequently, the Court allowed the writ petition and quashed the impugned notice dated 24 March 2023, as the reassessment action lacked a valid basis for AY 2020-21. The judgment emphasized the importance of factual accuracy and evidence in initiating reassessment proceedings under the Income Tax Act to prevent undue harassment to taxpayers.