2023 (9) TMI 844 - HC - Income Tax

Reopening of assessment - genuineness of the purchase transactions has been flagged by the AO, by referring to the information which has not been supplied to the petitioner - HELD THAT - AO did not consider bank statements and tax invoices to be relevant evidence. Furthermore, a perusal of the petitioner s reply dated 21.03.2023 would show that, although the petitioner furnished certain pieces of information to demonstrate that the transactions undertaken were genuine, the same were not considered by the AO. One such example is a piece of evidence concerning the production of the ledger account of the sellers which appears in petitioner s books of account. Petitioner placed on record documents to demonstrate that the transactions have been made through a banking channel. For example, in its reply the petitioner attached bank statements demonstrating payment made to the concerned parties. It appears that the petitioner has also placed on record the tax invoices and e-way bills. Despite these documents having been placed by the petitioner/assessee before the AO, the AO concluded that the petitioner had nothing to submit by way of a proper explanation regarding the transactions in issue. If AO had material to demonstrate that the sellers were dubious or non-existent, that material/information should have been put to the petitioner. Having failed to do so, in our opinion, the defence of the petitioner, in a sense, got compromised. Also there is reference to the non-existence of the vehicle No. HR99ACH0410. If the AO had relevant information based on which he concluded that the said vehicle did not exist, that information should have also been put to the petitioner. Thus the best way forward would be to set aside the impugned order, with liberty to AO to pass a fresh order.

Summary

Issues involved:
The judgment deals with an application for interim relief filed by the petitioner/assessee challenging notices and orders issued under the Income Tax Act, 1961.

Notice and Orders Assailed:
The writ petition challenges notices and orders including one issued under Section 148A(b) of the Income Tax Act, an order passed under Section 148A(d) of the Act, and a notice intimating that assessment will be completed under Section 144B of the Act.

Allegations and Defenses:
The petitioner/assessee was alleged to have benefited from bogus purchase entries totaling Rs. 24,31,89,457. The petitioner filed a partial reply which was considered by the Assessing Officer. The petitioner claimed that the defense was compromised as the relevant information was not provided by the AO.

Contentions and Rulings:
The petitioner's counsel argued that the assessment proceeding should not continue without providing all relevant information to the petitioner. The AO's rationale for considering the transactions as bogus was based on various discrepancies and non-existence of certain entities and vehicles.

Judicial Decision:
The High Court set aside the impugned order and directed the AO to pass a fresh order after providing all relevant information to the petitioner. The AO was instructed to allow the petitioner to file a further response and provide an opportunity for a personal hearing before proceeding with the assessment.

Final Disposition:
The writ petition was disposed of with the direction for the AO to pass a fresh order, ensuring the petitioner's defense was not compromised due to lack of relevant information. The court clarified that the judgment does not impact the final determination to be made by the AO.