2024 (3) TMI 315 - HC - Income Tax

Reopening of assessment - as alleged Petitioner was a beneficiary of accommodation entries - Notices under Section 148A(b) were issued, alleging escaped income, followed by a subsequent notice clarifying errors - Petitioner's response, supported by evidence, was rejected for failure to submit documents not initially requested - HELD THAT - Petitioner is correct in stating that these details were never asked for in the notice issued u/s 148A(b) of the Act or later. Petitioner is also correct in submitting that for the first time in this order there is even an allegation that investigation by Central Goods and Service Tax Department revealed that KMPL was indulging in non-genuine transactions and was merely passing accommodation entries. Therefore, the business that Petitioner had with KMPL was only on paper. There is an observation that Assessee has shown sales to KMPL in its books of account which is non-genuine. There is nothing to indicate how the AO has come to such a conclusion notwithstanding accepting the fact that Petitioner had submitted copy of financial statement, ledger details, ledger account details of GST sales in respect of tax invoices of all parties and copy of bank statement of HDFC Bank through which KMPL had made payment. Petitioner also pointed out that the AO in his order impugned has stated Petitioner failed to submit E-way bills whereas in the letter dated 20th March 2023 at Annexure A is a copy of the tax invoices and E-way bills. Mr. Deshpande also submits that perhaps the toll booth receipts may not be available because that would be paid by the transporter, but nevertheless an attempt will be made to submit the same. Therefore, we have no hesitation in quashing and setting aside the impugned order passed u/s 148A(d) of the Act and remand the matter for de novo consideration. Mr. Deshpande states that the documents alleged to have not been submitted in the impugned order shall be filed within two weeks from today.

Summary

Issues involved:
The issues involved in this case are related to the notice under Section 148A(b) of the Income Tax Act, 1961 alleging that income chargeable to tax for Assessment Year 2019-20 has escaped assessment, the validity of the notice, the rejection of the petitioner's reply, and the subsequent order passed under Section 148A(d) of the Act.

Notice under Section 148A(b):
The petitioner filed its return of income for Assessment Year 2019-20, declaring a total income. Subsequently, the petitioner was served with a notice alleging that income chargeable to tax may have escaped assessment. The notice contained information suggesting that a specific amount could have escaped assessment. However, a subsequent notice admitted that the earlier notice contained incorrect information and was invalid. The new notice provided details of the petitioner being a beneficiary of certain transactions and called upon the petitioner to show cause with supporting evidence. The petitioner responded by providing details of the transactions and relevant documents.

Rejection of Petitioner's Reply:
The petitioner's reply was rejected under Section 148A(d) of the Act on the grounds of failure to submit certain documents, which were not originally requested in the notice. The rejection also included an allegation that investigations revealed the other party involved in non-genuine transactions, implying that the business with the petitioner was only on paper. The petitioner had submitted various documents including tax invoices and E-way bills, but the rejection order did not consider these submissions adequately.

Judgment and Remand:
The High Court quashed and set aside the impugned order, remanding the matter for fresh consideration. The court directed the petitioner to file the alleged missing documents within a specified time frame. The Assessing Officer was instructed to dispose of the notice after giving a personal hearing to the petitioner and providing a reasoned order. The AO was also required to justify why, despite the petitioner's submissions, the transaction was still considered non-genuine. The court made the rule absolute in the specified terms and disposed of the petition without any order as to costs.