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TMI Blog2024 (12) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... tik Traders which was owned by the nephew of Shri Ashok Kumar Gupta. From the replies so submitted by both X and Y to the Show Cause notices would show that both X and Y admitted transactions with these firms. It showed that commodities i.e. Rajma and Kabuli Chana on the same day was purchased by the firms belonging to X and Y from a firm namly M/s NCS Enterprise at Nagaland and on the same date, that commodities were sold to these firms namely M/s Swastik Traders and M/s Kalki Trading Company at Delhi. The said aspect shows that there were transactions on papers and the Respondent No.3 therefore have proper reasons to believe that these were only paper transactions which was also admitted by Shri Ashok Kumar Gupta on oath during the survey proceedings. In the opinion of this Court, the impugned orders assailed under Section 148A(d) of the Act of 1961 in both the writ petitions cannot be said to be in violation of Section 148A of the Act of 1961. Further to that, from the impugned orders, it is also seen that the transactions in question being bogus transactions, the efficacy of the contentions made by the Petitioners that the transactions were of sale and not purchase had lost its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sara Lee Vs. Excise and Taxation Officer cum Assessing Authority and Others reported in (2023) 109 GSTR 402, the Supreme Court had the occasion of dealing with the circumstances as to when a writ Court can exercise jurisdiction when there is an alternative remedy available. It was opined by the Supreme Court in the said judgment that the jurisdiction under Article 226 of the Constitution can be exercised under the following circumstances: (a) Where the writ petition seeks enforcement of any of the fundamental rights; (b) Where there is violation of principles of natural justice; (c) Where the order or the proceedings are wholly without jurisdiction; or (d) Where the vires of an Act is challenged; or (e) Where the controversy is purely a legal one and it does not involve disputed questions of facts but only questions of law. 6. It is also apposite herein to take note of that in a subsequent judgment of the Supreme Court in the case of PHR Invent Educational Society Vs. UCO Bank and Others reported in (2024) SCC OnLine SC 528, the Supreme Court opined that the High Court would not ordinarily entertain a writ petition under Article 226 of the Constitution if an effective remedy is av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereto, a search and seizure action was conducted on 08.02.2019, Y s case was selected for compulsory scrutiny. Notice was issued under Section 153A of the Act of 1961 requiring Y to file his return of income and thereupon Y filed his return of income on 23.01.2021 declaring total income of Rs.1,36,89,630/- for the assessment year 2018-19 corresponding to the financial year 2017-18. Thereupon, an assessment order was passed on 09.06.2021 whereby the total income of Y was assessed at Rs.1,36,89,630/-. 10. The materials on record reveals that based upon certain information received through Insight Portal, it was learnt that X had made bogus purchase from M/s Swastik Traders of an amount of Rs.40,86,573/- and one M/s Kalki Trading Company for Rs.25,94,075/- during the financial year 2017-18. Similarly, in the case of Y, it revealed from the information that the Y had made bogus purchase from M/s Swastik Traders to the tune of Rs.25,86,700/- for the financial year 2017-18. On the basis of such information, both X and Y were issued Show Cause notices dated 21.03.2022 under Section 148A(b) of the Act of 1961 for the assessment year 2018-19. 11. Both X and Y submitted their reply to the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder law by arriving at a satisfaction regarding the acceptability/nonacceptability of the reply submitted by X and Y vis- -vis the allegations in the Show Cause notice under Section 148A of the Act of 1961. 14. The Coordinate Bench of this Court further observed that the orders dated 31.03.2022 were interfered with for the reason that the Respondent No.3 converted the allegations made in the Show Cause notices from bogus purchase to that of a sale after the replies submitted by X and Y. Additionally, the Respondent No.3 instead of arriving at some satisfaction merely assumed that it was rather strange that the X and Y had acted in the manner indicated therein. This Court further directed the Respondent No.3 to proceed de novo from the stage of the Show Cause reply being submitted by X and Y. 15. The records reveal that pursuant thereto, the Respondent No.3 passed two separate orders. In the case of X, an order was passed under Section 148A(d) on 31.05.2022 and in the case of Y, the order was passed under Section 148A(d) of the Act of 1961 on 10.09.2022. Both these orders have been separately assailed in both the writ petitions. It is under such circumstances, both the writ petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the effect that the validity of the initiation of reassessment would have to be independently evaluated and cannot be confused with the power that would ultimately be available in the hands of the Assessing Officer which would be involved once an assessment had been validly reopened. He further relied upon the observations made in the said judgment wherein it was observed that when the issue was never a part of the formation of the opinion for issuance of a notice under Section 148A(b), the same cannot be made the basis for passing an order under Section 148A(d). SUBMISSION OF THE LEARNED STANDING COUNSEL FOR THE RESPONDENTS: 19. Per contra, Mr. S. C. Keyal, the learned Standing counsel appearing on behalf of the Income Tax Department submitted that a perusal of the impugned orders assailed in both the writ petitions would show that due information was provided to the Petitioners in the Show Cause notices pertaining to the transactions. The learned Standing counsel submitted that upon examination of one Mr. Ashok Kumar Gupta, it came to light that he had clandestinely been arranging racket of providing bogus accommodation entries of fictitious/bogus/non-existent purchases, sales, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess transactions with those firms. The invoices as well as the ledger copies would further show that on the same day, there was purchases made by the Petitioners from a firm namely M/s NCS Enterprise i.e. on 22.05.2017 and on the same day, there were sales being made by the Petitioners to those firms namely M/s Swastik Traders as well as M/s Kalki Trading Company. The learned Standing counsel submitted that all these transactions on paper happened in Delhi and there were no physical sales. He further submitted that the all those purchases as well as the sales were doubtful which has been rightly recorded in the impugned orders. He therefore submitted that the Respondent No.3 had the jurisdiction to issue the notices under Section 148 as the preconditions were duly satisfied. He further submitted that the instant writ petition do not come within the exceptions for this Court ought to exercise the jurisdiction under Article 226 of the Constitution. He further relied upon the judgments of the Supreme Court in the case of Godrej Sara Lee (supra) and PHR Invent (supra) and submitted that pursuant to fresh assessment orders passed in the reassessment proceedings, the Petitioners would al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (v) the Assessing Officer is required to pass a specific order within the time stipulated. 25. In the backdrop of the above, let this Court take into consideration the facts involved in the instant proceedings. 26. From a perusal of the affidavit-in-opposition filed by the Respondents would show that upon receipt of the information from the Deputy Director of Income Tax (Investigation), Unit, 6(2) New Delhi through an insight portal of the Department, a survey action was conducted under Section 133A of the Act of 1961, in the case of one Shri Ashok Kumar Gupta, Shri Sandeep Gupta and Shri Anuj Gupta. During their survey proceedings, it was found that Shri Ashok Kumar Gupta was engaged in providing accommodation entries of non-genuine purchases and non-genuine sales to various parties. During the survey, details relating to such entries were gathered and the statement of Shri Ashok Kumar Gupta under Section 131(1A) of the Act of 1961 was recorded on oath. The said Shri Ashok Kumar Gupta in his statement recorded on 30.11.2018 admitted that he had given both purchase and sale related accommodation entries to various persons (individuals and entities) during the financial year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copies of the books of the account for financial year 2017-18, copy of the particular page of the bank account in which both X and Y have received their payments, copies of the invoices raised by them and copy of the particular page of the stock register. 28. Under such circumstances, the submissions of the learned counsel for the Petitioners that Section 148A(b) of the Act of 1961 was not complied with is totally misconceived. Apart from that, it is also relevant to mention that in the earlier round of litigation, this Court directed the Respondent Authorities to proceed de novo from the stage of Show Cause reply. 29. The next aspect which arises is as to whether the orders under Section 148A(d) of the Act of 1961 was in accordance with the provisions of Section 148A more particularly taking into account the Show Cause notice and the reply so submitted. From a perusal of the impugned orders, it would be seen that in the impugned orders, the Respondent No.3 had categorically mentioned that Shri Ashok Kumar Gupta had made non-genuine accommodation entries of purchase and sale to various individuals and entities. These accommodation entries were made through various firms which were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Kabuli Chana . These grains are quite unknown in Nagaland, not known to be cultivated in Nagaland, and neither would there be local demand for such non-local unknown grains. The purported purchase is from NCS Enterprise [John Imchen], Dimapur, Nagaland; and the sale to the fictitious entities at Delhi. Basically and effectively, the goods are transacted at Delhi so the accounting entries are but mere routing of the network racket of inter-State evasion of taxes. 15. Also, it may be observed that the assessee in his petition to the Hon ble High Court has not made mention about the purchases the party from whom purchased, nor the description of the goods so traded. 16. What is relevant and important is the larger macro picture of the inter-State network racket of bogus purchases, bogus sales, bogus consignments with motive to evade taxes. 31. In that view of the matter, there was no violation to Section 148A of the Act of 1961 while passing the impugned orders and as such the said impugned orders do not come within the ambit of the exceptions as settled by the Supreme Court as referred to supra. It is the opinion of this Court that both the writ petitions challenging the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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