9911796707
TMI Blog2024 (12) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Act, 1961 (for short 'the Act of 1961') whereby the Respondent No.3 in both the writ proceedings have passed orders opining that the income chargeable to tax had escaped assessment and thereby attracting Section 147 of the Act of 1961 and is a fit case for issuance of notice under Section 148 of the said Act of 1961. 4. It is relevant herein to observe that in normal course of events when a notice is issued under Section 148 of the Act of 1961, the course available to an assessee is to file the returns and on the basis thereof, the fresh assessment proceedings are carried out. The assessee if so aggrieved, can prefer appeal against such assessment order. However, in the present case, the condition precedent to issue the notice under Section 148 of the Act of 1961 have been put to challenge on the ground that the mandate of Section 148A of the Act of 1961 was not complied with. Therefore, the issue involved in the instant proceedings pertains to as to whether the exercise of jurisdiction by the Respondent No.3 in both the proceedings was done in consonance with the provisions of Section 148A of the Act of 1961. 5. At this stage, this Court finds it relevant to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of law. To appreciate the said aspect, this Court briefly deals with the facts leading to the filing of both the writ petitions infra. 8. From a perusal of the pleadings in the writ petitions including the cause title, it would be seen that both the writ petitioners are sons of one Shri Santosh Kumar Jasrasaria. The Petitioner in WP(C) No.4975/2022 (hereinafter for convenience referred to as 'X') holds a PAN Number being AFUPJ2208N. 'X' filed his return of income for the assessment year 2018-19 on 25.10.2018 declaring total income of Rs.43,44,760/-. Subsequent thereto, a search and seizure action had taken place under Section 132 of the Act of 1961 on 08.02.2019. X's case was selected for compulsory scrutiny and pursuant to the said search, notice was issued under Section 153A of the Act of 1961 requiring X to file his return of income. X thereupon filed his return of income on 23.01.2021 declaring total income of Rs.1,36,44,760/- for the assessment year 2018-19 corresponding to the financial year 2017-18. Thereupon, an assessment order was passed on 09.06.2021 whereby X's total income was assessed at Rs.1,36,44,760/-. 9. The Petitioner in WP(C) No.7014/2022 (hereinafter for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Respondent No.3 in the case of X and Y under Section 148A(d) opining inter alia that there was a strong indicators that the income chargeable to tax had escaped assessment in the case of both X and Y. A perusal of the respective orders dated 31.03.2022 passed in the cases of both X and Y which were similar reveals that the Respondent No.3 observed that though X and Y did not make purchase but they sold to the parties concerned as regards the exact amount which were duly reflected in the information received through risk management strategy of the Board flagged in the Insight Portal. It was therefore opined that there was a strong indicators that the income chargeable to tax had escaped assessment in the case of both X and Y. 13. The records further reveals that pursuant thereto, notice was issued under Section 148 of the Act of 1961. Both X and Y thereupon challenged the orders passed under Section 148A(d) of the Act of 1961 dated 31.03.2022 by filing two separate writ petitions being WP(C) No.3067/2022 and WP(C) No.3066/2022. Both these writ petitions were disposed of on 11.05.2022 vide separate orders of similar content. The Coordinate Bench of this Court while passing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have sold the materials to the parties in question. The learned counsel for the Petitioners therefore submitted that in the order dated 11.05.2022 passed by this Court in both the writ petitions i.e. WP(C) No.3067/2022 and 3066/2022, this Court had categorically observed that a transaction of purchase and transaction of sale are two different aspects and as such without there being any Show Cause notice issued in that perspective, the question of opining in the impugned orders that the Petitioners indulged in transactions of bogus sale to the parties in question was in violation to Section 148A(b) of the Act of 1961. 18. The learned counsel for the Petitioners further submitted that the basis on which the impugned orders under Section 148A(d) of the Act of 1961 were passed were on the basis of non-existent materials and were mere conjectures and surmises of the Respondent No.3 and as such, this is a fit case for interference with the impugned orders. In that regard, the learned counsel relied upon the judgment of the learned Delhi High Court in the case of Banyan Real Estate Fund Mauritius Vs. Assistant Commissioner of Income Tax reported in (2024) 165 Taxmenn.com 210 (Del). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Petitioners had no purchase transactions with those firms but had sold goods to those firms and in that support, have enclosed the ledger copies, bank statements, invoices and the stock register. The learned Standing counsel therefore submitted that the opportunity so given was in accordance with Section 148A(b) of the Act of 1961 and as such there was no infraction to the said provision. The learned Standing counsel further submitted that in the order dated 11.05.2022 passed in WP(C) No.3066/2022 and WP(C) No.3067/2022, this Court had made it clear that it was only in respect to not providing adequate reasons in the order, the earlier order dated 31.03.2022 was interfered with and there was a specific direction to carry out de novo proceedings post the Show Cause reply. The learned Standing counsel therefore submitted that this Court had not interfered with the Show Cause notices so issued to the Petitioners under Section 148A(b) of the Act of 1961 and as such the Petitioners herein cannot assail the same again in the instant proceedings. 20. The learned Standing counsel further submitted that a perusal of the impugned orders would further show the modus operandi employed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Act of 1961 as noted above, no notice under Section 148 of the Act of 1961 can be issued without following the procedure prescribed under Section 148A of the Act of 1961. It was also mandated that along with the notice under Section 148 of the Act of 1961, the Assessing Officer is required to serve the order passed under Section 148A of the Act of 1961. 23. A reading of Section 148 of the Act of 1961 on the face of it shows that compliance to Section 148A of the Act of 1961 has been made a condition precedent for issuance of a notice under Section 148 of the Act of 1961. 24. In terms with Section 148A of the Act of 1961, the procedure has now been streamlined and simplified. It provides that before issuing any notice under Section 148 of the Act of 1961, the Assessing Officer shall (i) conduct any enquiry, if required with the approval of the specified authority with respect to the information which suggests that income chargeable to tax had escaped assessment; (ii) provide an opportunity of being heard to the assessee, with the approval of the specified authority; (iii) consider the reply of the assessee furnished, if any, in response to the show cause notice r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain digital devices were impounded and relevant data from digital devices were extracted that the proprietorship firms of both X and Y entered into accommodation entries of sale with M/s Swastik Traders and M/s Kalki Trading Company. 27. In the backdrop of the above facts, let this Court therefore take note of the Show Cause notice which was issued to both X and Y. In the Show Cause notice which was issued to X, it was categorically mentioned that information have been received through insight portal that X had made bogus purchases with M/s Swastik Traders, proprietor Shri Rahul Bhuraria for Rs.40,86,573/- and M/s Kalki Trading Company, proprietor Shri Deepesh Goel for Rs.25,94,075/- during the financial year 2017-18. In the Show Cause notice issued to Y, it was also mentioned that from information received, it came to light that Y had made bogus purchases from M/s Swastik Traders proprietor Shri Rahul Bhuraria for Rs.25,86,700/- during the Financial Year 2017-18. The materials on record and more particularly the replies submitted by both X and Y would show that there was no denial by both X and Y that there were no transactions between X and M/s Swastik Traders and M/s Kalki T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Under such circumstances, 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 effect. The Respondent No.3 had categorically observed at paragraph Nos. 12, 13, 15 and 16 which being relevant are quoted herein under: "12. Now coming to the issue here - of the purchases for the purported sales made - the purchases are shown to have been made from NCS Enterprises, Proprietor being one John Imchen, a local Naga tribe, who is exempted from income-tax u/s 10(26). This same John Imchen had also been covered under the search and seizure action u/s 132 on 08/02/2019. One of the main reasons for the search and seizure action was that the assessee was running business(s) in the names of local Naga tribals. The assessee business is by the style name 'National Commodity Supplier Enterprises' and John Imchen business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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