The court emphasized that the Assessing Authority must follow the prescribed procedure under Section 148A of the Income Tax Act, 1961 and consider the material on record before issuing an order or notice.

ORDER :

1. By way of present writ petition filed under Article 226 of the Constitution of India, the petitioner seeks quashment of order (Annexure P/1(a) passed under Clause (d) of Section 148A of the Income Tax Act, 1961 (for short, “the Act, 1961”) and notice issued under Section 148 of the Act, 1961.

2. The brief facts as reflected from the record are that the petitioner is a domestic company and engaged in execution of civil construction works. It has filed income tax return for assessment year 2018-2019 on 26-3-2019 declaring the total income at Rs.43,14,13,840/-. It has also been stated that the company is maintaining regular books of account as per Companies Act, 2013 and also under Section 44AB of the Act, 1961 through independent auditor wherein the financial statement is also prepared. It has been contended that regular assessment for assessment year 2018-2019 was completed under Section 143 (3) of the Act, 1961 and total income was determined as per return determining demand payable at Rs. Nil. Thereafter, respondent No.4 has issued notice under Clause (b) of Section 148A of the Act 1961 on 24-3-2022 (Annexure P/5) wherein the Assessing Authority has mentioned about the credible information which is extracted below.

“Consequent to the information under High Risk CRIU/VRU cases obtained from insight portal, this office is in possession of information that M/s Panveen Trading Private Limited has certain transaction with you. Ms. Panveen Trading Private Limited has shown sale of Rs.2,20,00,275/- to Barbik Project Limited during the financial year 2017-2018.

However, on the basis of credible information is received that M/s Valeska Trading Private Limited, M/s Panveer Trading Private Limited & M/s Shwetpuship Commercial Private Limited were found indulging generating and selling tax invoices to various entities without physical supply of underlying goods/services for passing regular input tax credit to other business entities and for doing this they have also availed and utilized input Tax Credit (ITC) against fake invoices issued by others.

As per detailed information available with this office, you are a beneficiary of transaction for an amount of Rs.2,20,00,275/- made during the financial year 2017-2018 relevant to the AY 2018-2019 in the form of accommodation entry.

In view of the above discussion, it is evident that income chargeable to tax amounting to Rs.2,20,00,275/- has escaped assessment for AY 2018-19 and this is a fit case for issue of notice to show cause u/s 148A (b) of the Income Tax Act, 1961. You are therefore requested to show cause as to why a notice u/s 148 should not be issued on the basis of the above flagged information.”

3. The petitioner has submitted reply to the notice vide Annexure P/6 denying the allegations made in the notice contending that the notice was issued for providing opportunity of hearing being heard with respect to income chargeable to tax has escaped assessment as denied that any fake invoices that was used the same and the same is utilized for input tax credit. The petitioner prayed for supply of credible information along with copy of the fake invoices and copy of approval of the specified authority. The Assessing Authority considering the submissions has passed the order under Section 148A(d) (Annexure P/1) on 31-3-2022 wherein the Assessing Authority has observed as under.

“1. Credible information has been received from the Investigation Wing, Kolkata that the assessee has certain transactions with M/s Panveer Trading Private Limited during the financial year 2017-18.

2. During investigation, it is observed that M/s. Panveer Trading Private Limited has been incorporated on 05-10-2016 ie after the introduction of GST in indirect tax system.

3. Huge business transactions made by the entry is not in commensuration with its financial profile, as submitted before the income tax authority. Summary of income tax return filed by the entry is tabled”.

4. The Assessing Authority has passed the