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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Tara Vitasta Ganju, JJ.
Ac Infrastructures Private Limited – Appellant
Versus
Income Tax Officer & Anr. – Respondents
W.P.(C) 1754 of 2023 & CM Appls. 6709-6710 of 2023
Decided On : 10-02-2023
Income Tax Act - Assessment of Accommodation Entries - The court set aside the order and notice issued under Section 148A(d) of the Income Tax Act, 1961, and directed the Assessing Officer to carry out the proceedings de novo, with the requirement to furnish requisite material and accord personal hearing to the petitioner.
Fact of the Case:
The petitioner challenged the notice and order issued under the Income Tax Act, alleging the receipt of accommodation entries worth Rs.5.80 crores from a specific entity.
Finding of the Court:
The court set aside the order and notice, directing the Assessing Officer to provide requisite material, accord personal hearing, and conduct proceedings de novo.
Issues: Challenge to notice and order under the Income Tax Act, allegation of receipt of accommodation entries, sufficiency of material provided to the petitioner.
Ratio Decidendi: The court emphasized the need for the Assessing Officer to furnish requisite material and accord personal hearing to the petitioner before carrying out proceedings de novo.
Final Decision: The order and notice were set aside, and the Assessing Officer was directed to conduct proceedings de novo with the specified requirements.
JUDGMENT
[Physical Hearing/Hybrid Hearing (as per request)]
Rajiv Shakdher, J. (Oral)
CM APPL. 6710/2023
1. Allowed, subject to the petitioner filing legible copies of the annexures, at least three days before the next date of hearing.
W.P.(C) 1754/2023
2. Issue notice.
2.1. Mr Sanjay Kumar, learned senior counsel, who appears on behalf of the respondent/revenue, accepts notice.
3. In view of the directions that we propose to pass, Mr Sanjay Kumar says that no counter-affidavit needs to be filed.
4. Thus, with the consent of counsel for the parties, the writ petition is taken up for hearing and final disposal, at this stage itself.
5. Via this writ petition, the petitioner has assailed the notice dated 27.05.2022 issued under Section 148A(b) of the Income Tax Act, 1961 [in short, "Act"].
6. Besides this, challenge is also laid to the order dated 22.07.2022 passed under Section 148A(d) of the Act.
7. The impugned notice and order concern Assessment Year (AY) 2013-14.
8. The principal allegation against the petitioner is that it is a beneficiary of accommodation entries provided by Devesh Upadhyay via a company controlled by him.
9. In this regard, reference is made to an entity going by the name Neotex Vinimay Private Limited [in short, "NVPL"].
10. It is alleged that the petitioner has received accommodation entries worth Rs.5.80 crores from NVPL, which amalgamated with Shrihari Tradex Private Limited.
11. Ms Kavita Jha, who appears on behalf of the petitioner, has adverted to the notice issued under Section 133(6) of the Act, whereby information concerning the transaction entered into by the petitioner with NVPL was sought. This notice is dated 20.03.2020 and is marked as Annexure-E. 11.1 In this context, our attention has been drawn by Ms Jha to reply dated 19.05.2020.
12. A perusal of the reply shows that the stand taken by the petitioner was that it had obtained an unsecured loan from NVPL, albeit through a banking channel i.e., RTGS.
13. The amount which the petitioner claims it obtained as loan was Rs.6.35 crores. In support of this stand taken in the reply dated 19.05.2020, documents such as bank statement, the statutory audit report, balance sheet, profit and loss account and a statement setting forth computation of income (i.e., form 29B) were furnished.
14. We have queried Ms Jha as to whether any material was furnished concerning the allegation made qua the petitioner i.e., that it was a beneficiary of accommodation entries of worth Rs.5.80 crores.
15. Ms Jha says that the petitioner was not furnished any information/material, apart from what is stated in the notice dated 27.05.2022 issued under Section 148A(b) and order dated 22.07.2022 passed under Section 148 A(d) of the Act.
16. Having regard to the aforesaid, in our view, the best way forward would be to set aside the order dated 22.07.2022 passed under Section 148A(d) of the Act and a consequent notice of even date i.e., 22.07.2022 issued under Section 148 of the Act, with liberty to the Assessing Officer (AO) to carry out the proceedings de novo.
16.1. It is ordered accordingly.
17. However, it is made clear that before the AO commences the proceedings afresh, he will furnish the requisite material and/or information in support of the allegation levelled against the petitioner, that is, it is a beneficiary of accommodation entries worth Rs.5.80 crores.
18. The AO will also accord personal hearing to the authorised representative of the petitioner.
18.1. For this purpose, AO will issue a notice to the petitioner which would indicate the date and time of the hearing.
19. The AO will be at liberty to conduct proceedings via Video Conferencing.
20. Furthermore, if fresh material is supplied, AO will accord leeway to the petitioner to file a supplementary reply.
21. The writ petition is disposed of in the aforesaid terms.
22. Consequently, all the pending applications shall stand closed.
23. Parties will act based on the digitally signed copy of
The principle of natural justice and due process requires the Assessing Officer to provide requisite material and accord personal hearing before carrying out proceedings de novo.
The court emphasized the importance of reasonableness and rationality in the assessment process and granted the AO the opportunity to re-examine the issue with a fresh look and grant a personal heari....
The Assessing Officer must conduct due diligence and establish prima facie evidence before issuing notices under Section 148A of the Income Tax Act, 1961.
The principle of natural justice and fair procedure requires the Assessing Officer to provide the petitioner with all relevant material/information and the opportunity to respond before taking furthe....
The central legal point established in the judgment is that reassessment proceedings cannot be triggered based on unsubstantiated allegations, and the court has the authority to set aside the impugne....
The central legal point established in the judgment is that the AO must have underlying material available to form a reasonable belief that income chargeable to tax has escaped assessment, and must f....
Procedural fairness and compliance with notice requirements are essential in the assessment process under the Income Tax Act.
Non-application of mind by the Assessing Officer in adding the repayment of loan to the loan amount received from unrelated parties.
Notices issued to a dissolved partnership firm under the Income Tax Act were set aside for failure to provide requisite material to the parties, highlighting the necessity of upholding natural justic....
The importance of the petitioner's response to the notice issued under Section 148A(b) of the Income Tax Act and the granting of a personal hearing.
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