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 follow the principles of natural justice, including providing a personal hearing.

JUDGMENT

[Physical Hearing/Hybrid Hearing (as per request)]

Rajiv Shakdher, J. (Oral)

CM Appl.23013/2023

1. Allowed, subject to just exceptions.

W.P.(C) 5865/2023 & CM Appl.23012/2023 [Application filed on behalf of the petitioner seeking interim relief]

2. Issue notice.

2.1 Mr Gaurav Gupta, learned senior standing counsel, accepts notice on behalf of respondent/revenue.

3. In view of the order that we propose to pass, Mr Gupta says that a counter-affidavit need not be filed and he will argue the matter based on the record presently available to the court. Therefore, with the consent of the counsels for the parties, the writ petition is taken up final hearing and disposal, at this stage itself.

4. This writ petition concerns Assessment Year (AY) 2019-20.

5. The petitioner has laid a challenge to the order dated 22.03.2023 passed under Section 148A(d) of the Income Tax Act, 1961 [in short, "Act"]. Besides this, a challenge is also laid to the consequential notice of even date i.e., 22.03.2023 issued under Section 148 of the Act.

6. The principal allegation against the petitioner is that it is a beneficiary of an accommodation entry provided in the form of bogus loans, amounting to Rs. 35,18,52,491/- during the period in issue i.e., Financial Year (FY) 2018-19 [Assessment Year (AY) 2019-20].

6.1 It is alleged by the respondent/revenue that the bogus accommodation entry was provided by Aneri Fincap Ltd. [in short, "AFL"].

6.2 It is also asserted by the respondent/revenue that AFL is one of several entities controlled by an accommodation entry provider i.e., one, Mr Rajesh G Mehta.

6.3 The record shows that these allegations are, broadly, founded on the statement dated 08.11.2019 made by Rajesh G Mehta under Section 131 of the Act. [See typed copy of the statement appended on page 58 of the case file].

7. Counsel for the petitioner says that a bare perusal of the statement made by Mr Rajesh G Mehta would show that there is no reference to any accommodation entry being provided to the petitioner, as alleged, in the form of a bogus loan.

8. It is relevant to note that the petitioner earlier went by the name Ashiana Realtech Pvt. Ltd.

9. We may note that the petitioner does concede that it had received an unsecured loan from AFL. Furthermore, the petitioner does not dispute the amount which has been quantified by the AO.

10. That said, the petitioner's stand is that the loan is genuine. In this regard, the petitioner avers that the loan was repaid in the succeeding AY i.e., AY 2020-21.

10.1 In support of its plea that the loan is genuine, the petitioner adverts to the fact (something which has been noted in the order passed under Section 148A(d) of the Act) that the interest was paid and tax at source was deducted under Section 194A of the Act.

10.2 Counsel for the petitioner also emphasized the point that, although an opportunity was sought for personal hearing, the same was not provided by the AO. It is the submission of the counsel for the petitioner that the AO was obliged to grant personal hearing to the petitioner's authorized representative.

10.3 In this behalf, counsel for the petitioner has relied upon the circulars issued by the CBDT dated 01.08.2022 and 22.08.2022.

11. On the other hand, Mr Gaurav Gupta, learned senior standing counsel, who appears on behalf of the respondent/revenue, has taken the position that since AFL was a paper company, the petitioner could not have, possibly, entered into any genuine loan transaction.

11.1 It is also Mr Gupta's contention that the petitioner did not place on record any loan agreement pursuant to which, possibly, the loan was given, as asserted by it.

12. We have heard the counsels for the parties.

13. What emerges from the record, presently, available before the court is that the reassessment proceedings were triggered against the petitioner pursuant to a search and seizure action initiated under Section 132 of the Act against "Oneworld group entities". This action was take