IMPORTANT POINT
The court emphasized the importance of the AO seeking explanations before considering investments as unexplained, especially when the focus of the allegations had shifted.

JUDGMENT

Rajiv Shakdher, J. (Oral) - We heard the matter at length on 12.09.2023, whereupon we had etched out the broad contours of the matter. Thus, for the sake of convenience, the relevant parts of the order dated 12.09.2023 are extracted hereafter:

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

3. Via the instant writ petition, a challenge is laid by the petitioner to the following order and notices:

(i) Notice dated 23.02.2023 issued under Section 148A(b) of the Income Tax Act, 1961 [in short, "Act"].

(ii) Order dated 31.03.2023 passed under Section 148A(d) of the Act.

(iii) Notice dated 31.03.2023 issued under Section 148 of the Act.

4. A perusal of the notice dated 23.02.2023 issued under Section 148A(b) of the Act would show that the principal allegation against the petitioner, to begin with, was that there were unexplained credits in its bank account amounting to Rs.1,33,89,087/-.

4.1 It was alleged that the said credit entries arose on account of transactions with three entities going by the name M.K. Traders, Luxmi Agencies, and Lucky Traders.

5. The record shows that the petitioner filed a reply to the aforementioned notice on 07.03.2023. The stand taken by the petitioner was that it had not entered into any transaction with the aforementioned entities. The petitioner claims that it had also appended the bank statements of the accounts maintained with Indian Bank and ICICI Bank to its reply.

6. The Assessing Officer (AO), however, was not persuaded and proceeded to pass the impugned order dated 31.03.2023 under Section 148A(d) of the Act.

7. Mr Nischay Kantoor, who appears on behalf of the petitioner says that while passing the impugned order dated 31.03.2023, the AO has completely changed the goalpost.

7.1. It is submitted by Mr Kantoor that the AO now alleges that the petitioner has not explained the investments made in the unquoted shares of an entity going by the name Mahavir Transmission Ltd.

8. On the other hand, Mr Sanjeev Menon, learned Standing Counsel, who appears on behalf of the respondents/revenue, states that a perusal of the order passed under Section 148A(d) of the Act would show that the petitioner had not furnished the bank statement concerning ICICI Bank.

8.1 As noted above, this is refuted by Mr Kantoor and, in this behalf, he has drawn our attention to the bank statements which are appended on page 394 of the case file.

9. It appears that prima facie, Mr Kantoor is right that there has been a change in goalpost. This is evident upon perusal of the following extract from the impugned order:

"As per information assessee had taken accommodation entry from M/s. MK Traders, Luxmi Agencies & Lucky Traders which are entities controlled by Sh. Manish Gupta as unexplained credits. The assessee in its reply denied to have any transaction with said entities, it provided its copy of bank statement with the Indian Bank (A/c No.50316904371) for the period from 01.04.2018 till 31.12.2018 considering the date of search was 31.10.2018. On examination of said bank statement there is no credit entry for the amount as mentioned in the information receipt. As per the audit report of the assessee it had revenue from operation amounting to Rs.56,079/- and revenue from other income amounting to Rs.64,10,815/-. In note 17 for other income it had profit from sale of assets amounting to Rs.63,80,559/- and interest on security of Rs.30,256/-, the figure mentioned in the information nowhere matches with the above figure. In its reply the assessee is mentioned one more bank account with ICICI Bank (A/c No. 028405000028), the bank statement of which it has failed to submit. The closing balance in it shown as Rs.11,019/-. In the balance sheet of the assessee during the relevant assessment year there is no increase in share capital, there is no fresh unsecured loans, among the other current liabilities also the closing figure is of Rs.45,494/-, but in note 11 non-current investment there is share application money of Rs.17,50,0