The court ruled that erroneous identification of entities in tax assessments undermines the validity of claims, necessitating precise identification for legal accuracy.

JUDGMENT

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

Tara Vitasta Ganju, J. (Oral)--This Writ Petition is directed against order dated 27.07.2022 passed under Section 148A(d) of the Income Tax, 1961 [hereinafter referred to as "Act"] and the consequent notice of even date i.e., 27.07.2022 issued under Section 148 of the Act.

2. The impugned order and notice were preceded by a notice dated 15.05.2022 issued under Section 148A(b) of the Act concerning assessment year (`AY') 2016-2017.

3. A perusal of the impugned order shows that the principal allegation levelled against the petitioner is the following:

"2. As per the information available on Insight Portal & flagged by the Directorate of Income-Tax (System) as per risk profiling, the information relating to evasion of tax by the assessee has been disseminated; brief of which are as under:

A Search operation u/s 132 of the I.T. Act was carried out on 13.04.2017 on Himanshu Verma Group and during the post search proceedings by Central Circle, it was found that Sh. Himanshu Verma was [sic: has] indulged in providing bogus accommodation entries through various shell companies operated or controlled by him or dummy directors. During enquiry, it was found, that there was no actual business activity in any of concerns managed by him. He was doing business of providing bogus accommodation entries-.in the shape of share application money, Capital Gain on Shares, expenditure entries in lieu of certain commission charged from the beneficiary parties and to convert the unaccounted black money into white. The statement u/s 131 of the I.T. Act was also recorded on 13.04.2017 by the investigation Wing, Delhi, wherein he admitted to have indulged in the above activity.

Further, from the information, it is seen that Assessee Company has made following transactions with the entities controlled and managed by Sh. Himanshu Verma during F.Y.2015-16 relevant to A.Y.2016-17:

Thus, the assessee has received accommodation entries of Rs.1,13,50,000/- during F.Y. 2015-16 relevant to A.Y. 2016-17"

4. A perusal of the extract would show that inter alia what was alleged against the Petitioner is that transactions have been made with an entity controlled and managed by Mr Himanshu Verma called Kanhaiya Impex Pvt. Ltd.("KIPL") amounting to Rs.1,13,50,000/- in AY 2016-2017.

5. On 28.05.2022, in response to the notice dated 15.05.2022, the Petitioner stated that it does not have any dealings whatsoever with the company KIPL and therefore no income, much less Rs.1,13,50,000/-, has escaped assessment. The relevant part of the said reply is extracted hereafter:

"v.That the assessee company has not dealt with and has not entered into any transaction of whatsoever nature (sale, purchase, loan, share application money, transactions resulting into capital gains etc.) with alleged M/s Kanhaiya Impex Pvt. Ltd (PAN-AAHCM7I95C) amounting to Rs.1,13,50,000/- during the F.Y. 2015-16."

6. The Respondent/Revenue had thereafter by a letter dated 21.06.2022 provided additional information and asked the Petitioner to submit its reply. The additional information merely reiterated what was set forth earlier i.e., that it had entered into five transactions in the nature of accommodation entries with KIPL for Rs.1,13,50,000/-. The relevant extract of the information sheet appended reads as follows: