IMPORTANT POINT
The main legal point established in the judgment is the requirement for the Assessing Officer to consider the material available on record, including the reply filed by the assessee, before deciding whether it is a fit case to issue a notice under Section 148 of the Income Tax Act, 1961.

ORDER :

(Bhargav D. Karia, J.)

1. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 13th April 2022 issued under Section 148 of the Income Tax Act, 1961 (for short, “the Act”) for the Assessment Year 2018-19.

2. The brief facts of the case are as under:

2.1 The petitioner is a company incorporated under the Companies Act, 1956. The petitioner filed return of income showing total income of Rs.61,24,830/- for the Assessment Year 2018-19.

2.2 The respondent – Assessing Officer issued notice under Section 148A(b) of the Act calling upon the assessee as to why reassessment proceedings should not be initiated by issuing show cause notice under Section 148 of the Act on the following grounds:

- As per information received by the respondent. M/s S.K. Enterprises, Ahmedabad (i.e. a third party) was involved in availing incorrect Input Tax Credit (hereinafter referred to as "ITC" for the sake of brevity) as well as passing on ITC to others without actual supply of goods.

- Reference has been made to statements of Shahrukhkhan Pathan and Madhav Shah recorded by the department. In view of the same and certain other aspects, it was concluded that M/s. S.K. Enterprises is dummy concern and was created to defraud and to provide bogus invoices/bills to various buyers.

- The petitioner is alleged to be one such entity which has been provided GST ITC of Rs.60,91,125/- by M/s. S.K. Enterprises.

- In view of the above, the respondent was of the view that income of Rs.60,91,125/- has escaped assessment for the year under consideration.

2.3 The petitioner, in response to the above notice, filed reply dated 7th April 2022 requesting the respondent to drop the assessment proceedings containing as under:

- The respondent has relied upon think party information for alleging that there is escapement of income chargeable to tax in the hand of the petitioner. However, no details whatsoever of any inquiry or report of verification or information received from third party agencies or statement of any person or any evidences whatsoever have been provided to the petitioner along with show cause notice.

- The petitioner requested the respondent to provide copy of all the documents/statement/any other record etc which has been relied upon by the respondent for alleging that the petitioner has made any bogus purchases.

- The petitioner further requested the respondent to provide an opportunity of cross-examination of the persons concerned before relying upon their statement against the petitioner.

- The petitioner also requested for copy of approval of the competent authority for the purpose of initiating reassessment proceedings in the case of the petitioner.

- Genuineness of purchases in question stands proved beyond any shadow of doubt.

- Complete details of purchases made from M/s BK Enterprises (viz. name, address, PAN, GSTIN etc) were furnished to prove the purchases in question.

- Following documentary evidences of purchase, delivery and payment were also furnished:

- Ledger of SK Enterprises

- Invoices with respect to purchases;

- Relevant delivery notes/challans;

- Transport receipts;

- Relevant extract of bank statements;

- Purchase of Yarn was made from S.K. Enterprises for self- consumption as raw material.

- GST registration of S.K. Enterprises was in existence when purchases in questions were made by the petitioner and even cross verification of sales made by the said party to the petitioner has been carried out by the petitioner on GST Portal. Subsequently, GST Department had cancelled the GST registration of the said party on 11.09.2019.

- There is no logic in the petitioner company availing fake invoices for bogus ITC as alleged by the department, since the petitioner always has “excess ITC", as is verifiable from the unutilized GST credit balance.

- There is no escapement of income chargeable to tax, an alleged in the show cause notice. The said fact is evident from the followings:

- "G