Point of Law : Court satisfied that there was prima facie material available on record before the assessing officer for issuing a notice for reassessment and the notice under Section 148.

JUDGMENT :

Subhash Vidyarthi, J.

1. Heard Shri Desh Deepak Chopra, Senior Advocate assisted by Sri. Shailesh Verma, Advocate, the learned counsel for the petitioner and Shri Manish Misra, Advocate, the learned counsel for the respondents.

2. By means of this writ petition filed under Article 226 of the Constitution of India, the petitioner has challenged the validity of a notice dated 26.03.2021 issued by the Income Tax Officer, Range-5, Ayakar Bhawan, 5, Ashok Marg, Lucknow under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') proposing to assess/reassess the income/loss for the assessment year 2013-14.

3. The petitioner's case is that it is a registered partnership firm. It has entered into agreements with various Pharmaceutical and FMCG (Fast Moving Consumer Goods) Companies for providing Carrying and Forwarding Agents (C&F Agents) services. As per the terms of the agreements, the petitioner incurs various business expenses on behalf of the principal companies and while reimbursing the expenses, the principal companies deduct TDS. However, the reimbursement of expenses is not the petitioner's income and, therefore, it is not reflected in the petitioner's books of accounts as receipts from C&F business. Some of the companies have deducted TDS under different heads like Section 194 H of the Act that is meant for income from brokerage and commission and Section 194 J that is meant for fee for professional and technical services.

4. During the assessment year 2013-14 the petitioner had shown the total receipts of Rs.3,59,59,861/- in its Profit and Loss (P&L) Account, which comprised of commission income of Rs.3,47,58,295/- and interest income of Rs.12,01,566/-. The amount of TDS as per the statement in Form 26 AS was Rs.32,14,869/-. The petitioner filed its return for a total income of Rs.9,77,090/-.

5. During scrutiny, the Assessing Officer raised a query regarding high ratio of refund to TDS and the petitioner was asked to reconcile 26 AS with gross receipts as per P&L Account.

6. On 12-02-2015, the petitioner submitted a reply stating that it is making several expenses on behalf of the Principal Companies. The agreements are in the nature of a contract and hence TDS should be deducted @ 2% under Section 194 C of the Act. However, the nomenclature used for payments made to the petitioner is commission and, therefore, the Companies are deducting TDS @ 10% under Section 194 H. After taking into account all the expenses, the petitioner's net margins are such that the tax accrued is much less than the TDS and hence a heavy refund results. Every year the petitioner gets a certificate for lower deduction of TDS, but for the relevant year they got it very late and this was the reason for high ratio of refund to TDS. Again, on 27-02-2015, the petitioner sent another letter reiterating its earlier reply.

7. On 25-03-2015, the A.O. passed an Assessment Order assessing the petitioner's total income at Rs.11,42,428/-, after adding Rs.1,65,338/- to the returned income of Rs.9,77,090/- towards part of expenses disallowed.

8. On 26-03-2021, the A.O. issued a notice under Section 148 of the Act for the Assessment Year 2013-14, stating that he had reason to believe that the petitioner's income chargeable to tax has escaped assessment within the meaning of Section 147 of the Act. On 22.12.2021, the National Faceless Assessment Centre provided the reasons for re-opening of assessment. It states that on examination of documents on record and 26 AS, it is noticed that the assessee has received payments under Section 194 J also, but he has not shown the said receipts and has not given any explanation for the same. The assessee has not disclosed the amount of reimbursement of expenses claimed by it and the actual amount received by it towards reimbursement. It has not submitted the details of expenses incurred by it for verification during the assessment proceedings. It did not produce any ledger, bills and vouchers of expense