Gujarat High Court
Gayatri Cotton Private Limited (Pan ... vs Ito Ward 1(2) on 16 September, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/5854/2024 JUDGMENT DATED: 16/09/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 5854 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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Approved for Reporting Yes No
✔
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GAYATRI COTTON PRIVATE LIMITED (PAN AADCG0019P) THRO ITS
DIRECTOR
Versus
ITO WARD 1(2)
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Appearance:
MR SN DIVATIA(1378) for the Petitioner(s) No. 1
MR.VARUN K.PATEL(3802) for the Respondent(s) No. 1
NOTICE SERVED for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 16/09/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI)
1. Heard learned advocate Mr. S.N. Divatia for the petitioner and learned Senior Standing Counsel Mr. Varun Patel for the respondent.
2. Rule, returnable forthwith. Learned Senior Standing Counsel Mr. Varun Patel waives Page 1 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:27 IST 2025 NEUTRAL CITATION C/SCA/5854/2024 JUDGMENT DATED: 16/09/2025 undefined service of notice of rule for and on behalf of the respondent.
3. Having regard to the controversy involved in this petition, with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing.
4. By way of present petition under Article 226 of the Constitution of India, the petitioner challenges the validity of the Assessment Order passed by the respondent under Section 143(3) read with Section 144B of the Income Tax Act, 1961 (For short 'the Act') on 22.3.2024 for the Assessment Year 2022-23 whereby the respondent has assessed the total income of the petitioner at Rs.49,54,76,100/-.
5. Brief facts giving rise to present petition are as under:
5.1 The Petitioner is a duly incorporated Page 2 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:27 IST 2025 NEUTRAL CITATION C/SCA/5854/2024 JUDGMENT DATED: 16/09/2025 undefined limited liability company and engaged in the business of cotton ginning and pressing unit.
The Petitioner maintains regular books of accounts & other records which is subject to statutory as well as tax audit. The petitioner had filed its return of income for A.Y. 2022- 23 on 04.11.2022 declaring total income of Rs. 16,87,700/-. The return of income was processed u/s.143(1) of the Act. Thereafter, the case of the petitioner was selected for scrutiny on issues of substantial payment to non-GST entities, high liabilities compared to low income/receipts and directors in the company whose registration has been cancelled by MCA.
5.2 It is the case of the petitioner that during the course of assessment proceedings, the respondent issued notices for hearing and asking for the details/explanation from time Page 3 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:27 IST 2025 NEUTRAL CITATION C/SCA/5854/2024 JUDGMENT DATED: 16/09/2025 undefined to time. The respondent issued notice under Section 143(2) of the Act on 1.6.2023 stating that the case of the petitioner was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS). The petitioner states that it was a formal notice of jurisdiction. The respondent, thereafter, issued notice under Section 142(1) of the Act on 16.10.2023 and the petitioner sought adjournment vide response uploaded on 30.10.2023. The details were filed on 11.11.2023 and the case was adjourned to 14.11.2023. Thereafter, the respondent issued another Notice under Section 142(1) of the Act on 30.1.2024 and the petitioner again sought adjournment vide response uploaded on 24.2.2024. Another notice under Section 142(1) was issued by the respondent on 14.2.2024 and the petitioner uploaded the response on 24.2.2024. The Page 4 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:27 IST 2025 NEUTRAL CITATION C/SCA/5854/2024 JUDGMENT DATED: 16/09/2025 undefined respondent issued another notice under Section 142(1) of the Act on 26.2.2024 and the petitioner uploaded the response on 4.3.2024. Thereafter, show-cause notice-cum-draft Assessment Order was issued on 5.3.2024 seeking response on or before 11.3.2024 wherein the petitioner was asked to show cause as to why addition in income should not be made. However, the petitioner in reply to the aforesaid show-cause notice filed reply dated 11.3.2024 and sought adjournment. The final impugned order of assessment was passed by the respondent on 22.03.2024 determining the total income at Rs.49,54,76,100/- wherein the Assessment Officer made addition of Rs.49,37,88,400/- towards alleged bogus purchases and disallowance under Section 40A(3) of the Act.
5.3 It is the case of the petitioner that the Page 5 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:27 IST 2025 NEUTRAL CITATION C/SCA/5854/2024 JUDGMENT DATED: 16/09/2025 undefined Respondent had uploaded SCN cum draft assessment order on 05.03.2024 at 19:22 IST asking the response to be submitted by 11:00 hours of 11/03/2024. The respondent in the SCN had proposed that the total purchases from unregistered persons amounted to Rs. 49,37,88,400/- and by applying GST rate at 5% on such purchases, the ITC claim of Rs. 2,46,89,420/- on the supplies received from unregistered parties was not genuine. The respondent further observed that since the total purchases from unregistered persons as per detail of purchases in cash and through banking channels was Rs. 51,19,98,599/-, the balance purchases of Rs. 1,82,10,199/-were cash purchases from farmers which was to be treated as bogus. The respondent further observed that the purchases to the extent of Rs. 47,55,78,201/- (reducing the bogus Page 6 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:27 IST 2025 NEUTRAL CITATION C/SCA/5854/2024 JUDGMENT DATED: 16/09/2025 undefined purchases of Rs. 1,82,10,199/- from the total purchases of Rs. 49,37,88,400/-) were paid in cash in contravention of Sec.40A(3) of the Act.
5.4 It is the case of the petitioner that since the response to be given to the show cause notice required many details, documents and evidence to be gathered and furnished which would take considerable time, the petitioner had sought adjournment upto 24.03.2024.
5.5 Thereafter, the petitioner received
message by email from ID
[email protected] on the Tax Consultant Shri JH Godani, that the request seeking adjournment was successfully submitted.
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NEUTRAL CITATION C/SCA/5854/2024 JUDGMENT DATED: 16/09/2025 undefined 5.6 The Petitioner states that before any response could be given to the show cause notice, the respondent completed the assessment proceedings by passing the impugned order dated 22.03.2024 during the period of adjournment.
6. Learned advocate Mr. S.N. Divatia for the petitioner submitted that an adjournment was sought on 11.3.2024 to file reply to the show- cause notice, however, the Assessing Officer granted time of only two days i.e. upto 13.3.2024 for filing the reply and such extension was never informed to the petitioner. Therefore, the impugned order is without jurisdiction and in gross violation of principles of natural justice.
7. Per contra, learned Senior Standing Counsel Mr. Varun Patel has conceded to the Page 8 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:27 IST 2025 NEUTRAL CITATION C/SCA/5854/2024 JUDGMENT DATED: 16/09/2025 undefined fact that 'e-proceedings' downloaded from Income-tax Portal indicated that in response to the adjournment request on 11.3.2024, no communication has been made to the petitioner and the respondent has passed finalised Assessment Order on 22.3.2024 as stated in affidavit-in-rejoinder. For perusal, para-3.4 of the rejoinder is reproduced hereinbelow:
"3.4 I say and submit that the contents of para-8 of the said affidavit are denied in toto. The Petitioner denies the contention of the Respondent that the adjournment was granted through e- proceedings from 11.03.2024 to 13.03.2024. The petitioner submits that the perusal of "view notices for e- proceedings" as downloaded from income- tax portal of the petitioner company clearly indicates that after issuance of notice on 05.03.2024 fixing the response on 11.03.2024, no communication has been made to the petitioner and the respondent has finalized the assessment by order u/s 143(3) on 22.03.2024. Annexed hereto and Marked as "G" is the "view notices for e-proceedings" as downloaded from income-tax portal of the petitioner company. The petitioner submits that even on perusal of the extract annexed with the said affidavit at page-45 also indicate that the Page 9 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:27 IST 2025 NEUTRAL CITATION C/SCA/5854/2024 JUDGMENT DATED: 16/09/2025 undefined chronology of the alleged notices are not in consonance with the claim of the respondent."
8. In view of the same, it cannot be disputed that the impugned order is passed in clear breach and violation of principles of natural justice and, therefore, is de hors the settled principles of law. Therefore, without entering into merits only on this ground, the impugned order dated 22.3.2024 for the Assessment Year 2022-23 passed under Section 143(3) read with Section 144B of the Act is hereby quashed and set-aside and the matter is remanded to respondent-Assessing Officer to pass a fresh de-nova order, in accordance with law after considering the reply of the petitioner as well as to provide opportunity of hearing, if desired by the petitioner.Such exercise shall be completed within 12 weeks from the date of receipt of copy of this Order.
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NEUTRAL CITATION C/SCA/5854/2024 JUDGMENT DATED: 16/09/2025 undefined The petition is disposed of accordingly. Rule is made absolute to the aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J) (PRANAV TRIVEDI,J) SAJ GEORGE Page 11 of 11 Uploaded by SAJ GEORGE(HC01069) on Wed Sep 17 2025 Downloaded on : Wed Sep 17 23:25:27 IST 2025