Shri Shyam Sundar Dhanuka vs Union Of India And Others
2023 Latest Caselaw 2381 Cal/2

APOT NO. 187 OF 2023
   REPORTABLE

           IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
                       CIVIL APPELLATE JURISDICTION
                              ORIGINAL SIDE



                         RESERVED ON: 14.08.2023
                         DELIVERED ON: 30.08.2023


                                  CORAM:

          THE HON'BLE MR. CHIEF JUSTICE T.S. SIVAGNANAM
                                     AND
        THE HON'BLE MR. JUSTICE HIRANMAY BHATTACHARYYA


                          A.P.O.T NO. 187 OF 2023
                           (I.A. NO. G.A./01/2023)


                       SHRI SHYAM SUNDAR DHANUKA
                                  VERSUS
                        UNION OF INDIA AND OTHERS




Appearance:-
Mr. Abhrotosh Majumder, Sr. Adv.
Mr. Sourav Bagaria, Adv.
Mr. Arup Nath Bhattacharya, Adv.
Mr. Arya Bhattacharya, Adv.
                                                       ....for the Appellant.




Mr. Tilak Mitra, Adv.
Mr. Amit Sharma, Adv.
                                                     .....for the Respondent.




                                  Page 1 of 11
      APOT NO. 187 OF 2023
        REPORTABLE

                                     JUDGMENT

(Judgment of the Court was delivered by T.S. Sivagnanam, CJ.)

1. This intra court appeal by the writ petitioner is directed against the

order dated 08.05.2023 in WPO No. 929 of 2023. The appellant filed the said

writ petition challenging the order passed by the first respondent under

Section 148A(d) of the Income Tax Act, 1961 (the Act) dated 07.04.2023 and

the consequential notice issued under Section 148 of the Act. The learned

Single Bench by the impugned order rejected the contention of the appellant

that the assessing officer has not proceeded merely on the basis of remarks

"potential borrowers/lenders" as in the later part of the order the assessing

officer has clarified that on verification of the documents, he has found

credible evidence of actual borrowings done by the appellant and not

"potential" in nature. Further the learned Single Bench held that the

assessing officer has held that the appellant assessee has availed cash loan

to the tune of Rs. 40,70,00,000/- through finance broker Kaseras, other

different lenders and it has also been recorded. There is huge unexplained

expenditure within the meaning of Section 69C of the Act and that the cash

loan and repayment in cash comes within the crux of the provisions of

Section 269SS and Section 269T and other relevant provisions of the Act.

Further the learned Single Bench observed that on perusal of the order

impugned in the writ petition, it is evident that it was based on huge

materials and evidence regarding the alleged transaction and the court in

exercise of its writ jurisdiction cannot act as an assessing officer and

scrutinize those facts and evidence and substitute the some with its own

opinion. Further the learned writ court held that the order impugned before

APOT NO. 187 OF 2023 REPORTABLE

it is neither a non-speaking order nor there has been any violation of the

principles of natural justice nor there is any procedural irregularities nor it

can be stated that the assessing officer lacked inherent jurisdiction. On the

other hand, the order being based on facts, findings and materials evidence

cannot be interfered in a writ petition. With the above findings, the learned

writ court held that there was no scope for interfering with the order passed

under Section 148A(d) of the Act.

2. Mr. Abhratosh Majumder, learned senior advocate assisted by Mr.

Sourav Bagaria, learned advocate appearing for the appellant submitted that

the assessing officer had not provided the reasons recorded/information

which was the basis for initiating proceedings and in particular that such

reasons or information must have same rational nexus or live-link with the

formation of belief that income of the appellant has escaped assessment. It

is submitted that the assessing officer though has made an observation that

upon verification of the documents and the credible evidence, the appellant

has availed cash loan of Rs. 40,70,00,000/- through Uma Shankar Kasera,

the learned writ court failed to take into consideration that no such

document was furnished to the appellant. Further it is submitted that as per

the statutory scheme of Section 148 of the Act and inclusion of clause (a), it

specifically provides for conducting inquiry before issuance of the notice

under Section 148A(b) and that inquiry/investigation must precede the

issuance of notice under Section 148 of the Act. Further it is submitted that

the assessing officer without any independent application of mind and

without verification had come to the conclusion that the income of the

appellant has escaped assessment. Further it is submitted that the

APOT NO. 187 OF 2023 REPORTABLE

reassessment initiated relying on the report of the investigation wing is bad

in law as was held by this Court in the case of Girdhar Gopal Dalmia

Versus Union of India and Others in MAT No. 1757 of 2022 dated

24.11.2022. It is further submitted that the order impugned in the writ

petition was passed without considering and/or dealing with the contention

raised by the appellant in the reply dated March 16, 2023 and March 25,

2023 in response to the notice issued under Section 148A(b) of the Act dated

March 03, 2023, March 14, 2023. The order passed under Section 148A(d)

dated April 07, 2023 was passed in gross violation of the principles of

natural justice and therefore was liable to be set aside. On the above

grounds, the learned senior advocate sought for setting aside the order

passed in the writ petition and consequently to set aside the reopening

proceedings.

3. Mr. Tilak Mitra, learned senior standing counsel appearing along with

Mr. Amit Sharma, learned junior standing counsel for the department

submitted that the learned writ court after considering the factual position

rightly held that the disputed questions of fact which was canvassed before

it cannot be adjudicated in the writ petition and that there was sufficient

evidence brought on record by the assessing officer while passing the order

under Section 148A(d) of the Act and it will be well open to the appellant to

agitate all the issues during the reopening proceedings, by placing

documents and evidence in support of the claim and that the writ petition

was rightly dismissed.

4. We have elaborately heard the learned advocates for the parties and

carefully perused the materials placed on record.

APOT NO. 187 OF 2023 REPORTABLE

5. The respondent assessing officer issued notice under clause (b) of

Section 148A dated March 14, 2023 stating that he has information which

suggests that income chargeable to tax for the assessment year 2016-2017

has escaped assessment within the meaning of Section 147 of the Act. The

details of the information/inquiry conducted on which reliance was placed

by the department, along with supporting documents were enclosed along

with the notice dated March 14, 2023. The appellant was directed to show

cause as to why in view of the details contained in the enclosure, notice

under Section 148 of the Act should not be issued. The appellant was

required to submit a reply along with supporting documents not later than

March 29, 2023.

6. In the annexure to the said show cause notice, it has been stated that

information was available in the case of the appellant for the assessment

year 2016-2017 in the verification module of Insight Portal under the

category "Dissemination of certain High Risk CRIU/VRU PAN case and High

Risk CRIU/VRU Non PAN Cases" pertaining to the assessment year 2016-

2017 on Insight Portal selected under Risk Management Strategy (RMS)

cycle-(ii) vide proceedings dated February 20, 2023. It is stated that

information available with the assessing officer was analyzed and duly

verified with various portals namely Financial Transactions (SFT), TDS/TCS

Statement, CBIC Data, Form 15CC, Form 61, etc. as well as the overall

profile of the appellant based on the information available in the data which

was analyzed and verified. The assessing officer would state that the

information in the case of the appellant shows that there is potential tax

liability for the financial year 2015-2016 relevant to the assessment year

APOT NO. 187 OF 2023 REPORTABLE

2016-2017. Search and survey action under Section 132 of the Act

conducted at various spots of finance brokers Sanvaria and Kasera on

November 30, 2018 and the appellant assessee was beneficiary of the said

finance broker and has received a cash loan of Rs. 40, 70,00,000/- during

the assessment year under consideration. Therefore the assessee was

directed to furnish his explanation in the matter along with

clarification/information sought for from the assessee by the assessing

officer which are as follows:-

 Please mention details of that person and the nature of your financial transaction with that entity. Please furnish its name and current address and whether said money paid back to such entity in anytime in future.  Please furnish all evidence/details to establish the identity, creditworthiness and genuineness of this transaction. In order to establish the creditworthiness, you are requested to explain the immediate source of funds out of which money had been transferred to you.  Please explain how such amount has been utilized by you after its receipt. If the money has been transferred to some other entity thereafter, mention the name of that person, the reasons, for such payment and its present address with all supporting documents.

 Please furnish names and addresses of the Directors of your company who were holding that position at the time of receipt of such money.

 Please furnish statement of your Bank A/c, for the relevant period showing receipts of such money and its subsequent transfer, if applicable.

7. The appellant was directed to explain as to why notice under Section

148 of the Act should not be issued in his case to reopen the assessment for

the relevant year on the basis of adverse information received against the

appellant. Along with the notice, the copy of the report of the Deputy

Director of Income Tax Investigation Unit 2, (IV) Kolkata dated 15.11.2022

APOT NO. 187 OF 2023 REPORTABLE

was enclosed wherein there is a reference to the statement recorded from

the said Kaseras and to other documents which were seized during the

search and seizure operations. The assessee submitted his reply on March

16, 2023 stating that on perusal of the statement given by the Uma Shankar

Kasera, it is seen that there is no mention of the assessee's name in the said

statement and therefore it cannot be inferred that the assessee has given

cash loan. Further it was stated that the statement of Praveen Kumar

Kasera was not furnished to the appellant and therefore proper opportunity

was not granted. Further it was stated that along with the show cause

notice, the letter from the Deputy Director of Income Tax (Investigation)

dated 15.11.2022 was enclosed wherein modus operandi of unaccounted

cash loan transaction is discussed, however, the assessee fails to

understand as to how these letters led to an inference that the assessee has

given cash loans. Therefore the assessee demanded that evidence available

with the department on the basis of which they have alleged that the

assessee had received/lent cash loan of Rs. 40.70 crores is required to be

furnished to give opportunity to the appellant to rebut the said allegations.

Further it was contended that no inquiry was conducted in terms of clause

(a) of Section 148A of the Act which is a pre-cursor before initiating

proceedings under Section 147 of the Act. The appellant referred to CBDT

instructions dated 22.08.2022 on the subject regarding uploading of data

and functionalities/portal of the income tax department wherein there is an

observation that the information made available/data uploaded by the

reporting entities may not be fully accurate due to human error technical

APOT NO. 187 OF 2023 REPORTABLE

nature etc. With the above submissions, the assessee requested to drop the

reopening proceedings.

8. After considering the reply given by the assessee, the assessing officer

by order dated April 07, 2023 passed an order under clause (d) of Section

148A of the Act. After setting out the statutory provisions, it is stated that

investigation report received from the office of the DDIT (investigation) shows

that there are some remarks about potential borrowers/lenders and on

verification of the documents, it is seen that there are credible evidence of

actual borrowings which are not potential in nature but suggest the fact of

actual transaction. Further after examining and analyzing the information

available on record and the data reported in the Insight Portal copy of which

was shared with the assessee along with the show cause notice, the

assessing officer holds that it is evident that the assessee has availed cash

loan to the tune of Rs. 40.70 crores through the finance broker Kaseras

from different lenders such as Uma Shankar Kasera and the said amount

falls in the ambit of the case where any amount is borrowed only on or any

amount thereon is repaid to, any person otherwise then through an account

payee cheque drawn from a bank, the amount so borrowed or repaid shall

be deemed to be income of the person borrowing and repaying the amount

aforesaid for the previous year in which the amount was borrowed or repaid,

as the case may be and the income generated from the application of the

loan so taken as unexplained income.

9. Further the assessing officer pointed out that payment of interest on

cash loan falls within the ambit of unexplained expenditure within the

meaning of Section 69C of the Act. Further as regards, the cash amount and

APOT NO. 187 OF 2023 REPORTABLE

repayment of the same in cash, the relevant provisions which will stand

attracted are Section 269SS and 269D apart from the provision for imposing

penalty under Section 271D, 271DA are attracted. Further it has been

stated that on examination of seized documents marked as USK/6 found

and seized from the residential premises of finance broker Praveen Kumar

Kasera in Kolkata wherein there is a recording identifying the assessee as a

borrower and that he has taken cash loan to the tune of Rs. 40,70,00,000/-

during the financial year 2015-2016. Further it is stated that in the seized

documents, the finance broker Kasera used geometrical pattern/figure to

represent the loan amount in unaccounted cash loan account. Further

Kasera were using a unique disable method of coding the amount of

transaction. The primary basis of decoding of geometrical figure which when

confined to the documents containing geometrical figures corresponds with

rukkus. It has been further stated that after decoding the geometrical

figures, the exact amount of loan has been ascertained. Further it is stated

that using geometrical figure to represent the amount of cash loan has been

admitted by the Uma Shankar Kasera in his statement recorded on

30.11.2018. Further it is stated that the assessee's name is appearing in

several of the seized documents which show that cash loan were

availed/received from different lenders through finance brokers and the

assessee availed/received cash loan in his own name and also in the name

of group company. The relevant details were set out in a tabulated form and

made part of the order passed in the clause (d) of Section 148A of the Act.

Further it is stated that from the seized documents it is found that the

entries of data name of lender group and name of borrowers namely the

APOT NO. 187 OF 2023 REPORTABLE

appellant assessee were entered in the exercise book. There is reference to

search conducted by the department on other persons who are also part of

the Kasera group and ultimately the assessing officer held that the name of

the assessee appears in the seized documents having borrowed Rs.

40,70,00,000/- on a "rukka" and the amount so borrowed is deemed to be

income of the assessee and the interest paid by the assessee to the lender is

deemed to be unexplained expenditure and the income generated from the

application of the loan so taken as unexplained income.

10. Thus, the assessing officer concluded that the said sum of Rs.

40,70,00,000/- has escaped assessment and he is satisfied that issuance of

notice under Section 148 of the Act is required. Pursuant thereto notice

under Section 148 dated April 07, 2023 has also been issued.

11. In the light of the findings recorded by the assessing officer, it cannot

be stated that the order passed under clause (d) of Section 148 is a non-

speaking order nor the order to be branded as outcome of non-application of

mind. To test the correctness of the order, it is necessary that the disputed

question of facts have to be thoroughly analyzed. There are several stake

holders in the entire process which requires deeper probe into the matter

and such an exercise cannot be done in exercise of writ jurisdiction.

Therefore, the learned single bench was fully justified in not entertaining the

writ petition and leaving it upon to the appellant to agitate all issues in the

reopening proceedings for which notice under Section 148 has been issued

on April 07, 2023.

APOT NO. 187 OF 2023 REPORTABLE

12. In the result, the appellant has not made out any case for interference

with the order passed by the learned single bench. Accordingly, the appeal

fails and the same is dismissed. No costs.

(T.S. SIVAGNANAM, CJ.)

I Agree.

(HIRANMAY BHATTACHARYYA, J.)

(P.A- SACHIN)