Chattisgarh High Court
Barbrik Projects Ltd vs Union Of India on 15 December, 2022
1
AFR
HIGH COURT OF CHHATTISGARH, BILASPUR
WA No. 473 of 2022
Barbrik Projects Ltd. (Through Director Shri Ayush Agrawal, aged about 32
years, S/o Shri Mahesh Kumar Agrawal) Nehru Park Road, Surajpur, PS and
District Surajpur, Chhattisgarh.
---- Appellant
Versus
1. Union of India, through Secretary, Central Board of Direct Taxes, North
Block, New Delhi.
2. Principal Commissioner of Income-Tax (Central), Aaykar Bhawan,
Hoshangabad Road, Bhopal, (MP).
3. Additional Commissioner of Income Tax, Range Central, Aaykar Bhawan,
Civil Lines, Raipur (CG) PIN 492001
4. Assistant Commissioner of Income Tax, Central Circle, Shree Ram Plaza,
Vyapar Vihar, Bilaspur (CG) PIN 495004
---- Respondents
(Cause Title taken from Case Information System)
For Appellant : Mr. S. Rajeshwar Rao, Advocate.
For Respondent No. 1 : Mr. Ramakant Mishra, Deputy Solicitor
General
For Respondents No. 2 to 4 : Ms. Naushina Afrin Ali, Advocate
Dates of Hearing : 15.09.2022
Date of Judgment : 15.12.2022
Hon'ble Mr. Arup Kumar Goswami, Chief Justice
Hon'ble Mr. Deepak Kumar Tiwari, Judge
C A V Judgment
Per Arup Kumar Goswami, Chief Justice
Heard Mr. S. Rajeshwar Rao, learned counsel, appearing for the
appellant. Also heard Mr. Ramakant Mishra, learned Deputy Solicitor
General, appearing for the respondent No. 1 as well as Ms. Naushina Afrin
Ali, learned counsel, appearing for the respondents No. 2 to 4.
2. This writ appeal filed by the petitioner is presented against an order
dated 28.07.2022 passed by the learned Single Judge in WP(T) No.
186/2022 dismissing the writ petition. The writ petition was filed challenging
the order dated 31.03.2022 passed by the Assessing Officer (for short, the
AO) under Section 148-A of the Income Tax Act, 1961 (for short, the Act)
and the notice issued under Section 148 of the Act.
3. The petitioner is a company engaged in execution of civil
construction works and it had filed return of income tax under Section
139(1) of the Act for the Assessment Year (for short, AY) 2018-2019 on
26.03.2019 declaring total income at Rs.43,14,13,840/-. A notice under
Section 143(2) of the Act was issued to the assessee on 23.09.2019. By an
order dated 12.04.2021 passed under Section 143(3) of the Act, the total
income was determined as per the return. Thereafter, the AO, i.e., the
respondent No. 4 issued a show cause notice (for short, the SCN) under
Section 148A(b) of the Act on 24.03.2022 stating that he has information
which suggests that income chargeable to tax for the AY 2018-2019 has
escaped assessment within the meaning of Section 147 of the Act.
Alongwith the said SCN, details of the information was enclosed as
Annexure A and the assessee was asked to show cause as to why in view
of the details contained in Annexure A, notice under Section 148 of the Act
should not be issued. The assessee was accordingly asked to submit its
response to the extent technologically feasible, with supporting documents,
if any, electronically in 'e-proceeding' facility through its account in e-filing
portal on or before 30.03.2022. It was indicated that the said notice was
issued after obtaining prior approval of the Principal Commissioner of
Income Tax (Central), Bhopal, dated 24.03.2022.
4. It will be appropriate to extract Annexure A at this juncture for better
appreciation:
"SHOW CAUSE NOTICE NOTICE U/S 148A(b) OF
THE I.T. ACT, 1961 IN THE CASE OF SHRI BARBRIK
PROJECT LIMITED, PAN: AADCB4662P FOR A.Y.
2018-2019
Consequent to the information under High Risk
CRIU/VRU cases obtained from Insight portal, this
office is in possession of information that M/s. Panveen
Trading Private Limited has certain transaction with
you. M/s. Panveen Trading Private Limited has shown
sale of Rs.2,20,00,275/- to Barbarik Project Limited
during the financial year 2017-2018.
However, on the basis of Credible information is
received that M/s. Valeska Trading Private Limited, M/s.
Panveer Trading Private Limited & M/s. Shwetpushp
Commercial Private Limited were found indulging
generating and selling of tax invoices to various entities
without physical supply of underlying goods/services for
passing irregular input tax credit to other business
entities and for doing this they have also availed and
utilized Input Tax Credit (ITC) against fake invoices
issued by others.
As per detailed information available with this office,
you are beneficiary of transaction for an amount of Rs.
2,20,00,275/- made during the financial year 2017-2018
relevant to the A.Y. 2018-19 in the form of
accommodation entry.
In view of the above discussion, it is evident that
income chargeable to tax amounting to
Rs.2,20,00,275/- has escaped assessment for A.Y.
2018-2019 and this is a fit case for issue of notice to
show cause u/s. 148A(b) of the Income Tax Act, 1961.
You are therefore requested to show cause as to why a
notice u/s. 148 should not be issued on the basis of the
above flagged information.
By the show cause notice, you are being provided an
opportunity of being heard as per Section 148A(b) of
the Income Tax Act, 1961. Please also note that due to
paucity of time, no adjournment will be granted. In case
nothing is heard from you within the time specified, it
will be presumed that you have no explanation to offer
and accordingly, the notice u/s. 148 of the Act, will be
issued in your case. This notice is issued after
obtaining prior approval of the specified authority.
Pradeep Kumar Swarnakar
Central Circle, Bilaspur "
5. A perusal of the SCN dated 24.03.2022 goes to show that the AO
was in possession of information under High Risk Case Related
Information Upload (CRIU) / Verification Report Upload (VRU) obtained
from INSIGHT portal that M/s. Panveen Trading Private Limited had shown
sale amount of Rs. 2,20,00,275/- to the petitioner during the financial year
2017-2018. On the basis of credible information, it was found that three
entities, namely, M/s. Valeska Trading Private Limited, M/s. Panveen
Trading Private Limited and M/s. Shwetpushp Commercial Private Limited,
were found indulging in generating and selling tax invoices to various
entitles without physical supply of underlying goods/services for passing
irregular Input Tax Credit (ITC) to other business entities and thereby they
had also availed/utilized ITC against fake invoices issued by others.
Accordingly, it was recorded that as per detailed information available with
the office, the petitioner was a beneficiary of all the transactions to the tune
of Rs.2,20,00,275/- made during the financial year 2017-2018 relevant to
the AY 2018-2019 in the form of accommodation entry and accordingly,
made an observation that it was evident that the income chargeable to tax
amounting to Rs.2,20,00,275/- had escaped assessment for the AY 2018-
2019 and thus, it was a fit case to issue SCN under Section 148A(b) of the
Act. Accordingly, the petitioner was asked to show cause as to why notice
under Section 148 of the Act should not be issued on the basis of the
above information, also stating that an opportunity of being heard is given
to the petitioner in terms of Section 148A(b) of the Act.
6. The petitioner submitted its reply on 30.03.2022 denying the
allegations and asserting that it had not undertaken any transaction with
M/s. Panveen Trading Private Limited during the period under
consideration and to that extent, a certificate from a practicing Chartered
Accountant was enclosed as Annexure-1. Accordingly, while requesting to
drop the proceedings, a request was also made to supply a copy of the
information obtained from the INSIGHT portal under the High Risk
CRIU/VRU which was in possession of the office as also to supply the
referred credible information received regarding the entities mentioned in
the SCN, copies of fake invoices in which the assessee's name is
mentioned as well as the prior approval obtained from the specified
authority. In the certificate of the Chartered Accountant, it is stated that the
petitioner has not executed any transaction including purchase of any
materials/services etc. with Panveen (or Panveer) Trading Private Limited.
There was no ledger account of Panveen (or Panveer) for the year under
consideration till then and that the petitioner had not taken any ITC on
account of supply as reflected in GST-2A from Panveen (or Panveer)
Trading Private Limited, while filing GST returns.
7. The AO passed an order on 31.03.2022 under Section 148A(d) of
the Act with prior approval of the competent authority under Section 151 of
the Act and accordingly, the AO also issued notice under Section 148 of the
Act on 31.03.2022.
8. By the Finance Act of 2021, the procedure with regard to reopening
of assessment was substituted in Section 147 and 148 w.e.f. 01.04.2021.
9. It is relevant to state that Section 148A of the Act was also brought
into force with effect from 01.04.2021. It will be relevant to extract Section
148 and Section 148A of the Act, which read as follows:
"148. Issue of notice where income has escaped
assessment.- Before making the assessment,
reassessment or recomputation under section 147, and
subject to the provisions of section 148A, the Assessing
Officer shall serve on the assessee a notice, along with a
copy of the order passed, if required, under clause (d) of
section 148A, requiring him to furnish within such period,
as may be specified in such notice, a return of his income
or the income of any other person in respect of which he is
assessable under this Act during the previous year
corresponding to the relevant assessment year, in the
prescribed form and verified in the prescribed manner and
setting forth such other particulars as may be prescribed;
and the provisions of this Act shall, so far as may be, apply
accordingly as if such return were a return required to be
furnished under section 139:
Provided that no notice under this section shall be issued
unless there is information with the Assessing Officer which
suggests that the income chargeable to tax has escaped
assessment in the case of the assessee for the relevant
assessment year and the Assessing Officer has obtained
prior approval of the specified authority to issue such
notice.
Provided further that no such approval shall be required
where the Assessing Officer, with the prior approval of the
specified authority, has passed an order under clause (d)
of section 148A to the effect that it is a fit case to issue a
notice under this section.
Explanation 1.--For the purposes of this section and
section 148A, the information with the Assessing Officer
which suggests that the income chargeable to tax has
escaped assessment means,--
(i) any information in the case of the assessee for the
relevant assessment year in accordance with the risk
management strategy formulated by the Board from
time to time;
(ii) any audit objection to the effect that the assessment
in the case of the assessee for the relevant assessment
year has not been made in accordance with the
provisions of this Act; or
(iii) any information received under an agreement
referred to in section 90 or section 90A of the Act; or
(iv) any information made available to the Assessing
Officer under the scheme notified under section 135A;
or
(v) any information which requires action in
consequence of the order of a Tribunal or a Court.
Explanation 2.--For the purposes of this section, where,--
(i) a search is initiated under section 132 or books of
account, other documents or any assets are
requisitioned under section 132A, on or after the 1st
day of April, 2021, in the case of the assessee; or
(ii) a survey is conducted under section 133A, other
than under sub-section (2A) of that section, on or after
the 1st day of April, 2021, in the case of the assessee;
or
(iii) the Assessing Officer is satisfied, with the prior
approval of the Principal Commissioner or
Commissioner, that any money, bullion, jewellery or
other valuable article or thing, seized or requisitioned
under section 132 or section 132A in case of any other
person on or after the 1st day of April, 2021, belongs to
the assessee; or
(iv) the Assessing Officer is satisfied, with the prior
approval of Principal Commissioner or Commissioner,
that any books of account or documents, seized or
requisitioned under section 132 or section 132A in case
of any other person on or after the 1st day of April,
2021, pertains or pertain to, or any information
contained therein, relate to, the assessee,
the Assessing Officer shall be deemed to have information
which suggests that the income chargeable to tax has
escaped assessment in the case of the assessee where
the search is initiated or books of account, other
documents or any assets are requisitioned or survey is
conducted in the case of the assessee or money, bullion,
jewellery or other valuable article or thing or books of
account or documents are seized or requisitioned in case
of any other person.
Explanation 3.--For the purposes of this section, specified
authority means the specified authority referred to in
section 151.
148A. Conducting inquiry, providing opportunity before
issue of notice under section 148 - The Assessing Officer
shall, before issuing any notice under section 148,--
(a) conduct any enquiry, if required, with the prior approval
of specified authority, with respect to the information which
suggests that the income chargeable to tax has escaped
assessment;
(b) provide an opportunity of being heard to the assessee,
by serving upon him a notice to show cause within such
time, as may be specified in the notice, being not less than
seven days and but not exceeding thirty days from the date
on which such notice is issued, or such time, as may be
extended by him on the basis of an application in this
behalf, as to why a notice under section 148 should not be
issued on the basis of information which suggests that
income chargeable to tax has escaped assessment in his
case for the relevant assessment year and results of
enquiry conducted, if any, as per clause (a);
(c) consider the reply of assessee furnished, if any, in
response to the show-cause notice referred to in clause
(b);
(d) decide, on the basis of material available on record
including reply of the assessee, whether or not it is a fit
case to issue a notice under section 148, by passing an
order, with the prior approval of specified authority, within
one month from the end of the month in which the reply
referred to in clause (c) is received by him, or where no
such reply is furnished, within one month from the end of
the month in which time or extended time allowed to
furnish a reply as per clause (b) expires:
Provided that the provisions of this section shall not apply
in a case where,--
(a) a search is initiated under section 132 or books of
account, other documents or any assets are requisitioned
under section 132A in the case of the assessee on or after
the 1st day of April, 2021; or
(b) the Assessing Officer is satisfied, with the prior
approval of the Principal Commissioner or Commissioner
that any money, bullion, jewellery or other valuable article
or thing, seized in a search under section 132 or
requisitioned under section 132A, in the case of any other
person on or after the 1st day of April, 2021, belongs to the
assessee; or
(c) the Assessing Officer is satisfied, with the prior
approval of the Principal Commissioner or Commissioner
that any books of account or documents, seized in a
search under section 132 or requisitioned under section
132A, in case of any other person on or after the 1st day of
April, 2021, pertains or pertain to, or any information
contained therein, relate to, the assessee; or
(d) the Assessing Officer has received any information
under the scheme notified under section 135A pertaining to
income chargeable to tax escaping assessment for any
assessment year in the case of the assessee.
Explanation.--For the purposes of this section, specified
authority means the specified authority referred to in
section 151."
10. In support of the assailment with regard to order under Section
148A(d) and notice under Section 148 of the Act, Mr. Rao has urged as
follows:
(a) There is no valid information which suggests that income
chargeable to tax has escaped assessment as defined under
Section 148.
(b) The AO did not conduct verification under Section 148A(a) of
the Act.
(c) The AO did not consider appellant's reply as required under
clause (c) of Section 148A while passing the order under Section
148A(d) of the Act.
(d) The AO did not supply copies of documents asked for vide reply
dated 30.03.2022.
(e) The specified authority has granted sanction under Section 151
of the Act in a routine manner without application of mind.
11. It is further contended by him that in this case, no enquiry was
conducted which was necessary as the information uploaded under the
High Risk CRIU/VRU is not accurate which is accepted by the Central
Board of Direct Taxes (CBDT) when it had issued guidelines dated
01.08.2022. Relying on the CBDT guidelines dated 01.08.2022, he submits
that the AO is required to supply copies of all relevant information on which
reliance is placed. It is submitted that the order passed under Section
148A(d) is not appellable under Section 246A of the Act and therefore, writ
petition is maintainable. In support of his contentions, Mr. Rao relies on the
judgment rendered by the Calcutta High Court in Excel Commodity &
Derivative Pvt. Ltd. v. Union of India & Others, reported in 2022 (9) TMI
310, by Gujarat High Court in Studio Virtues v. Income Tax Officer Ward
5(3)(1) or His Successor, reported in 2022 (6) TMI 520, by Allahabad High
Court in Dharmendra Kumar Singh v. Union of India & 2 others, reported in
2022 (5) TMI 1390, by Delhi High Court in Aten Capital Private Limited v.
Assistant Commissioner of Income Tax, Circle (1) Delhi & Another , reported
in 2022 (5) TMI 1069 and the judgment of Hon'ble Supreme Court in M/s.
Sahara India (Firm), Lucknow v. CIT, Central-I & Another, reported in 2008
(4) TMI 4 - SC.
12. Ms. Naushina Afrin Ali, learned counsel, appearing for the
respondents No. 2 to 4 submits that the appellant has relied only on a
certificate of a Chartered Accountant to contend that no income chargeable
to tax had escaped assessment. The appellant also did not ask for any
personal hearing though the notice dated 24.03.2022 provided opportunity
of hearing to the appellant. It is submitted by her that in all cases, enquiry
is not required and all the information as required under the provisions of
the Act was furnished to the appellant. She places reliance on the decision
rendered on 02.06.2022 by a Division Bench of the Punjab & Haryana High
Court in Gian Castings Private Limited v. Central Board of Direct Taxes &
Others, CWP No. 9142/2022, the order of the Hon'ble Supreme Court in
Petition for Special Leave to Appeal (C) No. 10762/2020 whereby the
Hon'ble Supreme Court, by order dated 17.06.2022, dismissed the appeal
preferred by Gian Castings Private Limited, the judgment dated 28.03.2022
passed by the Hon'ble Supreme Court in Deputy Commissioner of Income
Tax, Central Circle 1(2) v. M/s. M.R.Shah Logistics Pvt. Ltd . in Civil Appeal
No. 2453/2022, arising out of Special Leave to Appeal (C) No. 22921/2019,
the judgment dated 05.03.2019 passed by the Hon'ble Supreme Court in
Principal Commissioner of Income Tax, Central-1 v. NRA Iron and Steel
Pvt. Ltd., in Civil Appeal No. 2463/2019, arising out of SLP(C) No.
29855/2018, and the judgment of the Delhi High Court dated 07.04.2022
rendered in WPC No. 4787/2022 in the case of Gulmuhar Silk Pvt. Ltd. v.
Income Tax Officer, Ward 10(3) Delhi.
13. The learned Single Judge held that a complete mechanism for
determination of escape amount has been provided under the statute and
the AO, while considering the reply made by the petitioner, has applied his
mind and accordingly, passed the impugned order under Section 148A(d)
of the Act. It was observed that the plea taken by petitioner is his defence
which can be examined while conducting proceeding under Section 148A
of the Act. Taking a view that the learned counsel for the petitioner was
unable to point out how the findings recorded by the AO are contrary to the
materials on record, the learned Single Judge held that the writ petition, at
that juncture, was not maintainable and accordingly, the writ petition was
dismissed.
14. Before proceeding further, it will be appropriate to take note of the
judgments relied on by the learned counsel for the petitioner.
15. In Excel Commodity & Derivative Pvt. Ltd. (supra), notice under
Section 148A(b) of the Act was issued on the allegation that the assessee
had done fictitious derivative transactions with M/s. Blueview Tradecom
Pvt. Ltd. The assessee had submitted reply to the said notice enclosing all
relevant documents in support of its claim to justify that it had not indulged
in any fictitious derivative transactions. The Division Bench of Calcutta High
Court, on perusal of the order passed under Section 148A(d), held that the
AO had indirectly accepted the explanation given by the assessee as the
AO had held that the assessee had taken accommodation entry by way of
fund transfer from M/s. Brightmoon Suppliers Pvt. Ltd., which is a different
company and as such, held that the order passed under Section 148A(d) of
the Act is unsustainable and taking that view, had interfered with the order
of the learned Single Judge by which the matter was remanded back to the
AO for fresh consideration.
16. In Studio Virtues (supra), the High Court of Gujarat, not being
satisfied with the reasoning given in the order under Section 148A(d) of the
Act, had set aside the order and remanded the matter back to the
authorities for fresh consideration with a further direction to afford an
opportunity of hearing to the petitioner.
17. In Dharmendra Kumar Singh (supra), the judgment relied on is an
interim order.
18. In our considered opinion, the above three decisions are not
attracted in the facts and circumstances of the case.
19. In M/s. Sahara India (Firm), Lucknow (supra), the question that had
fallen for consideration on a reference made by a two-Judge Bench was as
to whether the decision in Rajesh Kumar & Others v. Deputy Commissioner
of Income Tax & Others, to the extent it tends to lay down as an absolute
proposition that in every case where the AO issues a direction under
Section 142(2A), the assessee has to be heard before such an order is
passed, is correct. In other words, the two-Judge Bench had felt that it may
not be necessary to afford an opportunity of hearing to an assessee before
ordering special audit in terms of Section 142(2A) of the Act. The Hon'ble
Supreme Court held that exercise of powers under Section 142 (2A) of the
Act leads to serious civil consequences and, therefore, in the absence of
express provision for affording an opportunity of pre-decisional hearing to
an assessee, and Section 142(2A) having not barred giving of reasonable
opportunity to an assessee, the requirement of observance of principles of
natural justice is to be read into the said provision.
20. In M/s. M.R.Shah Logistics Pvt. Ltd. (supra), notice under Section
147/148 of the Act was issued on 31.03.2017 seeking to re-open the
assessment for the AY 2010-2011, i.e. prior to the amendment of Section
147/148 of the Act by the Finance Act, 2021. The Hon'ble Supreme Court
held that the basis for a valid re-opening of the assessment should be
availability of tangible material which can lead the AO to scrutinize the
returns for the previous assessment year in question, to determine whether
a notice under Section 147 of the Act is called for. As long as there is
objective tangible material, the sufficiency of that material cannot dictate
the validity of the notice based on "reasons to believe" forming part of
Section 147 of the Act.
21. In Gian Castings Private Limited (supra), the issue that had arisen
for consideration was whether at the stage of notice under Section 148 of
the Act, writ Court should venture into the merits of the controversy when
the AO was yet to frame assessment/re-assesment in discharge of
statutory duty cast upon him under Section 147 of the Act. The same was a
case relating to notice issued under Section 148A(b) of the Act. Reliance
was a placed on decisions of the various High Courts and also on
Raymond Woollen Mills Limited v. Income Tax Officer, Centre XI, Range
Bombay & Others, reported in (2008) 14 SCC 218. In the said case, the
Hon'ble Supreme Court had observed that at this stage, the Court had to
see only whether there was prima facie some material on the basis of
which the Department could reopen the case. Sufficiency or correctness of
the material is not a thing to be considered at this stage and it was
observed that it would be open to the assessee to prove that the
assumption of facts made in the notice was erroneous. Relying on the
precedent, the High Court of Punjab and Haryana held that where the
proceedings have not even been concluded by the statutory authority, the
writ Court should not interfere at such a premature stage.
22. A special leave petition filed against the aforesaid order was
dismissed by the Hon'ble Supreme Court in Special Leave to Appeal (C)
No. 10762/2022, by an order dated 17.06.2022, leaving all the contention
of the petitioner open to be urged at an appropriate stage.
23. Gulmuhar Silk Pvt. Ltd. (supra) is also a case where challenge was
made to an order passed by the AO under Section 148(A)(d) of the Act. In
the aforesaid case also, the decision in Raymond Woollen Mills Limited
(supra) was relied on. The Court noted that the assessee had only
submitted bank statements and not the books of accounts before the AO. It
was observed that the assessee would have ample opportunity during the
course of the proceedings before different statutory forums to show that the
finding of fact arrived at was erroneous as at that stage, no assessment
order was passed and it was only observed that it was a fit case for
issuance of notice under Section 148 of the Act. It was further observed
that is not a case which would fall under the exceptional grounds on which
a writ petition is maintainable at the interim stage in tax matters.
24. The issue that had fallen for consideration in NRA Iron & Steel Pvt.
Ltd. (supra), was that in a case where share capital/premium is credited in
the books of accounts of the assessee company, the onus of proof is on
the assessee to establish by cogent and reliable evidence of the identity of
the investor companies, the credit-worthiness of the investors and
genuineness of the transaction, to the satisfaction of the AO. The issue
before the AO was whether the amount of Rs.17,60,00,000/- allegedly
raised by the assessee through share capital/premium were genuine
transactions or not. The assessee had urged that the entire share capital
had been received through normal banking channels by account payee
cheques/demand drafts and produced documents such as income tax
return acknowledgments to establish the identity and genuineness of the
transaction. The AO independently got field enquiries conducted with
respect to the identity and credit-worthiness of the investor companies and
to examine the genuineness of the transactions. Based on the enquiries,
the AO held that the assessee had failed to prove the existence of the
identity of the investor companies and genuineness of the transactions as
a result of which the amount of Rs. 17,60,00,000/- was added back to the
total income of the assessee for the assessment year in question. The
appeal preferred by the assessee before the Commissioner of Income Tax
(Appeals)-I, was allowed as against which the Revenue filed an appeal
before the Income Tax Appellate Tribunal, which dismissed the appeal of
the Revenue. The appeal preferred by the Revenue before the High Court
of Delhi also came to be dismissed. On consideration of the materials on
record, the Hon'ble Supreme Court held that the assessee failed to
discharge the onus required under Section 68 of the Act and that the AO
was justified in adding the income back to the income of the assessee.
25. In Aten Capital Private Limited (supra), validity of an order passed
under Section 148(d) and the notice issued under Section 148 of the Act,
was under challenge. As the reply submitted by the petitioner was not
considered while passing the order under Section 148A(d), the said order
as well as the notice issued under Section 148 of the Act were set aside.
26. Much emphasis is laid by Mr. Rao on the guidelines for issuance of
notice under Section 148 of the Act, issued by the CBDT on 01.08.2022,
the relevant portion of which reads as follows:
"vii. If the result of enquiry/information available suggests
that the income chargeable to tax has escaped
assessment, the AO shall provide an opportunity of being
heard to the assessee by issuing a show cause notice u/s
148A(b) of the Act. The said notice shall provide between 7
to 30 days' time to the assessee for submitting the reply. A
template of show cause notice is enclosed at Annexure A1.
viii. If an assessee requests for a personal hearing, the
same may be dealt with following the principle of natural
justice by giving a reasonable period for compliance of
notice specifying the date of hearing.
xi. The AO has to consider the reply of assessee furnished,
if any, in response to the show-cause notice referred to in
clause (b) of section 148A before passing the order u/s
148A(d).
xii. The AO shall mandatorily pass a speaking order u/s
148A(d) in all cases with the 'prior approval of the specified
authority' (Annexure-A2) for such order u/s. 148A(d)
except in the cases covered in para 2.1 (iii) above of these
guidelines, irrespective of whether issuance of notice u/s
148 is being recommended or not. A template of such order
u/s. 148A(d) is enclosed at Annexure A3."
27. Emphasis is also laid by Mr. Rao on the communication issued by
the CBDT on 22.08.2022 on the subject 'Instruction regarding uploading of
data on functionalities/portal of the Income Tax Department - reg', the
relevant portion of which reads as follows:
"3. Further it is re-emphasized that-
i) Before initiating proceedings under Section 148/147 of
the Act, any information available on data-base/portal of the
Income Tax Department shall be verified before drawing
any adverse inference against the taxpayers. It is not out of
place to mention here that the information made available/
data uploaded by the reporting entities may not be fully
accurate due to inter alia, error of human nature, technical
nature, etc. Therefore, due verification may be carried out
and opportunity of being heard be given to the taxpayer
before initiating proceedings under Section 148/147 of the
Act.
ii)The supervisory authorities are hereby advised to keep
an effective supervision so as to ensure that all extant
Instructions/Guidelines/Circulars/SOPs are duly followed by
the Assessing Officers in their charge."
28. The guidelines dated 01.08.2022 and the communication dated
22.08.2022 were not in force when the AO passed the order. Naturally, in
the writ petition which was filed on 19.07.2022, the same could not have
been placed on record. However, in the appeal also, which was filed on
26.08.2022, there is no reference to the guidelines dated 01.08.2022 or the
communication dated 22.08.2022.
29. In the reply to the SCN under Section 148A(b) of the Act dated
24.03.2022, no material has been produced by the petitioner to counter the
allegations. Merely on the basis of a certificate issued by a Chartered
Accountant, the petitioner wanted the proceedings to be dropped and as
an after-thought, requested for supply the referred credible information
received regarding M/s. Valeska Trading Pvt. Ltd., M/s. Panveer Trading
Pvt. Ltd. and M/s. Shwetpushp Commercial Pvt. Ltd. It is not the case
projected in the reply to the SCN that in absence of any such information
as sought for, the assessee was not in a position to file appropriate reply.
The assesse also did not ask for fixing a date of hearing, although the SCN
dated 24.03.2022 clearly indicated that an opportunity of hearing is being
provided and the appellant did not avail any such opportunity.
30. In the appeal memo, at paragraph 5, the appellant had stated that it
had verified common GST portal and found that transactions aggregating
to Rs.2,20,00,275/- are reflected in Form No. 2A reportedly showing sales
of Rs.2,20,00,275/- in the appellant's name and uploaded by M/s. Panveen
Trading Private Limited. Thus, this information was very much available on
the GST portal. The relevant information was clearly indicated in the SCN
dated 24.03.2022 under Section 148A(b) of the Act that M/s. Panveen
Trading Pvt. Ltd. had shown sale of Rs. 2,20,00,275/- to the appellant
during the financial year 2017-2018 and that M/s. Panveer Trading Pvt. Ltd.
was found indulging in generating and selling tax invoices to various
entities without physical supply of underlying goods/services for passing
irregular ITC to other business entities and for doing this, they have also
availed and utilized ITC against fake invoices issued by others and that the
appellant was a beneficiary of such transaction made during the financial
year 2017-2018 relevant to the AY 2018-2019 in the form of
accommodation entry.
31. Source of information is not relevant. What is relevant is the tangible
material against the appellant. The petitioner did not even submit bank
statements or the books of accounts. In respect of the Income Tax Returns
filed by M/s. Panveer Trading Private Limited, the AO observed as follows:
".....
8. Income Tax returns filed by M/s. Panveer Trading
Limited were perused and it is observed that this entity
has shown huge growth in its turnover from Rs.
3,27,60,580/- in FY 2016-17 to Rs. 57,43,72,422/- in FY
2017-18. Despite such huge jump in turnover, the entity
has recorded very low PBT e.g. less than 1%, during FY
2017-18. Besides these entities have no place of
business or warehouse for procuring and storing goods.
9. In view of the above, it can be construed that M/s.
Panveer Trading Private Limited is a paper entity with no
financial worth, and is used for providing accommodation
entries in the guise of invoice issuance. Therefore,
transactions made by the entity were sham transactions
and all the sales made by the entity are bogus sales and
all the sales proceeds in the hand of the recipients are
actually bogus purchases in the hands of the invoice
recipients, by which profit of the recipients have been
suppressed. Therefore, all the expenses incurred by the
recipients and/or the ultimate beneficiaries in the guise of
purchases from M/s. Panveer Trading Private Limited
and other shell entities involved in issuing fake invoices
are nothing but accommodation entries.
10. List of entities to whom sales were made by M/s.
Panveer Trading Private Limited during FY 2017-18 was
sorted out from insight portal. ITRs of recipients' entities
were perused and financial analysis were done so as to
ascertain the financial creditworthiness of these entities
and also to ascertain as to whether these entities are
genuine or paper entities.
11. All these entities had made substantial number of
bogus transactions to the following entities during the FY
2017-18, relevant to the AY 2018-19, the details of which
is furnished below:
Sl.No PAN Name of Aggregated Remarks
Entity Transaction
Value
PANVEER TRADING PRIVATE LIMITED (PAN: AAICP8094Q)
1 AADCB4662P BARBARIK 2,20,00,275 Beneficiary
PROJECT
LIMITED
12. After considering the reply of the assesse and data
available on the record, it is well settled that the assessee
has made transactions of Rs. 2,20,00,275/- during the FY
2017-18 in form of bogus purchase from the M/s. Panveer
Trading Private Limited who are involved in providing of
accommodation entries in form of bogus sale/purchase
for commission. The assessee is the beneficiary company
in this case and the above transaction where no goods
were transferred from the seller to purchaser. Only entries
have been made in the books. By making
accommodation entries the assessee has raised bogus
expenditure in terms of bogus purchase. Thus, the
amount of purchase made from the above parties of Rs.
2,20,00,275/- has escaped assessment during the AY
2018-19. The information suggests that the income
chargeable to tax has escaped assessment by Rs.
2,20,00,275/-.
..."
32. There is, prima facie, some material on the basis of which the
Department could reopen the case. The petitioner had not even made an
attempt to assert that the material facts relied on in the SCN is erroneous.
33. In view of the above, we are of the opinion that no interference is
called for with the order of the learned Single Judge. Accordingly, the writ
petition is dismissed.
Sd/- Sd/-
(Arup Kumar Goswami) (Deepak Kumar Tiwari)
CHIEF JUSTICE JUDGE
Amit
