[Cites 7, Cited by 0]
Gujarat High Court
Guruvayur Infratech Private Limited vs Assistant Commissioner Of Income Tax, ... on 27 January, 2026
Author: A.S. Supehia
Bench: A.S. Supehia
NEUTRAL CITATION
C/SCA/11456/2025 ORDER DATED: 27/01/2026
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 11456 of 2025
==========================================================
GURUVAYUR INFRATECH PRIVATE LIMITED
Versus
ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, JAMNAGAR
==========================================================
Appearance:
MR B S SOPARKAR(6851) for the Petitioner(s) No. 1
MR MAUNIL G YAJNIK(9346) for the Respondent(s) No. 1
==========================================================
CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 27/01/2026
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. RULE. Learned Senior Standing Counsel Mr.
Yajnik waives service of notice of rule for and
on behalf of the respondent(s).
2. With the consent of the learned advocates
appearing for the respective parties, the matter
is taken up for final hearing today.
3. A short issue is involved in the matter. The
petitioner has assailed the issuance of notice
under section 148A(1) of the Income Tax Act, 1961
(for short "the Act") dated 31.03.2025 for the
Assessment Year (AY) 2021-22, the order passed by
the respondent under section 148A(3) of the Act
dated 28.06.2025, as well as the notice issued
under section 148 of the Act of even date.
NEUTRAL CITATION
C/SCA/11456/2025 ORDER DATED: 27/01/2026
undefined
FACTS:
4. The petitioner is engaged in the business of
civil construction. In the Financial Year 2020-
21, the petitioner had entered into a deal for
the purchase of cement with M/s.Dhairya
Enterprise and M/s.Shree Enterprise. According to
the terms of negotiation, the petitioner had paid
amounts of Rs.17,75,00,000/- and Rs.3,75,00,000/-
respectively. Subsequently, there was a survey by
the Directorate General of GST Intelligence
(DGGI), Gandhidham Regional Unit (GRU),
Gandhidham on 28.11.2020, and it was brought to
the notice of the petitioner that the above firms
were engaged in bogus billing. Unaware of these
facts, the petitioner did not want to enter into
litigation and had paid the sum of Goods and
Service Tax (GST) credit together with interest
and penalty amounting to Rs.5,13,02,342/-, as
directed by the DGGI, GRU, Gandhidham. Subsequent
thereto, no adverse proceedings were undertaken
against the petitioner.
5. The petitioner filed a return of income under
section 139(1) of the Act on 15.03.2022,
declaring total income of Rs.28,63,36,000/-. The
return of income was thereafter processed under
section 143(1) at Rs.28,99,04,000/-. The case of
the petitioner was selected for scrutiny
specifically for the reason that the petitioner
had made substantial purchases from suppliers who
NEUTRAL CITATION
C/SCA/11456/2025 ORDER DATED: 27/01/2026
undefined
were either non-filers or had non-business
profiles or reflected substantially lower
turnover in their Income Tax Returns. The
petitioner participated in the proceedings by
filing details as were called for from time to
time, and eventually, the assessment order came
to be passed under section 143(3) read with
section 144B of the Act on 27.12.2022, assessing
total income at Rs.29,11,39,700/-. Thereafter, on
09.09.2024, the petitioner was served with a
summons from the Deputy Director of Income Tax
(Investigation), Ahmedabad, which was duly
responded to vide response dated 17.09.2024.
Thereafter, the petitioner was again issued a
notice from the Deputy Director of Income Tax
(Investigation), Jamnagar on 17.12.2024, which
was also responded to on 17.01.2025.
6. Thereafter, on the strength of the
information flagged on the Insight Portal
regarding the passing on of fraudulent Input Tax
Credit without actual supply of corresponding
goods in the case of M/s.Dhairya Enterprise
(Prop. Drashti Shaileshkumar Jitiya), the
impugned show-cause notice under section 148A(1)
of the Act dated 31.03.2025 was issued to the
petitioner. The petitioner filed its objection
vide letter dated 13.04.2025.
NEUTRAL CITATION
C/SCA/11456/2025 ORDER DATED: 27/01/2026
undefined
7. The respondents, however, passed the impugned
order under section 148A(3) of the Act on
28.06.2025 and issued the impugned notice under
section 148 of the Act dated 28.06.2025 on the
ground that the petitioner had debited expenses
of Rs.17,74,50,073/-, whereas only
Rs.14,07,06,100/- was disallowed as bad debts,
and therefore, the balance amount of
Rs.3,67,43,973/- was held to have been wrongly
claimed as expenditure, and it was concluded that
the income had escaped assessment.
SUBMISSIONS ON BEHALF OF THE PETITIONER :
8. Learned advocate Mr.Soparkar has submitted
that the notice under section 148A(1) of the Act
was issued on the ground that the petitioner had
entered into bogus purchase transactions
aggregating to Rs.14,07,06,096/- during the AY
under consideration and, prima facie, the amount
of such information had not been subjected to
taxation under the Act. He submitted that when
the petitioner demonstrated that the said amount
of Rs.14,07,06,096/- was not claimed as
expenditure in the first place and that the same
had already been subjected to taxation under the
Act, the respondent, for the first time in the
order under section 148A(3) of the Act, brought a
new case that the amount of Rs.3,67,43,973/-,
NEUTRAL CITATION
C/SCA/11456/2025 ORDER DATED: 27/01/2026
undefined
being the component of GST and claimed as
expenditure, had escaped assessment.
9. Learned advocate Mr.Soparkar further
submitted that apart from the fact that there was
no escapement of income as such, the petitioner
was not put to notice regarding the issue of
Rs.3,67,43,973/- being the component of GST
claimed as expenditure having escaped assessment,
and therefore, the petitioner never had an
opportunity to explain how the same had not
escaped assessment. It was further submitted that
the order under section 148A(3) of the Act is
quite different from the information available
with the respondent, which led to the issuance of
notice under section 148A(1) of the Act. It was
also submitted that the case of the petitioner
was the subject matter of assessment under
section 143(3) of the Act precisely on account of
purchases from non-filers. He submitted that
detailed verification was carried out during the
assessment proceedings and hence, reopening on
the same ground amounts to a change of opinion
and is therefore not justified.
10. Learned advocate Mr.Soparkar further
submitted that while the respondent contends that
the petitioner had not claimed expenditure of
NEUTRAL CITATION
C/SCA/11456/2025 ORDER DATED: 27/01/2026
undefined
Rs.14,07,06,096/- being bad debts, the petitioner
had claimed expenditure of Rs.3,67,43,973/- as
GST on bogus purchases and therefore, income to
that extent had escaped assessment. It was
submitted that the petitioner claimed deduction
of Rs.3,67,43,973/- as GST not as a part of bogus
purchases from M/s.Dhairya Enterprise, but
because the petitioner had made payment of GST
amounting to Rs.5,13,02,342/- subsequent to the
survey by DGGI, GRU, Gandhidham, which is clearly
reflected in Form GST DRC-03 dated 30.11.2020. It
was submitted that the additional and actual
payment of GST by the petitioner is an allowable
expenditure and therefore, there is no income
that has escaped assessment.
11. In support of his submissions, learned
advocate Mr.Soparkar has placed reliance on the
judgment of the High Court of Delhi in the case
of Jindal Saw Ltd. Vs. Deputy/Assistant
taxmann.com 634 (Delhi).
SUBMISSIONS ON BEHALF OF RESPONDENT AUTHORITY
12. Vehemently opposing the aforesaid
submissions, learned Senior Standing Counsel
Mr.Yajnik submitted that it is undisputed that
the assessee had entered into purchase
NEUTRAL CITATION
C/SCA/11456/2025 ORDER DATED: 27/01/2026
undefined
transactions worth Rs.17,74,50,073/- with a paper
entity, M/s.Dhairya Enterprise, during the year
without actual receipt of goods. He submitted
that from the ledger, it is evident that the
assessee claimed to have advanced a sum of
Rs.17,74,50,073/- against purchases, and although
the vendor provided invoices, it did not supply
goods. He further submitted that though the
assessee claimed to have made advance payments
against purchase orders, the vendor provided only
invoices without supply of goods, and the
assessee did not provide copies of such invoices.
Hence, it was submitted that it is not
ascertainable whether the payment made by the
assessee was an advance or was made only after
receipt of invoices. Further, it was submitted
that against such payment of Rs.17,74,50,073/-,
the assessee wrote off only Rs.14,07,06,100/-,
whereas the remaining payment was appropriated
against the GST account, and such appropriation
is incomprehensible and inexplicable.
13. Learned Senior Standing Counsel further
submitted that since the assessee paid a sum of
Rs.17,74,50,073/- to M/s.Dhairya Enterprise,
which was categorized as bad debt and written off
as irrecoverable, by no stretch of imagination
NEUTRAL CITATION
C/SCA/11456/2025 ORDER DATED: 27/01/2026
undefined
could only Rs.14,07,06,100/- be written off while
the remaining amount was set off against the GST
account, particularly when the assessee had not
received anything in return against such payment.
This could have occurred only if the assessee had
availed GST credit to that extent against such
purchase invoices. He further submitted that it
was not the case of the assessee that such GST
amount was directly debited to reserves or that
it was never debited to the Profit and Loss
Account, and therefore, it is clear that the
remaining amount of Rs.3,67,43,973/- (i.e.,
Rs.17,74,50,073/- minus Rs.14,07,06,100/-) paid
to M/s.Dhairya Enterprise against such bogus
invoices was claimed as expenditure.
Consequently, income to that extent had escaped
assessment within the meaning of section 147 of
the Act. Hence, it was urged that the present
writ petition ought not to be entertained.
ANALYSIS
14. We have heard the learned advocates appearing
for the respective parties at length.
15. In our considered opinion, the respondent -
Assessing Officer (AO) fell in error, upon a
threadbare examination of the ledger details.
Initially, in the show-cause notice dated
NEUTRAL CITATION
C/SCA/11456/2025 ORDER DATED: 27/01/2026
undefined
31.03.2025 issued under section 148A(1) of the
Act, it was alleged that the petitioner had
entered into bogus purchase transactions
amounting to Rs.14,07,06,096/-. While passing the
order dated 28.06.2025 under section 148A(3) of
the Act, it was held that against the amount of
Rs.17,74,50,073/-, i.e. the advanced sum against
purchases, the petitioner had written off only
Rs.14,07,06,100/-, whereas the remaining sum of
Rs.3,67,43,973/- was appropriated against the GST
account and claimed as expenditure towards bogus
purchases. It was therefore concluded that income
to that extent had escaped assessment within the
meaning of section 147 of the Act. This opinion
was formed despite the petitioner having paid a
sum of Rs.5,13,02,342/- towards interest and
penalty. The petitioner, in its ledger account,
fully disclosed that the amount of
Rs.14,07,06,100/- pertaining to Dhairya
Enterprise was transferred as bad debt and added
back to the income of the company as per the
computation of income, and hence, not claimed as
expenditure. Accordingly, the petitioner also
furnished a certificate dated 12.04.2025 issued
by a Chartered Accountant certifying the write-
off of the amounts in question. Thus, the
allegation of claiming the amount of
NEUTRAL CITATION
C/SCA/11456/2025 ORDER DATED: 27/01/2026
undefined
Rs.3,67,43,973/- towards bogus expenditure during
the AY under consideration falls flat, since in
the show-cause notice issued under section
148A(1) of the Act dated 31.03.2025, the amount
of Rs.14,07,06,100/- was derived after
considering the aforesaid amount. Therefore, the
AO travelled beyond the original show-cause
notice and attempted to unearth and bifurcate the
amount, despite the fact that the petitioner had
already paid penalties and accepted the position,
as the petitioner did not wish to enter into
further litigation after discovering that the
entities, namely M/s. Dhairya Enterprise and M/s.
Shree Enterprise, were bogus.
16. Thus, upon an overall analysis of the facts
and the amounts reflected in the ledger, we do
not find that any income escaped assessment. On
the contrary, the AO attempted to exhume the
amount of Rs.3,67,43,973/- as bogus purchase from
the amount of Rs.14,07,06,100/-. The amount of
Rs.3,67,43,973/- was claimed as deduction not as
part of bogus purchases, but on account of
payment of Rs.5,13,02,342/- made subsequent to
the survey by DGGI. Even otherwise, the
petitioner was never called upon by the AO to
explain the alleged bogus claim of expenditure of
NEUTRAL CITATION
C/SCA/11456/2025 ORDER DATED: 27/01/2026
undefined
Rs.3,67,43,973/- as GST on bogus purchases.
Hence, the impugned order and notice are required
to be quashed and set aside.
17. In light of the foregoing observations, the
present writ petition stands allowed. The
impugned order and notice are quashed and set
aside. Rule made absolute. There shall be no
order as to costs.
Sd/-
(A. S. SUPEHIA, J)
Sd/-
(PRANAV TRIVEDI, J)
NVMEWADA/7
