The Division Bench of the Delhi High Court in the case of Dharam Pal vs The State (NCT of Delhi) consisting of Justices Manmohan and Manmeet Pritam Singh Arora upheld that merely filing of VAT returns cannot be held to establish genuineness of transaction especially when it was not shown that the VAT Department had made any physical or spot enquiry.
Facts
This writ petition was filed challenging the notice issued u/s 148A(b) of the Income Tax Act, 1961 (‘Act’) and the order passed u/s 148A(d) of the Act for the Assessment Year 2014-15.
Contentions Made
Petitioner: It was contended that the business of trading in chemical and other allied goods and the transaction took place during the year with the proprietor of M/s Seema Enterprises, Seema Gupta, through proper banking channels. It was further contended that the Petitioner as well as M/s Seema Enterprises filed their DVAT returns which were duly acknowledged by the Department.
Observations by the Court
The Bench noted that during the investigation it was found that M/s Seema Enterprises was not involved in any real business. Further, the proprietor had accepted that her firm was not engaged in real business activities. It opined that merely filing of VAT returns cannot be held to establish genuineness of transaction especially when it was not shown that the VAT Department had made any physical or spot enquiry. Moreover, neither party had produced before the Assessing Officer the transport details, purchase contract or bills regarding the alleged purchases. Therefore, that income had escaped assessment.
Judgment
The Bench found no error in the impugned order and disposed of accordingly.
Case: Mahalaxmi Dye India Pvt Ltd vs Asst. Commissioner of Income Tax & Anr.
Citation: W.P.(C) 14855/2022
Bench: Justice Manmohan, Justice Manmeet Pritam Singh Arora
Decided on: 20th October 2022
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