Aryan Management Services Private Limited v. Income Tax Officer, Ward-3(1), Delhi & Anr

$~43 IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 12422/2022 ARYAN MANAGEMENT SERVICES PRIVATE LIMITED ..... PetitionerThrough:Mr.Bhupinder Jit Kumar, Advocate. Versus INCOME TAX OFFICER, WARD-3(1), DELHI & ANR. ..... Respondents Through:Mr.Sanjay Kumar, Sr.StandingCounsel for the Revenue.Counsel for the Revenue. %Date of Decision: 29[th]August, 2022 CORAM: HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J (Oral): C.M.No.37355/2022 Exemption allowed, subject to all just exceptions.Accordingly, the application stands disposed of.Accordingly, the application stands disposed of. W.P.(C) No.12422/2022 & C.M.No.37354/2022 1.Present writ petition has been filed challenging the order dated 26[th]July, 2022 passed by the Respondent No. 1 under Section 148A(d) of theIncome Tax Act, 1961 (‘the Act’) and the notice dated 26[th]July, 2022issued by the Respondent No. 1 to the Petitioner under Section 148 of theJuly, 2022 passed by the Respondent No. 1 under Section 148A(d) of theIncome Tax Act, 1961 (‘the Act’) and the notice dated 26[th]July, 2022issued by the Respondent No. 1 to the Petitioner under Section 148 of the W.P.(C) No.12422/2022 Act for the Assessment Year 2014-15 and the consequential proceedingsinitiated thereto. 2.Learned counsel for the Petitioner states that the impugned order hasbeen passed without application of mind and without considering theresponse filed by the Petitioner. He states that the Petitioner is a small non-trading company earning only rental income, audited by a reputed firm ofauditors, namely Walker Chandiok & Co., LLP since financial year 2004-05 and has never had any requirement of outside funds. He further statesthat the company has a single bank account and never had any transactionwith Mr.Hasmukh Mehta as alleged. 3.Learned counsel for the Petitioner states that the material forming thebasis of the allegation against the Petitioner was not provided along withthe letter dated 27[th]May, 2022. He states that the name of the Petitionernowhere figures in the Diary or in the statements relied upon by theRespondent No. 1. He further states that even in the tabular informationstated to have been prepared on the basis of Diary, the name appearsdifferently on different pages. Consequently, according to him, the showcause notice is vague, non-specific and based on borrowed satisfaction. 4.Issue notice.Mr.Sanjay Kumar, learned senior standing counselaccepts notice on behalf of the Respondents-Revenue. He contends that theinvestigation wing has found the details of the transaction of Petitioner-Assessee in the seized diary. In the said details, it is clearly mentioned thatthe Assessee company has received cheques from Shri Hasmukh Mehtaamounting to Rs.1,72,00,000/- during the financial year 2013-14 which isnot a genuine business transaction as the entities from whom the funds have W.P.(C) No.12422/2022 been received are not doing any business and are paper concerns which areengaged in only providing accommodation entries.engaged in only providing accommodation entries. 4.Issue notice.Mr.Sanjay Kumar, learned senior standing counselaccepts notice on behalf of the Respondents-Revenue. He contends that theinvestigation wing has found the details of the transaction of Petitioner-Assessee in the seized diary. In the said details, it is clearly mentioned thatthe Assessee company has received cheques from Shri Hasmukh Mehtaamounting to Rs.1,72,00,000/- during the financial year 2013-14 which isnot a genuine business transaction as the entities from whom the funds have W.P.(C) No.12422/2022 been received are not doing any business and are paper concerns which areengaged in only providing accommodation entries.engaged in only providing accommodation entries. 5.A perusal of the paper book reveals that impugned order underSection 148A(d) of the Act has been passed on the ground that theAssessing Officer has certain details which shows that the AssesseeCompany has received cheques.In fact, the impugned order states:“…Since the amount of more than Rs.50,00,000/- has been received in thebank account of the assessee, the same is represented in the form of assethence, the present case satisfied the Section 149(1)(b) of the Income TaxAct, 1961.”Section 148A(d) of the Act has been passed on the ground that theAssessing Officer has certain details which shows that the AssesseeCompany has received cheques.In fact, the impugned order states:“…Since the amount of more than Rs.50,00,000/- has been received in thebank account of the assessee, the same is represented in the form of assethence, the present case satisfied the Section 149(1)(b) of the Income TaxAct, 1961.” 6.However, neither in the notice issued under Section 148A(b) of theAct nor in the impugned order passed under Section 148A(d) of the Act,there is any detail of any cheque credited in the bank account of thePetitioner-Assessee and/or any debit entry in the bank account ofMr.Hasmukh Mehta or his front companies.Act nor in the impugned order passed under Section 148A(d) of the Act,there is any detail of any cheque credited in the bank account of thePetitioner-Assessee and/or any debit entry in the bank account ofMr.Hasmukh Mehta or his front companies. 7.Accordingly, this Court is of the view that the Assessing Officer hasnot shared the material information stated in the impugned show causenotice issued under Section 148A(b) of the Act as well as in the impugnedorder passed under Section 148A(d) of the Act despite a specific requestmade by the Petitioner vide reply dated 07[th]June, 2022.not shared the material information stated in the impugned show causenotice issued under Section 148A(b) of the Act as well as in the impugnedorder passed under Section 148A(d) of the Act despite a specific requestmade by the Petitioner vide reply dated 07[th]June, 2022. 8.This Court is of the opinion that the Petitioner has been denied aneffectiveopportunitytofilearesponse/replyandnon-sharingofinformation is violative of the rationale behind the judgment of this Courtin Sabh Infrastructure Ltd. Vs. Assistant Commissioner of Income Tax,(398) ITR 198 as well as the statutory mandate.effectiveopportunitytofilearesponse/replyandnon-sharingofinformation is violative of the rationale behind the judgment of this Courtin Sabh Infrastructure Ltd. Vs. Assistant Commissioner of Income Tax,(398) ITR 198 as well as the statutory mandate. W.P.(C) No.12422/2022 9.Consequently, the impugned order passed under Section 148A(d) ofthe Act as well as the notice issued under Section 148 of the Act, both dated26[th]July, 2022 for the Assessment Year 2014-15 are set aside and thematter is remanded back to the Assessing Officer for a fresh determination.In the interest of justice, this Court permits the Assessing Officer to supplyadditional information, if any, in his possession to the Petitioner-Assesseewithin four weeks.The Petitioner-Assessee shall be at liberty to file anadditional response within four weeks thereafter.The Assessing Officershall subsequently decide the matter in accordance with law within fourweeks. W.P.(C) No.12422/2022 9.Consequently, the impugned order passed under Section 148A(d) ofthe Act as well as the notice issued under Section 148 of the Act, both dated26[th]July, 2022 for the Assessment Year 2014-15 are set aside and thematter is remanded back to the Assessing Officer for a fresh determination.In the interest of justice, this Court permits the Assessing Officer to supplyadditional information, if any, in his possession to the Petitioner-Assesseewithin four weeks.The Petitioner-Assessee shall be at liberty to file anadditional response within four weeks thereafter.The Assessing Officershall subsequently decide the matter in accordance with law within fourweeks. 10.With the aforesaid directions, present writ petition along with pendingapplication stands disposed of.This Court clarifies that the rights andcontentions of all the parties are left open. MANMOHAN, J AUGUST 29, 2022KA MANMEET PRITAM SINGH ARORA, J W.P.(C) No.12422/2022