Best Buildwell Private Limited v. Income Tax Officer, Circle 4 (2), Delhi And Anr

$~26 *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 11338/2022 BEST BUILDWELL PRIVATE LIMITED..... Petitioner Through:Mr.Salil Kapoor with Ms.AnanyaKapoor, Mr.Tarun Chanana andMr.Sumit Lal Chandani, Advocates. versus INCOME TAX OFFICER, CIRCLE 4 (2), DELHI AND ANR. ..... Respondents Through:Mr.Kunal Sharma, Sr.StandingCounsel for the Revenue. Date of Decision: 01[st]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.33396/2022 Exemption allowed, subject to all just exceptions. Accordingly, the application stands disposed of. W.P.(C) No.11338/2022 & C.M.No.33395/2022 1.Present writ petition has been filed challenging the order dated 30[th] March, 2022 passed under Section 148A(d) of the Income Tax Act, 1961 W.P.(C) No.11338/2022 [‘the Act’] and notice dated 31[st]March, 2022 issued under Section 148 ofthe Act as well as show cause notice dated 16[th]March, 2022 issued underSection 148A(b) of the Act for the Assessment Year 2018-19. 2.Learned counsel for the Petitioner states that the Petitioner had filedits return of income for the Assessment Year 2018-19 declaring an incomeof Rs.6,32,45,180/- and loss of Rs.74,36,185/-. He states that the case ofthe Petitioner was picked up for scrutiny and after examination of all thesubmissions of the Petitioner, an assessment order dated 27[th]April, 2021under Section 143(3) read with Section 144B of the Act was passedassessing the income of the Petitioner at Rs.6,41,76,500/-. He points outthat one of the points for selecting the Petitioner’s case for scrutiny was'Business Purchases' and after analysing the documents submitted by thePetitioner, no additions were made by the Assessing Officer on account ofbusiness purchases. 3.Learned counsel for the Petitioner states that the impugned showcause notice dated 16[th]March, 2022 issued under Section 148A(b) of theAct did not provide any information and/or details regarding the incomethat has been alleged to have escaped assessment. He states that thePetitioner filed a response to the impugned show cause notice dated16[th]March, 2022 specifically requesting the Respondent to provide thedetails of the transaction and also for providing the details of the vendorsfrom whom the Petitioner had made purchases and raised invoices, whichRespondent No.1 considered bogus. He further states that Respondent No.1failed to consider the fact that the Petitioner had made purchases fromvendors who were registered under GST and had claimed input tax credit ofGST on the purchases made from them as per statement 2A reflected on the W.P.(C) No.11338/2022 Page 2 of 4 GST portal based on the invoices raised by the vendors. He points out thatthe credit claimed by the Petitioner has not been rejected.the credit claimed by the Petitioner has not been rejected. 4.Learned counsel for the Petitioner states that the impugned orderdated 30[th]March, 2022 under Section 148A(d) of the Act merely relies onan alleged report prepared against the assessee company. He emphasisesthat no such report was ever furnished to the Petitioner.dated 30[th]March, 2022 under Section 148A(d) of the Act merely relies onan alleged report prepared against the assessee company. He emphasisesthat no such report was ever furnished to the Petitioner. W.P.(C) No.11338/2022 Page 2 of 4 GST portal based on the invoices raised by the vendors. He points out thatthe credit claimed by the Petitioner has not been rejected.the credit claimed by the Petitioner has not been rejected. 4.Learned counsel for the Petitioner states that the impugned orderdated 30[th]March, 2022 under Section 148A(d) of the Act merely relies onan alleged report prepared against the assessee company. He emphasisesthat no such report was ever furnished to the Petitioner.dated 30[th]March, 2022 under Section 148A(d) of the Act merely relies onan alleged report prepared against the assessee company. He emphasisesthat no such report was ever furnished to the Petitioner. 5.Issue notice.Mr.Kunal Sharma, learned Senior Standing Counselaccepts notice on behalf of the Respondents. He states that notice underSection 148A(b) of the Act had been issued in the present instance as thePetitioner’s ITR and GST Data did not reconcile. He also states that theanalysis of GST information of third parties reveal substantial routing offunds by way of bogus purchases.accepts notice on behalf of the Respondents. He states that notice underSection 148A(b) of the Act had been issued in the present instance as thePetitioner’s ITR and GST Data did not reconcile. He also states that theanalysis of GST information of third parties reveal substantial routing offunds by way of bogus purchases. 6.In rejoinder, learned counsel for the Petitioner states that theimpugned order passed under Section 148A(d) of the Act does not refer toany lack of reconciliation between the ITR and GST Data of the Petitioner.He also states that no GST information showing substantial routing of fundswas ever furnished to the Petitioner.impugned order passed under Section 148A(d) of the Act does not refer toany lack of reconciliation between the ITR and GST Data of the Petitioner.He also states that no GST information showing substantial routing of fundswas ever furnished to the Petitioner. 7.Having heard the counsel for parties, this Court is of the view that theimpugned show cause notice as well as the impugned order under Section148A(d) of the Act are based on distinct and separate grounds.impugned show cause notice as well as the impugned order under Section148A(d) of the Act are based on distinct and separate grounds. 8.The show cause notice primarily states that “it is seen that thePetitioner has made purchases from certain non-filers”.However nodetails or any information of these entities was provided to the Petitioner.It is not understood as to how the Petitioner was to know which of theentities it dealt with were filers or non-filers!Petitioner has made purchases from certain non-filers”.However nodetails or any information of these entities was provided to the Petitioner.It is not understood as to how the Petitioner was to know which of theentities it dealt with were filers or non-filers! W.P.(C) No.11338/2022 9.Further, the impugned order states that a report was prepared againstthe Petitioner-company which concludes that the assessee had shown boguspurchases from bogus entities to suppress the profit of the company andreduce the tax liability during the years 2015-16 to 2020-21. However, nosuch report which forms the basis for the ‘information’ on which theassessment was proposed to be reopened had been provided to thePetitioner. In fact, there are no specific allegations in the show cause noticeto which the Petitioner could file a reply. W.P.(C) No.11338/2022 9.Further, the impugned order states that a report was prepared againstthe Petitioner-company which concludes that the assessee had shown boguspurchases from bogus entities to suppress the profit of the company andreduce the tax liability during the years 2015-16 to 2020-21. However, nosuch report which forms the basis for the ‘information’ on which theassessment was proposed to be reopened had been provided to thePetitioner. In fact, there are no specific allegations in the show cause noticeto which the Petitioner could file a reply. 10.Keeping in view the aforesaid, the impugned order dated 30[th]March,2022 passed under Section 148A(d) and notice dated 31[st]March, 2022issued under Section 148 of the Act are quashed and the Respondents aregiven liberty to furnish additional materials in support of the allegationsmade in the show cause notice dated 16[th]March, 2022 within three weeksincluding reports, if any. Thereafter, the Assessing Officer shall decide thematter in accordance with law. With the aforesaid directions, the presentwrit petition along with pending application stands disposed of. The rightsand contentions of all the parties are left open. MANMOHAN, J AUGUST 1, 2022KA MANMEET PRITAM SINGH ARORA, J W.P.(C) No.11338/2022 Page 4 of 4