Mahashian Di Hatti Pvt. Limited v. Deputy Commissioner Of Income Tax

$~50 *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 12504/2022 MAHASHIAN DI HATTI PVT. LIMITED ..... Petitioner Through:Mr.Ramesh Singh, Sr.Advocate withMs.Shreya Jain and Mr.GauravTanwar, Advocates. versus DEPUTY COMMISSIONER OF INCOME TAX..... Respondent Through:Mr.Abhishek Maratha, Sr.StandingCounsel for the Revenue. % Date of Decision: 01[st]September, 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. 37749/2022 Exemption allowed, subject to all just exceptions. Accordingly, the application stands disposed of. W.P.(C) No.12504/2022 & C.M.No.37748/2022 1.Present writ petition has been filed challenging the notice dated18[th]May, 2022 issued under Section 148A(b) of the Income Tax Act, 1961(‘the Act’) and the order passed under Section 148A(d) of the Act and the notice issued under Section 148 of the Act dated 22[nd]July, 2022 for theAssessment Year 2015-16. 2.Learned senior counsel for the Petitioner states that the Respondentfailed to comply with the direction of the Supreme Court in the case ofUnion of India vs. Ashish Agarwal, 2022 SCC OnLine SC 543 inasmuchas it made far-fetched allegations without any supporting evidence. 3.He points out that in the show cause notice issued under Section148A(b) of the Act as well as the subsequent notice dated 18[th]May, 2022,the only allegation was that the Assessee-Company had taken entries ofRs.1,90,84,654/- from twenty-eight bogus entities maintained by Sh.DeepakNanjyani. He states that names of none of the twenty-eight bogus entitiesfrom whom the Petitioner had allegedly purchased raw material werementioned in the show cause notice. 4.He emphasises that in the relevant Assessment Year, the Petitionerhad a turnover of about Rs.743 crores and had purchased raw material worthabout Rs.442 crores. Consequently, learned senior counsel for the Petitionercontends that there has been violation of principles of natural justice as thePetitioner has been denied an effective opportunity to rebut the informationavailable with the Asseesing Offcer. 5.Mr.Abhishek Maratha, learned Senior Standing Counsel for theRespondnet-Revenue, who appears on advance notice, states that thePetitioner has received accommodation entries from Raj Trading Company,which is one of the twenty-eight bogus entities maintained by Sh.DeepakNanjyani. He also states that the Revenue is in possession of bank details ofRaj Trading company. In fact, today in Court, he has handed over to learned W.P.(C) No.12504/2022 counsel for the petitioner a copy of the email written by Income Tax Officer(Inv.) Raipur to Assistant Commissioner of Income Tax, Circle 16(1), Delhi. 6.This Court has consistently observed that to give effect to theobjective of the scheme of Section 148A of the Act, the Assessing Officermust provide specific material and information to the Assessee in the noticeissued under Section 148A(b) of the Act so that the Assessee can provide ameaningfulresponseatthestageofinquiryunderSection148Aproceedings. The following observation of this Court in its decision inDivya Capital One Private Limited v. ACIT & Ors., 2022 SCC OnLine Del1461 is apposite: W.P.(C) No.12504/2022 counsel for the petitioner a copy of the email written by Income Tax Officer(Inv.) Raipur to Assistant Commissioner of Income Tax, Circle 16(1), Delhi. 6.This Court has consistently observed that to give effect to theobjective of the scheme of Section 148A of the Act, the Assessing Officermust provide specific material and information to the Assessee in the noticeissued under Section 148A(b) of the Act so that the Assessee can provide ameaningfulresponseatthestageofinquiryunderSection148Aproceedings. The following observation of this Court in its decision inDivya Capital One Private Limited v. ACIT & Ors., 2022 SCC OnLine Del1461 is apposite: “11. This Court further finds that the information/materialstated in the impugned show cause notice dated 17th March,2022 issued under Section 148A(b) of the Act have not beenshared with the Petitioner, despite specific request made by thePetitioner vide letter dated 24th March, 2022, thereby denyingthe Petitioner an effective opportunity to file a response/reply.The non-sharing of the information is violative of the rationalebehind the judgment of this Court in Sabh Infrastructure Ltd.vs. Asst. CIT, MANU/DE/2989/2017 : 398 ITR 198 (Del).”stated in the impugned show cause notice dated 17th March,2022 issued under Section 148A(b) of the Act have not beenshared with the Petitioner, despite specific request made by thePetitioner vide letter dated 24th March, 2022, thereby denyingthe Petitioner an effective opportunity to file a response/reply.The non-sharing of the information is violative of the rationalebehind the judgment of this Court in Sabh Infrastructure Ltd.vs. Asst. CIT, MANU/DE/2989/2017 : 398 ITR 198 (Del).” 7.Consequently, as the show cause notice issued under Section 148A(b)of the Act as well as the subsequent notice dated 18[th]May, 2022 are bereftof any details, this Court is of the view that the Revenue by asking thePetitioner-Assessee to respond to the aforesaid vague show cause notice wasvirtually asking the Petitioner to search for ‘a needle in a haystack’. 8.However, as learned counsel for the Respondent-Revenue now statesthat the Respondent shall supply all the relevant material documents andinformation in its possession, the impugned order passed under Section149A(d) of the Act as well as the notice issued under Section 148 of the Act W.P.(C) No.12504/2022 dated 22[nd]July, 2022 are set aside with a direction to the Respondent-Revenue to issue a supplementary notice in pursuance to the initial noticeissued under Section 148A(b) of the Act, within three weeks enclosing allthe relevant/incriminating information/material/documents. The Petitionershall file its response to the said supplementary notice within three weeks.The Assessing Officer is directed to pass a fresh order under Section148A(d) in accordance with law within six weeks thereafter. 9.With the aforesaid directions, present writ petition along with pendingapplication stands disposed of. 10.This Court clarifies that it has not commented on the merit of thecontroversy. The rights and contentions of all the parties are left open. MANMOHAN, J SEPTEMBER 1, 2022KA MANMEET PRITAM SINGH ARORA, J W.P.(C) No.12504/2022