M/S Ester Industries Ltd v. Asstt. Commissioner Of Income Tax & Anr

$~13 *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 12677/2022 M/S ESTER INDUSTRIES LTD. ..... Petitioner Through:Mr.Arjun Prasad Sinha, Advocate. versus ASSTT. COMMISSIONER OF INCOME TAX & ANR. ..... RespondentsThrough:Mr.Zoheb Hossain, Sr.StandingCounsel for the Revenue withMr.Vipul Agrawal and Mr.ParthSemwal, Advocates. % Date of Decision: 02[nd]September, 2022 CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA MANMOHAN, J (Oral): J U D G M E N T C.M.No.38500/2022 Exemption allowed, subject to all just exceptions.Accordingly, the application stands disposed of. W.P.(C) No.12677/2022 W.P.(C) No.12677/2022 & C.M.No.38501/2022 1.Present writ petition has been filed challenging the order passed underSection 148A(d) of the Income Tax Act, 1961 [‘the Act’] and the noticeissued under Section 148 of the Act, both dated 23[rd]July, 2022 for theAssessment Year 2018-19.Section 148A(d) of the Income Tax Act, 1961 [‘the Act’] and the noticeissued under Section 148 of the Act, both dated 23[rd]July, 2022 for theAssessment Year 2018-19. 2.LearnedcounselforthePetitionerstatesthatthemonetaryrequirement for reopening assessment is Rs.50 lakhs which is not fulfilledin the present matter as the amount sought to be added in the income of thePetitioner is only Rs.34,62,830/-.requirement for reopening assessment is Rs.50 lakhs which is not fulfilledin the present matter as the amount sought to be added in the income of thePetitioner is only Rs.34,62,830/-. 3.Learned counsel for the petitioner also states that the Respondentsseek to initiate reassessment against the Petitioner based on incorrect factsas the impugned order alleges that the Petitioner has made bogus sales toone Mr.Dev Narayan proprietor of the firm Nitin Trading Company. He,however, points out that the Petitioner had sold its products to NitinTrading Company, which is a proprietorship firm of Mr. Aman Bhalla andnot Mr. Dev Narayan.seek to initiate reassessment against the Petitioner based on incorrect factsas the impugned order alleges that the Petitioner has made bogus sales toone Mr.Dev Narayan proprietor of the firm Nitin Trading Company. He,however, points out that the Petitioner had sold its products to NitinTrading Company, which is a proprietorship firm of Mr. Aman Bhalla andnot Mr. Dev Narayan. 4.He further states that the entire sales and records of the assessee hadbeen verified and accepted in the original scrutiny assessment concludedvide assessment order dated 4[th]March, 2021 and therefore, the saleproceeds of goods sold by the assessee and monies received for the purposefrom the buyer through RTGS in the bank cannot be regarded asunexplained cash credit under Section 68 of the Act, as the same had beenoffered to tax.been verified and accepted in the original scrutiny assessment concludedvide assessment order dated 4[th]March, 2021 and therefore, the saleproceeds of goods sold by the assessee and monies received for the purposefrom the buyer through RTGS in the bank cannot be regarded asunexplained cash credit under Section 68 of the Act, as the same had beenoffered to tax. 5.Having heard learned counsel for the Petitioner, this Court is of theview that the condition precedent of an asset in the form of Rs.50 lakhs isnot be attracted to the present case, as the notice under Section 148A(b) ofview that the condition precedent of an asset in the form of Rs.50 lakhs isnot be attracted to the present case, as the notice under Section 148A(b) of W.P.(C) No.12677/2022 5.Having heard learned counsel for the Petitioner, this Court is of theview that the condition precedent of an asset in the form of Rs.50 lakhs isnot be attracted to the present case, as the notice under Section 148A(b) ofview that the condition precedent of an asset in the form of Rs.50 lakhs isnot be attracted to the present case, as the notice under Section 148A(b) of W.P.(C) No.12677/2022 the Act had been issued on 17[th]March, 2022 i.e. within three years of theassessment year sought to be assessed, namely, 2018-19 and Section148A(d) order as well as Section 148 notice issued on 31[st]March, 2022 waswithin prescribed time. The said Section 148 notice and the order passedunder Section 148A(d) were set aside by this Court on the petition of theassessee vide order dated 27[th]May, 2022 and the matter was remanded tothe Assessing Officer to decide the matter in time bound manner. Theimpugned Section 148 notice dated 23[rd]July, 2022 has been passed by theAssessing Officer within the time granted by the Court and, therefore, thesaid notice cannot be considered time barred as sought to be alleged by thePetitioner. 6.This Court is of the view that the issue whether the transaction wasexecuted by the Petitioner with Nitin Trading Company, a proprietorship ofMr. Aman Bhalla or Mr. Dev Narayan, cannot be adjudicated upon in writproceedings and that too, when the assessment proceedings are pending.executed by the Petitioner with Nitin Trading Company, a proprietorship ofMr. Aman Bhalla or Mr. Dev Narayan, cannot be adjudicated upon in writproceedings and that too, when the assessment proceedings are pending. 7.This Court is also of the view that if the allegations in the orderpassed under Section 148A(d) of the Act are correct, then the Petitioner’sdefence that the transaction had already been subjected to tax is not correctinasmuch as the sale would be treated as unexplained cash credit underSection 68 of the Act and the full value would be liable to tax.passed under Section 148A(d) of the Act are correct, then the Petitioner’sdefence that the transaction had already been subjected to tax is not correctinasmuch as the sale would be treated as unexplained cash credit underSection 68 of the Act and the full value would be liable to tax. 8.The fact that a scrutiny assessment had been undertaken in the presentcase would not come to the Petitioner’s rescue, as the Respondents hadsubsequently recieved information that one of the parties with whom thePetitioner had transacted was an alleged entry operator- which fact was notknown to the revenue when the scrutiny assessment was carried out.case would not come to the Petitioner’s rescue, as the Respondents hadsubsequently recieved information that one of the parties with whom thePetitioner had transacted was an alleged entry operator- which fact was notknown to the revenue when the scrutiny assessment was carried out. W.P.(C) No.12677/2022 9.Consequently, the present writ petition along with pending applicationis dismissed.However, the Petitioner is given liberty to raise allcontentions and submissions before the Assessing Officer.is dismissed.However, the Petitioner is given liberty to raise allcontentions and submissions before the Assessing Officer.10.Needless to state that the Assessing Officer shall decide the matter onits own merits in accordance with law.its own merits in accordance with law. MANMOHAN, J SEPTEMBER 1, 2022KA MANMEET PRITAM SINGH ARORA, J W.P.(C) No.12677/2022 Page 4 of 4