M/S. Vijay Steel Traders v. The Assistant Commissioner Of Income Tax, Circle 7, Pune

IN THE HIGH COURT OF JUDICATURE AT BOMBAYCIVIL APPELLATE JURISDICTION WRIT PETITION NO. 15619 OF 2023 M/s. Vijay Steel Traders, A firm having its address at: S. No. 13/2/1, Opposite Bharat Petrol Pump, Urali Devanchi, Taluka Haveli, Pune 412 308.PAN: .…Petitioner Versus 1.The Assistant Commissioner of Income Tax, Circle 7, Pune,Room No.316, 3[rd] Floor, Aayakar Sadan, Bodhi Towers, Salisbury Park, Gultekdi, Pune 411 037, Email: 7, Pune,Room No.316, 3[rd] Floor, Aayakar Sadan, Bodhi Towers, Salisbury Park, Gultekdi, Pune 411 037, Email: . 2.The Additional/Joint/Deputy/Assistant Commissioner of Income Tax Income Tax Officer,National Faceless Assessment Centre, Through the Principal Chief Commissioner of Income Tax (National Faceless Assessment Centre), Delhi Room No.401, 2[nd] Floor, E-Ramp, Jawaharlal Nehru Stadium, New Delhi 110 003, Email: of Income Tax Income Tax Officer,National Faceless Assessment Centre, Through the Principal Chief Commissioner of Income Tax (National Faceless Assessment Centre), Delhi Room No.401, 2[nd] Floor, E-Ramp, Jawaharlal Nehru Stadium, New Delhi 110 003, Email: 3.The Assistant Commissioner of Income Tax, Central Circle 2(3), Pune,Aayakar Sadan, Bodhi Towers, Salisbury Park, Gultekdi, Pune 411 037, Email: Circle 2(3), Pune,Aayakar Sadan, Bodhi Towers, Salisbury Park, Gultekdi, Pune 411 037, Email: 4.The Union of India,Through the Principal Secretary, Department of Revenue, Ministry of Fiannce, Room No.128-B, North Block, NewDelhi 110 001, Emails: and …Respondents Mr. Rohan Deshpande, i/b. Mr. Smit Shah, for Petitioner.Mr. Suresh Kumar, for Respondents-Revenue. 2/5 508-aswp-15619-2023-J.doc CORAM:K. R. SHRIRAM &DR. NEELA GOKHALE, JJ.DATED:4[th] March 2024. ORAL JUDGMENT: (Per K.R.Shriram, J.) 1.Rule. Rule made returnable forthwith. By consent taken up forfinal hearing. 2.Petitioner had filed its return of income on 30[th] October 2019 for Assessment Year 2019-20 declaring total income ofRs.2,10,99,470/-. Petitioner’s return came to be processed underSection 143(1) of the Income Tax Act, 1961 (“the Act”). 3.Petitioner was served with a notice dated 4[th] March 2023 underSection 148A(b) of the Act alleging that there was informationsuggesting income chargeable to tax for AY 2019-20 has escapedassessment. The information was enclosed with the notice. It wasalleged that a sum of Rs.3,64,97,625/- could have escapedassessment. 4.Thereafter, Petitioner received a notice dated 15[th] March 2023again under Section 148A(b) of the Act. The details of informationwas annexed with the notice in which it was admitted byRespondents that the earlier notice dated 4[th] March 2023 was sentcontaining incorrect information and, therefore, should be treated asinvalid. This new notice contained brief details of informationcollected/received by the Assessing Officer (“AO”). The informationGaikwad RD 4.Thereafter, Petitioner received a notice dated 15[th] March 2023again under Section 148A(b) of the Act. The details of informationwas annexed with the notice in which it was admitted byRespondents that the earlier notice dated 4[th] March 2023 was sentcontaining incorrect information and, therefore, should be treated asinvalid. This new notice contained brief details of informationcollected/received by the Assessing Officer (“AO”). The informationGaikwad RD was Petitioner was a beneficary of accommodation entries amountingto Rs.27,50,000/- from one M/s. Kusum Multitrade Pvt. Ltd.(“KMPL”). Petitioner was called upon to show cause as to why theincome arising out of above transactions should not be treated asincome which has escaped assessment in the hands of Petitioner andconsequentially, why a notice under Section 148 of the Act should notbe issued. Petitioner was called upon to show cause with supportingevidence. It was also stated that prima facie Petitioner has notconsidered the financial transactions with KMPL wherein there isstrong possibility of tax implications. Petitioner replied vide its letterdated 20[th] March 2023 and gave details of three transactions enteredinto with KMPL. Petitioner also annexed copies of tax invoices and E-way bills. 5.The reply by Petitioner was rejected by an order dated 31[st]March 2023 passed under Section 148A(d) of the Act on the groundthat Petitioner failed to submit E-way bills, weigh bridge slips, deliverchallans, lorry receipts, toll booth slips, etc. Mr. Deshpande is correctin stating that these details were never asked for in the notice issuedunder Section 148A(b) of the Act or later. 6.Mr. Deshpande is also correct in submitting that for the firsttime in this order there is even an allegation that investigation byCentral Goods and Service Tax Department revealed that KMPL wasindulging in non-genuine transactions and was merely passingGaikwad RD accommodation entries. Therefore, the business that Petitioner hadwith KMPL was only on paper. There is an observation that Assesseehas shown sales to KMPL in its books of account which is non-genuine. There is nothing to indicate how the AO has come to such aconclusion notwithstanding accepting the fact that Petitioner hadsubmitted copy of financial statement, ledger details, ledger accountdetails of GST sales in respect of tax invoices of all parties and copyof bank statement of HDFC Bank through which KMPL had madepayment. Mr. Deshpande also pointed out that the AO in his orderimpugned has stated Petitioner failed to submit E-way bills whereasin the letter dated 20[th] March 2023 at Annexure A is a copy of the taxinvoices and E-way bills. Mr. Deshpande also submits that perhapsthe toll booth receipts may not be available because that would bepaid by the transporter, but nevertheless an attempt will be made tosubmit the same. 7.Therefore, we have no hesitation in quashing and setting asidethe impugned order dated 31[st ]March 2023 passed under Section148A(d) of the Act and remand the matter for de novo consideration.Mr. Deshpande states that the documents alleged to have not beensubmitted in the impugned order shall be filed within two weeksfrom today. The AO shall within four weeks thereafter dispose thenotice issued under Section 148A(b) of the Act after giving a personalhearing to Petitioner, notice whereof shall be communicated at leastGaikwad RD five working days in advance. The order to be passed shall be areasoned order and the AO shall also make out a case as to whynotwithstanding Petitioner submitting the tax invoices, E-way bills,bank statements to prove payment received by way of bankingchannel from KMPL and Petitioner having paid the GST component, why he would still consider it as a non-genuine transaction. 8.Rule is made absolute in the above terms. 9.Petition disposed. No order as to costs. (DR. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.)