Nagesh Trading Co v. Income Tax Officer, Ward-47-1, Delhi

$~29 IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 13781/2022 NAGESH TRADING CO. ..... Petitioner Through:Mr.Salil Kapoor with Mr.SumitLalchandani and Mr.Vibhu Jain,Advocates.Lalchandani and Mr.Vibhu Jain,Advocates. versus INCOME TAX OFFICER, WARD-47-1, DELHI..... Respondent Through:Mr.Abhishek Maratha, Sr.StandingCounsel for the Revenue.Counsel for the Revenue. Date of Decision: 12[th]October, 2022 CORAM: HON’BLE MR. JUSTICE MANMOHANHON’BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J:C.M.No.42110/2022 Exemption allowed, subject to all just exceptions. Accordingly, the application stands disposed of. W.P.(C) No.13781/2022 & C.M.No.42109/2022 1.Present writ petition has been filed challenging the show cause noticedated 2[nd]June, 2022 issued under Section 148A(b) of the Income Tax Act,1961 [‘the Act’] as well as the order passed under Section 148A(d) of theAct and the notice issued under Section 148 of the Act, both dated 28[th]July,2022 for the Assessment Year 2017-18. 2.Learned counsel for the Petitioner states that pursuant to the directionsof the Supreme Court in Union of India vs. Ashish Agarwal, 2022 SCC OnLine SC 543, the Petitioner was issued a letter dated 2[nd]June, 2022 underSection 148A(b) of the Act alleging that the Petitioner is a beneficiary ofaccommodation entries provided by the entities controlled by Mr.AshokKumar Gupta and has booked non-genuine bogus sales in their books ofaccounts to the tune of Rs.3,02,00,636/-. He states that the Petitioner hadfiled a reply dated 4[th]June, 2022, wherein it was submitted that theimpugned show cause notice dated 2[nd]June, 2022 under Section 148A(b) ofthe Act had been wrongly issued to the Petitioner as the initial notice underthe unamended Section 148 of the Act was issued to the Petitioner on31[st]March, 2021 and served vide email on the same date. He states that thePetitioner had duly participated in the re-assessment proceedings initiatedvide notice dated 31[st]March, 2021 issued under Section 148 of the Act byfiling its return of income and replying to all the notices issued underSection 142(1) of the Act. He states that the Respondent failed to pass there-assessment order within the prescribed time limit that ended on31[st]March, 2022. He further states that the Respondent, without taking intoconsideration the fact that the limitation for completing the re-assessmentproceedings pursuant to the notice issued under Section 148 of the Act hadalready elapsed subsequently issued the impugned show cause notice dated -2[nd]June, 2022 under Section 148A(b) of the Act. 3.Mr.Abhishek Maratha, learned senior standing counsel for theRespondent-Revenue, on the last date of hearing had handed over a copy ofletter dated 04[th]October, 2022 written to him by the Income Tax Officer,Ward-47(1), New Delhi. The said letter is reproduced hereinbelow:- “Kindly refer to the e-mail dated 29.09.2022 received from Sh.Abhishek Maratha, Sr. Standing Counsel in the case of Nagesh Trading Co. for A.Y. 2017-18 wherein he has required to advise thesuitable instructions. The pointwise reply is as under: 1. The assessment proceedings initiated vide notice u/s 148 of the Actafter 31.03.2021as per the old regime were quashed by the Hon'bleDelhi High Court vide W.P.(C)520/2022 & CM No.1499/2022 datedJanuary 11, 2022 and the assessee Nagesh Trading Co. wasappearing as a petitioner at Sr. No. 76 of the said judgment. In viewof the fact, the Hon'ble Jurisdictional High Court had allowed thewrit petition in the case of the assessee, hence on the bonafide beliefthe assessment proceedings that were initiated on 31.03.2021 but thedate of service of notice was not ascertainable, were not concludedby the Assessing Officer on 31.03.2022 presuming them to havebecome void ab-initio in assessee's case since the Hon'ble HighCourt had decided in his favour. 1. The assessment proceedings initiated vide notice u/s 148 of the Actafter 31.03.2021as per the old regime were quashed by the Hon'bleDelhi High Court vide W.P.(C)520/2022 & CM No.1499/2022 datedJanuary 11, 2022 and the assessee Nagesh Trading Co. wasappearing as a petitioner at Sr. No. 76 of the said judgment. In viewof the fact, the Hon'ble Jurisdictional High Court had allowed thewrit petition in the case of the assessee, hence on the bonafide beliefthe assessment proceedings that were initiated on 31.03.2021 but thedate of service of notice was not ascertainable, were not concludedby the Assessing Officer on 31.03.2022 presuming them to havebecome void ab-initio in assessee's case since the Hon'ble HighCourt had decided in his favour. 2. As discussed above, the re-assessment proceedings under the newregime were initiated once again, as the status of date of service ofnotice i.e. date and time stamp of mail delivery was not appearing onITBA Portal in the given case. A screenshot of same is enclosed forready reference. Therefore, the proceedings were started afresh inview of the Hon'ble Supreme Court Judgment in the case of AshishAggarwal by issuing copy of annexures u/s 148A(b) to giveopportunity of being heard to the assessee and thereafter passingorder u/s 148A(d) of the Act and subsequently issuing notice u/s 148of the Act for AY 2017-18. 3. The date of generation of DIN was on the referred notice was31.03.2021 however the date of service of notice i.e. date and timestamp of mail delivery was not appearing on ITBA Portal in thegiven case. A screenshot of same is enclosed for ready reference asthe documentary evidence. It is important to mention here that theproof of date of delivery of the notice u/s 148 of the Act dated31.03.2021 has not been informed by the assessee as well at the timeofre-assessmentproceedingsunderthenewregimewhenopportunity of being heard was provided vide DIN & LetterNo.ITBA/COM/F/17/2022-23/1043307054(1)dated02.06.2022fixing the date for 20.06.2022. 4. Clearly the issue involved is of assessee being involved as abeneficiary of providing / receiving of accommodation entry to the tune of Rs. 3,02,00,636/- through the web of entities operated byentry operators, Ashok Kumar Gupta, Sandeep Gupta and AnujGupta who were subject to survey operations by Investigation Wing,Delhi and the case was reopened based upon clear findings from theInvestigation Report. The notice u/s 148 dated 30.07.2022 for AY2017-18 was issued on the bonafide belief that earlier notice u/s 148dated 31.03.2021 was not served upon the assessee on 31.03.2021itself and that is the reason that assessee had gone in writ before theHon'ble High Court to which he got relief and proceedings hadbecome void ab-initio. However, now for the first time, the assesseehas filed evidence before the Hon'ble Delhi High Court that he hasreceivedthenotice,mentionedsupra,on31.03.2021itself.Therefore, the proceedings initiated by passing order u/s 148A(d) ofthe Act and issuing notice u/s 148 of the Act in the new regime mayget technically challenged. It is proposed that you may kindly plead before the Hon'ble HighCourt to kindly take a considerate view owing to a peculiarcircumstance and allow the present proceedings to continue in viewof the bonafide belief of the Assessing Officer and the limitationposed by the Departmental Software and the fact that assessee didnot come out clean when he had been given the opportunity. In theworst case scenario, you are advised to kindly ensure that since theincome has clearly escaped assessment and amount involved is morethan Rs. 50 lacs, so Department's right to re-initiate the assessmentis not compromised. The above reply is submitted after prior approval from the Pr.Commissioner of Income tax, Delhi-10, New Delhi.” 4.In rejoinder, learned counsel for the Petitioner states that the factsstated in the letter dated 04[th]October, 2022 are not correct inasmuch as thethree writ petitions being W.P.(C) Nos.520/2022, 559/2022 and 659/2022 donot pertain to the assessment year in question. The above reply is submitted after prior approval from the Pr.Commissioner of Income tax, Delhi-10, New Delhi.” 4.In rejoinder, learned counsel for the Petitioner states that the factsstated in the letter dated 04[th]October, 2022 are not correct inasmuch as thethree writ petitions being W.P.(C) Nos.520/2022, 559/2022 and 659/2022 donot pertain to the assessment year in question. 5.Having heard learned counsel for the parties, this Court is of the viewthat the Respondent having issued and served the impugned notice on 31[st]March, 2021 under Section 148 of the unamended Act, could not have issued another notice under Section 148A(b) of the Act dated 2[nd]June, 2022to the Petitioner. 6.Further the directions given by the Supreme Court in Ashish Agarwal(supra) were applicable to cases, where notices under Section 148 of the Acthad been issued during the period 01[st]April, 2021 to 30[th]June, 2021 –which is not the case in the present matter. 7.Consequently, the show cause notice dated 2[nd]June, 2022 as well asthe order passed under Section 148A(d) of the Act and the notice issuedunder Section 148 of the Act, both dated 28[th]July, 2022, for the AssessmentYear 2017-18 are quashed. 8.However, this Court clarifies that it has not dealt with the legality andvalidity of the proceedings initiated vide show cause notice dated 31[st]March, 2021 issued under Section 148 of the unamended Act. 9.Further, if the law permits the Respondent-Revenue to take furthersteps in the matter, they shall be at liberty to do so. Needless to state that ifand when such steps are taken and if the Petitioner has a grievance, it shallbe at liberty to take its remedies in accordance with law. 10.With the aforesaid directions and liberty, the present writ petitionstands disposed of. MANMOHAN, J OCTOBER 12, 2022/KA MANMEET PRITAM SINGH ARORA, J