Neutral Citation No: 2022/Dhc/002064 v. Assistant Commissioner Of Income Tax, Circle

$~S-27 *IN THE HIGH COURT OF DELHI AT NEW DELHI+W.P.(C) 6880/2022 & CM APPLs.20953-20954/2022RAJESH KUMAR MALHOTRA ..... Petitioner Through:Mr.Amol Sinha, Advocate withMr.Ashvini Kr., Mr.Abhinav Arya,and Mr.Rahul Kochar, Advocates. versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE- 10(1), DELHI & ANR...... Respondents Through:Mr.Shailendra Singh, Advocate. % Date of Decision: 25[th]May, 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): 1.Present writ petition has been filed challenging the notice dated 27[th]March, 2022 under Section 148 of the Income Tax Act, 1961 (‘the Act’) forthe Assessment Year 2018-19 pursuant to an order passed under Section148A(d) of the Act on 27[th]March, 2022 by the Respondent No.1. 2.Learned counsel for the Petitioner states that the Petitioner was askedto comply with the Show Cause Notice dated 21[st]March, 2022 by 25[th] March, 2022, thereby not giving him the minimum statutory prescribed timeof seven days to reply to the notice. 3.He points out that the notice under Section 148A(b) of the Act wasissued by the Respondent No.1 on 21[st]March, 2022 for the Assessment Year2018-19 stating that the Petitioner has claimed bogus Long Term CapitalGains (‘LTCG’) of Rs.1,23,21,875/- on purchase and sale in the shares ofM/s Achal Investments Ltd. However, he points out that the next paragraphof the notice stated that the income chargeable to tax has escaped assessmentfor the Assessment Year 2015-16, making the notice self-contradictory. 4.He further states that the notice mentioned that the evidencepertaining to the said information had been enclosed but the same was notserved upon the Petitioner. 5.Learned Counsel for the Petitioner states that the Petitioner has notclaimed any LTCGs on the shares of M/s Achal Investments Ltd. during theAssessment Year 2018-19. He states that the LTCG on shares of M/s AchalInvestments Ltd. pertains to the Assessment Year 2015-16 and the same hasalready been assessed under Section 143(3) of the Act vide order dated 29[th]December, 2017 by ACIT, Circle-70(1) and thereafter, the assessee hadopted for Vivad se Vishwas Act. He states that the Petitioner had not onlysubmitted his response, but also uploaded all the relevant documentaryevidences on 22[nd]March, 2022. 6.Learned Counsel for the Petitioner also states that the order dated 27[th]March, 2022 under Section 148A(d) has no factual correlation with the factsmentioned in the show-cause notice issued under Section 148A(b) of the Actdated 21[st]March, 2022. He states that the order passed under Section148A(d) states that the Petitioner has received an accommodation entry of Rs.35,50,070/- from Shri Naresh Jain and entities controlled by him. Hepoints out that the order nowhere states the name of M/s Achal InvestmentsLtd. as an entity is controlled by Sh. Naresh Jain. 7.He contends that the impugned order erroneously records that thePetitioner had not furnished any response to the Show Cause notice dated21[st]March, 2022. 8.On 2[nd]May, 2022, when this Court had heard the matter, learnedcounsel for the respondent on advance notice had stated that there wassuppression of facts by the petitioner. Consequently, this Court had directedthe respondent to file a short affidavit. 9.Today, learned counsel for the respondents has handed over a shortaffidavit in Court and the same is taken on record. In the short affidavit filedby the respondents, it is stated that the petitioner was issued two show causenotices under Section 148A(b) of the Act dated 23[rd]March, 2022 and 21[st]March, 2022 pertaining to Assessment Years 2015-16 and 2018-19respectively. It is stated that the information for the Assessment Year 2015-16 pertained to the bogus LTCG on purchase and sale of shares of Achalinvestments Ltd. and the information for the assessment year 2018-19related to receipt of accommodation entries from Shri Naresh Jain andentities controlled by him. 9.Today, learned counsel for the respondents has handed over a shortaffidavit in Court and the same is taken on record. In the short affidavit filedby the respondents, it is stated that the petitioner was issued two show causenotices under Section 148A(b) of the Act dated 23[rd]March, 2022 and 21[st]March, 2022 pertaining to Assessment Years 2015-16 and 2018-19respectively. It is stated that the information for the Assessment Year 2015-16 pertained to the bogus LTCG on purchase and sale of shares of Achalinvestments Ltd. and the information for the assessment year 2018-19related to receipt of accommodation entries from Shri Naresh Jain andentities controlled by him. 10.With regard to the reassessment proceeding for the Assessment Year2015-16, the short affidavit states that the Petitioner’s contention was foundto be correct and on the basis of the information on record, it was concludedthat there was no case of escapement of income made out in the AssessmentYear 2015-16. 11.The Respondent in its short affidavit admits that due to technicalglitches the annexure accompanying the notice dated 21[st]March, 2022issued for the assessment year 2018-19 as prepared by the Assessing Officerwas not served upon the petitioner and “was replaced with the annexurerelating to the assessment year 2015-16”. 12.The short affidavit of the respondents specifically withdraws theallegation of suppression made before this Court on 2[nd]May, 2022. 13.Having heard both the parties and having perused the paperbook, thisCourt is of the view that the Petitioner has not been provided an adequateopportunity to put forward its defense/reply as the annexure accompanyingthe notice enumerating the reasons for initiating reassessment pertained tothe Assessment Year 2015-16 and not 2018-19. It is pertinent to mentionthat the allegation mentioned in the 148A(b) and demand notice pertained toclaim of bogus LTCG on purchase and sale of shares of Achal InvestmentsLtd. and not with regard to alleged accommodation entries provided by ShriNaresh Jain. Consequently, this Court is of the view that the principles ofnatural justice have been violated on the present case. 14.Accordingly, the show cause notice dated 21[st]March, 2022 issuedunder Section 148A(b), the order dated 27[th]March, 2022 issued underSection 148A(d) and the notice dated 27[th]March, 2022 issued under Section148 of the Act for the Assessment Year 2018-19 are quashed. If the lawpermits the respondents/revenue to take further steps in the matter, they shallbe at liberty to do so. Needless to state that if and when such steps are takenand if the petitioner has a grievance, he shall be at liberty to take hisremedies in accordance with law. 15.In view thereof, the present writ petition along with pendingapplications stands disposed of. MANMOHAN, J MAY 25, 2022TS MANMEET PRITAM SINGH ARORA, J