Rajni Goel Legal Heir Of Ashok Kumar Goel v. Income Tax Officer Ward 34(1) Delhi & Anr

$~18 IN THE HIGH COURT OF DELHI AT NEW DELHI+W.P.(C) 8764/2023 & CM APPL. 33132/2023 RAJNI GOEL LEGAL HEIR OF ASHOK KUMAR GOEL .....Petitioner Through:Mr Mani Bhadra Jain and Mr SushantSinghal, Advocates. versus INCOME TAX OFFICER WARD 34(1) DELHI & ANR. .....Respondents Through:Mr Sanjay Kumar, SSC, Ms MonicaBenjamin, and Ms Easha Kadian,JSCs for the Revenue. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MS. JUSTICE SWARANA KANTA SHARMA O R D E R % 27.11.2024 1.The petitioner has filed the present petition, inter alia, impugning anassessment order dated 22.05.2023 (hereafter the impugned assessmentorder) passed under Section 147 read with Section 144 of the Income TaxAct, 1961 (hereafter the Act). The petitioner also impugns the demand noticedated 22.05.2023 issued under Section 156 of the Act as well as the noticeof initiation of the penalty proceedings under Section 274 of the Act for theassessment year (AY) 2014-15. 2.The petitioner is the widow and legal heir of late Mr Ashok KumarGoel, who expired on 04.06.2017. He was a partner of the firm named M/s.Shakti Sales Corporation – which was formed in the year 1989. The petitioner states that the partnership deed was executed between theconstituent partners (Mr Ashok Kumar Goel and Smt. Raj Rani Goel –sister-in-law of Mr Ashok Kumar Goel) on 17.06.1992. It is stated that thesaid firm dissolved on 31.03.2000 and the partners executed the dissolutiondeed dated 04.05.2000.The said fact was duly communicated to theconcerned authorities including the Registrar of Firms as well as the DelhiSales Tax Department. 3.The Assessing Officer (AO) issued a notice dated 21.06.2021 underSection 148 of the Act seeking to reopen the assessment of the firm, M/s.ShaktiSalesCorporation,whichwasdissolvedintheyear2000.Immediately on receipt of the said notice, the petitioner, who is the widowof Shri Ashok Kumar Goel informed the AO by a letter dated 02.07.2021that the firm M/s. Shakti Sales Corporation, had already been dissolved inthe year 2000, and therefore, no proceedings for reassessment of the saidfirm could be initiated. 4.Notwithstanding the said communication, the AO passed an orderdated 22.07.2022 under Section 148A(d) of the Act holding that it was a fitcase for issuance of the notice under Section 148 of the Act. 5.In view of the decision of the Supreme Court in Union of India &Others v. Ashish Agarwal: (2023) 1 SCC 617, the notices issued underSection 148 of the Act under the old regime were required to be construed asa notice under Section 148A(b) of the Act. 6.Apparently, a notice under Section 148A(b) of the Act was alsoissued to the petitioner, however the petitioner claims that no notice has been received. The Revenue had also not produced a copy of the same. 7.The said order dated 22.07.2022 indicates that the AO had consideredit a fit case to open the reassessment in respect of AY 2014-15 on the basisof the information available on the insight portal. The said information hadalso formed the basis of the assessment order passed subsequently. Therelevant extract of the insight portal information and the AO’s inference areset out below: - 6.Apparently, a notice under Section 148A(b) of the Act was alsoissued to the petitioner, however the petitioner claims that no notice has been received. The Revenue had also not produced a copy of the same. 7.The said order dated 22.07.2022 indicates that the AO had consideredit a fit case to open the reassessment in respect of AY 2014-15 on the basisof the information available on the insight portal. The said information hadalso formed the basis of the assessment order passed subsequently. Therelevant extract of the insight portal information and the AO’s inference areset out below: - “4. As the judgment applies to all cases whereextended reassessment notices have been issuedirrespective of the fact whether such notices havebeen challenged or not. So, in compliance with theorder of the Hon'ble Supreme Court, assessee wasprovided with information and material relied uponby this office for issue of the said show causenotice. The information was provided vide letterbearingDINNo.ITBA/COM/F/17/2022-23/1043192923(1) dated 26.05.2022. The saidletter containing the information was issued to theassesseethroughCommonFunctionITBAfunctionality and declared e-mail of the assesseeand also through speed post with tracking ID No.ED883428919IN. The details of the informationprovided is as under:“In this case information has beenshare by the Investigation Wing andthe details of the same as available intheINSIGHTPORTALhasbeenexamined and analyzed and it hasbeen found that the assessee hasentered into transaction amounting toRs.2,26,75,146/-withM/sGayatriMaaProp.AshokKumarGupta,Ridhi Sidhi Impex Prop. Ashok KumarGupta and M/s Parth International Prop. Anuj Kumar Gupta son ofAshok Kumar Gupta on account ofbogus sales made by the entitiescontrolled and managed by Sh. AshokKumarGupta.ThisInformationsuggest that income chargeable to taxhas escaped assessment. As the above information suggeststhat income chargeable to tax hasescaped assessment, the assessee wasasked to furnish the reply regardingwhy reassessment u/s 147 of theIncome Tax Act may not be made inthis case. Assessee was asked tofurnish the relevant details along withsupportingdocumentaryevidencewithrespecttotheinformationreceived,tothisofficeby09.06.2022.” 5. In response to opportunity provided to theassessee u/s 148A (b) of the Act, till date noresponse has been received from the assessee. Inthis case information has been share by theInvestigation Wing and the details of the same asavailable in the INSIGHT PORTAL has beenexamined and analyzed and it has been found thatthe assessee has entered into transaction amountingto Rs.2,26,75, 146/- with M/s Gayatri Maa Prop.Ashok Kumar Gupta, Ridhi Sidhi Impex Prop.Ashok Kumar Gupta and M/s Parth InternationalProp. Anuj Kumar Gupta son of Ashok KumarGupta on account of bogus sales made by theentities controlled and managed by Sh. AshokKumar Gupta. The modus operandi was that theygive non-genuine entries to various parties withoutany physical transactions, these trades where justentries provided to beneficiaries to enable them tobook bogus purchase and sales in their books. However, the assessee has not filed his ITR forA.Y 2014-15 thus does not give his income andsources thereof; Despite providing information andmaterial to the assessee as detailed above, theassessee has not made any compliance to the ShowCause letter dated 26.05.2022 till date. Therefore,the assessee has failed to explain detail and sourceof such credits into the bank account. Theinformation and material in hand therefore clearlysuggeststhatincomeofRs.2,26,75,146/-chargeable to tax has escaped assessment. It is also evident from information available withAssessing Officer that the income chargeable totax for this year, which has escaped assessment, ismore than Rs. 50 lakhs and is represented in theform of asset i.e an income of Rs. 2,26,75,146/-(CreditinBank)hasaccordinglyescapedassessment. On the basis of the material available on record, itis concluded that this is found to be a fit case forissuing notice u/s 148 of the I.T. Act for A.Y.2014-15.” It is also evident from information available withAssessing Officer that the income chargeable totax for this year, which has escaped assessment, ismore than Rs. 50 lakhs and is represented in theform of asset i.e an income of Rs. 2,26,75,146/-(CreditinBank)hasaccordinglyescapedassessment. On the basis of the material available on record, itis concluded that this is found to be a fit case forissuing notice u/s 148 of the I.T. Act for A.Y.2014-15.” 8.The AO has proceeded on the basis that the noticee had failed toexplain the information available on the insight portal, which was suggestiveof income escaping the assessment. It is material to note that the order hasbeen passed in the name of the firm M/s. Shakti Sales Corporation, despitethe AO being informed that no such firm exists. 9.According to the petitioner, after the dissolution of the firm, her latehusband carried on similar business as a sole proprietor. 10.After the commencement of the reassessment proceedings underSection 147 of the Act, the AO issued a notice dated 31.01.2023 underSection 142(1) of the Act. The petitioner responded to the said notice by a letter dated 07.02.2023 reiterating that the firm M/s. Shakti SalesCorporation (PAN: ) stood dissolved in the year 2000 and wasnot in existence. 11.Thereafter,theassessmentproceedingsculminatedintotheassessment order dated 22.05.2023. The AO also noted the reply receivedfrom the petitioner that the firm in question (M/s. Shakti Sales Corporationwhich was assigned PAN: ) was dissolved in the year 2000.Notwithstanding the said information, it proceeded to assess the income ofthe said firm at ₹2,26,75,146/-. 12.Apparently, the said addition was also made on the basis of theinformation available on the insight portal. 13.The order passed under Section 148A(d) of the Act as well as theimpugned assessment order does not clearly reflect the transactions on thebasis of which the AO has proceeded to tax the dissolved firm. 14.On a pointed query from the court, whether the learned counsel forthe Revenue could throw any light as to - a) who was the seller of the goods;b) what were the goods sold; c) to which party were the goods sold; or d) thedates of the transactions. The learned counsel for the Revenue responded inthe negative. He referred to the assessment order dated 22.07.2022, which isbereft of any particulars in regard to the transactions in question. Theassessment order merely reproduces the information as available on theinsight portal. Thus, it is apparent that the AO has not taken any steps toeven examine the details of the transactions. 15.The petitioner also asserts that both the partners of the erstwhile firm have since expired. The petitioner’s husband expired on 04.06.2017 andSmt. Raj Rani Goel also expired in the year 2018. 16.It is also apparent that the entire basis of proceedings to makeassessment of the AY 2014-15 is the use of the PAN of the erstwhile firm.Plainly, a firm that has already been dissolved several years ago cannot beassessed on account of misuse of the PAN in subsequent years. It was thusnecessary for the AO to have conducted an exercise to ascertain the natureof the transactions and the parties that in fact had executed the transactionsbefore proceeding to frame an assessment on a dissolved firm. 17.The provisions of Section 189 of the Act are of no assistance to theAO in the facts of the present case. 18.In view of the above, the impugned assessment order is set aside.However, we clarify that this would not preclude the AO from initiating anyother proceedings against any delinquent assessee, in accordance with law,provided the AO has sufficient grounds to do so. 19.The petition is disposed of in terms of the above. Pending applicationstands disposed of. VIBHU BAKHRU, J NOVEMBER 27, 2024 M SWARANA KANTA SHARMA, J Click here to check corrigendum, if any