Rajnish Puri v. Assistant Commissioner Of Income Tax, Circle 43(1),Delhi & Ors

$~24 *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 11482/2022 RAJNISH PURI ..... PetitionerThrough:Mr.Ruchesh Sinha, Advocate. versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 43(1),DELHI & ORS...... RespondentsThrough:Mr.Ruchir Bhatia, Sr.StandingCounsel for the Revenue.Date of Decision: 05[th]August, 2022DELHI & ORS...... RespondentsThrough:Mr.Ruchir Bhatia, Sr.StandingCounsel for the Revenue.Date of Decision: 05[th]August, 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.33943/2022 Exemption allowed, subject to all just exceptions.Accordingly, the application stands disposed of.Accordingly, the application stands disposed of. W.P.(C) No. 11482/2022 & C.M.No.33942/2022 1.Present writ petition has been filed challenging the order dated 23[rd]July, 2022 passed under Section 148A(d) of the Income Tax Act, 1961(hereinafter referred to as the ‘Act’) and the consequential notice dated 24[th]July, 2022 issued under Section 148 of the Act for the Assessment Year2014-15.July, 2022 passed under Section 148A(d) of the Income Tax Act, 1961(hereinafter referred to as the ‘Act’) and the consequential notice dated 24[th]July, 2022 issued under Section 148 of the Act for the Assessment Year2014-15. 2.In the present matter, the assessment of the Assessee was reopened onthe basis of information uploaded on INSIGHT portal stating that searchunder Section 132 of the Act had been conducted on 11[th]September, 2018in the case of Jignesh Shah and Sanjay Shah of Ahmedabad and the searchhad resulted in seizure of unaccounted cash of Rs.19.37 crores (relating toaccommodation entries and commission earned thereon), along withincriminating digital as well as documentary evidences. As per theimpugned Order, the Assessee, Shri Rajnish Puri, was found to be abeneficiary of accommodation entry of fictitious loan of Rs.63,06,250/-during Financial Year 2013-14. 3.Learned counsel for the Petitioner contends that the Petitioner hasconsistently stated during the proceedings that he has not entered into anytransaction with Mr. Jignesh Shah or Mr. Sanjay Shah, much less any loantransaction and that the Petitioner is ready to file an affidavit in this regard.He contends that the information on which the reassessment proceeding hadbeen initiated was incorrect and the assumption of jurisdiction wascompletely flawed. 4.Mr.RuchirBhatia,learnedSeniorStandingCounselfortheRespondents-Revenue, who appears on advance notice, states that thepresent case is of ‘fictitious long term capital gain’ arising out of trading inthe shares of Safal Herbs Ltd. In support of his contention, he relies uponthe Dissemination of Information note as well as the annexures attachedthereto. He emphasises that the hyperlinks mentioned in the annexures arefunctional. 5.However, this Court finds that both in the notice issued under Section148A(b) of the Act as well as in the Dissemination of Information note supplied to the Petitioner, the allegation is of a ‘fictitious loan’ and not‘fictitious long term capital gain’ of Rs.63,06,250/- 6.This Court is of the view that the allegation in the notice issued underSection 148A(b) of the Act has to be precise, so that the assessee has a fairand reasonable opportunity to put forward its defence.In the event, theallegation in the notice under Section 148A(b) of the Act is incorrect orvague, the Assessee would be deprived of an opportunity of putting forwardits defence and Section 148A(b) would be rendered nugatory. 5.However, this Court finds that both in the notice issued under Section148A(b) of the Act as well as in the Dissemination of Information note supplied to the Petitioner, the allegation is of a ‘fictitious loan’ and not‘fictitious long term capital gain’ of Rs.63,06,250/- 6.This Court is of the view that the allegation in the notice issued underSection 148A(b) of the Act has to be precise, so that the assessee has a fairand reasonable opportunity to put forward its defence.In the event, theallegation in the notice under Section 148A(b) of the Act is incorrect orvague, the Assessee would be deprived of an opportunity of putting forwardits defence and Section 148A(b) would be rendered nugatory. 7.At this stage, Mr.Ruchir Bhatia states that the Respondents have noobjection if the impugned order dated 23[rd]July, 2022 passed under Section148A(d) of the Act and the notice dated 24[th]July, 2022 issued underSection 148 of the Act are set aside and the matter is remanded back to theAssessing Officer for a fresh consideration.He further states that, in theShow Cause Notice under Section 148A(b) as well as in the DisseminationNote, the expression ‘fictitious loan’ should be read by the assessee as‘fictitious LTCG’ of Rs.63,06,250/- and the said notice should be readalong with Dissemination Note’ as well as the annexures handed over in theCourt. The notice may be deemed to be amended to this effect by way ofthis order. 8.Learned counsel for the petitioner has no objection to the said courseof action. 9.Consequently, the impugned order dated 23[rd]July, 2022 passed underSection 148A(d) of the Act and the notice dated 24[th]July, 2022 issuedunder Section 148 of the Act are set aside and the Petitioner-Asseessee isgiven an opportunity to file a response to the notice under Section 148A(b)as amended above of the Act within three weeks. The Assessing Officer is directed to pass a fresh order under Section 148A(d) of the Act within fourweeks thereafter. 10.With the aforesaid directions, the present writ petition along withpending application stands disposed of. This Court clarifies that it has notcommented on the merit of the controversy. The rights and contentions ofall the parties are left open. MANMOHAN, J AUGUST 05, 2022KA MANMEET PRITAM SINGH ARORA, J