TaxTMI 
TaxTMI 
2022 (12) TMI 763
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..... The writ petition was filed challenging the order dated 31.03.2022 passed by the Assessing Officer (for short, the AO) under Section 148-A of the Income Tax Act, 1961 (for short, the Act) and the notice issued under Section 148 of the Act. 3. The petitioner is a company engaged in execution of civil construction works and it had filed return of income tax under Section 139(1) of the Act for the Assessment Year (for short, AY) 2018-2019 on 26.03.2019 declaring total income at Rs.43,14,13,840/-. A notice under Section 143(2) of the Act was issued to the assessee on 23.09.2019. By an order dated 12.04.2021 passed under Section 143(3) of the Act, the total income was determined as per the return. Thereafter, the AO, i.e., the respondent No. 4 issued a show cause notice (for short, the SCN) under Section 148A(b) of the Act on 24.03.2022 stating that he has information which suggests that income chargeable to tax for the AY 2018-2019 has escaped assessment within the meaning of Section 147 of the Act. Alongwith the said SCN, details of the information was enclosed as Annexure A and the assessee was asked to show cause as to why in view of the details contained in Annexure A, notice ....
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....ment will be granted. In case nothing is heard from you within the time specified, it will be presumed that you have no explanation to offer and accordingly, the notice u/s. 148 of the Act, will be issued in your case. This notice is issued after obtaining prior approval of the specified authority. Pradeep Kumar Swarnakar Central Circle, Bilaspur " 5. A perusal of the SCN dated 24.03.2022 goes to show that the AO was in possession of information under High Risk Case Related Information Upload (CRIU) / Verification Report Upload (VRU) obtained from INSIGHT portal that M/s. Panveen Trading Private Limited had shown sale amount of Rs. 2,20,00,275/- to the petitioner during the financial year 2017-2018. On the basis of credible information, it was found that three entities, namely, M/s. Valeska Trading Private Limited, M/s. Panveen Trading Private Limited and M/s. Shwetpushp Commercial Private Limited, were found indulging in generating and selling tax invoices to various entitles without physical supply of underlying goods/services for passing irregular Input Tax Credit (ITC) to other business entities and thereby they had also availed/utilized ITC against fake in....
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....s substituted in Section 147 and 148 w.e.f. 01.04.2021. 9. It is relevant to state that Section 148A of the Act was also brought into force with effect from 01.04.2021. It will be relevant to extract Section 148 and Section 148A of the Act, which read as follows: "148. Issue of notice where income has escaped assessment.- Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: Provided that no notice under this section shal....
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....al Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee where the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. Explanation 3.-For the purposes of this section, specified authority means the specified authority referred to in section 151. 148A. Conducting inquiry, providing opportunity before issue of notice under section 148 - The Assessing Officer shall, before issuing any notice under section 148,- (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests....
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....Officer has received any information under the scheme notified under section 135A pertaining to income chargeable to tax escaping assessment for any assessment year in the case of the assessee. Explanation.-For the purposes of this section, specified authority means the specified authority referred to in section 151." 10. In support of the assailment with regard to order under Section 148A(d) and notice under Section 148 of the Act, Mr. Rao has urged as follows: (a) There is no valid information which suggests that income chargeable to tax has escaped assessment as defined under Section 148. (b) The AO did not conduct verification under Section 148A(a) of the Act. (c) The AO did not consider appellant's reply as required under clause (c) of Section 148A while passing the order under Section 148A(d) of the Act. (d) The AO did not supply copies of documents asked for vide reply dated 30.03.2022. (e) The specified authority has granted sanction under Section 151 of the Act in a routine manner without application of mind. 11. It is further contended by him that in this case, no enquiry was conducted which was necessary as the ....
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.... of Special Leave to Appeal (C) No. 22921/2019, the judgment dated 05.03.2019 passed by the Hon'ble Supreme Court in Principal Commissioner of Income Tax, Central-1 v. NRA Iron and Steel Pvt. Ltd., in Civil Appeal No. 2463/2019, arising out of SLP(C) No. 29855/2018, and the judgment of the Delhi High Court dated 07.04.2022 rendered in WPC No. 4787/2022 in the case of Gulmuhar Silk Pvt. Ltd. v. Income Tax Officer, Ward 10(3) Delhi. 13. The learned Single Judge held that a complete mechanism for determination of escape amount has been provided under the statute and the AO, while considering the reply made by the petitioner, has applied his mind and accordingly, passed the impugned order under Section 148A(d) of the Act. It was observed that the plea taken by petitioner is his defence which can be examined while conducting proceeding under Section 148A of the Act. Taking a view that the learned counsel for the petitioner was unable to point out how the findings recorded by the AO are contrary to the materials on record, the learned Single Judge held that the writ petition, at that juncture, was not maintainable and accordingly, the writ petition was dismissed. 14. Before proceed....
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....rious civil consequences and, therefore, in the absence of express provision for affording an opportunity of pre-decisional hearing to an assessee, and Section 142(2A) having not barred giving of reasonable opportunity to an assessee, the requirement of observance of principles of natural justice is to be read into the said provision. 20. In M/s. M.R.Shah Logistics Pvt. Ltd. (supra), notice under Section 147/148 of the Act was issued on 31.03.2017 seeking to re-open the assessment for the AY 2010-2011, i.e. prior to the amendment of Section 147/148 of the Act by the Finance Act, 2021. The Hon'ble Supreme Court held that the basis for a valid re-opening of the assessment should be availability of tangible material which can lead the AO to scrutinize the returns for the previous assessment year in question, to determine whether a notice under Section 147 of the Act is called for. As long as there is objective tangible material, the sufficiency of that material cannot dictate the validity of the notice based on "reasons to believe" forming part of Section 147 of the Act. 21. In Gian Castings Private Limited (supra), the issue that had arisen for consideration was whether at the ....
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.... share capital/premium is credited in the books of accounts of the assessee company, the onus of proof is on the assessee to establish by cogent and reliable evidence of the identity of the investor companies, the credit-worthiness of the investors and genuineness of the transaction, to the satisfaction of the AO. The issue before the AO was whether the amount of Rs.17,60,00,000/- allegedly raised by the assessee through share capital/premium were genuine transactions or not. The assessee had urged that the entire share capital had been received through normal banking channels by account payee cheques/demand drafts and produced documents such as income tax return acknowledgments to establish the identity and genuineness of the transaction. The AO independently got field enquiries conducted with respect to the identity and credit-worthiness of the investor companies and to examine the genuineness of the transactions. Based on the enquiries, the AO held that the assessee had failed to prove the existence of the identity of the investor companies and genuineness of the transactions as a result of which the amount of Rs. 17,60,00,000/- was added back to the total income of the assessee....
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....Emphasis is also laid by Mr. Rao on the communication issued by the CBDT on 22.08.2022 on the subject 'Instruction regarding uploading of data on functionalities/portal of the Income Tax Department - reg', the relevant portion of which reads as follows: "3. Further it is re-emphasized that22 i) Before initiating proceedings under Section 148/147 of the Act, any information available on data-base/portal of the Income Tax Department shall be verified before drawing any adverse inference against the taxpayers. It is not out of place to mention here that the information made available/ data uploaded by the reporting entities may not be fully accurate due to inter alia, error of human nature, technical nature, etc. Therefore, due verification may be carried out and opportunity of being heard be given to the taxpayer before initiating proceedings under Section 148/147 of the Act. ii ) The supervisory authorities are hereby advised to keep an effective supervision so as to ensure that all extant Instructions/Guidelines/Circulars/SOPs are duly followed by the Assessing Officers in their charge." 28. The guidelines dated 01.08.2022 and the communication dated 2....
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.... appellant. The petitioner did not even submit bank statements or the books of accounts. In respect of the Income Tax Returns filed by M/s. Panveer Trading Private Limited, the AO observed as follows: "..... 8. Income Tax returns filed by M/s. Panveer Trading Limited were perused and it is observed that this entity has shown huge growth in its turnover from Rs. 3,27,60,580/- in FY 2016-17 to Rs. 57,43,72,422/- in FY 2017-18. Despite such huge jump in turnover, the entity has recorded very low PBT e.g. less than 1%, during FY 2017-18. Besides these entities have no place of business or warehouse for procuring and storing goods. 9. In view of the above, it can be construed that M/s. Panveer Trading Private Limited is a paper entity with no financial worth, and is used for providing accommodation entries in the guise of invoice issuance. Therefore, transactions made by the entity were sham transactions and all the sales made by the entity are bogus sales and all the sales proceeds in the hand of the recipients are actually bogus purchases in the hands of the invoice recipients, by which profit of the recipients have been suppressed. Therefore, all the expens....