TaxTMI 
TaxTMI 
2025 (8) TMI 1113
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....ed under Section 148-A(d) and the notice dated 29.12.2024 issued under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as 'the said Act') along with ancillary reliefs. 4. The facts as narrated in the petition are as under: i. Petitioner is a medical diagnostic device company that provides single point of care platform for accurate disease diagnostics ii. On 03/04/2019, Petitioner appointed M/s Nexellence Consulting Pvt Ltd. (M/s Nexellence) as technical/commercial consultants for the tenders issued by Central/State Government for supply of products manufactured or for the services rendered by the Petitioner company. iii. On 09/04/2019, Petitioner entered into an agreement with M/s Stellar Diagnostics India Pvt Ltd (M/s Stellar) wherein it was mutually agreed to share technology and subsequent research and development for application and validation for cost effective diagnostic tool for Tuberculosis. iv. On 08/02/2021, Petitioner filed Return of Income (ROI) for the Previous year relevant to the impugned assessment year (AY) 2020-2021 declaring total loss @ Rs. 38,23,21,036/- v. Vide intimation dated 25/11/2021....
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....er section 37(1) of the said Act and the same was merely shown as an advance in the balance sheet under the head "current asset" and the said expenditure of Rs. 49,50,000/- is claimed as deduction in the subsequent assessment year 2021-2022. To support the same, reliance was placed on the ledger account of M/s Stellar, agreement dated 09/04/2024, the balance sheet and profit and loss account as on 31/03/2023. c. That out of the total payment to M/s Nexellence, an amount of Rs. 1,00,00,000/- was claimed as expenditure in the profit and loss account and 1,00,00,000/- was shown as advance in the Balance Sheet under the head "current asset". The expenditure of 1,00,00,000/- is claimed as deduction in AY 2021-2022. In support of the same, Profit and Loss Account, ledger account and balance sheet of company was furnished. Respondent no 1 is not justified in treating the payments as bogus in nature and there is no escapement of any income d. As per Section 149, no notice under Section 148 can be issued beyond 3 years provided the income chargeable to tax has escaped assessment amounts or is likely to amount to 50 lakhs or more. e. That payment of 49,50,000/- mad....
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....to Rs. 1,00,00,000/ -. The learned counsel has submitted that the Respondents have not adverted to the main issue that in AY 2020-2021, out of the total alleged amount of Rs. 1,00,00,000/- which escaped assessment, the balance sheets clearly show that the amount of Rs. 49,50,000/- paid to M/s Stellar and the same is claimed as expenditure in the next AY 2021-2022. It was further argued that out of the total amount of Rs. 1,01,00,000/- paid to M/s Nexellence as professional fees, an amount of Rs. 1,00,000/- is claimed as expenditure in Profit and loss account in AY 2020-2021 and balance of Rs. 1,00,00,000/- advance is claimed as expenditure and charged to profit and loss account for AY 2021-2022. It is submitted that only an amount of Rs. 1,00,000/- paid to M/s Nexellence was claimed for AY 2020-2021. It is submitted that the said contention has not been addressed by Respondent no. 1 in the Impugned Order nor in the affidavit in reply filed before this court. The balance sheets placed on record clearly bear out that the amount of Rs. 1,00,00,000/- for M/s Nexellence and Rs. 49,50,000 for M/s Stellar was shown as advance in the Balance Sheets under the head "current asset". It is als....
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.... respond to the allegations. Reliance is also placed on the judgments referred to in the Affidavit in reply which are indicated in the foregoing paras on the principle of interference Writ jurisdiction and nature and scope of proceedings under section 148 and 148 A. It is further contended that the order passed by Respondent No. 1 is a reasoned order with application of mind and Section 149(1) is applicable since the income that has escaped assessment is beyond 50 lakhs as indicated in the order. 9. The learned standing counsel has relied on the following decisions in support of her contentions: (i) Dinesh Verma V/s. Income Tax Officer (2025) 302 Taxmann 367 (SC), (ii) Dinesh Verma (Punjab & Hariyana) V/s. Income Tax Officer (2022) 141 Taxmann.com (Punjab & Haryana), (iii) Assistant Commissioner of Income Tax V/s. Rajesh Jhaveri Stock Brokers (P) Ltd. 2007 (161) Taxman 316 (SC), (iv) Anshul Jain V/s. Principal Commissioner of Income Tax 2022 (289) Taxman 239 SC, (v) Anshul Jain V/s. Principal Commissioner of Income Tax 2022 (143) Taxman.com 37 (Punjab & Har.), (vi) ARB Hotelks Resorts (P) Ltd. V/s. Anshul Jain V/s. Principal ....
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....tioner with M/s Stellar with regard to sharing of technology and research dated 09/04/2019 and with M/s Nexellence as technical/commercial consultants for central/state government tenders are bogus agreements and that there is no proof of these agreements being implemented and acted upon by the parties and they are only aimed at illegally reducing profits of the Petitioner and evade Income Tax. In the said show cause notice, it is stated that the information was unearthed in pursuance to a survey under section 133A of the said Act which was carried out in the case of the petitioner wherein the premises of the petitioner was covered under survey action under Section 133A of the IT Act on 11/03/2024. 14. The above show cause notice states that the proceedings under section 148A(b) of the Act have been initiated against the Petitioner on the premise that there is bogus/illegal expense booked which is relatable to Section 149(1)(b)(2) i.e expenditure in respect of a transaction or in relation to an event or occasion which has escaped assessment amount. In view of the same, the central issue is whether the amount of Rs. 1,50,50,000/- can be termed as an "expenditure" in respect of tr....
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....n as advances, we cannot ignore the fact that in the Impugned Order, Respondent no 1 has concluded on a prima facie basis that in the profit and loss account of the Petitioner, the total amount of Rs. 5,11,88,304/- has been claimed by the Petitioner as royalty expenses under the category of other expenses in its profit and loss account for the year under consideration i.e AY 2020-2021. Even in the reply filed before us by the Respondents no 1 and 2, there is a reference made to the claim of the Petitioner that expenditure of Rs. 5,11,88,304/- is fully pertaining to Big Tech Pvt Ltd. and not to M/s Stellar and M/s Nexellence. The amount of expenditure is quite a large amount. Respondent no. 1 has given a reason, which according to them, is a reasonable belief for passing the Impugned Order. 17. The issue raised by the Respondents is a serious issue of bogus agreements and bogus expenses being indicated by Petitioner to reduce profit and evade taxes. In the balance sheet and profit and loss account, there is an expenditure of Rs. 5,11,88,304 claimed which according to the Petitioner is relatable to Big Tech Pvt Ltd. No doubt the income was assessed at the time when the returns wer....
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....the said amount of Rs. 1,50,50,000/- would not arise. Therefore, no prejudice as such is caused to the Petitioner. 21. We have also taken note of the fact that inquiry with regard to AY 2021-2022 in relation to the bogus transaction of M/s Stellar and M/s Nexellence and M/s Global Enterprises is also pending before the authorities. The said reopening is within 3 years from the date of end of assessment year 2021-2022, therefore, Section 149(1)(b) is not attracted. The said proceedings are pending and are not subject matter of this petition. However, we cannot lose sight of the fact that the issues for AY 2020-2021 and AY 2021-2022 may be overlapping and requiring cross-reference in light of the serious allegations made against the Petitioner. 22. In the case of Red Chilli International Sales vs. Income Tax Officer (supra), the Hon'ble Apex Court observed as under: "2. The provisions reopening under the Income Tax Act, 1961 have undergone an amendment by the Finance Act, 2021, and consequently the matter would require a deeper and in depth consideration keeping in view the earlier case law. Accordingly, we set aside the observations made by the High Court in the i....