Luv Impex Private Limited vs. Income Tax Officer Ward 15 (1) & Anr.

Facts

The petitioner, Luv Impex Private Limited, filed a writ petition challenging notices and an order related to income tax assessment. The revenue alleged that the petitioner had benefited from bogus purchase entries amounting to Rs. 24,31,89,457/-. The Assessing Officer (AO) issued a notice under Section 148A(b) of the Income Tax Act, 1961, followed by an order under Section 148A(d) and a subsequent notice under Section 144B. The petitioner had partially replied to the notice, submitting bank statements, tax invoices, and e-way bills to demonstrate the genuineness of the transactions. However, the AO considered these submissions not tenable, citing issues with the suppliers, including non-existence, expired vehicle validity, and non-filing of ITRs by suppliers despite substantial sales.

Held

The Court held that the Assessing Officer (AO) erred by not furnishing the material and information to the petitioner that formed the basis of his conclusion regarding the alleged bogus purchase transactions. The Court found that the petitioner's defence was compromised because the AO did not share details about the alleged dubious or non-existent sellers, including specific information about vehicle non-existence or expired permits, which were mentioned in the impugned order. Consequently, the Court set aside the impugned order dated 28.03.2023. The AO was directed to furnish the relevant information/material to the petitioner, accord an opportunity for a further response, and then issue a fresh notice for a personal hearing before passing a fresh order under Section 148A(d) of the Act. The Court explicitly stated that it had not examined the merits of the matter.

Key Issues

1. Whether the Assessing Officer (AO) erred in passing an order under Section 148A(d) of the Income Tax Act, 1961, without providing the petitioner/assessee with the material and information relied upon to conclude that the purchase transactions were bogus? 2. Whether the failure of the AO to furnish the material concerning the alleged dubious or non-existent sellers compromised the petitioner's defence? Petitioner's Arguments: The petitioner contended that the AO had relied on information not supplied to them, which compromised their defence. They argued that documents like bank statements, tax invoices, and e-way bills were submitted to prove the genuineness of the transactions, but these were not adequately considered by the AO. Revenue's Arguments: The revenue, through its senior standing counsel, relied on the impugned order dated 28.03.2023 to argue that the assessment proceedings should be allowed to continue. However, the counsel conceded that the material based on which the AO concluded the transactions were bogus was apparently not furnished to the petitioner.