Samriddhi Industries vs. Central Borad Of Direct Taxes

Held

The Court held that the notice issued under Section 148A(b) of the Income Tax Act, 1961, along with the accompanying annexure detailing facts, figures, and reasons, was sufficient and adequate to provide the petitioner with a reasonable opportunity to prepare and submit an effective response. Therefore, the Court found no deficiency in the material particulars provided with the notice. Consequently, the Court dismissed the writ petitions, declining interference. The petitioners and the Revenue were left to pursue the remedies available under Section 148 of the Income Tax Act, 1961, in accordance with the law. The Court relied on its previous decision in W.P. No.15244 of 2023 (M/s Amrit Homes Private Ltd. Vs. Deputy Commissioner of Income Tax and another) regarding the object of Section 148A, which aims to prevent casual issuance of notices and unnecessary harassment to assessees.

Facts

The petitioner, Samriddhi Industries, a partnership firm, challenged notices and an order issued under Sections 148A(b), 148A(d), and 148 of the Income Tax Act, 1961. The Assessing Officer (AO) initiated proceedings based on information regarding GST invoice fraudsters, specifically citing an inquiry into M/s Sanket Steel Enterprises. This inquiry revealed that Sanket Steel Enterprises did not exist at its declared address and had utilized fraudulent Input Tax Credit (ITC) based on fake invoices from non-existent entities. The petitioner was identified as a party that claimed purchases from Sanket Steel Enterprises, with transactions valued at Rs. 1,16,88,503/-, leading the AO to believe expenses of Rs. 1,17,05,331/- were liable to be disallowed. The petitioner sought time to submit a reply, but instead, raised objections regarding the sufficiency of information provided. Subsequently, an order under Section 148A(d) was passed, deeming the case fit for reassessment under Section 148 for the assessment year 2019-20.

Key Issues

1. Whether the petitioner was denied a reasonable opportunity of being heard due to the non-supply of relevant material/evidence forming the basis of the Assessing Officer's opinion that income chargeable to tax had escaped assessment, as contemplated under Section 148A of the Income Tax Act, 1961? 2. Whether there is a live and proximate nexus between the information received by the Assessing Officer and the formation of the belief that income chargeable to tax has escaped assessment, as required for issuing notices under Section 148A and Section 148 of the Income Tax Act, 1961? Petitioner's Arguments: - The petitioner contended that they were not afforded a reasonable opportunity of being heard because the Assessing Officer failed to supply the documentary evidence and material that formed the foundation for the opinion that income had escaped assessment. - The petitioner also argued that there was no live and proximate link between the information received by the AO and the formation of the belief that income had escaped assessment. Revenue's Arguments: The judgment does not explicitly record arguments made by the Revenue. However, the Court's reasoning implies that the Revenue's position was that the information provided was sufficient and adequate.