Manish Daryani vs. Central Board Of Direct Taxes

1 WP-8854-2023 WP-8990-2023 IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR BEFORE HON'BLE SHRI JUSTICE SHEEL NAGU & HON'BLE SHRI JUSTICE HIRDESH WRIT PETITION No. 8854 of 2023

BETWEEN:- SAMRIDDHI INDUSTRIES THROUGH ITS PARTNER SMT. DIVYA DARYANI, OCCUPATION BUSSINESS, SHOP NO. 06, IST FLOOR, SHAH BUILDING, HAMIDIA ROAD, BHOPAL, NOW AT D/1 - 49, FIRDAUS NAGAR, BERASIA ROAD, BHOPAL (M.P.) - 462018 .....PETITIONER (BY SHRI MUKESH AGRAWAL – ADVOCATE AND SHRI AYUSH GUPTA - ADVOCATE) AND 1. CENTRAL BOARD OF DIRECT TAXES THROUGH ITS CHAIRMAN, MINISTRY OF FINANCE, (DEPARTMENT OF REVENUE), NORTH BLOCK, NEW DELHI - 110002 2. PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX-1, INCOME TAX DEPARTMENT, AAYKAR BHAWAN, 48, ARERA HILLS HOSHANGABAD ROAD BHOPAL (M.P.) 3. THE DCIT / ACIT 5(1), BHOPAL AAYKAR BHAWAN,

48,

ARERA

HILLS, HOSHANGABAD ROAD, BHOPAL (M.P.) 2 WP-8854-2023 WP-8990-2023 .....RESPONDENTS (RESPONDENTS BY SHRI SIDDHARTH SHARMA – ADVOCATE AND SHRI SHUBHAM MANCHANI -ADVOCATE) WRIT PETITION No. 8990 of 2023

BETWEEN:- MANISH DARYANI S/O LATE SHRI VISHAL DARYANI, 105-I SECTOR, GOVINDPURA INDUSTRIAL AREA, BHOPAL (M.P.) - 462023 OCCUPATION - BUSINESS .....PETITIONER (BY SHRI MUKESH AGRAWAL – ADVOCATE AND SHRI AYUSH GUPTA - ADVOCATE) AND 1. CENTRAL BOARD OF DIRECT TAXES THROUGH ITS CHAIRMAN, MINISTRY OF FINANCE, (DEPARTMENT OF REVENUE), NORTH BLOCK, NEW DELHI - 110002 2. PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX-1, INCOME TAX DEPARTMENT, AAYKAR BHAWAN, 48, ARERA HILLS HOSHANGABAD ROAD BHOPAL (M.P.) 3. THE DCIT / ACIT 3(1), BHOPAL AAYKAR BHAWAN,

48,

ARERA

HILLS, HOSHANGABAD ROAD, BHOPAL (M.P.) .....RESPONDENTS 3 WP-8854-2023 WP-8990-2023 (RESPONDENTS BY SHRI SIDDHARTH SHARMA – ADVOCATE AND SHRI SHUBHAM MANCHANI -ADVOCATE) Reserved on : 10.05.2023 Pronounced on : 18.08.2023 ---------------------------------------------------------------------------------------- These petitions having been heard and reserved for orders, coming on for pronouncement this day, Hon’ble Shri Justice Sheel Nagu pronounced the following: ORDER Both the writ petitions, namely, W.P. No.8854 of 2023 and W.P. No.8990 of 2023 filed under Article 226 of the Constitution of India involve common question of facts as well as law and, therefore, are being decided by this common order. 2. Writ Petition No. 8854 of 2023 assails the impugned notice dated 03.03.2023 (Annexure P/2) issued u/S. 148A(b) of the Income Tax Act, 1961 (for short ‘I.T.Act’), the subsequent order passed u/S.148A(d) of IT Act dated 17.03.2023 (Annexure P/6) and the consequential notice issued u/S.148 on 17.03.2023 (Annexure P/7). 2.1 Writ Petition No. 8990 of 2023 assails the impugned notice dated 03.03.2023 (Annexure P/3) issued u/S. 148A(b) of the IT Act, the subsequent order passed u/S.148A(d) of IT Act dated 20.03.2023 (Annexure P/6) and the consequential notice issued u/S.148 on 20.03.2023 (Annexure P/7). 4 WP-8854-2023 WP-8990-2023 2.2 Essentially the ground of failure of Revenue to follow the due process of law before issuing the aforesaid notices and order has been raised. 2.3 For the sake of convenience, facts are taken from W.P. No.8854 of 2023. 3. Learned counsel for rival parties are heard on the question of admission so also final disposal. 4. The brief facts giving rise to the present case are that the petitioner being a partnership firm was issued with a notice u/S.148A(b) of the IT Act on 03.03.2023 along with annexure detailing reasons for the Assessing Officer to come to an opinion that certain income pertaining to assessment year 2019-20 chargeable to tax has escaped assessment. The information supplied along with the said notice in brief was to the effect that based on the information received regarding GST Invoice Fraudsters, the case of proprietorship firm Shri Sanket Santosh Sahu (Prop. Of M/s Sanket Steel Enterprises) was inquired into disclosing that the said enterprise does not exist at the declared place of business. The information further disclosed that the said enterprise utilized fraudulent ITC based on the strength of fake tax invoices issued by nonexistent entity based in Chhattisgarh, thereby raising the necessary inference that these entities in Chhattisgarh are engaged in transaction only on paper. The information further disclosed that the books of account found in the enquiry against M/s Sanket Steel Enterprises that parties which claimed to have availed purchases from Shri Sanket Santosh Sahu have only indulged in availment of purchase invoices without any actual movement of goods thereby artificially inflating their purchase expenses and correspondingly reducing their taxable income. The petitioner partnership 5 WP-8854-2023 WP-8990-2023 firm was found to be one such party which claimed purchases from the said firm Shri Sanket Santosh Sahu with aggregated transaction valued at Rs.1,16,88,503/-. On the basis of this information, it was noticed to the petitioner that the expenses of Rs.1,17,05,331/- is liable to be disallowed and added back to income. Consequently, the notice u/S. 148A(b) of IT Act, noticed the petitioner to show cause as to why notice u/S.148 be not issued as per the aforesaid information. 4.1 Thereafter, the petitioner vide Annexure P/3 on 09.03.2023 sought time for collection of documents and preparation and submission of reply, which was granted by issuance of a fresh notice u/S/148A(b) of the IT Act vide Annexure P/4 dated 10.03.2023 asking the petitioner to submit a reply electronically on or before 13.03.2023. 4.2 Thereafter, the petitioner vide Annexure P/5 dated 13.03.2023 did not file any reply on merits but found fault with the information supplied along with the first show cause notice u/S.148A(b) and sought specific information to enable the petitioner to respond. Pertinently, the said reply (Annexure P/5) was accompanied with certain tax invoice and e-way bills. 4.3 On the basis of aforesaid response submitted by the petitioner, an order u/S.148A(d) of the I.T. Act was passed vide Annexure P/6 on 17.03.2023 enumerating in detail the reasons for finding this case to be fit enough for issuance of notice u/S.148 of the IT Act. 4.4 Consequently, impugned notice u/S.148 of the IT Act was issued on 17.03.2023 vide Annexure P/7 proposing to reassess the income which has escaped assessment for the assessment year 2019-20. 6 WP-8854-2023 WP-8990-2023 5. Learned counsel for petitioner primarily raised following two grounds in support of the challenge to the impugned notices and the order: (i) Reasonable opportunity of being heard due to non-supply of relevant material/evidence which are foundation behind the opinion formed by the Assessing Officer that income chargeable to tax has escaped assessment. (ii) Live and proximate nexus between information received by the Assessing Officer and the formation of belief that income chargeable to tax has escaped assessment, is missing. 6. As regards the first ground of denial of reasonable opportunity of being heard due to non-supply of documentary evidence/material in support of the notice u/S.148A(b) of the IT Act is concerned, the same has already been adjudicated and decided by this Court in a recent decision rendered on 09.08.2023 in W.P. No.15244 of 2023 (O)(M/s Amrit Homes Private Ltd. Vs. Deputy Commissioner of Income Tax and another). Relevant extract of the said decision is reproduced below for ready reference and convenience: “7.2 The object behind insertion of Section 148A by the Legislature w.e.f. 01.04.2021 inter alia appears as follows :- (a) to prevent rampant and casual issuance of notice u/S.148 by the Revenue; (b) to save unnecessary harassment to the assessee of being subjected to re-opening a case under Section 148; (c) to save the Revenue of the time and energy which may be vested pursuing frivolous and fruitless proceedings u/S 148.” 7 WP-8854-2023 WP-8990-2023 6.1 In regard to other ground of there being no live and proximate link between information received by Assessing Officer and formation of belief that income chargeable to tax has escaped assessment, it is seen from the notice issued u/S.148A(b) (Annexure P/2) dated 03.03.2023 that the same is accompanied by Annexure containing details of facts, figures and reasons, which are said to be the foundation of the Assessing Officer forming opinion that income chargeable to tax escaped assessment qua the assessment year 2019-20. 6.2 On the aforesaid detail of information furnished to the petitioner along with the said notice u/S. 148A(b), it appears that the same is sufficient and adequate to afford reasonable opportunity to petitioner to prepare and submit an effective response. Thus, it does not appear that the notice u/S. 148A(b) is wanting in material in particular. 7. Consequently, this Court declining interference dismisses both the writ petitions leaving the petitioners and the Revenue to pursue the remedy available u/S.148 of the IT Act in accordance with law. (SHEEL NAGU ) (HIRDESH) JUDGE JUDGE DV DINESH VERMA 2023.08.18 18:01:53 +05'30'