SHRI SHYAM CORPORATION vs. INCOME TAX OFFICER

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CW/10607/2024HC RajasthanRJHC02054158202419 May 2025Author: AVNEESH JHINGAN,MUKESH RAJPUROHIT2 pages
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What did the High Court hold?

The High Court held that the very foundation for the issuance of the notice under Section 148A(b) of the Income Tax Act, 1961, was eroded. The court noted the revenue's submission, supported by a communication from the department, that the information regarding M/s Vasuki Tradelink Pvt. Ltd. was wrongly sent by the GST department and the actual information related to M/s Varuni International. This clarification meant that the basis on which the reopening proceedings were initiated was factually incorrect. Consequently, the court found that the impugned order dated April 15, 2024, passed under Section 148A(d) and the notice itself were unsustainable. The court quashed both the notice and the order. The ratio decidendi is that if the information forming the sole basis for reopening an assessment is subsequently found to be erroneous and withdrawn, the reopening proceedings are liable to be quashed.

What were the facts?

The petitioner, Shri Shyam Corporation, an income tax assessee engaged in trading, filed its return for assessment year 2021. The Income Tax Officer (ITO) issued a notice under Section 148A(b) of the Income Tax Act, 1961, proposing to reopen the assessment. The initial reasons stated that the petitioner had made unaccounted purchases from M/s Rashmi Exports to avail input tax credit. Subsequently, a corrigendum dated March 26, 2024, changed the seller's name to M/s Vasuki Tradelink Pvt. Ltd. The petitioner objected, arguing that the information regarding M/s Vasuki Tradelink Pvt. Ltd. from the GST department was withdrawn, thus invalidating the reopening notice.

What were the issues?

1. Whether the reopening of assessment under Section 148A(b) of the Income Tax Act, 1961, is vitiated by a flawed foundation, given that the information forming the basis of the notice was subsequently clarified to be erroneous. Assessee's contention: The petitioner argued that the information provided by the GST department concerning M/s Vasuki Tradelink Pvt. Ltd. was withdrawn. Consequently, there was no valid basis for the issuance of the notice under Section 148A(b) of the Act, and the subsequent order under Section 148A(d) was therefore bad in law. Revenue's contention: The respondent revenue, through its counsel, produced a communication dated March 22, 2025, from the department. This communication clarified that the GST department had wrongly sent information regarding M/s Vasuki Tradelink Pvt. Ltd., and the correct information pertained to M/s Varuni International.

Which sections of the Income-tax Act were involved?

Section 148A(b),Section 148A(d)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2025:RJ-JP:21008-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 10607/2024 Shri Shyam Corporation, Having Its Address At 202, Block 11, Royal Green, Sirsi Road, Jaipur Through Its Partner Shri Pankaj Agarwal. ----Petitioner Versus Income Tax Officer, Ward-1(1), Jaipur Having Its Address At New Central Revenue Building, Statue Circle, Bhagwan Das Road, Jaipur ----Respondent For Petitioner(s) : Mr. Siddharth Ranka with Mr. Rohan Chatter For Respondent(s) : Mr. Anuroop Singhi with Mr. N.S. Bhatti & Mr. Aditya Khandelwal HON'BLE MR. JUSTICE AVNEESH JHINGAN HON'BLE MR. JUSTICE MUKESH RAJPUROHIT

Order 19/05/2025

1.

This petition is filed challenging the order dated 15.04.2024 passed under Section 148A(d) of the Income Tax Act, 1961 (for short ‘the Act’) relating to assessment year 2021. 2. The petitioner firm is an income tax assessee and is engaged in business of trading. The return for the assessment year 2021 was filed.

3.

The petitioner was issued a notice u/s 148A(b) of the Act. Along with the reasons for reopening, a corrigendum dated 26.03.2024 was issued. The reasons mentioned that the petitioner had made unaccounted purchases from M/s Rashmi Exports for availing the benefit of input tax credit. By issuing corrigendum

[2025:RJ-JP:21008-DB] (2 of 2) [CW-10607/2024] dated 26.03.2024, the name of the seller was changed from M/s Rashmi Exports to M/s Vasuki Tradelink Pvt. Ltd.

4.

The petitioner raised an objection that the information given by the GST department to the Income Tax department qua M/s Vasuki Tradelink Pvt. Ltd. was subsequently withdrawn and therefore, there is no basis for issuance of notice u/s 148A(b) of the Act.

5.

Learned counsel for the respondent has produced the copy of communication dated 22.03.2025 received from the department, same is taken on record. The contention is that the GST department has clarified that the information regarding M/s Vasuki Tradelink Pvt. Ltd. was wrongly sent rather the information was with regard to M/s Varuni Internatioal.

6.

In view of the above, the very foundation for issuance of notice u/s 148A(b) of the Act is eroded. Consequently, the impugned order dated 15.04.2024 and the notice are quashed.

7.

The writ petition is allowed. (MUKESH RAJPUROHIT),J (AVNEESH JHINGAN),J Riya/48

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