ABHISHEK BANSAL vs. INCOME TAX OFFICER, WARD 58(3), DELHI

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W.P.(C)/17300/2024HC DelhiDLHC01093488202416 December 2024Bench: HON'BLE THE ACTING CHIEF JUSTICE,HON'BLE MR. JUSTICE TUSHAR RAO GEDELA5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the petitioner's contention regarding insufficient time to respond to the notice under Section 148A(b) was unmeritorious and appeared to be an afterthought. The Court referred to Section 148A(b) of the Act, which mandates providing an opportunity of being heard by serving a notice to show cause within a specified time, not less than seven days and not exceeding thirty days. The Court clarified that the provision does not stipulate a requirement for seven *working* days, but rather a period of not less than seven calendar days. The petitioner had filed a response within the stipulated period, and therefore, could not raise a grievance about not being provided sufficient time. The Court found that the petitioner's response, while showing payments through banking channels, did not address the allegation of accommodation entries or demonstrate the movement of goods. Consequently, the petition was dismissed. No issues were expressly left undecided.

What were the facts?

The petitioner, Abhishek Bansal, challenged a notice dated March 21, 2024, under Section 148A(b) of the Income Tax Act, 1961, an order dated March 30, 2024, under Section 148A(d), and a notice dated March 30, 2024, under Section 148. The challenge was based on the assertion that the petitioner was not granted seven days to respond to the Section 148A(b) notice, as three of the seven days were holidays. The Assessing Officer (AO) had information that the petitioner made purchases worth ₹72,25,879 from Shri Ajay Gupta, a non-filer whose GSTIN was cancelled for being a shell entity. The AO believed these purchases were not commensurate with the petitioner's declared income for AY 2020-21. Despite the time constraint claim, the petitioner did respond on March 29, 2024, providing purchase invoices, ledger accounts, and bank statements. The AO noted the response but found it did not address the allegation of accommodation entries and the lack of proof of goods movement. Reassessment proceedings under Section 142(1) are ongoing.

What were the issues?

1. Whether the notice dated March 21, 2024, issued under Section 148A(b) of the Income Tax Act, 1961, afforded the petitioner the requisite minimum seven days to respond, considering the inclusion of public holidays in the calculation period? (Question of law and fact, turning on Section 148A(b) of the Act). Assessee's Contention: The petitioner argued that the seven-day period provided for responding to the Section 148A(b) notice was insufficient because three of those days were holidays, effectively reducing the working days for response. The petitioner claimed this violated the spirit of the provision, which implies a reasonable opportunity to respond. Revenue's Contention: The revenue contended that Section 148A(b) does not stipulate a requirement for seven *working* days, but rather a period of not less than seven days. They further argued that the petitioner had, in fact, filed a response within the stipulated period without requesting an extension, indicating the ground was an afterthought. They also pointed out that the petitioner's response did not adequately address the core issue of accommodation entries.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148A(b),Section 148A(d),Section 148,Section 142(1)

AI-generated summary — verify with the full judgment below

$~110 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 17300/2024

ABHISHEK BANSAL

.....Petitioner Through: Mr. Shahrukh Ejaz, Mr. Abhishek Kukkar, Ms. Palak Singh Parihar and Ms. Jahnavi Singh, Advocates

versus

INCOME TAX OFFICER, WARD 58(3), DELHI .....Respondent Through: Mr. Gaurav Gupta, Senior Standing Counsel with Mr. Shivendra Singh and Mr. Yojit Pareek, Advocates.

CORAM:

HON'BLE THE ACTING CHIEF JUSTICE

HON'BLE MR. JUSTICE TUSHAR RAO GEDELA

O R D E R %

16.12.2024 CM APPL. 73634/2024 1. Exemption allowed subject to all just exceptions. 2. The application stands disposed of. W.P.(C) 17300/2024 & CM APPL. 73633/2024 (Interim Relief) 3. The petitioner has filed the present petition impugning a notice dated 21.03.2024 passed under section 148A(b) of the Income Tax Act, 1961 (hereafter the Act) as well as an order dated 30.03.2024 passed under Section 148A(d) of the Act. Additionally, the petitioner also impugns a notice dated 30.03.2024 issued under Section 148 of the Act. 4. The petitioner’s challenge to the aforesaid notices and the order is This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 20:31:49

premised on the basis that the petitioner was not granted seven days to file a response to the notice issued under Section 148A(b) of the Act. The said notice was issued on 21.03.2024 and the petitioner was provided seven days to respond to the same. However, three days out of seven days were holidays and, therefore, the petitioner claims that he did not get seven working days to respond to the said notice. 5. A plain reading of the notice issued under Section 148A(b) of the Act indicates that the Assessing Officer (AO) had information to the effect that the petitioner had made purchases from an individual named Shri Ajay Gupta, sole proprietor of M/s Gupta Paper Marts of a value of ₹72,25,879/. Shri Ajay Gupta was a non-filer during the relevant period and had not responded to the summons issued to him. According to the information, Shri Ajay Gupta was not a genuine entity and payments received in the bank account of Shri Ajay Gupta were withdrawn in cash. 6. The petitioner had filed his return for the assessment year (AY) 2020- 21 declaring a total income of ₹5,33,540/- and the AO was of the view that the said return was not commensurate with the reported transactions entered into by the petitioner. 7. Although the petitioner claims that he did not have sufficient time to respond to the said notice, the petitioner did respond to the said notice on 29.03.2024. The petitioner’s response is also noted by the AO in his order dated 30.03.2024. 8. A copy of the said reply has not been annexed with the said petition. However, the learned counsel for the petitioner has referred to the order dated 30.03.2024 issued under Section 148A(d) of the Act, which records the response furnished by the petitioner. The same indicates that the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 20:31:49

petitioner had claimed that the purchases made from Shri Ajay Gupta were genuine purchases and had also produced a copy of ledger account; a copy of confirmation of balance in the books of the petitioner; a copy of purchase invoices; and a copy of bank statement reflecting the payments made to M/s Gupta Paper Marts. 9. The documents provided by the petitioner would establish that the payments had been made to Shri Ajay Gupta through banking channels. However, the same does not address the allegation of purchases reflected were accommodation entries. It is well settled that the accommodation those entries are entries where payments are made through banking channels but the same are not against any genuine commercial transaction and are compensated by reverse payments in cash. 10. In the present case, the petitioner was required to clearly show the movement of goods to establish that the goods had in fact moved from Shri Ajay Gupta to the petitioner. However, it does not appear that any such information was provided by the petitioner to the AO. 11. The AO, after taking note of the response submitted by the petitioner, issued an order holding that it was a fit case for issuance of notice under Section 148 of the Act. The AO had also noted that the Goods and Service Tax Identification Numbers (GSTIN) of the said dealer (Ajay Gupta) had been cancelled as the concerned authorities had found that the said entities were not involved in actual business activities but were mere shell entities. 12. It is also relevant to note that after issuance of notice under Section 148 of the Act, the AO had also issued notices under Section 142(1) of the Act and the reassessment proceedings are being conducted. The petitioner has also filed his response to the said notices. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 20:31:49

13.

The contention that the petitioner was not afforded sufficient time to file a reply to the notice issued under Section 148A(b) of the Act is unpersuasive. The said ground clearly appears to be an afterthought as the petitioner had not made any request for further time to file a response to the said notice. On the contrary, the petitioner had filed his response to the said notice within the stipulated period. 14. It is also relevant to refer to Section 148A of the Act as is applicable at the material time. The same is reproduced below:- “148A. Conducting inquiry, providing opportunity before issue of notice under section 148. The Assessing Officer shall, before issuing any notice under section 148,—

(a) ***

***

*** (b) provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) ***

***

***”

15.

Clause (b) of Section 148A of the Act does not stipulate that the Assessee is required to be provided minimum of seven working days. The Assessee is required to be provided notice not being less than seven days but not exceeding thirty days for furnishing his reply. 16. Even if it is accepted that the public holidays are required to be excluded for the purpose of calculation of seven days, the petitioner would be required to file his reply on the next date following the public holiday. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 20:31:49

However, as noted above, the petitioner did in fact file his reply within the specified period and, therefore, he cannot make any grievance at this stage of not being provided sufficient time to do so. 17. The petition is unmerited and is, accordingly, dismissed. Pending applications are also disposed of.

VIBHU BAKHRU, ACJ

TUSHAR RAO GEDELA, J DECEMBER 16, 2024 yrj

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This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 20:31:49

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