BHAGWAN SAHAI SHARMA vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 13-1 & ANR.

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W.P.(C)/999/2023HC DelhiDLHC01002199202327 January 2023Bench: HON'BLE MR. JUSTICE RAJIV SHAKDHER,HON'BLE MS. JUSTICE TARA VITASTA GANJU4 pages
AI SummaryRemanded

What did the High Court hold?

The Delhi High Court set aside the impugned notices and order. The Court found that the Assessing Officer (AO) had failed to furnish the necessary supporting material to the petitioner, specifically mentioning the affidavits filed by the directors of companies involved in providing accommodation entries. The Court noted that while the impugned order adverted to information emerging from a search against Jignesh S Shah and Sanjay Shah, suggesting they were in the business of providing accommodation entries, and that the petitioner's name appeared as a beneficiary in directors' affidavits, a copy of these affidavits was not provided to the petitioner. The Court granted liberty to the AO to conduct a de novo exercise, but mandated that before commencing any proceedings, the AO must furnish all relevant information concerning the subject transaction to the petitioner and accord a personal hearing.

What were the facts?

The petitioner, Bhagwan Sahai Sharma, filed a writ petition before the Delhi High Court challenging a notice dated July 30, 2022, issued under Section 148 of the Income Tax Act, 1961. Also challenged were an order dated July 30, 2022, passed under Section 148A(d) and a notice dated June 8, 2022, issued under Section 148A(b) of the Act. These proceedings concerned Assessment Year 2014-2015. The primary allegation against the petitioner was that he was a beneficiary of accommodation entries provided by Jignesh S Shah, accepting a fictitious loan of Rs. 7,59,50,185/-. The petitioner had undergone scrutiny assessment under Section 143(3) for the relevant period. The petitioner contended that he had not transacted with Jignesh S Shah and that no supporting material was provided by the revenue.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 148A and Section 148 of the Income Tax Act, 1961, are valid, considering the allegations of accommodation entries and fictitious loans, and the lack of supporting material provided to the assessee? Assessee's Contentions: - The petitioner was subjected to scrutiny assessment under Section 143(3) for the relevant period. - The petitioner had not entered into any transaction with Jignesh S Shah in the relevant Financial Year. - No material or information was furnished by the revenue to support the allegations against the petitioner. Revenue's Contentions: - It is possible that the information is in the custody of the Assessing Officer (AO) but was not furnished for some reason.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 143(3)

AI-generated summary — verify with the full judgment below

$~25 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 999/2023

BHAGWAN SAHAI SHARMA

......Petitioner Through: Ms Ananya Kapoor and Mr Sumit Lal Chandani, Advocates

versus

DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 13-1 & ANR

......Respondent Through: Mr Sunil Agarwal, Sr Standing Counsel on behalf of Mr Abhishek Maratha, Advocate

CORAM:

HON'BLE MR. JUSTICE RAJIV SHAKDHER

HON'BLE MS. JUSTICE TARA VITASTA GANJU

O R D E R %

27.01.2023 [Physical Hearing/Hybrid Hearing (as per request)] CM No. 3892/2023 1. Allowed, subject to just exceptions.

W.P.(C) 999/2023 & CM No.3891/2023[Application filed on behalf of the petitioner seeking interim relief] 2. Issue notice. 2.1 Mr Sunil Agarwal, who appears on behalf of Mr Abhishek Maratha accepts notice on behalf of the respondent/revenue. 3. In view of the directions that we propose to pass, Mr Agarwal says that no counter-affidavit is required to be filed. Therefore, with the consent of the counsel for the parties, the writ petition is taken up for hearing and final disposal, at this stage itself.

W.P.(C) 999/2023

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4.

This writ petition is directed against the notice dated 30.07.2022 issued under Section 148 of the Income Tax Act, 1961 [in short “Act”]. 4.1 In addition thereto, challenge has been laid to the order dated 30.07.2022 passed under Section 148A(d) and the notice dated 08.06.2022 issued under Section 148A(b) of the Act. 5. The impugned notices and order concern Assessment Year (AY) 2014-2015. 6. The record shows, that the principal allegation against the petitioner is, that he is a beneficiary of accommodation entries provided by one Jignesh S Shah. It is alleged, that fictitious loan was accepted by the petitioner amounting to Rs.7,59,50,185/-. 7. Ms Ananya Kapoor, who appears on behalf of the petitioner, has drawn our attention to the fact, that petitioner was subjected to scrutiny assessment under Section 143(3) of the Act. 7.1 In this regard, Mr Kapoor has referred to the order dated 10.05.2016, appended on page 72 of the case file. 8. Furthermore, Ms Kapoor says, that the reply filed by the petitioner to notice issued under Section 148A(b) of the Act made it clear, that he had not entered into any transaction in Financial Year (FY) 2013-2014 with Jignesh S Shah. 9. Besides this, Ms Kapoor also says, that no material/information has been furnished to the petitioner, in support of the allegations levelled against him. 10. A perusal of record, as presently made available to us, does seem to indicate that no material or information has been furnished to the petitioner, W.P.(C) 999/2023

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in support of the allegations levelled against him. The impugned order only adverts to the fact, that in a search action against Jignesh S Shah and another person i.e., Sanjay Shah, certain information emerged, which seemed to suggest that they were in the business of providing accommodation entries. 11. It is also suggested, that Directors of those companies had filed affidavits, in which the name of the petitioner appeared as one of the beneficiaries of the accommodation entries. It is in this backdrop, that the reassessment proceedings appear to have been triggered against the petitioner. It appears, that the Assessing Officer (AO) has failed to do even the minimum, which is to furnish a copy of the affidavit filed by those Directors. 12. Mr Agarwal, on the other hand, submits that it is quite possible, that the information is in the custody of the AO, which the AO, for whatever reason, has failed to furnish. 13. Given this position, we are inclined to set aside the impugned notices and the order. It is ordered accordingly. 14. Liberty is, however, given to the AO to carry out a de novo exercise. However, before the AO commences any proceedings, he/she shall furnish the relevant information available concerning the subject transaction to the petitioner/assessee. 14.1 The AO will also accord a personal hearing to the petitioner and/or his authorized representative.

W.P.(C) 999/2023

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15.

The writ petition and pending applications are disposed of in the aforesaid terms.

RAJIV SHAKDHER, J

TARA VITASTA GANJU, J

JANUARY 27, 2023

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W.P.(C) 999/2023

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