GDR FINANCE AND LEASING PRIVATE LIMIED V. INCOME TAX OFFICER, WARD 10(1), NEW DELHI

W.P.(C)/12040/2022

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The case involves GDR Finance and Leasing Private Limited, the petitioner, contesting an order and notice issued by the Income Tax Officer under the Income Tax Act, 1961, alleging involvement in tax evasion through accommodation entries. The petitioner was accused of having transactions amounting to Rs. 1,13,50,000 with Kanhaiya Impex Pvt. Ltd., which were claimed to be accommodation entries. The petitioner denied any such transactions. The Revenue later clarified that the transactions were with K.G. Finvest Pvt. Ltd., not Kanhaiya Impex. The court found the notice and order to be based on incorrect identification of the entity involved, leading to the setting aside of the order and notice.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 749502 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 21-12-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: ABHISHEK MARATHA
• Assessee Lawyers: PRAKASH KUMAR; RUPINDER AGGARWAL
• Keywords: Accommodation entry; Assessment year 2016-2017; Bogus Transaction; Income Tax; Tax Evasion
• Section: 148; 131; 148A(b); 148A(d)

Judgement Text

"Neutral Citation Number: 2023/DHC/000009 W.P.(C)12040/2022 Page 1 of 5 $~23 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Decision delivered on: 21.12.2022 + W.P.(C) 12040/2022&CM APPL. 35993/2022 GDR FINANCE AND LEASING PRIVATE LIMITED.... Petitioner Through: Mr Prakash Kumar & Mr Rupinder Kumar Aggarwal, Advs. versus INCOME TAX OFFICER, WARD 10(1), NEW DELHI.. Respondent Through: Mr Abhishek Maratha, Sr. Standing Counsel CORAM: HON'BLE MR JUSTICE RAJIV SHAKDHER HON'BLE MS JUSTICE TARA VITASTA GANJU [Physical Hearing/Hybrid Hearing (as per request)] TARA VITASTA GANJU, J. (ORAL): 1. This Writ Petition is directed against order dated 27.07.2022 passed under Section 148A(d) of the Income Tax, 1961 [hereinafter referred to as “Act”] and the consequent notice of even date i.e., 27.07.2022 issued under Section 148 of the Act. 2. The impugned order and notice were preceded by a notice dated 15.05.2022 issued under Section 148A(b) of the Act concerning assessment year („AY‟) 2016-2017. 3. A perusal of the impugned order shows that the principal allegation levelled against the petitioner is the following: “2. As per the information available on Insight Portal & flagged by the Directorate of Income-Tax (System) as per risk profiling, the information relating to evasion of tax by the assessee has been disseminated; brief of which are as under: A Search operation u/s 132 of the I.T. Act was carried out on 13.04.2017 on Himanshu Verma Group and during the post search proceedings by Central Circle, it was found that Sh. Himanshu Verma Digitally Signed By:RAHUL Signing Date:02.01.2023 22:30:12 Signature Not Verified Neutral Citation Number: 2023/DHC/000009 W.P.(C)12040/2022 Page 2 of 5 was [sic: has] indulged in providing bogus accommodation entries through various shell companies operated or controlled by him or dummy directors. During enquiry, it was found, that there was no actual business activity in any of concerns managed by him. He was doing business of providing bogus accommodation entries-.in the shape of share application money, Capital Gain on Shares, expenditure entries in lieu of certain commission charged from the beneficiary parties and to convert the unaccounted black money into white. The statement u/s 131 of the I.T. Act was also recorded on 13.04.2017 by the investigation Wing, Delhi, wherein he admitted to have indulged in the above activity. Further, from the information, it is seen that Assessee Company has made following transactions with the entities controlled and managed by Sh. Himanshu Verma during F.Y.2015-16 relevant to A.Y.2016-17: S. NO. NAME AMOUNT (IN RS.) REMARK S 1 Kanhaiya Impex Pvt. Ltd. 1,13,50,000 Accommodation entry Total 1,13,50,000 Thus, the assessee has received accommodation entries of Rs. 1,13,50,000/-during F.Y. 2015-16 relevant to A.Y. 2016-17” 4. A perusal of the extract would show that inter alia what was alleged against the Petitioner is that transactions have been made with an entity controlled and managed by Mr Himanshu Verma called Kanhaiya Impex Pvt. Ltd.(“KIPL”) amounting to Rs 1,13,50,000/- in AY 2016-2017. 5. On 28.05.2022, in response to the notice dated 15.05.2022, the Petitioner stated that it does not have any dealings whatsoever with the company KIPL and therefore no income, much less Rs 1,13,50,000/-, has escaped assessment. The relevant part of the said reply is extracted hereafter: “v .That the assessee company has not dealt with and has not entered into any transaction of whatsoever nature (sale, purchase, loan, share application money, transactions resulting into capital gains. etc.) with alleged M/s Kanhaiya Impex Pvt. Ltd (PAN- AAHCM7I95C) amounting to Rs. 1,13,50,000/- during the F.Y. Digitally Signed By:RAHUL Signing Date:02.01.2023 22:30:12 Signature Not Verified Neutral Citation Number: 2023/DHC/000009 W.P.(C)12040/2022 Page 3 of 5 2015-16.” 6. The Respondent/Revenue had thereafter by a letter dated 21.06.2022 provided additional information and asked the Petitioner to submit its reply. The additional information merely reiterated what was set forth earlier i.e., that it had entered into five transactions in the nature of accommodation entries with KIPL for Rs.1,13,50,000/-. The relevant extract of the information sheet appended reads as follows: Information Details S. No. Source PAN Source PAN Name Informatio n FY Informatio n Type Informatio n Value Informatio n Date Remarks 1. AAACK40 32H Kanhaiya Impex Pvt. Ltd. 2015-16 Others 1800000 29-07-2015 Accommodation Entry 2. AAACK40 32H Kanhaiya Impex Pvt. Ltd. 2015-16 Others 5000000 06-08-2015 Accommodation Entry 3. AAACK40 32H Kanhaiya Impex Pvt. Ltd. 2015-16 Others 1500000 15-12-2015 Accommodation Entry 4. AAACK40 32H Kanhaiya Impex Pvt. Ltd. 2015-16 Others 200000 17-12-2015 Accommodation Entry 5. AAACK40 32H Kanhaiya Impex Pvt. Ltd. 2015-16 Others 350000 19-12-2015 Accommodation Entry 6. AAACK40 32H Kanhaiya Impex Pvt. Ltd. 2015-16 Others 2500000 16-04-2016 Accommodation Entry 6.1 The Petitioner on 27.06.2022 replied, reiterating that it had not entered into any transactions with KIPL and stating that the information did not appear to be based on any factual evidence. 7. Despite issue of these communications, the Respondent/Revenue passed order dated 23.07.2022 reiterating the allegations as set forth in hereinabove. 8. A coordinate bench of this Court in its order dated 22.08.2022 had Digitally Signed By:RAHUL Signing Date:02.01.2023 22:30:12 Signature Not Verified Neutral Citation Number: 2023/DHC/000009 W.P.(C)12040/2022 Page 4 of 5 noticed the stand of the Petitioner that it had not entered into any transaction in the nature of an accommodation entry of Rs 1,13,50,000/- with KIPL during AY 2016-2017.In this regard, Mr Maratha had sought time to return with instructions. 8.1 Mr Maratha today has handed over an undated report issued by the Respondent/Revenue which inter alia states as follows: “…..Perusal of the above mentioned Bank Book clearly revealed that assessee had entered into above said transactions appearing at S. No. 1-5 in the above table. Amount and date of transaction are exactly the same. However name of the party appearing in the Bank Book with respect to above said five transactions is M/s K.G. Finvest Pvt. Ltd. and not M/s Kanhaiya Impex Pvt. Ltd. Further it has been found from the departmental database that PAN of M/s K.G. Finvest Pvt. Ltd. is AAACK4032H which is exactly matching with the PAN No. mentioned in the information sheet. It is important to mention here that PAN is unique identity of the party and not the name. Assessee, in its reply submitted that they had not entered into any transaction with M/s Kanhaiya Impex Pvt. Ltd. but never mentioned the PAN despite the fact that PAN of the party was duly supplied to the assessee. So it can be concluded that the information in possession of the Department and supplied to the assessee is correct except the fact that name of the party was wrongly mentioned but PAN was correct which is sufficient for unique identification ……” 9. A perusal of the instruction would show that it is the stand of the Respondent/Revenue that the transactions referred to are with respect to a company called K.G. Finvest Pvt. Ltd. (“KG Finvest”) and not KIPL. The said instructions also refer to PAN - AAACK4O32H of the entity going by the name K.G. Finvest as mentioned in the information sheet. 9.1 As is evident from the aforegoing, all communications addressed to the Petitioner only refer to KIPL and not KG Finvest. 10. In these circumstances, the Petitioner‟s stand that it had not entered into any transaction with KIPL appears to be correct. 10.1 Given this position, in our view, both the notice which is issued under Digitally Signed By:RAHUL Signing Date:02.01.2023 22:30:12 Signature Not Verified Neutral Citation Number: 2023/DHC/000009 W.P.(C)12040/2022 Page 5 of 5 Section 148A(b) of the Act and the order that was passed under Section 148A(d) of the Act suffer from obvious errors. 11. Accordingly, the impugned order and notice dated 27.07.2022 are set aside. 12. The Assessing Officer will however have liberty to take next steps in the matter as per law. 13. The writ petition is disposed of in the aforesaid terms. The pending application shall, accordingly, stand closed. 14. Parties will act based on the digitally signed copy of the order. TARA VITASTA GANJU, J RAJIV SHAKDHER, J DECEMBER 21, 2022/r Click here to check corrigendum, if any Digitally Signed By:RAHUL Signing Date:02.01.2023 22:30:12 Signature Not Verified "