JAIN ENTERPRISES V. INCOME TAX OFFICER, WARD 36(1) , DELHI & ORS.

W.P.(C)/7697/2023

AI Insights

The case involves Jain Enterprises challenging an order and subsequent notices issued by the Income Tax Officer under various sections of the Income Tax Act, 1961, concerning the Assessment Year 2019-20. The petitioner contested the order dated 24.03.2023, claiming it lacked proper application of mind, as evidenced by contradictory statements regarding the filing of income returns and reported transactions. The respondent acknowledged the possibility of an inadvertent error in the documentation. The court decided to set aside the impugned order and notices, directing a re-assessment after allowing the petitioner to present their case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 763770 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 30-05-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: VIPUL AGRAWAL; GIBRAN NAUSHAD; SAKSHI SHAIRWAL
• Assessee Lawyers: INDER BANSAL; VIVEK BANSAL
• Keywords: Application of mind; Assessment Year 2019-20; Income Tax; Fictitious Purchase Transaction
• Section: 148; 148A(b); 148A(d)

Judgement Text

" W.P.(C) 7697/2023 Pg. 1 of 3 $~56 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Decision delivered on:30.05.2023 + W.P.(C) 7697/2023 JAIN ENTERPRISES ..... Petitioner Through: Mr Inder Paul Bansal and Mr Vivek Bansal, Advocate versus INCOME TAX OFFICER, WARD 36(1), DELHI & ORS. ..... Respondent Through: Mr Vipul Agrawal, Sr Standing Counsel with Mr Gibran Naushad and Ms Sakshi Shairwal, Jr Standing Counsels CORAM: HON'BLE MR. JUSTICE RAJIV SHAKDHER HON'BLE MR. JUSTICE GIRISH KATHPALIA [Physical Hearing/Hybrid Hearing (as per request)] RAJIV SHAKDHER, J. (ORAL): W.P.(C) 7674/2023 & CM No.29696/2023 [Application filed on behalf of the petitioner seeking interim relief] 1. Issue notice. 2. Mr Vipul Agrawal, learned senior standing counsel who appears on behalf of the respondents/revenue accepts notice. 4. Mr Agrawal says that in view of the order that we propose to pass, he does not wish to file a counter-affidavit in the matter and that he will argue the matter based on the record presently available with the court. 5. Therefore, with the consent of the counsel for parties, the writ petition is taken up for hearing and final disposal of the case at this stage itself. 6. This writ petition concerns Assessment Year (AY) 2019-20. Digitally Signed By:NEELAM SHARMA Signing Date:24.06.2023 14:50:11 Signature Not Verified W.P.(C) 7697/2023 Pg. 2 of 3 7. Petitioner seeks to assail order dated 24.03.2023 passed under Section 148A(d) of the Income Tax Act, 1961 [in short, “the Act”]. Besides this, challenge is also laid to the consequential notice of even date i.e. 24.03.2023 issued under Section 148 of the Act. 7.1 In addition, thereto, petitioner has also challenged the show cause notice dated 04.03.2023 issued under Section 148A(b) of the Act issued by respondent no. 1. 8. The short ground on which the counsel for the petitioner seeks to assail the impugned order is that there has been no application of mind. For this purpose, counsel for petitioner has drawn our attention to paragraph 2.1 of the order dated 24.03.2023 wherein interalia it has been stated that the assessee had filed the return declaring his income amounting to Rs.56,09,080/-. Furthermore, this paragraph also adverts to the fact that the assessee in the period in issue undertook transaction amounting to Rs.1,14,34,000/-. 9. The observations made in this paragraph are not aligned with the observations made by the Assessing Officer (AO) in paragraph 4 wherein interalia it is stated that the petitioner had not filed its return of income. 10. Mr Vipul Agrawal, senior standing counsel, who appears on behalf of the respondents/revenue, points out that this is perhaps an inadvertent error as in the notice issued under Section 148A(b) of the Act there is no such assertion. 11. We may also note that the petitioner concededly did not file a reply to the notice dated 04.03.2023 issued under Section under Section 148A(b) of the Act. 12. Counsel for the petitioner says that the petitioner has an explanation for the transaction that has been flagged in the order dated 24.03.2023 issued under Section 148A(d) of the Act. 13. We may note that the charge levelled against that petitioner is that it has entered into fictitious purchase transaction with an entity going by the name of M/s Krishna Traders and it is this transaction which has been quantified at Rs. 1,14,34,000/-. 14. In our view, the best way forward would be to set aside the impugned order dated 24.03.2023 passed under Section 148A(d) of the Act and allow the AO to pass a fresh Digitally Signed By:NEELAM SHARMA Signing Date:24.06.2023 14:50:11 Signature Not Verified W.P.(C) 7697/2023 Pg. 3 of 3 order after giving opportunity to the petitioner to file a reply to the notice dated 04.03.2023 issued under Section 148A(b) of the Act. 15. This direction we are issuing because the error prove to be fatal for both sides if the order is allowed to remain on record given the contradiction between what is stated in paragraph 2.1 and paragraph 4 of the said order. 16. Accordingly, order dated 24.03.2023 issued under Section 148A(d) of the Act is set aside. Resultantly, the consequential notice of even date i.e. 24.03.2023 issued under Section 148 of the Act is also set aside. 17. The petitioner will file its response to the notice dated 04.03.2023 issued under Section 148A(b) of the Act within four weeks of receipt of the copy of the judgment. 18. The AO will thereafter accord personal hearing to the authorized representative of the petitioner. For this purpose, the AO will issue a notice to the petitioner whereby the date and time of hearing will be indicated. 19. Needless to say that the AO will pass speaking order, copy of which will be furnished to the petitioner. 20. Consequently, the pending application shall stand closed. 21. We make it clear that the fact that we have set aside the order dated 24.03.2023 passed under Section 148A(d) of the Act will not impact the merits of the case. 22. Parties will act based on the digitally signed copy of the order. (RAJIV SHAKDHER) JUDGE (GIRISH KATHPALIA) JUDGE MAY 30, 2023 as Click here to check corrigendum, if any Digitally Signed By:NEELAM SHARMA Signing Date:24.06.2023 14:50:11 Signature Not Verified "