M/s. U K Steel, A Partnership Firm Through Its Partner Shri Mohan Agrawal V. Union Of India Through Its Secretary, Ministry Of Finance, (Department Of Revenue) and Principal Commissioner Of Income Tax, Raipur-1 and Assistant Commissioner Of Income Tax Circle 1(1), Raipur

WPT/136/2024

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The case involves M/s. U K Steel, a partnership firm, which filed a writ petition against the Union of India and income tax authorities challenging an order and subsequent notice issued under the Income Tax Act, 1961. The petitioner contested the demand of Rs. 5,75,72,856 as unexplained expenditure related to transactions with M/s Sairam Ingot Pvt. Ltd. The petitioner argued that the tax authorities failed to provide necessary documents and did not adhere to procedural requirements as per CBDT guidelines and Supreme Court directives. The court found that the petitioner was not provided with the information and material relied upon by the Revenue, leading to the quashing of the order and notice.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 806344 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 02-08-2024
• Assessment Year: misc
• Other Referred Cases: Union of India v. Ashish Agrawal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: VIJAY CHAWLA
• Assessee Lawyers: APURV GOYAL
• Keywords: Procedural irregularities; Quashing of order; Show cause notice; Taxation; Unexplained expenditure
• Section: 148; 148A(d)

Judgement Text

" NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPT No. 136 of 2024 1. M/s. U K Steel, A Partnership Firm Through Its Partner Shri Mohan Agrawal S/o Vijay Kumar Agrawal, Aged About 39 Years, Registered Office At K.H. No. 272/5, Sarora, Urla Industrial Area, Raipur , Chhattisgarh, 493221. ... Petitioners versus 1. Union Of India Through Its Secretary, Ministry Of Finance, (Department Of Revenue), No. 137, North Block, New Delhi- 110001. 2. Principal Commissioner Of Income Tax, Raipur-1, Central Revenue Building, Raipur,Chhattisgarh. 3. Assistant Commissioner Of Income Tax Circle 1(1), Raipur, Central Revenue Building, Rai02, Rai03, Rai04, Raipur, Chhattisgarh 490001 ... Respondents For Petitioner : Mr. Apurv Goyal, Advocate For Respondent No. 2 & 3 : Mr. Vijay Chawla, Advocate Hon’ble Shri Justice Ravindra Kumar Agrawal, J. Order on board 02.08.2024. 1. The petitioner has filed this writ petition seeking the following reliefs:- 1. That, this Hon'ble Court may kindly be pleased to issue a writ/writs, direction/directions, order/orders quashing the impugned order dated 06/03/2024 passed under Section 148A(d) of the Income Tax Act, 1961 for assessment year 2020- 21 and proceedings initiated pursuant thereto; 2. That, this Hon'ble Court may kindly be pleased to issue a writ/writs, direction/directions, order/orders quashing the impugned notice dated 06/03/2024 passed under Section 148 of the Income Tax Act, 1961 for assessment year 2020-21 and all subseuquent proceedings/notices/orders initiated pursuant thereto; 3. That, this Hon’ble Court may kindly be pleased to grant any other relief(s), which is deemed fit and proper in the aforesaid facts and circumstances of the case. 2. Learned counsel for the petitioner would submit that initially a notice under Section 148 A(d) of the Income Tax Act, 1961 has been served upon the petitioner on 13/02/2024 and raised demand of Rs. 5,23,38,960/- from M/s Sairam Ingot Pvt. Ltd. during the financial year of 2019-20 and paid commission to M/s Sairam Ingot Pvt. Ltd. of Rs. 52,33,896/- and therefore, the amount of Rs.5,75,72,856/- is stated to be liable for taxation in the nature of unexplained expenditure. It is also submitted by the learned counsel for the petitioner is that no documents with respect to the alleged demand have been supplied by the respondent department in support of the said demand. 3. In reply to the said show cause notice dated 13/02/2024, the petitioner has submitted his reply on 16/02/2024 and submitted all the relevant documents in his support by saying that the total taxable purchase made from M/s Sairam Ingot Pvt. Ltd. was comes to the tune of Rs. 30,63,599/- and no purchase have been made from M/s Swastik Ingot Pvt. Ltd. Without considering the reply of the petitioner, the respondent department has passed the impugned order dated 06/03/2024 under Section 148 A(d) of the Income Tax Act, 1961 and consequently notice under Section 148 A(d) of the Income Tax Act, 1961 dated 06/03/2024 is issued. He would further submit that the Central Board of Direct Taxes issued a circular/ instructions dated 01/08/2022 for issuance of notice under Section 148 of the Income Tax Act, 1961 directing the assessing officer to enclose copy of all the relevant information available on which reliance is being place along with supporting document, if any, which was also not followed and therefore, the notice issued to the petitioner is bad in law. The order passed under Section 148 A(d) of the Income Tax Act of,1961 and consequent notice under Section 148 is liable to be quashed. 4. Learned counsel for the respondent opposes the submissions made by learned counsel for the petitioner and submits that after passing of the order under Section 148 A(d) of the Income Tax Act, 1961, the notice under Section 148 of the Income Tax Act was issued. There is no procedural irregularities in passing the order. He, however, does not dispute the submission of learned counsel for the petitioner that along with the notice under Section 148 A (b), petitioner was not supplied the information and the material relied upon by the Revenue, relief upon by the authorities, as per his oral instructions received from the respondent department. 5. I have heard learned counsel for the parties and also perused the record. 6. Petitioner has taken the specific ground that the petitioner was not served with the information and material relied upon by the Revenue along with notice under Section 148A(b) of the Act of 1961. This submission is not opposed by the counsel for respondent-department. The Circular/ instructions dated 01.08.2022 issued by the Central Board of Direct Taxes (CBDT) is extracted below for ready reference: \"enclose copy of all the relevant information\" * available on which reliance is being placed, along with supporting documents (if any). In the cases where information is received from the Investigation Wing or any other law enforcement agency, details of letter, brief summary of information along with relevant portion of such report and details of relied upon documents may be enclosed. Such a portion as does not bear reference to the assessee concerned may be appropriately redacted. Details of enquiry conducted, if any, be shared if reliance is being placed by the AO on it. Judicial order (ie. case laws) on which reliance is being placed, if any.\" 7. Hon'ble Supreme Court in the case of Union of India v. Ashish Agrawal reported in (2023) 1 SCC 617 : (2022) 444 ITR 1 SC, has further observed with regard to procedure to be followed by the respondent-department for issuance of notice under Section 148A(b). relevant portion(s) of the said judgment is reproduced below. 28. In view of the above and for the reasons stated above, the present Appeals are ALLOWED IN PART. The impugned common judgments and orders passed by the High Court of Judicature at Allahabad in W.T. No. 524/2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under: 28.1 The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under section 148A of the IT Act as substantiated by the Finance Act, 2021 and construed or treated to be showcause notices in terms of section 148A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assesees can reply to the showcause notices within two weeks thereafter; 28.2 The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed with as a onetime measure vis a vis those notices which have been Issued under section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts. 28.3 Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required; 28.4 The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees; Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted); 28.5 All defences which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available.\" 8. In view of the specific grounds taken by the learned counsel for petitioner, the instruction/ guidelines issued by the CBDT on 01.08.2022 and the decision of Hon'ble Supreme Court in the case of Ashish Agrawal (supra) and considering the submission of counsel for petitioner that information and material relied upon by Revenue was not supplied to petitioner is not disputed by counsel for respondent, I am inclined to allow this writ petition. 9. Accordingly this writ petition is allowed and the order Annexure P-1 dated 06.03.2024, passed under Section 148 A(d) as also the notice dated 06.03.2024 issued under Section 148 of the Income Tax Act, 1961 are hereby quashed. The matter is remitted back to Respondent No. 3 for passing the orders afresh, in accordance with law, on the notice under Section 148A(b) of the Act after supplying all the relevant materials and information in terms of guidelines dated 01.08.2022 issued by CBDT and keeping in mind the observation made by Hon’ble Supreme Court in Ashish Agrawal (Supra) and also after giving proper opportunity of hearing. 10.Writ petition is allowed with the aforesaid observation and direction. Sd/- (Ravindra Kumar Agrawal) Judge sagrika "