MAHANANDA ENTERPRISE LIMITED V. INCOME TAX OFFICER, WARD 1(1)(3)

SCA/8208/2022

AI Insights

In this case, Mahananda Enterprise Limited filed a writ application under Article 226 of the Constitution of India against the Income Tax Officer, Ward 1(1)(3), challenging the notices issued under Sections 148A(d) and 148 of the Income Tax Act, 1961. The notices were based on allegations that the company was a beneficiary of a transaction involving Rs. 2.5 lakh from Subham Sales Pvt. Ltd., managed by Mukesh Banka, who was implicated in managing shell companies and providing bogus unsecured loans. The court examined the records and found discrepancies in the assessment year mentioned in the notices and the actual year of the alleged transaction. Consequently, the court quashed the notices and set aside the proceedings initiated against Mahananda Enterprise Limited.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 748641 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 02-05-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: KALPANA RAVAL
• Assessee Lawyers: MANISH SHAH
• Keywords: Assessment Year; Bogus unsecured loans; Certiorari; Certiorari; Mandamus; Quashing; Search and seizure; Shell companies; Writ application
• Section: 148; 148A(d)

Judgement Text

"C/SCA/8208/2022 ORDER DATED: 02/05/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 8208 of 2022 ========================================================== MAHANANDA ENTERPRISE LIMITED Versus INCOME TAX OFFICER, WARD 1(1)(3) ========================================================== Appearance: MR MANISH J SHAH(1320) for the Petitioner(s) No. 1 MS KALPANA RAVAL, ADVOCATE for the Respondent DS AFF.NOT FILED (N) for the Respondent(s) No. 1 ========================================================== CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 02/05/2022 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1 B y t h i s w r i t a p p l i c a t i o n u n d e r A r t i c l e 2 2 6 o f t h e C o n s t i t u t i o n o f I n d i a , t h e w r i t a p p l i c a n t h a s p r a y e d f o r t h e f o l l o w i n g r e l i e f s : “ A ) T h i s H o n ’ b l e C o u r t b e p l e a s e d t o c a l l f o r t h e r e c o r d s o f t h e p r o c e e d i n g s , l o o k i n t o t h e m a n d b e p l e a s e d t o i s s u e a w r i t o f c e r t i o r a r i o r a n y o t h e r a p p r o p r i a t e w r i t , o r d e r o r d i r e c t i o n q u a s h i n g o f t h e i m p u g n e d o r d e r p a s s e d u / s . 1 4 8 A ( d ) d a t e d 3 1 . 0 3 . 2 0 2 2 a t A n n e x u r e - D a n d n o t i c e i s s u e d u / s . 1 4 8 d a t e d 3 1 . 0 3 . 2 0 2 2 a t A n n e x u r e - E . B ) T h i s H o n ’ b l e C o u r t b e p l e a s e d t o i s s u e a w r i t o f m a n d a m u s o r a n y o t h e r a p p r o p r i a t e w r i t , o r d e r o r d i r e c t i o n a s k i n g t h e r e s p o n d e n t n o t t o p r o c e e d f u r t h e r i n p u r s u a n c e o f S e c t i o n 1 4 8 n o t i c e a t A n n e x u r e - E . C ) P e n d i n g t h e h e a r i n g a n d f i n a l d i s p o s a l o f t h i s a p p l i c a t i o n , t h i s H o n ’ b l e C o u r t b e p l e a s e d t o s t a y a n y f u r t h e r p r o c e e d i n g s i n p u r s u a n c e o f S e c t i o n 1 4 8 n o t i c e a t A n n e x u r e - E . D ) T h i s H o n ’ b l e C o u r t b e p l e a s e d t o g r a n t a n y f u r t h e r o r o t h e r r e l i e f a s t h i s H o n ’ b l e C o u r t d e e m s j u s t a n d p r o p e r i n t h e i n t e r e s t o f j u s t i c e , a n d E ) T h i s H o n ’ b l e C o u r t b e p l e a s e d t o a l l o w t h i s a p p l i c a t i o n w i t h c o s t s Page 1 of 4 C/SCA/8208/2022 ORDER DATED: 02/05/2022 a g a i n s t t h e r e s p o n d e n t . ” 2 We h a v e h e a r d Mr . Ma n i s h J . S h a h , t h e l e a r n e d c o u n s e l a p p e a r i n g f o r t h e w r i t a p p l i c a n t a n d Ms . K a l p a n a R a v a l , t h e l e a r n e d S e n i o r S t a n d i n g C o u n s e l a p p e a r i n g f o r t h e R e v e n u e . 3 O n 2 6 t h A p r i l 2 0 2 2 , t h i s C o u r t p a s s e d t h e f o l l o w i n g o r d e r : “ 1 . D r a f t a m e n d m e n t i s a l l o w e d . T h e n e c e s s a r y i n c o r p o r a t i o n s h a l l b e c a r r i e d o u t a t t h e e a r l i e s t . 2 . We h a v e h e a r d Mr . Ma n i s h S h a h , t h e l e a r n e d c o u n s e l a p p e a r i n g f o r t h e w r i t - a p p l i c a n t [ a s s e s s e e ] a n d Mr s . K a l p a n a R a v a l , t h e l e a r n e d s e n i o r s t a n d i n g c o u n s e l a p p e a r i n g f o r t h e r e v e n u e . 3 . T h e s u b j e c t m a t t e r o f c h a l l e n g e i n t h e p r e s e n t w r i t - a p p l i c a t i o n i s t h e o r d e r p a s s e d u n d e r S e c t i o n - 1 4 8 A ( d ) o f t h e I n c o m e T a x A c t , 1 9 6 1 [ f o r s h o r t ‘ T h e A c t , 1 9 6 1 ’ ] d a t e d 3 1 . 0 3 . 2 0 2 2 . T h e A s s e s s i n g O f f i c e r i s s e e k i n g t o r e o p e n t h e a s s e s s m e n t f o r t h e A . Y . 2 0 1 8 - 1 9 . T h e n o t i c e i s s u e d u n d e r S u b - s e c t i o n - ( b ) o f S e c t i o n - 1 4 8 A i s e s s e n t i a l l y o n t h e g r o u n d t h a t t h e A s s e s s i n g O f f i c e r i s i n r e c e i p t o f a n i n f o r m a t i o n t h a t t h e a s s e s s e e i . e . t h e w r i t - a p p l i c a n t i s a b e n e f i c i a r y t o a n a m o u n t o f R s . 2 5 L a k h r e c e i v e d t h r o u g h t h e C a n a r a B a n k A c c o u n t N o . 3 4 4 2 0 1 7 0 0 2 0 6 f r o m o n e S u b h a m S a l e s P v t . L t d . , m a n a g e d a n d o p e r a t e d b y Mu k e s h B a n k a . Wh o i s Mu k e s h B a n k a ? 4 . A c c o r d i n g t o t h e A s s e s s i n g O f f i c e r , a s e a r c h a n d s e i z u r e a c t i o n i n t h e c a s e o f B a n k a G r o u p w a s c o n d u c t e d o n 2 1 . 0 5 . 2 0 1 8 . T h e i n c r i m i n a t i n g m a t e r i a l s c o l l e c t e d d u r i n g t h e s e a r c h a n d s u r v e y a c t i o n r e v e a l e d t h a t Mu k e s h B a n k a w a s m a n a g i n g p a p e r / s h e l l c o m p a n i e s a n d w a s k n o w n f o r p r o v i d i n g a c c o m m o d a t i o n e n t r i e s i n t h e n a t u r e o f b o g u s u n s e c u r e d l o a n s o r i n o t h e r f o r m s . 5 . P r i m a - f a c i e , i t a p p e a r s t h a t S u b h a m S a l e s P v t . L t d . i s a l s o o n e o f t h e s h e l l c o m p a n i e s c o n t r o l l e d a n d m a n a g e d b y Mu k e s h B a n k a . I n r e s p o n s e t o t h e n o t i c e i s s u e d u n d e r C l a u s e - ( b ) o f S e c t i o n - 1 4 8 A , t h e w r i t - a p p l i c a n t f i l e d i t s r e p l y o u t r i g h t d e n y i n g a n y s u c h t r a n s a c t i o n w i t h S u b h a m S a l e s P v t . L t d . T h e r e p l y w a s c o n s i d e r e d a n d w h i l e p a s s i n g t h e o r d e r u n d e r S u b - s e c t i o n - ( d ) o f S e c t i o n - 1 4 8 A , t h e A s s e s s i n g O f f i c e r r e i t e r a t e d i n s o - m a n y w o r d s t h a t h e i s i n r e c e i p t o f a s p e c i f i c i n f o r m a t i o n t h a t t h e w r i t - a p p l i c a n t i s a b e n e f i c i a r y o f a n a m o u n t o f R s . 2 5 L a k h f r o m C a n a r a B a n k A c c o u n t N o . 3 4 4 2 0 1 7 0 0 2 0 6 f r o m S u b h a m S a l e s P v t . L t d . m a n a g e d a n d o p e r a t e d b y Mr . Mu k e s h B a n k a . Page 2 of 4 C/SCA/8208/2022 ORDER DATED: 02/05/2022 6 . T h e f i n e a r g u m e n t c a n v a s s e d b y Mr . S h a h i s t h a t t h e A s s e s s i n g O f f i c e r m i g h t b e i n r e c e i p t o f s u c h i n f o r m a t i o n , h o w e v e r , i t i s n o t n e c e s s a r y t h a t s u c h i n f o r m a t i o n i s a l w a y s t r u e . T h e i n f o r m a t i o n t h a t m i g h t h a v e b e e n r e c e i v e d b y t h e A s s e s s i n g O f f i c e r , m a y b e e v e n f a l s e a n d i n c o r r e c t . Mr . S h a h w o u l d s u b m i t t h a t o n c e t h e a s s e s s e e m a k e s h i m s e l f c l e a r t h a t t h e i n f o r m a t i o n r e c e i v e d i s i n c o r r e c t a n d t h e t r a n s a c t i o n , w h i c h h a s b e e n s h o w n i n f a c t d o e s n o t e x i s t o n r e c o r d , t h e n t h e A s s e s s i n g O f f i c e r i n a c c o r d a n c e w i t h t h e n e w p r o c e d u r e u n d e r S e c t i o n - 1 4 8 A i s o b l i g e d t o s u b s t a n t i a t e h i s c a s e b y a d d u c i n g f u r t h e r m a t e r i a l s t o t h e a s s e s s e e a n d o n l y t h e r e a f t e r p r o c e e d t o i s s u e t h e n o t i c e u n d e r S e c t i o n - 1 4 8 A o f t h e A c t . 7 . T o a p p r e c i a t e t h i s f i n e a r g u m e n t o f Mr . S h a h t h e f i r s t t h i n g w e s h o u l d d o i s t o r e q u e s t Mr . R a v a l t o c a l l f o r t h e r e c o r d a n d s h o w t o u s w h a t i s t h e e x a c t i n f o r m a t i o n . 8 . P e r h a p s e v e n t h i s m a y n o t s u f f i c e . Wh e n t h e A s s e s s i n g O f f i c e r i s s o c l e a r a b o u t t h e b a n k a c c o u n t n u m b e r m a i n t a i n e d w i t h C a n a r a B a n k a n d i s a l s o s o s u r e a b o u t t h e e x a c t a m o u n t , i t i s e a s y f r o m t h e r e c o r d t o v e r i f y w h e t h e r t h e r e i s a n y s u c h t r a n s a c t i o n i n t h e b a n k a c c o u n t o f t h e a s s e s s e e w i t h r e s p e c t t o S u b h a m S a l e s P v t . L t d . f o r t h e a m o u n t o f R s . 2 5 L a k h . I f t h i s m u c h i s p o i n t e d t o u s t h a t s h o u l d b e t h e e n d o f t h e m a t t e r . 9 . S o f a r a s t h e a r g u m e n t o f Mr . S h a h a s r e g a r d s t h e n e w p r o c e d u r e , w h i c h i s n o w t o b e a d o p t e d i s c o n c e r n e d , w i l l b e a p p r e c i a t e d i n l i g h t o f t h e m a t e r i a l t h a t Mr . R a v a l m a y s h o w t o u s . 1 0 . I s s u e N o t i c e t o t h e r e s p o n d e n t , r e t u r n a b l e o n 2 8 . 0 4 . 2 0 2 2 . We r e q u e s t Mr . R a v a l t o a c t l i t t l e p r o m p t l y a n d c a l l f o r t h e n e c e s s a r y d e t a i l s . N o t i f y t h i s m a t t e r o n t o p o f t h e b o a r d . O n e s e t o f t h e e n t i r e p a p e r - b o o k s h a l l b e f u r n i s h e d t o Mr s . K a l p a n a R a v a l a t t h e e a r l i e s t . 1 1 . I t g o e s w i t h o u t s a y i n g t h a t a n y i n f o r m a t i o n m u s t b e s u b s t a n t i a t e d o n t h e b a s i s o f t h e r e c o r d a v a i l a b l e . I f a n y i n f o r m a t i o n i s n o t s u b s t a n t i a t e d w i t h a n y t h i n g o n p a p e r , t h e n p e r h a p s t h e A s s e s s i n g O f f i c e r m a y n o t b e j u s t i f i e d i n j u s t r a n d o m l y i s s u i n g s u c h n o t i c e . T h e r e f o r e , t o m o r r o w i f t h e A s s e s s i n g O f f i c e r i s n o t a b l e t o s u b s t a n t i a t e t h e i n f o r m a t i o n o n t h e b a s i s o f a n y r e c o r d i n w r i t i n g i n t h e f o r m o f a b a n k s t a t e m e n t i t s e l f , t h e n w e m a y m a k e a p p r o p r i a t e o b s e r v a t i o n a s t o h o w t h e A s s e s s i n g O f f i c e r i s e x p e c t e d t o p r o c e e d i n a c c o r d a n c e w i t h l a w . D i r e c t s e r v i c e p e r m i t t e d . ” Page 3 of 4 C/SCA/8208/2022 ORDER DATED: 02/05/2022 4 T o d a y , w h e n t h e m a t t e r w a s t a k e n u p f o r f u r t h e r h e a r i n g , Ms . R a v a l , t h e l e a r n e d S e n i o r S t a n d i n g C o u n s e l a p p e a r i n g f o r t h e R e v e n u e p o i n t e d o u t t h a t t h e v e r i f i c a t i o n o f t h e o r i g i n a l r e c o r d s r e v e a l e d t h a t t h e a l l e g e d t r a n s a c t i o n h a d o c c u r r e d i n a d i f f e r e n t a s s e s s m e n t y e a r a n d n o t r e l e v a n t t h e a s s e s s m e n t y e a r f o r w h i c h t h e n o t i c e u n d e r S e c t i o n 1 4 8 A h a s b e e n i s s u e d . 5 I n v i e w o f t h e a f o r e s a i d , t h e i m p u g n e d n o t i c e i s s u e d b y t h e A s s e s s i n g O f f i c e r d e s e r v e s t o b e q u a s h e d a n d s e t a s i d e . T h e s a m e i s , a c c o r d i n g l y , q u a s h e d a n d s e t a s i d e . I f t h e R e v e n u e w a n t s t o r e o p e n t h e a s s e s s m e n t f o r a n y o t h e r r e l e v a n t a s s e s s m e n t y e a r a n d i f p e r m i s s i b l e i n l a w , i t m a y d o s o i n a c c o r d a n c e w i t h l a w . 6 Wi t h t h e a f o r e s a i d , t h i s w r i t a p p l i c a t i o n s t a n d s d i s p o s e d o f . (J. B. PARDIWALA, J) (NISHA M. THAKORE,J) CHANDRESH Page 4 of 4 "