Sunil Kumar Jain Shrishrimal V. The Chief Commissioner Of Income Tax and Deputy Commissioner Of Income Tax and Assistant Commissioner Of Income Tax and National Faceless Assessment Centre

WPT/183/2023

AI Insights

The case involves Sunil Kumar Jain Shrishrimal, a proprietor of M/s Saheli Jewelers, who challenged the reopening of his income tax assessment for the year 2016-2017. The Income Tax Department issued notices and orders under Sections 148 and 148A of the Income Tax Act, alleging that the petitioner had made bogus purchases amounting to Rs.60,33,02,548 from M/s Navkar Jewellers, which had escaped assessment. The petitioner argued that he was not provided adequate opportunity to defend himself and that the procedural requirements were not met. The court, referencing various Supreme Court and High Court judgments, concluded that the authorities had followed the correct procedure and dismissed the petition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 804903 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 25-07-2023
• Assessment Year: misc
• Other Referred Cases: Union of India and Others Vs. Ashish Agarwal, Red Chilli International Sales Vs. Income Tax Officer & Anr., Principal Commissioner of Income Tax-I Vs. Shri Pukhraj Soni, Sita Ram Gautam Vs. Deputy Commissioner of Income Tax, Gian Castings Private Limited Vs. Central Board of Direct Taxes, Anshul Jain Vs. Principal Commissioner of Income Tax, Barbrik Projects Ltd. Vs. Union of India and others
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: AJAY KUMRANI
• Assessee Lawyers: GANESH PUROHIT; ANAND DADARIYA
• Keywords: Bogus purchases; Income Tax; Non-PAN case; Notice; Reassessment
• Section: 148; 148A(b); 148A(d); 149(1)(b); 44 AB

Judgement Text

"-1- NAFR HIGH COURT OF CHHATTISGARH, BILASPUR WPT No. 183 of 2023 Sunil Kumar Jain Shrishrimal S/o Late Shri Mohanlal Shrishrimal Aged About 62 Years Occupation Proprietor, M/s Saheli Jewelers, Gandhi Chowk Durg (C.G.) 491001 Pan No. Ajcps2009q ---- Petitioner Versus 1. The Chief Commissioner Of Income Tax Central Revenue Building, Raipur (C.G.) 2. Deputy Commissioner Of Income Tax Central Revenue Building, Raipur (C.G.) 3. Assistant Commissioner Of Income Tax Circle - 1(1), Income Tax Office 32/32 Bungalows, Bhilai (C.G.) 490031 4. National Faceless Assessment Centre New Delhi. ---- Respondents (Cause Title taken from Case Information System) For Petitioner : Mr. Ganesh Ram Purohit, Senior Advocate with Mr. Anand Dadariya, Advocate For Respondents : Mr. Ajay Kumrani, Advocate holding the brief of Mr. Amit Choudhari, Advocate Hon'ble Shri Justice Rakesh Mohan Pandey Order on Board 25.07.2023 Heard. 1) The petitioner has assailed the notice dated 26.06.2023 issued under Section 148 of the Income Tax Act along with updated order under Section 148A(d) of the Income Tax Act, 1961 (for short ‘the Income Tax Act’) issued by respondent No.2/Deputy -2- Commissioner of Income Tax, Circle-1(1), Bhilai (C.G.). 2) The facts of the present case are that the petitioner is an individual, carrying on the business of purchase and sale of jewellery as proprietor of M/s. Saheli Jewelers at Bhilai (C.G.). His PAN Number is AJCPS2009Q and he submitted his return of income for Assessment Year 2016-2017 on 10.10.2016 where total income was declared as Rs.88,80,040/-. In support of the Income Tax Return, an audit report in Form No.3CB and 3CD under Section 44-AB of the Income Tax Act was also submitted. Surprisingly, the petitioner received a notice issued by respondent No.3 under Section 148A(b) dated 27.03.2023 through a registered post calling upon the petitioner to explain as to why his case for assessment year 2016-2017 should not be reopened. The petitioner submitted a reply to the notice on 03.04.2023 through e-mail before respondent No.2 along with the ledger account of M/s. Navkar Jewelers, Durg appearing in Account Books of M/s. Saheli Jewelers, Durg, wherein the total transaction with M/s. Navkar Jewelers was to the extent of Rs.12,37,62,890/- in respect of the purchase and sale of gold bullion. On 10.04.2023, an order under Section 148-A(d) of the Income Tax Act was passed and thereafter notice under Section 148 of the Income Tax Act was issued. 3) The petitioner preferred a Writ Petition No.119/2023 before this Court against a notice dated 10.04.2023 issued under Section 148 and order passed under Section 148-A(d) of the Income Tax Act and vide order dated 04.05.2023, the petition was allowed -3- and the matter was remitted back to respondent No.2, to pass orders afresh after supplying the relevant materials and information relied upon by the Revenue, in light of the judgment passed by the Hon’ble Supreme Court in the matter of Union of India and Others Vs. Ashish Agarwal, 2023(1) SCC 617. 4) Thereafter again, on 15.05.2023, notice under Section 148A(b) of the Income Tax Act was issued and after submission of the reply, an order under Section 148A(d) of the Income Tax Act was passed and thereafter, notice under Section 148 of the Income Tax Act was issued on 26.06.2023 against which, this petition has been preferred. 5) Learned counsel for the petitioner would submit that against the order passed by respondent No.2 under Section 148A (d) and notice issued under Section 148 of the Income Tax Act, there is no provision for appeal or revision and duty is cast upon the authority passing the order to consider all the relevant and available defence taken by the petitioner. He would submit that proper opportunity was not afforded to the petitioner as the documents have not been supplied despite repeated applications. It is further submitted that the return for Assessment Year 2016-2017 was filed and the same is still available with the authorities, therefore, treating the assessee M/s. Saheli Jewelers as a NON-PAN case and not uploading the notices and order on the ITBA portal on the ID of the petitioner has rendered the entire process illegal. He would also submit that the order passed under Section 148A (d) of the Income Tax Act is contrary to the -4- provisions of Section 149(1)(b) of the Income Tax Act as it has to be proved by the Revenue that income chargeable to tax more than Rs.50 lacs was escaped by the assessee and the limitation is only three years, whereas, for availing the benefit of the extended period of 10 years it must be shown that income chargeable to tax was more than Rs. 50 lakh. The order has been passed and notice has been issued against the petitioner whereas, there is no material to establish that the petitioner has escaped assessment in a particular assessment year for the chargeable tax of more than Rs.50 lacs. Learned counsel for the petitioner would further submit that in an earlier round of litigation, this Court has categorically directed the Revenue to supply the documents, which are the foundation of the order passed under Section 148A (d) and notice issued under Section 148 of the Income Tax Act but same has not been complied with in its letter and spirit. He has placed reliance on the judgments passed by the Hon’ble Supreme Court in the matters of Union of India and others Vs. Ashish Agarwal (supra), Red Chilli International Sales Vs. Income Tax Officer & Anr., reported in 2023 SCC Online SC 237 and judgment passed by the High Court of Madhya Pradesh Indore Bench in the matter of Principal Commissioner of Income Tax-I Vs. Shri Pukhraj Soni passed in Income Tax Appeal No.53/2017 dated 06.02.2019 and judgment passed by the High Court of Madhya Pradesh at Jabalpur in the matter of Sita Ram Gautam Vs. Deputy Commissioner of Income Tax in Writ Petition -5- No.8416 of 2023 decided on 20.04.2023. 6) On the other hand, learned counsel for the respondents would submit that during the survey under Section 133A of the Income Tax Act on Pagaria Group, Sadar Bazar, Raipur, one Mohit Jain was found along with the cash amounting to Rs.33,00,000/- on 11.04.2019 and his statement was recorded on the same date where he stated that M/s. K.R. Jewellers, Raipur is involved in the trading of bullion and the seized amount was the sale proceeds of bullion of the last two days. Mr. Mohit Jain further admitted that he purchased bullion from M/s. Navkar Jewellers, M/s. Sumit Jewelers, M/s. K.D. Jewelers and M/s. Anup Jewellers. It is further admitted by this witness that though small cash bills were prepared but actually no such bullion was purchased or sold. He would further submit that the cash sales were repeatedly entered by M/s. Navkar Jewellers in its books of accounts during the Financial Year 2015-16. In the books of accounts of M/s. Navkar Jewellers during Financial Year 2015- 16, name of M/s. Saheli Jewellers has been entered pertaining to an order of Rs.60,33,02,548/- and thus, M/s. Saheli Jewellers has shown bogus purchases amounting to Rs.60,33,02,548/- from M/s. Navkar Jewellers during Assessment Year 2015-16. He would further submit that information was received on the Insight Portal as High-Risk CRIU/VRU information (NO PAN Case) and consequently, notice under Section 148 of the Income Tax Act was issued on 10.04.2023 after getting approval from the competent authority dated 06.04.2023 and same was set aside -6- by this Court vide order dated 04.05.2023 in WPT No.119 of 2023. He would further submit that the notice under Section 148A (b) of the Income Tax Act was issued on 15.05.2023 along with the complete information received on the Insight Portal of ITBA and in turn, the petitioner filed his written submission on 19.05.2023. It is further argued that during that period, the petitioner moved an application to supply certain documents and all the documents available on the Insight Portal of ITBA were supplied to the petitioner. Approval was sought from CCIT, Raipur and the same was accorded on 27.03.2023 to issue a manual notice under Section 148A of the Income Tax Act. Thereafter, an order under Section 148A (d) of the Income Tax Act was passed and a notice under Section 148 of the Income Tax Act was issued to the petitioner. He would also submit that according to Circular No.19/2019 dated 14.08.2019, no communication shall be issued by any income tax authority relating to assessment, appeals, orders, statutory or otherwise, exemption etc. to the assessee or any other person on or after the 1st day of October 2019 unless a computer generated Document Identification Number (DIN) has been allotted. His next contention is that according to a memorandum dated 20.02.2023 issued by the Department of Revenue, Ministry of Finance, Government of India automation is to be done faceless and thereafter a notice under Section 148 of the Income Act is to be issued by the jurisdictional Assessing Officer according to the provisions of Section 151A of the Income Tax Act. -7- 7) Learned counsel for the respondents has placed reliance upon the judgments passed by the Hon’ble Supreme Court in the matter of Raymond Woollen Mills Limited Vs. Income Tax Officer, Centre XI, Range Bombay & Others, reported in 2008 (14) SCC 218, and the judgments passed by this Court in the matters of M/s. Precision Engineering and another Vs. Assistant Commissioner of Income Tax and others, Writ Appeal No.336 of 2019 and Hariom Rice Mill Pvt. Ltd. and another Vs. Assistant Commissioner of Income Tax Circle 2(1), Bilaspur, Writ Appeal No.399/2019. He would submit that when the procedural requirements are satisfied and the inference drawn is based on the relevant materials, the High Court can't exercise the jurisdiction under Article 227 of the Constitution of India. 8) In rejoinder, learned counsel for the petitioner would submit that no evidence or material was supplied to the assessee by the respondents. The petitioner is maintaining regular books of accounts. The purchases from M/s. Navkar Jewellers are recorded in the books of accounts of the petitioner. The respondents have not provided any material or evidence to show the extent of transactions. In pursuance of the order passed by this Court in WPT No.119/2023, the respondents have not followed the law laid down by the Hon’ble Supreme Court in the matter of Ashish Agrawal (supra). It is also stated that if some entries are found in the record of Pagaria Group, then on the basis of such entries, the petitioner cannot be implicated and -8- held responsible. He would further submit that according to the respondents, they have treated the petitioner’s case as a Non- PAN case, whereas in the order passed under Section 148A (d) of the Income Tax Act dated 10.04.2023, it is specifically mentioned that the assessee has filed return of the income on 10.10.2016 showing total income of Rs.88,80,040/- and thus, the respondents have taken a contrary stand. He would further submit that the judgment of the Hon’ble Supreme Court in the matter of Raymond Woolen Mills Limited (Supra) would not apply in the present case as that case is in the backdrop of old Sections 147 and 148A of the Income Tax Act, whereas Section 148A of the Income Tax Act has been introduced in the Income Tax Act w.e.f. 01.04.2021. 9) I have heard learned counsel for the parties and perused the documents. 10) Section 148A has been introduced in the Income Tax Act from 01.04.2021. This Section says that before issuing notice, the Assessing Officer shall conduct an inquiry and provide an opportunity of being heard to the assessee. After taking into consideration the reply filed by the assessee, the Assessing Officer shall decide by passing an order, whether the case is fit for issuance of notice under Section 148 of the Income Tax Act and a certified copy of such order passed under Section 148 (A) (d) of the Income Tax Act along with such notice have to be served upon the assessee. The limitation for issuance of notice under Section 148 is provided in Section 149 of the Income Tax -9- Act. In normal cases, no notice shall be issued if three years have elapsed from the end of the relevant assessment year. Notice beyond the period of three years from the end of the relevant assessment year can be issued where the Assessing Officer would not be in possession of books of accounts or other documents or evidence which would reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment, amounts to or is likely to amount to fifty lacs rupees or more for that year. In such cases, notice can be issued beyond the period of three years but not beyond the period of 10 years from the end of the relevant assessment year. Notice under Section 148 of the Income Tax Act can be issued when there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of an assessee for the relevant assessment year. The specified authority for approving inquiries, providing an opportunity for passing orders under Section 148 of the Income Tax Act and for issuance of notice under Section 148 of the Income Tax Act is the Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year or Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General if more than three years have elapsed from the end of the relevant assessment year. 11) In the present case, the Assessing Officer found that during -10- Assessment Year 2015-16, the petitioner has shown bogus purchases amounting to Rs.60,33,02,548/- from M/s. Navkar Jewellers, Durg (C.G.). Information was received on the Insight Portal of ITBA. A show cause notice under Section 148A (b) of the Income Tax Act was issued on 27.03.2023 after obtaining approval from CCIT, Raipur. The written submission was filed by the petitioner on 19.05.2023. The petitioner in reply took a stand that the statement of Mohit Jain is contradictory and it cannot be used against the petitioner. In pursuance of the order passed by this Court in WPT No.119 of 2023, complete information received on Insight Portal was served upon the petitioner on 15.05.2023 and further, the reply was filed by the petitioner on 26.05.2023, wherein, it was submitted that basis of order and notice i.e. bills of bogus purchases amounting to Rs. 60,33,02,548/- from M/s. Navkar Jewelers during Financial Year 2015-16 have not been provided and information in this regard has also not been supplied. 12) Now it would be advantageous to deal with the judgments cited by the learned counsel for the petitioner. In the matter of Ashish Agrawal (supra), the Hon’ble Supreme Court has laid down the procedure to be adopted under the newly added Section 148A of the Income Tax Act. The relevant paras are as under:- “25.1 The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and treated to be showcause notices in terms of section 148A(b). The respective assessing officers shall within thirty days from today provide to the assessees the information and -11- material relied upon by the Revenue so that the assessees can reply to the notices within two weeks thereafter; 25.2 The requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a) be dispensed with as a onetime measure visàvis 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; 25.3 The assessing officers shall thereafter pass an order in terms of section 148A(d) after following the due procedure as required under section 148A(b) in respect of each of the concerned assessees; 25.4 All the defences which may be available to the assessee under section 149 and/or which may be available under the Finance Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available and; 25.5 The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended section 148 of the IT Act irrespective of whether they have been assailed before this Court or not. 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 substituted 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 -12- 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 one- time measure visàvis 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. ” 13) In the matter of Red Chilli International Sales (supra), the Hon’ble Supreme Court held that the provisions of reopening under the Income Tax Act, 1961 have undergone an amendment by the Finance Act, 2021 and consequently the matter would require a deeper and in-depth consideration keeping in view the earlier case law. Consequently, the Hon’ble Supreme Court set aside the order passed by the High Court and held that the petition would be maintainable and the issue would be examined in depth by the High Court if and when it arises for consideration. -13- 14) In the matter of Shri Pukhraj Soni (supra), the Hon’ble Supreme Court held that the incriminating materials in the form of random sheets, loose papers, computer prints, hard disk and pen drive etc. are inadmissible in evidence. 15) In the matter of Sita Ram Gautam (supra), the High Court of Madhya Pradesh held that when the quantum of Income escaped by the assessee is alleged to be less than Rs.50 lacs, no order could be passed under Section 148A(d) of the Income Tax Act. 16) Now coming to the judgments cited by learned counsel for the respondents. In the matters of Gian Castings Private Limited Vs. Central Board of Direct Taxes and others, CWP No.9142 of 2022 dated 02.06.2022, and Anshul Jain Vs. Principal Commissioner of Income Tax and another, CWP 10219 of 2022, the Punjab and Haryana High Court at Chandigarh while dealing with a similar issue held that where the proceedings have not even been concluded by the statutory authority, the writ Court should not interfere at such premature stage. It is further held that it is not a case where from a bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. The correctness of order under Section 148A (d) of the Income Tax Act is being challenged on the factual premise contending that jurisdiction though vested has been wrongly exercised. There is a vexed distinction between jurisdictional error and error of law/fact within the jurisdiction and for rectification or errors statutory remedy has -14- been provided. The order passed by the High Court of Punjab and Haryana has been affirmed by the Hon’ble Supreme Court in SLP(C) No.10762 of 2022 order dated 17.06.2022 and SLP No.14823/2022 order dated 02.09.2022 respectively. 17) The Division Bench of the High Court of Chhattisgarh in the matter of Barbrik Projects Ltd. Vs. Union of India and others, passed in Writ Appeal No.473 of 2022, dated 15.12.2022 while dealing with a similar issue in paras. 31(12), 32 & 33 observed as under : “31(12). After considering the reply of the assesse and data available on the record, it is well settled that the assessee has made transactions of Rs.2,20,00,275/- during the FY 2017-18 in form of bogus purchase from the M/s. Panveer Trading Private Limited who are involved in providing of accommodation entries in form of bogus sale/purchase for commission. The assessee is the beneficiary company in this case and the above transaction where no goods were transferred from the seller to purchaser. Only entries have been made in the books. By making accommodation entries the assessee has raised bogus expenditure in terms of bogus purchase. Thus, the amount of purchase made from the above parties of Rs. 2,20,00,275/- has escaped assessment during the AY 2018-19. The information suggests that the income chargeable to tax has escaped assessment by Rs. 2,20,00,275/-….” 32. There is, prima facie, some material on the basis of which the Department could reopen the case. The petitioner had not even made an attempt to assert that the material facts relied on in the SCN is erroneous. 33. In view of the above, we are of the opinion that no interference is called for with the order of the learned Single Judge. Accordingly, the writ petition is dismissed.” -15- 18) Now coming to the facts of the present case, in light of the judgments passed by the Hon’ble Supreme Court it is quite vivid that in the matter of Ashish Agrawal (supra), the Hon’ble Supreme Court has dealt with the new provision of Section 147 to 151 of the Income Tax Act on the ground that w.e.f. 01.04.2021 the law has been amended and has laid down the procedure which has to be adopted by the authorities. In the matter of Red Chilli International Sales (supra), the Hon’ble Supreme Court has held that the writ petition is maintainable for consideration of the matter in depth. In the matter of Shri Pukhraj Soni (supra), old provisions have been dealt with and in the matter of Sita Ram Gautam (supra), it is held that notice under Section 148 of the amended Income Tax Act cannot be issued when the quantum of income escaped is less than 50 lacs and thus, the decisions cited by learned counsel for the petitioner are of no help. 19) At the same time, the respondents have cited certain judgments passed by the various High Courts and some of them have been affirmed by the Hon’ble Supreme Court where it is categorically held that if there is no procedural fault, the Writ Court should not interfere at such premature stage when the proceeding initiated against the assessee are yet to be concluded by the statutory authority and in one of the decisions passed by the Division Bench of this Court it was held that the bogus purchases can be made basis for issuance of notice under Section 148 of the Income Tax Act and the said writ petition preferred by the -16- assessee was dismissed. 20) In view of the above, it is quite vivid that the documents have been supplied to the petitioner in pursuance of the order passed by this Court in WPT No.119 of 2023; thereafter notice was issued under Section 148A(b) of the Income Tax Act; the reply was filed by the petitioner; thereafter the order was passed under Section 148A(d) of the Income Tax Act and at the same time, notice under Section 148 of the Income Tax Act was issued; the matter is still pending before the authority and the petitioner has sufficient opportunity to take all defences available to him, in that view of the matter, I do not find any good ground to interfere with the order passed by the authorities under Section 148A(d) and notice issued under Section 148 of the Income Tax Act. Consequently, the present petition fails and is hereby dismissed. Sd/- (Rakesh Mohan Pandey) Judge Rekha "