VMVS TEXTILES PRIVATE LIMITED V. INCOME TAX OFFICER WARD 26(1) & ANR.

W.P.(C)/5766/2023

AI Insights

The case involves VMVS Textiles Private Limited, the petitioner, challenging an order under Section 148A(d) of the Income Tax Act, 1961, concerning the Assessment Year 2013-2014. The petitioner was alleged to have benefited from bogus unsecured loans amounting to Rs. 50,00,221 from two entities, which the revenue claimed had escaped assessment. The petitioner contested the inclusion of a transaction twice in the assessment and argued that the income deemed to have escaped assessment was not above Rs. 50,00,000 as claimed. The court, upon hearing, decided to set aside the impugned order and remand the matter back to the AO for a fresh examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 678088 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 03-05-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: PUNEET RAI; ASHVINI KUMAR; MADHAVI SHUKLA
• Assessee Lawyers: PRASHANT SHUKLA
• Keywords: Accommodation entries; Assessment Year 2013-2014; Bogus unsecured loans; Escaped assessment
• Section: 148; 148A(d)

Judgement Text

" W.P.(C) 5766/2023 Page 1 of 4 $~55 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Decision delivered on: 03.05.2023 + W.P.(C) 5766/2023 VMVS TEXTILES PRIVATE LIMITED ..... Petitioner Through: Mr Prashant Shukla, Adv. versus INCOME TAX OFFICER WARD 26(1) & ANR. ..... Respondents Through: Mr Puneet Rai, Sr Standing Counsel with Mr Ashvini Kumar and Ms Madhavi Shukla, 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): 1. Issue notice. 1.1 Mr Puneet Rai, learned senior standing counsel, accepts notice on behalf of the respondents/revenue. 2. In view of the directions that we propose to pass, Mr Rai says that he does not wish to file a counter-affidavit in the matter, and that he will rely upon the record, as is presently available to the Court. 2.1 Therefore, with the consent of the learned counsel for the parties, the writ petition is taken up for hearing and final disposal at this stage itself. Digitally Signed By:NEELAM SHARMA Signing Date:29.05.2023 16:46:11 Signature Not Verified W.P.(C) 5766/2023 Page 2 of 4 3. This writ petition concerns Assessment Year (AY) 2013-2014. 4. The writ petition assails the order dated 30.07.2022 passed under Section 148A(d) of the Income Tax Act, 1961 [in short, “Act”]. 4.1 Besides this, challenge is also laid to the CBDT instruction No. 1/2022 dated 11.05.2022. 5. Furthermore, the petitioner seeks a direction qua the respondents/revenue, to the effect that they should be restrained from taking further action, in pursuance of the consequential notice issued under Section 148 of the Act. 6. The principal allegation made against the petitioner is, that it is a beneficiary of accommodation entries provided by two entities i.e., Gopalpriya Commercial Private Limited and Lookline Vincom Pvt. Ltd. 7. The cumulative value of these accommodation entries has been pegged at Rs. 50,00,221/-. According to the respondents/revenue, these were bogus unsecured loans, said to have been obtained by the petitioner from the aforementioned entities. 8. Based on these broad allegations, the charge levelled against the petitioner is, that income chargeable to tax amounting to Rs. 50,00,221/- had escaped assessment. 9. In the reply filed by petitioner, it was inter alia pointed out, that the AO had wrongly taken into account, a transaction said to have been entered into between the petitioner and Gopalpriya Commercial Private Limited, twice over. Digitally Signed By:NEELAM SHARMA Signing Date:29.05.2023 16:46:11 Signature Not Verified W.P.(C) 5766/2023 Page 3 of 4 10. To be noted, as per the AO, on the same date i.e., 23.03.2013, two bogus transactions were said to have been entered into between the petitioner and Gopalpriya Commercial Private Limited, with each transaction amounting to Rs.10,00,055/- 11. Mr Prashant Shukla, who appears on behalf of the petitioner, says that the bank statements, in support of this stand taken by the petitioner, were also placed before the AO. 12. It is Mr Shukla’s contention, that although this aspect is noted in the impugned order dated 30.07.2022 passed by the AO under Section 148A(d) of the Act, the conclusion reached, that the escaped income is above Rs.50,00,000/- on the face of it, does not appear to be either reasonable or rational. 13. As noted above, in this context, Mr Shukla has placed emphasis on the bank statement, which was placed before the AO. It is Mr Shukla’s contention, that there is no information or material furnished to the petitioner, which proves that two transactions amounting to Rs. 10,00,055/- were entered into between petitioner and Gopalpriya Commercial Private Limited. 14. Mr Rai says, that the best way forward would be to remit the matter to the AO, to enable him to have a fresh look at the matter. 15. Accordingly, the impugned order dated 30.07.2022 passed under Section 148A(d) of the Act is set aside. 16. Liberty is, however, given to the AO to re-examine the issue. Digitally Signed By:NEELAM SHARMA Signing Date:29.05.2023 16:46:11 Signature Not Verified W.P.(C) 5766/2023 Page 4 of 4 17. For this purpose, the AO will issue notice to the petitioner. The AO will also grant personal hearing to the authorised representative of the petitioner. The notice will indicate the date and time of the hearing. 18. We may add, that since the order dated 30.07.2022 passed under Section 148A(d) of the Act has been set aside, quite logically, all consequential proceedings will collapse. 19. The writ petition is disposed of in the aforesaid terms. 20. Consequently, the pending application shall stand closed. RAJIV SHAKDHER, J GIRISH KATHPALIA, J MAY 3, 2023/ry Click here to check corrigendum, if any Digitally Signed By:NEELAM SHARMA Signing Date:29.05.2023 16:46:11 Signature Not Verified "