Ajay Gupta (HUF) Vs ITC (Delhi High Court)
Delhi High Court held that the Income Tax Act, 1961 provides an able machinery for assessment/reassessment of tax, the Assessee is not permitted to abandon with the machinery and invoke writ jurisdiction of the High Court under Article 226 of the Constitution of India.
Facts-
The Petitioner Assessee was served with a Show Cause Notice u/s. 148A(b) of the Act by AO, wherein, it was stated that a search was conducted by the Investigation Wing, Rohtak on Tradenext Securities Ltd. (Earlier known as Lifeline Securities Limited) and the said entity is involved in providing accommodation entries through the modus operandi set out in the notice. It was stated that the said Tradenext Securities Ltd. (‘Tradenext Securities’) operates several dummy demat accounts to provide accommodation entries and one such account is of Mridul Securities Private Ltd. (‘Mridul Securities’). It was further stated that the Assessee herein had received 32000 shares of TVS Motor Company Ltd. (‘TVS Motor’) worth Rs. 94,81,600/- from the dummy demat account of Mridul Securities.
After perusing the reply filed by the Assessee, the AO held that it is a fit case of issuance of notice under Section 148 of the Act.
Conclusion-
The Supreme Court in Commissioner of Income Tax v. Chabildas and Anr. has held that as the Act of 1961 provides an able machinery for assessment/reassessment of tax, the Assessee is not permitted to abandon with the machinery and invoke writ jurisdiction of the High Court under Article 226 of the Constitution of India.
This Court is of the view that the present cases do not fall under the exceptional ground on which a writ jurisdiction of the High Court can be invoked. The aforesaid facts put forth are disputed questions of facts, which cannot be adjudicated by a writ court exercising jurisdiction under Article 226 of the Constitution. Accordingly, the present writ petitions along with the pending applications are dismissed.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Present writ petition, being W.P. (C) 15828 of 2022, has been filed by Ajay Gupta, who is the Karta of the Petitioner’s Hindu Undivided Family (‘HUF’), seeking quashing of the order dated 18th July, 2022 passed under Section 148A(d) (‘impugned order’) of the Income Tax Act, 1961 (‘the Act’) and the notice dated 18th July, 2022 passed under Section 148 (‘impugned notice’) of the Act, by the Income Tax Officer, Ward 54(1), Delhi, for the Assessment Year (‘AY’) 2016-17.
2. The brief facts giving rise to the present case are that the Petitioner Assessee was served with a Show Cause Notice (‘SCN’) dated 23rd May, 2022 under Section 148A(b) of the Act by the Assessing Officer (‘AO’) wherein it was stated that a search was conducted by the Investigation Wing, Rohtak on Tradenext Securities Ltd. (Earlier known as Lifeline Securities Limited) and the said entity is involved in providing accommodation entries through the modus operandi set out in the notice. It was stated that the said Tradenext Securities Ltd. (‘Tradenext Securities’) operates several dummy demat accounts to provide accommodation entries and one such account is of Mridul Securities Private Ltd. (‘Mridul Securities’). It was further stated that the Assessee herein had received 32000 shares of TVS Motor Company Ltd. (‘TVS Motor’) worth Rs. 94,81,600/- from the dummy demat account of Mridul Securities.
The relevant portion of the SCN issued under Section 148A(b) of the Act reads as follows:
“In this case information was received through Insight portal in High Risk category that-
1. A search was conducted by the inv Wing, Rohtak on Tradenext Securities Ltd (Lifeline Securities Ltd) and Kundu Group of Rohtak. It was found that family members of Kundu group had taken accommodation entries in form ofExempt LTCG u/s 10(38) of the IT Act, 1961.
2. It was found that the members of Kundu group/beneficiaries had in their possession contract notes for purchase of shares which dated back to F.Y. 2009- 10 but on further investigation no such transaction was traced on market/stock exchange.
3. Authorized signatory of Tradenext Securities Ltd had accepted on oath that the contract notes issued by them were bogus and fabricated. He has further stated that these contract notes were not issued by his company.
4. It was found that shares were purchased on exchange in the name of one Sh. Rakesh Sharma and were subsequently transferred off-market to Tradenext Securities Ltd without any consideration and this was ultimately transferred to the beneficiaries. Sh. Rakesh Sharma has stated that his account was mis-used and he had lodged FIR in regard to the same. Sh. Rakesh Sharma has also stated that he has never opened any Demat Account.
5. Some of the beneficiaries have admitted that they had no knowledge of Share trading and they had arranged exempt LTCG for 2-3% commission.
6. Modus-Operandi(MO)-
