Sonansh Creations Pvt Ltd Vs ACIT And Anr. (Delhi High Court)
Conclusion: Where assessee had produced ledger accounts, AO did not have any material to substantiate that deposits aggregating ₹66,44,134/- were made in assessee’s bank account to contradict the same. Clearly, AO was required to be satisfied that such entries exists particularly where assessee had produced its accounts to show that the value of transactions was not as stated in the notice under Section 148A(b).
Held: AO had issued a notice under Section 148 calling upon assessee to deliver its return of income for the AY 2015-16 within a period of thirty days from the date of service of the said notice. Assessee-company responded to the said notice by objecting to its issuance without following the procedure as prescribed under Section 148A. Thereafter, assessee filed a writ petition [being W.P.(C) 518/2022] in this court challenging the issuance of the notice under Section 148 without following the procedure as prescribed under Section 148A. However, in view of the subsequent decision of the Supreme Court in Union of India & Ors. v. Ashish Agarwal2, the proceedings were revived. AO issued a fresh notice under Section 148A(b) calling upon assessee to respond to the information as available with the AO, which was suggestive of assessee’s income escaping assessment. According to the AO, assessee was a party to the accommodation entries of a value of ₹66,44,134/-, from companies related to one Sh. Joginder Pal Gupta. Assessee claimed that the value of the transaction with the said companies was ₹47,39,128/-, which was less than ₹50,00,000/- and out of the aforesaid sum, an amount of ₹9,89,128/- entered into with GMZ Commodities Pvt. Ltd. was on account of the profit on sale of shares and the petitioner had duly paid tax on the same. Notwithstanding assessee’s response that the value of transactions with three entities in question, which according to the AO, was suggestive of assessee’s income escaping assessment, were less than ₹50,00,000/-; AO issued the impugned order under Section 148A(d) holding that it was a fit case to issue a notice under Section 148. It was held that PCIT was of the view that the transactions as reported in insight portal needed further examination, thus, it would be a fit case for issuance of notice under Section 148. As observed earlier, this view was unsustainable. AO was required to form an opinion as to whether there was any credible information to substantiate that assessee’s assertion that the aggregate value of the transactions in question was less than ₹50,00,000/-, was incorrect. Clearly, at the stage of passing an order under Section 148A(d), AO was not required to form any conclusive view as to whether the entries in question represented income that had escaped assessment. Whilst, assessee had produced ledger accounts, AO did not have any material to substantiate that deposits aggregating ₹66,44,134/- were made in assessee’s bank account to contradict the same. Clearly, AO was required to be satisfied that such entries exists particularly where assessee had produced its accounts to show that the value of transactions was not as stated in the notice under Section 148A(b). If AO had any material to establish that the value of bank transfers in assessee’s bank account was in excess of what was claimed by assessee, AO would not be precluded from initiating fresh proceedings for reopening assessee’s assessments albeit in accordance with law.
