In Bogus Purchase Assessment Officer cannot reject reply without recording satisfaction: Gauhati High Court
Gauhati High Court on 11th may 2022, held that on In Bogus Purchase Assessment Officer cannot reject reply without recording satisfaction, This was seen in the matter of Abhinav Mittal Vs. Union of India, Case No. WP(C)/3067/2022 this matter was presided by HONOURABLE MR. JUSTICE ACHINTYA MALLA BUJOR BARUA
FACTS OF THE CASE
Income tax held that a transaction of purchase & a transaction of sale are two different transactions in two opposite directions. If the contention is that bogus purchases were made & the reply given thereof is that no such purchases were made, but in fact it was a sale by the assessee, it was for the IT officials to apply their own mind on the reply given by the petitioner. Conveniently, the Assistant Commissioner converts the contention made in the show cause not ice from a bogus purchase to that of a sale after the reply of the petitioner & also instead of arriving at any gratification, the Assistant Commissioner merely expressed that it is rather strange that the assessee had acted in the manner indicated therein. In view of the above, we interfere with the order dated 31.03.2022 & remand the matter back to the Assistant Commissioner for an appropriate order to be passed as need under the law by arriving at a gratification regarding acceptability/non-acceptability of the reply given by the petitioner vis-à-vis the contention in the show cause notice u/s 148A of the Income Tax Act.
Heard Mr. A Jain, learned counsel for the petitioner. Also heard Mr. H Gupta, learned counsel for the respondents in the IT Department.
A notice u/s 148A of the Income Tax Act, 1961 dated 21.03.2022 was issued to the petitioner assessee wherein in paragraph 1 of the Annexure thereto it was provided as extracted:
“1.Information has been received through Insight Portal under High RiskCase Related Information that Sri Abhinav Mittal had made bogus purchases from M/s. Swastik traders, Prop. Shri Rahul Bhuraria for Rs.40,86,573/- & M/s Kalki Trading Company, Prop. Shri Deepesh Goel for Rs.25,94,075/- during the FY 201718.”
A reading of the said paragraph 1 prima facie indicates that the contention against the petitioner is that he had made bogus purchase from M/s. Swastik Traders whose proprietor is Rahul Bhuraria for an amount of Rs.40,86,573/- & M/s Kalki Trading Company whose proprietor is Shri Deepesh Goel for an amount of Rs.25,94,075/- during the financial year 2017-18.
The petitioner in response thereof had given a reply before the Assessment Officer that he had not made any purchase as alleged in the notice u/s 148(A), but on the other hand for an equivalent amount for the period 2017-18, he has sold Kabuli Channa & Rajma to M/s. Swastik Traders & Kalki Trading Company of the said amount.
A transaction of purchase & a transaction of sale are two different transactions in two opposite directions. If the contention is that bogus purchases were made & the reply given thereof is that no such purchases were made, but in fact it was a sale by the assessee, it was for the Income Tax officials to apply their own mind on the reply given by the petitioner.
By the order dated 31.03.2022 of the Assistant Commissioner the only gratification that was arrived at is as extracted: “….It is rather strange that the assessee had made the exact sale amount towards sale of kabuli chana, as against the alleged bogus sale reported in the information received through Risk Management Strategy of the Board…”
Conveniently, the Assistant Commissioner converts the contention made in the show cause notice from a bogus purchase to that of a sale after the reply of the petitioner & also instead of arriving at any gratification, the Assistant Commissioner merely expressed that it is rather strange that the assessee had acted in the manner indicated therein.
JUDGEMENT
In view of the above, we interfere with the order dated 31.03.2022 & remand the matter back to the Assistant Commissioner for an appropriate order to be passed as need under the law by arriving at a gratification regarding acceptability/non-acceptability of the reply given by the petitioner vis-à-vis the contention in the show cause notice u/s 148A of the Income Tax Act. We make it clear that we are not interfering with the order for any other reason other than what is indicated above & the Assistant Commissioner would proceed de-novo from the stage of show cause reply being submitted by the petitioner. Writ petition stands disposed of in the above terms.
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JUDGEMENT REVIEWED BY YAKSHU JINDAL.