In a significant ruling delivered on Monday, the Delhi High Court has quashed a re-assessment notice under section 148A/148A(d) of the Income Tax Act, 1961 issued on the basis of reconciliation between the income tax returns and GST returns data.
The petitioner-assessee, M/s Best Buildwell Private Limited approached the High Court challenging the re-assessment alleging that that the Petitioner has made purchases from certain non-filers. The assessee contended before the Court that the impugned order under Section 148A(d) of the Act merely relies on an alleged report prepared against the assessee company. He emphasises that no such report was ever furnished to the Petitioner.
A bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that the impugned show cause notice as well as the impugned order under Section 148A(d) of the Act are based on distinct and separate grounds.
āThe show cause notice primarily states that āit is seen that the Petitioner has made purchases from certain non-filersā. However no details or any information of these entities was provided to the Petitioner. It is not understood as to how the Petitioner was to know which of the entities it dealt with were filers or non-filers!,ā the Court said.
Quashing the notice, the Court held that āfurther, the impugned order states that a report was prepared against the Petitioner-company which concludes that the assessee had shown bogus purchases from bogus entities to suppress the profit of the company and reduce the tax liability during the years 2015-16 to 2020-21. However, no such report which forms the basis for the āinformationā on which the assessment was proposed to be reopened had been provided to the Petitioner. In fact, there are no specific allegations in the show cause notice to which the Petitioner could file a reply.ā
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