Gauhati High Court
Page No.# 1/19 vs Union Of India And 2 Ors on 29 November, 2024
Author: Devashis Baruah
Bench: Devashis Baruah
Page No.# 1/19
GAHC010223292022
2024:GAU-AS:11932
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/7014/2022
ABHISHEK MITTAL
S/O- SHRI SANTOSH KUMAR JASRASARIA, R/O- HOUSE NO. 17,
AOYIMKUM VILLAGE, NEAR EROS CINEMA, DIMAPUR-797112,
NAGALAND.
VERSUS
UNION OF INDIA AND 2 ORS
THROUGH THE SECRETARY, MINISTRY OF FINANCE, NORTH BLOCK, NEW
DELHI-110001.
2:PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL)
GUWAHATI
AAYAKAR BHAWAN
CHRISTIAN BASTI
G.S. ROAD
GUWAHATI-781005
ASSAM
3:ASSISTANT COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE-2
GUWAHATI
AAYAKAR BHAWAN
CHRISTIAN BASTI
G.S. ROAD
GUWAHATI-781005
ASSA
Linked Case : WP(C)/4975/2022
Page No.# 2/19
ABHINAV MITTAL
S/O- SHRI SANTOSH KUMAR JASRASARIA
R/O- HOUSE NO. 17
AOYIMKUM VILLAGE
NEAR EROS CINEMA
DIMAPUR-797112
NAGALAND
INDIA.
VERSUS
THE UNION OF INDIA AND 2 ORS
THROUGH THE SECRETARY
MINISTRY OF FINANCE
NORTH BLOCK
NEW DELHI-110001.
2:PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL)
GUWAHATI
AAYAKAR BHAWAN
CHRISTIAN BASTI
G.S. ROAD
GUWAHATI-781005
ASSAM
3:ASSISTANT COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE-2
GUWAHATI
AAYAKAR BHAWAN
CHRISTIAN BASTI
G.S. ROAD
GUWAHATI-781005
ASSAM
------------
For the Petitioner(s) : Mr. A. Jain, Sr. Advocate
For the Respondent(s) : Mr. S. C. Keyal, SC, Income Tax
Date of Hearing : 10.09.2024
Date of Judgment : 29.11.2024
Page No.# 3/19
BEFORE
HONOURABLE MR. JUSTICE DEVASHIS BARUAH
JUDGMENT AND ORDER (CAV)
Heard Mr. A. Jain, the learned counsel appearing on behalf of the
Petitioners in both the writ petitions and Mr. S. C. Keyal, the learned Standing
counsel appearing on behalf of the Income Tax Department.
2. Both the writ petitions are taken up together taking into consideration the
similarity of the issues and the order passed by this Court on 09.11.2022 in
WP(C) No.7014/2022 whereby both the writ petitions were tagged along
together.
3. The Petitioners in both the writ petitions have assailed the orders passed
under Clause (d) of Section 148A of the Income Tax Act, 1961 (for short ‘the
Act of 1961’) whereby the Respondent No.3 in both the writ proceedings have
passed orders opining that the income chargeable to tax had escaped
assessment and thereby attracting Section 147 of the Act of 1961 and is a fit
case for issuance of notice under Section 148 of the said Act of 1961.
4. It is relevant herein to observe that in normal course of events when a
notice is issued under Section 148 of the Act of 1961, the course available to
an assessee is to file the returns and on the basis thereof, the fresh
assessment proceedings are carried out. The assessee if so aggrieved, can
prefer appeal against such assessment order. However, in the present case, the
condition precedent to issue the notice under Section 148 of the Act of 1961
have been put to challenge on the ground that the mandate of Section 148A of
the Act of 1961 was not complied with. Therefore, the issue involved in the
instant proceedings pertains to as to whether the exercise of jurisdiction by the
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Respondent No.3 in both the proceedings was done in consonance with the
provisions of Section 148A of the Act of 1961.
5. At this stage, this Court finds it relevant to take note of the scope of
jurisdiction under Article 226 of the Constitution of India on the basis of the
well settled principles of law enunciated by the Supreme Court. In the case of
Godrej Sara Lee Vs. Excise and Taxation Officer cum Assessing Authority and
Others reported in (2023) 109 GSTR 402, the Supreme Court had the occasion
of dealing with the circumstances as to when a writ Court can exercise
jurisdiction when there is an alternative remedy available. It was opined by the
Supreme Court in the said judgment that the jurisdiction under Article 226 of
the Constitution can be exercised under the following circumstances:
(a) Where the writ petition seeks enforcement of any of the
fundamental rights;
(b) Where there is violation of principles of natural justice;
(c) Where the order or the proceedings are wholly without jurisdiction;
or
(d) Where the vires of an Act is challenged; or
(e) Where the controversy is purely a legal one and it does not involve
disputed questions of facts but only questions of law.
6. It is also apposite herein to take note of that in a subsequent judgment
of the Supreme Court in the case of PHR Invent Educational Society Vs. UCO
Bank and Others reported in (2024) SCC OnLine SC 528, the Supreme Court
opined that the High Court would not ordinarily entertain a writ petition under
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Article 226 of the Constitution if an effective remedy is available to the
aggrieved person. It was opined that this particular Rule applies with great
rigour in matters involving recovery of taxes, cess, fees, and others types of
public money and dues of banks and other financial institutions. The Supreme
Court further opined that though the powers of the High Court under Article
226 of the Constitution are of widest amplitude, still the Courts cannot be
oblivious of the rules of self-imposed restraint evolved by the Courts. It was
opined that though the rule of exhaustion of alternative remedy is a rule of
discretion and not one of compulsion, still it is difficult to fathom any reason
why the High Court should entertain a writ petition filed under Article 226 of
the Constitution.
7. In view of the above well settled principles of law, the question which
needs to be looked into in the instant proceedings is as to whether the
Petitioners have been able to make out a case to come within the exceptions
curved out by the well settled principles of law. To appreciate the said aspect,
this Court briefly deals with the facts leading to the filing of both the writ
petitions infra.
8. From a perusal of the pleadings in the writ petitions including the cause
title, it would be seen that both the writ petitioners are sons of one Shri
Santosh Kumar Jasrasaria. The Petitioner in WP(C) No.4975/2022 (hereinafter
for convenience referred to as ‘X’) holds a PAN Number being AFUPJ2208N. ‘X’
filed his return of income for the assessment year 2018-19 on 25.10.2018
declaring total income of Rs.43,44,760/-. Subsequent thereto, a search and
seizure action had taken place under Section 132 of the Act of 1961 on
08.02.2019. X’s case was selected for compulsory scrutiny and pursuant to the
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said search, notice was issued under Section 153A of the Act of 1961 requiring
X to file his return of income. X thereupon filed his return of income on
23.01.2021 declaring total income of Rs.1,36,44,760/- for the assessment year
2018-19 corresponding to the financial year 2017-18. Thereupon, an
assessment order was passed on 09.06.2021 whereby X’s total income was
assessed at Rs.1,36,44,760/-.
9. The Petitioner in WP(C) No.7014/2022 (hereinafter for convenience
referred to as ‘Y’) holds a PAN Number being BVXPM9739H. ‘Y’ had filed his
original return of income for the assessment year 2018-19 on 18.10.2018
declaring total income of Rs.39,89,630/-. Subsequent thereto, a search and
seizure action was conducted on 08.02.2019, Y’s case was selected for
compulsory scrutiny. Notice was issued under Section 153A of the Act of 1961
requiring Y to file his return of income and thereupon Y filed his return of
income on 23.01.2021 declaring total income of Rs.1,36,89,630/- for the
assessment year 2018-19 corresponding to the financial year 2017-18.
Thereupon, an assessment order was passed on 09.06.2021 whereby the total
income of Y was assessed at Rs.1,36,89,630/-.
10. The materials on record reveals that based upon certain information
received through Insight Portal, it was learnt that X had made bogus purchase
from M/s Swastik Traders of an amount of Rs.40,86,573/- and one M/s Kalki
Trading Company for Rs.25,94,075/- during the financial year 2017-18.
Similarly, in the case of Y, it revealed from the information that the Y had made
bogus purchase from M/s Swastik Traders to the tune of Rs.25,86,700/- for the
financial year 2017-18. On the basis of such information, both X and Y were
issued Show Cause notices dated 21.03.2022 under Section 148A(b) of the Act
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of 1961 for the assessment year 2018-19.
11. Both X and Y submitted their reply to the respective Show Cause notices
stating inter alia that the information received as regards purchases made by
both X and Y from their respective firms to the extent mentioned in the Show
Cause notice were partially correct However, it was clarified that the said
transactions were sales and not purchases and as such there can be no reason
that their income chargeable to tax had escaped assessment. Both X and Y in
support of their statements made in their Show Cause reply enclosed the
ledger copies of the party concerned along with the particular pages of the
bank account in which they have received the payments as well as the copy of
the invoice raised by them and the copy of a particular pages of the stock
register. On the basis thereof, both X and Y submitted in their show cause reply
that as there was no purchase rather there was a sale by them, there was no
question of reducing the income.
12. The records further reveals that on 31.03.2022, two separate orders
were passed by the Respondent No.3 in the case of X and Y under Section
148A(d) opining inter alia that there was a strong indicators that the income
chargeable to tax had escaped assessment in the case of both X and Y. A
perusal of the respective orders dated 31.03.2022 passed in the cases of both
X and Y which were similar reveals that the Respondent No.3 observed that
though X and Y did not make purchase but they sold to the parties concerned
as regards the exact amount which were duly reflected in the information
received through risk management strategy of the Board flagged in the Insight
Portal. It was therefore opined that there was a strong indicators that the
income chargeable to tax had escaped assessment in the case of both X and Y.
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13. The records further reveals that pursuant thereto, notice was issued
under Section 148 of the Act of 1961. Both X and Y thereupon challenged the
orders passed under Section 148A(d) of the Act of 1961 dated 31.03.2022 by
filing two separate writ petitions being WP(C) No.3067/2022 and WP(C)
No.3066/2022. Both these writ petitions were disposed of on 11.05.2022 vide
separate orders of similar content. The Coordinate Bench of this Court while
passing the orders dated 11.05.2022 interfered with the orders dated
31.03.2022 passed under Section 148A(d) of the Act of 1961 and remanded
the matter back to the Respondent No.3 for passing appropriate orders as
required under law by arriving at a satisfaction regarding the acceptability/non-
acceptability of the reply submitted by X and Y vis-à-vis the allegations in the
Show Cause notice under Section 148A of the Act of 1961.
14. The Coordinate Bench of this Court further observed that the orders
dated 31.03.2022 were interfered with for the reason that the Respondent
No.3 converted the allegations made in the Show Cause notices from bogus
purchase to that of a sale after the replies submitted by X and Y. Additionally,
the Respondent No.3 instead of arriving at some satisfaction merely assumed
that it was rather strange that the X and Y had acted in the manner indicated
therein. This Court further directed the Respondent No.3 to proceed de novo
from the stage of the Show Cause reply being submitted by X and Y.
15. The records reveal that pursuant thereto, the Respondent No.3 passed
two separate orders. In the case of X, an order was passed under Section
148A(d) on 31.05.2022 and in the case of Y, the order was passed under
Section 148A(d) of the Act of 1961 on 10.09.2022. Both these orders have
been separately assailed in both the writ petitions. It is under such
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circumstances, both the writ petitions have been filed before this Court.
16. In the backdrop of the above, let this Court therefore take note of the
respective submissions made by the learned counsels appearing on behalf of
the parties.
SUBMISSION OF THE LEARNED COUNSEL FOR THE PETITIONERS:
17. Mr. A. Jain, the learned counsel appearing on behalf of the Petitioners
submitted that the impugned orders are in contravention to Section 148A(b) of
the Act of 1961 as the Petitioners herein were not provided an opportunity of
being heard in the manner specified in the order dated 11.05.2022 by this
Court. The learned counsel submitted that the Show Cause notice was issued
alleging that the Petitioners herein have indulged in bogus transactions of sales
with the respective parties whereas in the reply so submitted, the Petitioners
had categorically shown from the materials on record that the Petitioners have
not carried out any purchase transactions with the parties in question rather
the Petitioners have sold the materials to the parties in question. The learned
counsel for the Petitioners therefore submitted that in the order dated
11.05.2022 passed by this Court in both the writ petitions i.e. WP(C)
No.3067/2022 and 3066/2022, this Court had categorically observed that a
transaction of purchase and transaction of sale are two different aspects and
as such without there being any Show Cause notice issued in that perspective,
the question of opining in the impugned orders that the Petitioners indulged in
transactions of bogus sale to the parties in question was in violation to Section
148A(b) of the Act of 1961.
18. The learned counsel for the Petitioners further submitted that the basis
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on which the impugned orders under Section 148A(d) of the Act of 1961 were
passed were on the basis of non-existent materials and were mere conjectures
and surmises of the Respondent No.3 and as such, this is a fit case for
interference with the impugned orders. In that regard, the learned counsel
relied upon the judgment of the learned Delhi High Court in the case of
Banyan Real Estate Fund Mauritius Vs. Assistant Commissioner of Income Tax
reported in (2024) 165 Taxmenn.com 210 (Del). The learned counsel further
relied upon an order passed by the learned Delhi High Court in the case of
Logix Infratech Pvt. Ltd. Vs. Deputy Commissioner of Income Tax, Central Circle,
13(1), New Delhi rendered in WP(C) No.12390/2022 to the effect that the
validity of the initiation of reassessment would have to be independently
evaluated and cannot be confused with the power that would ultimately be
available in the hands of the Assessing Officer which would be involved once
an assessment had been validly reopened. He further relied upon the
observations made in the said judgment wherein it was observed that when
the issue was never a part of the formation of the opinion for issuance of a
notice under Section 148A(b), the same cannot be made the basis for passing
an order under Section 148A(d).
SUBMISSION OF THE LEARNED STANDING COUNSEL FOR THE RESPONDENTS:
19. Per contra, Mr. S. C. Keyal, the learned Standing counsel appearing on
behalf of the Income Tax Department submitted that a perusal of the
impugned orders assailed in both the writ petitions would show that due
information was provided to the Petitioners in the Show Cause notices
pertaining to the transactions. The learned Standing counsel submitted that
upon examination of one Mr. Ashok Kumar Gupta, it came to light that he had
clandestinely been arranging racket of providing bogus accommodation entries
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of fictitious/bogus/non-existent purchases, sales, consignments in return for
commission. During his examination, the said Ashok Kumar Gupta furnished a
list of names of fictitious entities on which bogus purchase and bogus sales
were invoiced. In the list of fictitious entities as disclosed by Shri Ashok Kumar
Gupta, were names of one M/s Swastik Traders and Kalki Trading Company.
Upon further enquiries being made, it revealed that these firms namely M/s
Swastik Traders and M/s Kalki Trading Company had business transactions with
the firms of the Petitioners. This aspect was duly informed to both the
Petitioners vide separate Show Cause notices thereby intimating that these
bogus transactions which were reflected of M/s Swastik Traders and M/s Kalki
Trading Company were not examined during the financial year 2017-18. The
learned Standing counsel further submitted that when such Show Cause
notices were issued, both the Petitioners did not deny that they had relation
with those firms rather stated that the Petitioners had no purchase transactions
with those firms but had sold goods to those firms and in that support, have
enclosed the ledger copies, bank statements, invoices and the stock register.
The learned Standing counsel therefore submitted that the opportunity so
given was in accordance with Section 148A(b) of the Act of 1961 and as such
there was no infraction to the said provision. The learned Standing counsel
further submitted that in the order dated 11.05.2022 passed in WP(C)
No.3066/2022 and WP(C) No.3067/2022, this Court had made it clear that it
was only in respect to not providing adequate reasons in the order, the earlier
order dated 31.03.2022 was interfered with and there was a specific direction
to carry out de novo proceedings post the Show Cause reply. The learned
Standing counsel therefore submitted that this Court had not interfered with
the Show Cause notices so issued to the Petitioners under Section 148A(b) of
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the Act of 1961 and as such the Petitioners herein cannot assail the same
again in the instant proceedings.
20. The learned Standing counsel further submitted that a perusal of the
impugned orders would further show the modus operandi employed by the
Petitioners. The learned Standing counsel submitted that the goods in question
were Rajma and Kabuli Channa. A perusal of the documents which were
furnished by the Petitioners to their replies showed that the Petitioners had
business transactions with those firms. The invoices as well as the ledger
copies would further show that on the same day, there was purchases made by
the Petitioners from a firm namely M/s NCS Enterprise i.e. on 22.05.2017 and
on the same day, there were sales being made by the Petitioners to those firms
namely M/s Swastik Traders as well as M/s Kalki Trading Company. The learned
Standing counsel submitted that all these transactions on paper happened in
Delhi and there were no physical sales. He further submitted that the all those
purchases as well as the sales were doubtful which has been rightly recorded
in the impugned orders. He therefore submitted that the Respondent No.3 had
the jurisdiction to issue the notices under Section 148 as the preconditions
were duly satisfied. He further submitted that the instant writ petition do not
come within the exceptions for this Court ought to exercise the jurisdiction
under Article 226 of the Constitution. He further relied upon the judgments of
the Supreme Court in the case of Godrej Sara Lee (supra) and PHR Invent
(supra) and submitted that pursuant to fresh assessment orders passed in the
reassessment proceedings, the Petitioners would always have the liberty to
challenge the same before the appellate authority.
21. This Court has duly heard the learned counsels appearing on behalf of
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the parties and also perused the materials on record. From the said
submissions so made, the point for determination which arises are:
(a) Whether the impugned orders passed under Section 148A(d) are in
violation to the provisions of Section 148A?
(b) Whether any interference is required in the facts and circumstances of
the case?
22. The Finance Act, 2021 which came into force from 01.04.2021 had
substituted the provisions of Section 147 to 151 of the Act of 1961. By this
amendment, radical and reformative changes were made governing the
procedure for reassessment proceedings. As per the amended provisions, more
particularly from Sections 147 to 149 and Section 151 of the Act of 1961, they
have prescribed the procedure governing initiation of reassessment
proceedings. In terms with the substituted provisions of the Act of 1961 as
noted above, no notice under Section 148 of the Act of 1961 can be issued
without following the procedure prescribed under Section 148A of the Act of
1961. It was also mandated that along with the notice under Section 148 of
the Act of 1961, the Assessing Officer is required to serve the order passed
under Section 148A of the Act of 1961.
23. A reading of Section 148 of the Act of 1961 on the face of it shows that
compliance to Section 148A of the Act of 1961 has been made a condition
precedent for issuance of a notice under Section 148 of the Act of 1961.
24. In terms with Section 148A of the Act of 1961, the procedure has now
been streamlined and simplified. It provides that before issuing any notice
under Section 148 of the Act of 1961, the Assessing Officer shall (i) conduct
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any enquiry, if required with the approval of the specified authority with
respect to the information which suggests that income chargeable to tax had
escaped assessment; (ii) provide an opportunity of being heard to the
assessee, with the approval of the specified authority; (iii) consider the reply of
the assessee furnished, if any, in response to the show cause notice referred
to in Clause-(b) of Section 148A; (iv) decide on the basis of the materials
available on record including the reply of the assessee (if any) as to whether or
not, it is a fit case to issue a notice under Section 148 of the Act of 1961 and
(v) the Assessing Officer is required to pass a specific order within the time
stipulated.
25. In the backdrop of the above, let this Court take into consideration the
facts involved in the instant proceedings.
26. From a perusal of the affidavit-in-opposition filed by the Respondents
would show that upon receipt of the information from the Deputy Director of
Income Tax (Investigation), Unit, 6(2) New Delhi through an insight portal of
the Department, a survey action was conducted under Section 133A of the Act
of 1961, in the case of one Shri Ashok Kumar Gupta, Shri Sandeep Gupta and
Shri Anuj Gupta. During their survey proceedings, it was found that Shri Ashok
Kumar Gupta was engaged in providing accommodation entries of non-genuine
purchases and non-genuine sales to various parties. During the survey, details
relating to such entries were gathered and the statement of Shri Ashok Kumar
Gupta under Section 131(1A) of the Act of 1961 was recorded on oath. The
said Shri Ashok Kumar Gupta in his statement recorded on 30.11.2018
admitted that he had given both purchase and sale related accommodation
entries to various persons (individuals and entities) during the financial year
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2012-13 and subsequent financial years. Amongst the various entities, he
stated about M/s Kalki Trading Company and M/s Swastik Traders. M/s Kalki
Trading Company was a proprietorship firm of one Shri Deepesh Goel who was
a servant of Shri Ashok Kumar Gupta and M/s Swastik Traders was a
proprietorship firm of one Shri Rahul Bhuraria who was a nephew of Shri Ashok
Kumar Gupta. It was further found in those survey proceedings that Shri Ashok
Kumar Gupta provided non-genuine/accommodation entries of purchase and
sales to various individuals and entities for the financial years 2012-13 to 2018-
19. The modus operandi so followed as per his statement made was that Shri
Ashok Kumar Gupta gave non-genuine entries to various parties and there was
no underlying physical transactions and these trades were just entries provided
to beneficiaries to enable them to book bogus purchase and sale in their
books. It was also found during the survey action when certain digital devices
were impounded and relevant data from digital devices were extracted that the
proprietorship firms of both X and Y entered into accommodation entries of
sale with M/s Swastik Traders and M/s Kalki Trading Company.
27. In the backdrop of the above facts, let this Court therefore take note of
the Show Cause notice which was issued to both X and Y. In the Show Cause
notice which was issued to X, it was categorically mentioned that information
have been received through insight portal that X had made bogus purchases
with M/s Swastik Traders, proprietor Shri Rahul Bhuraria for Rs.40,86,573/- and
M/s Kalki Trading Company, proprietor Shri Deepesh Goel for Rs.25,94,075/-
during the financial year 2017-18. In the Show Cause notice issued to Y, it was
also mentioned that from information received, it came to light that Y had
made bogus purchases from M/s Swastik Traders proprietor Shri Rahul Bhuraria
for Rs.25,86,700/- during the Financial Year 2017-18. The materials on record
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and more particularly the replies submitted by both X and Y would show that
there was no denial by both X and Y that there were no transactions between
X and M/s Swastik Traders and M/s Kalki Trading Company and between Y and
M/s Swastik Traders. In fact, both X and Y categorically admitted in their
replies that they had transactions but the transactions were not purchase but
were of sale and in that regard have also placed the ledger copies of the books
of the account for financial year 2017-18, copy of the particular page of the
bank account in which both X and Y have received their payments, copies of
the invoices raised by them and copy of the particular page of the stock
register.
28. Under such circumstances, the submissions of the learned counsel for
the Petitioners that Section 148A(b) of the Act of 1961 was not complied with
is totally misconceived. Apart from that, it is also relevant to mention that in
the earlier round of litigation, this Court directed the Respondent Authorities to
proceed de novo from the stage of Show Cause reply.
29. The next aspect which arises is as to whether the orders under Section
148A(d) of the Act of 1961 was in accordance with the provisions of Section
148A more particularly taking into account the Show Cause notice and the
reply so submitted. From a perusal of the impugned orders, it would be seen
that in the impugned orders, the Respondent No.3 had categorically mentioned
that Shri Ashok Kumar Gupta had made non-genuine accommodation entries
of purchase and sale to various individuals and entities. These accommodation
entries were made through various firms which were controlled by Shri Ashok
Kumar Gupta. Amongst these firms, it included the firms namely M/s Kalki
Trading Company which was owned by the servant of Shri Ashok Kumar Gupta
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and M/s Swastik Traders which was owned by the nephew of Shri Ashok Kumar
Gupta.
30. From the replies so submitted by both X and Y to the Show Cause
notices would show that both X and Y admitted transactions with these firms.
It showed that commodities i.e. Rajma and Kabuli Chana on the same day was
purchased by the firms belonging to X and Y from a firm namly M/s NCS
Enterprise at Nagaland and on the same date, that commodities were sold to
these firms namely M/s Swastik Traders and M/s Kalki Trading Company at
Delhi. The said aspect shows that there were transactions on papers and the
Respondent No.3 therefore have proper reasons to believe that these were
only paper transactions which was also admitted by Shri Ashok Kumar Gupta
on oath during the survey proceedings. Under such circumstances, in the
opinion of this Court, the impugned orders assailed under Section 148A(d) of
the Act of 1961 in both the writ petitions cannot be said to be in violation of
Section 148A of the Act of 1961. Further to that, from the impugned orders, it
is also seen that the transactions in question being bogus transactions, the
efficacy of the contentions made by the Petitioners that the transactions were
of sale and not purchase had lost its effect. The Respondent No.3 had
categorically observed at paragraph Nos. 12, 13, 15 and 16 which being
relevant are quoted herein under:
“12. Now coming to the issue here – of the purchases for the purported sales made – the
purchases are shown to have been made from NCS Enterprises, Proprietor being one
John Imchen, a local Naga tribe, who is exempted from income-tax u/s 10(26). This
same John Imchen had also been covered under the search and seizure action u/s 132
on 08/02/2019. One of the main reasons for the search and seizure action was that the
assessee was running business(s) in the names of local Naga tribals. The assessee
Page No.# 18/19business is by the style name ‘National Commodity Supplier Enterprises’ and John Imchen
business style name is ‘NCS Enterprises’ — very similar sound-style names; and which
can easily be mistaken one for the other.
Thus, in the present issue here — the purchases as also the sales are suspect.
13. Further more, the purported goods are stated to be ‘Rajma’ and ‘Kabuli Chana’. These
grains are quite unknown in Nagaland, not known to be cultivated in Nagaland, and
neither would there be local demand for such non-local unknown grains. The purported
purchase is from NCS Enterprise [John Imchen], Dimapur, Nagaland; and the sale to the
fictitious entities at Delhi. Basically and effectively, the goods are transacted at Delhi —
so the accounting entries are but mere routing of the network racket of inter-State
evasion of taxes.
15. Also, it may be observed that the assessee in his petition to the Hon’ble High Court
has not made mention about the purchases – the party from whom purchased, nor the
description of the goods so traded.
16. What is relevant and important is the larger macro picture of the inter-State network
racket of bogus purchases, bogus sales, bogus consignments – with motive to evade
taxes.”
31. In that view of the matter, there was no violation to Section 148A of the
Act of 1961 while passing the impugned orders and as such the said impugned
orders do not come within the ambit of the exceptions as settled by the
Supreme Court as referred to supra. It is the opinion of this Court that both the
writ petitions challenging the impugned orders dated 10.09.2022 in WP(C)
No.7014/2022 and the order dated 31.05.2022 in WP(C) No.4975/2022 do not
call for interference under Article 226 of the Constitution.
32. Accordingly, this Court do not find any ground for interference for which
both the writ petitions stands dismissed.
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33. The interim orders passed earlier stands vacated.
JUDGE
Comparing Assistant