Facts of the Case

The petitioner, RTPL Marketing Private Limited, was subjected to reassessment proceedings for Assessment Year 2019–20 based on suspicious financial transactions flagged by Punjab National Bank.

  • An amount of ₹31,00,000 was credited to the petitioner’s account.
  • The petitioner claimed this amount arose from the sale of khadi yarn to a proprietorship concern, Sethi International.
  • The proprietor, Mr. Manjeet Singh, had not filed his return of income for the relevant assessment year.
  • A notice under Section 148A(b) was issued, to which the petitioner responded with:
    • Invoices
    • Transport receipts

However, the Assessing Officer (AO) found discrepancies:

  • Transport receipts lacked G.R. (Goods Receipt) numbers
  • The transaction appeared non-verifiable

Subsequently, an order under Section 148A(d) was passed initiating reassessment.

Later, during court proceedings, the petitioner submitted additional supporting documents, including supplier invoices and movement records of goods.

Issues Involved

  1. Whether reassessment proceedings under Section 148A(d) were valid when additional evidence was not initially considered.
  2. Whether the transaction with Sethi International could be treated as non-genuine due to lack of verification.
  3. Whether subsequent submission of documents warrants reconsideration by the Assessing Officer.

Petitioner’s Arguments

  • The ₹31,00,000 transaction was a genuine sale of goods (khadi yarn).
  • Supporting documents such as invoices and transport receipts were furnished.
  • Additional documents submitted before the Court establish:
    • Movement of goods
    • Authenticity of transaction
  • The income from the transaction had already been offered to tax, making reassessment unnecessary.
  • The AO failed to properly appreciate the evidence before passing the order.

Respondent’s Arguments

  • The transaction was suspicious and unverifiable.
  • Key deficiencies:
    • Transport receipts lacked G.R. numbers
    • Buyer (Sethi International) had not filed income tax return
  • Additional documents submitted before the Court were not available to the AO during original proceedings.
  • Further inquiry was necessary to verify the genuineness of the transaction.

Court’s Findings / Order

  • The Court held that newly submitted documents require proper examination.
  • The earlier order dated 27.03.2023 under Section 148A(d) was set aside.
  • Directions issued:
    1. AO shall reconsider the matter afresh
    2. AO must consider all additional documents
    3. AO shall provide personal hearing to the petitioner
    4. AO must pass a reasoned (speaking) order
  • The writ petition was disposed of accordingly.

Important Clarifications by the Court

  • If income from the transaction has already been taxed, the existence or identity of the buyer becomes less significant, but still requires verification.
  • The Court emphasized procedural fairness and proper evaluation of evidence.
  • Reassessment proceedings must be based on complete and properly examined material.

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/RAS24082023CW91272023_130200.pdf   

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