Facts of the Case

The petitioner, a company engaged in export of readymade garments, was issued a notice under Section 148A(b) alleging that it had received accommodation entries from two entities—Balaji Enterprises and Dev Sales Corporation. The total alleged amount involved was Rs. 2,05,90,186/-.

The petitioner contended that it had genuinely purchased garments from these entities and exported them. It supported its claim with GST returns, including GSTR-2A reflecting inward supplies, and other relevant documents.

However, the Assessing Officer passed an order under Section 148A(d) and issued a consequential notice under Section 148 without adequately addressing the submitted evidence.

Issues Involved

  1. Whether reassessment proceedings under Section 148A can be sustained without proper examination of documentary evidence.
  2. Whether GST records and purchase documentation were ignored by the Assessing Officer.
  3. Whether mere non-availability of a supplier at the registered address is sufficient to conclude accommodation entries. 

Petitioner’s Arguments

  • The petitioner is engaged in genuine export business involving locally sourced garments.
  • Purchases from the alleged entities were legitimate and duly recorded.
  • GST returns (including GSTR-2A) clearly reflected inward supplies with matching GSTIN details.
  • Duty drawback was claimed against actual exports, confirming genuineness of transactions.
  • The Assessing Officer failed to consider crucial documentary evidence before passing the impugned order.

Respondent’s Arguments

  • The petitioner was allegedly a beneficiary of accommodation entries.
  • Suppliers (e.g., Balaji Enterprises) were not found at the given address.
  • Based on this information, reassessment proceedings were initiated.

Court’s Findings / Order

  • The Court observed that GSTIN details in GSTR-2A matched with invoices issued by the suppliers.
  • The Assessing Officer failed to examine this crucial evidence.
  • Mere absence of a supplier at a given address is not sufficient to establish that transactions are bogus.
  • The Assessing Officer did not conduct proper due diligence to disprove the petitioner’s claim.

Order:

  • The order passed under Section 148A(d) and consequential notice under Section 148 were set aside.
  • The matter was remanded for fresh (de novo) consideration.
  • The Assessing Officer was directed to:
    • Examine documents submitted by the petitioner
    • Provide opportunity to respond to any new material
    • Grant personal hearing before passing any order

Important Clarifications by Court

  • Reassessment cannot be based on incomplete inquiry or assumptions.
  • Documentary evidence such as GST records must be properly evaluated.
  • The burden lies on the Assessing Officer to prima facie establish falsity of the taxpayer’s claim.
  • Principles of natural justice must be strictly followed in reassessment proceedings.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/59027032023CW37972023_153414.pdf

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