Facts of the Case

The present writ petition pertains to Assessment Year 2013–14 and represents the second round of litigation before the Delhi High Court.

Earlier, the petitioner had challenged reassessment proceedings, which were set aside by the Court vide order dated 10.11.2022, remanding the matter back to the Assessing Officer (AO).

Subsequently:

  • A fresh notice dated 21.11.2022 was issued.
  • The petitioner filed a reply dated 29.11.2022.
  • The AO passed an order dated 22.12.2022 under Section 148A(d).
  • Consequential notice dated 23.12.2022 under Section 148 was issued.

The allegation against the petitioner was that it engaged in bogus sale and purchase transactions with Mr. Rohit Bharat Nilakhe (Proprietor of Adima Impex), involving an amount of ₹80,19,097.

The petitioner denied having entered into any such transactions.

Issues Involved

  1. Whether reassessment proceedings under Sections 148A(d) and 148 were valid in absence of adequate rebuttal evidence by the petitioner.
  2. Whether the petitioner’s denial of transactions without supporting documents was sufficient.
  3. Whether the Assessing Officer was justified in proceeding with reassessment based on alleged bogus transactions.

Peitioner’s Arguments

  • The petitioner contended that it had not entered into any transactions with the alleged party.
  • It was argued that a negative fact cannot be proved, i.e., proving non-existence of transactions is inherently difficult.
  • The petitioner submitted that relevant details such as debtor and creditor information were already available.

Respondent’s Arguments

  • The Revenue contended that the petitioner was involved in bogus transactions amounting to ₹80,19,097, including sales and purchases.
  • The petitioner failed to provide crucial supporting documents, especially bank statements.
  • Given the scale of transactions (revenue exceeding ₹969 crores and purchases exceeding ₹894 crores), proper verification was necessary.

Court’s Findings / Order

  • The petitioner ought to have produced relevant documents, including bank statements, to substantiate its claim.
  • Mere denial without documentary support was insufficient.

Directions Issued:

  1. The petitioner is granted eight weeks to file supporting documents, including bank statements.
  2. The Assessing Officer shall consider such documents during reassessment proceedings.
  3. If the AO finds no transactions with the alleged party, proceedings may be closed.
  4. Failure to submit documents within time will allow AO to proceed without further opportunity.

Important Clarification

  • The Court did not quash the reassessment proceedings, but provided a fair opportunity to the petitioner to substantiate its claim with documentary evidence.

The burden of proof effectively lies on the assessee when denying alleged financial transactions.

Sections Involved

  • Section 148A(d), Income Tax Act, 1961
  • Section 148, Income Tax Act, 1961
  • Section 143(3), Income Tax Act, 1961 

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/59022032023CW15242023_152206.pdf

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