Facts of the Case

The present writ petition was filed seeking quashing of reassessment proceedings for Assessment Year 2018–19.

The Assessing Officer issued a show cause notice under Section 148A(b) based on information received from the Directorate of Investigation indicating that M/s Nandi Traders had allegedly issued bogus Input Tax Credit (ITC) through fake sale bills.

The petitioner, Mrs. Sangeeta Arora, was identified as a beneficiary of such transactions amounting to ₹6.62 crores.

However, the petitioner contended that:

  • She had never transacted with M/s Nandi Traders
  • Her PAN was fraudulently misused to obtain a GST registration
  • The GST number was used under another entity, Superior International, with which she had no connection
  • She had already filed complaints with GST authorities and police, and the GST registration was cancelled
  • The alleged transactions were not reflected in her bank statements

Issues Involved

  1. Whether reassessment proceedings under Section 148A(b) can be quashed at the writ stage when allegations involve disputed facts.
  2. Whether alleged misuse of PAN and fraudulent GST registration can be adjudicated in writ jurisdiction.
  3. Whether the Assessing Officer is competent to examine factual disputes regarding bogus ITC transactions.

Petitioner’s Arguments

  • The petitioner is a victim of fraud, and her PAN was misused for obtaining GST registration.
  • She had no business dealings with M/s Nandi Traders.
  • The alleged transactions are absent from her bank records, proving lack of involvement.
  • Complaints were already filed before GST authorities and police, including proceedings under Section 156(3) CrPC.
  • Reassessment proceedings based on such fraudulent data would cause grave prejudice.

Respondent’s Arguments

  • The Revenue relied on information from the Directorate of Investigation indicating bogus ITC transactions.
  • The petitioner was identified as a beneficiary entity in such transactions.
  • The matter required factual verification, which falls within the jurisdiction of the Assessing Officer.

Court’s Findings / Order

  • The Court observed that the petitioner’s claims regarding:
    • misuse of PAN
    • fraudulent GST registration
    • absence of bank transactions

are pure questions of fact.

  • Such issues require examination of evidence, which is within the domain of the Assessing Officer during reassessment proceedings.
  • The Court held that:
    • It cannot adjudicate disputed factual issues under writ jurisdiction
    • The Assessing Officer is competent to verify the veracity of claims
  • Final Order:
    • Petition disposed of
    • Liberty granted to the petitioner to raise all contentions before the Assessing Officer
    • Court clarified that it has not examined merits of the case

Important Clarification

  • The judgment reinforces that writ jurisdiction is not appropriate where disputed facts exist, especially in tax reassessment matters.
  • The Court emphasized that allegations of fraud, PAN misuse, and bogus transactions must be examined through proper assessment proceedings.
  • The ruling ensures procedural fairness, allowing the assessee to present evidence before the Assessing Officer.

Sections Involved

  • Section 148A(b), Income Tax Act, 1961 – Show Cause Notice before Reassessment
  • Section 147, Income Tax Act, 1961 – Income Escaping Assessment (Implied)
  • Section 156(3), Criminal Procedure Code, 1973 – Direction for Police Investigation

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/58919102022CW147872022_165144.pdf

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