HC in exercise of Constitutional Writ Jurisdiction cannot act as AO and scrutinize facts and evidence : Calcutta HC [Read Order]

In a recent decision, a Single Bench of the Calcutta High Court ordered the Assessing Officer (AO) to submit a report on May 18, 2023, in order to inquire about the deponent’s business operations and verify from his return the type of business and transaction at issue in this case.

The bench of Justice Md. Nizamuddin noted that the impugned order under Section 148A(d) of the Income Tax Act can be implemented by a substantial amount of information and evidence regarding the alleged transaction, and that the court, acting in the exercise of its constitutional writ jurisdiction, cannot act as an assessing officer examining those facts and evidence and replacing them with its own.

Shyam Sundar Dhanuka, the petitioner, has contested the validity of the challenged order under Section 148A(d) of the Income Tax Act of 1961 on the grounds that the AO relied on an investigation report from the Directorate General of Income Tax (Investigation) in which a reference to a “potential borrower/lender” was made.

Additionally, the petitioner claimed that it was illegal to proceed on the basis of alleged remarks made by a “potential borrower/lender” without specifically naming or exposing anything adverse about the petitioner.

According to the AO, the assessee obtained a cash loan totaling Rs. 40,70,00,000 from several lenders, including Uma Shankar Kasera, through a finance broker named Kaseras.

It has also been noted that there is a significant amount of unexplained expenditure within the meaning of Section 69C of the Income Tax Act, and that the cash loan and cash repayment fall under provisions 269SS and 269T as well as other pertinent provisions of the Penalty under Income Tax Act.

The counsel of the petitioner asserted that the officer has proceeded merely on the basis of remarks “potential borrower/lender” is not correct since in the later part of the order AO has clarified that on verification of the document the assessing officer has found credible evidence of actual borrowings and not potential in nature.

The bench stated that the contested order was not a non-speaking order, it did not violate the principles of natural justice, it did not involve any procedural irregularities, and it was not issued by an officer who lacked jurisdiction by virtue of the facts and findings and relevant evidence.

The department will inquire about the business activity of this deponent, Ravi Kumar Agarwal, who affirmed the writ petition and identified himself as a businessman, according to a directive from the High Court given to Mr. Bagaria, the petitioner’s counsel must provide a copy of the pan card to Mr. Tilok Mitra, who is representing the respondent Income Tax Authority.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates