The Bombay High Court in a recent judgement has quashed the Income Tax reassessment notices as it was issued merely based on information received from the Directorate General of Goods and Service Tax ( GST ).
KEC International Ltd, the petitioner assessee challenged a reassessment notice issued under Section 148A(b) of the Income Tax Act, 1961, the order passed under Section 148A(d) of the act.
The Assessing Officer ( AO ) dismissed the contentions and stated that simply furnishing copies of purchase invoices, E-way Bills, Transport Bills and payments made through banking channels are insufficient to substantiate that the transaction made by Assessee company with EMI Transmission Ltd. is genuine.
As per the AO, the Directorate General of GST, Mumbai has identified one Curzen Infraprojects Pvt. Ltd. (formerly known as Blue Sea Commodities) was generating fake/bogus invoices for passing of fraudulent Input Tax Credit (ITC) without a supply of goods to various companies. EMI Transmission Ltd. was one of them because Petitioner dealt with EMI Transmission Ltd. and the transaction is non-genuine.
The assessee contended that when the order itself exposes the hollowness in the thinking of the Assessing Officer, even granting approval under Section 151 smacks of total non-application of mind. The goods purchased from EMI Transmission Ltd. were supplied to third parties and we would agree with Petitioner that without purchase there cannot be a sale.
A division bench of Justice K. R. Shriram and Justice Neela Gokhale has observed that the AO is only referring to the information received from the Directorate General of GST and there is absolutely nothing to indicate that he independently applied his mind to the material received or that he has analysed the response from Petitioner with the material received, which reflects total non-application of mind.
The court quashed the order and remanded the matter for de- novo consideration. Mr. Bharat Raichandani along with Mr. Aman Mishra appeared for Petitioner. Mr. Eshaan Saroop and Mr. Vikas T. Khanchandani appeared for Respondent.
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