The Delhi Bench High Court (HC)has held that the writ jurisdiction of the court cannot be invoked when there are no materials which show reassessment proceedings as arbitrary.
Mr. Ajay Gupta, who is the Karta of the Petitioner’s Hindu Undivided Family (‘HUF’) filed the writ petition seeking the quashing of the order dated 18th July, 2022 passed under Section 148A(d) of the Income Tax Act, 1961 (‘the Act’) and the notice dated 18th July, 2022 passed under Section 148 of the Act, by the Income Tax Officer.
The Petitioner Assessee was served with a Show Cause Notice (‘SCN’) dated 23rd May, 2022 under Section 148A(b) of the Act by the Assessing Officer (‘AO’) wherein it was stated that a search was conducted by the Investigation Wing, Rohtak on Tradenext Securities Ltdand the said entity is involved in providing accommodation entries through the modus operandi set out in the notice.
It was alleged that the said Tradenext Securities Ltd. (‘Tradenext Securities’) operates several dummy Demat accounts to provide accommodation entries and one such account is of Mridul Securities Private Ltd. (‘Mridul Securities’). It was further stated that the Assessee herein had received 32000 shares of TVS Motor Company Ltd. (‘TVS Motor’) worth Rs. 94,81,600/- from the dummy Demat account of Mridul Securities.
The Petitioner stated that the AO failed to appreciate that the Assessee in its ROI had disclosed that the sale of these shares, offered the income from the said shares as STCG and therefore there is no escapement of income.
The SCN and impugned order state that the entity Mridul Securities is involved in providing accommodation entries and the Assessee is the beneficiary of the specified alleged transaction.
The Court comprising Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that the Petitioners have not brought on record anything to suggest that the reassessment proceedings are being undertaken in an arbitrary manner and the cases do not fall under the exceptional ground on which a writ jurisdiction of the High Court can be invoked.
The disputed questions of facts, cannot be adjudicated by a writ court exercising jurisdiction under Article 226 of the Constitution and the Court dismissed the writ petitions along withthe pending applications are dismissed.
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