INCOME TAX : Where assessee had submitted copy of financial statement, ledger details, ledger account details of GST sales in respect of tax invoices of all parties and copy of bank statement of HDFC Bank through which supplier had made payment, Assessing Officer could not treat sales as bogus merely because assessee failed to submit e-way bills, etc
[2024] 161 taxmann.com 87 (Bombay)
HIGH COURT OF BOMBAY
Vijay Steel Traders
v.
Assistant Commissioner of Income-tax, Circle 7
K.R. SHRIRAM AND DR. NEELA GOKHALE, JJ.
WRIT PETITION NO. 15619 OF 2023
MARCH 4, 2024
Section 68 of the Income-tax Act, 1961 – Cash credit – (Accommodation entries) – Assessment year 2019-20 – Assessing Officer issued a notice under section 148A alleging that information suggested that income chargeable to tax for relevant year had escaped assessment in hands of assessee – Notice contained brief details of information collected/received by Assessing Officer that assessee was a beneficiary of accommodation entries amounting to Rs. 27.50 lakhs from one ‘KMPL’ and assessee was called upon to show cause as to why income arising out of above transactions should not be treated as income which had escaped assessment in hands of assessee and, consequentially, why a notice under section 148 should not be issued – Assessee replied to said notice – However, reply by assessee was rejected by Assessing Officer by an order passed under section 148A(d) on ground that assessee failed to submit E-way bills, weigh bridge slips, deliver challans, lorry receipts, toll booth slips, etc. – Whether since assessee had submitted copy of financial statement, ledger details, ledger account details of GST sales in respect of tax invoices of all parties and copy of bank statement of HDFC Bank through which ‘KMPL’ had made payment, impugned order passed under section 148A(d) was to be quashed and set aside and matter was to be remanded for de novo consideration – Held, yes [Paras 6 and 7] [In favor of assessee]
In a landmark decision, the High Court has firmly established that the absence of e-way bills cannot be the sole criterion for deeming sales as bogus or fraudulent. This judgment comes as a significant relief for the assessee, affirming the principle that tax authorities must consider the totality of circumstances and evidence before dismissing transactions as non-genuine. The court underscored that the non-submission of e-way bills, while a procedural lapse, does not automatically negate the authenticity of the sales transactions. This ruling is pivotal, setting a precedent that procedural non-compliance, in isolation, is insufficient to invalidate genuine business transactions. The decision emphasizes the need for a balanced approach, where tax authorities are encouraged to look beyond technical breaches and assess the substantive validity of transactions. This judgment protects businesses from being unjustly penalized for procedural oversights, fostering a more understanding and reasonable tax administration framework – JSPCO
