Research › Search › Judgment

Gujarat High Court · body

2025 DIGILAW 525 (GUJ)

Khyati Vishal Popat v. Income Tax Officer

2025-06-23

BHARGAV D.KARIA, PRANAV TRIVEDI

body2025
ORDER : BHARGAV D. KARIA, J. 1. Heard learned advocate Mr.Darshan R. Patel for the petitioner and learned Senior Standing Counsel Mr.Karan G. Sanghani for the respondent. 2. By this petition under Articles 226 and 227 of the Constitution of India, the petitioner has challenged a notice dated 31 st August, 2024 issued under Section 148 of the INCOME TAX ACT , 1961 (for short ‘the Act’). 3. The factual matrix giving rise to this petition can be summarised as under : 3.1. In the petition, the petitioner has not disclosed as to filing of return by the petitioner for the Assessment Year 2018-19 for which the impugned notice is issued. 3.2. The impugned notice for re-opening is issued on the basis of a search proceeding under Section 132 /132A of the Act conducted on Shri Shaileshkumar Balvantrai Desai, Shri Umang Shailesh Desai, Vapi on 18.11.2021. During the course of the search, number of incriminating documents and digital data were found and seized and certain documents containing incriminating information pertaining to the petitioner were also found and seized. 3.3. A satisfaction note dated 27.08.2024 was drawn with prior approval of the Principal CIT-1, Rajkot. 3.4. During the course of the search proceeding at Office of M/s.Gujarat Polysol Chemicals Limited (for short ‘GPCPL’), a master excel file containing multiple excel sheets was found and the printouts of the same were taken and were placed on record in compliance of Rule 65B of the Evidence Act. During the course of search proceedings, after analysing the segregating data of actual purchases and bogus purchases and cross- verifying the corresponding dates in the relevant accounted cash book maintained, it was found by the respondent that the details of concerned supplier party pertaining to the petitioner was segregated and one of the supplier M/s.Viena Chemicals had provided bogus purchase of Rs.31,80,000/- for the Financial Year 2017-18 and Rs.56,23,580/- for the Financial Year 2018-19 for the relevant Assessment Years 2018-19 and 2019-20. It is also found from the details of bogus purchase that cash amount was received back by Mr.Shailesh Desai (MD of GPCPL) with the concerned supplier party. It was therefore found by the respondent that M/s.Viena Chemicals had made a bogus sales and cash payments with the GPCPL of Rs.88,03,580/-. It is also found from the details of bogus purchase that cash amount was received back by Mr.Shailesh Desai (MD of GPCPL) with the concerned supplier party. It was therefore found by the respondent that M/s.Viena Chemicals had made a bogus sales and cash payments with the GPCPL of Rs.88,03,580/-. Such details found during the course of search pertain to one Shri Vishal Hareshkumar Popat represented by the petitioner-Khyati Vishal Popat as a legal representative. Therefore, after recording such facts and satisfaction, the approval was granted under Section 151 of the Act by the Office of the Chief Commissioner of Income Tax, Rajkot for re- opening of the assessment for Assessment Years 2018-19 and 2019-20 by specifically recording in the annexure to the satisfaction note to the effect that so far as Assessment Year 2018-19 is concerned, the same is reopened taking into consideration the provisions of Section 149(1A) of the Act. 3.5. It is also recorded in the said note that the assessse-Shri Vishal Hareshkumar Popat died on 06.09.2020 and the case of the assessee was represented by his wife-Khyati Vishal Popat as per the return of income filed for Assessment Year 2019-20 under Section 148 of the Act and for Assessment Years 2020-21 and 2021-22 under Section 139(1) of the Act. 4.1. Learned advocate Mr.Darshan R. Patel for the petitioner submitted that admittedly for the Assessment Year 2018-19, the total amount of alleged escapement is Rs.31,80,000/- which is less than Rs.50 Lakhs and the respondent-Authority could not have relied upon the provisions of Section 149(1A) of the Act as the said amount only represents the entry in the books of accounts without being represented by asset or expenditure as per the provisions of Section 149(1)(b) read with Section 149(1A) of the Act. 4.2. 4.2. Learned advocate Mr.Darshan Patel for the petitioner referred to the provisions of Section 149(1)(a), Section 149(1)(b) and Section 149(1A) of the Act to submit that on the basis of the details mentioned in the satisfaction note, the provisions of Section 149(1A) would not be applicable to the entries found from the books of accounts relating to the assessee and only with regard to the income represented in form of an asset or expenditure in relation to an event or occasion of the value referred of more than 50 Lakhs as per clause (b) of Section 149(1) can be considered for applicability of Section 149(1A) of the Act. 4.3. In support of his submissions, it was submitted that the impugned notice so far as it relates to the Assessment Year 2018-19 is concerned, would be without jurisdiction as it is issued beyond a period of three years and hence, the reliance placed by the respondent for invoking provisions of Section 149(1A) of the Act would not be applicable in the facts of the case. 4.4. In support of his submissions, reliance was placed on the decision of Hon’ble the Dehli High Court in case of M/s. L-1 Identity Solutions Operating Company Private Limited Versus Assistant Commissioner of Income Tax, Central Circle-25 reported in W.P. (C) 4845 of 2025 dated 17.04.2025 which is followed in the decision in case of Mohd Athar Anjum Versus Assistant Commissioner of Income- tax reported in [2025] 174 taxmann.com 337 (Delhi). 4.5. Referring to the above decision of the Hon’ble Delhi High Court, it was submitted that the facts in the case of the petitioner are identical with that of the case of Mohd Athar Anjum (Supra) wherein, it is held by the Hon’ble Delhi High Court that in the facts of the said case, the alleged cash transactions were for the different previous years and do not relate to the singular event or the occasion and are not represented by an asset and therefore, provisions of Section 149(1A) of the Act could not have been invoked by the respondent for clubbing the transactions for three years so as to issue to the notice for re-opening under Section 148 of the Act. 5. 5. Having considered the submissions made by learned advocate Mr.Darshan Patel for the petitioner and in view of the facts of the case, it is not in dispute that during the course of the search under Section 132 of the Act conducted on 18.11.2021 at the residential premises of Shri Shaileshkumar Balvantrai Desai and Shri Umang Shailesh Desai at Vapi it was found that there was transaction of bogus purchase between one M/s.Viena Chemicals whose proprietor was Shri Vishal Hareshkumar Popat who expired on 06.09.2020 and on basis of such transaction, the impugned notice for re- opening is issued under Section 148 of the Act, invoking Section 149(1A) of the Act as the transaction amount was less than 50 Lakhs for the Assessment Year 2018-19. It would therefore be germane to refer to the provisions of Section 149(1) and Section 149(1A) of the Act, the relevant portion whereof are extracted herein below : “ Section 149.(1) No notice under Section 148 shall be issued for the relevant assessment year,— (a) if three years and three months have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years and three months, but not more than five years and three months, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence related to any asset or expenditure or transaction or entries which show that the income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to fifty lakh rupees or more. Section 149(1A) Notwithstanding anything contained in sub-section (1), where the income chargeable to tax represented in the form of an asset or expenditure in relation to an event or occasion of the value referred to in clause (b) of sub- section (l), has escaped the assessment and the investment in such asset or expenditure in relation to such event or occasion has been made or incurred, in more than one previous years relevant to the assessment years within the period referred to in clause (b) of sub-section (1), a notice under Section 148 shall be issued for every such assessment year for assessment, reassessment or recomputation, as the case may be.” 6. On conjoint reading of the above provisions, it is clear that Section 149(1A) of the Act starts with Non Obstante clause vis-a-vis Sub-section (1) of Section 149 to provide that where the income chargeable to tax, represented in form of an asset or expenditure in relation to an event or occasion of the value referred to in clause (b) of Sub-section (1) i.e. Rs.50 Lakhs or more, has escaped the assessment and investment in such asset or expenditure is made in more than one previous year, then notice under Section 148 shall be issued for every such assessment year. 7. Considering the provisions of Section 149(1A) and applying the same to the facts of the case, it is found that for Financial Years 2018-19 and 2019-20, the proprietary concern of late Vishal Hareshkumar Popat has indulged in bogus purchases and cash transactions with the persons who were searched. Therefore, in such circumstances, it cannot be said that the details and data found during the course of search would not represent the expenditure in form of the bogus purchases in respect of the transactions or in relation to such event. 8. In the facts of the case, in both the Financial Years, i.e. 2017-18 and 2018-19, there were transactions of bogus purchases which were found during the course of search and such bogus purchases were relatable to the materials pertaining to late Vishal Hareshkumar Popat who is represented by his legal representatives. 9. So far as the facts of the cases before the Hon’ble Delhi High Court are concerned, the transactions were not pertaining to the one event as held by the Hon’ble Delhi High Court in case of Identity Solutions (Supra), as under: “13. In the present case, it is apparent that there is no singular occasion or event which has resulted in the income of more than one previous year exceeding the sum of Rs.50 lakhs. As noted above, the allegations against the Assessee are that it has undercharged its AE for the R&D Services rendered by it, and therefore, the income is required to be adjusted to the extent of Rs.27 lakhs. Additionally, it is alleged that the Assessee has overpaid for certain managerial and group related services to the extent of Rs.21 lakhs. As noted above, the allegations against the Assessee are that it has undercharged its AE for the R&D Services rendered by it, and therefore, the income is required to be adjusted to the extent of Rs.27 lakhs. Additionally, it is alleged that the Assessee has overpaid for certain managerial and group related services to the extent of Rs.21 lakhs. None of these two adjustments can be stated to have been a part of a singular event or occasion spanning more than one previous year.” 10. The Hon’ble Delhi High Court in case of Mohd Athar Anjum (Supra), after considering the findings arrived at in case of Identity Solutions (Supra), came to the conclusion that alleged cash transactions in different previous years do not relate to a similar event or occassion and are not represented by an asset and therefore, the provisions of Section 149(1A) of the Act were not made applicable. 11. However, considering the facts of the present case, where transactions or bogus purchases are relatable to different previous years, the decisions of the Hon’ble Delhi High Court would not be applicable. We are therefore of the opinion that the respondent- Assessing Officer has rightly invoked the provisions of Section 149(1A) of the Act for assumption of jurisdiction for issuance of the impugned notice under Section 148 of the Act beyond the period of three years taking into consideration the fact that the transactions found during the course of search relating to bogus purchases and cash deposited in books of accounts are one pertaining to the proprietary concern-M/s.Viena Chemicals. 12. In view of the foregoing reasons, the petition fails as it cannot be said that the respondent-Assesssing Officer could not have assumed the jurisdiction for re-opening of the assessment beyond the period of three years. The petition is accordingly summarily rejected. No orders as to cost.