CA certificate stating NIL dealings with party isn’t sufficient to drop SCN issued u/s 148A(b): HC

Case Details: Barbrik Projects Ltd. v. Union of India - [2022] 145 taxmann.com 481 (Chhattisgarh)

Judiciary and Counsel Details

• • Arup Kumar Goswami, CJ. & Deepak Kumar Tiwari, J.
  • S. Rajeshwar Rao, Adv. for the Appellant.
  • Ramakant Mishra & Ms Naushina Afrin Ali, Adv. for the Respondent.

Facts of the Case

Assessee was a company engaged in the execution of civil construction works. The Assessing Officer (AO) issued a show cause notice under section 148A. AO had information that the assessee was a beneficiary of bogus sale transactions amounting to Rs. 2 crores.

The assessee submitted its reply that it hadn’t undertaken any such transaction. It also furnished a certificate from a Chartered Accountant certifying that the assessee hadn’t executed any transaction.

However, AO passed the order under section 148A(d) and also issued a notice under section 148. The assessee filed a writ petition against the order passed under section 148A by AO.

High Court Held

The Chhattisgarh High Court held that the assessee wanted the proceedings to be dropped merely based on a certificate issued by a Chartered Accountant.

The GST Portal showed sales to the assessee by entity Panveer Trading Private Limited. It was found that such an entity is selling tax invoices (accommodation entries) without a corresponding supply of goods. The assessee did not counter the allegations of bogus purchases from the entity except by furnishing a CA certificate to the effect that the assessee had not executed any such transaction.

Thus, there was, prima facie, some material based on which the Department could reopen the case. The assessee had not even attempted to assert that the material facts relied on upon the SCN are erroneous. In view of the above, the assessee’s writ petition was to be dismissed.