Reassessment Notice Upheld as AO's Belief of Bogus Purchases was Based on Tangible Information.

Reassessment Notice Upheld as AO’s Belief of Bogus Purchases was Based on Tangible Information.

Issue

Whether the initiation of reassessment proceedings under section $148 A$ of the Income-tax Act, 1961, was legally valid, based on the Assessing Officer’s (AO) prima facie belief that the assessee had engaged in bogus purchase transactions, leading to an escapement of income.

Facts

The assessee, a partnership firm trading in metals, filed its income tax return for the Assessment Year 2019-20.
Subsequently, the AO issued a notice under section $148 A (b)$ , alleging that the firm had taken bogus accommodation entries disguised as purchases from a supplier, KAPL, amounting to ₹88.86 lakhs.
The assessee filed a reply with documentary evidence and sought a hearing.
The AO, after considering the reply, was not satisfied. The AO noted several red flags regarding the supplier (KAPL):
- It was a known defaulter with large debts.
- It had filed a tax return for only one year, declaring ‘nil’ income and ‘nil’ profit.
- Its high volume of transactions was not commensurate with its filed Income Tax Return (ITR).
Based on this information, the AO concluded that the purchases from KAPL were sham transactions and that income had consequently escaped assessment.

Decision

The court held in favour of the revenue.

The initiation of reassessment was found to be justified.
The court reasoned that the genuineness of the transactions is a pure question of fact that must be scrutinized during the reassessment proceedings, not at the preliminary stage of issuing a notice.
It was held that there was no violation of the principles of natural justice, as the assessee was granted an opportunity to present its case in response to the notice.
The court reiterated the settled legal position that the sufficiency of the material available with the AO is beyond the scope of judicial review. The court’s role is only to ascertain if there is a rational nexus between the information and the belief formed.
It was concluded that the AO possessed sufficient information to form a prima facie belief that income had escaped assessment.

Key Takeaways

Low Threshold for Reassessment: The requirement to initiate reassessment is not “conclusive proof” but “information suggesting” that income has escaped assessment. The AO only needs a rational, prima facie basis to proceed. ️‍♂️
Limited Scope of Judicial Review: When challenging a reassessment notice, a court will not act as an appellate authority. It will not weigh the sufficiency of the AO’s evidence but will only check for the existence of a logical connection between the information and the reason to believe.
Notice Stage vs. Assessment Stage: The purpose of a section $148 A$ notice is to initiate proceedings based on suspicion. The final determination of facts, such as the genuineness of purchases, happens during the actual reassessment that follows.
Compliance with Natural Justice: Providing a show-cause notice and considering the assessee’s reply, as mandated under section $148 A$ , fulfills the requirements of natural justice at the initiation stage.

HIGH COURT OF DELHI

R S Alloys

Income-tax Officer ^*

V. Kameswar Rao and Vinod Kumar, JJ.

W.P.(C) Nos. 12575 of 2025
CM APPL. No. 51236 of 2025

SEPTEMBER 2, 2025

Ruchesh Sinha, Ms. Monalisa Maity and Ms. Shilpa Choudhary, Advs. for the Petitioner. Vipul Agrawal, SSC, Ms. Sakshi Shairwal, Akshat Singh, JSCs, Gaoraang Ranjan and Ms. Harshita Kotru, Advs. for the Respondent.

OREDR

V. Kameswar Rao, J. – The challenge in this petition is to reassessment proceedings for the Assessment Year (AY) 2019-20 which are being carried out under Section 147/148 of the Income Tax Act, 1961 (the Act) in pursuance to the order dated 28.06.2025, issued by the respondent no.1.

2. We may narrate the facts of the present case, as apparent from the petition. The petitioner (hereinafter referred to as the assessee ‘), a partnership firm engaged in the business of trading of ferrous and non-ferrous metals, filed its Income Tax Return for the AY 2019-20 under Section 139(1) of the Act. Thereafter a notice under Section 140A(1) of the Act was issued, whereby, it was alleged that the assessee had entered into some bogus transactions involving accommodation entries with M/s. Karthik Alloys Pvt. Ltd. during the Financial Year (FY) 2018-19 amounting to Rs. 88,86,000/-.

3. The assessee replied to the said notice asking for an opportunity of hearing be granted before drawing any adverse inference. Despite this request, the Assessment Officer (AO) failed to consider the submissions of the assessee and disposed of the same in a mechanical and cryptic manner, by merely relying upon some information received from the investigation wing of the respondents, without pointing out any discrepancy in its reply.

4. Mr. Ruchesh Sinha, learned counsel for the assessee, at the outset, submitted that with effect from 01.04.2021, the provisions of Sections 147, 148, 149 and 151 of the Act, as they stood on 31.03.2021, were obliterated and substituted by the Finance Act, 2021. A new Section 148A was also introduced in the statute, which provided the mechanism of triggering reassessment proceedings.

5. Further, the Central Board of Direct Taxes (CBDT) has issued detailed guidelines pertaining to the handling of reassessment cases, which were applicable to the new regime of reassessment that existed until 31.08.2025. The same was issued to all senior officials of the department by virtue of these guidelines, the CBDT in substance enumerated the following principles:

The AO, if required shall undertake enquiries on any information that is received or is available with him which suggests that the income chargeable to tax has escaped assessment in a previous year only with the prior approval of the specified authority.

If the result of enquiry/information available suggests that the income chargeable to tax has escaped assessment then in that case, the AO has to provide an opportunity of hearing to the assessee by issuing a show cause notice u/s 148A(b) [(now 148A(1)] of the Act.

If in case the Assessee has requested or requests for an opportunity of personal hearing, then the same may be dealt with the following principles of natural justice by giving a reasonable period for compliance of notice while specifying the date of hearing.

The AO is required to consider the reply of the assessee in letter and spirit that has been furnished in response to the show cause notice issued u/s 148A(b), prior to passing of the order u/s 148A(d)[(now 148A(3)].

It is mandatory for the AO to pass a speaking order u/s 148A(3) in all cases with the prior approval of the specified authority for the order passed u/s 148A(3).

Information relevant to the case pertaining to the assessee’s income that has escaped assessment has to be provided. The information that is not relevant in case of the assessee shall be redacted.

Along with the notice issued u/s 148, prior approval of the specified authority u/s 151 of the Act is required to be sent along with the the notice u/s 148.

6. In continuation to the aforesaid guidelines, the CBDT issued instructions dated 22.08.2022, wherein it has drawn attention to the aforesaid guidelines for issuance of notice u/s 148 of the Act. In this instruction the CBDT re-emphasized as under:

“a. Before initiating proceedings under section 148/147 of the Act, any information available on data-base/portal of Department shall be verified before drawing any adverse inference against the taxpayers. It is not out of place to mention here that the information made available/data uploaded by the reporting entities may not be fully accurate due to inter alia, error of human nature technical nature, etc. Therefore, due verification may be carried out and opportunity of being heard be given to the taxpayer before initiating proceedings under section 148/147 of the Act.

b. The Income Tax supervisory authorities are hereby advised to keep an effective supervision so Instructions/Guidelines/ Circulars/SOPs are duly followed by the Assessing Officers in their charge.”

7. According to Mr. Sinha, these instructions/guidelines were issued by the CBDT to ensure that the reassessment proceedings are not initiated in a routine manner and the principles of natural justice are followed.

8. He further submitted that with effect from 1.09.2025, the earlier reassessment regime, which existed from 1.04.2021 to 31.08.2024, was amended. However, the essence of the new reassessment mechanism was retained and no substantial changes were made and only timelines for initiating the reassessment proceedings were amended. The essence of the above guidelines shall, therefore apply mutatis mutandis to the new reassessment regime that came into force with effect from 01.09.2024 as the same depicts intention of the legislature and is based on the principles of natural justice.

9. Now, coming back to the facts of the present case, it is the submission of Mr. Sinha that the order of the AO is only based on a transaction that took place between M/s. Karthik Alloys Pvt. Ltd. and the assessee, which cannot be allowed to the sole basis for initiate reassessment proceedings.

10. Further, the reply filed by the assessee was required to be considered by the AO and it was only after such consideration that it was to be decided whether the reassessment proceedings were warranted in the facts of the case. This is not merely a formality, but has to be considered in both letter and spirit. Reliance is this regard is placed on the judgment of this Court in Devat and Ram Company (P.) Ltd. v. Income-tax Officer W.P.(C) 14258/2024, wherein in similar circumstances it was held as under:

“12. We are also hard-pressed to imagine as to what further material or evidence could be furnished by the petitioner to establish that its transactions were genuine, and in any event no income had escaped assessment. It is necessary for the AO, at the bare minimum, to examine the material placed by the petitioner and verify whether the same could be faulted. However, the AO did not undertake any such exercise but rejected the overwhelming evidence furnished by the petitioner merely on assuming that information available on the portal was correct.

xxxx xxxx xxxx

18. The provisions of Section 148A of the Act must be read in a meaningful manner. It must give a fair opportunity to the assessee to respond to the information which, according to the AO, suggests that the assessee’s income had escaped assessment. It is necessary for the AO to thereafter, at the bare minimum, examine the evidence and material produced by the assessee to counteract the allegations. Disregarding response furnished by the petitioner solely for the reason of the information on portal and simply reiterating the information as available, would render the procedure under Section 148A of the Act meaningless”

11. The new reassessment mechanism that was introduced 01.04.2021 and the CBDT guidelines though strictly applicable, to the earlier reassessment proceedings which existed from 01.04.2021 to 31.08.2024, would be applicable to the present proceedings also, which was modified w.e.f., 01.09.2024. It is trite law that CBDT circulars/ guidelines/instructions are binding on the Revenue any action in contravention thereto should be considered void-ab-initio. In this regard, he has relied upon on the judgments of the Supreme Court in (a) Union of India v. Azadi Bachao Andolan 263 ITR 706 (SC), (b) Navnit Lal C. Javeri v. K.K. Sen, AAC [1965] 56 ITR 198 (SC), (c) Commissioner of Wealth-tax v. Vasudeo V. Dempo [196 ITR 216 (SC)and (d) ITO – Ellerman Lines Ltd. v. CIT [1971] 82 ITR 913 (SC) etc.

12. He stated that the manner in which the notice under Section 148A(1) of the Act and also the order under Section 148A(3) were passed makes it clear that the binding guidelines issued by the CBDT have not been followed. In fact, the entire basis for initiating the reassessment proceedings is only the alleged information received which does not in any way indicate any escapement of income on part of the assessee.

13. From a perusal of paragraph 5.2 of the impugned order, it becomes clear that the AO is based on the fact that M/s. Karthik Alloys Pvt. Ltd. has gone into liquidation, has held that the said entity is bogus. This view of the AO, if accepted, would amount to saying that any entity which has faced liquidation proceedings is bogus. In fact, the said entity was subsequently purchased by M/s. QVC Exports Pvt. Ltd., which would prove that it is a legitimate business.

14. That apart, he has stated that the mere existence of information dehors the facts of the case and reply of the assessee does not give unbridled powers to the Revenue to reopen the case. He has referred to the judgment of the Supreme Court in Indian & Eastern Newspaper Society v. CIT 119 ITR 996 (SC). Reference is also made to the judgment in Divya Capital One (P.) Ltd. v. Assistant Commissioner of Income-tax 45 ITR 436 (Delhi)/W.P.(C) 7406/2022 wherein, in the context of the term information’ this Court has stated as under:

“8. This Court is further of the view that under the amended provisions, the term “information” in Explanation 1 to Section 148 cannot be lightly resorted to so as to re-open assessment. This information cannot be a ground to give unbridled powers to the Revenue. Whether it is “information to suggest” under amended law or “reason to believe” under erstwhile law the benchmark of “escapement of income chargeable to tax” still remains the primary condition to be satisfied before invoking powers under Section 147 of the Act. Merely because the Revenue respondent classifies a fact already on record as “information” may vest it with the power to issue a notice of re-assessment under Section 148A(b) but would certainly not vest it with the power to issue a reassessment notice under Section 148 post an order under Section 148A(d)”

15. Mr. Sinha vehemently submitted that before moving on with any information received, the same needs to be supplemented by independent enquiry and proper application of mind. Any order passed subsequent thereto, has to be a speaking order.

16. To buttress his submissions, he has referred to the judgments in Hindustan Steels Ltd. Rourkela v. A.K. Roy (1996) 3 SSC 513, Secretary & Curator, Victoria Memorial v. Howrah Ganatantrik Nagrik Samity JT 2010(2)SC 566 and Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 (SC).

17. He has sought prayers as made in the petition.

18. On the other hand, Mr. Vipul Agrawal, learned counsel appearing for the respondent/Revenue, would submit that information available with the respondent under the Risk Management Strategy formulated by CBDT suggested that income chargeable to tax has escaped assessment in the case of the assessee during the relevant assessment year. On the basis of such information and verification of status of return of income filed by the assessee from e-filing portal, that it was found that the assessee has filed its return for AY 2019-20, declaring income at Rs. 40,90,533/-and the same was processed u/s 143(1) of the Act on 30.11.2019 at an income of Rs. 40,90,533/-. During the period, the assessee undertook above mentioned transactions amounting to Rs. 88,86,000/-

19. He stated that an investigation/enquiry was conducted by the CGST Kolkata, in the case of M/s Karthik Alloys Pvt. Ltd. and it was found that the said entity was engaged in providing fraudulent GST invoices for claiming exaggerated Input Tax Credit to other business entities having no existence at their declared place of business as well as places where the consignment were purportedly received. It was established that M/s Karthik Alloys Pvt. Ltd. is a paper entity with no financial worth, and is it provides accommodation entries in the guise of invoices of issuance. The investigation also revealed that the present assessee/petitioner had made purchases of Rs. 88,86,000/- from M/s Karthik Alloys Pvt Ltd. This information, according to him, clearly suggests that during the relevant previous year, the assessee had income chargeable to tax.

20. Therefore, an opportunity of being heard was provided to the assessee, vide notice dated 28.03.2025 u/s 148A(1) of the Act. In response thereto, the assessee has filed its response on14.04.2025 and 30.04.2025, vide its letter dated 11.04.2025 and 30.04.2025 respectively, along with certain documents. The assessee submitted its copy of accounts for FY 2018-19, copy of purchase bills, GST return, copy of bank statement, documents in reference to transportation, copy of financials of the company uploaded on MCA site, copy of orders passed by NCLT, Mumbai Bench in the case of M/s Karthik Alloys Pvt Ltd and GST details of the M/s Karthik Alloys Ltd and declaration by some transport companies. The AO had perused the records, and found that there were some issues that remained unexplained and unsubstantiated.

21. He submitted that mere production of the above documents and books of accounts does not mean there is no discrepancy in sales and purchases made by the assessee. Further, on a perusal of the orders of NCLT, Mumbai Bench, it becomes clear that M/s Karthik Alloys Pvt. Ltd. was a defaulter on account of non-payment against purchases, and was not in a position to make huge transaction to legitimately run the business, which substantiates the inference made by the AO that it had issued bogus bills to the assessee in order to suppress the actual income by claiming Input Tax Credits in GST returns. He has drawn our attention to paragraph 5.3 of the impugned order, wherein the AO, by referring to the summary of Income Tax Returns of the said entity, has held that is a paper entity with no financial worth, and is used for providing accommodation entries in the guise of issuing invoices.

22. Mr. Agrawal stated that therefore, it is justified to come to the conclusion that the transactions made by the said entity were sham transactions and the sales proceeds at the hand of the assessee/petitioner are actually bogus and non-genuine purchases, by which, profit of the assessee have been suppressed.

23. He submitted that the above information, would satisfy the requirement of the AO “having information which suggests that income chargeable to tax has escaped assessment in the case of an assessee” under Section 148A of the Act, for the purpose of reopening of assessment.

24. He has sought dismissal of the petition.

25. Having heard the learned counsel for the parties, the short issue that arises for consideration is whether the respondents were justified in issuing the notice dated 28.03.2025 under Section 148A(1) of the Act; order dated 28.06.2025 passed under Section 148A(3) of the Act; and notice dated 28.06.2025 under Section 148 of the Act, relatable to the AY 2019-20 and initiating the reassessment proceedings.

26. The submissions of the learned counsel for the petitioner are the following –

(1)

the impugned action taken by the respondents is not in conformity with the guidelines issued by the CBDT of which reference has been made in paragraph no.5 above;

(2)

it is mandatory under the new reassessment mechanism to provide a fair opportunity to the assessee before initiating the reassessment proceedings;

(3)

the order of the AO is only based on a transaction that took place between M/s. Karthik Alloys Pvt. Ltd and assessee, which cannot be the sole basis for initiating the reassessment proceedings;

(4)

the respondents have not considered the reply filed by the assessee properly as the consideration of the reply should not be a mere formality and the CBDT guidelines should be followed in letter and spirit;

(5)

the impugned order dated 28.06.2025 reveals that the AO held that M/s. Karthik Alloys Pvt. Ltd. is a bogus entity based on the fact that it has gone into liquidation. In fact, the very fact that that liquidation proceedings have been initiated against M/s. Karthik Alloys Pvt. Ltd. would suggest it is not a bogus entity; and

(6)

initiation of the reassessment proceedings, has to be pursuant to an independent enquiry and proper application of mind.

27. Per contra, it is the stand of the respondents as contended by Mr. Vipul Agrawal that a proper opportunity was provided to the assessee in as much as the assessee in response to the notice dated 28.03.2025 under Section 148A(1) of the Act had filed two responses on 14.04.2025 and 30.04.2025 vide letters dated 11.04.2025 and 30.04.2025 along with certain documents like purchase bills, GST returns, copy of bank statements, documents with regard to transportation, copy of the finances of the company uploaded on MCA website, copy of order passed by the NCLAT, Mumbai Bench and declaration of some transport companies.

28. The stand of the AO on the response filed by the assessee can be seen from the paragraphs no.5.1 to 5.3 of the order dated 28.06.2025 passed under Section 148A(3) of the Act, reproduced as under:-

“5.1 In response to opportunity provided to the assessee u/s 148A (1) of the Act, the assessee has filed its response on14.04.2025 and 30.04.2025, vide its letter dated 11.04.2025 and 30.04.2025 respectively, along with certain documents. The assessee has submitted a paper books having copy of accounts for F.Y. 2018-19, copy of purchase bills, GST return, copy of bank statement, documents in reference to transportation, copy of financials of the company uploaded on MCA site, copy of orders passed by NCLT in the case of M/s Karthik Alloys Pvt Ltd (L-6,7, Cuncolim Industrial Estate, Salcete, Goa – 403703) and GST details of the M/s Karthik Alloys Ltd and declaration by the transport companies. The reply as well as supporting documents submitted by the assessee have been perused.

Without being prejudiced to the documentary evidences by the assessee, the undersigned has certain points which remained unexplained and unsubstantiated. Further, assessee has relentlessly emphasized on the documentary evidences brought on record but it should not overlook that maintaining proper records/books of accounts simply does not rule out that there is no discrepancy in sales and purchase. Assessee has quoted the comments against the M/s Kathik Alloys Pvt Ltd in the information shared by CEIB, Department of revenue, which is written as “collecting GST but not depositing the same in the government exchequer and emphasized that if a party is collecting GST and not depositing the same with the government, it does not means that the transaction itself is bogus, but similarly from the same it also cannot be inferred that transaction were not bogus.

5.2 Assessee has submitted the copy of order in different cases passed by NCLT, Mumbai, Bench, in which M/s Karthik Alloys Pvt Ltd was second party, and the same are produced before the undersigned to substantiate that the M/s Karthik Alloys Pvt Ltd is not a paper entity and were doing actual business. For the sake of more clarity order has been perused and it is found that M/s Karthik Alloys Pvt Ltd was a defaulter and a debtor of huge payment towards the second party on account of non payment against the purchases, in cases in which order is submitted before the undersigned.

This fact also the weakens the stand of the assessee that the M/s Karthik Alloys Pvt Ltd has made genuine transaction with the assessee amounting to Rs. 88,00,000/-. Relying on the orders passed by the NCLT, Mumbai Bench in the case of M/s Karthik Alloys Pvt Ltd and not in a position to make huge transaction to legitimately run the business and it only suggested that M/s Karthik Alloys Ltd had financial crisis during the year under consideration, which also indicates that it had issued bogus bills to the assessee in order to suppress the actual income by claiming Input Tax Credits in GST returns.

Further the matter of M/s Karthik Alloys Ltd being before Hon’ble NCLT, cannot be test for judging the involvement of this entity in aforesaid bogus and non-genuine purchases/sale transactions.

5.3 On perusal of ITR of M/s Karthik Alloys, it was found that it has filed return of income for only AY 2018-19. Moreover, the said entity has shown NIL income & NIL profit before tax. Huge business transactions made by the entity is not commensurate with the ITR filed by the entity. Summary of Income-tax returns filed by the entity is tabled below:

NAME	A/Y	SHARE CAPITAL	FIXED ASSETS	TOTAL REVENUE FROM OPERATION	RENT PAID	PROFIT BEFORE TAX	GROSS TOTAL INCOME	TOTAL TAX PAID
Karthik Alloys Pvt. Ltd	2018 19	52300000	349397323	1187367354	0	-360925089	0	0

In view of the above financial analysis it can be construed that M/s Karthik Alloys Pvt. Ltd., is a paper entity with no financial worth, and is used for providing accommodation entries in the guise of invoice issuance. Therefore, transactions made by the entity were sham transactions and all the sales made by the entity are bogus and non-genuine sales and all the sales proceeds in the hand of the assessee i.e. M/s R. S. Alloys are actually its bogus and non-genuine purchases, by which profit of the assessee have been suppressed.

Therefore, all the expense of Rs.88,00,000/- incurred by the assessee i.e. M/s R. S. Alloys in the guise of purchases from M/s Karthik Alloys Pvt. Ltd., Unit-II (GSTIN:19AAACK7734Q1ZT) are non-genuine and unsubstantiated purchases.”

29. The conclusion of the AO is that mere maintenance of the documents and books of accounts provided by the assessee does not mean that there are no discrepancies in the sales and purchases made by the assessee. He has laid stress on the fact that M/s. Karthik Alloys Pvt. Ltd. was a defaulter and debtor of huge payments towards a second party on account of non-payment against purchases. He also stated that these facts further weaken the stand of the assessee that M/s. Karthik Alloys Pvt. Ltd. has made genuine transactions with the assessee amounting to Rs. 88,86,000/-. In fact he has also noted that the order passed by the NCLAT, Mumbai Bench in the case of M/s. Karthik Alloys Pvt. Ltd. would also show that it was not in a position to make huge transactions and ultimately to run business and it only suggested that M/s. Karthik Alloys Pvt. Ltd. had financial crises during the relevant year under consideration. It was also noted that M/s. Karthik Alloys Pvt. Ltd. had filed return of income only for the year 2018-19 showing „nil’ income and „nil’ profit before tax. In other words, huge business transactions undertaken by the entity does not appear commensurate with the ITR filed by the said entity.

30. Suffice it to state, while the petitioner contends that the transaction relating to the amount of Rs. 88,86,000/- is genuine, it is the stand of the respondents that it is a sham transaction whereby M/s. Karthik Alloys Pvt. Ltd. has issued bogus bills to the assessee in order to suppress actual income by claiming Input Tax Credit in GST returns. This is a pure question of fact and needs to be looked into and enquired scrupulously and it is necessary to issue notice primarily to carry out the reassessment proceedings and ascertain as to whether the said transaction needs to be added to income for the purpose of tax or not. In fact, the Revenue has taken precisely this stand in these proceedings, that on the basis of the documentary evidence filed by the assessee and after hearing it, such an exercise needs to be carried out.

31. Having said that, it is also apposite to mention here that there is no violation of the principles of natural justice, as alleged by the assessee. It is based on the notice dated 28.03.2025, to which response was filed by the assessee that the reassessment order has been passed.

32. It is not the case of the assessee that no opportunity of hearing was granted by the AO pursuant to the notice under Section 148A(1) of the Act, which resulted into the order under Section 143A(3) of the Act. It is also not contested that the present action has been taken based on the information available with the respondent under Risk Management Strategy formulated by the CBDT, which is recognised under Section 148(3)(i) of the Act. It is in pursuance of this that the respondent has taken a view that that income chargeable to tax has escaped assessment in the case of the assessee during the relevant AY. A reference to the same has been made in the show cause notice issued under Section 148A(1) of the Act, which reads as under:-

“2. Information available with this office under risk management strategy formulated by CBDT suggests that income chargeable to tax has escaped assessment in the case of assessee during the relevant assessment year. Copy of case related information as downloaded from the Insight Portal in your case is also annexed herewith.”

If that be so, initiation of the reassessment proceedings cannot be faulted.

33. Another submission of Mr. Sinha is that the information sought to be relied upon by the respondent is not sufficient enough to reopen the assessment. We are unable to accept the submission for the simple reason that sufficiency of the material available with the AO to carry out reassessment is beyond the pale of judicial review.

34. At this juncture, we may refer to the judgment of this Court in Raghav Garg v. Income Tax Officer [WP(C) No. 10070 of 2024, dated 30-9-2024] on which much reliance was placed by Mr. Agrawal, wherein it was held as under:

“8. As noted above, the principal allegation is that the petitioner had availed the accommodation entries from two above-named suppliers who were found to be non-existent by the investigation wing of the tax department. Clearly, the said information leads to the suggestion that the petitioner’s income for the relevant Assessment Year escaped assessment.

9. Although, the petitioner had produced documents in support of its claim that the purchases were genuine, however, it had not produced any other material to establish that the said two named entities (M/s S.P. Trading and N.B. Agency) were creditworthy or were of any substance.

10. It is neither necessary nor apposite for this Court to proceed on an adjudicatory exercise regarding the allegations made in the notice as that is the matter which is to be considered by the AO in the reassessment proceedings. Suffice to say that the AO had sufficient grounds that suggest that assessee’s income for the AY 2020-2021 has escaped assessment.”

35. Suffice it to state, we find that the AO has sufficient information available with him to carry out the reassessment proceedings.

36. Mr. Sinha has relied upon the judgment in Devat Ram Company Pvt. Ltd. (supra) in support of his arguments. We have perused the judgment. The reassessment proceedings therein were carried out on the basis of some information received in respect of one M/s. Madhumita Steel Industry Pvt. Ltd., which was alleged to be a bogus company. Proceedings were initiated against the assessee therein and also one M/s. Gold Feather Pvt. Ltd. (GFPL). However, a recommendation was given by the Principal Director of Income Tax that the proceedings against both the parties be dropped. It is in this back ground that this Court had allowed the petition therein and set aside the impugned order passed under Section 148A(d) of the Act and notice issued under Section 148A(b) of the Act. As such, this judgment would not come to the aid of the petitioner/assessee.

37. Mr Sinha to buttress his submissions that CBDT circulars / guidelines are to be mandatorily followed by the respondent/the Revenue has relied upon the judgments in Azadi Bachao Andolan (supra), (b) Navnit Lal C. Javeri (supra), (c) Vasudeo V. Dempo (supra), and (d) Ellerman Lines Ltd. (supra). There is no dispute to the principles laid down in these judgments, however, they would not be applicable to the facts of the present case.

38. Similarly, the judgments in Hindustan Steels Ltd. (supra), the Secretary & Curator, Victoria Memorial (supra), and Calcutta Discount Co. Ltd (supra) relied upon by him in support of his contention that any order passed subsequent to the information received would have to be supplemented by an independent enquiry and should be a speaking order are clearly distinguishable as we have held that the AO is justified in passing the reassessment order dated 28.06.2025.

39. In view of our discussion above, this petition is bereft of any merits and is dismissed. Consequently, the pending application has become infructuous and is also dismissed.