Garg Ship Breaking Pvt. Ltd. v. The PCIT

Parties Involved

Facts Summary

The assessee, Garg Ship Breaking Pvt. Ltd., engaged in the business of wholesale and retail of scrap materials, filed its income return for the Assessment Year 2021-22 on 13-03-2022, admitting a total income of Rs. 35,76,760/-. The case was taken up for scrutiny due to substantial purchases from suppliers who were either non-filers or reflected very low turnover. A search action by the CGST Department on 27-03-2022 led to the seizure of all documentary evidence. The Assessing Officer (AO) issued a notice under section 133(6) of the Income Tax Act, 1961, regarding Red Flagged information available in the Department's insight portal. Only one person responded to the notice. The AO did not obtain details/records from the CGST Department, and due to the unavailability of concrete materials, the AO accepted the returned income with a qualification that suitable action would be taken if any adverse information was received in the future.…

Legal Issues

• 1. Whether the learned Principal Commissioner of Income Tax (PCIT) erred in law and on the facts of the case in exercising the powers under section 263 of the Income Tax Act, 1961.
• 2. Whether the PCIT erred in holding that the AO did not conduct inquiries properly, making it a fit case under section 263 of the Income Tax Act, 1961.

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

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