NEUTRAL CITATION
C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 5447 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BIREN VAISHNAV
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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BHARATKUMAR DINUBHAI PATEL
Versus
INCOME TAX OFFICER WARD 5(3)(1), AHMEDABAD
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Appearance:
MR B S SOPARKAR(6851) for the Petitioner(s) No. 1
MR.VARUN K.PATEL, SENIOR STANDING COUNSEL WITH MR. DEV D.
PATEL, ADVOCATE for the Respondent(s) No. 1
NOTICE SERVED for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 28/08/2023
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV) Page 1 of 11 Downloaded on : Sun Sep 17 02:42:18 IST 2023 NEUTRAL CITATION C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023 undefined 1 Rule returnable forthwith. Learned advocate appearing for the respondent waives service of notice of rule. With consent of the learned advocates appearing for the parties, the matter is taken up for final hearing today. 2 By way of this petition under Article 226 of the Constitution of India, the petitioner has challenged the order dated 22.03.2021. The Notice was issued under Sec.148 of the Income Tax Act. The petitioner has also prayed that the order dated 09.02.2022, by which the objections were disposed of be quashed and set aside. 3 Facts in brief indicate that the petitioner filed his returns of income for Assessment Year 2015-16 on 13.08.2015 declaring a total income of Rs.2,50,620/-. The return was selected for scrutiny. A detailed scrutiny was undertaken.
3.1 It is the case of the petitioner that realizing a mistake in calculation of long term capital gain, the Page 2 of 11 Downloaded on : Sun Sep 17 02:42:18 IST 2023 NEUTRAL CITATION C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023 undefined petitioner, Suo Moto offered the same for tax by filing a revised computation of income showing total income of Rs.51,62,600/- and requested the Assessing Officer to replace the correct figure with the incorrect figure. 3.2 It is further the case of the petitioner that notice under Sec.142(1) of the Act was issued on 12.10.2017 asking the petitioner to show cause as to why share in the total consideration of 13 plots should not be treated as undisclosed income of the petitioner. The petitioner filed replies on 07.11.2017 and 14.12.2017. Eventually, the Assessing Officer assessed the income of the petitioner at Rs.51,62,600/- vide order under Sec.143(3) dated 18.12.2017.
3.3 On 22.03.2021, notice under Sec.148 of the Act was issued. The petitioner, on 19.04.2021, without prejudice filed his returns and sought for reasons recorded for reopening. The reasons were supplied by a communication dated 20.05.2021. The petitioner filed his Page 3 of 11 Downloaded on : Sun Sep 17 02:42:18 IST 2023 NEUTRAL CITATION C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023 undefined objections on 08.06.2021. The objections were disposed of on 0902.2022.
4 Mr.B.S.Soparkar, learned counsel for the petitioner would make the following submissions: 4.1 That the respondent had recorded only one reason to believe that the income had escaped assessment on the ground that the petitioner had sold 13 properties during F.Y 2014-15 relevant to A.Y 2015-16 and the petitioner had earned income of Rs.81,89,669/- which has to be treated as income under Sec.69 of the Act. 4.2 Shri Soparkar, learned counsel, would submit that the reopening was undertaken beyond a period of four years on the end of the assessment year. There is no allegation of failure on the part of the assessee to disclose fully and truly all material facts. He would take the Court through the reasons supplied by the respondent and submit that it is evident that it was only based on Page 4 of 11 Downloaded on : Sun Sep 17 02:42:18 IST 2023 NEUTRAL CITATION C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023 undefined verification of records of the assessee himself. In other words, there was no other material on which the notice or reasons were based.
4.3 Mr.Soparkar, learned counsel, would submit that it is evident that for the same issue, scrutiny was carried out, notice under Sec.142(1) of the Act was issued. He would draw the Court's attention to the notice which indicated the same 13 properties suggesting that it was the case of the revenue in such notice that the petitioner had been dealing in land trading and he was asked to show cause as to why the share in the total sale consideration should not be treated as undisclosed income.
4.4 Mr.Soparkar, learned counsel, would rely upon the replies filed to this notice on 07.11.2017 and 14.12.2017 to submit that he had offered sufficient explanation with regard to the issue. He would therefore submit that since detailed replies were filed and were considered and Page 5 of 11 Downloaded on : Sun Sep 17 02:42:18 IST 2023 NEUTRAL CITATION C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023 undefined accepted by a revised return of income, issuance of notice would amount to change of opinion which is impermissible.
4.5 Mr.Soparkar, learned counsel, would submit that no new tangible material was brought on record and all the details which were part of the reasons recorded, were already available with the respondent during the course of original scrutiny assessment. The reopening according to Mr.Soparkar, learned counsel, was based on audit objections.
4.6 Mr.Soparkar, learned counsel, further submitted that factually incorrect reasons were recorded, inasmuch as, for the very 13 plots, detailed replies were filed and same were made by submissions dated 07.11.2017 and 14.12.2017. He would further submit that the notice and the impugned order be quashed and set aside. 5 Mr.Varun Patel, learned Senior Standing Counsel appearing with Mr.Dev D. Patel, learned advocate for the Page 6 of 11 Downloaded on : Sun Sep 17 02:42:18 IST 2023 NEUTRAL CITATION C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023 undefined revenue, would submit that the petition is filed at a premature stage, inasmuch as, only a notice under Sec.148 r/w. Sec.147 of the Income Tax Act for the Assessment Year 2015-16 has been issued. The petitioner has an alternative remedy by way of an appeal to the commissioner of Income-tax. Mr.Patel, learned Senior Standing Counsel, would submit that the assessment was reopened after taking into account and in accordance with the legal procedures and duly recording reasons for which the case was reopened. He would submit that the returns of the petitiner was selected for scrutiny as it was noticed that the petitioner had sold 13 properties during F.Y. 2014-15 for the transaction had neither neither been disclosed nor shown the profit derived from that transaction. It was noticed that of 12 sale deeds executed in F.Y. 2014-15, the assessee had earned an income of Rs.81,89,669/-, the same needs to be treated as income of the assessee under Sec.69 of the Act.
5.1 Mr.Patel, learned Senior Standing Counsel, would Page 7 of 11 Downloaded on : Sun Sep 17 02:42:18 IST 2023 NEUTRAL CITATION C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023 undefined further submit that it can reasonably be concluded that the failure on the part of the assessee to disclose fully and truly of necessary material facts during the assessment proceedings and hence the exercise of issuing notice was just and proper.
6 Having considered the submissions made by the learned counsels appearing for the respective parties, adverting to the reasons recorded in the notice under sec.143(2) r/w. Sec.147 of the Income-tax Act, it is the case of revenue that "on verification of records, it is noted that the assessee has 13 properties sold during the F.Y. 2014-15 and the assessee had neither disclosed the sale, nor shown the profits derived therefrom." Analysing such information, it was the case of the revenue that the opinion was concluded based on two separate development agreements and this information was based on examination of the case records.
6.1 What is important to note is that the petitioner had received scrutiny assessment notice under Sec.142(1) of Page 8 of 11 Downloaded on : Sun Sep 17 02:42:18 IST 2023 NEUTRAL CITATION C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023 undefined the Act, wherein, the precise scope of inquiry was in context of the very same 13 lands which are the subject matter of the re-assessment proceedings. The petitioner had tendered replies to these notices on 07.11.2017 and 14.12.2017 categorically pointing out that the copies of the development agreements and the financial statements which reflected the income from such agreements was duly offered to tax. The said full income was offered for tax during respective assessment years when consideration was received and while calculating income, computation for the said years, tax was paid. Based on this, an assessment order was passed under Sec.143(3) on 18.12.2017. Reading of the Assessment Order would indicate that to a specific query in respect to the purchase and sale of such properties and considering the reply dated 15.05.2017, the assessment order was finalized. What therefore is apparent that there has been a change of opinion. Detailed replies were filed and the same were considered and accepted by the Assessing Oficer.
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NEUTRAL CITATION C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023 undefined 6.2 All these facts indicate that, firstly, when the reasons supplied by the respondent are seen, there is no allegation of failure on part of the assessee to disclose fully and truly of material facts which particularly was the onus of the revenue since the reopening is undertaken beyond a period of four years from the end of the assessment year. The reasons, further would indicate that it was based on the very case records and as per the author of the reasons, they were self explanatory, and therefore, no further inquiry was required in this case. Obviously therefore, there was no new tangible material based on which reasons for reassessment were taken. The order disposing of objections, therefore, dated 09.02.2022 would also fail again.
6.3 From the notice dated 12.10.2017 and on the response that the petitioner filed vide replies dated 07.11.2017 and 14.12.2017, it is evident that the same material which was accepted by the respondent, has been made a part of the revised reassessment regime by the Page 10 of 11 Downloaded on : Sun Sep 17 02:42:18 IST 2023 NEUTRAL CITATION C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023 undefined impugned notice and the order disposing the objections. 7 For the aforesaid reasons, therefore, the impugned notice dated 22.03.2021 and the order dated 09.02.2022 are quashed and set aside. The petition is allowed, accordingly. Rule is made absolute.
(BIREN VAISHNAV, J) (BHARGAV D. KARIA, J) BIMAL Page 11 of 11 Downloaded on : Sun Sep 17 02:42:18 IST 2023