The Bombay High Court allowed the petition and quashed the notice dated 30th March, 2021 issued under Section 148 of the Income Tax Act, 1961 (“the Act”).
A division bench of this Court comprising Hon’ble Justice Dhiraj Singh Thakur and Kamal Khata observed that nothing new had happened between the date of the order of the assessment and the date of the formation of the opinion to reopen the assessment proceedings.
Brief Facts:
In this petition, the Petitioner challenged the notice dated 30th March, 2021 issued under Section 148 of Act, whereby seeking to reopen the assessment year 2015-16. The reasons for reopening as communicated to the Petitioner was an advance payment of Rs.17,76,08,505/- made to M/s Nancy Builders and Developers Pvt. Ltd., which according to the Assessing Offcer (A.O.), remain unexplained and, therefore, it was alleged that the Petitioner had failed to disclose fully and truly all material facts necessary for the reassessment.
Contentions of the Petitioner:
The main ground of challenge by the Petitioner in the present petition was that the initiation of reassessment proceedings is nothing but a change of opinion, and there was no omission on the part of the Petitioner to disclose the material facts in the present case.
Contentions of the Respondent:
The learned Counsel for the Respondents submitted that there was no proper disclosure of the material facts before the A.O. during scrutiny proceedings on the ground that M/s Goel Ganga Developers(India) Pvt. Ltd. was not a party to the MOU between the Petitioner and M/s Nancy Builders & Developers Pvt. Ltd. and that M/s Goel Ganga Developers(India) Pvt. Ltd. had not consented to the said transfer due to which an amount of Rs.17,76,08,505/- had remained unexplained. Therefore, the transaction had to be treated as an unexplained investment under Section 69 of the Act and was required to be brought to tax.
Observations of the Court:
Firstly, this Court noticed that in the present case, the assessment is sought to be reopened beyond the period of four years from the end of the relevant assessment year 2015-16. Therefore, the jurisdictional requirement that there was a failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment had to be established by the assessing officer. Secondly, after referring to the catena of judgments, the bench observed that if a notice under Section 148 has been issued without the jurisdictional foundation under Section 147 is available to the Assessing Officer, the notice and the subsequent proceedings will be without jurisdiction, liable to be struck down in exercise of writ jurisdiction of this Court.
Testing the facts of the present case on the touchstone of the settled position of law, it was seen that the issue of ‘Large Loans/Advances’, was not only raised during the scrutiny assessment but the same was responded to specifically by the assessee, as noted from the clarifications dated 5 June 2017 and 16 August 2017, which finally led to passing of the Order under Section 143(3) of the Act. Therefore, in view of this Court, the notice to initiate the reassessing proceedings is nothing but a change of opinion, which does not satisfy the jurisdictional foundation under Section 147 of the Act.
The decision of the Court:
The Bombay High Court allowed the petition and set aside the impugned notice dated 30 March 2021 issued under Section 148 of the Act and all connected proceedings.
Case Title: Konark Life Spaces vs Assistance Commissioner of Income Tax
Coram: Hon’ble Justice Dhiraj Singh Thakur and Kamal Khata
Case no.: WRIT PETITION NO. 2840 OF 2022
Advocate for the Petitioner: Dr. K. Shivram
Advocate for the Respondent: Mr. Suresh Kumar
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