Bombay High Court
Ravi Kanaiyalal Sheth vs Asst Commissioner Of Income Tax ... on 20 December, 2021
Bench: K.R. Sriram, Amit B. Borkar
Digitally signed
by GAURI
GAURI AMIT
GAEKWAD 1/5 906.WP-3174-2019.doc
AMIT Date:
GAEKWAD 2021.12.22
15:47:48
+0530
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.3174 OF 2019
Ravi Kanaiyalal Sheth ....Petitioner
V/s.
Assistant Commissioner of Income Tax
Circle 5(3)(1) & Ors. ....Respondents
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Mr. Atul K. Jasani for petitioner.
Mr. Suresh Kumar for respondents.
----
CORAM : K.R. SHRIRAM &
AMIT B. BORKAR, JJ.
DATED : 20th DECEMBER 2021
P.C. :
1 Petitioner is impugning the notice dated 30th March 2019 issued
under Section 148 of the Income Tax Act, 1961 (the said Act) seeking to
reopen the assessment for Assessment Year 2012-2013 and the order
rejecting the objections passed on 23rd October 2019.
2 The reasons for reopening read as under :
The assessee has filed return of income declaring income of
Rs.5,00,93,727/- and long term capital loss of
Rs.2,28,79,325/- on 31.07.2012. Further proceedings u/s.
143(3) were completed on 23.03.2015 determining income
at Rs.5,22,05,840/-. As as per information received, Mr. Avi
Sheth has invested Rs.95.33 Crores, it is not proportional to
the return of income filed by the assessee. In view of the
facts and documents on record coupled with the information
from DDIT (Inv)-Unit-6(1), Mumbai, I have reasons to
believe that income as mentioned above, chargeable to tax
has escaped assessment within the meaning of Section 147 of
the IT Act as the assessee has failed to disclose fully and truly
all material facts necessary for its assessment in its case. The
approval under proviso of sec 151(1) is hereby required
before issuance of notice u/s. 148 of the I.T. Act.
Gauri Gaekwad
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3 The Assessing Officer has formed a view that there are reasons
to believe escapement of income within the meaning of Section 147 of the
said Act because "the assessee has filed return of income declaring income
of Rs.5,00,93,727/- and capital loss of Rs.2,28,79,325/- and proceedings
under Section 143(3) of the said Act was completed on 23rd March 2015
determining income at Rs.5,22,05,840/-. But as per information received,
petitioner has invested Rs.95.33 Crores which is not proportional to the
return of income filed by petitioner".
4 As the notice has been issued after the expiry of four years from
the end of the relevant assessment year, the onus is on respondents to show
that income chargeable to tax has escaped assessment by reason of failure
on the part of petitioner to disclose fully and truly all material facts
necessary for his assessment, for that assessment year.
\
5 Mr. Suresh Kumar relied upon a judgment of this Court in
Crompton Greaves Ltd. V/s. Assistant Commissioner of Income Tax,
Circle 6 (2) 4 1
to submit that even if the reason for reopening does not
specifically state that there was any failure on the part of petitioner to
disclose fully and truly all material facts necessary for its assessment for
the relevant assessment year, it will not be fatal to the assumption of
jurisdiction under Sections 147 and 148 of the Act. We would certainly
agree with Mr. Suresh Kumar but as held in Crompton Greaves Ltd.
1 . (2015) 55 taxmann.com 59 (Bombay)
Gauri Gaekwad
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(Supra), this is subject to the rider that there must be cogent and clear
indication in the reasons supplied, that in fact there was failure on the
part of the assessee to disclose fully and truly all the material facts
necessary for its assessment. If the factum of failure to disclose can be
culled down from the reasons in support of the notice seeking to reopen
assessment, that will certainly not be fatal to the assumption of
jurisdiction under Sections 147 and 148 of the said Act. The Court held
"However, if from the reasons, no case of failure to disclose is made out,
then certainly the assumption of jurisdiction under Sections 147 and 148
of the Act would be ultra vires, being in excess of the jurisdictional
restraints imposed by the first proviso to Section 147 of the Act".
6 Having considered the reasons, the factum of failure to disclose
cannot be culled down from the reasons in support of the notice seeking to
reopen the assessment. The entire basis is that the Assessing Officer is
unable to understand how a person, whose income is determined at
Rs.5,22,05,840/-, could have invested Rs.95.33 Crores. The fact is petitioner
has invested much more than Rs.95.33 Crores during the year. The details of
all investments made have been filed by petitioner through his Advocate's
letter dated 20th January 2015 full two months before the assessment
proceedings were completed under Section 143(3) of the said Act. Copies of
these documents have also been provided to respondent in response to the
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notice to reopen. Mr. Jasani submitted that the documents itself indicate
that the investments were far in excess of Rs.95.33 Crores and the Assessing
Officer, before the original assessment, has considered all the details
provided and has thereafter passed the assessment order dated 23 rd March
2015.
7 The Assessing Officer had all materials facts before him when
he made the original assessment. When the primary facts necessary for
assessment are fully and truly disclosed, the Assessing Officer is not
entitled on change of opinion to commence proceedings for
reassessment. Even if the Assessing Officer, who passed the assessment
order, may have raised too many legal inferences from the facts disclosed,
on that account the Assessing Officer, who has decided to reopen
assessment, is not competent to reopen assessment proceedings. Where
on consideration of material on record, one view is conclusively taken by
the Assessing Officer, it would not be open to reopen the assessment
based on the very same material with a view to take another view.
8 But from the reasons, it appears that the Assessing Officer is
proceeding purely on the basis of suspicion because he is unable to
comprehend how a person, whose income has been assessed at
Rs.5,22,05,840/-, would have invested Rs.95.33 Crores. An Assessing
Officer is not permitted to make a roving inquiry. We are, therefore, not
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satisfied that the reasons given by the Assessing Officer make out any case
of failure on the part of petitioner to fully and truly disclosed material facts.
Once all the material were placed before the Assessing Officer and he chose
not to mention about all the investments in the assessment order, it could
not be contended that the Assessing Officer has not applied his mind while
passing the assessment order.
9 In the circumstances, petition is allowed in terms of prayer
clause - (a), which reads as under :
(a) this Hon'ble Court may be pleased to issue a
Writ of Certiorari or a writ in the nature of
Certiorari or any other appropriate writ, order or
direction under Article 226 of the Constitution of
Indian calling for the records of the petitioner's case
and after examining the legality and validity
thereof quash and set aside the notice dated
30th March 2019 (Exhibit A) issued by respondents
under Section 148 of the Act seeking to reopen the
assessment for the assessment year 2012-13; and
order rejecting objections (Exhibit S) dated
23rd October 2019.
10 Petition disposed.
(AMIT B. BORKAR, J.) (K.R. SHRIRAM, J.)
Gauri Gaekwad
