Bombay High Court
Saurashtra Finstocik Pvt. Ltd vs Assistant Commissioner Of Income Tax ... on 18 January, 2024
Author: Neela Gokhale
Bench: K. R. Shriram, Neela Gokhale
2024:BHC-OS:1068-DB
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
Digitally
signed by
SHAMBHAVI
SHAMBHAVI NILESH
SHIVGAN
WRIT PETITION NO.890 OF 2016
NILESH
SHIVGAN Date:
2024.01.20
10:41:45
+0530 Saurashtra Finstock Pvt. Ltd. ...Petitioners
Versus
Assistant Commissioner of Income Tax Circle-11(1)(2) ...Respondent
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Mr. S.C.Tiwari, with Ms Rutuja N Pawar, for Petitioners.
Mr. Suresh Kumar for Respondent-Revenue.
----
CORAM: K. R. SHRIRAM &
DR.NEELA GOKHALE, JJ.
DATED: 18th January 2024
PC:-
1. The reasons recorded for issuing notice under Section 148 of the Income Tax
Act, 1961 ("Act") is scanned and re-produced below:
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2. At the time of admission on 26th February 2016, the following order
came to be passed:
"Heard. Rule.
2. This Petition challenges the notice dated 31st March, 2015
issued under Section 148 of the Income Tax Act ("the Act")
seeking to reopen the assessment for the assessment year 2010-
11. The order dated 17th December 2015 of the Respondent
disposing of the objections to the reasons recorded in support of
the impugned notice inter alia records that information received
from sources has to be verified to check its genuineness.
3. Thus, prima-facie, it appears that reopening notice has been
issued not on the basis of reason to believe but on reason to
suspect only for the purpose of making investigation and enquiry
to ascertain whether any income has escaped assessment. This is
prima facie not permissible.
4. In the above view, there shall be interim relief in terms of
prayer clause (b)."
3. We have considered pleadings and also heard learned counsels. We
totally agree with the observations made by the Court at the time of
admitting the petition. We are satisfied that there are no reasons to believe
but only reasons to suspect. This view was also followed in Paranjpe
Schemes (Construction) Ltd. v. Deputy Commissioner of Income Tax Circle
2(3)(1) & Ors.1
4. In Darpan Chandliya v. Income Tax Officer 2, a similar
situation arose where also the AO had noted that he is seeking
some information to examine the case of assessee. The Court
held that, that cannot be stated to be founded on the belief that
any income which is chargable to tax has escaped assessment.
Just because some information has been received does not
entitle Respondent to reopen assessment. The reasons must be
founded on the satisfaction of the AO that income chargeable to
tax has escaped assessment. Once that is not to be found, then
the impugned notice cannot be sustained. The Court said,
"what is found is that there are no reasons to believe but, only
1 Writ Petition No.1415 of 2022 dtd.10.11.2023.
2 2023 (155) taxmann.com 447 Bombay.
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reasons to suspect. Hence, reopening of assessment is not
satisfactory." Paragraph 8 of the said judgment reads as under:
"8. Moreover, the AO has noted in the reason to believe
that he is seeking some information to examine the case of
assessee, to enquire about these Rs. 7,00,000/-. In the
judgment of this Court in the case of Nivi Trading Limited
v. Union of India and Another3, it is held that
"If more details are sought or some verification is
proposed, that cannot be a substitute for the
reasons which led AO to believe that an income
chargeable to tax has escaped assessment. The
principal condition for issuance of notice is to be
found in Section 147 of the Act and that is on the
reason to believe that, any income chargeable to tax
has escaped assessment for any assessment year,
then, the AO may, subject to the provisions of
Sections 148 to 153, assess or reassess such income
and also any other income chargeable to tax which
has escaped assessment."
In the case at hand, the AO does not say that any income
chargeable to tax has escaped assessment. All that the AO
desires is 'examination of certain details pertaining to the
amount paid by Petitioner to Crown'. That cannot be stated
to be founded on the belief that any income which is
chargeable to tax has escaped assessment and hence such
verification is necessary. Just because some information
has been received from the Investigation Wing, does not
entitle Respondent to re-open assessment. The reasons
must be founded on the satisfaction of AO that income
chargeable to tax has escaped assessment. Once that is not
to be found, then, the impugned notice cannot be
sustained. What we find is that there are no reasons to
believe but, only reasons to suspect. Hence, re-opening of
assessment is not satisfactory."
4. In the circumstances, we are satisfied that there are no reasons to
believe but only reasons to suspect escapement of income. In fact, in the
order disposing objections, the Assessing Officer, to a request of petitioner
to provide access to documents, relying on which the reopening was made,
has responded as under:
"6. Information regarding some transactions, as already
intimated to you, has been received from sources and it has
to be verified to check the genuineness. It does not
3. 64 taxmann.com 92 (2015)(Bom).
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necessarily mean that the assessee has defaulted on the
aforesaid issues. Proper hearing and opportunity will be
given to you for producing relevant details/explanations in
support of your contentions before passing the order u/s
148 rws 147 of the I.T.Act."
5. In the circumstances, the Petition is allowed in terms of prayer clause
(a), which reads as under:
"(a) That the Hon'ble Court may be pleased to issue a writ
of certiorari or a writ in the nature of certiorari or any
appropriate writ, order or direction after calling for the
records and proceedings of the Respondent and quash and
set aside the notice under Section 148 dated 31.03.2015 to
the petition."
6. Petition disposed.
(DR.NEELA GOKHALE, J.) (K. R. SHRIRAM, J.)
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