Bombay High Court
Vijay Vasant Kulkarni vs Asst. Commissioner Of Income Tax Circle ... on 5 February, 2025
Author: M. S. Sonak
Bench: M. S. Sonak
2025:BHC-AS:5542-DB
Revati 1 4.wp-9833.22(J).docx
SAYYED Digitally signed
by SAYYED
SAEED SAEED ALI
AHMED ALI IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ALI Date:
AHMED 2025.02.05
15:19:54
CIVIL APPELLATE JURISDICTION
ALI +0530
WRIT PETITION NO.9833 OF 2022
Vijay Vasant Kulkarni
B 34, Plot No.56,
Taragiri Apartment,
Ideal Colony, Pune-411029 .. Petitioner
Versus
1. Assistant Commissioner of Income
Tax Circle (2), Pune, Income Tax
Office PMT Building, Shankar
Seth Road, Pune-411 037.
2. Addl. Commissioner of Income Tax
Range 2, Pune, Income Tax Office,
PMT Building, Shankar Seth Road,
Pune-411 037
3. Addl./Joint/Dy./Asst.CIT/
Income Tax Officer
National Faceless Assessment Centre
Delhi
4. Union of India
through the Secretary,
Ministry of Finance,
North Block, New Delhi-110001. .. Respondents
_______________________________________________________________
Mr. R. S. Padvekar a/w Tanzil Padvekar and Ms. Tejal P. Kharkar for the
petitioner.
Mr. Suresh Kumar for the respondents.
_______________________________________________________________
CORAM : M. S. Sonak &
Jitendra Jain, JJ.
RESERVED ON : 3 February 2025
PRONOUNCED ON : 5 February 2025
::: Uploaded on - 05/02/2025 ::: Downloaded on - 05/02/2025 22:13:54 :::
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JUDGMENT (Per Jitendra Jain, J.) :
-
1. By this petition under Article 226 of the Constitution of India the
petitioner challenges re-assessment order passed under Section 147 read
with Section 144B of the Income Tax Act (hereinafter referred to as "the
Act") and notice of demand both dated 29 March 2022 for the
assessment year 2015-16.
Brief facts:
2. The petitioner is an individual and has filed his original return of
income for the Assessment year 2015-16 on 30 October 2015. The said
return of income was selected for scrutiny and a notice under Section
142 (1) of the Act dated 21 June 2017 was issued seeking details
mentioned in annexure to the letter. The petitioner has enclosed undated
replies to this notice in the present petition. On 5 October 2017, an
assessment order under Section 143(3) of the said Act came to be passed
accepting the return of income. In the said return, there is no discussion
of any issue except stating that on change of the officer, the Chartered
Accountant of the petitioner attended from time to time and filed various
details.
3. The replies said to have been filed during the assessment
proceedings do not bear any acknowledgment of the same having filed
with revenue during the assessment proceedings.
Revati 3 4.wp-9833.22(J).docx
4. Post conclusion of the assessment proceedings, the petitioner has
filed letters with the assessing officer on 17 August 2018 and 27 August
2018, which are stated to be a reply to the audit objection of the revenue
on deduction under Section 54F of the Act and on income from house
property.
5. On 28 March 2021, the petitioner was served with a notice under
Section 148 of the Act proposing to reassess the income for the
assessment year 2015-16. On 30 June 2021, the petitioner was supplied
with reasons for reopening. Briefly, the reasons record that deduction
under Section 54F must be restricted to the cost of acquisition of
petitioner's share in the property. It further states that no rental income
has been offered for tax under Section 23 of the Act.
6. The petitioner, vide letter dated 13 July 2021, objected to the
reopening. In the objection concerning the issue of deduction under
Section 54F, the petitioner has only stated that this issue was verified
during the assessment proceedings and an opinion was formed, and
therefore, it is a case of change of opinion. In the said objection, there is
no reference to any query having been raised by the assessing officer
during the assessment proceedings and replies filed by the petitioner
during the assessment proceedings. On the issue of taxation of rental
income, there is no averment that this issue was examined during the
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assessment proceedings. The only objection is that the said issue was
raised at the behest of the audit party, and hence, it does not constitute
"reasons to believe" by the assessing officer. The objection also refers to
re-assessment proceedings being initiated at the behest of the audit
objections.
7. On 25 March 2022, an order rejecting the above objection came to
be passed. Thereafter, on 29 March 2022, an assessment order under
Section 147 read with Section 144 B came to be passed, making
additions /disallowance on account of "income from house property"
amounting to Rs.46,85,625/- and disallowance of deduction under
Section 54F to the extent of Rs.3,86,95,545/-. The income was
reassessed at Rs.10,86,36,149/- and a demand of Rs.2,65,22,019/- came
to be raised.
8. Instead of filing an appeal, the petitioner approached this Court
through the present petition on 27 April 2022, challenging the
reassessment order and notice of demand dated 29 March 2022. On 20
September 2022, this Court granted ad-interim relief, which continues to
date. It is against this backdrop that the present petitioner is before us.
Submission of the Petitioner:
9. Mr. Padvekar, learned counsel for the petitioner, submits that the
impugned notice under Section 148 has been issued beyond a period of
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4 years from the end of the relevant assessment year. Since there is no
failure to disclose fully and truly all material facts necessary for the
assessment, the impugned proceedings are barred by the first proviso to
Section 147 of the Act as it existed at the relevant time. Learned counsel
further submitted that both these issues were examined during the
assessment proceeding and, therefore, the impugned proceeding would
amount to a change of opinion, which is not permissible under the Act.
The petitioner also submitted that the proceedings have been issued
without proper sanction under Section 151 of the Act. Learned counsel
also submitted that no sufficient opportunity of hearing was given before
passing the impugned order since between the date of order rejecting the
objection and final assessment order only 3 days were available. He also
submitted that reassessment is based on the audit party's borrowed
satisfaction.
10. Mr. Padvekar learned counsel for the petitioner relied upon the
following decision in the case of Jayant Dave Vs Assistant Commissioner
of Income Tax1, Union of India Vs Rajiv Bansal2, Sidhmicro Equities (P.)
Ltd. Vs Deputy Commissioner of Incoem-tax 3, Deputy Commissioner of
Income Tax Vs Sidhmicro Equities (P.) Ltd. 4 and Asian Paints Vs Assistant
2 (2024) 167 taxmann.com 70 (SC)
3 (2023) 150 taxmann.com 460 (Bombay)
4 (2023) 150 taxmann.com 461 (SC)
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Commissioner of Income-tax5. Mr. Padvekar, therefore, prayed that the
assessment order is bad in law.
Submission of the Respondent:
11. Per contra, Mr. Suresh Kumar learned counsel for the revenue
submits that on account of the Taxation and Other Laws (Relaxation and
Amendment of Certain Provisions) Act, 2022 (TOLA), the period of 4
years specified under the provisions of Section 147 of the Act stands
extended and therefore the petitioner cannot take the benefit of the said
provision and consequential notice is not barred by the first proviso of
Section 147 of the Act. Learned counsel for the respondent submitted
that there was no query raised during the assessment proceedings
concerning taxation of rental income under the head 'house property'
and also as per queries raised during assessment proceedings, there does
not seem to be any query on Section 54F, and therefore this is not a case
of change of opinion. He further submitted that the approval had been
correctly taken following Section 151 of the Act read with TOLA. He
further submits that various issues raised in the present petition were not
raised in the objection. Mr. Suresh Kumar further submits that the
decisions relied upon by the petitioner do not apply to the facts of the
present case. He further submitted that the issues raised by the petitioner
5 (2008) 296 ITR 90 Bombay
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involve the investigation of facts, and this Court, in its exercise of
jurisdiction under Article 226 of the Constitution, cannot delve into
disputed questions of facts. He submits that all these issues can be
examined in the appeal, the same being an alternate and efficacious
remedy under the Act.
Analysis :-
12. We have heard learned counsel for the petitioner and the
respondent and have perused the documents annexed to the petition.
13. At the outset, in the petition, the petitioner has only stated that he
has no other efficacious alternate remedy except by way of this writ
petition. In our view, this statement is not correct. Against the
reassessment order passed there is an appeal provided under Chapter XX
of the Act and this fact has been communicated to the petitioner in the
notice of demand dated 29 March 2022 itself. We may also note that for
filing an appeal, there is no provision under the Income-tax Act of any
pre-deposit for entertaining and adjudicating the appeals. Therefore,
merely because a demand is raised it does not mean that the Writ Court
should entertain the writ when there is an alternate and efficacious
remedy available by way of appeal under the Act. We have recently in
the case of Oberoi Constructions Limited Vs. Union of India & Ors .6 have
6 (2025) 137 GSTR 601
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analysed the law on this subject, and by following the same, we reject
the petitioner's contention that this Court should exercise the extra-
ordinary jurisdiction to entertain the petition.
14. In any case, we propose to examine whether this Court should
exercise its extraordinary jurisdiction to examine the validity of re-
assessment proceedings in the present case.
15. The issue of whether, on account of TOLA provisions, proviso to
Section 147 of the Act would be applicable or not was not raised by the
petitioner in its objections. This issue has been raised for the first time
before this Court. In our view, if the objection has not been raised before
the assessing officer, it would not be fair to raise such an objection in
Writ Petition for the first time to challenge the validity of the
reassessment proceedings.
16. The petitioner has filed undated letters to show that the issue of
Section 54F was examined during the assessment proceedings and,
therefore, there is a change of opinion. In the annexure to the queries
raised, there is no query concerning Section 54F or taxation of rental
income. Whether these undated letters were filed or not during the
assessment proceedings in the absence of any document acknowledging
the same by the revenue, it would not be proper for us to enter the arena
of investigating this issue as to whether these documents were filed or
Revati 9 4.wp-9833.22(J).docx
not. This would involve an investigation into the facts that this Court,
under Article 226 of the Constitution of India, cannot examine. However,
the petitioner is free to demonstrate the same in appeal.
17. Insofar as the issue of rental income under the house property is
concerned, no query is raised, and even in the undated letters, there is
no reply on this issue. Therefore, we cannot accept the petitioner's
contention that this issue was examined during the assessment
proceedings. Learned counsel for the petitioner was fair in stating that,
certainly, this was not examined.
18. Learned counsel for the petitioner also submitted that the
impugned proceedings were initiated at the behest of the audit party
and, therefore, the proceedings are bad in law. In our view, it is a settled
position that if the audit objection is on facts, then the revenue would
have no jurisdiction to reopen the case on audit. However, if the issue
raised is a question of law, then certainly, reopening can be done. The
issue in the present case, whether it is a question of fact or a question of
law, will have to be examined in the light of the submissions made
during the course of the assessment proceedings, which would again
involve the determination of questions of fact, which this Court cannot
go into in writ proceedings. In any view, the reasons recorded do not
mention the reopening being done based on audit objections. Therefore,
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we have our own doubts about whether the petitioner can raise this
issue. Also, we cannot comprehend how internal audit objection
documents were shared with the petitioner.
19. On perusal of the letter filed on 17 August 2018, in response to
the audit party's query, we find various documents annexed to this letter.
Prima facie, we do not find a reference to these documents in undated
letters, which the petitioner claims to have filed in assessment
proceedings.
20. The petitioner's last submission that the impugned order is
contrary to the decision of this Court in the case of Asian Paints (Supra)
can be examined by the Appellate Authority, which has the power to
adjudicate upon the same and the consequences thereto. It is also
important to note that the petitioner has participated in the re-
assessment proceedings despite the officer not disposing of the objection
observed in the assessment order. The petitioner, vide letter dated 28
March 2022, has made his detailed submissions on the merits of the case
without raising any objection on the insufficiency of time between the
order rejecting objection and the time given for reply. On 17 January
2022, the petitioner has filed detailed submissions on the merits again
without objecting the respondents not having passed any order disposing
of the objections. Therefore, in our view, the petitioner cannot now raise
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this contention before the Writ Court. However, the petitioner is free to
raise this issue before the Appellate Authority.
21. We now deal with the decisions relied upon by the learned counsel
for the petitioner. The first decision relied upon by the petitioner in the
case of Jayant Dave (Supra) is not applicable since, in that case, there
was no issue raised on the applicability or non-applicability of TOLA to
the first proviso to Section 147 of the Act. Furthermore, in the present
case, the queries raised during the assessment proceedings do not show
any queries raised on Section 54F and income from house property. The
letters annexed to the petition to show that the details filed during
original assessment proceedings concerning Section 54F are undated.
Various issues raised in the present matter were not raised in the
objections filed, and furthermore, in the present case, the assessee has
participated in the assessment proceeding without raising any objections
as to the insufficiency of time between the order rejecting the objection
and passing the assessment order or the officer not deciding the
objection within reasonable time. In our view, therefore, the said
decision is distinguishable on facts and not applicable.
22. The next decision relied upon by the petitioner in the case of Rajiv
Bansal (supra) and Sidhmicro Equities (P.) Ltd. (supra) would require
ascertainment of facts of the present case and the applicability of the
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Supreme Court decisions to the facts before us. In any case, these issues
raised were not raised in the objections before the assessing officer.
Therefore, it would not be proper for this Court to adjudicate upon this
issue when it is raised for the first time in a writ proceeding. However,
liberty is given to raise this issue in appeal.
23. Given the above, we refrain from exercising our jurisdiction under
Article 226 of the Constitution of India. However, if the petitioner files
an appeal against the assessment order dated 29 March 2022 within four
weeks from the date of uploading of the present order, then, the
Appellate Authority will adjudicate the appeal without any issue as to
limitation since the petitioner had approached this Court within one
month from the date of passing of the impugned order and the petition
was pending in this Court since then and the petitioner was bona fidely
pursuing the said petition.
24. We may also further observe that this Court had granted ad-
interim relief on 20 September 2022. We extend the said ad-interim
relief for four weeks from the date of uploading the present order to
enable the petitioner to make an appropriate application before the
appropriate Authority for seeking a stay of the demand.
25. If such an application is made, the appropriate Authority would
examine and decide on its own merits without getting influenced by any
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of our observations made in the present order.
26. We also make it clear that the petitioner is at liberty to raise all the
objections raised in this petition before the Appellate Authority on the
validity of jurisdiction under Section 147 of the Act. Our above
observations on Section 147 are only limited to concluding whether this
Court should exercise its extraordinary jurisdiction under Article 226 of
the Constitution of India despite the alternate and efficacious remedy.
Therefore, any observations in this order should not be construed as our
observations or findings on the validity of the impugned orders or
notices. We keep all the parties' contentions open for adjudication before
the Appellate Authorities.
27. The petition is disposed of in the above terms. No costs.
28. All concerned must act on an authenticated copy of this order.
(Jitendra Jain, J.) (M. S. Sonak, J.)
Revati 14 4.wp-9833.22(J).docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.9833 OF 2022
Judgment delivered on : 5 February 2025.
For Approval and signature
The Honourable Justice M. S. SONAK
AND
The Honourable Justice JITENDRA JAIN
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