Gujarat High Court
Shefali Chintan Parikh vs Assistant Commissioner Of Income ... on 22 August, 2023
Bench: Bhargav D. Karia
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 20723 of 2019
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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SHEFALI CHINTAN PARIKH
Versus
ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 5(2)(1)
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Appearance:
MR B S SOPARKAR, ADVOCATE (6851) for the Petitioner(s) No. 1
MR.VARUN K.PATEL, SENIOR STANDING COUNSEL with MR.DEV
PATEL, ADVOCATE (3802) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 22/08/2023
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV)
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1. By way of this petition under Article 226 of the
Constitution of India, the petitioner has prayed
for a direction to quash and set aside the notice
dated 28.03.2019 issued under Section 148 of
the Income Tax Act.
2. Facts in brief are as under:
2.1 The petitioner, an individual, filed his return
of income for assessment year 2012-13 on
30.09.2012 declaring total income of
Rs.1,52,83,010/-. The case was selected for
scrutiny and was accordingly scrutinized. It is
the case of the petitioner that at the time of
original assessment, specific questions regarding
the sale of land, value of the sale and deviation
from the Jantri value were raised by notice dated
11.09.2014 which was replied vide letters dated
12.01.2015 and 03.03.2015. It was also
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investigated by the Intelligence and Criminal
Investigation Department as is evident from its
letter dated 14.12.2013 which was replied on
24.02.2014. An assessment order was made on
19.03.2015.
2.2 The respondent issued notice under Section
148 of the Act on 28.03.2019 for the A.Y. 2012-
13. In response thereto, the petitioner sought
reasons for reopening, which was supplied on
09.04.2019. The petitioner by letter dated
24.04.2019 raised various objections on merits
and on law. Vide order dated 15.11.2019, the
respondent disposed of the objections and
rejected the same.
3. Mr.B.S.Soparkar learned counsel for the
petitioner made the following submissions:
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3.1 Reading the reasons supplied on
09.04.2019, Mr.Soparkar would submit that
there was no failure to disclose fully and truly all
material facts. Four years have elapsed from the
end of AY 2012-13 and therefore notice under
Section 148 is barred by the proviso to Section
147.
3.2 He would submit that the reasons to believe
that income has escaped assessment would
indicate that it is based on the information which
has been received from the DIT (I & CI),
Ahmedabad, vide letter dated 16.02.2015 with
respect to the sale of immovable property. He
would submit that this information was available
as the assessment order was passed on
19.03.2015.
3.3 Mr.Soparkar would further submit that DIT
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(I & CI), on 24.12.2013 inquired from the
assessee by a letter dated 24.12.2013 for the
very same land and the assessee supplied the
information by a response dated 24.02.2014.
3.4 The Assessing Officer had also raised
specific queries regarding the sale of land vide
notice dated 11.09.2014 under Section 142(1) of
the Income Tax Act, 1961, and the assessee had
given the required details in response thereto by
a communication dated 12.01.2015 disclosing the
details of the transactions. He would submit that
it was specifically pointed out that quoting of a
wrong PAN was inadvertent typographical error
in the document.
3.5 Mr.Soparkar would further submit that no
fresh tangible material was available and only
the assessment record was looked into. No new
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material or information came to the notice of the
authorities.
3.6 Mr.Soparkar would submit that notices were
issued by DIT (I & CI) Officer, as well as the
Assessing Officer inquiring into the very same
land and the very same issue of applicability of
Section 50C. The petitioner provided detailed
replies to the same. The then Assessing Officer
had taken all those replies into consideration
while passing the assessment order. Now
therefore, by giving a different treatment to the
very same issue, it was a mere change of opinion.
3.7 Assailing the reasons to be without
application of mind, Mr.Soparkar would submit
that time and again the assessee has submitted
before the Assessing Officer that the assessee is
engaged in the business of trading of land and
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therefore Section 50C has no application.
3.8 Mr.Soparkar would further submit that
there is no income that suggests it had escaped
assessment.
4. Mr.Varun Patel learned Senior Standing Counsel
with Mr.Dev Patel learned advocate for the
respondent, based on the affidavit-in-reply filed
by the respondent would submit that the case
was taken up for reassessment after duly
recording the reasons for reopening. Since the
matter fell beyond the period of four years,
sanction envisaged under Section 151 of the Act
was obtained. He would submit that it cannot
be inferred that since the information was
supplied earlier, it was a case of "borrowed
satisfaction".
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4.1 He would further submit that it cannot be
termed that the Assessing Officer cannot take a
view either against or in favour of the assessee.
If any item has escaped from the assessment
which was otherwise includable which the
Assessing Officer noticed subsequently on his
own investigation, it will never amount to change
of opinion.
4.2 Mr.Patel would submit that the transaction
itself on the basis of subsequent information is
found to be bogus transaction. Mere disclosure
at the time of original assessment proceedings
need not mean that the disclosure was true and
full.
4.3 He would submit that by mentioning an
incorrect 'PAN' in the sale deed, it is apparent
that there was a deliberate attempt of the
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petitioner to keep herself out of the purview of
the income tax department's verification.
5. Having considered the submissions made by the
learned counsel for the respective parties, it
would be apt to refer to the copy of the reasons
supplied. Reading the copy would indicate that
the basis of the information which gave the
author of the notice the reason to believe is the
letter from the DIT (I & CI), Ahmedabad, dated
16.02.2015 with respect to the sale of immovable
property. What is striking is that this
communication of 16.02.2015 is prior to passing
of the assessment order on 19.03.2015.
Obviously therefore, only after such information
was on record that the assessment order was
passed on 19.03.2015. Moreover, as per the
author of the reasons, the assessee had sold a
non-agricultural land under block being survey
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no.360 at Nasmed, Kalol District, Gandhinagar,
for a consideration of Rs.13,23,800/- on
16.01.2012, whereas, the SRO, Kalol, had held
the jantri value of the entire land at
Rs.2,47,78,650/- and therefore, there is a
difference of Rs.2,34,54,850/- as per Section 50C
of the Act.
5.1 It is evident that during the course of
assessment proceedings under Section 143(3) of
the Act, the assessee had given details of all the
sale deeds including the sale deed in question
vide a reply to the Assessing Officer dated
12.01.2015. This was in response to the notice
under Section 142 (1) of the Act. Even by a reply
dated 24.02.2014 to the letter of the Additional
Director of Income Tax, Intelligence and
Criminal Investigation, the petitioner had pointed
out by way of description and location of the
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land. It was specifically brought to the notice of
the Intelligence Wing that the
assessee/petitioner is engaged in the business of
trading in land. That the land in question was
held by the petitioner as stock-in-trade. The
income that had arisen to the petitioner on this
transaction was in the nature of income from
business and profession. The assessee had duly
got her books of account audited under Section
44AB. The land was treated as stock-in-trade
and hence, jantri rates are not applicable in case
of business transactions entered into by the
assessee. It was specifically pointed out that in
view of the above, the land was not subject to
capital gain and jantri value is inapplicable. It
was therefore also submitted that Section 50(C)
of the Act could not have been applied.
5.2 In other words, when specific queries were
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made regarding the sale of land and the assessee
had given the required details, it could not be
said that there was a failure to disclose fully and
truly all material facts so as to assume
jurisdiction under Section 148 of the Act.
5.3 In fact, as is evident from the reasons itself,
no fresh information of tangible material was on
record and it was only an information which was
known and explained was made a basis of the
notice.
5.4 Even on account of the concept of change of
opinion, inasmuch as, based on the notices
issued, the Assessing Officer had already made
inquiries into the very same land and on the
issue of applicability of Section 50C of the Act, it
was not open for the respondent to give a
different treatment.
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5.5 In several decisions of this Court, it has
been held that even in the reasons recorded
when there is no allegation that there was any
failure on the part of the assessee in not
disclosing truly and fully material facts necessary
for the assessment, the assumption of
jurisdiction to reopen the assessment beyond a
period of four years in exercise of powers under
Section 147 of the Act is bad in law and contrary
to the provisions of Section 137.
5.6 On the concept of change of opinion in the
case of Gujarat Power Corporation Limited
vs. Assistant Commissioner of Income Tax
reported in [2013] 350 ITR 266 (Guj), the
Division Bench of this Court considering the
question of reassessment under Section 148 of
the Act held as under:
"42. Bearing in mind these conflicting
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interests, if we revert back to central issue
in debate, it can hardly be disputed that
once the Assessing Officer notices a certain
claim made by the assessee in the return
filed, has some doubt about eligibility of
such a claim and therefore, raises queries,
extracts response from the assessee,
thereafter in what manner such claim
should be treated in the final order of
assessment, is an issue on which the
assessee would have no control whatsoever.
Whether the Assessing Officer allows such a
claim, rejects such a claim or partially
allows and partially rejects the claim, are all
options available with the Assessing Officer,
over which the assessee beyond trying to
persuade the Assessing Officer, would have
no control whatsoever. Therefore, while
framing the assessment, allowing the claim
fully or partially, in what manner the
assessment order should be framed, is
totally beyond the control of the assessee. If
the Assessing Officer, therefore, after
scrutinizing the claim minutely during the
assessment proceedings, does not reject
such a claim, but chooses not to give any
reasons for such a course of action that he
adopts, it can hardly be stated that he did
not form an opinion on such a claim. It is not
unknown that assessments of larger
corporations in the modern day, involve
large number of complex claims, voluminous
material, numerous exemptions and
deductions. If the Assessing Officer is
burdened with the responsibility of giving
reasons for several claims so made and
accepted by him, it would even otherwise
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cast an unreasonable expectation which
within the short frame of time available
under law would be too much to expect him
to carry. Irrespective of this, in a given case,
if the Assessing Officer on his own for
reasons best known to him, chooses not to
assign reasons for not rejecting the claim of
an assessee after thorough scrutiny, it can
hardly be stated by the revenue that the
Assessing Officer can not be seen to have
formed any opinion on such a claim. Such a
contention, in our opinion, would be devoid
of merits. If a claim made by the assessee in
the return is not rejected, it stands allowed.
If such a claim is scrutinized by the
Assessing Officer during assessment, it
means he was convinced about the validity
of the claim. His formation of opinion is thus
complete. Merely because he chooses not to
assign his reasons in the assessment order
would not alter this position. It may be a
non-reasoned order but not of acceptance of
a claim without formation of opinion. Any
other view would give arbitrary powers to
the Assessing Officer.
43. We are, therefore, of the opinion that in
a situation where the Assessing Officer
during scrutiny assessment, notices a claim
of exemption, deduction or such like made
by the assessee, having some prima facie
doubt raises queries, asking the assessee to
satisfy him with respect to such a claim and
thereafter, does not make any addition in
the final order of assessment, he can be
stated to have formed an opinion whether or
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not in the final order he gives his reasons
for not making the addition.
44. At this stage, we may examine the
decision of the Division Bench of this Court
in the case of Praful Chunilal Patel v. M.
J. Makwana, Assistant Commissioner of
Income Tax, (supra) more closely. This was
a case wherein assessment previously
framed under section 143(3) of the Act was
sought to be reopened within a period of
four years from the end of the relevant
assessment year. The case concerned
assessment year 1993-94 and therefore, the
amended section 147 of the Act was
applicable. On certain claims of the assessee
which were not rejected by the Assessing
Officer in the scrutiny assessment, the court
held that in cases where the Assessing
Officer has not made an assessment of any
item of income chargeable to tax while
passing the assessment order, it cannot be
said that such income was subjected to an
assessment. The court was of the opinion
that in the original assessment, the
Assessing Officer never really formed an
opinion on a particular contentious issue. It
was in this background that the Court was
of the opinion that since no opinion was
formed in this regard, consequently there
would be no question of a mere change of
opinion. The Court also expressed an
opinion that in view of the explanation 2 to
section 147 of the Act, power to make
assessment or re-assessment within four
years would be attracted even in cases
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where there has been complete disclosure of
all material facts."
6. For all the aforesaid reasons, the impugned
notice dated 28.03.2019 and the consequential
order dated 15.11.2019 disposing of the
objections of the petitioner are quashed and set
aside.
7. Petition is accordingly allowed.
(BIREN VAISHNAV, J)
(BHARGAV D. KARIA, J)
ANKIT SHAH
