Bharatkumar Dinubhai Patel vs Income Tax Officer Ward 5(3)(1), ...
2023 Latest Caselaw 6299 Guj

                                                                                 NEUTRAL CITATION




     C/SCA/5447/2022                             JUDGMENT DATED: 28/08/2023

                                                                                  undefined




             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

               R/SPECIAL CIVIL APPLICATION NO. 5447 of 2022


FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE BIREN VAISHNAV

and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA

==========================================================

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 ?

==========================================================
                    BHARATKUMAR DINUBHAI PATEL
                                Versus
              INCOME TAX OFFICER WARD 5(3)(1), AHMEDABAD
==========================================================
Appearance:
MR B S SOPARKAR(6851) for the Petitioner(s) No. 1
MR.VARUN K.PATEL, SENIOR STANDING COUNSEL WITH MR. DEV D.
PATEL, ADVOCATE for the Respondent(s) No. 1
NOTICE SERVED for the Respondent(s) No. 2
==========================================================

    CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV
          and
          HONOURABLE MR. JUSTICE BHARGAV D. KARIA

                             Date : 28/08/2023

                     ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV)

NEUTRAL CITATION

C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023

undefined

1 Rule returnable forthwith. Learned advocate

appearing for the respondent waives service of notice of

rule. With consent of the learned advocates appearing for

the parties, the matter is taken up for final hearing today.

2 By way of this petition under Article 226 of the

Constitution of India, the petitioner has challenged the

order dated 22.03.2021. The Notice was issued under

Sec.148 of the Income Tax Act. The petitioner has also

prayed that the order dated 09.02.2022, by which the

objections were disposed of be quashed and set aside.

3 Facts in brief indicate that the petitioner filed his

returns of income for Assessment Year 2015-16 on

13.08.2015 declaring a total income of Rs.2,50,620/-. The

return was selected for scrutiny. A detailed scrutiny was

undertaken.

3.1 It is the case of the petitioner that realizing a

mistake in calculation of long term capital gain, the

NEUTRAL CITATION

C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023

undefined

petitioner, Suo Moto offered the same for tax by filing a

revised computation of income showing total income of

Rs.51,62,600/- and requested the Assessing Officer to

replace the correct figure with the incorrect figure.

3.2 It is further the case of the petitioner that notice

under Sec.142(1) of the Act was issued on 12.10.2017

asking the petitioner to show cause as to why share in the

total consideration of 13 plots should not be treated as

undisclosed income of the petitioner. The petitioner filed

replies on 07.11.2017 and 14.12.2017. Eventually, the

Assessing Officer assessed the income of the petitioner at

Rs.51,62,600/- vide order under Sec.143(3) dated

18.12.2017.

3.3 On 22.03.2021, notice under Sec.148 of the Act was

issued. The petitioner, on 19.04.2021, without prejudice

filed his returns and sought for reasons recorded for

reopening. The reasons were supplied by a

communication dated 20.05.2021. The petitioner filed his

NEUTRAL CITATION

C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023

undefined

objections on 08.06.2021. The objections were disposed

of on 0902.2022.

4 Mr.B.S.Soparkar, learned counsel for the petitioner

would make the following submissions:

4.1 That the respondent had recorded only one reason

to believe that the income had escaped assessment on the

ground that the petitioner had sold 13 properties during

F.Y 2014-15 relevant to A.Y 2015-16 and the petitioner

had earned income of Rs.81,89,669/- which has to be

treated as income under Sec.69 of the Act.

4.2 Shri Soparkar, learned counsel, would submit that

the reopening was undertaken beyond a period of four

years on the end of the assessment year. There is no

allegation of failure on the part of the assessee to disclose

fully and truly all material facts. He would take the Court

through the reasons supplied by the respondent and

submit that it is evident that it was only based on

NEUTRAL CITATION

C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023

undefined

verification of records of the assessee himself. In other

words, there was no other material on which the notice or

reasons were based.

4.3 Mr.Soparkar, learned counsel, would submit that it

is evident that for the same issue, scrutiny was carried

out, notice under Sec.142(1) of the Act was issued. He

would draw the Court's attention to the notice which

indicated the same 13 properties suggesting that it was

the case of the revenue in such notice that the petitioner

had been dealing in land trading and he was asked to

show cause as to why the share in the total sale

consideration should not be treated as undisclosed

income.

4.4 Mr.Soparkar, learned counsel, would rely upon the

replies filed to this notice on 07.11.2017 and 14.12.2017

to submit that he had offered sufficient explanation with

regard to the issue. He would therefore submit that since

detailed replies were filed and were considered and

NEUTRAL CITATION

C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023

undefined

accepted by a revised return of income, issuance of notice

would amount to change of opinion which is

impermissible.

4.5 Mr.Soparkar, learned counsel, would submit that no

new tangible material was brought on record and all the

details which were part of the reasons recorded, were

already available with the respondent during the course

of original scrutiny assessment. The reopening according

to Mr.Soparkar, learned counsel, was based on audit

objections.

4.6 Mr.Soparkar, learned counsel, further submitted

that factually incorrect reasons were recorded, inasmuch

as, for the very 13 plots, detailed replies were filed and

same were made by submissions dated 07.11.2017 and

14.12.2017. He would further submit that the notice and

the impugned order be quashed and set aside.

5 Mr.Varun Patel, learned Senior Standing Counsel

appearing with Mr.Dev D. Patel, learned advocate for the

NEUTRAL CITATION

C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023

undefined

revenue, would submit that the petition is filed at a

premature stage, inasmuch as, only a notice under

Sec.148 r/w. Sec.147 of the Income Tax Act for the

Assessment Year 2015-16 has been issued. The petitioner

has an alternative remedy by way of an appeal to the

commissioner of Income-tax. Mr.Patel, learned Senior

Standing Counsel, would submit that the assessment was

reopened after taking into account and in accordance

with the legal procedures and duly recording reasons for

which the case was reopened. He would submit that the

returns of the petitiner was selected for scrutiny as it was

noticed that the petitioner had sold 13 properties during

F.Y. 2014-15 for the transaction had neither neither been

disclosed nor shown the profit derived from that

transaction. It was noticed that of 12 sale deeds executed

in F.Y. 2014-15, the assessee had earned an income of

Rs.81,89,669/-, the same needs to be treated as income of

the assessee under Sec.69 of the Act.

5.1 Mr.Patel, learned Senior Standing Counsel, would

NEUTRAL CITATION

C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023

undefined

further submit that it can reasonably be concluded that

the failure on the part of the assessee to disclose fully and

truly of necessary material facts during the assessment

proceedings and hence the exercise of issuing notice was

just and proper.

6 Having considered the submissions made by the

learned counsels appearing for the respective parties,

adverting to the reasons recorded in the notice under

sec.143(2) r/w. Sec.147 of the Income-tax Act, it is the

case of revenue that "on verification of records, it is noted

that the assessee has 13 properties sold during the F.Y.

2014-15 and the assessee had neither disclosed the sale,

nor shown the profits derived therefrom." Analysing such

information, it was the case of the revenue that the

opinion was concluded based on two separate

development agreements and this information was based

on examination of the case records.

6.1 What is important to note is that the petitioner had

received scrutiny assessment notice under Sec.142(1) of

NEUTRAL CITATION

C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023

undefined

the Act, wherein, the precise scope of inquiry was in

context of the very same 13 lands which are the subject

matter of the re-assessment proceedings. The petitioner

had tendered replies to these notices on 07.11.2017 and

14.12.2017 categorically pointing out that the copies of

the development agreements and the financial statements

which reflected the income from such agreements was

duly offered to tax. The said full income was offered for

tax during respective assessment years when

consideration was received and while calculating income,

computation for the said years, tax was paid. Based on

this, an assessment order was passed under Sec.143(3)

on 18.12.2017. Reading of the Assessment Order would

indicate that to a specific query in respect to the

purchase and sale of such properties and considering the

reply dated 15.05.2017, the assessment order was

finalized. What therefore is apparent that there has been

a change of opinion. Detailed replies were filed and the

same were considered and accepted by the Assessing

Oficer.

NEUTRAL CITATION

C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023

undefined

6.2 All these facts indicate that, firstly, when the

reasons supplied by the respondent are seen, there is no

allegation of failure on part of the assessee to disclose

fully and truly of material facts which particularly was the

onus of the revenue since the reopening is undertaken

beyond a period of four years from the end of the

assessment year. The reasons, further would indicate that

it was based on the very case records and as per the

author of the reasons, they were self explanatory, and

therefore, no further inquiry was required in this case.

Obviously therefore, there was no new tangible material

based on which reasons for reassessment were taken. The

order disposing of objections, therefore, dated 09.02.2022

would also fail again.

6.3 From the notice dated 12.10.2017 and on the

response that the petitioner filed vide replies dated

07.11.2017 and 14.12.2017, it is evident that the same

material which was accepted by the respondent, has been

made a part of the revised reassessment regime by the

NEUTRAL CITATION

C/SCA/5447/2022 JUDGMENT DATED: 28/08/2023

undefined

impugned notice and the order disposing the objections.

7 For the aforesaid reasons, therefore, the impugned

notice dated 22.03.2021 and the order dated 09.02.2022

are quashed and set aside. The petition is allowed,

accordingly. Rule is made absolute.

(BIREN VAISHNAV, J)

(BHARGAV D. KARIA, J) BIMAL