Assessment. This Court In Paragraph v. Deputy Commissioner Of Income Tax 2(1)11 Held As Under

PURTIPRASADPARAB IN THE HIGH COURT OF JUDICATURE AT BOMBAYDigitally signed byPURTI PRASADPARABORDINARY ORIGINAL CIVIL JURISDICTIONDate: 2022.03.1617:01:45 +0530 WRIT PETITION NO. 1998 OF 2014 S.M.B. Associates V/s. Deputy Commissioner of Income Tax15(2), Mumbai And Ors. ….Petitioner …Respondents ---- Mr. B.V. Jhaveri a/w Mr. S. Sriram for Petitioner.Mr. Akhileshwar Sharma for Respondents-Revenue. ---- CORAM : K.R. SHRIRAM & N. J. JAMADAR, JJ. DATED : 11[th] MARCH, 2022 P.C. : 1. When the petition came to be admitted on 3[rd] November, 2014, the court observed as under in paragraph no.2. 2) The petitioners have challenged the impugned noticedated 25 March 2013 under Section 148 of the Income TaxAct, 1961 (“the Act”) seeking to reopen the assessment forA.Y. 2008-09. The reasons in support of the impugned noticeindicate that the assessee had claimed as expenditure anamount of Rs.3.77 crores to its joint venture partner asFinance Charges during the regular assessment proceedingsis sought to be classified as interest and in the absence of taxbeing deducted at source the entire expenditure isdisallowable under Section 40(a)(ia) of the Act. We find thatduring the assessment proceedings the petitioner wasspecifically asked to show cause the nature of expenditurerelating to finance charges. The petitioner had by its letterdated 20 December 2010 responded to the same byfurnishing the joint venture agreement and the nature ofexpenditure. It is only thereafter the Assessing Officer on 24December 2010 passed as assessment order under Section143(3) of the Act for A.Y. 2008-09 in regular assessmentproceedings. Thus, prima facie impugned notice stems from amere change of opinion. In the above view of the matter,interim relief in terms of prayer clause (d). 2.We having perused the petition and the documents annexedthereto, and the affidavit in reply and having heard the counsel we are alsosatisfied and agree with the view expressed at the time of admission that there-opening proposed is purely based on change of opinion. 3.It is settled law that it is not necessary that the assessmentorder should contain reference and/or discussion to disclose its satisfactionin respect of the query raised. Once a query is raised during the assessmentproceedings and the assessee has replied to it, it follows that a query raisedwas a subject of consideration of the Assessing Officer while completing theassessment. This court in paragraph no.14 of Aroni Commercials Ltd. vs.Deputy Commissioner of Income Tax 2(1)11 held as under : Deputy Commissioner of Income Tax 2(1)11 14) We find that during the assessment proceedings thepetitioner had by a letter dated 9 July 2010 pointed out thatthey were engaged in the business of financing trading andinvestment in shares and securities. Further, by a letter dated8 September 2010 during the course of assessmentproceedings on a specific query made by the Assessing Officer,the petitioner has disclosed in detail as to why its profit onsale of investments should not be taxed as business profits butcharged to tax under the head capital gain. In support of itscontention the petitioner had also relied upon CBDT CircularNo.4/2007 dated 15 June 2007. (The reasons for reopeningfurnished by the Assessing Officer also places reliance uponCBDT Circular dated 15 June 2007). It would therefore, benoticed that the very ground on which the notice dated 28March 2013 seeks to reopen the assessment for assessmentyear 2008-09 was considered by the Assessing Officer whileoriginally passing assessment order dated 12 October 2010.This by itself demonstrates the fact that notice dated 28March 2013 under Section 148 of the Act seeking to reopenassessment for A.Y. 2008-09 is based on mere change ofopinion. However, according to Mr. Chhotaray, learnedCounsel for the revenue the aforesaid issue now raised hasnot been considered earlier as the same is not referred to inthe assessment order dated 12 October 2010 passed for A.Y. 1 [2014] 44 taxmann.com 304 (Bombay) 1 [2014] 44 taxmann.com 304 (Bombay) 2008-09. We are of the view that once a query is raisedduring the assessment proceedings and the assessee hasreplied to it, it follows that the query raised was a subject ofconsideration of the Assessing Officer while completing theassessment. It is not necessary that an assessment ordershould contain reference and/or discussion to disclose itssatisfaction in respect of the query raised. If an AssessingOfficer has to record the consideration bestowed by him on allissues raised by him during the assessment proceeding evenwhere he is satisfied then it would be impossible for theAssessing Officer to complete all the assessments which arerequired to be scrutinized by him under Section 143(3) of theAct. Moreover, one must not forget that the manner in whichan assessment order is to be drafted is the sole domain of theAssessing Officer and it is not open to an assessee to insistthat the assessment order must record all the questions raisedand the satisfaction in respect thereof of the Assessing Officer.The only requirement is that the Assessing Officer ought tohave considered the objection now raised in the grounds forissuing notice under Section 148 of the Act, during theoriginal assessment proceedings. There can be no doubt in thepresent facts as evidenced by a letter dated 8 September 2012the very issue of taxability of sale of shares under the headcapital gain or the head profits and gains from business was asubject matter of consideration by the Assessing Officerduring the original assessment proceedings leading to anorder dated 12 October 2010. It would therefore, follow thatthe reopening of the assessment by impugned notice dated 28March 2013 is merely on the basis of change of opinion of theAssessing Officer from that held earlier during the course ofassessment proceeding leading to the order dated 12 October2010. This change of opinion does not constitute justificationand/or reasons to believe that income chargeable to tax hasescaped assessment. 4. In the circumstances, petition is allowed in terms of prayer clause – (a) which reads as under : (a)that this Hon’ble Court may be pleased to issue awrit of certiorari or a writ in the nature of certiorari orany other appropriate writ, order or direction underArticle 226 of the Constitution of India calling for therecords of the case leading to the issue of the noticeunder section 148 of the Act dated 25[th] March, 2013 andthe order dated 1[st] August, 2014 rejecting the objectionsof the Petitioner firm being Ex. “J” hereto and after goingthrough the same and examining the question of legality thereof to quash, cancel and set aside the impugnednotice u/sec. 148 of the Act and the notice dated 25[th]March, 2013 and the order dated 1[st] August, 2014rejecting the objections of the Petitioner firm being Ex.“J” hereto. 5.Petition disposed. (N. J. JAMADAR, J.) (K.R. SHRIRAM, J.)