Assistant Commissioner Of Income Tax - 26(3), Mumbai And Ors v. Itr 90 (Bom

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 3576 OF 2019 S.A. Developers v/s. Assistant Commissioner of Income Tax - 26(3), Mumbai and ors. …. Petitioner …. Respondents --- Mr. Devendra H. Jain a/w. Ms. Radha Halbe for Petitioner.Mr. Sham V. Walve for Respondents – Revenue. CORAM : K.R. SHRIRAM &R.N. LADDHA, JJ. DATED : JANUARY 04, 2022 P. C. :- .Petitioner is impugning a notice dated 27/03/2019 issued undersection 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’),subsequent order dated 19/11/2019 disposing petitioner’s objections to theimpugned notice and the Assessment Order and notice of demand dated09/12/2019. As regards Assessment Order and notice of demand, the samewas passed without waiting for the mandatory period of 4 weeks prescribedin the Judgment of this Court in the case of Asian Paints Ltd. v/s. Deputy1Commissioner of Income Tax. The Officer Mr. Arvind RamchandraKumbhare who has passed the Assessment Order has filed an Affidavit dated01/12/2021 stating that he was not aware about the Asian Paints Judgmentand hence passed the order before expiry of the mandatory period of 4 2/5 409 WP3576.2019.doc weeks. The Affidavit is taken on record and the apology tendered by Mr.Kumbhare is accepted. In view of this, Mr. Walve states that the AssessmentOrder and notice of demand dated 09/12/2019 be considered as withdrawn. 2.Now what remains to be considered is whether the notice dated27/03/2019 issued under Section 148 is a valid notice. If the Court answersin negative, the subsequent order dated 19/11/2019 will also get set aside. 3.Petitioner had filed its return of income on 19/11/2014 for AY 2012-2013 declaring total income of Rs.39,50,776/-. The case was selected forlimited scrutiny under Computer Aided Scrutiny Selection (CASS) and theassessment was completed under Section 143(3) of the Act on 27/01/2015determining the assessed income at Rs.40,10,780/-. 4.On 27/03/2019, petitioner received a notice under Section 148 of theAct stating that there are reasons to believe that petitioner’s incomechargeable to tax for AY 2012-13 has escaped assessment within themeaning of Section 147 of the Act. The reasons for re-opening have beenprovided and it is contained in a communication dated 07/06/2019, copywhereof is at Exh.J to the Petition. We have perused the reasons with theassistance of Mr. Jain and Mr. Walve. Since re-opening of the assessment isproposed after expiry of period of 4 years, the proviso to Section 147 is 3/5 409 WP3576.2019.doc applicable. The Assessing Officer has no power to review an assessmentwhich has been concluded so he has to first come to the conclusion based ontangible material that there is an escapement of income from assessment andhe has to also show that there was failure on the part of petitioner to trulyand fully disclose material facts. At the same time, the Assessing Officercannot re-open an assessment merely on the basis of change of opinion. Butin the reasons to believe in the present case, we do not find even a singleground which can be considered to be tangible basis for re-opening theassessment or conclude that there has been failure to disclose any materialfact. The Assessing Officer states that from the partnership deed, auditedaccounts and Form No.3CD report, it is seen that that the Assessee has 15partners, one of whom is Dhansukh Nanda HUF. According to the AssessingOfficer, an HUF cannot become a partner of a firm or enter into a contractwith other person and hence the Assessee has not complied with theprovisions of Section 184 of the Act and the amount of Rs.89,24,703/- andremuneration of Rs.60,00,000/- paid to partners, aggregating toRs.1,49,24,703/- cannot be considered for deduction. 5.In our view, this is a clear case of change of opinion because petitionerhad, before the original assessment order was passed, filed Form No.3CD inwhich Dhansukh Nanda HUF is shown as a partner with 10% profit sharingratio. Form No.3CD also indicates that a sum of Rs.1,94,826/- has been paid 4/5 409 WP3576.2019.doc as interest to Dhansukh Nanda (HUF). These materials were on the face of adocument available before the Assessing Officer who passed the originalAssessing Order dated 27/01/2015. Mr. Walve states that in the originalAssessment Order, there is no mention about Dhansukh Nanda HUF andtherefore it is likely that the original Assessing Officer has failed to note thatone of the partners in petitioner firm was an HUF. We do not agree with Mr.Walve because if Assessment Order does not speak about this, we wouldconsider it as having been accepted by the Assessing Officer who passed theoriginal Assessment Order that it was perfectly okay for an HUF to be apartner in petitioner firm. We would hasten to add that we are not for amoment opining whether an HUF can be a partner in a firm under theprovisions of Indian Parnership Act, 1932. 6.This is a clear case of change of opinion. There is also nothing toindicate any failure on the part of petitioner to disclose any material fact.Hence, we do not propose to go into the issue as to whether the stand ofrespondent that petitioner has not complied with provisions of Section 184of the Act is correct. 7.For reasons aforesaid, 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 orWrit of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ, Order or direction, calling forthe records of the Petitioner’s case and after going into thelegality and propriety thereof, to quash and set aside thenotice u/s 148 dated 27.03.2019 (“Exhibit H”), thesubsequent Order dated 19.11.2019 (“Exhibit L”) disposingof Petitioner’s objections on the issue of impugned noticeand the assessment order and notice of demand dated09.12.2019 (“Exhibit N”). ” 8.Petition disposed. (R.N. LADDHA, J.) (K.R. SHRIRAM, J.) Digitally signedPREETIby PREETI HJAYANIHDate:2022.01.10JAYANI12:35:45+0530