Balkrishna Hiralal Wani v. Income Tax Officer, Ward

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.448 OF 2011 AND WRIT PETITION NO.482 OF 2011 Balkrishna Hiralal Wani Versus Income Tax Officer, Ward No.11(2)(2) & Others ..Petitioner. ..Respondents. Mr.J.D. Mistri, Senior Advocate with Mr.R. Wani , Ms.Supriya Devergudi i/by ANS Law for the petitioner.Mr.K.R. Chaudhari with Mr.A.S. Shivsharan for the respondent. CORAM : J.P. Devadhar & A.A. Sayed, JJ. P.C. : DATE : 6[th] July, 2011. 1.Heard. Rule. By consent, taken up for final hearing. 2.In these two writ petitions, the petitioner has challenged two notices both dated1[st] December 2010 issued under Section 148 of the Income Tax Act, 1961 seeking to reopen the assessment for assessment years 2005-06 and 2006-07. 3.The petitioner was a partner in a firm of solicitors. He retired on attaining the age of 70 years on 22[nd] October 2003. On retirement, the petitioner as per the deed of partnership was entitled to receive a sum of Rs.1,73,25,000/- in eight installments. The petitioner received the following amounts from the firm : a)Rs.21,65,625/- in the financial year 2004-05; b)Rs.43,31,250/- in the financial year 2005-06; c)Rs.40,63,671/- in the financial year 2006-07; and d)Rs.24,39,453/- in the financial year 2007-08. In the returns filed for the respective assessment years in question, the petitioner had not offered the above amounts for taxation, however, in the footnote to the computation of total income, the petitioner had stated that the above amounts were not liable to tax. The assessments were completed accordingly without making additions of the above amounts received in the respective assessment years. 4.The impugned notices are issued to reopen the assessments for A.Y. 2005-06 and 2006-07. From the reasons recorded for the assessment years, it is seen that basically the assessment is reopened with a view to bring to tax the amounts received on retirement in the respective assessment years. Although additional ground is raised in the assessment year 2006-07, the same is not pressed by the Counsel for the Revenue. Thus, the only issue to be considered in these two petitions is, whether the amount of Rs.43,31,250/- received in the assessment year 2005-06 and Rs.40,63,671/- received by the assessee in the assessment year 2006-07 can be said to have 5.It is not in dispute that similar proceedings were initiated by the Assessing Officer relating to the amount of Rs.21,65,625/- received by the petitioner in the assessment year 2004-05 by issuing a notice under Section 148 of the Income Tax Act, 1961. In that case also, the assessment was sought to be reopened within a period of four years from the end of relevant assessment year. Challenging the said notice, Writ Petition No.191 of 2010 was filed in this Court, which was allowed on 10[th] February 2010 by holding that the reopening of the assessment was bad in law. 6.Counsel for the Revenue sought to distinguish the said judgment on the ground that in that assessment year the amount was sought to be taxed under Section 28(va) / 28(iv) of the Act, whereas in the present case no such Section has been mentioned. He relied on a judgment of the Apex Court in the case of Raymond Woollen Mills Limited V/s. Income Tax Officer reported in 236 ITR 34 (S.C.) in support of his contention that sufficiency of the reasons for reopening the assessment cannot be gone into in a writ petition. 7.We see no merit in the above contentions raised by the Counsel for the Revenue. As rightly contended by Mr.Mistri, learned Senior Advocate for the petitioner, once this Court on consideration of the clauses in the partnership deed has come to the conclusion that the reopening of the 6.Counsel for the Revenue sought to distinguish the said judgment on the ground that in that assessment year the amount was sought to be taxed under Section 28(va) / 28(iv) of the Act, whereas in the present case no such Section has been mentioned. He relied on a judgment of the Apex Court in the case of Raymond Woollen Mills Limited V/s. Income Tax Officer reported in 236 ITR 34 (S.C.) in support of his contention that sufficiency of the reasons for reopening the assessment cannot be gone into in a writ petition. 7.We see no merit in the above contentions raised by the Counsel for the Revenue. As rightly contended by Mr.Mistri, learned Senior Advocate for the petitioner, once this Court on consideration of the clauses in the partnership deed has come to the conclusion that the reopening of the assessment to bring to tax the amounts received on retirement (by way of first instalment) is not justified and accordingly quashed the reassessment proceedings, then for the same reasons reopening of the assessment for the subsequent years to bring to tax the amounts received on retirement would have to be quashed and set aside. No case is made out for taking a contrary view. Merely because the assessing officer has not mentioned the Section under which he wants to tax the amounts received on retirement, it cannot be said that the reasons recorded for reopening of the assessment in the present case are different from the reasons recorded in the earlier year. 8. In this view of the matter for the reasons stated in Writ Petition No.191 of 2010 dated 10[th] February 2010, we hold that the reopening of the assessment by the impugned notices dated 1[st] December 2010 cannot be sustained. 9.Accordingly, Rule is made absolute by quashing both the notices dated 1[st] December 2010 are quashed and set aside. Rule is made absolute in above terms with no order as to costs. (A.A. Sayed, J.) (J.P. Devadhar, J.)