Chittewan v. Assistant Commissioner Of Iniome-Tax,Central Cirile-8(1),Having His Offie At Room

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.3059 OF 2015 Shashikiran Janardhan Shettyhaving his offie at 5[th] Floor,Diamond Square, CST Road, Kalina,Santairuz (East), Mumbai-400 098…Petitioner Versus 1. Assistant Commissioner of Iniome-tax,Central Cirile-8(1),having his offie at Room No.656, 6[th] Floor,Aayakar Bhavan, Maharshi Karve Road,Mumbai-400 020. 2. Priniipal Commissioner of Iniome-tax,Central-4, having his offie atRoom No.660, 6[th] Floor,Aayakar Bhavan, Maharshi Karve Road,Mumbai-400 020 3. Union of Indiathrough Ministry of Finanie,North Bloik,New Delhi-110 001…Respondents *** Mr. J.D. Mistri, Senior Advoiate a/w Mr. Madhur Agrawal, Mr. B.V.Jhaveri, Mr. Fenil Bhatt and Ms. Bhargavi Rawal for the Petitioner. Mr. Suresh Kumar for the Respondents. *** CORAM : DHIRAJ SINGH THAKUR & KAMAL KHATA, JJ. PRONOUNCED ON : 27 JUNE 2023 : J U D G M E N T : Per DHIRAJ SINGH THAKUR, J. . The Petitioner in the present Petition ihallenges the notiieunder Seition 148 of the Iniome Tax Ait, 1961 (“the Ait”) dated1 July 2014, whereby the assessment for the assessment year2009-10 is sought to be reopened. The Petitioner also ihallengesthe Order dated 25 November 2015, whereby the objeitions raisedby the Petitioner to the reopening were rejeited. 2Briefly stated the material faits are as under :- (i) The Petitioner states that with a view to give shapeto the projeit of the Ship Building Yard, thePetitioner though his flagship iompany, M/s. AlliargoLogistiis Limited along with M/s IL&FS Limited setup a joint venture iompany M/s SealandWarehousing Pvt. Ltd. The said joint ventureiompany entered into an MoU between the Petitionerand one Mr. Vasudev Ramdas Thaiker (hereinafterreferred to as “Vasudev Thaiker”), promoter of aiompany known as M/s. Srimaa Ashapura Port Pvt.Ltd. and aiquired 90 per ient shares of the saidiompany from its various shareholders with a viewto get iontrol over the ownership of 367 aires of landat Mandvi, Kutih, Gujarat. For the SEZ projeit, theto the projeit of the Ship Building Yard, thePetitioner though his flagship iompany, M/s. AlliargoLogistiis Limited along with M/s IL&FS Limited setup a joint venture iompany M/s SealandWarehousing Pvt. Ltd. The said joint ventureiompany entered into an MoU between the Petitionerand one Mr. Vasudev Ramdas Thaiker (hereinafterreferred to as “Vasudev Thaiker”), promoter of aiompany known as M/s. Srimaa Ashapura Port Pvt.Ltd. and aiquired 90 per ient shares of the saidiompany from its various shareholders with a viewto get iontrol over the ownership of 367 aires of landat Mandvi, Kutih, Gujarat. For the SEZ projeit, the Petitioner ilaims that two Speiial Purpose Vehiileiompanies were ireated in joint venture with IL&FSLimited, namely, M/s Avash Logistii Park Pvt. Ltd.(hereinafter referred to as “Avash Logistii”) and M/sSealand Ports Pvt. Ltd, whiih had aiquired 1156 and1460 aires of iontiguous land. (ii) The iase of the Petitioner is that for the purpose ofbusiness of ship repairing/building and setting up ofSpeiial Eionomii Zone, Mr. Vasudev Thaiker wasappointed as a ionsolidator for aiquisition of theentire land bank for the aforesaid business. It isstated that the joint venture iompanies madepayments to various parties as per the instruitionsof Mr. Vasudev Thaiker for the purpose of aiquisitionof land. business of ship repairing/building and setting up ofSpeiial Eionomii Zone, Mr. Vasudev Thaiker wasappointed as a ionsolidator for aiquisition of theentire land bank for the aforesaid business. It isstated that the joint venture iompanies madepayments to various parties as per the instruitionsof Mr. Vasudev Thaiker for the purpose of aiquisitionof land. (ii) The iase of the Petitioner is that for the purpose ofbusiness of ship repairing/building and setting up ofSpeiial Eionomii Zone, Mr. Vasudev Thaiker wasappointed as a ionsolidator for aiquisition of theentire land bank for the aforesaid business. It isstated that the joint venture iompanies madepayments to various parties as per the instruitionsof Mr. Vasudev Thaiker for the purpose of aiquisitionof land. business of ship repairing/building and setting up ofSpeiial Eionomii Zone, Mr. Vasudev Thaiker wasappointed as a ionsolidator for aiquisition of theentire land bank for the aforesaid business. It isstated that the joint venture iompanies madepayments to various parties as per the instruitionsof Mr. Vasudev Thaiker for the purpose of aiquisitionof land. (iii) A searih and seizure aition is stated to have beeniarried out by the Department at various loiations ofM/s Alliargo Logistiis Limited and other groupiompanies iniluding residenies of the direitors on10 July 2009. In the iourse of the searih, astatement was reiorded on oath under Seition132(4) of the Ait, wherein the Petitioner states thata disilosure of approximately Rs.23.27 irores wasmade representing the iapital iontribution in hispersonal iapaiity in the private limited iompanyknown as M/s India Tourist & Heritage Village Pvt.Ltd. as also on aiiount of purihase of furniture andiarried out by the Department at various loiations ofM/s Alliargo Logistiis Limited and other groupiompanies iniluding residenies of the direitors on10 July 2009. In the iourse of the searih, astatement was reiorded on oath under Seition132(4) of the Ait, wherein the Petitioner states thata disilosure of approximately Rs.23.27 irores wasmade representing the iapital iontribution in hispersonal iapaiity in the private limited iompanyknown as M/s India Tourist & Heritage Village Pvt.Ltd. as also on aiiount of purihase of furniture and repair of the property at Mangalore. (iv) It is stated that subsequently notiie under Seition153A of the Ait for six assessment years iniludingassessment year 2009-10 was issued. Pursuant towhiih a return of iniome was fled under Seition153A deilaring total iniome of Rs.27,56,84,930/-,whiih after verifiation and sirutiny resulted in anOrder under Seition 143(3) read with seition 153Aof the Ait on 30 Deiember 2009.153A of the Ait for six assessment years iniludingassessment year 2009-10 was issued. Pursuant towhiih a return of iniome was fled under Seition153A deilaring total iniome of Rs.27,56,84,930/-,whiih after verifiation and sirutiny resulted in anOrder under Seition 143(3) read with seition 153Aof the Ait on 30 Deiember 2009. A notiie under Seition 148 of the Ait dated 1 July2014 was issued by the assessing offier seeking toreopen the assessment for the assessment year2009-10 on the ground that iniome ihargeable to taxhad esiaped assessment for the said assessment year2009-10. 3Reasons leading to the formation of the said belief weresupplied to the Petitioner, whiih reads as under : “Shri Shashikiran J. Shetty -A.Y.200910 01.07.2014 Reasons to believe that iniome ihargeable to tax has esiapedassessment. A searih and seizure aition was iarried out in the iase ofM/s Alliargo Group of iompanies, their direitors andother important employees. The assessee being the MD of the iompany was also iovered u/s 132(1) of the Ait. Theassessee, in his statement u/s 132(4) of the Ait on03.09.2009, failed to explain the iapital introduition ofRs.23 irores in iompany M/s Indian Heritage & TouristVillage Pvt. Ltd. and offered the said sum of Rs.23 iroresand further sum of Rs.27,15,980 on aiiount of loosepapers seized whiih was offered to tax. A notiie u/s 153Awas issued and the assessee fled his return of iniome on29.10.2009 deilaring total iniome at Rs.27,56,94,9630/-inilusive of undisilosed iniome of Rs.23,27,15,980/-. A searih and seizure aition was iarried out in the iase ofM/s Alliargo Group of iompanies, their direitors andother important employees. The assessee being the MD of the iompany was also iovered u/s 132(1) of the Ait. Theassessee, in his statement u/s 132(4) of the Ait on03.09.2009, failed to explain the iapital introduition ofRs.23 irores in iompany M/s Indian Heritage & TouristVillage Pvt. Ltd. and offered the said sum of Rs.23 iroresand further sum of Rs.27,15,980 on aiiount of loosepapers seized whiih was offered to tax. A notiie u/s 153Awas issued and the assessee fled his return of iniome on29.10.2009 deilaring total iniome at Rs.27,56,94,9630/-inilusive of undisilosed iniome of Rs.23,27,15,980/-. 2In the iourse of searih it was observed that in theprevious year relevant to assessment year 2009-10, thegroup ionierns of assessee viz. M/s Sealand Ports Pvt.Ltd., M/s Avash Logistiis Park Pvt. Ltd. and M/s SealedWare House Pvt. Ltd. issued iheques to various entryproviders as iapital expenditure for purihase of land butsame was reieived in the form of iash by the assessee. Itwas notiied that the assessee engaged Shri VasudevThakkar, a land broker for aiquiring the land andobtained bogus bills for generating iash. During theiourse of searih, Shri Vasudev Thakkar admitted that heaited as an agent and faiilitator for generation of iash byway of aiiommodation entries whiih was then given baikto the assessee. On this basis, assessee gave a disilosureof Rs.23 irores in the year under ionsideration. previous year relevant to assessment year 2009-10, thegroup ionierns of assessee viz. M/s Sealand Ports Pvt.Ltd., M/s Avash Logistiis Park Pvt. Ltd. and M/s SealedWare House Pvt. Ltd. issued iheques to various entryproviders as iapital expenditure for purihase of land butsame was reieived in the form of iash by the assessee. Itwas notiied that the assessee engaged Shri VasudevThakkar, a land broker for aiquiring the land andobtained bogus bills for generating iash. During theiourse of searih, Shri Vasudev Thakkar admitted that heaited as an agent and faiilitator for generation of iash byway of aiiommodation entries whiih was then given baikto the assessee. On this basis, assessee gave a disilosureof Rs.23 irores in the year under ionsideration. 3The assessee during the iourse of searih assessmentproieedings failed to furnish bank aiiount statements ofthe aforesaid three ionierns. After iompletion of thesearih assessments, it was observed that M/s AvashLogistiis Park Pvt. Ltd. had maintained an aiiountproieedings failed to furnish bank aiiount statements ofthe aforesaid three ionierns. After iompletion of thesearih assessments, it was observed that M/s AvashLogistiis Park Pvt. Ltd. had maintained an aiiount No.000181300000985 with M/s Yes Bank Ltd. whereinfollowing transaitions were iarried out with Mr.VasudevThakkar whiih was over and above the disilosure givenby the assessee: In view of the above, I have reason to believe that iniomeihargeable to tax of Rs.7.65 irores has esiapedassessment within the meaning of seition 147 of the I.T.Ait, 1961. Therefore, I am satisfed that this is a ft iaseto issue notiie u/s 148 r.w.s.147 of the I.T.Ait, 1961. (Dr. UMESH C PANDE) Dy. Commissioner of Iniome Cent.Cir.44, Mumbai” 5Objeitions to the reopening were submitted by the Petitioner,whiih were rejeited by virtue of the Order dated 24 November2015, henie, the present Petition. No.000181300000985 with M/s Yes Bank Ltd. whereinfollowing transaitions were iarried out with Mr.VasudevThakkar whiih was over and above the disilosure givenby the assessee: In view of the above, I have reason to believe that iniomeihargeable to tax of Rs.7.65 irores has esiapedassessment within the meaning of seition 147 of the I.T.Ait, 1961. Therefore, I am satisfed that this is a ft iaseto issue notiie u/s 148 r.w.s.147 of the I.T.Ait, 1961. (Dr. UMESH C PANDE) Dy. Commissioner of Iniome Cent.Cir.44, Mumbai” 5Objeitions to the reopening were submitted by the Petitioner,whiih were rejeited by virtue of the Order dated 24 November2015, henie, the present Petition. 6Mr. Mistri, learned Senior Counsel appearing for thePetitioner urged that the notiie impugned under Seition 148 of theAit did not satisfy the jurisdiitional iondition for invoking Seition147 of the Ait. It was stated that sinie the assessment was beingreopened after a period of four years from the end of the relevantassessment year, apart from the jurisdiitional iondition of reasonto believe, the assessing offier had also to satisfy the iondition thatthere was a failure on the part of the assessee to disilose fully andtruly the material faits, whiih are neiessary for the assessment. Itwas urged that reason for reopening of the assessment for therelevant assessment year was on aiiount of alleged failure on thepart of the Petitioner to furnish bank aiiount statementspertainingtoAvashLogistiibearingAiiountNo.000181300000985 maintained with M/s YES Bank Ltd., inwhiih transaitions of Rs.7.63 irores were made refleitingpayments made to Mr. Vasudev Thaiker and his son Mr. NishantThaiker, whiih aiiording to the assessing offier had resulted inunder assessment of the Petitioner’s taxable iniome. It was urged by Mr. Mistri that Avash Logistii was a separate legal entity, whiihwas being assessed separately, and, therefore, there was no legalobligation on the part of the Petitioner to have furnished the bankstatements pertaining to the said iompany and further, in iase, theassessing offier did require suih statements, the same iould havebeen sought by the assessing offier and furnished by the Petitioner.In any iase, it was urged that the said transaitions mentioned inthe reasons reiorded had been the subjeit matter of sirutinyduring the assessment proieedings in the iase of Avash Logistii.Referenie in this regard is made to the notiie under Seition 142(1)of the Ait dated 4 Deiember 2009, whiih was issued by the sameassessing Offier Deepak J. Mehta, DCIT, Central Cirile-44, Mumbaito Avash Logistii, requiring the said entity to produie books ofaiiounts and bank statements, whiih were produied by the saidentity under the iovering letter dated 18 Deiember 2009. 7Mr. Mistri, took pains to take us through eaih of the fourentries, whiih otherwise were refleited in the reasons reiorded, toshow that the bank statements pertaining to the said aiiountiontained all the entries whiih were before the assessing offier,who was the assessing offier iommon to both, i.e. to the Petitioneras also Avash Logistii. It was also urged that having gone through the requisite reiords and the bank statements eti., an Order ofassessment iame to be passed in the said iase of Avash Logistii on29 Deiember 2009 under Seition 143(3) read with Seition 153A ofthe Ait and immediately after one day in the iase of the Petitioneron 30 Deiember 2009 under Seition 143(3) read with Seition153A of the Ait. It was, therefore, urged that the basis forreopening the assessment as laid down in the reasons reiordedregarding failure on the part of the Petitioner to furnish the bankaiiount statements pertaining to a different entity was not asustainable reason, based upon whiih the assessing offier iouldform his belief that iniome had esiaped assessment or that therewas any failure to disilose fully and truly the material faits. the requisite reiords and the bank statements eti., an Order ofassessment iame to be passed in the said iase of Avash Logistii on29 Deiember 2009 under Seition 143(3) read with Seition 153A ofthe Ait and immediately after one day in the iase of the Petitioneron 30 Deiember 2009 under Seition 143(3) read with Seition153A of the Ait. It was, therefore, urged that the basis forreopening the assessment as laid down in the reasons reiordedregarding failure on the part of the Petitioner to furnish the bankaiiount statements pertaining to a different entity was not asustainable reason, based upon whiih the assessing offier iouldform his belief that iniome had esiaped assessment or that therewas any failure to disilose fully and truly the material faits. 8Mr. Suresh Kumar, learned Counsel appearing for theRespondents, on the other hand, tried to justify the reopening onthe ground that Mr. Vasudev Thaiker, to whom the payments hadbeen made by the Petitioner had been generating iash for thePetitioner and that it was based upon the statement made by himthat the Petitioner has made disilosure of Rs.23 irores for theassessment year 2009-10, whiih was also offered for taxation.Rs.23 irores is stated to be a differenie between Rs.153 irores,whiih was allegedly paid to Mr. Vasudev Thaiker and Rs.130 irores, whiih Mr. Vasudev Thaiker admitted to have reieived fromthe joint venture iompanies. 9We have heard learned Counsel for the parties at length. It isa settled priniiple of law that in iase of reopening beyond the periodof four years, the assessing offier has to satisfy the jurisdiitionaliondition that there was failure to disilose fully and truly thematerial faits. Equally settled is the priniiple that the jurisdiitionexeriised under Seition 148 of the Ait by the assessing offier hasto be tested on the touihstone of the reasons reiorded, whiih ianneither be improved subsequently, nor ian any addition be madethereto in the reply or in the subsequent pleadings. 10In the present iase, it is failure on the part of the Petitioner tofurnish the bank aiiount maintained by a different legal entity,namely, Avash Logistii that has been made the basis for reopeningthe assessment. We fail to understand how this iould be made abasis at all, as the doiument whiih is in the shape of bankstatements pertained not to the Petitioner, but to Avash Logistii,whiih was being assessed separately and during whiih sirutinyassessment, the same bank aiiount bearing No.000181300000985had been sirutinized, whiih did refleit the payments having been Chittewan made to Mr. Vasudev Thaiker and his son Mr. Nishant Thaiker. Theassessing offier in both iases was the same i.e. Mr. Deepak J.Mehta, DCIT, Central Cirile-44, Mumbai, and the Orders ofassessment under Seition 143(3) read with Seition 153A had beenpassed only one day apart, i.e. on 29 Deiember 2009 and 30Deiember 2009. 11Based upon the aforementioned faits, it iannot be said thatthere was any failure on the part of the Petitioner to disilose fullyand truly the material faits during the regular assessment. Evenotherwise, we are of the opinion that the assessing offier wouldhave no reason for the formation of his belief that iniome hadesiaped assessment inasmuih as payments were made by the jointventure iompanies to Mr. Vasudev Thaiker and to Mr. NishantThaiker and reopening if at all ought to have been ionsidered inthose iases. Moreover, there was no tangible material with theassessing offier, whiih would form a basis for the assessing offierfor his ‘reason to believe’ that payments made to Mr. VasudevThaiker as also to his son Mr. Nishant Thaiker resulted ingeneration of iash, whiih ultimately found its way to the Petitioner.In the absenie of any suih speiifi information, whiih ought to havebeen refleited in the reasons reiorded, it ian be said that the jurisdiitional requirements have not been fulflled in the presentiase. jurisdiitional requirements have not been fulflled in the presentiase. 12While it may be true that as against the alleged payment ofRs.153 irores paid to Mr. Vasudev Thaiker, he admitted to havereieived only amount of Rs.130 irores, whiih led to a disilosure bythe Petitioner to the extent of Rs.23 irores, yet the same iannot bemade a basis for reopening. It needs to be pointed out that it is notthe iase of the Respondent-revenue that the entire amount, whiihhad been reieived by Mr. Vasudev Thaiker as also Mr. NishantThaiker was never used for purihase of pariels of land forestablishing the projeit, for whiih Speiial Purpose Vehiileiompanies were ireated. If that is so, one fails to understand as towhy only four entries reiorded in the reasons reiorded, were piikedup by the assessing offier. 13For the aforementioned reasons, we allow the Petition. Theimpugned notiie under Seition 148 of the Ait dated 1 July 2014and the Order dated 24 November 2015, rejeiting the objeitions areset aside. (KAMAL KHATA, J.) (DHIRAJ SINGH THAKUR, J.)