Commissioner Of Income Tax-20Mumbai, Having Office Atpiramal Chamber, Lalbaug, Parel,Mumbai – 400 012 v. Amit B. Borkar, Jj. Dated : 8[Th] December 2021

PURTIPRASADPARAB Digitally signed byPURTI PRASADPARABDate: 2021.12.1711:07:46 +0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 3597 OF 2019 Chhagan Chandrakant Bhujbal5[th] Floor, Militia Apartment,Mathar Pakhadi Road, Mazgaon,Mumbai – 400 010, Maharashtra. V/s. 1. Income Tax Officer Ward 20(1)(3),Room No.114, 1[st] Floor, PiramalChamber, Lalbaug, Parel,Mumbai – 400 012. ….Petitioner 2. Commissioner of Income Tax-20Mumbai, having office atPiramal Chamber, Lalbaug, Parel,Mumbai – 400 012. …Respondents ---- Mr. K. Gopal a/w Mr. Jitendra Singh and Mr. Om Kandalkar i/b Mr. SatendraKumar Pandey for Petitioner.Mr. Sham V. Walve for Respondents. ---- CORAM : K.R. SHRIRAM & AMIT B. BORKAR, JJ. DATED : 8[th] DECEMBER 2021 ORAL JUDGMENT : (PER : K.R. SHRIRAM, J.) 1.Since pleadings in the petition are completed, we have decidedto dispose the petition at admission stage itself. 2.Petitioner is impugning notice dated 31[st] March, 2019 issuedunder Section 148 of the Income Tax Act, 1961 (the Act) stating thatrespondents have reasons to believe that income chargeable to tax for the A.Y. 2012-13 has escaped assessment within the meaning of Section 147 of the Act. 3.Thereafter, petitioner was provided reasons for re-opening by communication dated 28[th] September, 2019. The reasons reads as under : 1. The assessee has filed return of income for the A.Y. 2012-13 on30.03.2013 declaring total income of Rs.3,72,997/-. 2. In this case credible information received vide letter bearingNo.DDIT(Inv)/Unit-6(3)/Information/2018-19 dated 30.03.2019has been received in this office on 31.03.2019 by email at 05:47PM, from Dy. Director of Income Tax (Inv.)-6(3), Mumbai whereinit is stated that “the suspect person have defrauded theMaharashtra Government by preparing fabricated/bogusdocuments and used them as genuine documents. The accusedpersons especially the public servants by misusing theirdesignation under criminal conspiracy committed acts like to cheatgovernment and to cause financial loss and to gain the developerM/s. K.S. Chamankar Enterprises”. It is also mentioned thataccused mentioned has in criminal conspiracy misrepresented thefacts to the Govt and dishonestly got the plot for the building ofState Central Library on BOT basis allocated to M/s.India Bull RealTech Limited. 3. In view of the above facts, I have reasons to believe that incometo the extent of more than Rs.1,00,000/- chargeable to tax hasescaped assessment for A.Y. 2012-13. Accordingly, the proceedingsu/s. 147 of the Income Tax Act, 1961 are duly attracted in order toframe proper assessment to bring to tax appropriate income. It istherefore a fit case for issuance of notice u/s.148 of the Income TaxAct, 1961. 4. In this case more than four years but not more than six yearshave lapsed from the end of the assessment year underconsideration. Thus, the notice u/s. 148 is issued after obtainingprior approval of the Pr. Commissioner of Income Tax, Range-20,Mumbai as required under the provisions of section 151(1) of theIncome Tax Act, 1961. 4. Petitioner replied to this notice with the reasons by a letter dated 10[th] October, 2019 objecting to the re-opening. The objections filed by petitioner was disposed by an order dated 17[th] October, 2019 rejectingthe objections. Thereafter, petitioner, by submissions dated 5[th] November,2019, complied with notice issued under Section 142(1) of the Act. On 11[th]December, 2019 petitioner was issued notice to show cause as to why theamount of Rs.3,13,00,000/- being transaction effected on 10[th] May, 2011and 1[st] October, 2011 in a particular bank account between two partiesshould not be added to the income under Section 69A of the Act beingunexplained money. It is at that stage petitioner filed this petition and ad-interim stay was granted by an order dated 19[th] December, 2019. 5.We have heard Mr. Gopal, counsel for petitioner and Mr. Walve,counsel for respondents. by petitioner was disposed by an order dated 17[th] October, 2019 rejectingthe objections. Thereafter, petitioner, by submissions dated 5[th] November,2019, complied with notice issued under Section 142(1) of the Act. On 11[th]December, 2019 petitioner was issued notice to show cause as to why theamount of Rs.3,13,00,000/- being transaction effected on 10[th] May, 2011and 1[st] October, 2011 in a particular bank account between two partiesshould not be added to the income under Section 69A of the Act beingunexplained money. It is at that stage petitioner filed this petition and ad-interim stay was granted by an order dated 19[th] December, 2019. 5.We have heard Mr. Gopal, counsel for petitioner and Mr. Walve,counsel for respondents. 6.Mr. Gopal submitted that the notice dated 31[st] March, 2019issued under Section 148 of the Act has not been validly issued and iswithout jurisdiction. Mr. Gopal submitted that (a) the reasons does notindicate what was the amount of income which has escaped assessment; and(b) the information based on which this notice itself has been issued wasreceived only at 5.47 p.m., by respondent and the notice was issued at about10.49 p.m., and therefore how could the authority which has granted thesanction by issuance of notice could be said to have applied his mind to theproposal put up before him for approval. Mr. Gopal relied on judgment of this court in German Remedies Ltd. vs. Deputy Commissioner of Income-Tax1 to submit that to grant or notto grant approval under Section 151 of the Act to re-open an assessment iscoupled with a duty and the commissioner was duty bound to apply hismind to the proposal put up to him for approval in the light of the materialrelied upon by the Assessing Officer. Mr. Gopal submitted that such powercannot be exercised casually, in a routine and perfunctory manner. Mr. Gopal relying on another judgment of this court in Principal Commissioner of Income-tax 5 vs. Shodiman Investments (P) Ltd.2submitted that notice has to be set aside because the reasons recorded evendoes not indicate the amount which according to the Assessment Officer hasescaped assessment. 7.Mr. Walve submitted that petitioner never had any problemwhen he received notice dated 31[st] March, 2019 or when he received thereasons for re-opening or when the objections filed were rejected by theorder dated 17[th] October, 2019. Mr. Walve submitted that even if the objections were rejected,petitioner participated in the assessment proceedings and made submissionsand filed documents vide letter dated 5[th] November, 2019 in compliancewith notice issued under Section 148(1) of the Act. But petitioner suddenlywoke up and decided to challenge the notice issued under Section 148 ofthe Act itself when petitioner received Show Cause Notice dated 11[th] 1 [2006] 287 ITR 494 (Bom) 2 [2018] 93 taxmann.com 153 (Bombay) December, 2019 as to why the amount of Rs.3,13,00,000/- should not beadded to the income under Section 69A of the Act. Having participated inthe assessment proceedings, petitioner at this stage cannot challenge thenotice. He relied upon a judgment of this court in Amaya Infrastructure (P.) Ltd. vs. Income Tax Officer Ward 12(1)(1)3. Mr. Walve submitted that therefore the court should notexercise its jurisdiction under Article 226 of the Constitution of India anddismiss the petition and direct petitioner to participate in the assessmentproceedings and if petitioner is aggrieved by the assessment order, petitionermay challenge that order as per the alternative remedy prescribed under theAct. 8.Mr. Gopal in rejoinder submitted that petitioner decided to filethis petition when petitioner got to know the reasons after receiving furthernotice under Section 142(1) of the Act on 11[th] December, 2019. Ltd. vs. Income Tax Officer Ward 12(1)(1)3. Mr. Walve submitted that therefore the court should notexercise its jurisdiction under Article 226 of the Constitution of India anddismiss the petition and direct petitioner to participate in the assessmentproceedings and if petitioner is aggrieved by the assessment order, petitionermay challenge that order as per the alternative remedy prescribed under theAct. 8.Mr. Gopal in rejoinder submitted that petitioner decided to filethis petition when petitioner got to know the reasons after receiving furthernotice under Section 142(1) of the Act on 11[th] December, 2019. 9.This is a notice that has been issued after expiry of four yearsfrom the end of the relevant assessment year. There has been no scrutinyassessment done under Section 143(3) of the Act and the assessment hasbeen processed under Section 143(1) of the Act. Therefore, proviso toSection 147 of the Act would not apply. In such a case governing test hasbeen formulated in the judgment of the Hon’ble Supreme Court in 3 [2017] 79 taxmann.com 345 (Bombay) 4and the Hon’ble Commissioner of Income Tax vs. Kelvinator of India Ltd.4 Apex Court has enunciated the principle as follows: "Therefore, post 1[st] April, 1989, power to reopen is muchwider. However, one needs to give a schematicinterpretation to the words "reason to believe" fallingwhich, we are afraid, s. 147 would give arbitrary powersto the Assessing Officer to reopen assessments on thebasis of "mere change of opinion", which cannot be per sereason to reopen. We must also keep in mind theconceptual difference between power to review andpower to reassess. The Assessing Officer has no power toreview; he has the power to reassess. But reassessmenthas to be based on fulfillment of certain pre-conditionand if the concept of "change of opinion" is removed, ascontended on behalf of the Department, then, in the garbof reopening the assessment, review would take place.One must treat the concept of "change of opinion" as anin-built test to check abuse of power by the AssessingOfficer. Hence, after 1st April, 1989, the Assessing Officerhas power to reopen, provided there is "tangiblematerial" to come to the conclusion that there isescapement of income from assessment. Reasons musthave a live link with the formation of the belief. Our viewgets support from the changes made to s. 147 of the Act,as quoted hereinabove. Under the Direct Tax Laws(Amendment) Act, 1987, Parliament not only deleted thewords "reason to believe" but also inserted the word"opinion" in s. 147 of the Act. However, on receipt ofrepresentations from the companies against omission ofthe words "reason to believe", Parliament re-introducedthe said expression and deleted the word "opinion" onthe ground that it would vest arbitrary powers in theAssessing Officer". (emphasis supplied). In Export Credit Guarantee Corporation of India Ltd. vs.Additional Commissioner of Income Tax and Ors.5 the court held The Assessing Officer even within a period of four yearscannot reopen an assessment merely on the basis of achange of opinion. The Assessing Officer has no powerto review an assessment which has been concluded. Butwhere he has tangible material to come to theconclusion that there is an escapement of income fromassessment, the power to reopen can be exercised. Theexpression "reason to believe" in Section 147 has been 4 [2010] 320 ITR 561 (SC) 5 [2013] 350 ITR 651 (Bom) construed in thejudgment of the Supreme Court inAssistant Commissioner of Income Tax vs. Rajesh JhaveriStock Brokers P. Ltd. [2007] 291 ITR 500 (SC), to meana cause or justification. However, at the stage when theAssessing Officer reopens an assessment, it is notnecessary that the material before the Court shouldconclusively prove or establish that income has escapedassessment. A reason to believe at the stage of reopeningis all that is relevant. This aspect must be emphasizedbecause it clearly emerges from the judgment of RajeshJhaveri Stock Brokers P. Ltd. [2007] 291 ITR 500 (SC). 4 [2010] 320 ITR 561 (SC) 5 [2013] 350 ITR 651 (Bom) construed in thejudgment of the Supreme Court inAssistant Commissioner of Income Tax vs. Rajesh JhaveriStock Brokers P. Ltd. [2007] 291 ITR 500 (SC), to meana cause or justification. However, at the stage when theAssessing Officer reopens an assessment, it is notnecessary that the material before the Court shouldconclusively prove or establish that income has escapedassessment. A reason to believe at the stage of reopeningis all that is relevant. This aspect must be emphasizedbecause it clearly emerges from the judgment of RajeshJhaveri Stock Brokers P. Ltd. [2007] 291 ITR 500 (SC). "Section 147 authorises and permits the AssessingOfficer to assess or reassess income chargeable to tax ifhe has reason to believe that income for any assessmentyear has escaped assessment. The word 'reason' in thephrase 'reason to believe' would mean cause orjustification. If the Assessing Officer has cause orjustification to know or suppose that income hadescaped assessment, it can be said to have reason tobelieve that an income had escaped assessment. Theexpression cannot be read to mean that the AssessingOfficer should have finally ascertained the fact by legalevidence or conclusion ... At that stage, the finaloutcome of the proceeding is not relevant. In otherwords, at the initiation stage, what is required is 'reasonto believe', but not established fact of escapement ofincome. At the stage of issue of notice, the only questionis whether there was relevant material on which areasonable person could have formed a requisite belief.Whether the materials would conclusively prove theescapement is not the concern at that stage. This is sobecause the formation of belief by the Assessing Officeris within the realm of subjective satisfaction." 8.To hold that the Assessing Officer must bedeemed to have accepted what he has plainlyoverlooked or ignored in the assessment order would beto stretch the interpretation of Section 147 to a pointwhere the provision would cease to have meaning andcontent. Such an exercise of excision by judicialinterpretation is impermissible. When an assessment issought to be reopened within a period of four years ofthe end of the relevant assessment year, the test to beapplied is whether there is tangible material to do so.What is tangible is something which is not illusory,hypothetical or a matter of conjecture. Something whichis tangible need not be something which is new.AnAssessing Officer who has plainly ignored relevantmaterial in arriving at an assessment acts contrary to law. If there is an escapement of income in consequence,the jurisdictional requirement of Section 147 would befulfilled on the formation of a reason to believe thatincome has escaped assessment. The reopening of theassessment within a period of four years is in thesecircumstances within jurisdiction. (emphasis supplied) 10.Therefore, the test to be applied is whether there was reason tobelieve that income had escaped assessment and whether the AssessingOfficer has tangible material before him for the formation of that belief.Once tangible basis has been disclosed for re-opening the assessment, itwould not be appropriate for this court to prevent an enquiry whatsoeverby the Assessing Officer. In this case, the reasons indeed disclose what isthat tangible material. law. If there is an escapement of income in consequence,the jurisdictional requirement of Section 147 would befulfilled on the formation of a reason to believe thatincome has escaped assessment. The reopening of theassessment within a period of four years is in thesecircumstances within jurisdiction. (emphasis supplied) 10.Therefore, the test to be applied is whether there was reason tobelieve that income had escaped assessment and whether the AssessingOfficer has tangible material before him for the formation of that belief.Once tangible basis has been disclosed for re-opening the assessment, itwould not be appropriate for this court to prevent an enquiry whatsoeverby the Assessing Officer. In this case, the reasons indeed disclose what isthat tangible material. 11.As regards the judgment of this court in German Remedies Ltd.(supra), relied upon by Mr. Gopal, we certainly agree with Mr. Gopal thatthe power vested in the commissioner under Section 151 of the Act to grantor not to grant approval to the Assessing Officer to re-open an assessment iscoupled with duty and the commissioner is duty bound to apply his mind tothe proposal put up to him for the approval in the light of the material reliedupon by the Assessing Officer and such power cannot be exercised casually,in a routine and perfunctory manner. The court held in the facts andcircumstances of that case that the approval in that case granted suffersfrom non-application of mind. It was in the peculiar facts and circumstancesof that case. In the case at hand, there is nothing to indicate that there was non-application of mind. Merely because information was received at 5.47p.m. and the notice was issued by 10.49 p.m. would not mean that there hasbeen non-application of mind. If we hold that it would be merelyspeculative and based on conjecture. 12.As regards Shodiman Investments (P) Ltd. (supra) relied uponby Mr. Gopal, again in the particular facts and circumstances of that case,the court concluded that the reasons do not indicate any link or nexus toconnect that income chargeable to tax has escaped assessment. Moreover,in Shodiman Investments (P) Ltd. (supra) the facts were different and thatwas the case where assessment order had been passed under Section 143(3) of the Act and the allegations was failure to disclose truly and fully allmaterial facts by assessee. 12. 13.On the submissions of Mr. Walve that petitioner havingparticipated in the assessment proceedings, at this stage cannot challengethe notice. We would agree with Mr. Walve. In Amaya Infrastructure (P.)Ltd. (supra) petitioner had participated in the assessment proceedings andthe court held that in such a case it would not be open for petitioner to nowcontend that this court should exercise its extra ordinary jurisdiction andprohibit the authorities in proceeding further with the impugned notice.Paragraph no.9 of the said judgment reads as under : 9.In this case, we find that the petitioners have filed detailedinformation called for by the Assessing Officer under Section 12. 13.On the submissions of Mr. Walve that petitioner havingparticipated in the assessment proceedings, at this stage cannot challengethe notice. We would agree with Mr. Walve. In Amaya Infrastructure (P.)Ltd. (supra) petitioner had participated in the assessment proceedings andthe court held that in such a case it would not be open for petitioner to nowcontend that this court should exercise its extra ordinary jurisdiction andprohibit the authorities in proceeding further with the impugned notice.Paragraph no.9 of the said judgment reads as under : 9.In this case, we find that the petitioners have filed detailedinformation called for by the Assessing Officer under Section 142(1) and 143(2) of the Act and thus participated in theassessment proceedings. This having been done, it is not open forthe petitioners to now contend that this Court should exercise itsextra-ordinary jurisdiction and prohibit the Authorities fromproceeding further with the impugned notice. This is particularlyso as the question of jurisdiction has been raised by thepetitioners before the Assessing Officer during the assessmentproceedings under the Act. In the present facts, the petitionershave participated in the proceedings before the Assessing Officer.The objections to the reasons recorded by the Assessing Officer insupport of the impugned notice during the assessmentproceedings is to point out to him the reassessment proceedingsare bad as the requirement of Sections 147 and 148 of the Act arenot satisfied. It would be completely different scenario where thepetitioners have not participated in the proceedings before theAssessing Officer and object to exercise of jurisdiction by theAssessing Officer at the very threshold and not while participatingin the reassessment proceedings. In such cases, it is not a case of aparty seeking identical relief by two parallel modes. The orderspassed by the Assessing Officer are subject to effective, efficaciousalternative remedy under the Act. Therefore, we see no reason toexercise our extra-ordinary jurisdiction in the facts of this case. 14.In the circumstances, we do not see any reason to exercise our extra-ordinary jurisdiction under Article 226 of the Constitution of India and prohibit the authority from proceeding further in the matter. 15.Petition dismissed with no order as to costs. (AMIT B. BORKAR, J.) (K.R. SHRIRAM, J.)