Easy Pay Private Limited v. Dcit

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 15739 of 2021 With R/SPECIAL CIVIL APPLICATION NO. 5883 of 2022==========================================================JAY KRISHNA GROUP THROUGH BHARVAD NAVGHAN CHHAGANBHAI VersusINCOME TAX OFFICER WARD -1 ========================================================== Appearance:DARSHAN R PATEL(8486) for the Petitioner(s) No. 1M R BHATT & CO.(5953) for the Respondent(s) No. 1========================================================== CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMARandHONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI Date : 17/08/2022 ORAL ORDER (PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR) 1. Heard Mr.Darshan R.Patel, learned counsel appearing for the petitioner and Mr.Karan Sanghani,learned counsel appearing for the respondent. Perused therecord. 2.Short point that arises for our consideration inthese two petitions is : Whether respondent was correct and justified inissuing the notices under section 148 of theIncome Tax Act 1961 (“the Act” for short) forreopening assessment for the assessment years 2016-2017 and 2017-2018 ? 3.Since the contentions raised, grounds urged,defence pleaded in these two petitions are common andimpugned notices issued under section 148 of the Act alsobeing the same and identical, these two petitions are takenup together for consideration and disposed of by thiscommon order. 4.Petitioner, in the respective petitions, is apartnership firm had filed its return of income for therespective assessment years 2016-2017 and 2017-2018declaring total income. Notices under section 143(2) and142(1) were issued to the petitioner, pursuant to which,reply was filed and even notice under section 142(1) of theAct calling upon the petitioner to produce the details anddocuments had also been replied by the petitioner andsubsequently, order under section 143(2) of the Act came tobe passed by assessing the income of the petitioner. 5.A notice under section 148 of the Act came to beissued to the petitioner for respective assessment yearswhich was accompanied by the reasons for such reopeningand the petitioner on receipt of said notice filed itsobjections which came to be rejected and by orders dated9.3.2022 and 17.8.2021 (Annexures-L and I) respectivelywhich are impugned in the respective Special CivilApplications. 6.It is the contention of Mr.Darshan Patel, learned 5.A notice under section 148 of the Act came to beissued to the petitioner for respective assessment yearswhich was accompanied by the reasons for such reopeningand the petitioner on receipt of said notice filed itsobjections which came to be rejected and by orders dated9.3.2022 and 17.8.2021 (Annexures-L and I) respectivelywhich are impugned in the respective Special CivilApplications. 6.It is the contention of Mr.Darshan Patel, learned counsel appearing for the petitioner that there was noadditional material which was available before the AssessingOfficer and notices issued prior to the assessment was dulyreplied with supporting documents. Having considered thisaspect, Assessing Officer had passed the assessment ordersfor respective assessment years and as such, there is nojustification for reopening of the assessment based onalleged escapement of income which is not there. He wouldfurther elaborate his submissions contending that merechange of opinion cannot be a ground for reopening of theassessment and until and unless there is fresh materialwhich has come to his knowledge, the Assessing Officerwhich has purportedly escaped income while assessmentbeing carried would only be a ground on which reopening ofthe proceedings could be commenced, as otherwise suchcommencement of proceedings would be flawed. By drawingthe attention of the Court to various materials which wereavailable before the Assessing Officer at the time of scrutiny,he would contend that in the present case, mere change ofopinion is the basis on which the respondent intends toreopen assessment and it is the very same AssessingOfficer, who had scrutinized the return of income orscrutinized documents on the basis of details furnished bythe petitioner at the time of assessment, has issued thenotices for reopening of assessment without there being anyfresh material. As such, he contends that same is liable tobe quashed. In support of his submissions, he has reliedupon the following judgments. (i) Special Civil Application No.14401 of 2021 Easy Pay Private Limited Vs DCIT (ii) (2018) 98 taxmanna.com 447 (Guj) SwatiMalove Divetia Vs ITO dated 10.9.2018 (iii) 352 ITR 349 (Guj) Parixit Industries P. Ltd VsACIT dated 12.3.2012 (iv) Special Civil Application No.17223 of 2016Sandip B.Padsala Vs ITO (v) 339 ITR 535 (Guj) (2012) 21 taxmann.com 83 (Guj) H.K.Buildcon Ltd. Vs ITO dated 12.4.2010. (vi) 350 ITR 131 (Guj) (2013) 31 taxmann.com359 (Guj) Ganesh Housing Corporation LimitedVs DCIT dated 12.3.2012 (vii) (2022) 139 taxmann.com 502 (Alh) AwleshKumar Singh Vs UOI dated 5.5.2022 (viii) Special Civil Application No.21030 of 2017Mumtaz Haji Mohmad Memon Vs ITO (ix) Special Civil Application No.16171 of 2017Vijay Harishchandra Patel Vs ITO dated6.12.2017 (x) Special Civil Application No.16790 of 2017Narendrakumar M.Patel Vs ITO dated 7.2.2018 (xi) (2018) 92 taxmann.com 74 (Guj) SunriseEducation Trust Vs ITO dated 19.2.2018 (xii) (2002) 124 Taxman 641 (Guj) SagarEnterprise Vs ACIT dated 26.12.2001. (xiii) (2022) 139 taxmann.com 562 (SC) Prin.CITVs Fibres and Fabrics Int.P.Ltd. Dated 25.4.2022. (Guj) H.K.Buildcon Ltd. Vs ITO dated 12.4.2010. (vi) 350 ITR 131 (Guj) (2013) 31 taxmann.com359 (Guj) Ganesh Housing Corporation LimitedVs DCIT dated 12.3.2012 (vii) (2022) 139 taxmann.com 502 (Alh) AwleshKumar Singh Vs UOI dated 5.5.2022 (viii) Special Civil Application No.21030 of 2017Mumtaz Haji Mohmad Memon Vs ITO (ix) Special Civil Application No.16171 of 2017Vijay Harishchandra Patel Vs ITO dated6.12.2017 (x) Special Civil Application No.16790 of 2017Narendrakumar M.Patel Vs ITO dated 7.2.2018 (xi) (2018) 92 taxmann.com 74 (Guj) SunriseEducation Trust Vs ITO dated 19.2.2018 (xii) (2002) 124 Taxman 641 (Guj) SagarEnterprise Vs ACIT dated 26.12.2001. (xiii) (2022) 139 taxmann.com 562 (SC) Prin.CITVs Fibres and Fabrics Int.P.Ltd. Dated 25.4.2022. 7.Per contra, Mr.Karan Sanghani, learned counselappearing for the respondent - revenue would support theimpugned orders by contending and drawing our attentionto the reply affidavit, more particularly, with reference toparagraphs 5 and 6, to buttress his argument that onaccount of insight portal disclosing modus operandi adoptedby the petitioner gave rise for reopening the assessment ascertain amounts had escaped assessment on account ofthis material not being available at the time of scrutiny andsame being the basis on which reassessment is now beingproposed to be done, it cannot be gainsaid by assessee thatthere is no fresh material available before the authorities.He would also contend that it is not change of opinion bythe Assessing Officer which has necessitated reopening ofassessment but Assessing Officer having unearthedinformation through insight portal, it had resulted inescapement of income to tax which has perforced theAssessing Officer to issue the impugned notices whichcannot be tested in the proceedings under Article 227 of theConstitution of India, inasmuch as correctness or otherwise of the said material cannot be gone into by this Court andhe has prayed for dismissal of the petitions. He has reliedupon the decision in the case of Aaspas Multimedia LtdVs Deputy Commissioner of Income Tax, reported in(2018) 405 ITR 512 (Guj) in support of his submissions. DISCUSSION AND FINDINGS : 8.The facts in brief having already been stated, wedo not propose to burden this judgment by repeating thesame. At the outset, it requires to be noticed that the scopeof reopening by issuance of notice under section 148 of theAct has been laid to rest by the Honourable Apex Court inthe case of Assistant Commissioner of Income Tax VsRajesh Jhaveri Stock Brokers P. Ltd., reported in (2007)291 ITR 500 (SC) wherein it has been held by Apex Courtthat expression “reason to believe” should not be read tomean that Assessing Officer should have finally ascertainedthe fact by legal evidence or conclusion. The expression“reason to believe” would mean cause or justification forreopening. If the Assessing Officer has cause or justificationto know or suppose to know that income had escapedassessment, it can be said to have reason to believe thatincome had escaped assessment. It has been furtherobserved by Apex Court thus : “16. Section 147 authorises and permits theAssessing Officer to assess or reassess incomechargeable to tax if he has reason to believe thatincome for any assessment year has escaped “16. Section 147 authorises and permits theAssessing Officer to assess or reassess incomechargeable to tax if he has reason to believe thatincome for any assessment year has escaped assessment. The word “reason” in the phrase“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 havereason to believe that an income had escapedassessment. The expression cannot be read tomean that the Assessing Officer should havefinally ascertained the fact by legal evidence orconclusion. The function of the Assessing Officeris to administer the statute with solicitude for thepublic exchequer with an inbuilt idea of fairnessto taxpayers. As observed by the Supreme Courtin Central Provinces Manganese Ore Co. Ltd. v.ITO [1991] 191 ITR 662, for initiation of actionunder section 147(a) (as the provision stood atthe relevant time) fulfillment of the two requisiteconditions in that regard is essential. At thatstage, the final outcome of the proceeding is notrelevant. In other words, at the initiation stage,what is required is “reason to believe”, but not theestablished fact of escapement of income. At thestage of issue of notice, the only question iswhether there was relevant material on which areasonable person could have formed a requisitebelief. Whether the materials would conclusivelyprove the escapement is not the concern at thatstage. This is so because the formation of beliefby the Assessing Officer is within the realm ofsubjective satisfaction (see ITO v. selected Dalurband Coal Co.P. Ltd. [1996] 217 ITR 597(SC) ; Raymond Woolen Mills Ltd. v. ITO [1999]236 ITR 34 (SC).” 9.Thus, the expression “reason to believe” wouldmean and include that there should be subjectivesatisfaction by objective assessment available with theAssessing Officer for issuance of notice. In the instant case,the said notices, which are issued to the petitioner, havebeen furnished to the petitioner and conclusion drawn bythe Assessing Officer for reopening of assessment is that theAssessing Officer received “insight portal” information to theeffect that the petitioner firm is in business of lucky drawnetworking scheme and that no other tangible assets werehandled by the firm other than financial transactions.Though Mr.Darshan Patel has made valiant attempt tocontend before this Court that information sought for whileissuing notices under sections 143(2) and 142(1) of the Act,details have been produced. The fact remains that theAssessing Officer did not possess this insight portalinformation which has been relied upon for issuance of thenotices under section 148 of the Act. As such, thecontention raised by learned counsel appearing for thepetitioner requires to be considered for the purpose ofoutright rejection and it stands rejected. 10.Yet another contention which has been raised bylearned counsel appearing for the petitioner is that whilegiving approval under section 151 of the Act, there has beenno due application of mind by the said authority. Howsoever 10.Yet another contention which has been raised bylearned counsel appearing for the petitioner is that whilegiving approval under section 151 of the Act, there has beenno due application of mind by the said authority. Howsoever attractive the said argument could be would not stand torhyme or reason inasmuch as the said order of approvalwhich was accompanied by the reasons for reopening ofassessment would disclose very same basis, namely “insightportal”. The information which was secured by theAssessing Officer subsequent to the assessment proceedingsor scrutiny proceedings has been referred to and this hasbeen considered, examined and on objective assessment ofthe material on record available before the said authority,permission has been accorded under section 151 of the Actwhich cannot be said, held or construed as without dueapplication of mind. As such, the said contention alsostands rejected. Though several judgments on the said issuei.e. change of opinion and explaining the term or expression“reason to believe” have been relied upon, we are of theconsidered view that all these judgments are based on thefacts and as such, without dwelving upon each of thesejudgments, we hold that there cannot be any second opinionwith regard to proposition of law that mere change ofopinion cannot form the basis for reopening of assessment. 11.Mr.Darshan Patel, learned counsel appearing forthe petitioner has vehemently contended that very sameAssessing Officer, who scrutinized, assessed and framedassessment orders, is the one who has issued the noticesunder section 148 of the Act is the basis on changedopinion and reopening of assessment is not permissible,cannot be accepted for the simple reason that notices forreopening as well as reasons assigned for reopening wouldclearly indicate that it is the material which has come to the knowledge of the Assessing Officer i.e. insight portal detailsto his knowledge conforce issuance of notices under section148 of the Act. As to whether assertion made by the revenuein the impugned notices is to be sustained or otherwisewould be subject matter of scrutiny by the AssessingOfficer. At the time of issuance of notices for reopening, theAssessing Officer would not be required to finallyascertained the fact that by arriving at the conclusion onthe basis of any evidence as held by the Honourable ApexCourt in Rajesh Jhaveri Stock Brokers P. Ltd (supra)referred to hereinabove. 12.This Court in exercise of powers vested underArticle 227 of the Constitution of India would not take overthe decision making powers of the statutory authority. TheHonourable Apex Court in the case of D.N.Jeevaraj VsChief Secretary, Government of Karnataka, reported in(2016) 2 SCC 653, has held that the High Court cannotmandate beyond the course of action to be taken by thestatutory authority by giving complete go-by to theprocedural requirement and the Court itself taking overfunctions of the authority. It has been further held thus : “43. To this we may add that if a court is of theopinion that a statutory authority cannot take anindependent or impartial decision due to someexternal or internal pressure, it must give itsreasons for coming to that conclusion. Thereasons given by the court for disabling thestatutory authority from taking a decision can “43. To this we may add that if a court is of theopinion that a statutory authority cannot take anindependent or impartial decision due to someexternal or internal pressure, it must give itsreasons for coming to that conclusion. Thereasons given by the court for disabling thestatutory authority from taking a decision can always be tested and if the reasons are found tobe inadequate, the decision of the court to by-pass the statutory authority can always be setaside. If the reasons are cogent, then in anexceptional case, the court may take a decisionwithout leaving it to the statutory authority to doso. However, we must caution that if the courtwere to take over the decision taking power of thestatutory authority it must only be in exceptionalcircumstances and not as a routine. Insofar asthe present case is concerned, the High Court hasnot given any reason why it virtually took over thedecision taking function of the authorities and forthis reason alone the mandamus issued by theHigh Court deserves to be set aside, apart fromthe merits of the case which we have alreadyadverted to.” 13.In that view of the matter, contentions of learnedcounsel appearing for the petitioner cannot be accepted andit stands rejected and the point formulated hereinabove isaccordingly answered in the negative i.e. in favour of therespondent and against the petitioner assessee. 14.We are also of the considered view that it wouldbe apt and necessary to observe at this juncture yet anotherfact which has unfolded in the instant case. As noticedhereinabove, the short issue which was required to beexamined, considered, adjudicated and answered by thisCourt was with regard to the validity of the notices issued under section 148 of the Act and consequential orderspassed thereon. Learned counsel appearing for thepetitioner, who has elaborately and vehemently arguedassailing the impugned notices and orders, has relied upona catena of judgments (13 judgments). It is trite law thatwhile relying upon case – laws in support of theirsubmissions, learned advocates need not file or rely uponrepetitive judgments on the same issue by furnishing sameto the Court so as to inflate the records. Any judgmentwhich has been relied upon has to be independent, separateand distinct from one which has already relied upon for itsapplication to the facts of the case concerned. By furnishingor submitting multiple judgments on the same issue, as hashappened in the instant case i.e. furnishing several citationson same issue with reference to discussion made by theHonourable Apex Court and this court on expression“reason to believe” and “change of opinion” as applied todifferent facts would not change the facts of the presentcase. Despite our request to learned counsel appearing forthe petitioner as to whether he proposes to rely upon all thejudgments on the same issue, he has insisted for all thethirteen judgments referred to in the list of authorities beingconsidered by this Court of which we have referred to fewhereinabove as being applicable to the facts of the saidcases. In fact, on the same issue, several judgments havebeen furnished. The Honourable Apex Court in the case ofRashmi Metaliks Ltd. & Anr Vs Kolkata Metrop. Dev.Auth. & Ors, (2013) 10 SCC 95 has held that suchpractice requires to be deprecated and accordingly, wedeprecate the same. We do hope and trust that these observations would be taken in right spirit and we observethat judgment which would cover the issue even if it is onein number it would suffice. By observing thus, we proceedto pass the following ORDER (i)The Special Civil Applications aredismissed with no order as to costs. (ii)The order dated 9.3.2022 at Annexure-L in Special Civil Application No.5883 of 2022and the order dated 17.8.2021 at Annexure-I inSpecial Civil Application No.15739 of 2021 areaffirmed. (iii)Rule discharged. observations would be taken in right spirit and we observethat judgment which would cover the issue even if it is onein number it would suffice. By observing thus, we proceedto pass the following ORDER (i)The Special Civil Applications aredismissed with no order as to costs. (ii)The order dated 9.3.2022 at Annexure-L in Special Civil Application No.5883 of 2022and the order dated 17.8.2021 at Annexure-I inSpecial Civil Application No.15739 of 2021 areaffirmed. (iii)Rule discharged. (ARAVIND KUMAR,CJ) H.M. PATHAN (ASHUTOSH J. SHASTRI, J)