Jain Cooperative Bank Limited v. Assisstant Commissioner Of Income Tax,Central Circle 28, Delhi & Anr

$~38 *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 13075/2022 & CM APPLs. 39588-39589/2022 JAIN COOPERATIVE BANK LIMITED ..... Petitioner Through: Mr. Gagan Narang, Advocate withMr. Rudraksh Gupta, Advocate. versus ASSISSTANT COMMISSIONER OF INCOME TAX,CENTRAL CIRCLE 28, DELHI & ANR. ..... Respondents Through: Mr. Ajit Sharma, Advocate withMr. A. Renganath, Advocate. % Date of Decision: 08[th]September, 2022 CORAM: HON’BLE MR. JUSTICE MANMOHANHON’BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J: (ORAL) 1.Present writ petition has been filed challenging the Order passedunder Section 148A(d) and the Notice issued under Section 148 of theIncome Tax Act, 1961 (‘the Act’) dated 30[th]July, 2022 for Assessment Year2017-18. 2.Learned counsel for the petitioner states that the reassessmentproceedings cannot be initiated merely based on ‘suspicion’ or ‘surmise’ and the reasons for reopening as provided in the impugned Notices areinsufficient and amount to a mere ‘change of opinion’ on an aspect alreadyknown to the respondents. He states that the cash deposited in Bank duringdemonetization and / or remitted by way of cheques were duly disclosed inthe Income Tax Return Form, and Financial Statements of the Assessee. Heasserts that the cash deposited belonged to the assessee’s customers/depositors and was not the assessee’s money. He states that there has beenno complaint against the Bank by its customers / depositors and all the dataduly synchronized had been made available to the respondents on multipleoccasions. 3.Hefurthersubmitsthattheprimaryallegationforinitiatingreassessment proceedings against the petitioner is that irregularly highamount of currency notes had been deposited in the petitioner’s accountsduring AY 2017-18 i.e. during demonetization. He states that therespondents have failed to consider that the petitioner, being a bank, wasmerely following the RBI’s instructions and high volume of old 500 and1000 currency notes were deposited with the petitioner by its customersduring the permitted period by the RBI. 4.He submits that no foul play was detected during search and seizureoperations conducted by the IT department in 2018 and the assessmentproceedings were completed vide Assessment Order dated 29[th]December,2018. He submits that the bank is now being arbitrarily subjected toreassessment proceedings even after the accounts where cash was depositedhave already been assessed. 5.He also states that the impugned notice and order are void-ab-initio asthe respondent No. l has failed to comply with Section 148A (d) as well as the Instruction No. l of 2022 issued by respondent No.2 which provide thatthe assessing officer, shall decide on material available on record includingthe reply of the assessee. He points out that the Notice dated 31[st]May, 2022issued under Section 148A(b) granted time of two weeks (before 14 days) tothe assessee to respond. He contends that though the assessee vide the letterdated 13[th]June, 2022 sought further time to gather information, yet the AOdid not respond to the request of the assessee. He points out that the assesseevide the letter dated 28[th]June, 2022 filed detailed reply, which was notconsidered by the Assessing Officer. He submits that the action ofrespondents in issuing order dated 30[th]July, 2022 without taking intoconsideration the detailed reply dated 28[th]June, 2022 filed by the petitionerin response to the respondent No.l’s letter / Show Cause Notice dated31[st]May, 2022 is illegal. 6.Havingheardlearnedcounselforthepetitioner,thisCourtisoftheviewsthatthepetitionerhaschallengedthereopeningproceedingson merits ofthecase.TheSupremeCourt in the case of Raymond Woollen Mills Ltd. vs. ITO And Ors.,[1999 236 ITR 34 SC] has held as under:- 6.Havingheardlearnedcounselforthepetitioner,thisCourtisoftheviewsthatthepetitionerhaschallengedthereopeningproceedingson merits ofthecase.TheSupremeCourt in the case of Raymond Woollen Mills Ltd. vs. ITO And Ors.,[1999 236 ITR 34 SC] has held as under:- “3. In this case, we do not have to give a final decision as towhether there is suppression of material facts by the assessee ornot. We have only to see whether there was prima facie somematerial on the basis of which the Department could reopen thecase. The sufficiency or correctness of the material is not a thingto be considered at this stage. We are of the view that the courtcannot strike down the reopening of the case in the facts of thiscase. It will be open to the assessee to prove that the assumptionof facts made in the notice was erroneous. The assessee may alsoprove that no new facts came to the knowledge of the Income-taxOfficer after completion of the assessment proceeding. We arewhether there is suppression of material facts by the assessee ornot. We have only to see whether there was prima facie somematerial on the basis of which the Department could reopen thecase. The sufficiency or correctness of the material is not a thingto be considered at this stage. We are of the view that the courtcannot strike down the reopening of the case in the facts of thiscase. It will be open to the assessee to prove that the assumptionof facts made in the notice was erroneous. The assessee may alsoprove that no new facts came to the knowledge of the Income-taxOfficer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. Thequestions of fact and law are left open to be investigated anddecided by the assessing authority. The appellant will be entitledto take all the points before the assessing authority. The appealsare dismissed. There will be no order as to costs.” (emphasis supplied) 7.Further, as per the notice issued under Section 148A(b) thereassessmentproceedingswereinitiatedonthebasisof suspicioustransactions flagged by the FIU [Financial Intelligence Unit]. It is pertinentto mention that the petitioner is registered as a non-scheduled Urban Co-operative bankwho ‘maintained current accounts with Chandni Chowk,Shakarpur and Karkardooma Branches, New Delhi a/c no. 523011066574,523011066582,634011031880,683011012827,683011012860haddeposited huge cash amounting to Rs.141.28 crores during the period from01[st]April,2016 to 31[st]December, 2016’. From the Search Assessmentorder under Section 153A dated 29[th]December, 2018, it is not clear whetherthese deposits were verified by the Assessing Officer or not. In fact, theAssessment Order passed under Section 153A read with Section 143(3)dated 29[th]December, 2018 is an order passed pursuant to the search,wherein it seems only the documents seized during the search wereconsidered. The said order does not reveal that the aspect of cash depositswas specifically examined by the Assessing Officer. The Supreme Court inthe case of Income Tax Officer v. Techspan India Pvt. Ltd. and Anr.,(2018) 6 SCC 685 has held under:- “12.Before interfering with the proposedre-opening oftheassessment on the ground that the same is based only on a change inopinion, the court ought to verify whether the assessment earliermade has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement ofincome that was taxable. If the assessment order is non-speaking,cryptic or perfunctory in nature, it may be difficult to attribute to theassessing officer any opinion on the questions that are raised in theproposed re-assessment proceedings. Every attempt to bring to tax,income that has escaped assessment, cannot be absorbed by judicialintervention on an assumed change of opinion even in cases where theorder of assessment does not address itself to a given aspect sought tobe examined in the re-assessment proceedings.” (emphasis supplied) opinion on a matter which is the basis of the alleged escapement ofincome that was taxable. If the assessment order is non-speaking,cryptic or perfunctory in nature, it may be difficult to attribute to theassessing officer any opinion on the questions that are raised in theproposed re-assessment proceedings. Every attempt to bring to tax,income that has escaped assessment, cannot be absorbed by judicialintervention on an assumed change of opinion even in cases where theorder of assessment does not address itself to a given aspect sought tobe examined in the re-assessment proceedings.” (emphasis supplied) 8.Further, as far as non-consideration of petitioner’s reply is considered,it is settled law that ‘principle of natural justice is no unruly horse and nolurking land mine’ as held by Mr.Justice Krishna Iyer in Chairman, Boardof Mining Examination and Chief Inspector of Mines Vs. Ramjee, (1997)2 SCC 256. In fact, in M/s S.Tikara Vs. State of M.P. & Ors, AIR 1997 SC1691, it has been held that the principles of natural justice cannot bepetrified or fitted into rigid moulds. They are flexible and turn on the factsand circumstances of each case. Consequently, the questions that arise arewhether there has been any unfair deal by the respondent? 9.In the present instance, in view of the allegation of cash deposits of141.28 crores during demonetization period, this Court is of the opinion thateven if the reply now sought to be relied upon by the petitioner was takeninto account, notice under Section 148 of the Act was called for – as a primafacie case of escapement of income was made out. Consequently, no groundfor interdicting the reassessment is made out at this stage. 10.Accordingly, the present writ petition along with pending applicationsis dismissed.However, this Court clarifies that the Assessing Officer shalldecide the matter on its own merits without being influenced by any observation made in the present order. The rights and contentions of all theparties are left open. MANMOHAN, J SEPTEMBER 8, 2022js MANMEET PRITAM SINGH ARORA, J