Jean Ibrahim Somji v. The Income Tax Officer (International Taxation), Ward-4, Pune & Anr

1/4 446-aswp-3780-2022.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.3780 OF 2022 Jean Ibrahim Somji …Petitioner VersusThe Income Tax Officer (International Taxation), Ward-4, Pune & Anr. …Respondents Mr. Mihir Naniwadekar, with Mr. Rohan Deshpande, i/b. Ms. Farzeen Khambatta, for Petitioner.Mr. Suresh Kumar, for Respondents-Revenue. CORAM:K. R. SHRIRAM &DR. NEELA GOKHALE, JJ.DATED:12[th] March 2024 PC:- 1.Petitioner, a non-resident Indian individual, is challenging areopening notice dated 31[st] March 2021 issued under Section 148 ofthe Income Tax Act, 1961 (“the Act”) as also an order dated 19[th]January 2022 by Respondent No.1 rejecting Petitioner’s objections. 2.Petitioner and her spouse were joint owners of a flat at G-1102,One North, Pune (“the Said Flat”). During the Assessment Yearunder consideration, i.e., AY 2015-16, the flat was sold and aftertaking into account the indexed cost of acquisition and cost ofimprovement, the composite long term capital loss in the case ofPetitioner and her spouse was computed at Rs.34,62,446/-. In thereturn of income (“ROI”) and computation filed by Petitioner,Petitioner’s 50% share in the long term capital loss was duly disclosed 3.It is also Petitioner’s case, and admittedly so, that Petitioner’scase was selected for scrutiny assessment and an assessment orderdated 29[th] November 2017 was passed under Section 143(3) of theAct. During the course of assessment proceedings, Petitioner wasissued notice dated 27[th] July 2016 under Section 143(2) of the Actinforming Petitioner that the Department has decided to conduct alimited scrutiny with regard to interest income and mismatch inincome/capital gain on sale of land or building. Petitioner was alsoissued another notice dated 26[th] September 2017 seeking clarificationon various points/issues, one of which was details regardingsale/purchase of immovable property during the Financial Year 2014-15. 4.Petitioner, by Chartered Accountant’s letters dated 3[rd] October2017 and 11[th] October 2017 provided all the details. With regard tothe capital loss booked on sale of the said flat, detailed explanationwas given in the communication dated 11[th] October 2017.Subsequently, an assessment order dated 29[th] April 2017 came to bepassed in which the Assessing Officer (“AO”) has dealt with the saleof the said flat and the capital loss booked by Petitioner and herspouse. The AO has accepted the loss as booked by Petitioner andher spouse. 5.Thereafter Petitioner received a notice dated 31[st] March 2021under Section 148 of the Act alleging that there were reasons tobelieve Petitioner’s income chargeable to tax for AY 2015-16 hasescaped assessment. The reason for such a belief was also providedto Petitioner and it relates only regard to the capital loss booked byPetitioner. The AO was not agreeing with the indexed cost disclosedby Petitioner in the ROI. According to the AO, instead of a loss ofRs.34,62,446/- in the sale of the flat, there is a capital gain ofRs.88,277/-. We have considered the reason to believe and it isbased on records filed by Petitioner. The reason itself begins with thewords “……….on going through the records, it is noticed that a shortterm capital gain of Rs.88,277/- was remained to add in the totalassessed income…….on perusal of records……”. 6.We agree with Mr. Naniwadekar that in this case since thenotice under Section 148 of the Act was issued after the expiry offour years of the assessment year and the assessment under Section143(3) of the Act having been completed, as per the proviso toSection 147 of the Act, only if there was a failure on the part ofAssessee to disclose truly and fully material facts, the assessmentcould be reopened. The AO has taken a stand that by virtue of theTaxation and Other Loss (Relaxation of Certain Provisions)Ordinance, 2020 and the notifications issued thereunder, the provisoto Section 147 of the Act will not be applicable. It is an incorrect stand because the AO in the notice issued under Section 148 of theAct states that it has been issued after obtaining the necessarysatisfaction of the Commissioner of Income Tax, (“CIT”) Pune. If itwas within four years, he would not have taken the approval of theCIT and he would have taken the approval only of the JointCommissioner of Income Tax. 7.Moreover, in this case the issue regarding the capital loss onthe sale of the said flat was subject of assessment proceedings. It isevident from the assessment order itself. Therefore, it is a clear caseof ‘change of opinion’ and that cannot be the basis for reopening anassessment. 8.In the circumstances, we allow the Petition in terms of prayerclause (a), which reads as under: “(a)Issue a Writ of Certiorari or a Writ in thenature of Certiorari or any other appropriate Writ,order of direction under Article 226 of theConstitution of India, quashing the Impugned Noticeu/s 148 of the Act dated 31[st] March 2021 (Exhibit A)and the Impugned Order on objections dated 19[th]January 2022 (Exhibit C) and the impugnedreassessment proceedings for AY 2015-16 as beingwholly without jurisdiction, illegal and arbitrary;” 9.Petition disposed. (DR. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.)