Laxmikant Vinod Lath v. Income Tax Officer, Ward 17(2)(2), Mumbai And Others

VISHALSUBHASHPAREKAR Digitally signedby VISHALSUBHASHPAREKARDate: 2022.01.1117:15:30 +0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.111 OF 2020 Laxmikant Vinod Lath ...Petitioner vs.Income Tax Officer, Ward 17(2)(2), Mumbaiand Others ...Respondents Mr. P.J. Pardiwalla, Senior Advocate i/b. Mr. A.K. Jasani, for thePetitioner.Mr. Suresh Kumar, for the Respondents. CORAM :K.R. SHRIRAM &N. J. JAMADAR, JJ.DATE :JANUARY 10, 2022 P.C.: 1.The Petitioner unhappy with the notice dated 31[st] March,2019 issued under section 148 of the Income Tax Act, 1961 andPetitioner's objection to the reopening being rejected vide orderdated 25[th] November, 2019 has approached this Court by way of thisPetition. 2.Petitioner is praying for quashing of this notice dated 31[st]March, 2019 and the order dated 15[th] November, 2019. 3.Though time was granted on 17[th] December, 2019 toRespondents for filing reply if necessary, no reply has been filed tilldate. 4.Petitioner has received notice dated 31[st] March, 2019 undersection 148 of the Act for A.Y. 2012-2013. The reasons for reopeningof the assessment are : (a) Petitioner had filed return of income for A.Y. 2012-2013declaring total income of Rs. 6,09,900/- which was processed undersection 143(1) and later under section 143(3) of the Act. Accordingto the Jurisdictional Assessing Officer(JAO) Petitioner wasmaintaining bank account with ICICI Bank, Dombivali Branch. Inthe said account, there are large valued non-cash transactionsbetween 5[th] March, 2011 to 12[th] November, 2011. There was credittransaction of Rs. 744 lacs and debit transaction also of Rs. 744lacs. In the reasons it is mentioned that the purpose of deploymentof such large fund is not known. (b) From the perusal of Form 26AS for A.Y. 2012-2013 Petitionerhas received Rs.1.4 Crores of interest income from M/s. Eske TexIndia Private Limited but this has not been disclosed in his return ofincome. Petitioner is also alleged to have received income ofapproximately Rs.12.7 lacs on which TDS is deducted under section94C by M/s. Sunil Industries. But Petitioner has shown otherincome to the tune of Rs. 15,22,063/-. These transactions do notmatch with the profile of Petitioner. (c) For the month of March, 2011 certain payments have been received amounting to Rs. 1,70,000/- which was used to makecertain payments to schools. We are ignoring this figure because itdoes not pertain to the assessment year in question but relates toA.Y. 2011-2012. (d) According to Respondent No. 1, therefore he has reasons tobelieve that income chargeable to the tune of Rs. 744 lacs hasescaped assessment within the meaning of section 147 of the Act. 5. Though in the reasons, it is alleged that Petitioner hadreceived Rs. 1.4 Crores interest income of Rs. 12.7 lacs on whichTDS is deducted etc., those are not amounts which are stated tohave escaped assessment. This is because in paragraph 7 of thereasons, the JAO has restricted the income chargeable to tax thathas escaped assessment to Rs. 744 lacs. This is the figure for whichthere has been credit transaction and debit transaction during theassessment year. 6.First and foremost, we have to note that where there has beencredit of Rs. 744 lacs and admittedly debit of Rs. 744 lacs, how canthere be any income at all and that too which has escapedassessment. The entire amount received has been paid out.Moreover, in the balance-sheet annexed to the Petition there are names of Ashok Mahansaria and Yogesh Mahansaria against whomliability in the sum of Rs. 8,50,90,155/- and Rs. 3,50,40,164/-respectively, has been recorded. It is this amount of investmentwhich was gone to M/s. Eske Tex India Private Limited. Petitionerreceived interest of Rs. 1,41,18,920/- and has also paid interest ofRs. 1,43,43,518/-. 6.First and foremost, we have to note that where there has beencredit of Rs. 744 lacs and admittedly debit of Rs. 744 lacs, how canthere be any income at all and that too which has escapedassessment. The entire amount received has been paid out.Moreover, in the balance-sheet annexed to the Petition there are names of Ashok Mahansaria and Yogesh Mahansaria against whomliability in the sum of Rs. 8,50,90,155/- and Rs. 3,50,40,164/-respectively, has been recorded. It is this amount of investmentwhich was gone to M/s. Eske Tex India Private Limited. Petitionerreceived interest of Rs. 1,41,18,920/- and has also paid interest ofRs. 1,43,43,518/-. 7.In the reasons for reopening though there is a mention of Rs.1.4 Crores credit of interest income from M/s. Eske Tex (I) Pvt. Ltd,the reason is silent about the payment of interest of Rs.1,43,43,518/-. In the computation of income, Petitioner hasdisclosed interest received of Rs. 1,41,18,920/- and payment of Rs.1,43,43,518/- restricted to Rs. 1,42,05,185/-. Even in the capitalaccount there is disclosure of interest receipt of Rs. 1,41,18,920/-and interest payment of Rs. 1,43,43,518/-. Therefore these detailshave been made available before the assessment was completedunder section 143(3) of the Act. Just because some information hasbeen received from the Investigation Wing, does not entitleRespondents to reopen assessment based on change of opinion.Merely, deposit of money into the bank account by way of chequeitself is not a ground for escapement of income. Mere high valuedeposit in the bank account cannot be a reason for reopening under section 148 of the Act. The reasons as made available to Petitionermerely indicates information received from Investigation Wingabout a particular entity entering into suspicious transaction. Thatmaterial is not further linked to the conclusion that Petitioner hasindulged in any activity which can give rise to reason to believe onthe part of the Assessing Officer that income chargeable to tax hasescaped assessment. It does appear that the Assessing Officer hasmerely issued a reopening notice on the basis of intimation receivedfrom the Investigation Wing and consequent to change of opinion. 8.In the circumstances, we allow the Petition in terms of prayer clause (a) which reads as under: “ (a)That this Court may be pleased to issue a writ ofcertiorari or any other writ, order or direction underArticles 226 and 227 of the Constitution of India callingfor the records of the case leading to the issue of theimpugned notice and passing of the impugned order andafter going through the same, and examining thequestion of legality thereof, quash, cancel and set asidethe impugned notice (Exhibit C) dated 31[st] March, 2019and the impugned notice (Exhibit C) dated 31[st] March,2019 and the impugned order (Exhibit H) dated 15[th]November, 2019." 9.Petition disposed accordingly. (N. J. JAMADAR, J.) (K. R. SHRIRAM, J.)