Mr.dhiraj Bhansali v. Income-Tax Officer, Non-Corporate Ward 6(3), Chennai – 600 006

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 21.03.2019 CORAM THE HONOURABLE Dr.JUSTICE ANITA SUMANTH WP. No.6103 of 2018andWMP. Nos.7522 & 7523 of 2018 Mr.Dhiraj BhansaliPartner,M/s.Sha Rikhabdas Madaji & Co ... PetitionerVs. Income-Tax Officer,Non-Corporate Ward 6(3),Chennai – 600 006. ... Respondent PRAYER: Writ Petition filed under Article 226 of theConstitution of India, praying for a Writ of Certiorari to callfor the records of the respondent pertaining to the assessmentorder dated 29.11.2017, assessed under Section 143(3) r/w 147 ofthe Income Tax Act, 1961 and the consequential demand noticedated 29.11.2017, issued under Section 156 of the Income TaxAct, 1961 and the accompanied notice dated 29.11.2017 issuedunder Section 274 read with Section 271 of the Income Tax Act1961 all based on the rejection order of the respondent hereindated 19.02.2018 all pertaining to the petitioner herein and toquash the same. For Petitioner : Mr.P.V.Balasubramanian, for M/s.GMS Law Associates Heard Mr.Balasubramanian, learned counsel for thepetitioner and Mrs.Hema Muralikrishnan, learned Senior StandingCounsel for the respondent. 2. The petitioner is on the second round of litigation asregards proceedings for re-assessment under the provisions ofthe Income-Tax Act, 1961 (in short 'Act') for Assessment Year2010-11. Pursuant to a return of income filed by the petitioner https://hcservices.ecourts.gov.in/hcservices/ an intimation under Section 143(1) was passed and the return wasnot taken up for scrutiny. While this was so, and thepetitioner was under the impression that the proceedings for theAssessment Year in question have attained finality, a noticeunder Section 148 was issued by the respondent on 30.03.2017which is the last day of the six (6) year period provided forre-assessment under the Act. The petitioner appeared beforethe Assessing Officer in response to notices for hearing dated17.04.2017 and 04.08.2017 calling for production of variousparticulars. An order of re-assessment dated 29.11.2017 came tobe passed by the respondent raising a demand of a sum ofRs.1,12,85,704/-. 3. The petitioner approached this Court in WP. No.33560 of2017 praying for the issuance of Writ of a Certiorari quashingthe aforesaid order of re-assessment and consequential notice ofdemand dated 29.11.2017. The writ petition was disposed on21.12.2017 directing the Assessing Officer to furnish thereasons for re-opening and granting the petitioner fifteendays time to submit his objections thereto, in line with theprocedure set out in this case of GKN Driveshafts (India) Ltd v.Income Tax Officer [(2003) 259 ITR 19 (SC)]. The respondent wasdirected to pass a speaking order and communicate the samewithin a period of two (2) weeks to the petitioner. Theassessment was however not set aside. 4. Pursuant to the aforesaid order, the petitioner has beenfurnished reasons for re-opening and filed objections theretowhich have been rejected vide order dated 19.02.2018. It is asagainst the aforesaid order that the petitioner is before thisCourt. 5. The petitioner in his objection dated 12.02.2018 hasmade submissions with regard to the merits of the assessment.With regard to the assumption of jurisdiction by the officer,the petitioner states that no new or tangible information hasbeen brought on record and that the proposed re-assessment wasmerely a re-appreciation or review of the facts already onrecord. 4. Pursuant to the aforesaid order, the petitioner has beenfurnished reasons for re-opening and filed objections theretowhich have been rejected vide order dated 19.02.2018. It is asagainst the aforesaid order that the petitioner is before thisCourt. 5. The petitioner in his objection dated 12.02.2018 hasmade submissions with regard to the merits of the assessment.With regard to the assumption of jurisdiction by the officer,the petitioner states that no new or tangible information hasbeen brought on record and that the proposed re-assessment wasmerely a re-appreciation or review of the facts already onrecord. 6. The reasons for the re-assessment dated 02.02.2018reveal that material has been received from the Information Wingon the basis of which the present proceedings have beeninitiated. The reasons state thus:'An information received from the DDIT(Inv.)., Unit 2(1), Chennai vide letterNo.DDIT (Inv)/U-2(1)/16-17 dated 28.03.2017.On verification of the bank account No.60310500045 of Shri Vinith K Bhansali'smaintained with ICICI Bank, Sowcarpet Branch,Chennai, the following amounts were creditedas detailed below: Date Amount of Credit01.09.2009Rs.1,00,00,00002.09.2009Rs. 60,00,00017.03.2010Rs. 85,00,000 During the course of enquiry conducted by theDDIT, Shri Vinith K Bhansali has stated thathe received a sum of Rs.1.60 crores as loanfrom M/s.Sha Rikhabdas Madaji & Co. (PANAABFS0195H) a partnership firm where hisfather Shri Kantilal Bansali is one of thepartners. On further verification by theDDIT, the firm M/s.Sha Rikhabdas Madaji & Co.explained the sources for the payments ofRs.1.60 crores to Shri Vinith K Bhansali asloan of Rs.1.75 crores received fromM/s.Balaji Reality, Indore. No confirmationor any other evidence was produced before theInvestigation Wing. On verification from the ITD System, it isfound that the assessee firm filed its returnof income for Asst. Year 2010-11 on 22.03.2013admitting a total income of Rs.7,630/-. Onverification of the Part A-BS of the return ofincome filed the secured loan was shown as Niland unsecured loan was shown as Rs.1,49,430/-.Hence, I have reason to believe that thetransaction in respect of the sum of Rs.1.60crores which is chargeable to income tax hasescaped assessment for the AY 2010-11 withinthe meaning of Sec.147 of the Income Tax Act,1961' 7. Bearing in mind the fact that the return filed by thepetitioner was not taken up for scrutiny initially, and only anintimation under Section 143(1) has been issued, I am of theview that the assumption of jurisdiction in this case cannot befaulted, particularly since the respondent has, in the reasonsfor re-opening, cited tangible material upon which he rests hisbelief of escapement of income. In Assistant Commissioner ofIncome Tax v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. [(2007)291 ITR 500 (SC)], the Supreme Court has dealt with theescapement of income in cases where an intimation under Section143(1) is issued and states thus: '16. Mr. Monga submitted that the intimation https://hcservices.ecourts.gov.in/hcservices/ 7. Bearing in mind the fact that the return filed by thepetitioner was not taken up for scrutiny initially, and only anintimation under Section 143(1) has been issued, I am of theview that the assumption of jurisdiction in this case cannot befaulted, particularly since the respondent has, in the reasonsfor re-opening, cited tangible material upon which he rests hisbelief of escapement of income. In Assistant Commissioner ofIncome Tax v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. [(2007)291 ITR 500 (SC)], the Supreme Court has dealt with theescapement of income in cases where an intimation under Section143(1) is issued and states thus: '16. Mr. Monga submitted that the intimation https://hcservices.ecourts.gov.in/hcservices/ under Section 143 (1) of the Act was as much anassessment as regular assessment of a return thathas been picked up for scrutiny under Section143 (3) of the Act. It is further submitted by MrMonga that there was no tangible material thatthe AO came across to justify forming 'reasons tobelieve' that income had escaped assessment. Theonly material referred to were the statement ofaccounts, balance sheet, audited report etc.which in any way were available with the AO inrespect of both the Petitioner and the firm forthe AY in question at the time of issuance of theorder/ intimation under Section 143 (1) of theAct. The reasons recorded were therefore at besta change of opinion based on suspicion andsurmises.17. It is further submitted by Mr Monga that thenotice under Section 148 of the Act cannot beissued for the purpose of verification of thematerial already available with the authorities.Mr. Monga placed reliance on the decisionin Commissioner of Income Tax v. Kelvinator ofIndia Limited (2010) 187 Taxman 312 (SC), anddecisions of this Court in Commissioner of IncomeTax v. Orient Craft Limited(2013)354 ITR 536 (Del), Mohan Gupta (HUF) v. Commissioner ofIncome Tax (2014) 366 ITR 115 (Del) , Pr.Commissioner of Income Tax v. Tupperware India(P) Ltd. (2016) 236 Taxman 494 (Del),Commissioner of Income Tax v. Batra BhattaCompany (2010) 321 ITR 526 (Del), Commissioner ofIncome Tax-V v. Times Business Solution Ltd.(2013) 354 ITR 25 (Del), Commissioner of IncomeTax - Central v. Indo Arab Air Services (2016)283 CTR 92 (Del) and Asia SatelliteTelecommunications Co. Ltd. v. Assistant Directorof Income-tax, International Taxation (2013) 29taxmann.com 317 (Del). Submissions of counsel for the Revenue 18. Countering the above submissions it ispointed by Mr. Dileep Shivpuri, learned counselfor the Revenue that the recent decision of theSupreme Court in Deputy Commissioner of Income-tax v. Zuari Estate Development & Investment Co.Ltd. (2015) 373 ITR 661 (SC) settled the legalposition that where the return had been processedunder Section 143 (1) of the Act, there was no„assessment" as such and therefore, the questionof change of opinion did not arise. He referred https://hcservices.ecourts.gov.in/hcservices/ to the order dated 10th February 2016 passed bythe High Court of Judicature at Bombay in WritPetition No. 3027 of 2015 (KhubchandaniHealthparks Pvt. Ltd. v. Income Tax Officer 6 (3)(4) Mumbai) where the above legal position wasfurther explicated.' In the light of the discussion above as well as thejudgement of the Supreme Court in the case of Rajesh Jhaveri(supra), there is no merit in this writ petition and the same isdismissed. https://hcservices.ecourts.gov.in/hcservices/ to the order dated 10th February 2016 passed bythe High Court of Judicature at Bombay in WritPetition No. 3027 of 2015 (KhubchandaniHealthparks Pvt. Ltd. v. Income Tax Officer 6 (3)(4) Mumbai) where the above legal position wasfurther explicated.' In the light of the discussion above as well as thejudgement of the Supreme Court in the case of Rajesh Jhaveri(supra), there is no merit in this writ petition and the same isdismissed. 8. The order of re-assessment dated 29.11.2017 thus standsrevived in the light of the rejection of the objections of thepetitioner dated 19.02.2018. The petitioner seeks and is grantedliberty to challenge the order of re-assessment dated 29.11.2017before the Commissioner of Income Tax (Appeals). Since thepetitioner has been litigating against the proceedings for re-assessment from 19.12.2017 when it filed the first writ petitionchallenging the order of re-assessment, the appeal shall bereceived by the Commissioner of Income Tax (Appeals), if filedwithin two weeks from today, without reference to limitation. 9. The Writ Petition is disposed of in the above terms.Connected Miscellaneous Petitions are closed. No costs. BEING MENTIONED This matter was under the caption for Being Mentioned on11.04.2019 pursuant to the Order of this Court dated 21.03.2019and made herein in the presence of the aforesaid counsel on theeither side, the Court made the following Order:- The matter is listed today under the caption 'for beingmentioned' for a specific direction to return the original orderof assessment filed along with W.P.No.33560 of 2017. 2. I find, there is already a noting by this Bench, in theoriginal order, dated 21.03.2019 passed in W.P.no.6103 of 2018that the original order of assessment filed in W.P.no.33560 of2017 be returned on 03.04.2019, i.e., the date on which theorder is directed to be issued. 3. In the light of the above, there is no impediment for thereturn of the order. Let the same be returned forthwith. 4. Further, in paragraph 8 of the order, dated 21.03.2019,passed in the above writ petition, the time for filing of appealis set out as two weeks from 21.03.2019. https://hcservices.ecourts.gov.in/hcservices/ 4.1. Considering the above circumstances, the time grantedto file Appeal stands extended by two weeks from today. 5. It is made clear that, excepting the fixing of timelimit, the order dated 21.03.2019 passed in the above writpetition, shall hold good / remain unaltered. Sd/- Assistant Registrar(CS IV) //True Copy// Sub Assistant RegistrarrkpToIncome-Tax Officer,Non-Corporate Ward 6(3),Chennai – 600 006.+1cc to M/s.GMS Law Associates, Advocate sr.35754WP. No.6103 of 2018andWMP. Nos.7522 & 7523 of 2018GN(27/04/2019)