Sherla v. Wpl.2145.2019_7.Doc

IN THE HIGH COURT OF JUDICATURE AT BOMBAYO.O.C.J. WRIT PETITION (L) NO.2145 OF 2019 African Daisy Realty Pvt. Ltd. & anr. … Petitioners Vs Union of India & Ors.… Respondents Mr.Nikhil Rngta with Mr.Rajat Gupta for the PetitionersMr.Sham Walve for Respondents CORAM: AKIL KURESHI & S.J. KATHAWALLA, JJ. DATED: AUGUST 5, 2019 P.C.: 1.This petition is filed by the assessee challenging the notice of reopening of assessment dated 29.2.2019 passed byRespondent No.2 – Assessing Officer seeking to reopen thepetitioner’s assessment for the Assessment Year 2012-2013. TheAssessing Officer provided reasons recorded by him for reopeningof the assessment which reads as under: “REASON FOR REOPENING UNDER SECTION 147 OFTHE INCOME TAX ACT, 1961. The assessee filed its return on 30.09.2012 declaringtotal income of Rs.2200. The return was processed u/s143(1) of the Income-tax Act, 1961 (herein after “the Act”) on22/02/2013. As per Memorandum of Association, the mainobject of the company was to carry on business ofdevelopers, builders, masonary, general construction contractor etc. However, on perusal of return of income andprofit & loss account, no such business activity found to becarried out by the assessee. 2.The case of the assessee was selected for scrutinyunder CASS for AY 2013-14 on the reason of Large increasein unsecured loans. During the course of the assessmentproceedings for this AY, notices u/s 133(6) were issued to 10loan creditors. Out these, 8 notices were returned back andbalance 2 loan creditors did not replied. Considering thesefacts and details/documents available on record, theAssessing Officer added unsecured loans ofRs.8,71,62,441/- received during the FY 2012-13 as incomeof the assessee. The CIT (A) confirmed this addition. Duringthe course of this assessment proceedings, the AssessingOfficer has also found that the assessee received loan ofRs.10,27,21,810/- from following firms/company. Notices u/s133(6) were issued these firms by the AO, but these noticeswere either returned back or no reply received. These factswere apprised to the assessee during the course ofassessment proceedings for AY 2013-14 but the assesseedid not submit any reply. 3.The return of income of assessee for this assessmentyear is verified and found that the assessee has unsecuredloans of Rs.10,27,21,810/- as per balance sheet. 4.The above facts proves that the assessee companyhas received unexplained cash credit u/s 68 of the Act of 2.The petitioner raised objections to the notice of reopening ofassessment. Such objections were however rejected by an orderdated 31.5.2019. Hence, the petition. 3.At the outset, we may record that the return filed by thepetitioner to the said A.Y. 2012-13 was accepted u/s 143(1) of theIncome Tax Act (“the Act” for short), without scrutiny. In that viewof the matter, as is settled through a series of judgments of theSupreme Court and this Court, the Assessing Officer had muchwider latitude in reopening the assessment if he had tangiblematerial at his end to enable him to form a belief that incomechargeable to tax has escaped assessment, he could by recordingreasons, issue notice for such reassessment. Reference in thisregard, can be made to the judgments of the Supreme Court in thecase of Assistant Commissioner of Income Tax vs. RajeshJhaveri Stock Brokers (P) Ltd.[1] as well as in the case of DeputyCommissioner of Income Tax vs.Zuari Estate Development &Investment Co. Ltd.[2] 1(2007) 291 ITR 500 (SC)2(2015) 373 ITR 661 (SC) : [2016] 236 Taxman 12(2015) 373 ITR 661 (SC) : [2016] 236 Taxman 1 1(2007) 291 ITR 500 (SC)2(2015) 373 ITR 661 (SC) : [2016] 236 Taxman 12(2015) 373 ITR 661 (SC) : [2016] 236 Taxman 1 4.In this background, we may refer to the reasons recorded.The Assessing Officer in his assessment has recorded that theassessee has declared total income of Rs.2200 for the saidAssessment Year in the return of income filed. He recorded thatthe return of income of the petitioner for the Assessment Year2013-2014 was taken in scrutiny. During such scrutinyassessment, since much increase in unsecured loans was noticed,notices u/s 133(6) of the Act were issued to ten loan creditors. Outof these ten creditors, notices to eight returned back. The othertwo loan creditors did not reply. The Assessing Officer proceededto frame the assessment on the basis of material on record. Hemade addition of a sum of Rs.8.71 crores (rounded off) to theunsecured loans received during the period relevant to theAssessment Year 2012-2013 to the income of the assessee. TheCIT (Appeals) confirmed this addition. During the course of suchassessment, the Assessing Officer also noticed that the assesseehad received loan of Rs.10.27 crores (rounded off) from variousfirms and companies. Notices u/s 133(6) were issued to suchfirms also, which were returned back or were not responded to.The assessee also did not submit his reply in connection with thesaid loans of Rs.10.27 crores. The Assessing Officer had verifiedthe return of the income of the assessee for the said Assessment Year 2012-2013 and found that the assessee had disclosed havingreceived unsecured loans of Rs.10.27 crores. According to theAssessing Officer, this would show that the assessee had receivedunexplained cash credit of Rs.10.27 crores in terms of section 68of the Act. He, therefore, had reason to believe that the incomechargeable to tax had escaped assessment. 5.We do not find that the reasons recorded by the AssessingOfficer are such that it can be stated that the reasons lackedvalidity. The learned Counsel for the petitioner however submittedthat the petitioner had made full disclosures about such unsecuredloans and in any case, the assessment for the Assessment Year2013-2014 is not yet final, the assessee had filed appeal which ispending. 6.Neither of these two grounds permit us to quash theimpugned notice of reassessment. Mere disclosure of receipt ofunsecured loans would not be sufficient to avoid reassessment incase where the return was accepted without scrutiny. Further, theAssessing Officer has only referred to the assessment of thesubsequent Assessment Year to demonstrate the nature ofunsecured loans received by the assessee. There is no provisionwhich would require him to await finality of such assessment before issuing the notice of reassessment. 7.In the result, the petition is dismissed. (S.J. KATHAWALLA, J.) (AKIL KURESHI, J.)