Sunil Hanskrishna Khanna,Navi Mumbai v. Asst.commissioner Of Income Taxrange 27(3) Navi Mumbai & Ors

IN THE HIGH COURT OF JUDICATURE AT BOMBAYAPPELLATE CIVIL JURISDICTION WRIT PETITION NO.3031 OF 2022 Sunil Hanskrishna Khanna,Navi Mumbai ….Petitioner. Vs. Asst.Commissioner of Income TaxRange 27(3) Navi Mumbai & Ors..... Respondents. --------- Mr. Prakash Pandit a/w Advocate Premchandra Tripathi for petitioner.Mr. Akhileshwar Sharma, Advocate for respondent. --------- CORAM : K.R. SHRIRAM & N.R.BORKAR, JJ. DATE : 21[st] APRIL, 2022. P.C.: 1.Affidavit-in-reply tendered by Mr. Sharma is taken on record. 2.Petitioner is impugning notice dated 31.3.2021 issued u/s 148 of theIncome Tax Act, 1961 (hereinafter to be referred to as the ‘said Act’) bywhich respondent no.1 has alleged that there are reasons to believe thatpetitioner’s income chargeable to tax for the Assessment Year 2013-2014has escaped assessment as within the meaning of Section 147 of the saidAct. Chitra Sonawane 3.Reasons recorded for such belief is also annexed to the petition. 4.The entire basis for such belief is petitioner had traded in the sharesof a Company by name JRI Industries and Infrastructure Limited and hadsold shares worth Rs.3,08,62,878/- and claimed Short Term Capital Gainsof Rs.33,54,179/- u/s 111 A of the said Act. The Assessing Officer hasreceived information from the office of DDIT (Inv) that JRI Industries andInfrastructure Ltd. was involved in providing accommodation entries in theform of Bogus Long Term Capital Gains/Short Term Capital Lossess inpenny stock scrips to the beneficiaries by manipulating stock market.Since petitioner was one of the persons/beneficiaries who had traded in thescrip of JRI Industries, entire consideration of Rs.3,08,62,878/- from saleof shares of the said scrip remained unexplained. Therefore, said amounthad escaped assessment. 5.Here is the case where reopening is proposed after expiry of 4 yearsfrom the end of relevant assessment year and since assessment u/s 143(3)of the said Act has been completed, proviso to Section 147 of the Act shallapply. Therefore, there is a bar for reopening unless respondent is able toshow there has been escapement of income due to failure on the part ofpetitioner to truly and fully disclose material facts required for assessment. Chitra Sonawane 6.We have considered the reasons recorded and the reasons does notdisclose what was the material fact that petitioner was bound to disclosewhich fact he has failed to truly and fully disclose. 7.Moreover, during the assessment proceedings, specific query wasraised in the notice dated 28.7.2015 issued u/s 142(1) calling uponpetitioner to produce copies of Demat statements for assessment year2012-2013 and assessment year 2013-2014 and also file details of scripwise share purchase/sale. Petitioner in its reply, which is undated, hasprovided all details. Further query was raised by notice dated 25.01.2016u/s 142(1) of the said Act, on the same point which is the subject matterof the reasons recorded, i.e., long term capital gains and short term capitalgain. Petitioner responded by its letter dated 8.2.2016 and provided alldetails. In the details, petitioner has also disclosed name of JRI Industriesand Infrastructure Limited as one of the Company in which he had traded.Further details were provided by petitioner vide letter dated 12.2.2016. Inaffidavit in reply filed through one Raju B. Kuhikar, affirmed on 30.3.2022, in para 12 it is averred as under; “12. I say that information received from the DDIT(Inv.) Unit-5(2), Mumbai is a tangible material. Iadmit that the petitioner has furnished the particularof transaction in the JRI Industries and InfrastructureLimited. The same was treated by the AssessingOfficer as bonafide transactions and assessed Chitra Sonawane accordingly. The Assessing officer had no means toknow that such transaction in the scrip of the JRIIndustries and Infrastructure Limited are notbonafide.” 8.Mr. Akhileshwar Sharma, for respondent submitted that this issue in para 12 it is averred as under; “12. I say that information received from the DDIT(Inv.) Unit-5(2), Mumbai is a tangible material. Iadmit that the petitioner has furnished the particularof transaction in the JRI Industries and InfrastructureLimited. The same was treated by the AssessingOfficer as bonafide transactions and assessed Chitra Sonawane accordingly. The Assessing officer had no means toknow that such transaction in the scrip of the JRIIndustries and Infrastructure Limited are notbonafide.” 8.Mr. Akhileshwar Sharma, for respondent submitted that this issue has not been discussed in the assessment order. It is settled law that once aquery is raised, during assessment proceeding and assessee has replied toit, it follows that the query raised was subject of consideration of the A.O.while completing the assessment and it is not necessary that assessmentorder should contain reference and/or discussion to disclose its satisfaction in respect of query raised. Still, in affidavit in reply it is admitted that theA.O. had accepted particulars of transactions furnished by petitioner andthe A.O. has treated the same as bonafide transactions and assessedaccordingly. 9.Even if, the Assessing Officer had no means to know that thetransactions in the scrip of JRI Industries and Infrastructure Limited are notbonafide and even if, we assume that the Assessing Officer had committed a mistake, still, as held in Gemini Leather Stores vs The Income TaxOfficer1 assessment cannot be re-opened by reason of omission or failureon the part of the assessee to disclose fully and truly all material facts as 1 (1975)100 ITR 1 (SC) Chitra Sonawane Income Tax Officer had material facts before him when he made originalassessment and he can not take recourse to reopen to remedy the error. 10. In the circumstances, we allow the petition in terms of prayer clause(a) which reads as under; “(a) This Hon’ble Court be pleased to issue awrit or certiorari or a writ in the nature ofcertiorari or any other appropriate writ, order ordirection under Article 226 of the Constitution ofIndia against the 1[st] Respondent calling for therecord of the case of the petitioner and afterlooking into the same and going into the questionof the legality thereof quash and set aside thesaid notice u/s 148 dated 31.3.2021, togetherwith the order dated 30.12.2021 and theassessment proceedings in pursuance of the saidnotice.” 11. Petition disposed, with no order as to costs. (N.R. BORKAR, J.) (K.R.SHRIRAM, J.) Chitra Sonawane Chitra Sonawane