The Income Tax Officer 30(3)(2)& Anr v. Purti Parab

Digitallysigned byPURTIPURTIPRASADPRASADPARABPARABDate:2022.01.1117:22:05+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 3620 OF 2019 Sanjeev Amritlal Chheda V/s. ….Petitioner The Income Tax Officer 30(3)(2)& Anr. …Respondents ---- Mr. Nishit M. Gandhi a/w Ms. Akshita Bhandari for Petitioner.Mr. Sham V. Walve for Respondents-Revenue. ---- CORAM : K.R. SHRIRAM & R.N. LADDHA, JJ. DATED : 5[th] JANUARY, 2022 P.C. : 1.Petitioner was served with a notice dated 28[th] March, 2019under Section 148 of the Income Tax Act, 1961 (the Act) for the AssessmentYear 2012-13 in which the Jurisdictional Assessing Officer (JAO) has stated“Whereas I have reasons to believe that your income chargeable to tax forthe Assessment Year 2012-13 has escaped assessment within the meaning ofsection 147 of the Income Tax Act, 1961 ………. This notice is being issuedafter obtaining the necessary satisfaction of the Pr. CIT 30, Mumbai.” 2.We have seen the reasons for re-opening under Section 147 ofthe Act made available to petitioner which is dated 25[th] March, 2019. Thereasons does not even indicate initially that income chargeable to tax hasescaped assessment. The entire basis of the notice is that respondent had information that petitioner had borrowed cash loan of Rs. 16,30,000/- inA.Y. 2012-13 from one Mahavir Engineer and therefore petitioner hasviolated provisions of Section 269SS of the Act. There is not even a whisperas to what was the amount of income of petitioner that has escapedassessment. Though in the reasons the JAO states that he has reasons tobelieve that petitioner has borrowed cash loan of Rs.16,30,000/- and hasviolated the provisions of Section 269SS of the Act, in the proforma forrecording reasons for initiating proceedings under Section 148 of the Actand for obtaining the approval of the Commissioner of Income Tax/Pr.Commissioner of Income Tax, the JAO has incorrectly stated that thequantum of income which has escaped assessment is Rs.16,30,000/- andnot borrowing or cash loan taken. Taking admittedly a loan cannot be anyreason to be even considered as income. What we find is that the JointCommissioner has expressed that from the reasons recorded it is a fit casefor issuance of notice under Section 148 of the Act and the PrincipalCommissioner has also expressed he is satisfied about issuance of noticeunder Section 148 of the Act. If these two gentlemen had only read thereasons as recorded for re-opening, certainly they would have realised thatthere is no income which has escaped assessment because the problemaccording to the JAO was that petitioner has borrowed cash loan ofRs.16,30,000/-. In fact in paragraph no. 9 of the reasons recorded it readsas under : 9.In the light of the above discussion and in consequence of information in the possession of the undersigned, I have reason tobelieve that by accepting cash loan of Rs.16,30,000/-, theassessee has violated the provision of section 269SS of I.T. Act,1961 in the Assessment Year 2012-13. Hence, there is escapementof assessmentby reason of the failure on the part of the assesseeto disclose fully and truly all material facts necessary within themeaning of section 147 of Income Tax Act, 1961. He says ‘there is escapement of assessment’ by reason of thefailure on the part of the assessee to disclose fully and truly all material factsbut does not say that ‘there is escapement of income chargeable to tax thathas escaped assessment’. 9.In the light of the above discussion and in consequence of information in the possession of the undersigned, I have reason tobelieve that by accepting cash loan of Rs.16,30,000/-, theassessee has violated the provision of section 269SS of I.T. Act,1961 in the Assessment Year 2012-13. Hence, there is escapementof assessmentby reason of the failure on the part of the assesseeto disclose fully and truly all material facts necessary within themeaning of section 147 of Income Tax Act, 1961. He says ‘there is escapement of assessment’ by reason of thefailure on the part of the assessee to disclose fully and truly all material factsbut does not say that ‘there is escapement of income chargeable to tax thathas escaped assessment’. 3.Moreover, even in the Assessment Order dated 4[th] December,2019 respondents accept the total income as per the return of incomedeclared by petitioner of Rs.7,87,370/- and the whole basis in theassessment order is only to justify respondents’ allegations that petitionerhad contravened the provisions of Section 259SS of the Act. Since thenotice under section 148 of the Act is issued only where there is income thathas escaped assessment, notice as impugned in the petition could not havebeen issued. If respondents felt that they have information that petitionerhad taken cash loan of Rs.16,30,000/- and there has been contravention ofthe provisions under Section 269SS of the Act and petitioner was liable topenalty under Section 271D of the Act for failure to comply, thenrespondents could have commenced action or proceedings towardsimposition of penalty under Section 271D of the Act. Once respondentproceeds on the basis that petitioner had accepted cash loan of Rs.16,30,000/- that loan could never be considered as income and thereforethere cannot be any escapement of income of the loan amount ofRs.16,30,000/-. 4.In the circumstances, without making any observations as towhether respondents could take any action under Section 271D of the Act or whether respondents are right in the allegations against petitioner ofborrowing cash loan in the sum of Rs.16,30,000/-, only on the jurisdictionalissue under Section 148 of the Act, we are allowing the petition in terms ofprayer clause – (a) which read as under : (a) That this Hon’ble Court may be pleased to issue underArticle 226 of the Constitution of India an appropriate direction,order or a writ, including a writ in the nature of ‘Certiorari’,calling for the records of the case and, after satisfying itself as tothe legality thereof, quash and set aside the Notice u/s 148 dated28.03.2019, Ex. “B” herein, the order disposing objections dated05.11.2019, Ex. “H” herein and the ex-parte assessment orderdated 04.12.2019 Ex. “J” herein passed by the Respondent; 5.Mr. Walve states that respondent should be permitted to takeaction under Section 271D of the Act. It is open to respondent to take suchaction as adviced in accordance with law. We are not making any observations on the merits of the case. 6.Petition disposed. (R.N. LADDHA, J.) (K.R. SHRIRAM, J.)