V/S.income Tax Officer Ward 4(3)(1) & Anr v. Amit B. Borkar, Jj

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.3581 OF 2021 Sharvah Multitrade Company Private Limited ….Petitioner V/s.Income Tax Officer Ward 4(3)(1) & Anr. ….Respondents ---- Mr. Rohan Deshpande i/b. Ms. Farzeen Khambatta for petitioner.Mr. Sham V. Walve for respondents. ---- CORAM : K.R. SHRIRAM & AMIT B. BORKAR, JJ. DATED : 20[th] DECEMBER 2021 P.C. : 1Petitioner is impugning a notice dated 31[st] March 2021 issuedunder Section 148 of the Income Tax Act, 1961 (the said Act) and order onobjections dated 23[rd] July 2021. 2Petitioner has raised various grounds but the primary ground istotal non application of mind while issuing the notice under Section 148 ofthe said Act and even while passing the order on objections. We would addthat there has been total non application of mind even while filing theaffidavit in reply to the petition by the same officer – Mr. ShailendraDamodar Suryavanshi, Income Tax Officer, Ward 4(3)(1), Mumbai. Perhapsthis officer does not know the meaning of the words "application of mind"because he seems to be using this expression without applying his mind. Thenotice has been issued under Section 148 of the said Act on 31[st] March 2021for Assessment Year 2015-2016. The assessment had been completed under Section 143(3) of the said Act on 28[th] September 2017. Therefore, provisoto Section 147 of the said Act shall apply and respondents will have to makeout a case of failure on the part of petitioner to truly and fully disclosematerial facts. 3In the reasons recorded for reopening, respondents miserablyfail in this primary obligation. Moreover, the reasons indicate total nonapplication of mind in as much as in the tabular form, it is stated thatSharvah Multitrade Company Private Limited for F.Y. 2014-15 had been abeneficiary through fund trail of Rs.3.72 Crores. Then again, it is mentionedthat the above mentioned bogus entities managed, controlled and operatedby M/s. Sharvah Multitrade Company Private Limited for providing bogusaccommodation entries, hence, all the transactions entered into between theabove mentioned entities and the assessee/beneficiary are bogusaccommodation entries in nature. What perplexes us as much as theassessee was perplexed is how can a company provide bogus entry to itself.Sharvah Multitrade Company Private Limited is alleged to be a beneficiaryidentified through fund trail and its PAN number is shown to beAAQCS2595H. Petitioner, who is the assessee, is also Sharvah MultitradeCompany Private Limited and its PAN number is . Therefore,this clearly shows total non application of mind by the Assessing OfficerMr. Suryavanshi. His statement in the reasons “…………… and after carefulapplication of mind ……..” is risible. There is total non application of mind. 4In the affidavit in reply, the same Mr. Suryavanshi states “asAnnexure – 2 is the copy of the approval u/s 151 of the Act”. There is noannexure – 1 mentioned anywhere. Moreover, in the affidavit filed in theCourt, even this annexure is missing. This further displays total nonapplication of mind by this officer. 5Mr. Walve tendered a copy of the approval under Section 151 ofthe said Act which he had in his file where it says “In view of reasonsrecorded, I am satisfied that it is a fit case to issue notice u/s. 148 ”. Thishas been signed by PCIT, Mumbai one Anil Kumar. If this PCIT only read thereasons recorded, he would have raised a query how can an entity providebogus entry to itself. That shows total non application of mind by the saidMr. Anil Kumar as well. We have to also note that in the format for approvalunder Section 151 of the said Act, one Vijay Kumar Soni, Range 4(3),Mumbai, has recommended grant of approval. That shows non applicationof mind even by this Vijay Kumar Soni. We wonder whether the officers ofrespondents ever bother to read the papers before writing the reasons orrecommending for approval or while granting approval. 6We must also note that in the objections filed by petitioner videits letter dated 10[th] May 2021 to the notice issued under Section 148 of thesaid Act, petitioner have raised these points and also alleged lack ofapplication of mind. The said Mr. Suryavanshi while rejecting the objections,by an order dated 23[rd] July 2021, first of all makes a false statement that “the assessee’s above submissions and objections have been carefullyconsidered and the same are dealt with as under ” but he does not deal withthe objection of the assessee of lack of application of mind. We have to alsonote that the said Mr. Suryavanshi is totally silent about the objectionsraised on non application of mind. In the affidavit in reply, at paragraph 9he says it was a typographical error and inadvertent mistake because in thecase information received in insight portal on 27[th] March 2021, only firstpage was displayed. Even if we accept what he says for a moment, stillanyone reading the reason would realise that it defies sensibility that howthe company will provide bogus entry to itself. Even otherwise this Mr.Suryavanshi had an opportunity to correct the error when he passed theorder on objections but he chose to skirt the issue and he went on to say inhis affidavit in reply that the objection was duly dealt with by issuing aletter dated 23[rd] July 2021. In our view, it has not been duly dealt withbecause this Mr. Suryavanshi had an obligation to deal with the objectionsraised by petitioner in their objections to reopening. In our view, all thesegrounds require us to allow the petition in terms of prayer clause – (a),which we hereby do. Prayer clause – (a) reads as under : (a) Declare that the Impugned Notice u/s 148 ofthe Act dated March 31, 2021 (Exhibit A) and theImpugned Order on objections dated July 23, 2021(Exhibit B) and the impugned reassessmentproceedings for AY 2015-16 are wholly withoutjurisdiction, illegal, arbitrary, and liable to bequashed. the Act dated March 31, 2021 (Exhibit A) and theImpugned Order on objections dated July 23, 2021(Exhibit B) and the impugned reassessmentproceedings for AY 2015-16 are wholly withoutjurisdiction, illegal, arbitrary, and liable to bequashed. 7Petition disposed. 8 8A copy of this order be placed before the Principal ChiefCommissioner of Income Tax, Mumbai for information and necessary action.A copy of this order also be sent to Mr. Shailendra Damodar Suryavanshi sothat he would be careful in future. A copy of this order be also sent to theChairman, CBDT, who may perhaps formulate a scheme whereby theofficers are trained how to apply their mind and what all points should bekept in mind while recording the reasons. The Chairman, CBDT may alsoadvise the concerned Commissioners not to grant approval under Section151 of the said Act mechanically but after considering the reasons carefullyand scrutinizing the same. (AMIT B. BORKAR, J.) (K.R. SHRIRAM, J.)