Wp/2102/2022 Of D K Realty India Private Limited v. Asstt. Commissioner Of Income-Tax, Circle 1(3)(1), Mumbai, R

tIN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 2102 OF 2022 Digitallysigned bySHRADDHASHRADDHAKAMLESHKAMLESHTALEKARD.K. Realty India Private Limited,TALEKARDate:2023.02.158 Abhishek Building, Dalia Industrial Estate,19:45:19+0530Andheri Link Road, Andheri West,Andheri (E), Mumbai 400 0058, MaharashtraPAN : AAECD4308D … Petitioner Versus 1. Asstt. Commissioner of Income-tax,Circle 1(3)(1), Mumbai,R.No. 540, 5[th] Floor,Aayakar Bhavan, M.K. Road, Mumbai – 400 020. 2. The National Faceless Assessment Centre, E Ramp, Jawaharlal Nehru Stadium,Delhi 110 003. 3. Union of India, through the Secretary, Department of Revenue,Ministry of Finance,North Block, New Delhi – 110 001.…Respondents ***** Dr.K. Shivram, Senior Advocate with Mr.Rahul K. Hakani &Mr.Shashi A. Bekal, Advocate for petitioner. Mr.Akhileshwar Sharma with Mr.Vikas T. Khanchandani,Advocate for respondents. CORAM : DHIRAJ SINGH THAKUR &VALMIKI SA MENEZES, JJ. PRONOUNCED ON :15[th] FEBRUARY, 2023. : J U D G M E N T : PER DHIRAJ SINGH THAKUR, J. 1.The petitioner challenges the notice dated 30[th] March 2021issued under section 148 of the Income Tax Act, 1961 (‘the Act’)which sought to reopen the petitioner’s assessment for theassessment year 2017-18 on the ground that income had escapedassessment within the meaning of section 147 of the Act. 2.The reasons for reopening are as under : 1. The assessee company had fled its return ofincome for A.Y. 2017-18 on 30.10.17 declaring lossof (-)Rs.3,69,85,637/-. The case was selected forscrutiny and the assessment was completed u/s143(3) of the Act on 29.12.2019 assessing loss ofassessee at (-) Rs.59,95,891/-. 2. In this case, an information was received fromthe offce from offce of Deputy Director of IncomeTax (Investigation) Unit 6(3), Mumbai dated23.06.2017, that in the search action (u/s.132/133A) in the case of M/s. Dyaneshwari MultiState Urban Cooperative Credit Society Limited(PAN : ), it was discovered byInvestigation wing that during F.Y. 2015-16 & F.Y.2016-17, the assessee M/s. D.K. Realty haddeposited Rs.9,65,50,000/- (Rs.7,50,00,000/- inF.Y. 2015-16 & Rs.2,15,50,000/- in F.Y. 2016-17) inthe said Credit society and on summons issuedu/s. 131 of the Income Tax Act to the Assessee, ithad stated that the funds deposited to M/s.Dyaneshwari Multi State Urban Credit Society werein nature of advances for business purpose. Theinvestigation wing after further investigation concluded that the society’s (M/s. Dyaneshwari)records and those of persons managing andevidences seized/impounded during searchproceedings clearly establish the fact that M/s.Dyaneshwari has only been used as a conduit ofconversion of cash into RTGS and vice versa. M/s.Dyaneshwari did not engage in any kind of actualbusiness activity, nor has it engaged in any kind ofsale/purchase business activity, the entity M/s.D.K. Realty was also not able to produce any kindof supporting evidences to provide as to what wasthe business activity for which it provided advancesto Rs.9.65 crore to M/s. Dyaneshwari Multi StateUrban Credit Society. In view of the above facts, and since theassessee company has clearly been unable toexplain/substantiate the impugned transaction, itcan be concluded that the amount ofRs.2,15,50,000/-representsnothingbutunexplained sum and needs to be brought to taxaccordingly. 3Hence, it is clear that there is failure on thepart of the assessee to disclose fully and truly allmaterial facts necessary for the assessment for theyear in question within the meaning of First provisoto section 147(1) of the Act. In view of the above facts, and since theassessee company has clearly been unable toexplain/substantiate the impugned transaction, itcan be concluded that the amount ofRs.2,15,50,000/-representsnothingbutunexplained sum and needs to be brought to taxaccordingly. 3Hence, it is clear that there is failure on thepart of the assessee to disclose fully and truly allmaterial facts necessary for the assessment for theyear in question within the meaning of First provisoto section 147(1) of the Act. 4In view of the above, I have reason to believethat income chargeable to tax to the tune ofRs.2,15,50,000/- has escaped assessment withinthe meaning of section 147 of the Act for the A.Y.2017-18. It is, therefore, proposed to issue noticeunder section 148 of the Income-tax Act, 1961 forA.Y. 2017-18 to reassess such income and also anyother income chargeable to tax which has escapedassessment and which may come to noticesubsequently in the course of proceedings underthis section. 3.Learned counsel for the petitioner urged that the reopening of the assessment was nothing but a change of opinion which amounts to a review of the order of assessment which hasrepeatedly been held to be impermissible. Reliance in this regardhas been placed on the judgment of the Delhi High Court in thecase of Commissioner of Income-tax Vs. Kelvinator of India Ltd. [1]. 4.It was urged that the basis for reopening as seen from thereasons recorded is the fact that the petitioner had deposited anamount of Rs.2,15,50,000/- in the fnancial year 2016-17 whichhad been brought to light by the Investigation Wing of thedepartment. It is stated that the said issue was specifcally goneinto by the Assessing Offcer (‘AO’) during the scrutiny assessmentproceedings. Reference in this regard was made to the notice,dated 17[th] November 2019 issued under section 142(1) of the Act,whereby, the petitioner had been asked to furnish the details in the following manner : “1. In a search action u/s. 132/133A of the ITAct in case of M/s. Dyaneshwari Multi StateUrban Cooperative Credit Society Ltd. on07.04.2017, it was found that an amount ofRs.9,65,50,000/- was received by Dyaneshwarifrom your Company on various dates(Rs.7,50,00,000/- in A.Y. 2016-17 andRs.2,15,50,000/- in A.Y. 2017-18). Please explainfor what purpose the said payment was made andexplain sources of the same payment made to M/s. Dyaneshwari Multi State Urban CooperativeCredit Society Ltd. with documentary evidencesi.e. bank statements and when the said amount was returned back to you. Please furnish theledger account for the same.……..” 5.This notice was replied by virtue of communications, dated20[th] December 2019 and 27[th] December 2019. Finally, the order ofassessment under section 143(3) was passed on 29[th] December2019. It was urged that the queries having been raised and theissue considered in the light of the submissions made, as also theorder of assessment having been passed under section 143(3), thereassessment proceedings sought to be initiated ,would be a clearcase of change of opinion, and would not satisfy the jurisdictionalcondition for the reopening under section 147 of the Act. 6.Admittedly, the assessment is sought to be reopened withina period of four years from the end of the relevant assessmentyear 2016-17, and therefore, it would not be necessary for the AOto establish that there had been any failure on the part of theassessee to furnish material facts fully and truly. However,notwithstanding the above requirement which is to operateadditionally for a reopening beyond the period of four years, theAO had to have ‘reason to believe’ that income chargeable to taxhad escaped assessment. 6.Admittedly, the assessment is sought to be reopened withina period of four years from the end of the relevant assessmentyear 2016-17, and therefore, it would not be necessary for the AOto establish that there had been any failure on the part of theassessee to furnish material facts fully and truly. However,notwithstanding the above requirement which is to operateadditionally for a reopening beyond the period of four years, theAO had to have ‘reason to believe’ that income chargeable to taxhad escaped assessment. 7.It is no longer res-integra that once during the course ofassessment proceedings, a query was raised and replied, it will bepresumed that the issue was the subject matter for considerationduring the said assessment proceedings notwithstanding the factthat there is no specifc mention of that particular issue inspecifc words in the order of assessment. An order of assessmentunder section 143(3) having been passed must be deemed to havebeen passed after considering all material facts in regard to thequeries raised which stood duly answered in terms of thejudgment of the Full Bench decision of Delhi High Court inCommissioner of Income-tax Vs. Kelvinator of India Ltd.[2]. In thesaid judgment, the Full Bench of Delhi High Court held : “We also cannot accept submission of Mr.Jolly to the effect that only because in theassessment order, detailed reasons have not beenrecorded on analysis of the materials on therecord by itself may justify the Assessing Offcerto initiate a proceeding under section 147 of theAct. The said submission is fallacious. An orderof assessment can be passed either in terms ofsub-section (1) of Section 143 or Sub-section (3)of Section 143. When a regular order ofassessment is passed in terms of the said sub-section (3) of section 143 a presumption can beraised that such an order has been passed onapplication of mind. It is well known that apresumption can also be raised to the effect thatin terms of clause (e) of section 114 of the Indian 2[2002] 123 Taxman 433 (Delhi) Evidence Act the judicial and offcial acts havebeen regularly performed. If it be held that anorder which has been passed purportedlywithout anything further, the same wouldamount to giving premium to an authorityexercising quasi- judicial function to take beneftof its own wrong.” 8.The Apex Court in Commissioner of Income Tax V/s. Kelvinator of India Ltd.[3] held that there was a difference between‘power to review’ and ‘power to reassess’ under section 147 andthat the AO had no power to review and that, if the concept of‘change of opinion’ was removed, then, in the garb of reopening of the assessment, a review would take place. It was held : “ ….The Assessing Offcer has no power to review; hehas the power to reassess. But reassessment has tobe based on fulfllment of certain precondition and ifthe concept of “change of opinion” is removed, ascontended on behalf of the Department, then, in thegarb of re-opening the assessment, review would takeplace. One must treat the concept of “change ofopinion” as an in-built test to check abuse of powerby the Assessing Offcer. Hence, after 1-4-1989,Assessing Offcer has power to reopen, provided thereis “tangible material” to come to the conclusion thatthere is escapement of income from assessment.Reasons must have a live link with the formation ofthe belief.” 9.Admittedly, between the date of the orders of assessment sought to be reopened and the date of forming of opinion by the Income-tax Offcer nothing new has happened. There is no change3[2010] 320 ITR 561 (SC) 9.Admittedly, between the date of the orders of assessment sought to be reopened and the date of forming of opinion by the Income-tax Offcer nothing new has happened. There is no change3[2010] 320 ITR 561 (SC) of law. No new material has come on record. No information hasbeen received. It is merely a fresh application of mind by the sameAssessing Offcer to the same set of facts. Testing the facts of thepresent case on the touchstone of the judgments referredhereinabove, it is thus clear that the basis for reopening remainsthe same which was otherwise the subject matter of scrutiny bythe AO during the scrutiny assessment proceedings leading topassing of the order under section 143(3) of the Act. 10.We are, therefore, of the opinion that the present case isnothing but a change of opinion which does not satisfy thejurisdictional requirement under section 147 of the Act. Theimpugned notice under section 148 dated 30[th] March 2021 andthe impugned order rejecting the objections dated 16[th] March2022 as also the draft assessment order dated 21[st] March 2022are quashed. 11.The petition is allowed in the aforementioned terms. Noorder as to costs. [ VALMIKI SA MENEZES, J. ] [DHIRAJ SINGH THAKUR, J.]