Wp/2435/2022 Of A And J Associates And Anr v. The Assistant Commissioner Of Income Tax Circle 23(1) Mumbai And 3 Ors

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONWRIT PETITION NO. 2435 of 2022. … Mr. Jitendra Jain a/w. Mr. Ansh Agal i/by PDS Legal for thepetitioners. Mr. Akhileshwar Sharma a/w. Ms. Shilpa Goel for the respondents.… CORAM : DHIRAJ SINGH THAKUR AND KAMAL KHATA, JJ. : 1ST MARCH 2023. RESERVED ON PRONOUNCED ON : 4TH MAY 2023. J U D G M E N T [PER: KAMAL KHATA, J.] 1.This Petition under Article 226 challenges notice undersection 148 of the Income-tax Act, 1961 (‘Act’) dated 19[th] March2021 issued by Respondent No.1 proposing to reassess the incomefor the assessment year (‘AY’) 2015-16 and the order dated 16[th]March 2022, rejecting the objections raised by Petitioner to theproposed action of reopening. 2.The reasons for opening are as under: “1. Brief details of the assessee- The assessee filed itsreturn of income on 30.09.2015 for A.Y. 2015-16declaring income at Rs. 11,59,34,180/- and the same wasassessed u/s 143(3) on 19/12/2017 determining totalincome at Rs.12,07,27,060/-. 2. Brief details of information received by the AO-Onperusal of assessment records it was observed thatassessee sold office premises i.e., 302, 3[rd] Floor, building no.19, A-Wing, Pinnacle corporate Pane, BKC, BandraEast, Mumbai-400051 for a consideration ofRs.14,00,00,000/- on 02.05.2014. The assessee claimedto have purchased commercial premisesi.e., 101, 1[st]Floor, Dev Plaza, Andheri (W), Mumbai-58 for a totalconsideration of Rs.23,29,19,898/- on 31.03.2015. It wascontended that since neither the WDV of the block ofassets “Building” become Nil/Negative and there weresome assets in the said block, hence, there were no capitalgain arising u/s 45 of the act. However, it is noticed from the copy of agreement for saledated 31.03.2015 for the purchase of office premises No.101 at Dev Plaza that the agreement for sale wasregistered with the office of the Registrar only on04.04.2015. Also, out of the total consideration of Rs.22,05,00,000/- Only part payment was paid to thevendor of the property till the execution of the saidagreement. 3. Analysis of information received-The assessee wasonly allowed permission to enter the said unit on specificrequest for carrying out. Fitments and refurbishing only.Hence, the said property was not in possession of theassessee as on 31.03.2015, which is also evident frompara 2 and para 11 of the agreement. Since the assesseecannot claim that it has property as on 31.03.2015, theassessee cannot claim that it has completed partperformance of the contract as stipulated under theprovision of section 53A of the transfer of property act. Itis also pertinent to mention here that, in response tonotice u/s. 133(6) of the Act, Shri. Vijay Thakkar, thevendor of the impugned property, submitted that he hadreceived Rs.20,50,00,000/- as an advance from theassessee and the property was sold in A.Y. 2016-17.Thus, the impugned transaction reached finality on04.04.2015 and not as on 31.03.2015 as the sameproperty could not be shown as an asset in the balancesheet of the vendor as well as the assessee as on31.03.2015. Therefore, it is not correct on the part of theassessee to show the new property purchased in thebalance sheet as on 31.03.2015. Since the property wasnot in the possession of the assessee as on 31.03.2015, inthe assessment order the amount of profit on sale of the-property should be taxed as ShortTerm Capital Gain.4. Basic of forming reason to believe and details ofescapement of income- In view of the above specificinformation, I have reason to believe and am satisfiedthat amount of Rs. 4,65,87,479/- has escaped assessmentin the hands of the assessee for A.Y. 2015-16. Therefore,assessment proceedings are required to be re-opened u/s 147 of the Income-tax Act, 1961 to bring the incomeescaping assessment to tax for the above said assessmentyear. 5. Applicability of the provisions of section 147/151 ofthe Fact of the case-The case of the assessee for A.Y.2015-16 needs to be re-opened u/s 147 of the Income TaxAct, 1961 to bring to tax the escaped income. More thanfour years but not more than 6 years have lapsed fromthe end of assessment year under consideration. Hence,the good self is requested to kindly accord necessary ap-proval in this case to issue notice u/s 148 for AY 2015-16.6. Put up for kind perusal and approval please.” 3.The issues before the ITAT as seen from the Order of the ITAT dated 11[th] January 2022 are as under: “11. Considered the rival submissions andmaterial placed on record, we observed fromthe record that Ld. Pr.CIT set aside theAssessment Order by invoking three issueswhich are as under:-“i) Purchase of commercial property atAndherivide agreement dated 31[st] March 2015registered on 4[th] April 2015 cannot be added tothe block of asset and therefore u/s 50, the saleof offce premises at Bandra which forms partof the block would result into capital gain.ii) Income received on which no TDS isdeducted.iii) Genuineness of business promotionexpenses.” 4.An examination and comparison of the reasons recorded in notice dated 19[th] March 2021 and the order dated 11[th] January2022 of the ITAT indicates that they are the same only put indifferent words. The examination of the records indicates that the4/7 objections to the notice were filed on 10[th] January 2022 i.e., a dayprior to the order of the ITAT on 11[th] January 2022 andconsequently it only contained an averment that the Appeal waspending. The ruling on objections rejecting them, by the impugnedorder dated 16[th] March 2022 does not consider the ITAT order infavour of the Petitioner. 5.The criteria for reopening of assessment after a period offour years are no longer res integra in view of the judgement ofthis Court in the case of Ananta Landmark P. Ltd v Dy. CITwherein this Court held that where assessment was not sought tobe reopened on the ‘reasonable belief’ that income had escapedassessment on account of failure of assessee to disclose truly andfully all material facts that were necessary for computation ofincome but was a case wherein assessment was sought to bereopened on account of change of opinion of AO the reopening wasnot justified. It is also held that where primary facts necessary forassessment are fully and truly disclosed the AO is not entitled toreopen the assessment on a change of opinion. It is held that whileconsidering the material on record, one view is conclusively takenby AO, it would not be open for the AO to reopen the assessmentbased on the very same material and take another view. 6.In the present case, the Respondent No. 1 has relied uponthe same information available from the assessment records therewas no new tangible material available on record to conclude thatincome had escaped assessment. In our view it is clearly a ‘changeof opinion’. Besidesa perusal of the ITAT order dated 11[th]January 2022 evinces that the same contentions are rejected bythe ITAT and have attained finality in favour of the Petitioner. 7.In view of the aforesaid, we are of the view that the AO oughtto have considered the order passed by the ITAT and could notfeign ignorance as late as on 16[th] March 2022 especially when therevenue (respondent/s) was a party to the proceeding. Even thereply filed on 13[th] June 2022 is silent on the effect of the ITATorder. It essentially states that the Petitioner has failed to disclosematerial facts fully and truly in the original assessment. 7.In view of the aforesaid, we are of the view that the AO oughtto have considered the order passed by the ITAT and could notfeign ignorance as late as on 16[th] March 2022 especially when therevenue (respondent/s) was a party to the proceeding. Even thereply filed on 13[th] June 2022 is silent on the effect of the ITATorder. It essentially states that the Petitioner has failed to disclosematerial facts fully and truly in the original assessment. 8.In our view, the Respondents ought to have offered towithdraw the notice and the impugned order at the inception ofthe hearing of the matter which they chose not to do and invitedan order from this Court. The Respondents are also expected tocome with clean hands and be forthright with the Courts, it’s notan obligation solely for the assessee. Be that as it may thePetitioner would be entitled to succeed in this proceeding. 9.We, therefore, pass the following order- i.The impugned notice dated 19[th] March 2021, the order dated 16[th] March 2022, issued by Respondent No.1 for AY 2015-16 are quashed and set aside. ii.Rule made absolute in above terms. (KAMAL KHATA, J.) (DHIRAJ SINGH THAKUR, J.)