Wp/2685/2007 Of Bang Securities Pvt. Ltd v. The Assistant Commissioner Of Income Tax Central Circle 41 Mumbai And 2 Ors

Digitallysigned byMEERAMEERAMAHESHMAHESHJADHAVJADHAVDate:2021.12.1511:08:41+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONWRIT PETITION NO.2685 OF 2007 Bang Securities Pvt. Ltd. ….Petitioner V/s.The Assistant Commissioner of IncomeTax Central Circle-41 & Ors. …Respondents ---- Mr.J. D. Mistri, Senior Advocate a/w Mr. Madhur Agrawal i/b Mr. Atul K. Jasani for PetitionerMr. Suresh Kumar for Respondents ---- CORAM : K.R. SHRIRAM &AMIT B. BORKAR, JJ DATED : 10th DECEMBER 2021 P.C. : 1Petitioner received a notice dated 30[th] March 2007 from respondentno.1 under Section 148 of the Income Tax Act, 1961 (the Act), seeking toreopen the assessment for the A.Y.-2000-2001 followed by two notices dated20[th] November 2007 and 13[th] December 2007 under Section 142(1) and143(2), respectively. Thereafter, an order dated 12[th] December 2007rejecting petitioner’s objections to reopen for A.Y.-2000-2001 came to bepassed. These three notices and the order are impugned in this petition.2Section 147 of the Act which provides for re-opening of assessment, inthe proviso makes it clear that where an assessment has been made underSection 143(3), no action shall be taken under Section 147 after expiry of 4years from the end of the relevant assessment year unless the income of theassessee chargeable to tax has escaped assessment by reason of the failureon part of the assessee to make a return under Section 139 or in response to a notice issued under Section 142 or Section 148 or to disclose fully andtruly all material facts necessary for his assessment for that assessment year.In the case of petitioner, the assessment was completed under Section143(3) of the Act on 31[st] March 2003. The proposed re-opening indisputablyis after expiry of 4 years from end of assessment year. We have consideredthe reasons recorded for re-opening and issuance of notice under Section148 and in our view, it does not make out any case of petitioner failing todisclose fully and truly all material facts necessary for its assessment for thatyear. In fact, there is not even an allegation that there has been a failure onthe part of petitioner. 3Mr. Suresh Kumar relied upon a judgment of this Court in CromptonGreaves Ltd. V/s. Assistant Commissioner of Income Tax, Circle 6 (2)1 tosubmit that even if the reason for reopening does not specifically state thatthere was any failure on the part of petitioner to disclose fully and truly allmaterial facts necessary for its assessment for the relevant assessment year,it will not be fatal to the assumption of jurisdiction under Sections 147 and148 of the Act. We would certainly agree with Mr. Suresh Kumar but as heldin Crompton Greaves Ltd. (Supra), this is subject to the rider that there mustbe cogent and clear indication in the reasons supplied, that in fact there wasfailure on the part of the assessee to disclose fully and truly all the materialfacts necessary for its assessment. If the factum of failure to disclose can beculled down from the reasons in support of the notice seeking to reopen 1 (2015) 55 Taxmann.com 59 (Bombay) assessment, that will certainly not be fatal to the assumption of jurisdictionunder Sections 147 and 148 of the Act. The Court held “However, if fromthe reasons, no case of failure to disclose is made out, then certainly theassumption of jurisdiction under Sections 147 and 148 of the Act would beultra vires, being in excess of the jurisdictional restraints imposed by thefirst proviso to Section 147 of the Act”. 1 (2015) 55 Taxmann.com 59 (Bombay) assessment, that will certainly not be fatal to the assumption of jurisdictionunder Sections 147 and 148 of the Act. The Court held “However, if fromthe reasons, no case of failure to disclose is made out, then certainly theassumption of jurisdiction under Sections 147 and 148 of the Act would beultra vires, being in excess of the jurisdictional restraints imposed by thefirst proviso to Section 147 of the Act”. 4The point that emerges from the reasons recorded for re-openingpetitioner’s assessment concerns transactions of two clients of petitionernamely: Parth Investment Consultants Pvt Ltd. (Parth) and Devki Finance &Trading Pvt Ltd. (Devki). Both these had effected share transactions throughpetitioner and these transactions were also recorded in the books of accountof Parth and Devki, which were found during search related proceedings.Ofcourse, both Parth and Devki have subsequently denied these transactionsas theirs and contended that these were petitioner’s transactions. In thereasons recorded, the Assessing Officer has cited more particularly from theassessments of Parth and Devki and has made it the basis for re-opening.Therefore, as respondents have not crossed the threshold for re-openingafter a period of 4 years, i.e., discharge the onus of proving failure todisclose fully and truly all material facts for petitioner’s assessment, thenotice dated 30[th] March 2007 issued under Section 148 of the Act, has to beset aside on this ground alone. 5In the reasons, it is recorded that in the case of Parth it is noted thatan addition of Rs.50,31,450/- has been made by Assessing Officer on account of speculation profit earned for A.Y.-2000-2001. In the reasons, it isalso mentioned that in the case of Devki the Assessing Officer has added asum of Rs.17,77,500/- on account of profit from share trading for A.Y.-2000-2001 and added Rs.3,37,17,358/- for A.Y.-2001-2002 in the case ofDevki on account of credit entry treated as income under Section 68 of theAct. Once these amounts have been added as income of Parth and Devki,certainly that cannot be a reason to conclude that any income chargeable totax has escaped the assessment for the same assessment years in the handsof another party, i.e, petitioner. 6It appears from the reasons that the Assessing Officer has decided toreopen petitioner’s case for A.Y.-2000-2001 under Section 148 of the Actbecause of retraction by Parth and Devki and before passing a blockassessment order in the case of petitioner for the period 1[st] April 1991 to23[rd] March 2001 on 26[th] September 2003. In the case of assessment of Parthand Devki, the Assessing Officer has recorded their retraction and dismissedthose retractions as after thought because the transactions were recorded byParth and Devki in their own books of account but they did not book thesame into account while computing the profit. Where on consideration ofmaterial on record, one view conclusively is taken by the Assessing Officer, itwould not be open to re-open the assessment based on very same materialwith a view to take another view. In our view, this is a case where theassessment is sought to be re-opened on account of change of opinion of theAssessing Officer. There is no new material to which reference is to be found and the entire basis for re-opening the assessment is the materialwhich was available before the Assessing Officer in the course of assessmentproceedings of petitioner, Parth and Devki and respondent no.1 is thecommon Assessing Officer. In this case, it cannot be postulated that thecondition precedent to the re-opening of the assessment beyond a period of 4 years has been fulfilled. 7In the circumstances, petition is allowed in terms of prayer clause (a) which reads as under: found and the entire basis for re-opening the assessment is the materialwhich was available before the Assessing Officer in the course of assessmentproceedings of petitioner, Parth and Devki and respondent no.1 is thecommon Assessing Officer. In this case, it cannot be postulated that thecondition precedent to the re-opening of the assessment beyond a period of 4 years has been fulfilled. 7In the circumstances, petition is allowed in terms of prayer clause (a) which reads as under: “(a) This Hon’ble Court may be pleased to issue a writ of certiorari ora writ in the nature of certiorari or any other appropriate writ, orderor direction under Article 226 of the Constitution of India calling forthe records of the Petitioner’s case and after examining the legalityand validity thereof quash and set aside the notice dated 30[th] March2007 issued by Respondent no.1 under Section 148 of the Act seekingto reopen the assessment for the assessment year 2000-01 and thetwo notices, dated 20[th] November 2007 and 13[th] December 2007,issued by Respondent no.1 under Sections 142(1) and 143(2)respectively and the order dated 12[th] December 2007.” 8Petition disposed with no order as to costs. (AMIT B. BORKAR, J) (K.R. SHRIRAM, J.)