Wp/3134/2019 Of Triumph Hospitals Private Limited v. The Income Tax Officer, Ward 8 (3) (2) And 2 Ors

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 3134 OF 2019 Triumph Hospitals Private Limited V/s. The Income Tax Officer Ward8(3)(2) and Ors. ….Petitioner …Respondents ---- Mr. Shreehari Iyer a/w Mr. Upendra Lokegaonkar i/b Mint and Confreres forPetitioner.Mr. Suresh Kumar for Respondents. ---- CORAM : K.R. SHRIRAM & N. J. JAMADAR, JJ. DATED : 11[th] JANUARY, 2022 P.C. : 1.Petitioner is impugning the notice dated 31[st] March, 2019 issued under Section 148 of the Income Tax Act, 1961 (the Act) for theAssessment Year 2012-13 and order dated 18[th] October, 2019 rejecting theobjections raised by petitioner against the re-assessment proceedings. 2. Petitioner had filed return of income on 28[th] September, 2012 declaring total income of Rs.5,21,560/-. The case was selected for scrutinyand the assessment order was passed under Section 143(3) of the Act on23[rd] March, 2015 assessing total income of Rs.6,22,430/- 3.It is recorded that petitioner had claimed total interestexpenditure of Rs.83,73,815/-. The same has been noted even in the assessment order dated 23[rd] March, 2015 (not 23[rd] March, 2013) whilediscussing the disallowance under Section 14A of the Act. The AssessingOfficer after considering all documents and legal provisions, in paragraph no.11 of the assessment order has concluded as under : 11.However, as the assessee has incurred total expenses ofRs.83,73,815/- in the Profit & Loss a/c. for this year, followingthe above well settled judicial Decisions referred above, thisexpenditure of Rs.98,753/-, is held as reasonable expenses forthe purpose of section 14A and the working under Rule 8D atRs.98,753/- is restricted to that amount of total expensesclaimed in the P & L A/c. 4. 4.If one consider the reasons for re-opening, the entire basis ofalleged escapement of income are the Record and Proceedings availablewith the Assessment Officer that were filed and considered by the AssessingOfficer who passed the original assessment order. According toJurisdictional Assessing Officer (JAO) from the amount of Rs.83,73,815/-claimed by the assessee as interest expenditure, a sum of Rs.40,78,048/-was made by petitioner under Section 36(1)(iii) of the Act which was notpermissible and since that claim has not been disallowed at the time oforiginal assessment, there is escapement of assessment of said income.Therefore, one thing is very clear is that this claim was made by theassessee, i.e., petitioner, which has been considered by the original AssessingOfficer but the JAO on change of opinion feels that interest expenditureamounting to Rs.40,78,048/- under Section 36(1)(iii) of the Act shouldhave been disallowed at the time of original assessment. There are manyjudgments of this court and the Hon’ble Apex Court and many other High Courts which bars re-opening of assessment on the basis of change ofopinion. 5.This is a case where proposed re-opening is after the expiry offour years from the relevant assessment year and the assessment underSection 143(3) of the Act has also been completed. Therefore, proviso toSection 147 of the Act would apply. As per proviso to Section 147 of theAct, as it was then in force, there is bar on re-opening of assessment after aperiod of four years where assessment under Section 143(3) of the Act hasbeen completed unless the respondents are able to show that theescapement of income was due to failure on the part of the assessee to trulyand fully disclose material facts required for assessment. Having consideredthe reasons, we do not find that there was any material fact which was notdisclosed while the assessment proceedings were on. As noted earlier, thispoint has been discussed in the assessment order and the Assessing Officerhad allowed petitioner’s claim for interest expenditure except a sum ofRs.98,753/-. 6.Simply using the expression “because of failure on the part ofthe assessee to fully and truly disclosed all material fact etc., would not helprespondents because it is quite obvious that these expressions have beenused only to overcome the restrictions in the proviso to Section 147 of theAct. 7.In our view, petition has to be allowed and the same is allowed in terms of prayer clause – (a) which reads as under : (a) this Hon’ble Court may be pleased to issue a Writ ofCertiorari or a writ in the nature of Certiorari or any otherappropriate writ, order or direction under Article 226 of theConstitution of India calling for the records of the Petitioner’scase and after examining the legality and validity thereofquash and set aside the notice dated 31[st] March, 2019 Ex. ‘G’issued under section 148 of the Act to reopen the assessmentfor the assessment year 2012-2013 together with the orderdated 18[th] October, 2019 Exh. ‘K’ dealing with the Petitioner’sobjections; 8.Petition disposed with no order as to costs. (N. J. JAMADAR, J.) (K.R. SHRIRAM, J.)