Wp/3174/2019 Of Ravi Kanaiyalal Sheth v. Asst Commissioner Of Income Tax Circle 5(3)(1) And 2 Ors

Digitally signedby GAURIGAURIAMITGAEKWADAMITDate:GAEKWAD2021.12.2215:47:48+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.3174 OF 2019 Ravi Kanaiyalal Sheth ….Petitioner V/s.Assistant Commissioner of Income TaxCircle 5(3)(1) & Ors. ….Respondents---- Mr. Atul K. Jasani for petitioner.Mr. Suresh Kumar for respondents. ---- CORAM : K.R. SHRIRAM &AMIT B. BORKAR, JJ. DATED : 20[th] DECEMBER 2021 AMIT B. BORKAR, JJ. P.C. : 1Petitioner is impugning the notice dated 30[th] March 2019 issuedunder Section 148 of the Income Tax Act, 1961 (the said Act) seeking toreopen the assessment for Assessment Year 2012-2013 and the orderrejecting the objections passed on 23[rd] October 2019. 2The reasons for reopening read as under : The assessee has filed return of income declaring income ofRs.5,00,93,727/- and long term capital loss ofRs.2,28,79,325/- on 31.07.2012. Further proceedings u/s.143(3) were completed on 23.03.2015 determining incomeat Rs.5,22,05,840/-. As as per information received, Mr. AviSheth has invested Rs.95.33 Crores, it is not proportional tothe return of income filed by the assessee. In view of thefacts and documents on record coupled with the informationfrom DDIT (Inv)-Unit-6(1), Mumbai, I have reasons tobelieve that income as mentioned above, chargeable to taxhas escaped assessment within the meaning of Section 147 ofthe IT Act as the assessee has failed to disclose fully and trulyall material facts necessary for its assessment in its case. Theapproval under proviso of sec 151(1) is hereby requiredbefore issuance of notice u/s. 148 of the I.T. Act. 3The Assessing Officer has formed a view that there are reasonsto believe escapement of income within the meaning of Section 147 of thesaid Act because “the assessee has filed return of income declaring incomeof Rs.5,00,93,727/- and capital loss of Rs.2,28,79,325/- and proceedingsunder Section 143(3) of the said Act was completed on 23[rd] March 2015determining income at Rs.5,22,05,840/-. But as per information received,petitioner has invested Rs.95.33 Crores which is not proportional to thereturn of income filed by petitioner”. 4As the notice has been issued after the expiry of four years fromthe end of the relevant assessment year, the onus is on respondents to showthat income chargeable to tax has escaped assessment by reason of failureon the part of petitioner to disclose fully and truly all material factsnecessary for his assessment, for that assessment year. \ 5Mr. Suresh Kumar relied upon a judgment of this Court inCrompton Greaves Ltd. V/s. Assistant Commissioner of Income Tax,Circle 6 (2) 4 1 to submit that even if the reason for reopening does notspecifically state that there was any failure on the part of petitioner todisclose fully and truly all material facts necessary for its assessment forthe relevant assessment year, it will not be fatal to the assumption ofjurisdiction under Sections 147 and 148 of the Act. We would certainlyagree with Mr. Suresh Kumar but as held in Crompton Greaves Ltd. 1 . (2015) 55 taxmann.com 59 (Bombay) (Supra), this is subject to the rider that there must be cogent and clearindication in the reasons supplied, that in fact there was failure on thepart of the assessee to disclose fully and truly all the material factsnecessary for its assessment. If the factum of failure to disclose can beculled down from the reasons in support of the notice seeking to reopenassessment, that will certainly not be fatal to the assumption ofjurisdiction under Sections 147 and 148 of the said Act. The Court held“However, if from the reasons, no case of failure to disclose is made out,then certainly the assumption of jurisdiction under Sections 147 and 148of the Act would be ultra vires, being in excess of the jurisdictionalrestraints imposed by the first proviso to Section 147 of the Act”. (Supra), this is subject to the rider that there must be cogent and clearindication in the reasons supplied, that in fact there was failure on thepart of the assessee to disclose fully and truly all the material factsnecessary for its assessment. If the factum of failure to disclose can beculled down from the reasons in support of the notice seeking to reopenassessment, that will certainly not be fatal to the assumption ofjurisdiction under Sections 147 and 148 of the said Act. The Court held“However, if from the reasons, no case of failure to disclose is made out,then certainly the assumption of jurisdiction under Sections 147 and 148of the Act would be ultra vires, being in excess of the jurisdictionalrestraints imposed by the first proviso to Section 147 of the Act”. 6Having considered the reasons, the factum of failure to disclosecannot be culled down from the reasons in support of the notice seeking toreopen the assessment. The entire basis is that the Assessing Officer isunable to understand how a person, whose income is determined atRs.5,22,05,840/-, could have invested Rs.95.33 Crores. The fact is petitionerhas invested much more than Rs.95.33 Crores during the year. The details ofall investments made have been filed by petitioner through his Advocate'sletter dated 20[th] January 2015 full two months before the assessmentproceedings were completed under Section 143(3) of the said Act. Copies ofthese documents have also been provided to respondent in response to the notice to reopen. Mr. Jasani submitted that the documents itself indicatethat the investments were far in excess of Rs.95.33 Crores and the AssessingOfficer, before the original assessment, has considered all the detailsprovided and has thereafter passed the assessment order dated 23[rd] March2015. 7The Assessing Officer had all materials facts before him whenhe made the original assessment. When the primary facts necessary forassessment are fully and truly disclosed, the Assessing Officer is notentitled on change of opinion to commence proceedings forreassessment. Even if the Assessing Officer, who passed the assessmentorder, may have raised too many legal inferences from the facts disclosed,on that account the Assessing Officer, who has decided to reopenassessment, is not competent to reopen assessment proceedings. Whereon consideration of material on record, one view is conclusively taken bythe Assessing Officer, it would not be open to reopen the assessmentbased on the very same material with a view to take another view. 8But from the reasons, it appears that the Assessing Officer isproceeding purely on the basis of suspicion because he is unable tocomprehend how a person, whose income has been assessed atRs.5,22,05,840/-, would have invested Rs.95.33 Crores. An AssessingOfficer is not permitted to make a roving inquiry. We are, therefore, not satisfied that the reasons given by the Assessing Officer make out any caseof failure on the part of petitioner to fully and truly disclosed material facts.Once all the material were placed before the Assessing Officer and he chosenot to mention about all the investments in the assessment order, it couldnot be contended that the Assessing Officer has not applied his mind whilepassing the assessment order. 9 In 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 aWrit of Certiorari or a writ in the nature ofCertiorari or any other appropriate writ, order ordirection under Article 226 of the Constitution ofIndian calling for the records of the petitioner's caseand after examining the legality and validitythereof quash and set aside the notice dated30[th] March 2019 (Exhibit A) issued by respondentsunder Section 148 of the Act seeking to reopen theassessment for the assessment year 2012-13; andorder rejecting objections (Exhibit S) dated23[rd] October 2019. 10 Petition disposed. (AMIT B. BORKAR, J.) (K.R. SHRIRAM, J.)