Wp/3255/2019 Of Anil Gulabdas Shah v. The Assistant Commissioner Of Income Tax Circle 24 (1) And 2 Ors

PURTI IN THE HIGH COURT OF JUDICATURE AT BOMBAYPRASADPARABORDINARY ORIGINAL CIVIL JURISDICTION Digitally signed byPURTI PRASADPARABWRIT PETITION NO. 3255 OF 2019 Date: 2022.04.1215:00:22 +0530ALONGWITHIN PERSON APPLICATION (L) NO. 371 OF 200IN WRIT PETITION NO. 3255 OF 2019 Anil Gulabdas Shah V/s.The Assistant Commissioner ofIncome Tax Circle 24(1) & Ors. ….Petitioner …Respondents ---- Mr. Anil G. Shah, Petitioner in person present.Mr. Akhileshwar Sharma for Respondents-Revenue.Mr. Nishant Thakkar, Amicus Curiae present. ---- CORAM : K.R. SHRIRAM &N. R. BORKAR, JJ. DATED : 6[th] APRIL, 2022 P.C. : 1.Petitioner has impugned notice dated 31[st] March, 2019 issuedunder Section 148 of the Income Tax Act, 1961 (the Act) and the orderdated 12[th] November, 2019 disposing petitioner’s objections to re-open. 2.For the Assessment Year 2012-13 petitioner had filed returns on30[th] August, 2012 declaring total income of Rs.39,87,250/-. The return wasinitially processed under Section 143(1) of the Act and subsequently regularassessment under Section 143(3) of the Act was made on 28[th] March, 2015. 3.Petitioner received a notice dated 31[st] March, 2019 underSection 148 of the Act which is impugned in this petition, where it is stated that there were reasons to believe that petitioner’s income chargeable to taxfor A.Y. 2012-13 has escaped assessment within the meaning of Section 147of the Act. It is also stated that the notice is issued after obtaining necessarysatisfaction of the Principal Commissioner of Income Tax, Mumbai (Pr. CIT).Petitioner has been provided a copy of the approval issued by Pr. CIT underSection 151 of the Act to which is also annexed the reasons recorded for re-opening based on which the approval was granted. Paragraph No.2 of the reasons reads as under : 2. In this case, information was received in this office thatthe assessee is staying at B-1601, Titanium Tower, J.P. Road,Mumbai – 400 053. His old address was 6F, DhanRatna, BWing, 6[th] Floor, Bhardawadi Road, Andheri (W), Mumbai –400 058. The said flat was purchased by him along with hiswife and son viz. Nina A. Shah (PAN ) & SohamA. Shah (PAN ) for a consideration of Rs.2.10Crores. However, from the information received in this officeit is revealed that the assessee had paid Rs.5.21 Crores as aconsideration of the said flat (in FY 2011-12). In a complaintfiled by the assessee with Maharashtra RERA, assessee hashimself mentioned that he had purchased the said flat for aconsideration of Rs.5,21,00,000/- for undone flat (called asKhoka) in January 2012 for cash + cheques includingRs.30,00,000 stamp duty + Registration charges + VAT +Service Tax + Sundry services and Rs.80,00,000/- has beenspent for tiling, kitchen, bathroom, toilets, window frames,glasses, plumbing, electricians, painting etc. Total cost of theflat is mentioned as Rs.6,31,00,000/- for occupation. Hence,it is apparent that income to the extent of Rs.3.11 Crore hasescaped assessment. 4. 4.Therefore, the entire basis why the officer felt that there werereasons to believe that petitioner’s income chargeable to tax for A.Y. 2012-13 has escaped assessment is that in the complaint that petitioner filed withMaharashtra RERA, he has admitted that he had purchased flat for consideration of Rs.5,21,00,000/-, whereas the documents filed with thedepartment only indicates consideration of Rs.2.10 Crores. Therefore, thereis escapement of income to the extent of Rs.3.11 Crores. This is the wholeand sole basis for re-opening the assessment. 4. 4.Therefore, the entire basis why the officer felt that there werereasons to believe that petitioner’s income chargeable to tax for A.Y. 2012-13 has escaped assessment is that in the complaint that petitioner filed withMaharashtra RERA, he has admitted that he had purchased flat for consideration of Rs.5,21,00,000/-, whereas the documents filed with thedepartment only indicates consideration of Rs.2.10 Crores. Therefore, thereis escapement of income to the extent of Rs.3.11 Crores. This is the wholeand sole basis for re-opening the assessment. 5.Petitioner in response to the notice dated 31[st] March, 2019 filedreturns in the prescribed form and also filed his objections on 4[th] July, 2019.In the objections, petitioner has raised various grounds but one of theprincipal ground raised is that the complaint with Maharashtra RERA whichthe Assessing Officer has relied upon was subsequently amended with RERAAuthorities on 7[th] January, 2019. The original complaint with RERAAuthorities is dated 25[th] December, 2018. Petitioner also provided a copy ofthe Maharashtra RERA complaint that was amended on 7[th] January, 2019.In the amended complaint which is even much before the letter dated 12[th]January, 2019, i.e., the complaint the society provided to the Income TaxAuthorities proves that an amount of Rs.2,58,13,351/- has been paid forthe flat and the details of the payments made are also provided there. Inthe order disposing the objections dated 12[th] November, 2019 which is alsoimpugned in the petition, the Assessing Officer admits that he has receivedfrom petitioner the amended copy of the RERA complaint but simply statesthat the authenticity of the said amended copy is not ascertainable andhence this objection of petitioner stands disposed. It is necessary tomention that the objections were filed on 4[th] July, 2019 and the order on objections is passed on 12[th] November, 2019, five months and one weeklater, but still the Assessing Officer states that the authenticity of theamended copy of the RERA complaint was not ascertainable. It will benecessary to mention that in the order on objections or the reasons theAssessing Officer does not state any where how he was satisfied with theauthenticity of the original complaint. We have to note that petitioner hadapplied to the Income Tax Authorities under the Right To Information Act,2005 (RTI Act) to find out the basis of information that Assessing Officerhad received and in the order under Section 7(1) of the RTI Act, to a queryraised by petitioner as to whether the verification of the complaint was doneby ACIT 24(1), it is stated negative in reference of authenticity as per caserecords. We have to note that the order under Section 7(1) of the RTI Acthas also been passed by the same Circle 24(1) which has proposed to re-open petitioner’s assessment.In our view, the Assessing Officer had enough time to find theveracity or authenticity of the complaint if he had any doubt and he couldnot have dismissed the objections by just a wave of his hand. 6.Mr. Sharma states at this stage that the order on objectionsstates assessee has submitted proposed amended copy of the RERAcomplaint. In the objections filed assessee does not say any where that heproposed to amend the RERA complaint. The RERA complaint had alreadybeen amended on 7[th] January, 2019 before even the society had lodgedcomplaint with the Income Tax Department. 6.Mr. Sharma states at this stage that the order on objectionsstates assessee has submitted proposed amended copy of the RERAcomplaint. In the objections filed assessee does not say any where that heproposed to amend the RERA complaint. The RERA complaint had alreadybeen amended on 7[th] January, 2019 before even the society had lodgedcomplaint with the Income Tax Department. 7.Mr. Sharma submitted that the society in its letter dated 12[th]February, 2019 had also referred to a police complaint dated 24[th] August,2017 and perhaps that would have also indicated the same figure of Rs.5.21Crores as suggested in the original complaint to Maharashtra RERA. Wecannot accept the statement of Mr. Sharma because even though the policecomplaint was available with the Assessing Officer he chose not to rely uponthe police complaint in the reasons recorded for re-opening. Even in theorder on objections there is no reference to this police complaint. Even inthe affidavit in reply to the petition there is no reference to this policecomplaint. Mr. Sharma states that respondent cannot be precluded fromissuing fresh reasons to the notice by relying upon even this policecomplaint. We cannot express our opinion on this. In such a case firstlythe notice issued under Section 148 of the Act has to go. The reason tobelieve must be that of the Assessing Officer. Neither the court nor theadvocate can supplement it or add to it or improve upon it. If the Revenuecan do so, if permissible in law and in accordance with law, Revenue may dowhat it is adviced and of course petitioner may raise whatever objections hehas. We repeat we have not expressed any opinion on this. 8.One more point which we find strange is in the affidavit in replyfiled through one Mr. Milind Jagtap, Assistant Commissioner of Income TaxCircle 24(1), Mumbai affirmed on 7[th] August, 2020, it is stated in paragraphno.7 that the assessee during the course of re-assessment proceedings hadenough opportunity to produce the copy of amended complaint made before the Maha RERA Authorities and the assessment proceedings would havebeen finalized by taking cognizance of the same. However, assessee hasfailed to do for the reasons best known to him. We have stated it is ratherstrange because in the order disposing the objections the Assessing Officeracknowledges having received the amended copy of the RERA complaint. 9.Therefore, we are satisfied that the notice issued under Section148 of the Act has to go. We hereby quash and set aside the notice dated31[st] March, 2019. Consequently, the order dated 12[th] November, 2019 isalso quashed and set aside. 10.At the same time, if Revenue, as noted earlier, wishes to re-openthey may do so in accordance with law and if the law permits and it iswithin limitation. But the Revenue has to go through the process asrequired to be followed under the amended Act. We are not advisingRevenue what to do to re-open or what is to be referred to in the reasons. 11.Petition accordingly stands disposed. 12.We must express our appreciation for the distinguishedassistance by Mr. Nishant Thakkar, learned Amicus Curiae. The endeavourput forth by him has been of immense value in deciding this petition. (N. R. BORKAR, J.) (K.R. SHRIRAM, J.)