Wp/3379/2018 Of Giriraj Enterprise v. Assistant Commissioner Of Income Tax, Circle 33(1) And Anr

Priya Soparkar IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.3379 OF 2018 Giriraj Enterprise … Petitioner V/s. Assistant Commissioner of Income Tax, Circle 33(1) and anr.… Respondent --- Mr.K. Gopal with Mr.Tanmay Phadke i/by Mr.Satendra Pandeyfor the Petitioner.Mr.Arvind Pinto for the Respondents. --- CORAM : AKIL KURESHI AND M.S.SANKLECHA, JJ. DATE : JANUARY 10, 2019. P.C.:- 1.With the consent of learned Advocates for the parties,petition is taken up for final disposal. Petitioner has challengeda notice of reopening of assessment issued by the respondentNo.1 and Assessing Officer on 26[th] March, 2018. 2.Petitioner is a partnership firm engaged in the business ofconstruction and development of land. For the assessment year2011-12, the petitioner had filed return of income declaring Priya Soparkar 210 wp 3379-18-o income of Rs.7.16 crores (rounded off). The petitioner filed arevised return on 21[st] February, 2013 revising to total income toRs.5.60 crores (rounded off). The return of the petitioner wastaken in scrutiny. The Assessing Officer passed order underSection 143(3) of the Income Tax Act, 1961 ("the Act" forshort) on 31[st] January, 2014 accepting the petitioner'sreturned income. To reopen such completed assessment, theAssessing Officer issued the impugned notice. In order to do so, he had recorded following reasons:- “The assessee M/s Giriraj Enterprises having PANAAAFG5294L,Address:GovardhanNagar,Boraspada Road, Poisar, Kandivali (West),Mumbai-400067 pertains to the charge of ACIT-33(1), Mumbai. The assessee M/s. GirirajEnterprises has filed the return of income forA.Y.2011-12 declaring total income ofRs.5,60,99,611/-. The nature of business activityof the assessee is Builder & Developer. An Information has been received from theDeputy Director of Income Tax, (I&CI), Mumbaivide letter No.DDIT (I&CI), Unit-2(1)/SRA/2016-17 dated 05.05.2017 received in this office on17/05/2017. To analyze and verify taxation of redevelopmentProjects, Joint Venture arrangement and transferof development rights the project was taken upwith the prior approval of DGIT(I &CI). Afterassignment of the case, the notice u/s 133(6) of the I.T.Act, was issued to assessee. In responsethereto the assessee has submitted details. Onperusal of details as well as affidavit, it isnoticed that the assessee vide affidavit dated23.08.2016 filed with this office that in SRASlum Redevelopment projects in the name ofGanesh Krupa CHSL in which LOISRA/ENG/765/RS/PL/LOI dated 24.06.2003 wasissued by SRA, there is no agreement or MOU orJV or SPV agreement entered into at any stageof redevelopment with another developer/entitypertaining to A.Y. 2010-11 to A.Y. 2016-17. Letter to M/s Giriraj Enterprises was sent by theoffice of DCIT (I&CI) Unit-1(2), Mumbai forfurnishing some details. In response to abovementioned letter assessee M/s Giriraj Enterprisesdenied any type of their indulgence in any typeof SRA. Office of the DCIT (I & CI) Unit -1(2), Mumbaithen transferred the entire correspondence tothis office for necessary action. Record of the assessee was checked and it isfound that assessee is a builder. So to verify theintelligence report gathered by the Intelligenceand Criminal Investigation, it is necessary tothrough enquired the details. In the light of above mentioned facts, I havereason to believe that assessee has escapedassessment within the meaning of section of 147of the Income Tax Act, 1961 as assessee hastaken up a Redevelopment Projects for whichpurpose assessee has obtained a LOI (Letter ofintent from SRA (Slum Rehabilitation Authority). In view of the above sanction u/s 151(1) of the Office of the DCIT (I & CI) Unit -1(2), Mumbaithen transferred the entire correspondence tothis office for necessary action. Record of the assessee was checked and it isfound that assessee is a builder. So to verify theintelligence report gathered by the Intelligenceand Criminal Investigation, it is necessary tothrough enquired the details. In the light of above mentioned facts, I havereason to believe that assessee has escapedassessment within the meaning of section of 147of the Income Tax Act, 1961 as assessee hastaken up a Redevelopment Projects for whichpurpose assessee has obtained a LOI (Letter ofintent from SRA (Slum Rehabilitation Authority). In view of the above sanction u/s 151(1) of the Income Tax Act, 1961, is solicited for issuance ofnotice u/s 148 of the I.T.Act, from the Pr. CIT-33, Mumbai as period of more than four yearshave lapsed from the end of the relevantassessment year.” 3.Upon being supplied the reasons, the petitioner raisedobjections to the reopening of assessment on 17[th] July, 2018.Such objections, however, were rejected by Assessing Officer byorder dated 14[th] August, 2018 upon which the present petitionhas been filed. 4.Appearing for the petitioner learned counsel submitted thatthe notice of reopening has been issued beyond the period of fouryears and there was no failure on the part of the assessee todisclose truly and fully all material facts. The notice has beenissued for carrying out fishing inquiries. The reasons proceed oncompletely erroneous ground. He pointed out that in response tothe notice issued by the Assessing Officer under Section 133(6)of the Act, the petitioner had pointed out on affidavit that thepetitioner-firm had not undertaken development of Ganesh KrupaCo-operative Housing Society during the period relevant to the assessment year nor therefore claimed any income arising out ofsuch project despite which the Assessing Officer issued theimpugned notice and rejected the objections to such notice inwhich also such contention was raised. 5.On the other hand, learned counsel for the revenue opposedthe petition contending that the Assessing Officer had recordedproper reasons. Information was received from the InvestigationWing pursuant to which he has also raised queries with theassessee. Full facts can be brought on record only duringassessment proceedings which the Assessing Officer should bepermitted to carry out. 6.For multiple reasons, we do not find that the AssessingOfficer is justified in reopening the assessment. Firstly, asnoted the notice of reopening of assessment has been issuedbeyond the period of four years from the end of relevantassessment year. The additional requirement as per the provisoof Section 147 of the Act that escapement of income should beon account of failure on part of the assessee to disclose truly 610 wp 3379-18-o and fully all material facts, would be applicable. In the presentcase, from the reasons recorded, we do not find that suchrequirement was fulfilled. Further, in the reasons itself theAssessing Officer has stated that the record of the assessee waschecked and it was found that it is a builder and therefore, toverify the intelligence gathered by Intelligence Wing, it isnecessary to carry out thorough and detailed inquiry. Veryclearly thus by his own account the Assessing Officer wishes tocarry out a fishing inquiry. It is well settled through series ofjudgments of this Court and other Courts that reopening ofassessment can be done only if the Assessing Officer has reasonto believe that income chargeable to tax has escaped assessment.Reopening of assessment cannot be permitted for carrying outfishing inquiries. 7.Additionally, we also find that the Assessing Officer isproceeding on completely wrong premise. Perusal of the reasonsrecorded by him would show that he has some prima facieobjections to the assessee having developed Ganesh KrupaHousing Society land which according to information received Priya Soparkar 10 wp 3379-18-o by him did not contain any agreement. When the assesseerepeatedly pointed out to the Assessing Officer before and evenafter issuing of notice for reopening that he had neitherdeveloped any such project during the year of the considerationnor claimed exempt income arising out of such project, it wasduty of the Assessing Officer atleast to prima facie show howsuch assertion of the assessee was incorrect. He simply cannotclaim that full assessment must be permitted even in absenceof any prima facie evidence of income chargeable to tax havingescaped assessment. For all these reasons, impugned notice isset aside. Petition allowed and disposed of. (M.S.SANKLECHA,J.) (AKIL KURESHI,J.)….