Wp/3495/2018 Of Saurabh Suryakant Mehta v. Income Tax Officer 20(3)(2) Mumbai And Anr

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.3495 OF 2018 Saurabh Suryakant Mehta .. Petitioner v/s. Income Tax Officer & Anr. .. Respondents Dr. K. Shivram, Senior Counsel a/w Mr. Rahul Hakani for the petitionerMr. A.R. Malhotra a/w Mr. N.A. Kazi for respondent nos. 1 and 2 CORAM : AKIL KURESHI & M.S. SANKLECHA, J.J. P.C. DATED : 17[th] JANUARY, 2019 1.The petitioner has challenged the notice of reopening ofassessment dated 30[th] March, 2018, as Annexure "L" to the petition.Brief facts are as under :- 2.The petitioner is an individual and the dealer of iron and steel.For Assessment Year 2011-12 the petitioner had filed the return ofincome, which was taken in scrutiny by the Assessing Officer by issuingnotice under Section 148 of the Act. He had recorded reasons forissuing the notice which suggested that he had received informationfrom the Sales Tax Department that the assessee had indulged in Havala entries and had not carried out actual trading activities withrespect to certain sales. Pursuant to this notice, the Assessing Officerpassed an order of assessment under Section 143(3) r/w Section 147 ofthe Act on 28[th] March, 2016 making certain additions to the assessee'sdeclared income. 3.To reopen such assessment, the Assessing Officer issued theimpugned notice. In order to do so, he had recorded followingreasons:- “The reason for issue of notice u/s 148 in your case for AY 2011-12 is as under :- “In this return of income was filed on 16.09.2011 declaringincome of Rs.8,05,347/-. Subsequently, order u/s 143(3) rws147 was passed on 23.03.2016 assessing the income of theassessee at Rs.13,84,720/-. On going through the assessment order it is seen that theaddition of Rs.2,96,284/- was made @ 2.25% of the total boguspurchase of Rs.1,31,68,191/-. It is observed from the case record that there was a specificinformation in respect of bogus hawala transaction, receivedfrom Sales Tax Department. In respect of this, during the courseof assessment proceedings, notice u/s 133(6) were issued to theconcerned parties. On verification of the same, it is seen thatthe said parties had issued bogus bill to the assessee and theassessee has failed to establish the genuineness of transactions.Since the transaction has not been established, whole of theamount i.e. Rs.13168191/- needs to be added to the totalincome. However, only 2.25% of the said amount was added,which is without any base. Further, Hon'ble Supreme Court vide order dated 16.01.2017 inthe case of M/s. N.K. Proteins Ltd. In SPL © CC Nos. 769 of2017 : 2017-TIOL-23-SC-IT has clearly held as below; “Once a finding of fact has been given that entire purchasesshown on the basis of fictitious invoices and debited in the P & LA/c are established as bogus, restricting the addition to a certainpercentage goes against the principles of sections 68 and 69C ofthe I.T. Act.” In view of the above facts, I am of the opinion that the assessee'sincome to the extent of Rs.1,28,71,907/- (1,31,68,191 –296284) has escaped assessment. Accordingly, the proceedingu/s 147 of the Income Tax Act, 1961 are duly attracted in orderto frame proper assessment to bring to tax appropriate income onthe issue of bogus entries of purchases and any other incomewhich will be detected during the course of assessmentproceedings. Therefore, this case is fit for issue of notice u/s148 of the I.T. Act, 1961.” 4.Upon being supplied the reasons, the assessee raised objectionsto the notice of reopening under letter dated 28[th] November, 2018.Such objections were rejected by the Assessing Officer by order dated30[th] November, 2018. Hence, this petition. 5.Having heard learned Counsel for the parties for final disposal ofthe petition, we notice that the impugned notice has been issuedbeyond the period of 4 years from the end of the relevant assessmentyear. The requirement that the income chargeable to tax has escaped 4.Upon being supplied the reasons, the assessee raised objectionsto the notice of reopening under letter dated 28[th] November, 2018.Such objections were rejected by the Assessing Officer by order dated30[th] November, 2018. Hence, this petition. 5.Having heard learned Counsel for the parties for final disposal ofthe petition, we notice that the impugned notice has been issuedbeyond the period of 4 years from the end of the relevant assessmentyear. The requirement that the income chargeable to tax has escaped assessment due to failure on the part of the assessee to disclose trulyand fully all material facts, would be applicable. Further, as persettled law, if a claim or an issue had been examined by the AssessingOfficer during the previous assessment proceedings, in absence of anymaterial available to the Assessing Officer later on to reassess suchincome would based on mere change of opinion and, therefore,impermissible. 6.In the present case, the Assessing Officer had examined thematerial collected by the Sales Tax Department, prima facie suggestingthat the assessee had indulged into bogus billing activities withoutactually carrying out the purchase and sale of the commodity. It is onthis basis that the notice of reopening of assessment was issued earlierand addition of Rs.2,96,284/- was made. There are reasons recordedfor issuing the impugned notice. We can gather that the AssessingOfficer now believes that not mere 2.25% of the total bogus purchase ofRs.1.31 crores (rounded of) is to be added but the entire amount shouldhave been added as the undisclosed income of the assessee. Withrespect to the validity of such a contention of the Assessing Officer, wehave no comment to offer. However, what cannot be denied is that theAssessing Officer merely wishes to change the nature of the assessment previously made. In other words, during the previous reassessmentproceedings, the Assessing Officer examined the alleged bogus sales ofthe assessee, taxed 2.25% thereof as assessee's additional income andpassed the order of assessment accordingly. The Assessing Officernow believes that taxing 2.25% of the sales, was an error and insteadthe entire amount should have been added to the assessee's income.This would be a mere change of opinion. The Act recognizes therevisional powers of the Commissioner to be exercised in case where theassessment order is erroneous and prejudicial to the interest of theRevenue. However, the reopening of assessment is an entirelyindependent and vastly different jurisdiction and cannot be confusedwith the revisional powers of the higher authority. 7.Under the circumstances, the impugned notice is quashed.Petition is disposed of accordingly. (M.S. SANKLECHA, J.) (AKIL KURESHI, J.)