Wp/3497/2019 Of Infinity.com Financial Securities Limited v. Assistant Commissioner Of Income Tax - 4 (1) (1) And 2 Ors

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.3497 OF 2019 Infinity.com Financial Securities Limited ….Petitioner V/s. Assistant Commissioner of Income Tax – 4(1)(1) & Ors. ….Respondents---- Mr. Jeet Kamdar i/b. Mr. Sameer G. Dalal 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 a notice dated 30[th] March 2019 issued under Section 148 of the Income Tax Act, 1961 (the said Act) forAssessment Year 2012-2013 and order dated 15[th] October 2019 rejecting theobjections. 2The notice having been issued after expiry of four years, provisoto Section 147 of the said Act is applicable. There is nothing in the reasonsto indicate that there has been failure on the part of petitioner to truly andfully disclose any material fact. No reply has been filed though time to filereply was granted on 18[th] December 2019. 3In the reasons, it is stated that office of respondent no.1received beneficiaries information in the case of one M/s. Divine Multimedia(India) Ltd., a Penny Stock Company from DDIT (Inv) Unit 7 (3), Mumbai through email dated 28[th] March 2019. On persual of the same, it is seen thatthe assessee has indulged in creating fictitious Long Term CapitalGain/Loss/Short Term Capital Gain on purchase and sale of penny stocksduring the year and the company on which petitioner has illegitimateactivity of booking of bogus profit/loss was M/s. Divine Multimedia (India)Ltd. The amount of profit is Rs.1,53,56,887/-. 4During the course of original assessment proceedings, theAssessing Officer had, by a letter dated 6[th] January 2014, called uponpetitioner to furnish in the format prescribed therein details of investmentsalongwith detail pertaining to the method adopted by petitioner for thevaluation of the closing balance of investment, details of share trading (ownaccount) for delivery based and non-delivery based transactions separatelyand also submit the detail pertaining to the method adopted by petitionerfor the valuation of the closing stock, short term capital gains and long termcapital gains. In reply, petitioner provided these details including the dateon which it purchased the shares of M/s. Divine Multimedia (India) Ltd., thedate on which the shares were sold and the capital gain/loss made. Infactpetitioner has shown a capital gain of Rs.70,33,024/- and the value of theshares sold of M/s. Divine Multimedia (India) Ltd. was Rs.1,53,56,886/-.M/s. Divine Multimedia (India) Ltd. was earlier called as Kalidoscope FilmsLtd. Petitioner had made available these information before the Assessing Officer, who after considering the same has passed the assessment order. Officer, who after considering the same has passed the assessment order. 5Mr. Suresh Kumar relied upon a judgment of this Court inCrompton Greaves Ltd. V/s. Assistant Commissioner of Income Tax, Circle 6(2) 1 to submit that even if the reason for reopening does not specificallystate that there was any failure on the part of petitioner to disclose fully andtruly all material facts necessary for its assessment for the relevantassessment year, it will not be fatal to the assumption of jurisdiction underSections 147 and 148 of the Act. We would certainly agree with Mr. SureshKumar but as held in Crompton Greaves Ltd. (Supra), this is subject to therider that there must be cogent and clear indication in the reasons supplied,that in fact there was failure on the part of the assessee to disclose fully andtruly all the material facts necessary for its assessment. If the factum offailure to disclose can be culled down from the reasons in support of thenotice seeking to reopen assessment, that will certainly not be fatal to theassumption of jurisdiction under Sections 147 and 148 of the Act. The Courtheld “However, if from the reasons, no case of failure to disclose is madeout, then certainly the assumption of jurisdiction under Sections 147 and148 of the Act would be ultra vires, being in excess of the jurisdictionalrestraints imposed by the first proviso to Section 147 of the Act”. The Assessing Officer had all materials facts before him whenhe made the original assessment. When the primary facts necessary for 1. (2015) 55 taxmann.com 59 (Bombay) assessment are fully and truly disclosed, the Assessing Officer is not entitledon change of opinion to commence proceedings for reassessment. Even ifthe Assessing Officer, who passed the assessment order, may have raised toomany legal inferences from the facts disclosed, on that account theAssessing Officer, who has decided to reopen assessment, is not competentto reopen assessment proceedings. Where on consideration of material onrecord, one view is conclusively taken by the Assessing Officer, it would notbe open to reopen the assessment based on the very same material with aview to take another view. 6Therefore, all material facts had been disclosed by petitioner inthe course of the regular assessment proceedings and the reasons recordedfor initiation of reassessment too give reference only to the details alreadysubmitted by petitioner in the course of the original assessment proceedingsand nothing more. It is a well settled judicial principle that the true test ofincome chargeable to tax escaping assessment is whether there exists fresh“tangible material” on the basis of which an appropriate conclusion can bereached. In the absence of such fresh material, the reassessment proceedingswould be invalid. This principle has been upheld by the Hon’ble SupremeCourt and the jurisdictional High Court in various rulings. This Court hasheld that reassessment based on a reconsideration of material alreadyavailable on record at the time of the original assessment proceedings tantamounts to a change of opinion and would be invalid. Further, since therelevant facts, which were already on record at the time of the originalassessment proceedings, also form the basis for the initiation of the subjectreassessment proceedings, it is amply clear that there was no fresh materialthat could have come to the notice of respondent no.1 to warrant reopeningof assessment. Information received from DDIT (Inv.) regarding petitionerindulging in illegitimate activity of booking bogus profit/loss on scrip ofM/s. Divine Multimedia (India) Ltd. would not by itself constitute anyfresh material for reopening assessment. Information received from DDIT(Inv.) has already been examined and inquired into by respondent no.1 inthe original assessment proceedings where after submitting variousdetails with regard to details of investments, details of short term capitalgains and long term capital gains the same had been satisfactorilyexplained and accepted by respondent no.1. 7In our view, the notice dated 30[th] March 2019 issued underSection 148 of the said Act is issued without jurisdiction and requires to beset aside. The consequential order dated 15[th] October 2019 also requires tobe set aside. 8Therefore, the notice dated 30[th] March 2019 and order dated15[th] October 2019 are quashed and set aside. 9Petition disposed. (AMIT B. BORKAR, J.) (K.R. SHRIRAM, J.)