Wp/391/2022 Of Naroli Resorts Pvt. Ltd v. Assistant Commissioner Of Income Tax Central Circle 3(1) And Anr

Digitally signedby GAURIGAURIAMITAMITGAEKWADGAEKWADDate:2022.05.0610:17:03 +0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.391 OF 2022 Assistant Commissioner of IncomeTax, Central Circle 3(1) and Anr. ….Respondents ---- Mr. Ruchesh Sinha a/w. Mr. Neel Kothari and Mr. Chaitanya Sharma i/b.Mr. Rahul Agarwal for petitioner.Mr. Suresh Kumar a/w. Ms. Krunali Satra and Ms. Mohinee Choughule forrespondents. ---- CORAM : K.R. SHRIRAM &N.R. BORKAR, JJ. DATED : 2[nd] MAY 2022 P.C.: 1Petitioner is impugning a notice dated 30[th] March 2021 issued under Section 148 of the Income Tax Act, 1961 (the Act) for AssessmentYear 2014-2015 and order on objections dated 18[th] November 2021. 2We have considered the reasons recorded for reopening and it isthe case of respondent no.1 that while going through the case record, it wasrevealed that the assessee had paid up share capital of 1,27,380 shares ofRs.10/- each as on 31[st] March 2013. The assessee has issued 62,380 sharesto M/s. Kesar Motels Pvt. Ltd. (a related party) and others in F.Y. 2013-2014at a premium of Rs.1,005/- per share. The assessee has followed DiscountedCash Flow method (DCF) and valued the shares at Rs.1,015/- per share as per valuation report relied upon to justify the share premium. The AssessingOfficer feels that the assessee could have charged premium of onlyGauri Gaekwad Rs.249.70 per share and, therefore, has charged excess premium ofRs.765.30. Accordingly, a sum of Rs.4,77,39,414/- has escaped assessment. 3Admittedly notice has been issued after the expiry of four yearsfrom the end of relevant assessment year. The proviso to Section 147 of theAct will, therefore, apply and it is for respondents to show that there hasbeen escapement of income due to failure on the part of the assessee totruly and fully disclose material fact required for assessment during theassessment year. Though in the reasons recorded, there is a bald allegationmade that assessee had not fully and truly disclosed necessary facts, in ourview, this allegation is made only to get around the restriction imposed bythe proviso to Section 147 of the Act. 4In our view, the reason for reopening is nothing but a change ofopinion. Admittedly scrutiny assessment under Section 143(3) of the Actwas completed on 26[th] November 2016 after accepting loss shown in thereturns. During the assessment proceedings, by a notice dated 3[rd] November2016 issued under Section 142(1) of the Act, petitioner was called upon byrespondent no.1 to provide valuation report, bank statements and ITR ofM/s. Kesar Motels Pvt. Ltd. for share premium received. This was providedby petitioner vide its Chartered Accountant’s letter dated 8[th] November2016. Petitioner had also provided copy of ITR, valuation certificate andother details. After considering all these points, an assessment order dated29[th] November 2016 came to be passed. 5Mr. Suresh Kumar submitted that the fact that the sharepremium issue was discussed during the assessment proceedings is notreflected in the assessment order. Mr. Suresh Kumar also submitted that theshare premium calculation was not on the basis of fair market valueconsidering Rule 11UA of the Income Tax Rules. 6Admittedly, as stated earlier, this is a case of reopening afterexpiry of four years from the end of the relevant assessment year.Respondent had to show that there was failure to truly and fully disclosematerial facts. Not only petitioner has disclosed but respondent has alsoraised queries during the course of assessment proceedings and has passedan assessment order under Section 143(3) of the Act. 5Mr. Suresh Kumar submitted that the fact that the sharepremium issue was discussed during the assessment proceedings is notreflected in the assessment order. Mr. Suresh Kumar also submitted that theshare premium calculation was not on the basis of fair market valueconsidering Rule 11UA of the Income Tax Rules. 6Admittedly, as stated earlier, this is a case of reopening afterexpiry of four years from the end of the relevant assessment year.Respondent had to show that there was failure to truly and fully disclosematerial facts. Not only petitioner has disclosed but respondent has alsoraised queries during the course of assessment proceedings and has passedan assessment order under Section 143(3) of the Act. 7 On the issue of the assessment order being silent, it is settledlaw that once a query is raised during the assessment proceedings and theassessee has replied to it, it follows that the query raised was a subject ofconsideration of the Assessing Officer while completing the assessment. It isnot necessary that an assessment order should contain reference and/ordiscussion to disclose its satisfaction in respect of the query raised [AroniCommercials Ltd. V/s. Deputy Commissioner of Income Tax 2 (1)[1]]. 8Since respondent no.1 has not crossed the fetter imposed underthe proviso to Section 147 of the Act, we do not consider it necessary to seethe applicability of Rule 11UA of the Income Tax Rules. It would suffice to 1. (2014) 44 taxmann.com 304 (Bombay) say that during the assessment proceedings valuation report was sought and valuation by the Chartered Accountant has been submitted which has not been disputed or denied. 9In the circumstances, petition is allowed in terms of prayer clause – (a), which reads as under : (a) a writ of and/or order and or directions in thenature of certiorari, prohibition, mandamus or anyother appropriate writ, order or direction quashingimpugned notice dated 30.3.2021 for the A.Y. 2014-15, issued by Respondent No.1 under section 148 ofthe Income Tax Act 1961 and proceedings initiatedpursuant thereto. 10Petition accordingly disposed. (N.R. BORKAR, J.) (K.R. SHRIRAM, J.)