Wp/923/2022 Of Giraffe Developers Pvt. Ltd v. The Assistant Commissioner Of Income Tax Central Circle 7 (3) Mumbai 3 Ors

Digitallysigned byPURTIPURTIPRASADPRASADPARABPARABDate:2022.03.0811:23:22+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 923 OF 2022 Giraffe Developers Pvt. Ltd. ….Petitioner V/s.The Assistant Commissioner of IncomeTax Central Circle 7(3), Mumbai & Ors. …Respondents ---- Mr. Fenil Bhatt i/b Mint & Confreres for Petitioner.Mr. Suresh Kumar for Respondents ---- CORAM : K.R. SHRIRAM &N. J. JAMADAR, JJ. DATED : 3[rd] MARCH, 2022 P.C. : 1.Petitioner is impugning the notice dated 27[th] January, 2021issued under Section 148 of the Income Tax Act, 1961 (the Act) and theorder dated 31[st] December, 2021 rejecting petitioner’s objections to re-opening. Here is the case where notice has been issued after expiry of fouryears from end of the relevant assessment year and the assessment underSection 143(3) of the Act has also been completed. Therefore, proviso toSection 147 of the Act being applicable to the case, respondent has to showthat there has been failure on the part of petitioner to make true and fulldisclosure of material fact, otherwise re-opening is barred. 2.We have perused the reasons for re-opening dated 4[th] February,2021 with the assistance of Mr. Bhatt and Mr. Suresh Kumar. In our view,the reasons for re-opening first of all does not disclose any where or evenany allegation can be culled out that there has been failure on the part of petitioner to fully and truly disclose material fact. Moreover, the re-opening is based purely on the basis of change of opinion which is not permissible and thirdly has been issued without application of mind. 3. The reasons for re-opening reads as under : 1. The original return of income was filed on 30.09.2013declaring total income at Rs. Nil/- for A.Y. 2013-14. The incomewas assessed at Rs. Nil/- dated 31.03.2016 u/s 143(3) of the I.T.Act after adjusting brought forward loss of Rs.22,43,00,000/- ofA.Y. 2012-13. 2. Subsequently from the perusal of assessment records, it isseen that in computation of income Rs.4,20,31,597/- receivedfrom bank interest and addition of Rs.19,00,000/- as interestreceived as per 26AS has been included in Business income andbrought forward business loss of previous year has been adjustedagainst it. 3. The income of Rs.4,39,31,597/- (Rs.4,20,31,597 +Rs.19,00,000) should be treated as income from other sourceand should not be adjusted with the brought forward businesslosses as per section 71 of the I.T. Act. and should not be adjusted with the brought forward business Therefore, it is seen that income chargeable to tax has escaped assessment which amounts of Rs.4,39,31,597/-. This had resulted in under-assessment of Rs.4,39,31,597/- for A.Y. 2013-14. 4. Based on the discussion held above, it is seen that there isunder assessment, therefore, the income chargeable to tax hasescaped assessment during the scrutiny proceedings u/s 143(3)of the I.T. Act, which is beyond four years from the end ofrelevant assessment year, which requires approval of Pr. CIT u/s151(2) of the I.T. Act. 5. In view of the above, I have reason to believe that anamount of Rs.8,45,74,750/- has escaped assessment for A.Y.2014-15 within the meaning of explanation 2 to Sec. 147 of theI.T. Act and this is the fit case for reopening the assessmentunder section 147 of the I.T. Act. 4. As could be seen there is no allegation any where that there has been failure to fully and truly disclose material fact. 5. 5.As could be seen from paragraph no.3 of the reasons it is theopinion of the officer who proposes to re-open that the income ofRs.4,39,31,597/- should be treated as income from other sources andshould not be adjusted with the brought forward business losses as perSection 71 of the Act. This has also been considered during the assessmentproceedings and in fact in paragraph no.8 of the assessment order there iseven discussion about addition of Rs. 19,00,000/- as interest received as per26 AS. 4. As could be seen there is no allegation any where that there has been failure to fully and truly disclose material fact. 5. 5.As could be seen from paragraph no.3 of the reasons it is theopinion of the officer who proposes to re-open that the income ofRs.4,39,31,597/- should be treated as income from other sources andshould not be adjusted with the brought forward business losses as perSection 71 of the Act. This has also been considered during the assessmentproceedings and in fact in paragraph no.8 of the assessment order there iseven discussion about addition of Rs. 19,00,000/- as interest received as per26 AS. 6.On the point of non application of mind, paragraph no.5 of thereasons, it is stated that amount of Rs.8,45,74,750/- has escaped assessmentwhereas in paragraph no.3 it says amount of Rs.4,39,31,597/- has escapedassessment. Moreover, in paragraph no.5 it is mentioned that amount hasescaped assessment for A.Y. 2014-15 whereas the assessment year underconsideration is A.Y. 2013-14. 7.On all these grounds mentioned above, petition is allowedandthe impugned notice dated 27[th] January, 2021 and the impugned orderdated 31[st] December, 2021 are hereby quashed and set aside. 8.Petition disposed. (N. J. JAMADAR, J.) (K.R. SHRIRAM, J.)