IN THE HIGH COURT OF JUDICATURE AT BOMBAY<\/p>\n
CIVIL APPELLATE JURISDICTION<\/p>\n
WRIT PETITION NO. 14490 OF 2018<\/p>\n
Akshar Builders and Developers .. Petitioner<\/p>\n
v\/s.<\/p>\n
Asstt. Commissioner of Income Tax28(1) Mumbai & Anr. .. Respondents<\/p>\n
Ms. Ritika Agarwal I\/b ACE Legal for the petitioner<\/p>\n
Mr. N.C. Mohanty for the respondents<\/p>\n
CORAM : AKIL KURESHI & M.S. SANKLECHA, J.J.<\/p>\n
DATED : 17th JANUARY, 2019<\/p>\n
P.C.<\/p>\n
1. The petitioner has challenged a notice of reopening of assessment
\ndated 29th March, 2018 under which the respondent no.1 Assessing
\nOfficer has reopened the petitioner’s assessment for A.Y. 201112. In
\norder to issue the notice, the Assessing Officer had recorded following
\nreasons :<\/p>\n
\u201c1. In this case return of income for A.Y. 201112 has been
\nfiled on 25.3.2013 declaring total income at Rs. NIL\/. The
\nassessee is a builder and developer.<\/p>\n
2. A detailed investigation report has been forwarded by
\nDirectorate of Investigation, Unit1(2), Ahmedabad regarding
\nsurvey action conducted on M\/s. Mudra Finvest (Guj) Ltd. On
\n8.12.2016. The entity is involved in the jewellery business.<\/p>\n
3. Four hard disk which contain digital data were impounded
\nfrom the premises, 6 ground floor, revdi bazaar, Ahmedabad
\nduring survey. On examination of these disks it is seen that
\nM\/s. MUDRA REAL ESTATE PRIVATE LTD is a group entity who
\nhas constructed and developed project \u201c4D SQUARE\u201d in
\nAhemdabad \u2013 Gandhi Nagar road.<\/p>\n
3.1 The tally data from the disk, contained ledgers of various
\nparties cash book, trial balance, P\/I account and balance sheet of
\nM\/s. Mudra Real Estate Private Ltd. For F.Y. 201011. On
\nperusal of the same it is seen that huge amount was paid in cash
\nto various entities. The name of AKSHAR BUILDER AND
\nDEVELOPER PAN : AANFA3072H appears as one of these entities
\nand is JV PARTNER in the development and construction of ‘4D
\nSQUARE’. A cash amount of Rs.3,54,82,000\/ was paid to M\/s.
\nAkshar Builder and Developers on different dates. The ledger
\naccount retrieved from the disks of the period 1.4.2010 to
\n31.3.2011 showing cash entries paid to M\/s. Akshar Builders
\nand Developers along with other information is forwarded to the
\nundersigned.<\/p>\n
4. Specific information has been passed in the case of M\/s.
\nAkshar Builders and Developers regarding cash payments made
\nby M\/s. Mudra Real Estate Pvt. Ltd. Ahmedabad to M\/s. Akshar
\nBuilders and Developers. The assessee firm M\/s. Akshar Builders
\nand Developers has filed Nil return of income for the A.Y. 2011
\n12. The information received from DGIT (Inv) Unit 1(2),
\nAhmedabad is credible information. The cash amount received
\namounting to Rs.3,54,82,000\/ is not accounted for and not
\noffered for taxation.<\/p>\n
5. It is worth mentioning that the statement of Shri.
\nSanjaykumar Hundia Director of M\/s. MUDRA REAL ESTATE
\nPRIVATE LTD was recorded u\/s 131 of the IT Act on 25.1.2018.
\nHe has admitted to knowing M\/s. Akshar Builders and
\nDevelopers who is codeveloper of the project ‘4D Square’. The
\ncash book of M\/s. Mudra Real Estate Pvt. Ltd. Ahmedabad which
\nis enclosed also reflects the amount paid to M\/s. Akshar Builder
\nand Developer.<\/p>\n
6. The analysis of the return of income filed does not reflect
\nthese transactions in the accounts or income. The return of
\nincome for AY 201112 does not reflect any of the above
\ntransaction. The statement by the director of M\/s. Mudra Real
\nEstate Pvt. Ltd. the cash book,ledger account reveal that the
\nassessee is having cash income of Rs.3,54,82,000\/ for FY 2010
\n11 for FY 201011 relevant to A.Y. 201112 which is not
\naccounted for or disclosed for taxation.<\/p>\n
7. In view of the above, I have reason to believe that income
\nchargeable to tax which has escaped assessment to the tune of
\nRs.3,54,82,000\/ (Rs. Three Crore fifty four lakhs eighty two
\nthousand only) chargeable to tax within the meaning of
\nExplanation 2(b) of Section 147 of the I.T. Act, 1961. As such it
\nis a fit case for issuance of notice u\/s 148 of the Income Tax Act,
\n1961.<\/p>\n
8. In this case, since more than four years have lapsed from
\nthe end of assessment year under consideration, hence necessary
\nsanction to initiate proceedings u\/s 147 and to issue notice u\/s
\n148 of the I.T. Act may be accorded as per provisions of Section
\n151 of the Income Tax Act.\u201d<\/p>\n
2. Upon being supplied the reasons, the petitioner filed objections to
\nthe notice of reopening under communication dated 28th November,
\n2018. Such objections were however rejected by the Assessing Officer
\nby order dated 14th December, 2018.<\/p>\n
3. The petitioner is a partnership firm, Akshar Builders and
\nDevelopers (“AB&D” for short). For Assessment Year 201112, the
\npetitioner had filed its return of income which was accepted under
\nSection 143(1) of the Income Tax Act, 1961 (“the Act” for short)
\nwithout scrutiny. To reopen such assessment the impugned notice has
\nbeen issued. The main ground of challenge raised by the Counsel for
\nthe petitioner is that there was no tangible material available with the
\nAssessing Officer to form a belief that the income chargeable to tax has
\nescaped assessment. She pointed out that the Assessing Officer relies
\non the documents seized during the survey operation against one M\/s.
\nMudra Real Estate Pvt. Ltd. (“Mudra” for short) which recorded certain
\ncash payments to one M\/s. Akshar Developers (“AD” for short).<\/p>\n
Counsel submitted that the petitioner AB&D, a partnership firm, has
\ndistinct identity and different partners from AB, another partnership
\nfirm having different set of partners. She pointed out that both the
\npartnership firms have different PAN numbers. The Assessing Officer,
\ntherefore, acted on a material prima facie showing payments by Mudra
\nto AD and reopened the assessment in case of the present petitioner.
\nCounsel further submitted that the reassessment in case of Mudra has
\nnow been done by the Assessing Officer, passing order on 31st
\nDecember, 2018 in which also there is no addition in relation to the
\nsaid alleged payments by Mudra to AD. In other words, the
\nDepartment in the assessment in case of Mudra has not relied on the
\npayments in question.<\/p>\n
4. On the other hand, learned Counsel for the Department opposed
\nthe petition contending that previously assessment was not framed after
\nscrutiny. The Assessing Officer therefore would have much wider scope
\nto reopen the assessment. In this regard, he relied upon the decision of
\nthe Supreme Court in the case of ACIT Vs. Rajesh Jhaveri Stock
\nBrokers (P) Ltd., (2007) 291 ITR 500. Counsel submitted that at this
\nstage the sufficiency of material enabling the Assessing Officer to
\nreopen the assessment would not be subject matter of scrutiny by the
\nCourt. He further submitted that the Assessing Officer had sufficient
\nmaterial at his command to form a belief that income of the present
\npetitioner chargeable to tax has escaped assessment.<\/p>\n
5. Since the factum of reassessment order in case of Mudra is not
\npart of the present proceedings, we may keep the same out of
\nconsideration. From the record it emerges that the Assessing Officer
\nhas issued notice of reopening of assessment after recording his reasons
\nfor doing so. These reasons suggest information available to the
\nAssessing Officer supplied by the Investigation wing of the Department
\nthat the assessee had received cash amounts of Rs.3.54 crores which
\nwas not accounted for and not offered to tax. He has referred to
\nstatement of one Shri. Sanjay Kumar Hundia, Director of Mudra
\nrecorded on 25th January, 2018 suggesting cash payment by Mudra to
\nAB&D. However, the document supplied by the Assessing Officer which
\nis a copy of the ledger account of AD in the books of Mudra, at best
\nsuggests that such cash payment was made to AD and not to the AB&D,
\nwhereas notice of reopening of assessment is issued against AB&D i.e.
\nthe present petitioner. <\/p>\n
To cover this mismatch, it is now sought to be
\nsuggested by the Assessing Officer that Investigation Wing informed
\nhim that the two entities are one and the same and AB&D is popularly
\nreferred to as AD. However, this being the question of two entities
\nbeing separate, having different partners and having distinct PAN
\nnumbers. These aspects are not disputed by the Revenue either while
\ndisposing of the objections raised by the petitioner to the notice of
\nreopening or in the affidavit filed in response to the present petition.
\nWe, therefore, proceeded on such basis.<\/p>\n
6. It is thus emerges from the record that the Assessing Officer has
\nmerely acted upon the information submitted to him by the
\ninvestigation wing that there is material to suggest that Mudra had paid
\ncash amount to AB&D whereas, the material collected during the survey
\nagainst Mudra prima faice suggests such cash payment to AD. <\/p>\n
This
\nwould demonstrate total lack of application of mind on the part of the
\nAssessing Officer. If he had perused the material supplied to him by
\nthe investigation wing, he would have immediately noticed that
\nmaterial referred would suggest cash payment to AD and not AB&D i.e.
\nthe present petitioner.<\/p>\n
7. Even in a case where the return filed by the assessee is accepted
\nwithout scrutiny, as per the settled law, the Assessing Officer can issue a
\nnotice of reopening of assessment provided he has reason to believe
\nthat income chargeable to tax has escaped assessment. The Assessing
\nOfficer cannot proceed mechanically and also on erroneous information
\nthat may have been supplied to him. In fact, we note that in the
\npresent case the Assessing Officer had issued a notice to a wrong
\nperson. The impugned notice is, therefore, set aside.<\/p>\n
8. Petition is disposed of accordingly.<\/p>\n
(M.S. SANKLECHA, J.) (AKIL KURESHI, J.)<\/p>\n","protected":false},"excerpt":{"rendered":"
Even in a case where the return filed by the assessee is accepted without scrutiny, as per the settled law, the Assessing Officer can issue a notice of reopening of assessment provided he has reason to believe that income chargeable to tax has escaped assessment. The Assessing Officer cannot proceed mechanically and also on erroneous information that may have been supplied to him. In fact, we note that in the present case the Assessing Officer had issued a notice to a wrong person<\/p>\n