IN THE HIGH COURT OF BOMBAY AT GOA
\nWRIT PETITION NO. 17 OF 2020
\nM\/s. Anand Developers,
\na partnership firm constituted
\nunder the provisions of the
\nPartnership Act, 1932, having office
\nat 801, Anand Square B, Near
\nSanjeevani Hospital, Baina,
\nVasco Da Gama 403 802, Goa,
\nIndia P.A. No.AAMFA 9496L,
\nthrough its Authorized Representative
\nMr. Ashish V. Prabhu Verlekar, son of
\nMr. V.B. Prabhu Verlekar, major of age,
\nIndian National, having office at
\n201, Govinda Building, M.G. Road,
\nPanaji, Goa. ..\u2026 Petitioner
\nVersus
\n1. Asst. Commissioner of Income Tax
\nCircle 2(1), having office at
\nPatto, Panaji \u2013 Goa.
\n2. Commissioner of Income-Tax
\nPatto, Panaji, Goa. \u2026… Respondents.
\nMr. Shivan Desai, Advocate for the Petitioner.
\nMs. Susan Linhares, Standing Cousnel for the Respondents.
\n2 wp17-20dt.18-02-20
\nCoram : M.S. Sonak &
\nKum. Nutan D. Sardessai, JJ.
\nDate : 18th February, 2020.
\nORAL JUDGMENT : (Per M.S. Sonak, J.)
\nHeard Mr. Shivan Desai for the Petitioner and Ms. S.
\nLinhares, learned Standing Counsel for the Respondents.
\n2. Rule. Rule is made returnable forthwith with the consent
\nof and at the request of the learned Counsel for the parties.
\n3. Challenge in this Petition is to the Notice dated 29th March,
\n2019, issued under Section 148 of the Income Tax Act, 1961 (IT
\nAct) and the order dated 17th December, 2019, disposing of the
\nPetitioner’s objections to the reopening of the assessment in
\npursuance of the notice dated 29th March, 2019.
\n4. Mr. Shivan Desai, learned Counsel for the Petitioner
\nsubmits that in the present case, true and complete disclosures were
\nmade by the Petitioner vide letter dated 20th February, 2015 in the
\ncourse of the assessment proceedings itself. Upon consideration of
\nsuch disclosures, the Assessing Officer (AO) made assessment order
\ndated 16th March, 2015 under Section 143(3) of the IT Act. Mr.
\nDesai submits that in such circumstances, merely on the basis of a
\n3 wp17-20dt.18-02-20
\nchange of opinion, the AO lacked jurisdiction to issue notice under
\nSection 148 of the IT Act, seeking to reopen the assessment. In any
\ncase, Mr. Desai submits that since, there was absolutely no failure to
\nmake true and full disclosures, there was no jurisdiction to issue
\nnotice under Section 148 of the IT Act, after expiry of period of 4
\nyears from the date of assessment. On both these grounds, he
\nsubmits that the Rule is liable to be made absolute in the present
\nPetition. He relies on the cases of Mrs. Parveen P. Bharucha vs. The
\nDeputy Commissioner of Income Tax Circle 2 and anr.1; Zuari
\nFoods and Farms Pvt. Ltd. vs. Asst. Commissioner of Income-Tax
\nand another2; and Bombay Stock Exchange Ltd. vs. Deputy Director
\nof Income-Tax (Exemption) and others (No.2)3 in support of the
\nPetition.
\n5. Ms. Linhares, learned Standing Counsel for the
\nRespondents submits that since the Petitioner had admitted vide
\nletter dated 20th February, 2015 that it had violated the provisions of
\nSection 80IB of the IT Act and further, failed to make true and full
\ndisclosures, there was absolutely no jurisdictional error in issuing the
\nimpugned notice or making the impugned order. She submits that
\nthe scope of interference with notices under Section 147\/148 of the
\nIT Act is quite limited. She submits that at this stage, it will not be
\n1 (2012) 348 ITR 325
\n2 WP No.1001 of 2007 decided on 11\/4\/2018
\n3 [2014] 365 ITR 181 (Bom)
\n4 wp17-20dt.18-02-20
\nappropriate to go into the merits of the matter, for which, the
\nPetitioner will have ample opportunity during the reassessment
\nproceedings. She, therefore, submits that the present Petition is liable
\nto be dismissed. She relies on Calcutta Discount Co. Ltd. vs.
\nIncome-tax Officer4; S. Narayanappa vs. Commissioner of Incometax5;
\nAssistant Commissioner of Income Tax vs. Rajesh Jhaveri Stock
\nBrokers (P) Ltd.6 and Raymond Woollen Mills Ltd. vs. Income Tax
\nOfficer & Ors. in support of her defence.
\n6. The rival contentions now fall for our determination.
\n7. In the present case, we are concerned with the Assessment
\nYear 2012-13, for which, the Petitioner had submitted returns within
\nthe prescribed period, declaring total income of Rs.62,233\/-. The
\ncase was selected for scrutiny through CASS and notice was issued to
\nthe Petitioner under Section 143(2) of the IT Act, which was served
\nupon the Petitioner on 28-08-2013. Based upon the details
\nfurnished by the Petitioner to the AO, the assessment order dated 16th
\nMarch 2015 was made by the AO in terms of Section 143(2) of the
\nIT Act.
\n8. Paragraphs 3 and 4 of the assessment order dated 16th
\n4 [1961] 41 ITR 191 (SC)
\n5 [1967] 63 ITR 219(SC)
\n6 (2007) 291 ITR 0500
\n5 wp17-20dt.18-02-20
\nMarch, 2015 are relevant to the issues raised in the present Petition
\nand, therefore, the same are prescribed below for convenience of
\nreference :
\n\u201c3. In response to the notices issued, Shri Rajan Ramani,
\nChartered Accountant and the Authorized Representative of
\nthe assessee appeared from time to time and submitted the
\ndetails. The details produced have been verified and the
\ncase was heard. The assessee is carrying on the Real
\nEstate\/Builders & Developers.
\n4. After perusing the details submitted by assessee, the
\nassessment is concluded by accepting the return of income
\nof the assessee.\u201d
\n9. In fact, it is the case of the Petitioner that the Petitioner,
\nvide letter dated 20th February, 2015, in the course of assessment
\nproceedings before the AO had itself submitted that a few flats may
\nhave been allotted to persons in violation of Clause 10(f) of Section
\n80IB of the IT Act. However, in the same letter, it was contended
\nthat this ought not to be regarded as any breach of the provisions of
\nSection 80IB or in any case, this ought not to be regarded as any
\nbreach of the provisions of Section 80IB in its entirety and at the
\nhighest, benefit may be denied in respect of the transfers made in
\nbreach of Clause 10(f) of Section 80IB of the IT Act.
\n10. The Petitioner has pleaded that for the present, the
\nPetitioner does not have a copy of the letter dated 20th February,
\n6 wp17-20dt.18-02-20
\n2015 and, therefore, letters were addressed to the Respondents to
\nfurnish a copy of the same. However, the copy of the same has till
\ndate not been furnished by the Respondents.
\n11. The factum of address of the letter dated 20th February,
\n2015 is indisputable, because the Respondents have themselves not
\nonly referred to the letter dated 20th February, 2015, but also quoted
\nfrom the letter dated 20th February, 2015 in the Show Cause Notice
\ndated 17th December, 2019 issued to the Petitioner along with the
\nimpugned Order dated 17th December, 2019, by which the
\nobjections of the Petitioner to the reopening of the assessment came
\nto be rejected. Even the impugned order dated 17th December, 2019,
\nrejecting the Petitioner’s objections, makes a specific reference to the
\nPetitioner’s own letter dated 20th February, 2015 submitted during
\nthe assessment proceedings under Section 143(3) of the IT Act.
\n12. Both, the Show Cause Notice dated 17th December, 2019
\nand the impugned Order dated 17th December, 2019, specifically
\nstate that the Petitioner, in the course of the assessment proceedings
\nbefore the AO, had furnished a list of flat owners to whom flats were
\nsold in the project ‘Bay Village’. The notice and the impugned order
\nproceed to state that upon perusal of this list, coupled with the letter
\ndated 20th February, 2015, it transpires that there was noncompliance
\non the part of the Petitioner with the provisions of
\n7 wp17-20dt.18-02-20
\nSection 80IB, at least in so far as some of the sales were concerned.
\n13. Since, it is virtually an admitted fact that the Petitioner had
\nsubmitted a list of the flat owners and further, itself vide letter dated
\n20th February, 2015 pointed out that there may be breach in so far as
\nsale of some of the flats are concerned, it can really not be said by the
\nRespondents that there was no truthful or complete disclosures on
\nthe part of the Petitioners in the course of the assessment
\nproceedings itself. Merely making of bald statement that the assessee
\nhad not disclosed fully and truly all the material facts, is really never
\nsufficient in such matters.
\n14. In the case of Bombay Stock Exchange Ltd. (supra),
\nDivision Bench of this Court has held that though it is true that the
\nreasons for initiating reassessment proceedings do, in fact, state that
\nthere was violation on the part of the Petitioner to disclose fully and
\ntruly all material facts necessary for its assessment, however, making
\nof such bald assertion was not enough. Relying upon Hindustan
\nLever Ltd. vs. R.B. Wadkar, Assistant CIT, [2004] 268 ITR 232
\n(Bom), the Division Bench held that there is requirement of giving
\ndetails as to which fact or the material was not disclosed by the
\nPetitioner, leading to its income escaping assessment. In the said
\nmatter as well, there was only a bald assertion in the reasons that
\nthere was failure on the part of the Petitioner to disclose fully and
\n8 wp17-20dt.18-02-20
\ntruly all material facts, without giving any details thereof. The notice
\nproposing to reopen the assessment was quashed in such
\ncircumstances.
\n15. In the present case as well, apart from bald assertion that
\nthe Petitioner had not disclosed fully and truly all material facts, no
\ndetails have been disclosed as to the material which was allegedly not
\ndisclosed either truly, or fully. Rather, the record indicates that the
\nentire list of flat owners was disclosed. Further, vide letter dated 20th
\nFebruary, 2015, disclosures were made in relation to the sale
\ntransactions and it was even suggested that some of the sale
\ntransactions may not be compliant with the provisions of Clause
\n10(f) of Section 80IB of the IT Act. Clearly, therefore, the
\nRespondents have failed to make out any case that there was no true
\nand full disclosures by the Petitioner.
\n16. Section 147 of the IT Act empowers the AO who has
\nreason to believe that any income chargeable to tax has escaped
\nassessment for any assessment year, to reassess such income, no
\ndoubt, subject to the provisions of sections 148 to 153 of the IT Act.
\nThe proviso to Section 147, however, makes clear that where an
\nassessment under sub- section (3) of section 143 has been made for
\nthe relevant assessment year, no action shall be taken under Section
\n147 of the IT Act, after the expiry of four years from the end of
\n9 wp17-20dt.18-02-20
\nrelevant assessment year, unless any income chargeable to tax has
\nescaped assessment for such assessment year by reason of the failure
\non the part of the assessee, inter alia, \u201cto disclose fully and truly all
\nmaterial facts necessary for its assessment for that assessment year.\u201d
\n17. This means that normally, the limitation period for
\nreassessment under Section 147 of the IT Act is 4 years. However, in
\na case where the assessment has been made under Section 143(3) of
\nthe IT Act where, inter alia, the assessee fails to disclose fully and
\ntruly all material facts necessary for assessment for that assessment
\nyear, reassessment can be made even beyond the period of 4 years in
\nterms of Section 148 of the IT Act. Therefore, in order to sustain a
\nnotice seeking to reopen assessment beyond normal period of 4 years,
\nit is necessary for the Respondents to establish, at least, prima facie
\nthat there was failure to disclose fully and truly all material facts
\nnecessary for the assessment for that assessment year.
\n18. In the facts of the present case, the Respondents have failed
\nto establish this precondition even prima facie. Rather, the material
\non record establishes that there were full and true disclosures of all
\nmaterial facts necessary for the assessment of the Petitioner for the
\nAssessment Year 2012-13. Despite this, the impugned notice seeking
\nto reopen the assessment for the Assessment Year 2012-13 has been
\nissued beyond the normal period of 4 years. According to us, on this
\n10 wp17-20dt.18-02-20
\nshort ground the impugned notice dated 29th March, 2019 and the
\nimpugned order dated 17th December, 2019 are required to be
\nquashed and set aside.
\n19. The view which we have taken finds support in the
\ndecisions of the Division Bench of this Court in the case of Mrs.
\nParveen P. Bharucha (supra) and Zuari Foods and Farms Pvt. Ltd.
\n(supra).
\n20. The decisions relied upon by Ms. Linhares are quite
\ndistinguishable and will not apply to the fact situation in the present
\nmatter.
\n21. S. Narayanappa (supra) provides that where it was clear
\nfrom the material on record that there was nondisclosure on the part
\nof the assessee which led to underassessment of income, the Revenue
\nwas entitled to issue notice, seeking reopening of the assessment. In
\nthe present case, the material on record is clear, on that there was no
\nfailure to disclose true and full material facts on the part of the
\nPetitioner-assessee. Therefore, the decision in S. Narayanappa (supra)
\ncan be of no assistance to the Respondents-Revenue.
\n22. In Raymond Woollen Mills Ltd. (supra), the Hon’ble Apex
\nCourt has held sufficiency or correctness of the material on the basis
\n11 wp17-20dt.18-02-20
\nof which the AO may have had ‘reasons to believe’ is not to be
\nexamined at the stage of determining the validity of the notices,
\nseeking to reopen the assessment. In the present case, we have not at
\nall adverted to the sufficiency or correctness of the material. In fact,
\nthat issue is not being addressed, since one of the essential parameters
\nprecedent to reopening of assessment, has not at all been complied
\nwith by the Revenue.
\n23. In Rajesh Jhaveri Stock Brokers (P) Ltd. (supra), there is
\ndiscussion as to the circumstances in which it can be held that the
\nnotice seeking reassessment is based on a mere change of opinion by
\nthe AO. Again, we have not gone into this issue in the present matter
\nand, therefore, the decision is really not attracted in the present case.
\n24. The decision in Calcutta Discount Co. Ltd. (supra) in fact,
\nassists the case of the Petitioner rather than the Respondents. In this
\ndecision, the Hon’ble Supreme Court has held that it is the duty of
\nthe assessee to disclose fully and truly all primary relevant facts and
\nonce all primary facts are before the assessing authority, he requires
\nno further assistance by way of disclosure and it is for him to decide
\nwhat inference of facts can be reasonably drawn and what legal
\ninferences have ultimately to be drawn. However, if there are some
\nreasonable grounds for thinking that there had been underassessment
\nas regards any primary facts which could have a material
\n12 wp17-20dt.18-02-20
\nbearing on question of under-assessment, that would be sufficient to
\ngive jurisdiction to the ITO to issue notice for reassessment.
\n25. In the present case, as noted earlier, there is absolutely no
\nreference to any alleged material facts which the Petitioner failed to
\ndisclose in the course of the assessment proceedings. Rather, the
\nimpugned notice refers to the list, as well as the letter issued by the
\nPetitioner itself, which is sought to be made basis for reopening of the
\nassessment. In this case, it is apparent that all the primary facts were
\ndisclosed by the Petitioner. In fact, the Petitioner had disclosed truly
\nand fully all the material facts and it was open to the AO to take the
\nsame into account in the course of the assessment proceedings or, in
\nany case, it was open to the AO to issue notice for reassessment
\nwithin normal period of 4 years from the date of assessment.
\n26. For all the aforesaid reasons, we allow the present Petition
\nand quash and set aside the impugned notice dated 29th March,
\n2019 and the impugned order dated 17th December, 2019. Rule is
\naccordingly made absolute in terms of prayer clauses (a), (b) and (c)
\nof the Petition. There shall be no order as to costs.
\nNutan D. Sardessai, J. M.S. Sonak, J.<\/p>\n","protected":false},"excerpt":{"rendered":"
The decision in Calcutta Discount Co. Ltd in fact, assists the case of the Petitioner rather than the Respondents. In this decision, the Hon’ble Supreme Court has held that it is the duty of the assessee to disclose fully and truly all primary relevant facts and once all primary facts are before the assessing authority, he requires no further assistance by way of disclosure and it is for him to decide what inference of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. However, if there are some reasonable grounds for thinking that there had been underassessment as regards any primary facts which could have a material bearing on question of under-assessment, that would be sufficient to give jurisdiction to the ITO to issue notice for reassessment.<\/p>\n