ICICI Bank Ltd. v. Deputy Commissioner of Income Tax-2(3)(1) & Ors.

1. Deputy Commissioner of Income Deputy Commissioner of Income Tax-2(3)(1) Tax-2(3)(1) having his office at Room No.552, having his office at Room No.552, Aayakar Bhavan, M.Karve Road, Aayakar Bhavan, M.Karve Road, Mumbai-400020

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2. Union of India Union of India through Ministry of Law through Ministry of Law Aayakar Bhavan, Maharshi Karve Road, Aayakar Bhavan, Maharshi Karve Road, Mumbai-400020......Respondents Respondents Ms. Aarti Vissanji a/w Mr. S.J.Mehta for Petitioner. Ms. Aarti Vissanji a/w Mr. S.J.Mehta for Petitioner. Mr. Abhishek Mishra for Respondents. Mr. Abhishek Mishra for Respondents. CORAM: M. S. Sonak & Jitendra Jain, JJ. DATED: 11 February 2025 ORAL JUDGMENT (Per Jitendra Jain, J.):-

1. Heard learned counsel for the parties. Heard learned counsel for the parties.

2. Rule. Rule is made returnable immediately at the request of and Rule. Rule is made returnable immediately at the request of and with the consent of learned counsel for the parties. with the consent of learned counsel for the parties.

3. This petition challenges notice under Section 148 of the Income- This petition challenges notice under Section 148 of the Incometax Act, 1961 (hereinafter referred to as ‘the Act’) issued by the tax Act, 1961 (hereinafter referred to as ‘the Act’) issued by the respondent No.1 for the assessment year 2014 -15. respondent No.1 for the assessment year 2014 -15.

4. The reasons for re-opening were furnished to the petitioner on 25 The reasons for re-opening were furnished to the petitioner on 25 November 2011 and the same reads as under:- November 2011 and the same reads as under:-

5. Ms. Vissanji, learned counsel for the petitioner submits that the impugned notice is issued after a period of 4 years from the end of the impugned notice is issued after a period of 4 years from the end of the relevant assessment year and in the absence of any allegation of any relevant assessment year and in the absence of any allegation of any failure to disclose fully and truly all material facts necessary for the failure to disclose fully and truly all material facts necessary for the assessment, impugned notice is barred by the first proviso to Section assessment, impugned notice is barred by the first proviso to Section 147 of the Act. She further submits that the issue for which the re- 147 of the Act. She further submits that the issue for which the reopening is sought was raised in the course of the assessment opening is sought was raised in the course of the assessment proceedings and a reply was filed by the petitioner and same was proceedings and a reply was filed by the petitioner and same was considered in the assessment order. Therefore, based on this ground considered in the assessment order. Therefore, based on this ground also the impugned proceedings would amount to change of opinion. also the impugned proceedings would amount to change of opinion. She relied upon the decision in the case of She relied upon the decision in the case of Hindustan Unilever Limited Hindustan Unilever Limited Vs R.B. Wadkar Vs R.B. Wadkar[1] and decision of the co-ordinate bench of this Court in and decision of the co-ordinate bench of this Court in the petitioner’s own case in Writ Petition No.3108 of 2022 dated 31 the petitioner’s own case in Writ Petition No.3108 of 2022 dated 31 October 2022 in support of her submission and prayed that the October 2022 in support of her submission and prayed that the impugned notice be quashed. She further submits that all the details impugned notice be quashed. She further submits that all the details were furnished alongwith the return of income in the assessment were furnished alongwith the return of income in the assessment proceeding and the same is evident from the reasons recorded itself. proceeding and the same is evident from the reasons recorded itself.

6. Mr. Mishra learned counsel for the respondent defends the Mr. Mishra learned counsel for the respondent defends the impugned proceedings and submits that the petitioner has misimpugned proceedings and submits that the petitioner has misrepresented in so far as the issue of deduction under Section 36(1)(vii) represented in so far as the issue of deduction under Section 36(1)(vii) is concerned. He therefore submits that there is a failure on the part of is concerned. He therefore submits that there is a failure on the part of the petitioner to disclose fully and truly all material facts and therefore the petitioner to disclose fully and truly all material facts and therefore the proceedings are valid and same is not hit by the first proviso of the proceedings are valid and same is not hit by the first proviso of Section 147 of the Act. Section 147 of the Act.

7. We have heard learned counsel for the petitioner and respondent We have heard learned counsel for the petitioner and respondent and perused the documents brought to our attention. There is no and perused the documents brought to our attention. There is no dispute that the notice under Section 148 is issued after the expiry of dispute that the notice under Section 148 is issued after the expiry of period of 4 years from the end of the relevant assessment order. As per period of 4 years from the end of the relevant assessment order. As per 1 (2004) 268 ITR 332 the first proviso of Section 147 of the Act, re-assessment proceedings the first proviso of Section 147 of the Act, re-assessment proceedings cannot be initiated after period of 4 years from the end of the relevant cannot be initiated after period of 4 years from the end of the relevant assessment year unless there is a failure on the part of the assessee to assessment year unless there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. disclose fully and truly all material facts necessary for the assessment. The co-ordinate bench of this Court in the case of The co-ordinate bench of this Court in the case of Hindustan Unilever Hindustan Unilever Limited (Supra) Limited (Supra) has held that there has to be not only the allegation has held that there has to be not only the allegation that there is a failure on the part of the assessee to disclose fully and that there is a failure on the part of the assessee to disclose fully and truly all material facts but the reasons should also state what are the truly all material facts but the reasons should also state what are the material facts which were not disclosed. On a perusal of the reasons material facts which were not disclosed. On a perusal of the reasons recorded in the present case, we do not find any allegation of any recorded in the present case, we do not find any allegation of any failure to disclosure fully and truly of material facts necessary in the failure to disclosure fully and truly of material facts necessary in the assessment. But on the contrary on a perusal of the reasons recorded, it assessment. But on the contrary on a perusal of the reasons recorded, it shows that the information on the basis of which re-opening is sought shows that the information on the basis of which re-opening is sought was based on the documents filed by the petitioner alongwith the return was based on the documents filed by the petitioner alongwith the return of income and in the assessment proceeding. Therefore, on this short of income and in the assessment proceeding. Therefore, on this short ground itself the impugned proceedings are required to be quashed and ground itself the impugned proceedings are required to be quashed and set aside. set aside.

8. The learned counsel for the petitioner is justified in relying upon The learned counsel for the petitioner is justified in relying upon the decision in its own case in Writ Petition No.3108 of 2022 where on the decision in its own case in Writ Petition No.3108 of 2022 where on very similar ground the notice under Section 148 of the Act was very similar ground the notice under Section 148 of the Act was quashed. quashed.

9. In any case the assessing officer in the course of the assessment In any case the assessing officer in the course of the assessment proceedings had raised a query vide letter dated 1 July 2016 which proceedings had raised a query vide letter dated 1 July 2016 which reads as under: reads as under: Please give details of rural advances --- Please give details of claims of Please give details of rural advances --- Please give details of claims of deduction towards advances given by rural branches of banks and deduction towards advances given by rural branches of banks and justify allowability as to whether such branches are eligible to be justify allowability as to whether such branches are eligible to be treated as a ‘rural branch’ according to the definition given in treated as a ‘rural branch’ according to the definition given in Explanation (ia) to Section 36(1)(viia) of the Income-tax Act, 1961. Explanation (ia) to Section 36(1)(viia) of the Income-tax Act, 1961. Please give population as per 2011 census of place of rural branch, the Please give population as per 2011 census of place of rural branch, the total income and Bad debt, provisions of bad debt a/c u/s 36(1)(viia). total income and Bad debt, provisions of bad debt a/c u/s 36(1)(viia).

10. The said query was replied by the petitioner vide letter dated 21 The said query was replied by the petitioner vide letter dated 21 September 2017 and thereafter an assessment order was passed where September 2017 and thereafter an assessment order was passed where the issue relating to Section 36(1)(viia) and 36(1)(vii) was discussed in the issue relating to Section 36(1)(viia) and 36(1)(vii) was discussed in para 19 and 20 of the assessment order. para 19 and 20 of the assessment order.

11. In our view, if a query is raised and the assessee files its reply and In our view, if a query is raised and the assessee files its reply and the issue form subject matter of the assessment order, there can be no the issue form subject matter of the assessment order, there can be no question of any failure to disclose fully and truly all material facts but question of any failure to disclose fully and truly all material facts but on the contrary allowing the respondents to pursue the present on the contrary allowing the respondents to pursue the present proceeding would amount to empowering power of review on proceeding would amount to empowering power of review on respondents which the Act does not provide and which is not respondents which the Act does not provide and which is not permissible under the Act. Therefore, even on this ground, the permissible under the Act. Therefore, even on this ground, the impugned proceedings are required to be quashed and set aside. impugned proceedings are required to be quashed and set aside.

12. In view of the above, the Rule is made absolute in terms of prayer In view of the above, the Rule is made absolute in terms of prayer clause (a) which reads as under: clause (a) which reads as under: “(a) “(a) This Hon’ble Court may be pleased to issue under Article 226 of the This Hon’ble Court may be pleased to issue under Article 226 of the Constitution of India an appropriate direction, order or writ Constitution of India an appropriate direction, order or writ including a writ in the nature of Certiorari calling for the records of including a writ in the nature of Certiorari calling for the records of the case and after satisfying itself as to the legality thereof, quash the case and after satisfying itself as to the legality thereof, quash and set aside the notice dated 25.03.2021 (Exhibit ‘M’) issued by and set aside the notice dated 25.03.2021 (Exhibit ‘M’) issued by the Respondent No.1 and the order dated 17.01.2022 (Exhibit ‘Q’) the Respondent No.1 and the order dated 17.01.2022 (Exhibit ‘Q’) for the relevant assessment year.” for the relevant assessment year.” (Jitendra S. Jain, J.) (M. S. Sonak, J.)