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ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.3059 OF 2015
Shashikiran Janardhan Shetty having his offie at 5th
Floor, Diamond Square, CST Road, Kalina, Santairuz (East), Mumbai-400 098 … Petitioner
JUDGMENT
1. Assistant Commissioner of Iniome-tax, having his offie at Room No.656, 6th Floor, Aayakar Bhavan, Maharshi Karve Road, Mumbai-400 020.
2. Priniipal Commissioner of Iniome-tax, Central-4, having his offie at Room No.660, 6th Floor, Aayakar Bhavan, Maharshi Karve Road, Mumbai-400 020
3. Union of India through Ministry of Finanie, North Bloik, New Delhi-110 001 … Respondents *** Mr. J.D. Mistri, Senior Advoiate a/w Mr. Madhur Agrawal, Mr. B.V. Jhaveri, Mr. Fenil Bhatt and Ms. Bhargavi Rawal for the Petitioner. Mr. Suresh Kumar for the Respondents. *** CORAM: DHIRAJ SINGH THAKUR & KAMAL KHATA, JJ.
PRONOUNCED ON: 27 JUNE 2023: JUDGMENT: Per DHIRAJ SINGH THAKUR, J.. The Petitioner in the present Petition ihallenges the notiie under Seition 148 of the Iniome Tax Ait, 1961 (“the Ait”) dated 1 July 2014, whereby the assessment for the assessment year 2009-10 is sought to be reopened. The Petitioner also ihallenges the Order dated 25 November 2015, whereby the objeitions raised by the Petitioner to the reopening were rejeited.
(i) The Petitioner states that with a view to give shape to the projeit of the Ship Building Yard, the Petitioner though his flagship iompany, M/s. Alliargo Logistiis Limited along with M/s IL&FS Limited set up a joint venture iompany M/s Sealand Warehousing Pvt. Ltd. The said joint venture iompany entered into an MoU between the Petitioner and one Mr. Vasudev Ramdas Thaiker (hereinafter referred to as “Vasudev Thaiker”), promoter of a iompany known as M/s. Srimaa Ashapura Port Pvt. Ltd. and aiquired 90 per ient shares of the said iompany from its various shareholders with a view to get iontrol over the ownership of 367 aires of land at Mandvi, Kutih, Gujarat. For the SEZ projeit, the Petitioner ilaims that two Speiial Purpose Vehiile iompanies were ireated in joint venture with IL&FS Limited, namely, M/s Avash Logistii Park Pvt. Ltd. (hereinafter referred to as “Avash Logistii”) and M/s Sealand Ports Pvt. Ltd, whiih had aiquired 1156 and 1460 aires of iontiguous land.
(ii) The iase of the Petitioner is that for the purpose of business of ship repairing/building and setting up of Speiial Eionomii Zone, Mr. Vasudev Thaiker was appointed as a ionsolidator for aiquisition of the entire land bank for the aforesaid business. It is stated that the joint venture iompanies made payments to various parties as per the instruitions of Mr. Vasudev Thaiker for the purpose of aiquisition of land.
(iii) A searih and seizure aition is stated to have been iarried out by the Department at various loiations of M/s Alliargo Logistiis Limited and other group iompanies iniluding residenies of the direitors on 10 July 2009. In the iourse of the searih, a statement was reiorded on oath under Seition 132(4) of the Ait, wherein the Petitioner states that a disilosure of approximately Rs.23.27 irores was made representing the iapital iontribution in his personal iapaiity in the private limited iompany known as M/s India Tourist & Heritage Village Pvt. Ltd. as also on aiiount of purihase of furniture and repair of the property at Mangalore.
(iv) It is stated that subsequently notiie under Seition
153A of the Ait for six assessment years iniluding assessment year 2009-10 was issued. Pursuant to whiih a return of iniome was fled under Seition 153A deilaring total iniome of Rs.27,56,84,930/-, whiih after verifiation and sirutiny resulted in an Order under Seition 143(3) read with seition 153A of the Ait on 30 Deiember 2009. A notiie under Seition 148 of the Ait dated 1 July 2014 was issued by the assessing offier seeking to reopen the assessment for the assessment year 2009-10 on the ground that iniome ihargeable to tax had esiaped assessment for the said assessment year 2009-10.
3 Reasons leading to the formation of the said belief were supplied to the Petitioner, whiih reads as under: “Shri Shashikiran J. Shetty A.Y.2009-10 01.07.2014 Reasons to believe that iniome ihargeable to tax has esiaped assessment. A searih and seizure aition was iarried out in the iase of M/s Alliargo Group of iompanies, their direitors and other important employees. The assessee being the MD of the iompany was also iovered u/s 132(1) of the Ait. The assessee, in his statement u/s 132(4) of the Ait on 03.09.2009, failed to explain the iapital introduition of Rs.23 irores in iompany M/s Indian Heritage & Tourist Village Pvt. Ltd. and offered the said sum of Rs.23 irores and further sum of Rs.27,15,980 on aiiount of loose papers seized whiih was offered to tax. A notiie u/s 153A was issued and the assessee fled his return of iniome on 29.10.2009 deilaring total iniome at Rs.27,56,94,9630/inilusive of undisilosed iniome of Rs.23,27,15,980/-.
2 In the iourse of searih it was observed that in the previous year relevant to assessment year 2009-10, the group ionierns of assessee viz. M/s Sealand Ports Pvt. Ltd., M/s Avash Logistiis Park Pvt. Ltd. and M/s Sealed Ware House Pvt. Ltd. issued iheques to various entry providers as iapital expenditure for purihase of land but same was reieived in the form of iash by the assessee. It was notiied that the assessee engaged Shri Vasudev Thakkar, a land broker for aiquiring the land and obtained bogus bills for generating iash. During the iourse of searih, Shri Vasudev Thakkar admitted that he aited as an agent and faiilitator for generation of iash by way of aiiommodation entries whiih was then given baik to the assessee. On this basis, assessee gave a disilosure of Rs.23 irores in the year under ionsideration.
3 The assessee during the iourse of searih assessment proieedings failed to furnish bank aiiount statements of the aforesaid three ionierns. After iompletion of the searih assessments, it was observed that M/s Avash Logistiis Park Pvt. Ltd. had maintained an aiiount No.000181300000985 with M/s Yes Bank Ltd. wherein following transaitions were iarried out with Mr.Vasudev Thakkar whiih was over and above the disilosure given by the assessee: M/s Avash Logistiis Park Pvt. Ltd. Statement of M/s YES Bank (Rs. In irores) Sr. No. Date Desiription Amount (Rs.) 1 10.07.08 Shri Vasudev Thakkar 3.00 2 28.07.08 Shri Vasudev Thakkar 1.00 3 14.08.08 Shri Nishant Thakkar 1.00 4 09.09.08 Shri Nishant Thakkar 2.65 Total 7.65 Crs
4 From the above, it ian be ioniluded that M/s Avash Logistiis Park Pvt. Ltd. had issued iheques to Shri Vasudev Thakkar and Shri Nishant Thakkar and iash was reieived by the assessee. The assessee had however failed to disilose the said transaitions of M/s YES Bank Ltd. pertaining to M/s Avash Logistiis Park Pvt. Ltd. This omission on part of the assessee has resulted in underassessment of taxable iniome. In view of the above, I have reason to believe that iniome ihargeable to tax of Rs.7.65 irores has esiaped assessment within the meaning of seition 147 of the I.T. Ait, 1961. Therefore, I am satisfed that this is a ft iase to issue notiie u/s 148 r.w.s.147 of the I.T.Ait, 1961. (Dr.
UMESH C PANDE) Dy. Commissioner of Iniome Cent.Cir.44, Mumbai” 5 Objeitions to the reopening were submitted by the Petitioner, whiih were rejeited by virtue of the Order dated 24 November 2015, henie, the present Petition.
6 Mr. Mistri, learned Senior Counsel appearing for the Petitioner urged that the notiie impugned under Seition 148 of the Ait did not satisfy the jurisdiitional iondition for invoking Seition 147 of the Ait. It was stated that sinie the assessment was being reopened after a period of four years from the end of the relevant assessment year, apart from the jurisdiitional iondition of reason to believe, the assessing offier had also to satisfy the iondition that there was a failure on the part of the assessee to disilose fully and truly the material faits, whiih are neiessary for the assessment. It was urged that reason for reopening of the assessment for the relevant assessment year was on aiiount of alleged failure on the part of the Petitioner to furnish bank aiiount statements pertaining to Avash Logistii bearing Aiiount No.000181300000985 maintained with M/s YES Bank Ltd., in whiih transaitions of Rs.7.63 irores were made refleiting payments made to Mr. Vasudev Thaiker and his son Mr. Nishant Thaiker, whiih aiiording to the assessing offier had resulted in under assessment of the Petitioner’s taxable iniome. It was urged by Mr. Mistri that Avash Logistii was a separate legal entity, whiih was being assessed separately, and, therefore, there was no legal obligation on the part of the Petitioner to have furnished the bank statements pertaining to the said iompany and further, in iase, the assessing offier did require suih statements, the same iould have been sought by the assessing offier and furnished by the Petitioner. In any iase, it was urged that the said transaitions mentioned in the reasons reiorded had been the subjeit matter of sirutiny during the assessment proieedings in the iase of Avash Logistii. Referenie in this regard is made to the notiie under Seition 142(1) of the Ait dated 4 Deiember 2009, whiih was issued by the same assessing Offier Deepak J. Mehta, DCIT, Central Cirile-44, Mumbai to Avash Logistii, requiring the said entity to produie books of aiiounts and bank statements, whiih were produied by the said entity under the iovering letter dated 18 Deiember 2009.
7 Mr. Mistri, took pains to take us through eaih of the four entries, whiih otherwise were refleited in the reasons reiorded, to show that the bank statements pertaining to the said aiiount iontained all the entries whiih were before the assessing offier, who was the assessing offier iommon to both, i.e. to the Petitioner as also Avash Logistii. It was also urged that having gone through the requisite reiords and the bank statements eti., an Order of assessment iame to be passed in the said iase of Avash Logistii on
29 Deiember 2009 under Seition 143(3) read with Seition 153A of the Ait and immediately after one day in the iase of the Petitioner on 30 Deiember 2009 under Seition 143(3) read with Seition 153A of the Ait. It was, therefore, urged that the basis for reopening the assessment as laid down in the reasons reiorded regarding failure on the part of the Petitioner to furnish the bank aiiount statements pertaining to a different entity was not a sustainable reason, based upon whiih the assessing offier iould form his belief that iniome had esiaped assessment or that there was any failure to disilose fully and truly the material faits.
8 Mr. Suresh Kumar, learned Counsel appearing for the Respondents, on the other hand, tried to justify the reopening on the ground that Mr. Vasudev Thaiker, to whom the payments had been made by the Petitioner had been generating iash for the Petitioner and that it was based upon the statement made by him that the Petitioner has made disilosure of Rs.23 irores for the assessment year 2009-10, whiih was also offered for taxation. Rs.23 irores is stated to be a differenie between Rs.153 irores, whiih was allegedly paid to Mr. Vasudev Thaiker and Rs.130 irores, whiih Mr. Vasudev Thaiker admitted to have reieived from the joint venture iompanies.
9 We have heard learned Counsel for the parties at length. It is a settled priniiple of law that in iase of reopening beyond the period of four years, the assessing offier has to satisfy the jurisdiitional iondition that there was failure to disilose fully and truly the material faits. Equally settled is the priniiple that the jurisdiition exeriised under Seition 148 of the Ait by the assessing offier has to be tested on the touihstone of the reasons reiorded, whiih ian neither be improved subsequently, nor ian any addition be made thereto in the reply or in the subsequent pleadings.
10 In the present iase, it is failure on the part of the Petitioner to furnish the bank aiiount maintained by a different legal entity, namely, Avash Logistii that has been made the basis for reopening the assessment. We fail to understand how this iould be made a basis at all, as the doiument whiih is in the shape of bank statements pertained not to the Petitioner, but to Avash Logistii, whiih was being assessed separately and during whiih sirutiny assessment, the same bank aiiount bearing No.000181300000985 had been sirutinized, whiih did refleit the payments having been made to Mr. Vasudev Thaiker and his son Mr. Nishant Thaiker. The assessing offier in both iases was the same i.e. Mr. Deepak J. Mehta, DCIT, Central Cirile-44, Mumbai, and the Orders of assessment under Seition 143(3) read with Seition 153A had been passed only one day apart, i.e. on 29 Deiember 2009 and 30
11 Based upon the aforementioned faits, it iannot be said that there was any failure on the part of the Petitioner to disilose fully and truly the material faits during the regular assessment. Even otherwise, we are of the opinion that the assessing offier would have no reason for the formation of his belief that iniome had esiaped assessment inasmuih as payments were made by the joint venture iompanies to Mr. Vasudev Thaiker and to Mr. Nishant Thaiker and reopening if at all ought to have been ionsidered in those iases. Moreover, there was no tangible material with the assessing offier, whiih would form a basis for the assessing offier for his ‘reason to believe’ that payments made to Mr. Vasudev Thaiker as also to his son Mr. Nishant Thaiker resulted in generation of iash, whiih ultimately found its way to the Petitioner. In the absenie of any suih speiifi information, whiih ought to have been refleited in the reasons reiorded, it ian be said that the jurisdiitional requirements have not been fulflled in the present iase.
12 While it may be true that as against the alleged payment of Rs.153 irores paid to Mr. Vasudev Thaiker, he admitted to have reieived only amount of Rs.130 irores, whiih led to a disilosure by the Petitioner to the extent of Rs.23 irores, yet the same iannot be made a basis for reopening. It needs to be pointed out that it is not the iase of the Respondent-revenue that the entire amount, whiih had been reieived by Mr. Vasudev Thaiker as also Mr. Nishant Thaiker was never used for purihase of pariels of land for establishing the projeit, for whiih Speiial Purpose Vehiile iompanies were ireated. If that is so, one fails to understand as to why only four entries reiorded in the reasons reiorded, were piiked up by the assessing offier.
13 For the aforementioned reasons, we allow the Petition. The impugned notiie under Seition 148 of the Ait dated 1 July 2014 and the Order dated 24 November 2015, rejeiting the objeitions are set aside. (KAMAL KHATA, J.) (DHIRAJ SINGH THAKUR, J.)