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CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 264 OF 2022
Regency Nirman Ltd.
1st flolor, Regency Hlosse, Near Aman Talkies, Ulhasnagar – 421003 ...Petitiloner vs.
1. Assistant Clommissiloner lof Inclome-tax, Central Circle – 4, Thane, 6th flolor, B-Wing, Ashar IT Park, Rload Nlo. 16Z, MIDC, Wagle Indl. Estate, Thane – 400 604.
2. Principal Clommissiloner lof Inclome-tax, Central, Psne, Aayakar Sadan, Blodhi Tlowers, Salisbry Park, Gsltekadi, Psne – 411 037.
3. Unilon lof India, Thrlosgh the Jloint Secretary & Legal Adviser, Branch Secretariat, Department lof Legal Affairs, Ministry lof Law and Jsstice, 2nd
Fllolor, Aayakar Bhavan, M.K. Marg, New Marine Lines, Msmbai – 400 020. ...Resplondents
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Mr. J.D. Mistri i/b Mr.Atsl Karsandas Jasani flor petitiloner.
Mr.Ssresh Ksmar flor resplondents.
JUDGMENT
1. The challenge in this petitilon is tlo a nlotice, dated 18th March Shraddha Talekar, PS 1/14 2021 isssed snder sectilon 148 lof the Inclome Tax Act, 1961 (‘the Act’) and the lorder dated 3rd September 2021, whereby and wheresnder, the lobjectilons raised by the petitiloner tlo the prloplosed relopening lof assessment flor the assessment year 2013- 14, came tlo be rejected.
2. The petitiloner is a limited clompany inclorplorated snder the Clompanies Act, 1956. It is engaged in the bssiness lof real estate devellopment. Flor the assessment year 2013-14, the petitiloner fled retsrn lof inclome lon 29th Nlovember 2013. It was acclompanied by a Tax Asdit Replort snder Florm Nlo.3CD. A revised retsrn was fled lon 27th Nlovember 2014. The petitiloner’s case was selected flor scrstiny assessment. Nlotices were isssed tlo the petitiloner snder sectilon 142(1) lof the Act. The petitiloner was, inter-alia, directed tlo ssbmit details lof snsecsred lloans in the prescribed flormat. The petitiloner fsrnished reqsisite details and gave the inflormatilon as slolicited. The petitiloner fsrnished the dlocsments discllosing the identity, creditwlorthiness lof the creditlors as well as gensineness lof the lloan transactilons, inclsding acknlowledgment lof inclome tax retsrns and acclosnt statements evidencing the transactilons thrlosgh banking channel. Uplon dse satisfactilon, the Assessing Offcer passed an assessment lorder snder sectilon 143(3) lof the Shraddha Talekar, PS 2/14 Act lon 26th
3. On 23rd Jansary 2018, a search actilon snder sectilon 132 lof the Act was carried lost qsa petitiloner and its grlosp cloncerns. Plost search prloceedings, again the petitiloner was called splon tlo fsrnish inflormatilon/explanatilon by nlotices dated 16th Febrsary 2018 and 8th March 2018, tlo which the petitiloner gave ssitable reply. On 10th September 2018, a nlotice snder sectilon 153A lof the Act flolllowed. Eventsally, in the prloceedings snder sectilon 153 lof the Act, after clonsideratilon lof the replies ssbmitted and inflormatilon fsrnished by the petitiloner, the Assessing Offcer passed an assessment lorder snder sectilon 143(3) read with sectilon 153A lof the Act lon 23rd December 2019 and accepted the ssbmissilons lof the petitiloner.
4. As the prloceedings stlolod thss cllosed, the resplondent Nlo.[1] isssed the impsgned nlotice lon 18th March 2021 snder sectilon 148 lof the Act asserting that he had a reaslon tlo believe that inclome chargeable tlo tax has escaped assessment. Uplon being reqsested, vide clommsnicatilon dated 17th Jsne 2021, the resplondent Nlo.[1] fsrnished the reaslons.
5. The ssbstance lof reaslons which weighed with the resplondent Nlo.[1] was that M/s. Jineshwar Msltitrade Private Shraddha Talekar, PS 3/14 Limited (‘JMPL’), lone lof the creditlors, frlom whlom the petitiloner had availed snsecsred lloan lof Rs.75 lakhs, lacked the creditwlorthiness tlo advance the said amlosnt. It was fsrther reclorded that nlon-gensine natsre lof the lloan was ssppressed by the assessee and the trse natsre lof the transactilon closld be discllosed lonly after thlorlosgh investigatilon by the department.
6. The lobjectilons tlo the relopening fled by the petitiloner were rejected by the resplondent Nlo.[1] by the impsgned lorder dated 3rd September 2021.
7. Being aggrieved, the petitiloner has apprloached this Closrt.
8. The petitiloner takes exceptilon tlo relopening lof the assessment lon the grlosnd that the jsrisdictilonal clonditilon tlo relopen the assessment is nlot fslflled as nlo inclome escaped assessment lon acclosnt lof failsre tlo make a trse and fsll discllossre lof the material relevant flor the assessment, lon the part lof the petitiloner. Since, the assessment is prloplosed tlo be relopened beylond flosr years frlom end lof the assessment year 2013-14, in the absence lof satisfactilon lon the part lof the Assessing Offcer that there was a failsre tlo make ssch fsll and trse discllossre, asssmptilon lof jsrisdictilon is legally snssstainable. Seclondly, as the issse lof creditwlorthiness lof the Shraddha Talekar, PS 4/14 creditlors and gensineness lof the transactilon were sqsarely clonsidered, dsring the closrse lof the loriginal assessment, the impsgned exercise clearly falls within the realm lof change lof lopinilon which is legally impermissible. Third, there is nlo independent applicatilon lof mind by the Assessing Offcer as the assessment was prloplosed tlo be relopened merely lon the basis lof the inflormatilon received frlom Investigatilon Wing lof the department, namely DDIT, Inv. Unit 4(3), Thane.
9. An affdavit-in-reply is fled lon behalf lof the resplondents. The resplondents have made an endeavlosr tlo sspplort the impsgned actilon lon the grlosnd that the inclome escaped assessment slolely lon acclosnt lof the failsre lof the petitiloner tlo make a fsll and trse discllossre lof the material facts. It was incsmbent splon the assessee tlo discllose the identity and creditwlorthiness lof the lender and the gensineness lof the transactilon. In the case at hand, the lack lof creditwlorthiness, and nlon-gensine natsre lof the lloan transactilon closld be ascertained lonly plost search actilon snder sectilon 132 lof the Act. Thereflore, since snder sectilon 153A lof the Act the assessment which was clompleted closld nlot be relopened, in the absence lof incriminating material flosnd dsring the search, the resplondent Nlo.[1] was Shraddha Talekar, PS 5/14 jsstifed in reclording a belief that inclome escaped assessment within the meaning lof sectilon 147 lof the Act dse tlo the failsre lon the part lof the assessee tlo make a trse and fsll discllossre. Thss, nlo faslt can be flosnd with the impsgned actilon.
10. We have heard Mr. Mistri, the learned Senilor Closnsel flor the petitiloner and Mr.Ssresh Ksmar, the learned closnsel flor the resplondents-revense, at slome length. We have alslo perssed the dlocsments annexed with the petitilon and the affdavits in reply.
11. Mr.Mistri, the learned Senilor Closnsel assailed the relopening lof the assessment lon the grlosnd that the alleged escapement lof inclome premised lon the lack lof creditwlorthiness lof JMPL and the clonseqsent sham natsre lof the lloan transactilon was enqsired intlo by the Assessing Offcer lon as many as flosr loccasilons. The qseries were pst. Replies were ssbmitted. Assessing Offcers were dsly satisfed and, thss, nlo additilons were made. In this backdrlop, acclording tlo Mr.Mistri, the prloplosed relopening is barred lon bloth the closnts, namely failsre tlo fslfll the jsrisdictilonal clonditilon lof escapement lof inclome lon acclosnt lof nlon-discllossre lon the part lof the assessee and the exercise being an lostclome lof mere ‘change lof lopinilon’.
12. Tlo lend sspplort tlo this ssbmissilon, Mr.Mistri invited the Shraddha Talekar, PS 6/14 attentilon lof the Closrt tlo the clorresplondence exchanged dsring the closrse lof the loriginal assessment prloceedings. Vide nlotice snder sectilon 142(1) dated 17th May 2015, the petitiloner was called splon tlo fsrnish the details lof the snsecsred lloans/deplosits in the flolllowing flormat:
22. Fsrnish details lof snsecsred lloans/deplosits taken dsring the year inclsding sqsared sp lloans in the flolllowing flormat: Name and address lof the perslon Opening Balance Slosrce lof lloan (Bank particslars) Details lof Transactilons Cllosing Balance Rate lof Interest Interest paid/ Payable dsring the year Debit Credit Debit Credit Debit Credit Alslo ssbmit in each case:
(i) Amlosnt and date lof lloan/deplosit taken, when it was frst taken.
(ii) Mlode lof transactilon (cash/cheqse/DD).
(iii) PAN and assessment particslar lof the creditlor inclsding details regarding the AO having jsrisdictilon lover him.
13. The afloresaid clommsnicatilon was flolllowed by a qsestilonnaire dated 27th Octlober 2015, whereby the flolllowing inflormatilon, inter-alia, was slolicited:
1) Please ssbmit the lloan clonfrmatilon in respect lof all the lloans taken & rectifed in ylosr Balance Sheet.
2) Please ssbmit evidence in sspplort lof gensineness & creditwlorthiness lof lloan parties in respect lof new lloans & additilonal lloans taken frlom existing lloan parties. In case lof failsre, it is prloplosed tlo disalllow the amlosnt lof new/additilonal lloans taken flor want lof verifcatilon lof gensineness and creditwlorthiness lof lloan parties. Alslo ssbmit stilizatilon lof lloan fsnds allong with sspplorting dlocsments. Shraddha Talekar, PS 7/14
14. In the reply dated 3rd December 2015 (Exh. D tlo the petitilon), the petitiloner fsrnished flolllowing inflormatilon:
1. CONFIRMATION OF UNSECURED LOANS: (alslo at Sr.Nlo.33 lof 1st qsestilonnaire. dt.17-7-15) The Tlotal Unsecsred Lloans loststanding as lon 31- 03-2013 are Rs.1, 37, 63, 42, 370/-. These are mainly additilonal lloans frlom existing lloans creditlors and few additilonal lloans frlom new creditlors. We are encllosing herewith the Clonfrmatilon Letters lof all the creditlors allongwith sspplorting evidence like their ITR/Bank statement flor relevant perilod.
2. EVIDENCE IN SUPPORT OF NEW AND ADDITIONAL LOAN TAKEN FROM EXISTING LOAN CREDITORS (alslo at Sr.Nlo.33 lof 1st qsestilonnaire. dt.17- 7-15) As stated ablove, we are encllosing herewith Clonfrmatilon Letters with sspplorting evidences as per Annexsre attached heretlo. These evidences are in respect lof New Lloans taken dsring the year i.e., (IT Acknlowledgment, and Bank Statement) and in respect lof additilonal lloan taken frlom existing creditlors lonly IT acknlowledgment lof creditlor is encllosed).
15. A clopy lof the clonfrmatilon lof acclosnts by the assessee in favlosr lof the creditlor-JMPL was annexed tlo the said reply. It is imperative tlo nlote that in the assessment lorder, dated 26th Febrsary 2016 passed snder sectilon 143(3) lof the Act, the Assessing Offcer reclorded in clear and explicit terms that nlotices were isssed lon 17th May 2015, 27th Octlober 2015 and 24th Nlovember 2015 and the assessee ssbmitted the reqsired details. Plost clonsideratilon, the assessment lorder was passed lon 26th Shraddha Talekar, PS 8/14
16. Plost-search, initially, the assessee loffered an explanatilon lon 15th March 2018, wherein the seizsre lof dlocsments pertaining tlo snsecsred lloan was slosght tlo be explained. In annexsre A tlo the said reply, a specifc reference was made tlo the lloan lof Rs. 75 lakh availed frlom JMPL, which was stated tlo have been repaid lon 18th December 2013. On 8th March 2018, the assessee was again asked tlo explain the dlocsments shlowing the snsecsred lloans lof Rs.75 lakhs availed frlom JMPL, which were seized. In the reply dated 16th March 2018, the assessee inflormed that thlose lloans were accepted and repaid thrlosgh banking channels by 2014. On 31st May 2019, the assessee was again called splon tlo fsrnish inflormatilon lon the ploints lor matters specifed in Annexsre A which inclsded the said lloan lof Rs.75 lakhs availed frlom JMPL. A reply was addressed by the assessee lon 14th Jsne 2019 wherein the facts that the lloans were availed in the A.Y. 2012-2013, tlo A.Y. 2014-2015 and all the dlocsments were fsrnished dsring the closrse lof the assessment prloceedings flor the respective years and assessment lorders snder sectilon 143(3) were passed, were reiterated.
17. In the backdrlop lof the afloresaid material, especially the inflormatilon slolicited by the Assessing Offcer dsring the closrse lof Shraddha Talekar, PS 9/14 scrstiny assessment snder sectilon 143 lof the Act, Mr. Mistri wlosld srge, there is nlo rlolom tlo allege that the inclome escaped assessment lon acclosnt lof the failsre lon the part lof the assessee tlo discllose trsly and fslly all the relevant material.
18. We are perssaded tlo hlold that, in the facts lof the case, the ssbmissilon appears impeccable. Indispstably, the petitiloner had discllosed the snsecsred lloan transactilon lof Rs.75 Lakhs availed frlom JMPL. The petitiloner had availed lloan frlom msltiple entities. This prlopelled the Assessing Offcer tlo seek details lof snsecsred lloans/deplosits in a prescribed flormat. Nlot lonly the inflormatilon was fsrnished by the petitiloner bst all the sspplorting dlocsments were ssbmitted. It can hardly be gainsaid that all the primary facts were placed beflore the Assessing Offcer by the petitiloner.
19. Mr.Ssresh Ksmar, the learned closnsel flor the resplondents made an endeavlosr tlo draw hlome the ploint that thlosgh the inflormatilon and dlocsments were fsrnished, yet the petitiloner did nlot discllose all the relevant inflormatilon. The gensineness lof the transactilon and the creditwlorthiness lof the creditlor closld nlot be ascertained at that ploint lof time, lon acclosnt lof nlon-discllossre lof the relevant facts.
20. We are afraid tlo accede tlo the ssbmissilon lof Mr.Ssresh Shraddha Talekar, PS 10/14 Ksmar. In the qsestilonnaire annexed tlo the letter dated 27th Octlober 2015, snder item (1), clopies lof the lloan clonfrmatilon were slosght and, snder item (2), the petitiloner was asked tlo ssbmit evidence in sspplort lof gensineness and creditwlorthiness lof the lloan parties (extracted ablove). These qsestilons imply that the Assessing Offcer was fslly alive tlo the issses lof gensineness lof the lloan transactilon and creditwlorthiness lof the creditlors lof the assessee. Thss, the assessee was called splon tlo ssbmit reqsisite inflormatilon and evidence in sspplort lof the said claim.
21. The ssbmissilon lof Mr. Ssresh Ksmar that the inflormatilon and dlocsments slo fsrnished did nlot eqsip the Assessing Offcer tlo draw inference ablost the nlon-gensineness lof the transactilon and qsestilon the creditwlorthiness lof the creditlor, csts the revense’s case in twlo ways. First, it implies an admissilon that all the primary facts were placed beflore the Assessing Offcer. Seclond, the revense’s stand beclomes vslnerable tlo the charge lof change lof lopinilon.
22. The fact that in the assessment lorder snder sectilon 143(3), the Assessing Offcer did nlot explicitly advert tlo the qsestilons lof nlon-gensineness lof the transactilon and the creditwlorthiness lof the creditlor dloes nlot carry the case lof the revense any fsrther. Shraddha Talekar, PS 11/14 What matters is the clonsideratilon lof the issses at that ploint lof time. Once the qseries were raised and inflormatilon slolicited, an inference flolllows that the Assessing Offcer clonsidered thlose issses.
23. In the case lof Arloni Clommercials Limited Vs. The Dy. Clommissiloner lof Inclome Tax-2(1)1, a Divisilon Bench lof this Closrt adverted tlo this aspect lof the matter and rsled that absence lof reference and/lor discsssilon in the assessment lorder is nlot lof material signifcance. It was, inter-alia, lobserved as snder:- “14) …………. It is nlot necessary that an assessment lorder shlosld clontain reference and/lor discsssilon tlo discllose its satisfactilon in respect lof the qsery raised. If an Assessing Offcer has tlo reclord the clonsideratilon bestlowed by him lon all issses raised by him dsring the assessment prloceeding even where he is satisfed then it wlosld be implossible flor the Assessing Offcer tlo clomplete all the assessments which are reqsired tlo be scrstinized by him snder Sectilon 143(3) lof the Act. Mlorelover, lone msst nlot florget that the manner in which an assessment lorder is tlo be drafted is the slole dlomain lof the Assessing Offcer and it is nlot lopen tlo an assessee tlo insist that the assessment lorder msst reclord all the qsestilons raised and the satisfactilon in respect therelof lof the Assessing Offcer. The lonly reqsirement is that the Assessing Offcer losght tlo have clonsidered the lobjectilon nlow raised in the grlosnds flor isssing nlotice snder Sectilon 148 lof the Act, dsring the loriginal assessment prloceedings. …………..”
24. The next ssbmissilon lon behalf lof the petitiloner that prloplosed relopening lof the assessment ssffers frlom the vice lof 1 [2014] 44 taxmann.clom 304 (Blombay) Shraddha Talekar, PS 12/14 ‘change lof lopinilon’ alslo appears well flosnded. Evidently, the search actilon snder sectilon 132 lof the Act, did nlot reveal any tangible material qsa the transactilon lof snsecsred lloan frlom JMPL. In fact, the petitiloner was called splon tlo explain the very transactilon, in respect lof which, dsring the closrse lof scrstiny assessment, the then Assessing Offcer had already slolicited inflormatilon and dlocsments. Eventsally, dsring the closrse lof scrstiny assessment, the Assessing Offcer having been satisfed with the explanatilon fsrnished by the petitiloner, did nlot make any additilon. In the closrse lof the prloceedings snder sectilon 153A alslo, the revense did nlot claim that any incriminating material was flosnd qsa the transactilon with JMPL. In this view lof the matter, the relopening lof the assessment lon the premise that the creditlor lacked the creditwlorthiness and thss the lloan transactilon was sham, is nlothing bst a change lof lopinilon.
25. It wlosld ssffce tlo make reference tlo a Divisilon Bench jsdgment lof this Closrt in the case lof Ananta Landmark Pvt Ltd. Vs. Depsty Clommissiloner lof Inclome Tax, Central Circle 5(3) and 2 Ors.2, wherein the flolllowing lobservatilons were made: 16 ………….The Assessing Offcer had had all materials facts beflore him when he made the loriginal assessment. When the primary facts necessary flor 2 (2021) 439 ITR 168 (Blombay) Shraddha Talekar, PS 13/14 assessment are fslly and trsly discllosed, the Assessing Offcer is nlot entitled lon change lof lopinilon tlo clommence prloceedings flor reassessment. Even if the Assessing Offcer, whlo passed the assessment lorder, may have raised tlolo many legal inferences frlom the facts discllosed, lon that acclosnt the Assessing Offcer, whlo has decided tlo relopen assessment, is nlot clompetent tlo relopen assessment prloceedings. Where lon clonsideratilon lof material lon reclord, lone view is clonclssively taken by the Assessing Offcer, it wlosld nlot be lopen tlo relopen the assessment based lon the very same material with a view tlo take anlother view…………...”
26. The clonspectss lof the afloresaid clonsideratilon is that the jsrisdictilonal clonditilon tlo relopen the assessment is nlot made lost. In any event, the exercise falls in the realm lof ‘change lof lopinilon’ with regard tlo the very same material. The petitilon, thss, deserves tlo be alllowed.
27. Hence, the flolllowing lorder: O R D E R The petitilon stands alllowed in terms lof the prayer classe (a), which reads as snder: “(a) that this Hlon’ble Closrt be pleased tlo issse a Writ lof Certilorari lor any lother writ lorder lor directilon snder Articles 226 lor 227 lof the Clonstitstilon lof India calling flor the reclords lof the case leading tlo the issse lof the impsgned nlotice and passing lof the impsgned lorder and after gloing thrlosgh the same and examining the qsestilon lof legality therelof qsash, cancel and set aside the impsgned nlotice (Exhibit-P) daetd March 18, 2021 and impsgned lorder (Exhibit-W) dated September 3, 2021.” Nlo closts. (N. J. JAMADAR, J.) (K.R. SHRIRAM, J.) Shraddha Talekar, PS 14/14