Gujarat High Court
Shefali Chintan Parikh vs Assistant Commissioner Of Income Tax ... on 22 August, 2023
Author: Biren Vaishnav
Bench: Biren Vaishnav, Bhargav D. Karia
NEUTRAL CITATION
C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 20723 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BIREN VAISHNAV
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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SHEFALI CHINTAN PARIKH
Versus
ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 5(2)(1)
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Appearance:
MR B S SOPARKAR, ADVOCATE (6851) for the Petitioner(s) No. 1
MR.VARUN K.PATEL, SENIOR STANDING COUNSEL with MR.DEV
PATEL, ADVOCATE (3802) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 22/08/2023
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV) Page 1 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023 NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined
1. By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed for a direction to quash and set aside the notice dated 28.03.2019 issued under Section 148 of the Income Tax Act.
2. Facts in brief are as under:
2.1 The petitioner, an individual, filed his return of income for assessment year 2012-13 on 30.09.2012 declaring total income of Rs.1,52,83,010/-. The case was selected for scrutiny and was accordingly scrutinized. It is the case of the petitioner that at the time of original assessment, specific questions regarding the sale of land, value of the sale and deviation from the Jantri value were raised by notice dated 11.09.2014 which was replied vide letters dated 12.01.2015 and 03.03.2015. It was also Page 2 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023 NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined investigated by the Intelligence and Criminal Investigation Department as is evident from its letter dated 14.12.2013 which was replied on 24.02.2014. An assessment order was made on 19.03.2015.
2.2 The respondent issued notice under Section 148 of the Act on 28.03.2019 for the A.Y. 2012-
13. In response thereto, the petitioner sought reasons for reopening, which was supplied on 09.04.2019. The petitioner by letter dated 24.04.2019 raised various objections on merits and on law. Vide order dated 15.11.2019, the respondent disposed of the objections and rejected the same.
3. Mr.B.S.Soparkar learned counsel for the petitioner made the following submissions: Page 3 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023
NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined 3.1 Reading the reasons supplied on 09.04.2019, Mr.Soparkar would submit that there was no failure to disclose fully and truly all material facts. Four years have elapsed from the end of AY 2012-13 and therefore notice under Section 148 is barred by the proviso to Section
147. 3.2 He would submit that the reasons to believe that income has escaped assessment would indicate that it is based on the information which has been received from the DIT (I & CI), Ahmedabad, vide letter dated 16.02.2015 with respect to the sale of immovable property. He would submit that this information was available as the assessment order was passed on 19.03.2015.
3.3 Mr.Soparkar would further submit that DIT Page 4 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023 NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined (I & CI), on 24.12.2013 inquired from the assessee by a letter dated 24.12.2013 for the very same land and the assessee supplied the information by a response dated 24.02.2014.
3.4 The Assessing Officer had also raised specific queries regarding the sale of land vide notice dated 11.09.2014 under Section 142(1) of the Income Tax Act, 1961, and the assessee had given the required details in response thereto by a communication dated 12.01.2015 disclosing the details of the transactions. He would submit that it was specifically pointed out that quoting of a wrong PAN was inadvertent typographical error in the document.
3.5 Mr.Soparkar would further submit that no fresh tangible material was available and only the assessment record was looked into. No new Page 5 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023 NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined material or information came to the notice of the authorities.
3.6 Mr.Soparkar would submit that notices were issued by DIT (I & CI) Officer, as well as the Assessing Officer inquiring into the very same land and the very same issue of applicability of Section 50C. The petitioner provided detailed replies to the same. The then Assessing Officer had taken all those replies into consideration while passing the assessment order. Now therefore, by giving a different treatment to the very same issue, it was a mere change of opinion.
3.7 Assailing the reasons to be without application of mind, Mr.Soparkar would submit that time and again the assessee has submitted before the Assessing Officer that the assessee is engaged in the business of trading of land and Page 6 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023 NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined therefore Section 50C has no application.
3.8 Mr.Soparkar would further submit that there is no income that suggests it had escaped assessment.
4. Mr.Varun Patel learned Senior Standing Counsel with Mr.Dev Patel learned advocate for the respondent, based on the affidavit-in-reply filed by the respondent would submit that the case was taken up for reassessment after duly recording the reasons for reopening. Since the matter fell beyond the period of four years, sanction envisaged under Section 151 of the Act was obtained. He would submit that it cannot be inferred that since the information was supplied earlier, it was a case of "borrowed satisfaction".Page 7 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023
NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined 4.1 He would further submit that it cannot be termed that the Assessing Officer cannot take a view either against or in favour of the assessee. If any item has escaped from the assessment which was otherwise includable which the Assessing Officer noticed subsequently on his own investigation, it will never amount to change of opinion.
4.2 Mr.Patel would submit that the transaction itself on the basis of subsequent information is found to be bogus transaction. Mere disclosure at the time of original assessment proceedings need not mean that the disclosure was true and full.
4.3 He would submit that by mentioning an incorrect 'PAN' in the sale deed, it is apparent that there was a deliberate attempt of the Page 8 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023 NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined petitioner to keep herself out of the purview of the income tax department's verification.
5. Having considered the submissions made by the learned counsel for the respective parties, it would be apt to refer to the copy of the reasons supplied. Reading the copy would indicate that the basis of the information which gave the author of the notice the reason to believe is the letter from the DIT (I & CI), Ahmedabad, dated 16.02.2015 with respect to the sale of immovable property. What is striking is that this communication of 16.02.2015 is prior to passing of the assessment order on 19.03.2015. Obviously therefore, only after such information was on record that the assessment order was passed on 19.03.2015. Moreover, as per the author of the reasons, the assessee had sold a non-agricultural land under block being survey Page 9 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023 NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined no.360 at Nasmed, Kalol District, Gandhinagar, for a consideration of Rs.13,23,800/- on 16.01.2012, whereas, the SRO, Kalol, had held the jantri value of the entire land at Rs.2,47,78,650/- and therefore, there is a difference of Rs.2,34,54,850/- as per Section 50C of the Act.
5.1 It is evident that during the course of assessment proceedings under Section 143(3) of the Act, the assessee had given details of all the sale deeds including the sale deed in question vide a reply to the Assessing Officer dated 12.01.2015. This was in response to the notice under Section 142 (1) of the Act. Even by a reply dated 24.02.2014 to the letter of the Additional Director of Income Tax, Intelligence and Criminal Investigation, the petitioner had pointed out by way of description and location of the Page 10 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023 NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined land. It was specifically brought to the notice of the Intelligence Wing that the assessee/petitioner is engaged in the business of trading in land. That the land in question was held by the petitioner as stock-in-trade. The income that had arisen to the petitioner on this transaction was in the nature of income from business and profession. The assessee had duly got her books of account audited under Section 44AB. The land was treated as stock-in-trade and hence, jantri rates are not applicable in case of business transactions entered into by the assessee. It was specifically pointed out that in view of the above, the land was not subject to capital gain and jantri value is inapplicable. It was therefore also submitted that Section 50(C) of the Act could not have been applied. 5.2 In other words, when specific queries were Page 11 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023 NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined made regarding the sale of land and the assessee had given the required details, it could not be said that there was a failure to disclose fully and truly all material facts so as to assume jurisdiction under Section 148 of the Act. 5.3 In fact, as is evident from the reasons itself, no fresh information of tangible material was on record and it was only an information which was known and explained was made a basis of the notice.
5.4 Even on account of the concept of change of opinion, inasmuch as, based on the notices issued, the Assessing Officer had already made inquiries into the very same land and on the issue of applicability of Section 50C of the Act, it was not open for the respondent to give a different treatment.
Page 12 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023
NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined 5.5 In several decisions of this Court, it has been held that even in the reasons recorded when there is no allegation that there was any failure on the part of the assessee in not disclosing truly and fully material facts necessary for the assessment, the assumption of jurisdiction to reopen the assessment beyond a period of four years in exercise of powers under Section 147 of the Act is bad in law and contrary to the provisions of Section 137. 5.6 On the concept of change of opinion in the case of Gujarat Power Corporation Limited vs. Assistant Commissioner of Income Tax reported in [2013] 350 ITR 266 (Guj), the Division Bench of this Court considering the question of reassessment under Section 148 of the Act held as under:
"42. Bearing in mind these conflicting Page 13 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023 NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined interests, if we revert back to central issue in debate, it can hardly be disputed that once the Assessing Officer notices a certain claim made by the assessee in the return filed, has some doubt about eligibility of such a claim and therefore, raises queries, extracts response from the assessee, thereafter in what manner such claim should be treated in the final order of assessment, is an issue on which the assessee would have no control whatsoever. Whether the Assessing Officer allows such a claim, rejects such a claim or partially allows and partially rejects the claim, are all options available with the Assessing Officer, over which the assessee beyond trying to persuade the Assessing Officer, would have no control whatsoever. Therefore, while framing the assessment, allowing the claim fully or partially, in what manner the assessment order should be framed, is totally beyond the control of the assessee. If the Assessing Officer, therefore, after scrutinizing the claim minutely during the assessment proceedings, does not reject such a claim, but chooses not to give any reasons for such a course of action that he adopts, it can hardly be stated that he did not form an opinion on such a claim. It is not unknown that assessments of larger corporations in the modern day, involve large number of complex claims, voluminous material, numerous exemptions and deductions. If the Assessing Officer is burdened with the responsibility of giving reasons for several claims so made and accepted by him, it would even otherwise Page 14 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023 NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined cast an unreasonable expectation which within the short frame of time available under law would be too much to expect him to carry. Irrespective of this, in a given case, if the Assessing Officer on his own for reasons best known to him, chooses not to assign reasons for not rejecting the claim of an assessee after thorough scrutiny, it can hardly be stated by the revenue that the Assessing Officer can not be seen to have formed any opinion on such a claim. Such a contention, in our opinion, would be devoid of merits. If a claim made by the assessee in the return is not rejected, it stands allowed. If such a claim is scrutinized by the Assessing Officer during assessment, it means he was convinced about the validity of the claim. His formation of opinion is thus complete. Merely because he chooses not to assign his reasons in the assessment order would not alter this position. It may be a non-reasoned order but not of acceptance of a claim without formation of opinion. Any other view would give arbitrary powers to the Assessing Officer.
43. We are, therefore, of the opinion that in a situation where the Assessing Officer during scrutiny assessment, notices a claim of exemption, deduction or such like made by the assessee, having some prima facie doubt raises queries, asking the assessee to satisfy him with respect to such a claim and thereafter, does not make any addition in the final order of assessment, he can be stated to have formed an opinion whether or Page 15 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023 NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined not in the final order he gives his reasons for not making the addition.
44. At this stage, we may examine the decision of the Division Bench of this Court in the case of Praful Chunilal Patel v. M. J. Makwana, Assistant Commissioner of Income Tax, (supra) more closely. This was a case wherein assessment previously framed under section 143(3) of the Act was sought to be reopened within a period of four years from the end of the relevant assessment year. The case concerned assessment year 1993-94 and therefore, the amended section 147 of the Act was applicable. On certain claims of the assessee which were not rejected by the Assessing Officer in the scrutiny assessment, the court held that in cases where the Assessing Officer has not made an assessment of any item of income chargeable to tax while passing the assessment order, it cannot be said that such income was subjected to an assessment. The court was of the opinion that in the original assessment, the Assessing Officer never really formed an opinion on a particular contentious issue. It was in this background that the Court was of the opinion that since no opinion was formed in this regard, consequently there would be no question of a mere change of opinion. The Court also expressed an opinion that in view of the explanation 2 to section 147 of the Act, power to make assessment or re-assessment within four years would be attracted even in cases Page 16 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023 NEUTRAL CITATION C/SCA/20723/2019 JUDGMENT DATED: 22/08/2023 undefined where there has been complete disclosure of all material facts."
6. For all the aforesaid reasons, the impugned notice dated 28.03.2019 and the consequential order dated 15.11.2019 disposing of the objections of the petitioner are quashed and set aside.
7. Petition is accordingly allowed.
(BIREN VAISHNAV, J) (BHARGAV D. KARIA, J) ANKIT SHAH Page 17 of 17 Downloaded on : Sun Sep 17 02:03:27 IST 2023