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2023 Supreme(Bom) 194
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Dhiraj Singh Thakur, Kamal Khata, JJ.
Devkant Synthetics India Pvt. Ltd - Appellant
Versus
Additional/joint/deputy/assistant Commissioner Of Income Tax Offcer & Ors. - Respondents
Writ Petition No. 2854 of 2022
Decided On : 10-02-2023
Counsel for Appearing Parties
Nishant Thakkar, Advocate, Jasmin Amalsadvala, Advocate, Akhileshwar Sharma, Advocate, Shilpa Goel, Advocate
The main legal point established in the judgment is that reassessment proceedings under section 148 of the Income Tax Act, 1961 require the satisfaction of conditions for exercising jurisdiction beyond the period of four years and the full and true disclosure of all material facts necessary for assessment.
Headnote:
Income Tax Act - Reassessment Proceedings - Section 148 - 143(3) - 14(A) - 263 - 147 - [KEYWORD] - [SUBJECT] - [1961 (Income Tax Act) - Section 148, 143(3), 14(A), 263, 147] - The court discussed the reassessment proceedings initiated under section 148 of the Income Tax Act, 1961, the conditions for exercising jurisdiction beyond the period of four years, and the requirement of full and true disclosure of all material facts necessary for assessment. The court highlighted the erroneous presumption by the Assessing Officer and concluded that the reassessment proceedings were without jurisdiction.
Fact of the Case:
The petitioner challenged the reassessment proceedings initiated under section 148 of the Income Tax Act, 1961, leading to the final order of reassessment relevant to the assessment year 2013-14. The petitioner argued that all the transactions referred to in the reasons recorded had been furnished during the scrutiny assessment proceedings and were gone into by the Assessing Officer.
Finding of the Court:
The court found that there was no failure on the part of the assessee to disclose any material facts fully and truly during the regular assessment proceedings. The court held that the reassessment proceedings were without jurisdiction and quashed the impugned notice and the order of reassessment, along with all consequential orders and notices.
Issues: The issues revolved around the disclosure of transactions during the original assessment proceedings, the conditions for exercising jurisdiction beyond the period of four years, and the validity of the reassessment proceedings under section 148 of the Income Tax Act, 1961.
Ratio Decidendi: The court held that there was no basis to hold that there was any failure on the part of the assessee to disclose any material facts fully and truly during the regular assessment proceedings. The court concluded that the reassessment proceedings were without jurisdiction and quashed the impugned notice and the order of reassessment, along with all consequential orders and notices.
Final Decision: The petition was disposed of accordingly, and the impugned notice and the order of reassessment were quashed and set aside, along with all consequential orders and notices.
JUDGMENT
Dhiraj Singh Thakur, J. - The petitioner in the present petition challenges the reassessment proceedings initiated pursuant to a notice, dated 31st March 2022 issued under section 148 of the Income Tax Act, 1961 ('the Act') leading to the fnal order of reassessment, dated 26th March 2022 relevant to the assessment year 2013-14. Demand notices as also the penalty notice, both dated 26th March 2022, pursuant to the passing of the order of reassessment are also challenged in the present petition.
2. Briefy stated the material facts are as under :
2.1 The petitioner is a company engaged in the business, inter-alia, of trading in shares and securities. It is stated that during the previous year relevant to the assessment year 2013-14, shares and securities amounting to Rs.36,04,65,386/- were traded. It is stated that after considering the purchase costs and other business expenditures, the petitioner reported a proft before tax of Rs.63,68,739/- in its Proft and Loss account for the year ending 31st March 2013.
2.2 A return of income for the assessment year 2013-14 was fled declaring a total income at Rs.23,16,530/-, which included the income earned from the sale of shares and securities under the head of 'Profts and Gains from Business and Profession'. Subsequently, the Assessing Offcer issued a notice, dated 9th September 2014/9th June 2015 in terms of section 143(2) of the Act calling inter-alia for further information as regards certifed copies of auditor's report, balance-sheet, proft and loss account etc. The information was furnished by the petitioner vide communication dated 3rd September 2015.
3. Respondent No.2 then issued a notice under section 142(1) of the Act on 30th October 2015 calling upon the petitioner to furnish the scrip-wise details of opening stock purchases, sales and closing stock in the prescribed format. It also required the petitioner to submit a copy of Form No.10DB which is a Form evidencing payment of securities transaction tax on the transactions entered in a recognised stock exchange, duly certifed and reconciled with the audited accounts. The petitioner was also required to submit a copy of all the demat accounts of the assessee-company for the fnancial year 2012-13. All these documents were then furnished to the Assessing Offcer. The petitioner then proceeded to fle partial details called for by the respondents.
4. In between, the petitioner states that it was handed over a copy of the Annual Information Report ('AIR'), dated 22nd January 2016 which contained the details of the transactions made by the petitioner with respect to the purchase and sale of shares/ derivatives for the assessment year under consideration as available on the records of the Income Tax Department. The petitioner was directed to reconcile all the entries as per the petitioner's books and to provide documentary evidence for the same.
5. The petitioner further submitted the requisite documents vide communication dated 28th January 2016, furnished all the requisite documents to the Assessing Offcer, including a copy of Form 10DB and the scrip-wise details of opening stock purchase of shares, sale of shares and closing stock. The petitioner also claims that it submitted a statement reconciling the transactions mentioned in the Annual Information Report of the department with the transactions entered into in the books of accounts of the petitioner. A copy of the said reconciled statement is also on record.
6. The case of the petitioner is that it was only after the Assessing Offcer had satisfed itself thoroughly on all the issues which had been identifed during the proceedings that a fnal order of assessment, dated 29th March 2016 came to be passed under section 143(3) of the Act assessing the petitioner's income at Rs.37,36,365/-.
7. Mr.Nishant Thakkar, learned counsel for the petitioner further stated that the order of as
