The court upheld the reopening of assessment under the Income Tax Act, ruling that failure to disclose material facts can be inferred from recorded reasons, justifying reassessment based on subsequent information.

JUDGMENT :

JITENDRA JAIN J.

1. Rule was granted in this matter on 30 November 2016 and the impugned proceedings were stayed.

2. This petition challenges the re-assessment notice under Section 148 of the Income Tax Act, 1961 (the Act), dated 30 March 2016, seeking to reopen the assessment for the assessment year (AY) 2009-2010, and the order dated 28 September 2016 rejecting the objection.

Brief Facts:-

3. The Petitioner is engaged in the business of real estate development in and around the Mumbai Metropolitan Region.

Proceedings under Section 143(3):-

4. For the AY 2009-2010, the Petitioner filed its return of income under Section 139 of the Act. The said return of income was selected for scrutiny assessment vide notice under Section 142(1) of the Act. In the said notice dated 5 October 2011, confirmation for the unsecured loan was called for. The Petitioner vide letter dated 10 October 2011, responded to the said requisition regarding the query relating to loan confirmation. The Petitioner filed a copy of a letter dated 24 August 2011 issued by the Reserve Bank of India (RBI). Vide letter dated 17 October 2011, the Petitioner, with respect to fully convertible debenture (unsecured loan) amounting to Rs.403,67,44,471/- enclosed copy of Foreign Inward Remittance Certificate (FIRC) issued by the HDFC Bank and confirmation letter from the RBI. The Petitioner further filed, vide letter dated 8 November 2011, copy of the agreement with Flirasca Holding Company Limited towards the aforesaid debenture issue. Based on these documents filed during the assessment proceedings, an assessment order under Section 143 (3) of the Act was passed accepting the return income of the Petitioner.

5. In the assessment order under Section 143(3) dated 23 November 2011, the Assessing Officer (AO) has noted that he has examined the unsecured loan taken as Foreign Direct Investment (FDI) after scrutinising and has accepted the transaction of unsecured loan.

Reassessment Proceedings:-

6. On 30 March 2016, the impugned notice under Section 148 of the Act called upon the Petitioner to file its return of income since the AO had reasons to believe that income for the AY 2009-2010 had escaped assessment. The Petitioner was served with the reasons for reopening via letter dated 19 May 2016. Briefly, the reason states that the unsecured loan amounting to Rs. 4,03,45,97,439/- received by the Petitioner is unexplained money of the Petitioner which has been routed through layering via various offshore entities located in tax haven countries, and these entities have an intimate connection with the Petitioner and its directors. The Petitioner, vide letter dated29 June 2016 filed its objections. On 28 September 2016, the AO rejected the objections raised by the Petitioner. On this backdrop, the present petition is filed challenging the impugned proceedings.

Submissions of the Petitioner:-

7. Mr. Sanghavi filed a compilation comprising 11 case laws; he relied only on the decision in the case of New Delhi Television Ltd. vs. Deputy Commissioner of Income Tax, (2020) 116 taxmann.com 151 (SC) (NDTV) and Samson Maritime Limited vs. Deputy Commissioner of Income Tax & Ors., 2019 (1) TMI 544 (Bombay). The learned counsel submitted that allegation of failure of disclose as required in the proviso is not alleged/stated in the reasons as recorded. He further submitted that, in any case, there was full disclosure of all facts and same is evident from the assessment order. He also relied on objections filed wherein there is a reference to the proceedings before Settlement Commission. He, therefore, submitted that jurisdictional conditions are not satisfied and proceedings be quashed. No other submissions have been made other than what is recorded herein.

Submissions of the Respondents:-

8. Mr. Suresh Kumar, learned counsel for the Respondents, submitted that subsequent to the assessment order, information was received that the loan transaction is not genuine and, therefore, the reopening pro