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2018 Supreme(P&H) 1761
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
S.J. VAZIFDAR, AVNEESH JHINGAN, JJ.
Greater Mohali Area Development Authority - Petitioner
Versus
Deputy Commissioner of Income Tax, Circle-6(1) Mohali - Respondent
CWP No. 26125 of 2017 (O&M)
Decided On : 27-04-2018
For the Petitioners:Ms. Radhika Suri, Senior Advocate with Mr. M.S. Kanda, Advocate.
For the Respondents: Mrs. Urvashi Dhugga, Senior Standing Counsel.
The main legal point established in the judgment is that the Assessing Officer has the jurisdiction to reopen an assessment if there are reasonable grounds to believe that income has escaped assessment due to the assessee's failure to disclose fully and truly all material facts necessary for assessment.
Headnote:
Income Tax - Assessment Reopening - Sections 147 and 148 of the Income Tax Act, 1961 - The court held that the Assessing Officer had reason to believe that income chargeable to tax had escaped assessment due to the petitioner's failure to disclose fully and truly all material facts necessary for assessment. The court also found that the Assessing Officer had not considered the effect of External Development Charges (EDC) on the petitioner's income during the original assessment proceedings. The court dismissed the writ petition.
AVNEESH JHINGAN, J.
1. The petition has been filed for quashing an order dated 27.11.2012 disposing of the petitioner’s objections to the reasons recorded for re-opening the assessment under Sections 147 and 148 of the Income Tax Act, 1961 (for short ‘the Act’).
2. The petitioner filed a return for the assessment year 2010-11. The audited balance sheet was a part of the return. The Schedule of Current Liabilities and Provisions read as under:-
“Annual Statement of Accounts 2009-2010 GMADA”
GREATER MOHALI AREA DEVELOPMENT AUTHORITY, SAS NAGAR,
SCHEDULE OF CURRENT LIABILITIES AND PROVISIONS
Particulars
A. Current Liabilities:
1 (i) to (viii) xx xx xx xx xx
B. Other Liabilities:
1. xx xx xx
2. External Development Charges
(From Land Developers)
3 to 6. xx xx xx
7. EDC Under Papra Act, 1995
8 to 12 xx xx xx xx
Previous year
31.03.2010
Total Amount
Rs.6,133,835,831.15
Current year
31.03.2009
Total amount
Rs. 7,311,864,244.78
3. The Assessing Officer (A.O.) by a letter dated 27.11.2012 issued a questionnaire item 9 whereof read: “Please provide details for each Account amounting to Rs.7,31,18,64,244/-”. The petitioner filed a reply dated 05.12.2012. The reply, regarding the said query read as follows:-
“8. Detail of sundry creditors is given as under:-
Current Liabilities Year 31.03.2010 Amount (In Rs.)
>Creditors & Payables
1. Creditors for supplies
2. Creditors for construction
3. Other creditors
4. Payable to staff
5. Provident Fund (Contributory)
6. Ex-Gratia payable
7. Stock payable
8. Works payable 13,074,974.59
1,75,530.00
26,526,492.28
181,701.23
(1,250,808.00)
6,250.00
294,800.22
1,103,717.00
TOTAL 40,112,657.12
9. Detail of Current Liabilities is given as under:-
Current Liabilities Year 31.03.2010 Amount (In Rs.)
> Current liabilities as per detail given in point no.8
> Other liabilities
1. Miscellaneous Accounts,
2. External Development charges (From Land Developers)
3. Change of land use (From Developers).
4.DD PO Civil Dispensary
5. Director Water Resources & Environment
6. Urban Development Fund
7. EDC Under Papra Act
8. License fee payable to Punjab Government.
9. Chq. Issued but not presented for payment.
10. Security fee plots
11. Pollution Control Board
12. Security Building Plan 40,112,657.12
1,780,897.00
4,556,731,248.00
0.00
2,995,199.00
0.00
8,545,979.00
75,397,249.00
2,526,174,188.00
9,699,299.01
1,286,016.00
1,187,500.00
87,954,012.65
TOTAL 7,311,864,244.78
4. The assessment under section 143(3) of the Act was finalized vide order dated 31.12.2012. The effect of the EDC upon the petitioner’s income was not referred to in the assessment orders.
5. On 06/07.02.2017 a notice under Section 147/148 of the Act was issued proposing to re-open the assessment as according to the A.O., the petitioner’s income chargeable to tax had escaped assessment. The reasons recorded on 12.06.2017 were supplied. As much turns on the reasons, it is necessary to refer to them in their entirety. They read as under:-
“Reasons for issue of notice under section 148 of the Income Tax Act, 1961 for the assessment year 2010-11 in the case of Greater Mohali Area Development Authority, Sector 62, PUDA Bhawan, Mohali (PAN-AAALG0872G).
During perusal of records in this case, it was seen that the assessee had received External Development Charges (EDC) from Land Developers/Colonizers/Real Estate Builders/Promoters during the F.Y. 2008-09. The said External Development Charges were not brought to the ambit of tax by the assessee but were instead shown as a liability in its Balance Sheet under the head “Other Liabilities”.
It is pertinent to mention here that External Development Charges are received from the Land Developers/Colonizers/Real Estate Builders/Promoters who seek approval from the assessee (i.e. Greater Mohali Area Development Authority) or other Competent Authority to develop a Residential or Commercial or Institutional Zone on their piece/chunk of land. The said amount received under the nomenclature “External Development Charges” is supposed be used by the assessee for carrying on of External
