SUN0N-SAND HOTELS PRIVATE LIMITED vs. ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX AND 3 ORS

26-oswpl-1043-22.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION (L) NO. 1043 OF 2022

Sun-n-Sand Hotels Private Limited

39, Juhu Beach, Mumbai-400 049. … Petitioner. V/s. 1. Additional/Joint/ Deputy Assistant Commissioner of Income Tax/Income Tax Ofcer, National Faceless Assessment Centre, Delhi. 2. Assistant Commissioner of Income Tax, Circle 3(2)(1), Mumbai 3. Principal Commissioner of Income Tax, Mumbai-3, 4. Union of India through the Joint Secretary and Legal Adviser

… Respondents. ---------------- Mr. Percy J. Pardiwalla, Sr. Advocate a/w. Jeet Kamdar i/b Mr.Atul K. Jasani for the Petitioner. Mr. Suresh Kumar for the Respondent. ----------------

CORAM : K.R. SHRIRAM &

N.R. BORKAR, JJ. DATE : MARCH 29, 2022. ORAL JUDGEMENT (PER N.R. BORKAR, J.) 1] This petition takes an exception to the notice dated 30.03.2021 issued by respondent No.2 under section 148 of the Income Tax Act, 1961 (for short “the Act”) seeking to Dinesh Sherla 1/12 CNR No : HCBM020010442022 Uploaded on - 06/04/2022 Downloaded on - 27/10/2026 18:17:24

26-oswpl-1043-22.doc reopen the assessment for Assessment Year (A.Y.) 2014 -15 and the order on objections dated 13.12.2021 passed by the respondent No.1. 2] The petitioner is a company incorporated under the Companies Act and is engaged in the business of hotels and power generation from windmills. 3] The petitioner fled its original return of income in terms of section 139 of the Act for A.Y. 2014-2015 on 29.11.2014 declaring total income of Rs.26,79,01,280/- after claiming deduction under section 80-IA of the Act amounting to Rs.5,42,49,584/-. 4] Subsequently, the petitioner fled a revised return on 25.03.2016 declaring total income of Rs.16,31,11,500/- after claiming deduction under section 80-IA of the Act amounting to Rs.16,00,18,236/-. 5] The petitioner’s return was selected for scrutiny assessment. The notice under section 142(1) of the Act calling Dinesh Sherla 2/12 Uploaded on - 06/04/2022 Downloaded on - 27/10/2026 18:17:24

26-oswpl-1043-22.doc upon the petitioner to fle various details / documents to complete assessment was issued. Specifc details pertaining to deduction claimed under section 80-IA of the Act with cogent documentary evidences were also sought. 6] Pursuant to the abovesaid notice, the petitioner submitted a copy of the return, computation of income, tax audit report in Form No. 3CD and copy of annual report. 7] According to the petitioner, respondent No.2 during the course of assessment proceedings requested for further details in respect of claim of deduction under section 80-IA of the Act from wind power generation and the same were submitted. 8] According to the petitioner, respondent No.2 after scrutinizing all the details furnished by the petitioner and examining all the issues passed an assessment order dated 09.12.2016 under section 143(3) of the Act and allowed the deduction under section 80-IA of the Act amounting to Rs.16,00,18,236/-. Dinesh Sherla 3/12 Uploaded on - 06/04/2022 Downloaded on - 27/10/2026 18:17:24

26-oswpl-1043-22.doc 9] According to the petitioner, inspite of above facts and circumstances, the respondent No.2, after expiry of four years from the end of relevant assessment year, had issued impugned notice dated 30.03.2021 under section 148 of the Act stating therein that he has reason to believe that the petitioner’s income chargeable to tax for A.Y. 2014-15 has escaped assessment within the meaning of section 147 of the Act. 10] The petitioner by a letter dated 28.04.2021 requested the respondent No.2 to drop the reassessment proceedings as according to the petitioner all material facts which were necessary for making the assessment were fully and truly disclosed and there was no escapement of income chargeable to tax. In addition to it, the petitioner requested respondent No.2 to provide reasons recorded for initiating reassessment proceedings as well as approval/sanction of respondent No.3 and provide a copy of tangible material based on which an opinion has been formed that the income chargeable to tax has escaped assessment. Dinesh Sherla 4/12 Uploaded on - 06/04/2022 Downloaded on - 27/10/2026 18:17:24

26-oswpl-1043-22.doc 11] Respondent No.2, accordingly, provided the reasons recorded for reopening the assessment. The petitioner on 06.07.2021 submitted its objections to the proposed reassessment. 12] Respondent No.2 thereafter by its letter dated 09.12.2021 intimated to the petitioner about the transfer of reassessment proceeding to National Faceless Assessment Centre. The respondent No.1, thereafter, by impugned order dated 13.12.2021 rejected the objections of the petitioner. 13] We have heard Mr. Pardiwalla, the learned Senior Counsel for the petitioner and Mr. Suresh Kumar, the learned counsel for the respondents- Revenue. 14] Mr. Pardiwalla submits that the existence of a valid reason to believe is a sine qua non for the exercise of jurisdiction under section 147 of the Act. It is submitted that the said reasons to believe cannot be based on surmise or conjecture or an assumption or an audit scrutiny without any independent application of mind by assessing ofcer. Dinesh Sherla 5/12 Uploaded on - 06/04/2022 Downloaded on - 27/10/2026 18:17:24

26-oswpl-1043-22.doc 15] It is submitted that the reasons recorded for reopening assessment must be based on new information or material, however, in the present case, the Assessing Ofcer is seeking to reopen the reassessment proceedings based on the same material facts which were before him when he concluded the original assessment proceedings. It is submitted that reassessment without any additional information amounts to change of opinion and the same is not permissible. 16] It is further submitted that the proviso to section 147 of the Act provides that where an assessment under section 143(3) of the Act has been made for relevant assessment year and four years from the end of the relevant assessment year has expired, then no reassessment proceedings can be initiated under section 147 of the Act unless any income chargeable to tax has escaped assessment for such assessment year by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for that assessment year. It is submitted that the petitioner’s case is covered by the said Dinesh Sherla 6/12 Uploaded on - 06/04/2022 Downloaded on - 27/10/2026 18:17:24

26-oswpl-1043-22.doc proviso as there is no failure on the part of the petitioner of the kind envisaged in the proviso and the record would clearly show that the entire issue with respect to deduction under section 80-I A of the Act has been duly scrutinized in the original assessment proceedings. 17] On the other hand, Mr. Suresh Kumar submits that on perusal of fnancials of the company, it was found that the losses of earlier years has not been notionally carried forward and set – of with the income of the subsequent years and thus there was excess deduction. It is submitted that no specifc query was raised in that respect at the time of original assessment proceeding. It is thus submitted that the reopening is based on tangible material and this is not a case of mere change of opinion. It is submitted that petition be dismissed. 18] We have perused the reasons recorded for reopening the assessment. For ease of reference, they are scanned and reproduced herein below. Dinesh Sherla 7/12 Uploaded on - 06/04/2022 Downloaded on - 27/10/2026 18:17:24

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26-oswpl-1043-22.doc 19] Respondent No.2 in its afdavit in reply dated 1.2.2022 in paragraphs 4.4 and 4.5 has stated thus: “4.4. Later during assessment proceedings the erstwhile AO specifcally asked from the assessee about his claim of deduction u/s 80-IA(4) of the Act and the assessee submitted the requisite documents in the light of abovementioned Board circular. Accordingly the erstwhile AO allowed the said deductions to the assessee. 4.5. However, later the erstwhile JAO at the charge of circle 3.2.1, Mumbai observed few discrepancies in the fnancials of the assessee for AY 2014-15 and accordingly recorded his satisfaction (reason to believe) dated 19.03.2021, about the allowance of the 80-IA(4) deductions for Windmill Units at “Sangali-II” and “Sangali-III” and as per Act and the guidelines laid down by the Hon’ble Apex Court in the case of GKN Drive Shaft (India) Ltd [(2002) 125 taxmann 963 (SC)], the case of the assessee was reopened u/s 147 of the Act and accordingly, notice u/s 148 of the IT Act 1961 was issued to the assessee on 30.03.2021.”

20] It is evident from the afdavit-in-reply that the Assessing Ofcer had all material facts before him when he made the original assessment and issue of deduction under section 80- IA of the Act was a subject of consideration during the assessment proceedings. 21] This Court in Ananta Landmark Pvt. Ltd. vs. Deputy Commissioner of Income Tax Central Circle 5(3) and ors.1 has held: 1 (2021) 439 ITR 168 Dinesh Sherla 10/12 Uploaded on - 06/04/2022 Downloaded on - 27/10/2026 18:17:24

26-oswpl-1043-22.doc “The Assessing Ofcer has no power to review an assessment which has been concluded. If a period of four years has lapsed from the end of relevant year, the Assessing Ofcer has to mention what was the tangible material to come to the conclusion that there is an escapement of income from assessment and that there has been failure to fully and truly disclose material fact. After a period of four years even if the Assessing Ofcer has some tangible material to come to the conclusion that there is an escapement of income from assessment, he cannot exercise the power to reopen unless he discloses what was the material fact which was not truly and fully disclosed by the assessee.” 22] In the present case, the petitioner had truly and fully disclosed all material facts necessary for the purpose of assessment. They were carefully scrutinized and fgures of income as well as deduction were carefully reworked by the Assessing Ofcer. In fact, in the reasons for reopening, there is not even a whisper as to what was not disclosed. In our view, this is not a case where the assessment is sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but this is a case wherein the assessment sought to be reopened on account of change of opinion of the Assessing Ofcer about the manner of Dinesh Sherla 11/12 Uploaded on - 06/04/2022 Downloaded on - 27/10/2026 18:17:24

26-oswpl-1043-22.doc computation and deduction under Section 80-IA of the Act. In our view, the same is not permissible. 23] Consequently, Petition is allowed. The notice dated 30.03.2021 issued by respondent No.2 under section 148 of the Act seeking to reopen the assessment for the A.Y. 2014-15 and the order dated 13.12.2021 are quashed and set aside. 24] Petition is disposed of with no order as to costs.

(N.R. BORKAR, J.) (K.R. SHRIRAM, J.) Dinesh Sherla 12/12 Uploaded on - 06/04/2022 Downloaded on - 27/10/2026 18:17:24 Powered by TCPDF (www.tcpdf.org)