MANJU GUPTA vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 16 (1) AND ANR.

WP1263.12

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1263 OF 2012. Smt Manju Gupta, ] Swastik Industrial Estate, II Floor, ] 178, C.S.T. Road, Kalina, ] Mumbai – 400 098. ] ... Petitioner Vs 1. Assistant Commissioner of Income Tax ] Circle 16(1), having its office at 203, ] Matru Mandir, Tardeo Road, Mumbai-7. ] 2. Additional Commissioner of Income Tax ] 16(1), having his office at 205, ] Matru Mandir, Tardeo Road, Mumbai-7. ] 3. Commissioner of Income Tax, ] City-16, having his office at 230, ] Matru Mandir, Tardeo Road, Mumbai-7. ] 4. Union of India, ] The Central Government Advocate, ] Aayakar Bhavan, Maharshi Karve Road, ] Mumbai – 400 020. ] ... Respondents Mr. Jitendra Jain with Ms. Jyoti Sinha i/b M/s. Negandhi, Shah & Himayatullah for the Petitioner. Mr. Suresh Kumar for the Respondents. SRP                                                                                                                                                           1/8 CNR No : HCBM020127762012 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:55:17

WP1263.12 CORAM : S.J. VAZIFDAR, & M.S. SANKLECHA, JJ. THURSDAY, 28TH JUNE, 2012 ORAL JUDGMENT : [Per S.J. Vazifdar, J.] 1. Respondent Nos.2, 3 and 4 are the Additional Commissioner of Income Tax, Commissioner of Income Tax and the Union of India respectively. The petitioner challenges a notice dated 29th March, 2011, issued under section 148 of the Income Tax Act, 1961, seeking to re- open the assessment in respect of the petitioner for the assessment year 2005-06 and an order dated 12th April, 2012, rejecting the petitioner's objections in respect thereof. 2. On 29th August, 2005, the petitioner filed her return of income under various heads of income. The petitioner paid tax on long term capital gains arising before 30th September, 2004 at 10 per cent and for the period thereafter, the petitioner paid securities transaction tax and claimed long term capital gain exemption under section 10(38) of the Act. The petitioner contends that the transactions were executed through a broker registered with SEBI. SRP                                                                                                                                                           2/8 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:55:17

WP1263.12 3. On 29th March, 2010, respondent No.1 issued a notice (with which this appeal is not concerned) under section 148 to re-open the assessment alleging that long term capital gain on the sale of shares of Osian LPG Bottling Limited represented her unaccounted income. By a letter dated 11th November, 2010, respondent No.1 communicated the reasons for re-opening her assessment. Objections thereto were filed by the petitioner on 24th November, 2010. On 29th October, 2010, respondent No.1 passed an order under section 143(3) read with section 147 assessing the petitioner's income at Rs.21,47,200/- i.e. an addition of only Rs.25,090/-. As the addition was paltry, the petitioner did not contest the same. 4. After the expiry of four years from the end of the relevant assessment year, the petitioner received the impugned notice dated 29th March, 2011, under section 148. The petitioner, by her letter dated 7th May, 2011, requested the respondents to furnish the reasons for the same. The respondents, by a letter dated 16th November, 2011, furnished the reasons which read as under : SRP                                                                                                                                                           3/8 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:55:17

WP1263.12 “It has to the notice that Ms. Manju Gupta, the assessee, assessed in this circle has done sale of shares worth of Rs.5,84,285 through M/s. Alliance Intermediaries Private Limited and sale of shares worth of Rs.7,20,270 through M/s. Goldstar Finvest Securities Pvt. Ltd. The sale has been shown to claim long term capital gain and which is claimed as exempt. Therefore, to the extent of Rs.13,04,555/- the income has escaped assessment for tax. Accordingly, assessment for 2005-06 is reopened under section 147 of the IT Act.” 5. By an order dated 2nd December, 2011, the Assistant Commissioner of Income Tax rejected the petitioner's objections. The petitioner filed Writ Petition No.212 of 2012 challenging this order. A Division Bench of this Court disposed of the writ petition by an order and judgment dated 3rd April, 2012. The Division Bench found that the said order dated 2nd December, 2011, had not dealt with some of the objections and, therefore, set aside the order and restored the matter to the file of the Assessing Officer for passing a fresh order on the objections raised by the petitioner. The Division Bench, however, observed further : “6. It is relevant to note that the assessing officer in his affidavit in reply to the Writ Petition has stated that from the letter dated 7th March, 2011 issued by the Deputy Director of Income Tax (Investigation), Unit-1(4), Mumbai he came to know that the alleged sale of shares by the assessee through M/s. Alliance Intermediaries & Network (P) Ltd. and M/s.Goldstar SRP                                                                                                                                                           4/8 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:55:17

WP1263.12 Finvest Securities Pvt. Ltd. did not actually take place and that these companies had only provided the accommodation entries to the assessee. If these material facts, which go to the root of the matter were available with the assessing officer on the date of issuance of the impugned notice dated 29th March, 2011, why the same were not reflected in the reasons recorded for reopening of the assessment, is the question. Whether it is a case of dereliction of duty or sheer negligence or callousness on the part of the assessing officer is a matter which needs consideration. 7. In these circumstances, while directing the assessing officer to pass fresh order within a period of two weeks from today on the objections raised by the assessee, we direct the Chief Commissioner, Circle 16(1), Mumbai to investigate as to whether the reassessment proceedings have been handled by the assessing officer efficiently so as to protect the interests of the revenue and submit a report to that effect to this Court within a period of 3 weeks from today.”

WP1263.12 and the Commissioner in respect of the proceedings under sections 147/148. This is one of the reasons we do not intend interfering with the said impugned notice and the impugned order, which we will refer to shortly, at this stage. It is desirable that the appellant challenges the order before the appellate authorities. We intend keeping it open to the parties to take such steps as they may desire, including in respect of the said report or what is stated therein, in accordance with law. The consequences of what is stated in the report may well require consideration by the appellate authorities. It is clarified that even the question as to whether the contents can now be referred to by the respondent as well as the veracity and the effect thereof on the validity of the proceedings are also kept open. 8. Thereafter, a fresh order i.e. the said impugned order dated 12th April, 2012, was passed once again, rejecting the petitioner's objections to the impugned notice. The impugned order deals with the merits i.e. the facts of the transactions as well. This includes a reference to search and seizure action under section 132 conducted in respect of other companies and the statements made by the SRP                                                                                                                                                           6/8 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:55:17

WP1263.12 officers/directors of such companies which reflect adversely on the petitioner's transactions. We do not intend making any observations on the detailed analysis of these facts contained in the impugned order least it prejudices the parties in any manner. It was contended on behalf of the petitioner that the notice under section 148 did not refer to these facts and the validity thereof can be determined only on the basis of the contents recorded in the notice. 9. In the facts of the present case, several other aspects require consideration. The same was noted in the order of the Division Bench dated 3rd April, 2012 in Writ Petition No.212 of 2012. In the peculiar facts of this case, it may become necessary for the appellate authorities to consider various other aspects, including the reasons for the omission to mention certain aspects in the impugned notice, the respondent's entitlement to now refer to them and the legal effect thereof. It is for this reason that we decline to exercise jurisdiction under Article 226 of the Constitution of India. SRP                                                                                                                                                           7/8 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:55:17

WP1263.12 10. The Writ Petition is, therefore, disposed of making it expressly clear that all the contentions of the parties are kept open. The petitioner is at liberty to raise all the contentions, including those contained in this Writ Petition before the relevant authorities. No order as to costs. M.S. SANKLECHA, J. S.J. VAZIFDAR, J. SRP                                                                                                                                                           8/8 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:55:17 Powered by TCPDF (www.tcpdf.org)