SAMEEKSHA TRUST vs. THE INCOME TAX OFFICER (E)-2(3) AND ANR

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WP/1132/2016HC Bombay14 March 2024Bench: HON'BLE SHRI JUSTICE K.R. SHRIRAM, HON'BLE JUSTICE DR. NEELA KEDAR GOKHALE4 pages
AI SummaryAllowed

What did the High Court hold?

The Bombay High Court made the rule absolute in both writ petitions. The court agreed with its earlier interim order that the reopening notices were issued beyond four years from the end of the relevant assessment years. Consequently, the proviso to Section 147 of the Income Tax Act, 1961, was applicable, requiring a failure on the part of the petitioner to truly and fully disclose all material facts for reopening to be permissible. The court found that the reasons for reopening were based on an examination of records to form a belief that income had escaped assessment, but this belief was not supported by any material indicating a failure to disclose. Furthermore, the issue regarding the petitioner's entitlement to exemption under Section 11 was already a subject of consideration during the scrutiny assessment proceedings under Section 143(3). Therefore, the reopening was also based on a change of opinion, rendering the notices without jurisdiction. The court quashed and set aside the notices dated March 19, 2015, under Section 148 and the subsequent orders.

What were the facts?

The assessee, Sameeksha Trust, filed two writ petitions challenging notices dated March 19, 2015, issued by the Income Tax Officer (ITO) to reopen assessments for Assessment Years (AY) 2008-09 and 2009-10. These notices were issued under Section 148 of the Income Tax Act, 1961, and were beyond four years from the end of the relevant assessment years. The Bombay High Court, in an interim order on March 23, 2016, noted that the reasons for reopening did not indicate any failure by the petitioner to disclose material facts truly and fully. The court also observed that the issue of the petitioner's entitlement to exemption under Section 11, which formed the basis of the reopening, was already considered during the scrutiny assessment proceedings under Section 143(3) for both AYs. The court granted interim relief and expedited the hearing.

What were the issues?

1. Whether the notices issued under Section 148 of the Income Tax Act, 1961, for reopening assessments for AY 2008-09 and 2009-10, which were issued beyond four years from the end of the relevant assessment years, are valid, considering the proviso to Section 147 of the Act. Assessee's Contention: The reopening notices are beyond the four-year period and do not satisfy the conditions of the first proviso to Section 147, as there was no failure on the part of the petitioner to disclose truly and fully all material facts. The reasons for reopening are based on a change of opinion, as the issue of entitlement to exemption under Section 11 was already examined during the regular assessment proceedings under Section 143(3). Revenue's Contention: The assessee was publishing magazines for commercial purposes and was therefore not entitled to exemption under Section 11 of the Act. (This contention was noted by the court but not elaborated upon as an argument against the assessee's case).

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 11,Section 143(3)

AI-generated summary — verify with the full judgment below

1/4 205_206-oswp-1132-2016-J.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1132 OF 2016 WITH WRIT PETITION NO. 1174 OF 2016 Sameeksha Trust, 320-321, A-Z Industrial Estate, G.K. Marg, Lower Parel, Mumbai – 400 013. …Petitioner Versus 1. The Income Tax Officer (E)-2(3), having his office at 5th Floor, Piramal Chambers, Parel, Lalbaug, Mumbai – 400 012. 2. The Union of India through Ministry of Law, Aayakar Bhavan, Maharshi Karve Road, Mumbai – 400 020. …Respondents Mr. Sudhir J. Mehta for Petitioner. Mr. Dinesh Gulabani a/w Mr. Prathmesh Bhosle for Respondent No. 1. CORAM: K. R. SHRIRAM & DR. NEELA GOKHALE, JJ. DATED: 14th March 2024 ORAL JUDGMENT : (Per K. R. Shriram, J.) 1. On 23rd March 2016, when the Court was pleased to admit these petitions, the following order came to be passed : “1. Heard. Rule in both these Petitions. Respondents waive service. 2. The challenge in both the Petitions is to two notices dated 19th March, 2015 seeking to reopen the assessment for A.Y. 2008-09 and 2009-10 respectively. The reopening notices are clearly beyond a period of 4 years from the end of the relevant assessment years. The reasons in support of the impugned notices do not indicate any failure on the part of the Petitioner to Gitalaxmi CNR No : HCBM020067822016 Uploaded on - 19/03/2024 Downloaded on - 31/10/2026 00:45:08

2024:BHC-OS:4648-DB

2/4 205_206-oswp-1132-2016-J.doc disclose truly and fully all material facts necessary for assessment. In fact the reasons proceed on examination of the records to come to the alleged belief that the income chargeable to tax has escaped assessment. Although reasons in conclusion do state that there is a failure on the part of the assessee to disclose truly and fully all material facts, nothing in the reasons prima facie support the allegations. Besides, prima facie the basis of the reasons viz. the Petitioner not being entitled to the benefit of exemption under Section 11 of the Act as it was not carrying out charitable activities was a subject matter of consideration while passing scrutiny assessment orders in regular assessment proceedings under Section 143(3) of the Act in both the assessment years. 3. Therefore, prima facie the impugned notices are without jurisdiction on account of failure to satisfy the first proviso to Section 147 of the Act and also on account of change of opinion. Accordingly, there shall be an interim relief in terms of prayer clause (c) in both the Petitions. 4. As the dispute appears to be within a narrow compass, at the request of the counsel for the parties, the Petition is expedited. It shall be placed on the bottom of the board for final hearing of Writ Petitions on 13th April, 2016.” 2. We have considered the pleadings with assistance of the Counsels and we agree entirely with the view expressed by the Court in the order dated 23rd March 2016. 3. For both the years, assessment under Section 143(3) of the Income Tax Act, 1961 (“the Act”) has been completed and the notices impugned in the petitions issued under Section 148 of the Act, have also been issued after expiry of four years from the end of relevant assessment year. Therefore, the proviso to Section 147 of the Act Gitalaxmi Uploaded on - 19/03/2024 Downloaded on - 31/10/2026 00:45:08

3/4 205_206-oswp-1132-2016-J.doc shall apply and reopening is permissible only if there was a failure on the part of Petitioner to truly and fully disclose all the material facts. In fact, the reasons proceed on examination of the records to come to the alleged belief that the income chargeable to tax has escaped assessment. Further, the issue of Petitioner being entitled to benefit of exemption under Section 11 of the Act, was also a subject of consideration during the assessment proceedings. 4. Mr. Gulabani states that assessee was publishing magazines for commercial purposes and therefore, not entitled to exemption under Section 11 of the Act. It would not help the Respondents’ case because that also was a subject of consideration during the assessment proceedings. Therefore, the reopening is also based on account of change of opinion. 5. In the circumstances, we make the Rule granted on 23rd March 2016 absolute in terms of prayer clause (a), which reads as under :- WRIT PETITION NO. 1132 OF 2016 : “a) This Hon’ble Court may be pleased to issue under Article 226 of the Constitution of India an appropriate direction, order or writ including a writ in the nature of Certiorari calling for the records of the case and after satisfying itself as to the legality thereof, quash and set aside the notice dated 19.03.2015 (Exhibit ‘G’) issued by the Respondent No. 1 under Section 148 and order dated 28.01.2016 (Exhibit ‘M’) for the relevant assessment year.” Gitalaxmi Uploaded on - 19/03/2024 Downloaded on - 31/10/2026 00:45:08

4/4 205_206-oswp-1132-2016-J.doc WRIT PETITION NO. 1174 OF 2016 : “a) This Hon’ble Court may be pleased to issue under Article 226 of the Constitution of India an appropriate direction, order or writ including a writ in the nature of Certiorari calling for the records of the case and after satisfying itself as to the legality thereof, quash and set aside the notice dated 19.03.2015 (Exhibit ‘G’) issued by the Respondent No. 1 under Section 148 and order dated 19.02.2016 (Exhibit ‘K’) for the relevant Assessment Year 2009-10.” 6. Petitions disposed. No order as to costs.

(DR. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.) Gitalaxmi GITALAXMI KRISHNA KOTAWADEKAR Digitally signed by GITALAXMI KRISHNA KOTAWADEKAR Date: 2024.03.19 11:07:58 +0545 Uploaded on - 19/03/2024 Downloaded on - 31/10/2026 00:45:08 Powered by TCPDF (www.tcpdf.org)

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