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wp 4372-22.odt Prajakta Vartak IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURI ICTION WRIT PETITION NO. 4372 OF 2022 Wavy Construction LLP ) having its office at Level 6, Ceejay House ) Dr. Annie Besant Road, Worli, ) Mumbai – 400 018. ) ..Petitioner Versus
Asst. Commissioner of Income-tax, ) Circle-22(1) ) Room No. 322, Piramal Chambers, ) Lal Baug, Parel, Mumbai – 400 012. )
Principal Commissioner of Income Tax-20) Room No. 418, 4th Floor, Piramal Chambers ) Lal Baug, Parel, Mumbai – 400 012. )
Assistant Commissioner of Income-tax ) having his office at National Faceless ) Assessment Centre, Delhi. )
Union of India ) through Ministry of Finance, North Block, ) New Delhi – 110 001. ) ..Respondents __________ Mr. J. D. Mistri, Senior Advocate with Mr. B. V. Jhaveri and Ms. Bhargavi Raval for Petitioner. Mr. Akhileshwar Sharma for Respondents. __________
CORAM: G. S. KULKARNI & ADVAIT M. SETHNA, JJ. RESERVED ON: 26 NOVEMBER 2024. PRONOUNCED ON: 20 DECEMBER 2024. Page 1 of 46 ------------------------- 20 December 2024 PRAJAKTA SAGAR VARTAK Digitally signed by PRAJAKTA SAGAR VARTAK Date: 2024.12.20 22:22:30 +0530
wp 4372-22.odt Judgment (per G. S. Kulkarni, J.):
Rule, returnable forthwith. Respondents waive service. By consent of the parties, heard finally.
This petition under Article 226 of the Constitution of India challenges an order dated 14 October 2021 passed by the Assessing Officer whereby the petitioner’s objections against the reopening of assessment under Section 147 of the Income Tax Act, 1961 (for short, the “IT Act”) has been rejected and the consequent assessment order dated 30 September 2022 passed by the Assessing Officer under Sections 143(3) read with Sections 147, 260 and 144B of the IT Act. Assessment Year relevant to the impugned orders is A.Y. 2012-13. 3. The necessary facts as the petition would set out, need to be noted:- The petitioner is a limited liability partnership firm, which was initially incorporated as a Private Limited Company on 27 November 1995 and thereafter converted into a limited liability partnership (LLP) on 30 March 2011. It is regularly filing its income tax returns since its incorporation.
For the assessment year 2012-13, the petitioner filed its return of income on 29 September 2012. On 03 October 2013, an intimation was issued to the petitioner under Section 143(1) of the IT Act. After a long Page 2 of 46 ------------------------- 20 December 2024
wp 4372-22.odt period of time that is on 12 November 2018, a notice under Section 133(6) was issued by the DDIT (I & CI), Unit-2(2) calling for details like share of the petitioner in the sale proceeds, from the sale of land, computation of capital gains, etc. The petitioner, by its letter dated 27 November 2018, replied to the said notice in which it furnished all the details which were called for. On 07 December 2018, the petitioner filed further details as also requested that a personal hearing be granted to it by the DDIT. Again notices under Section 133(6) were issued to the petitioner by the Income Tax Officer (I & CI), Unit-2(1) on 20 November 2018 and 19 December 2018 to which replies were filed by the petitioner on 14 December 2018 and 28 December 2018, respectively. On 17 January 2019, a further notice was issued to the petitioner by the said Income Tax Officer under Section 133(6).
It is on the aforesaid backdrop, on 29 March 2019, a notice was issued to the petitioner under Section 148 of the IT Act, informing the petitioner that there was reason to believe that income chargeable to tax for the assessment year in question (2012-13) had escaped assessment within the meaning of Section 147 of the IT Act, and for such reason, it was proposed to assess/re-assess the income/loss for the said assessment year. Accordingly, the petitioner was called upon to deliver within 30 days from the receipt of such notice, a return in the prescribed form, for the said Page 3 of 46 ------------------------- 20 December 2024
wp 4372-22.odt assessment year. The assessing officer by a communication dated 23 April 2019 furnished reasons to the petitioner for reopening of the case inter alia recording that the income chargeable to tax of Rs. 4,13,05,930/- had escaped assessment within the meaning of section 147 of the IT Act which was in relation to transaction of sale of property undertaken by Shri. Daayas Lovaji Frezar and Shri. Sanjay B. Jadhav on 16 August 2011, to the tune of Rs. 9,00,00,000/-.
The petitioner objected to the reasons by its letter dated 06 May 2019 dealing the same on merits, thereby contending that the reasons to believe were vague; they had no nexus to the conclusion arrived at by the assessing officer, hence, they were bad in law. The assessing officer considered such objections, and by an order dated 25 November 2019 rejected the objections raised by the petitioner. Thereafter an assessment order dated 19 May 2021 was passed by the Assessing Officer.
In the aforesaid circumstances, the petitioner approached this Court by filing Writ Petition No. 3368 of 2019 challenging the notice issued under Section 148 and the said order dated 25 November 2019 rejecting / disposing of the objections raised by the petitioner. On such writ petition, an ad-interim order came to be passed by the Division Bench on 13 December 2019 whereby stay was granted to the impugned notice and further proceedings. The stay order was continued till the Division Bench Page 4 of 46 ------------------------- 20 December 2024
wp 4372-22.odt heard the parties on 21 September 2021 when it passed the following order disposing of the writ petition in terms of paragraph 3 with the concurrence of learned counsel. “1. Mr. Walve states that an affidavit of one Biju Thomas, Assistant Commissioner of Income Tax sworn on September 17, 2021 has been filed in compliance with the order dated September 14, 2021. We have considered the affidavit and we accept the explanation given therein.
The assessment order dated May 19, 2021 is hereby quashed and set aside. Naturally, consequential notices, if any, are also quashed and set aside.
Keeping open the rights and contentions of the parties, we pass the following order with the concurrence of the counsel. (A) The impugned order dated November 25, 2019 (Exhibit ‘P’ to the petition) disposing the objection raised against reopening of assessment under Section 147 of the Income Tax Act, 1961 (the ‘Act’) is quashed and set aside. (B) The matter is remanded to the concerned authority to reconsider the objection dated May 6, 2019 and pass further orders. Should petitioner wish to file any further submissions in response to the letter dated April 23, 2019 giving reasons for reopening assessment for AY 2012-13, petitioner may do so within two weeks from today. No extension will be granted. (C) Should petitioner seek any clarification regarding the figures which are mentioned in the reasons for reopening, the concerned authority shall provide the same within two weeks of receiving the communication from petitioner. (D) The concerned authority may further dispose of the objection to the reopening of assessment after giving a personal hearing to the petitioner as per Rules prescribed.
We clarify that we have not made any observations on the merits of the case.
Mr. Walve states that in case of reopening upto the stage of disposal of objection, it remains with the juri ictional Assessing Officer, and once it is disposed by the juri ictional Assessing Officer, the matter goes to Faceless Scheme for further assessment. Statement accepted.
Writ Petition disposed.” Page 5 of 46 ------------------------- 20 December 2024
wp 4372-22.odt (emphasis supplied)
Thus, according to the petitioner, as a consequence of the aforesaid order passed by this Court, the proceedings stood remanded to the Assessing Officer to reconsider the objections dated 06 May 2019 raised by the petitioner and pass further orders. It is the petitioner’s case that as permitted by paragraph 3(B) of the aforesaid order passed by the Division Bench, the petitioner on 30 September 2021 filed further objections, in response to the reasons as provided to the petitioner for reopening of the assessment, by Assessing Officer’s letter dated 23 April 2019. 9. The Assessing Officer thereafter addressed a letter dated 08 October 2021 to the petitioner enclosing a communication addressed by the Income Tax Officer (I & CI) to the Principal Commissioner of Income Tax dated 06 March 2019, in regard to the information on the said transaction namely the transaction of sale of property as undertaken by Shri. Darayas Lovaji Frezar and Shri. Sanjay B. Jadhav on 16 August 2011 which was in the tune of Rs. 9,00,00,000/-. Thus, enclosing the said letter dated 06 March 2019, the petitioner was informed that following the principles of natural justice, the petitioner shall make submissions/reply on such information on the transactions as received by the Assessing Officer.
It is the petitioner’s case that on 14 October 2021, respondent no.1 rejected the objections of the petitioner. Also, the petitioner was not Page 6 of 46 ------------------------- 20 December 2024
wp 4372-22.odt furnished with a copy of the approval under Section 151 of the IT Act, although it was specifically sought by the petitioner. Thereafter the assessment proceedings were transferred to the National Faceless Assessment Centre, Delhi as per the intimation dated 08 September 2022. The petitioner contends that a show cause notice dated 12 September 2022 was issued to the petitioner by posting such notice on the Income Tax portal. Also a notice under Section 142(1) of the IT Act dated 12 September 2022 was lodged on the portal. The petitioner contends that it was not aware about the issuance of the show cause notice as also the notice under Section 142(1) both dated 12 September 2022, hence, the same remained to be responded by the petitioner.
On 20 September 2022, a communication was addressed by respondent no.3/Assistant Commissioner of Income-tax, National Faceless Assessment Centre (for short, “NFAC”) to the petitioner enclosing therewith a show cause notice dated 20 September 2022 inter alia recording that the variations, which were intended to be made, prejudicial to the interest of the petitioner, were primarily in regard to the information stated to be received in respect of transaction of sale of property by Shri. Daayas Lovaji Frezar and Shri. Sanjay Jadhav on 16 August 2011 to the tune of Rs. 9,00,00,000/- and more particularly, as seen from a copy of Index-II, which was obtained in relation to the said transaction from the Page 7 of 46 ------------------------- 20 December 2024
wp 4372-22.odt office of the Sub-