Punia Capital Pvt. Ltd Vs ACIT (Bombay High Court)
The Hon’ble Bombay High Court in Punia Capital Pvt. Ltd. v. the Assistant Commissioner of Income Tax and Ors. [Writ Petition No.1091 of 2022 dated February 15, 2023] quashed the notice and the consequential order of the Revenue Department for re-opening of assessment. Held that, the Revenue Department could only re-open an assessment beyond four years, if there was a failure on the part of the assessee to disclose material facts fully and truly and not on the basis of “reason to believe” without satisfying the jurisdictional condition required under the provisions of Section 147 of the Income Tax Act, 1961 (“the IT Act”).
Facts:
Punia Capital Pvt. Ltd. (“the Petitioner”) had filed the Income Tax returns under the Section 139 of the IT Act for the Assessment Year (“A.Y.”) 2015-16. The Revenue Department (“the Respondent”) selected the case for scrutiny and issued a notice under Section 142 (1) of the IT Act, calling for the various details mentioned therein. The Petitioner replied to the notice, submitting its financial statements for the A.Y. 2015-16, and the assessment proceedings were completed under Section 143 (3) dated August 31, 2017 accepting the loss of INR 4,23,213/- declared in the Return of Income (“ROI”).
Subsequently, a notice dated March 31, 2021 under Section 148 of the IT Act (“the Impugned Notice”) was issued by the Respondent, on the grounds that there was a reason to believe that income for A.Y. 2015-16 had escaped assessment as per Section 147 of the IT Act. The Petitioner, in response to the Impugned Notice, dated April 13, 2021, filed the ROI declaring the loss of INR 4,23,213/- and further requested for a copy of the reasons recorded for reopening the assessment, which was provided by the Respondent.
The Petitioner raised the objections against the reasons for initiating the re-assessment proceedings, contending that the reasons reflected non-application of mind by the Respondent and were based upon an incorrect factual matrix, wherein, the loan had not been taken by the Petitioner, but rather advanced to M/s. Outstripe Suppliers Pvt. Ltd., on which the interest was also received, and details regarding the same were provided during the assessment proceedings. However, the objections were rejected by the Respondent vide order dated December 14, 2021 (“the Impugned Order”).
Being aggrieved, this petition has been filed.
Issue:
Whether the re-opening of the assessment is sustainable?
Held:
The Hon’ble Bombay High Court in Writ Petition No.1091 of 2022 held as under:
