Gujarat HC Quashes Reopening Beyond 4 Years as 2(22)(e) Conditions Were Not Met

Jorss Bullion Private Limited Vs ITO (Gujarat High Court)

The Gujarat High Court allowed Jorss Bullion Private Limited’s writ petition challenging the Section 148 reopening notice dated 29.03.2019, consequential assessment order under Sections 143(3) read with 147, and demand notice under Section 156 for AY 2012-13.

The petitioner had originally declared total income of ₹1,64,59,510 and its assessment was completed under Section 143(3) on 23.03.2015 after scrutiny and submission of the computation of income, audited balance sheet and audit report. Almost four years later, reopening was initiated on the premise that common shareholder Pushpak Realities Pvt. Ltd. held 90% in the petitioner and 49.88% in Amber Enclave Pvt. Ltd., allegedly attracting Section 2(22)(e) concerning deemed dividend.

The petitioner clarified that Pushpak Realities actually held only 4.60% in the petitioner and that the petitioner was not a registered shareholder of Amber Enclave. Detailed objections also relied upon Ankitech (P.) Ltd. and Daisy Packers (P.) Ltd., but the assessment order did not address those decisions.

The Revenue relied on the alternative remedy of appeal under Section 246A and referred to Chhabil Dass Agarwal. The High Court, however, held that the case fell within exceptions permitting exercise of writ jurisdiction. It noted that the reopening was beyond four years, the relevant shareholding details had already been disclosed during the original scrutiny assessment, and there was no failure by the petitioner to fully and truly disclose material facts.