Ananta Landmark Pvt. Ltd. Vs DCIT (Bombay High C0urt)
Conclusion: Assessment was sought to be reopened not on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but on account of change of opinion of AO about the manner of computation of the deduction under Section 57, therefore, the same was invalid.
Held: In the instant case, assessee had truly and fully disclosed all material facts necessary for the purpose of assessment. Not only material facts were disclosed by assessee truly and fully but they were carefully scrutinized and figures of income as well as deduction were reworked carefully by AO. In the reasons for reopening, AO had infact relied upon the audited accounts to say that the claim of deduction under Section 57 was not correct, the figures mentioned in the reason for reopening of assessment were also found in the audited accounts of assessee. In the reasons for reopening, there was not even a whisper as to what was not disclosed. In the order rejecting the objections, AO admitted that all details were fully disclosed. This was not a case where assessment was sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but this was a case wherein the assessment was sought to be reopened on account of change of opinion of AO about the manner of computation of the deduction under Section 57 of the Act.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
Since pleadings are completed, we decided to dispose this petition at the admission stage itself.
Rule.
Rule made returnable forthwith.
2 Petitioner had filed its annual returns for Assessment Year 2012-2013. As required under Section 139 of the Income Tax Act, 1961 (the Act), petitioner being a company filed its audited profit and loss account and balance sheet and the auditor’s report with the annual returns.
Thereafter, petitioner received a notice dated 5th August 2014 under Section 143 (2) of the Act alongwith notice dated 5th August 2014 under Section 142 (1) of the Act calling upon petitioner to furnish the documents mentioned as per the annexure to the notice. There are four items mentioned in the annexure but what we are concerned with is serial no.2 in the annexure, i.e., audited accounts, 3cd, balance sheet, P & I A/C etc. By its letter dated 14th August 2014, petitioner submitted all the documents asked for and also clarified that tax audit report in Form 3CD for the Assessment Year 2012-2013 was not applicable.
3 Petitioner, thereafter received another notice dated 10th October 2014 under Section 142 (1) of the Act calling upon petitioner to provide certain details, one of which is “details of interest expenses claimed under Section 57 of the Act”. These details were provided vide petitioner’s letter dated 3rd December 2014. Thereafter, there was a personal hearing granted and as per the further details sought during the personal hearing, petitioner provided further documents and details by its letter dated 17th December 2014.
4 After considering the details supplied, an assessment order dated 20th February 2015 came to be passed accepting petitioner’s explanations and computation of income. Ofcourse in the assessment order certain credit for tax paid in the sum of Rs.42,160/- was not granted and to that extent, a notice of demand under Section 156 of the Act was issued. That amount has been paid by petitioner. More than four years, after the assessment order dated 20th February 2015 came to be passed, petitioner received a notice dated 26th March 2019 under Section 148 of the Act stating “… I have reasons to believe that your income chargeable to tax for the Assessment Year 2012-13 has escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961”. In response, petitioner, without prejudice to its rights and contentions, sought for the reasons to believe. Respondent, by its letter dated 28th May 2019 provided petitioner the reasons recorded for reopening of the assessment.
5 The short reasons to believe, for ease of reference, is scanned and reproduced hereinbelow :
ANNEXURE
Reason for re-opening of assessment u/s 147 of the I.T.Act, 1961
M/s Ananta Landmarks Pvt. Ltd.
PAN: AABCK6989Q
Asst. Year: 2012-13
1. The assessee is engaged in the business of real estate and development and filed its return of income for AY 2012-13 on 15/09/2012 declaring total income of Rs.6,96,880/-. The assessment in the instant case was completed u/s 143(3) on 20/02/2015 by accepting the returned income.
2. Thereafter, it is noticed that the assessee had availed following secured and unsecured loans as under:
