Mahendra Gumanmalji Lodha Vs ACIT (Gujarat High Court)
Summary: The Gujarat High Court considered a challenge to the reopening of the petitioner’s assessment for Assessment Year 2013-14 pursuant to notice dated 29.03.2019. The petitioner’s original return had undergone scrutiny under Section 143(3) of the Income-tax Act, 1961, culminating in an assessment order dated 29.01.2016. During that assessment, the Assessing Officer had considered the petitioner’s net interest income of Rs.2,03,59,901/-, the profit and loss account and debit of Rs.26,82,419/- towards expenses, including finance charges (interest) of Rs.24,43,488/-. The petitioner also contended that all relevant bank statements, including the bank account subsequently referred to in the reopening proceedings, had already been furnished and examined during the original scrutiny assessment.
In the reopening proceedings, the petitioner was called upon to explain credits aggregating to Rs.1,01,59,07,691/- in the bank account and total sale/gross receipts of Rs.1,02,65,196/-. On the basis of the investigation report, the respondent formed an opinion that Rs.98,86,61,322/- was required to be treated as unexplained income. The petitioner objected that the relevant aspects had already been examined during the original scrutiny assessment and that there was no new tangible material, not previously available to the Assessing Officer, justifying reopening under Section 147.
The Revenue opposed the writ petition, submitting that new information had been received from the Investigation Wing and that there were sufficient reasons to conclude that income exceeding Rs.1 lakh had escaped assessment. The Revenue accordingly contended that the reopening proceedings should not be interfered with.
The Court, however, found that the petitioner’s assessment for AY 2013-14 had already been completed under Section 143(3) after scrutiny of the relevant material. The Court noted that the bank statements and the matters forming the basis of the reopening had been available during the original assessment proceedings. In these circumstances, the Court concluded that the reopening was “nothing but a change of opinion”. The Court also took note of the assessment for AY 2014-15, where the Assessing Officer, while passing an order under Section 147 read with Section 143(3), had made no additions and had determined the assessee’s income at the same amount.
The Court therefore held that the impugned notice dated 29.03.2019 could not be sustained and quashed and set aside the notice. The writ petition consequently succeeded. The decision underscores, on the facts recorded in the judgment, the distinction between reopening an assessment on the basis of material justifying reassessment and attempting to revisit matters that had already been examined during the original scrutiny assessment.
Cases Discussed
- Mahendra Gumanmal Lodha (HUF), Special Civil Application No.22636 of 2019, order dated 21.07.2026 — The Court noted that the HUF had challenged reopening of its assessment for AY 2014-15 and that the reopening had been set aside by the Gujarat High Court by order dated 21.07.2026. No independently verified TaxGuru destination for this exact case/order was located, so the case remains unlinked.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Learned Senior Advocate, Mr.Tushar Himani, at the outset, has submitted that the reopening of the assessment in the case of the present petitioner is done for the Assessment Year (for short ‘A.Y.’) 2013-14 (the subject matter of the present petition) and 2014-15, however, so far as the reopening of the assessment for A.Y. 2014-15 is concerned, he has tendered the order dated 29.03.2024 passed under Section 147 read with Section 143(3) of the Income Tax Act, 1961 (for short ‘the Act’) and has submitted that total income of the assessee remained the same and hence, it is urged that the impugned notice as well as the order may be quashed and set aside. Moreover, he has pointed out that in the original assessment proceedings initiated under the provision of Section 143(2) of the Act is culminated into the scrutiny assessment order under Section 143(3) of the Act, dated 29.01.2016. All the aspects relating to the dividend as well as the earned interest income was considered and accordingly, the assessment order was passed. It is submitted that so far as the Mahendra Gumanmal Lodha (HUF) is concerned, it had challenged the reopening of the assessment for the A.Y. 2014- 15, which has been set aside by this Court vide order dated 21.07.2026 passed in Special Civil Application No.22636 of 2019. Thus, it is urged that the present writ petition may be allowed by setting aside the notice dated 29.03.2019.
2. In response to the foregoing submissions, learned Senior Standing Counsel, Mr.Dev D. Patel has submitted that since the new information was received by the Investigation Wing and there are sufficient reasons to conclude that the income more than Rs.1 lakh escaped assessment, the reopening of the assessment for the A.Y.2013-14 was undertaken under the provisions of Section 147 of the Act. It is submitted that there is ample material which would point out that the income chargeable to tax has escaped assessment. Thus, it is urged that the petition may not be entertained.
3. The facts which are established from the pleadings are that for the A.Y. 2013-14, the income tax returns filed by the petitioner were undertaken under scrutiny assessment under Section 143(3) of the Act and accordingly, the assessment order was passed therein on 29.01.2016. The said assessment order has been passed after considering all the relevant material relating to the earned net interest income of Rs.2,03,59,901/- and after examining the profit and loss account and the debit of an amount of Rs.26,82,419/- as expenses including an amount of Rs.24,43,488/- as finance charges (interest) was examined and the scrutiny assessment order was passed.
4. By the impugned notice, the petitioner was again called upon to explain the amount credited in his bank account aggregated to Rs.1,01,59,07,691/- and also the total sale/gross receipts for the year under consideration which is Rs.1,02,65,196/-. The respondent in light of the investigation report opined that Rs.98,86,61,322/- was required to be treated as unexplained income in the hands of the petitioner for the year under consideration. Accordingly, the impugned notice has been issued.
5. The petitioner objected the same reiterating that all the aspects were already undertaken in the assessment. It is not the case of the respondent that the Investigation Wing has formed its opinion upon any new tangible material, which was not in the possession of the Assessing Officer, who passed the order dated 29.01.2016 under Section 143(3) of the Act. The petitioner’s case was selected for scrutiny assessment. All the bank statements including the bank account in question were already submitted by the petitioner when examined in the scrutiny assessment and ultimately, the same has been accepted.
6. Under the circumstances, we are of the opinion that the reopening is nothing but a change of opinion. Additionally, we have also noticed that for the A.Y. 2014-15, the Assessing Officer while passing the order under Section 147 read with Section 143(3) of the Act, has not made any additions and the income of the assessee has been determined as the same. Hence, as a settled legal precedent, the impugned notice dated 29.03.2019 is quashed and set aside. The present writ petition succeeds.
