BOMBAY HIGH COURT
RAJBHUSHAN OMPRAKASH DIXIT
VS. DCIT
20-04-2019
W P NO.3546 OF 2018
The Petitioner, an individual, has challenged
a notice dated 02/05/2017 issued by the Respondent Deputy Commissioner of Income
Tax.
Brief facts are as under :
The Petitioner, at the relevant time,
was working as an independent Director of one M/s. Toporder Properties Pvt. Ltd.
which was one of the Sterling Biotech Ltd. group companies. The said group of entities,
including the Petitioner, was subjected to search and seizure action under Section
132(1) of the Income Tax Act, 1961 (‘the Act’, for short) and survey operations
under Section 133A of the Act on 28/06/2011. Subsequent to the search, the Assessee
filed the return of income for the Assessment Year 20112012 declaring total income of Rs.7.20 Lakhs
(rounded of). The Assessing Officer completed the assessment under Section 153A
read with 143(3) of the Act on 20/03/2014 accepting the Petitioner’s returned income.
4. To reopen such assessment, he issued
the impugned notice. In order to do so, he had recorded the following reasons :
“Return of Income for the year under
consideration was filed 23.02.2012 declaring total income of Rs.7,20,916/. Subsequently,
assessment u/s 153A r.w.s. 143(3) was finalized by the then DCIT, CC. 10, Mumbai
on 20.03.2014, determining total income of Rs.7.20,980/. Search & Seizure action
u/s. 132(1) of the I.T. Act was conducted in the Sterling Group of cases on 28.06.2011
by the DDIT (Inv.) Unit VII (4), Mumbai. In the Search and Seizure action u/s. 132(1)
several parties were involved at various places. Party No.17 conducted search at
the premises of M/s. Sterling Biotech Ltd. at Sandesara Estate, Vadodara. During
the course of search proceedings, the search party seized various documents being
AnnexureA7, on perusal of AnnexureA7, it is observed that AnnexureA7 consists of
152 pages.
(A) In the page no.8 dated 10.1.2011,
the following entry is made interalia Rs. 20,00,000/cash received fro Mr. R. B.
Dixit at Delhi, the same is given to cash S.K.G. (through Gagan Dhawan).
The above entry in the seized document
clearly reveals that the assessee had minimum cash in hand on 10.01.2011 of Rs.20,00,000.
The cash possessed by the assessee is
not forming part of assessee’s return of income for the year under consideration.
This tantamount escapement of income within the meaning of Section 147 of the Income
Tax Act.
Survey u/s. 133A was conducted in the
case of M/s. PMT Machines Ltd., 20/B, Khatau Bldg., A. D. Marg, Fort, Mumbai by
DDIT, (Inv) UnitI, on 28.6.2011. The survey was conducted simultaneously when the Search
& Seizure action was taken in the case of M/s. Sterling Group of cases on 28.06.2011
by the DDIT (Inv.) Unit VII(4), Mumbai.
During the course of survey action 133A
the survey team impounded certain documents which includes Annexures A4 and A5 inter
alia. On perusal of these Annexures it is observed that these impounded documents
include vouchers. These vouchers show the payments have been made to Shri R. B.
Dixit on various dates as detailed below :
URS Annexure Page No. Date Amount (Rs.)
A4
104
11.10.2010 18,00,000
A4
65 8.06.2010 3,25,000
A4
53 27.04.2010 5,35,000
A4
45 15.11.2010 15,00,000
A5
157 27.01.2011 16,00,000
A5
139 8.9.2010 2,85,000
A5
134
17.9.2010 11,50,000
A5
49
12.01.2011 20,00,000
A5
11
19.10.2010 20,00,000
Total 85,35,000
The aforementioned amounts of Rs.85,35,000/
received by Shri R. B. Dixit for the reasons specified in the vouchers. These amounts
received by the assessee is an income in his hands which is not offered for
tax in the return of income and thereby not forming part of assessment order.
In the backdrop of above, the undersigned
has reason to believe that the income has escaped within the meaning of section
147 of the I.T. Act, Accordingly notice u/s. 148 is being issued after obtaining
necessary sanction required by provisions of Section 151 of the Pr. CIT, Central1,
Mumbai.”
5. Upon being supplied the reasons,
the Assessee raised objections to the notice of reopening of assessment under a
letter dated 14th July, 2017. In such objections, he had, inter alia, contended
as under :
“The reference of the documents which
is given in the reason for reopening of the case, were already available with the
asessing officer at the time of assessment and after considering these documents/materials
assessment concluded u/s. 143(3) w.r.t. 153A and hence it is stated that there is
only difference of opinion and change of view. In the absence of the additional
evidence other than seized material we hereby state that provisions of reassessment
under section 147/148 is not warranted and is bad in law as it amounts to change
in view.”
6. The Assessing Officer rejected such objections
by an order dated 19.09.2018. In such order, in relation to the Petitioner’s contention
of the documents relied upon in the reasons already available with the Assessing
Officer during the original assessment, he stated as under :
“5. During the course of the assessment
proceedings for the A.Y. 2011-12, the assessee was not countered by the Assessing
Officer with the entires found in Annexure A7 seized during the search action at
the premises of Sterling Biotech Ltd. at Sandesara Estate, Vadodra. The assessee
was also not countered with the vouchers included in Annexure A4 and A5 which were
impounded during the course of survey action u/s 133A on M/s. PMT Machines Limited
on 28.06.2011. The Assessing Officer failed to form an opinion on the contents of
these entries which show cash possessed by the assessee to the tune of Rs.20,00,000/and
the content of voucher which shows payment made to the assessee amount to Rs.85,35,000.
As the Assessing Officer did not form
an opinion on this issue, there is no question of any difference or change of view/opinion.”
7. The Petitioner thereafter filed this
petition to challenge the notice of reopening of assessment. Learned Counsel for
the Petitioner submitted that there was no failure on the part of the assessee to
disclose truly and fully all material facts. The documents relied upon by the Assessing
Officer in the reasons for reopening the assessment, were available with the Assessing
Officer during the original scrutiny assessment.
8. On the other hand, Mr. Suresh Kumar,
learned Counsel for the Department, opposed the petition contending that the Assessing
Officer has recorded proper reasons. There was lack true and full disclosure on
the part of the Assessee, particularly in view of the Explanation 1 to Section 147
of the Act.
9. Having thus heard the learned Counsel
for parties, we may refer to the reasons recorded by the Assessing Officer. In such
reasons, he has referred to two facts. Firstly, as per the seized documents (AnnexureA7)
during the search, an amount of Rs.20,00,000/was stated to have been paid in cash
by the Assessee to one S.K.G. According to the Assessing Officer, the Assessee had
cash on hand of Rs.20,00,000/which was undisclosed. The second fact which the Assessing
Officer relied upon was the seizure of vouchers during the search showing a total
payment of Rs.85,35,000/to the Assessee. Here again, the Assessing Officer believed
that the Assessee had thus received cash amount of Rs.85,35,000/.
10. Undisputed fact is that all these
documents were before the Assessing Officer when the original scrutiny under assessment
under Section 153A read with 143(3) was made. It was in this background that the
Assessee had, in his objections, asserted that the documents relied upon in the
reasons were very much available with the Assessing Officer earlier. It was in the
context of these objections that the Assessing Officer, while disposing of the objections,
as noted above, had remarked that he had not formed any opinion on such documents
in the assessment order.
12. The stand taken by the Assessing
Officer may save him from the allegation of change of opinion, however, in the present
case when we are examining the validity of the notice of reopening issued beyond
the period of four years from the end of relevant assessment year, the question of lack of true and
full disclosure by the Assessee would become relevant. In this context, once the
Department i.e. the Assessing Officer had certain information, material, or document
before him during the assessment proceeding, irrespective of the source of such
information, material, or document, the Assessee cannot be blamed for nondisclosure
thereof.
13. Mr. Suresh Kumar, however, sought
to rely on the Explanation 1 to Section 147 to contend that this would be a case
of lack of true and full disclosure on the part of the Assessee. This Explanation
reads as under :
“Explanation 1.Production before the
Assessing Officer of account books or other evidence from which material evidence
could with due diligence have been discovered by the Assessing Officer will not
necessarily amount to disclosure within the meaning of the foregoing proviso.”
As per this Explanation thus, production
before the Assessing Officer of account books or other evidence from which material
evidence could with due diligence have been discovered by the Assessing Officer
will not necessarily amount to disclosure within the meaning of the first proviso
to Section 147. Here is not a case where the Assessee is seeking to rely on a disclosure
which the Revenue can seek to bring within the fold of the said Explanation. Here
is a case where the Department already had collected certain documents and materials
which were before the Assessing Officer at the time of framing assessment. If the
Assessing Officer did not, for some reason, advert to such material or did not utilize
the same, he surely cannot allege that the Assessee failed to disclose truly and
fully all material facts.
14. In view of the above discussion,
the impugned notice is set aside. The petition is allowed and disposed of.
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