Priya Soparkar 1 16 wp 3390 18 o IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.3390 OF 2018 Swastik Safe Deposit And Investments Ltd. Petitioner V/s. Assistant Commissioner of, Income tax (8)(3)(1), Mumbai and ors. Respondents Mr.Jehangir Mistri, Senior Counsel with Mr.Madhur Agrawal i/by Mr.Atul Jasani for Petitioner. Mr.N.C.Mohanty for Respondent Nos.1 and 2. CORAM : AKIL KURESHI AND M.S.SANKLECHA, JJ. DATE : FEBRUARY 14, 2019. P.C.: 1. Heard learned counsel for parties for final disposal of petition. 2. Petitioner has challenged notice of reopening of assessment dated 24th March, 2018. 3. Brief facts are as under: ::: Uploaded on - 20/02/2019 ::: Downloaded on - 21/02/2019 09:48:24 ::: Priya Soparkar 2 16 wp 3390 18 o Petitioner is company registered under Companies Act, 1956. One M/s Sayoy Finance and Investments Private Limited (hereinafter referred to as Savoy Finance ) had sold certain shares of one M/s Piramal Healthcare Limited for total consideration of Rs.322.36 crores (rounded off). Savoy Finance merged with petitioner company Swastik Safe Deposit and Investments Limited (hereinafter referred to Swastik Safe ), effective date of merger being 1st April, 2010. 4. petitioner Swastik Safe filed return of income for assessment year 2011 12 on 28th September, 2011 declaring total income of Rs.57.87 lakhs, which mainly consisted of short term capital gain on sale of shares. This return was accepted without scrutiny in terms of Section 143(1) of Income Tax Act, 1961 ( Act for short). To reopen such assessment, Assessing Officer issued impugned notice. In order to do so, he had recorded following reasons: Annexure M/s Swastik Safe Deposit & Investments Ltd. PAN AAACT 3608G A.Y. 2011 12 Reasons for Reopening ::: Uploaded on - 20/02/2019 ::: Downloaded on - 21/02/2019 09:48:24 ::: Priya Soparkar 3 16 wp 3390 18 o Information was received from office of ITO 8(1)(3) Mumbai, wherein it was found that M/s Savoy Finance and Investment Private Limited being Non Filer of Return of Income for A.Y. 2011 12 had entered in Sale of Share; On further verification of ITS details of M/s. Savoy Finance and Investment Private Limited for F.Y. 2010 11 relevant to A.Y. 2011 12 it is seen that M/s Savoy Finance and Investment Private Limited has sold shares of M/s Piramal Health for Rs.322,36,60,636/ during A.Y.2011 12. Further it is found that M/s. Savoy Finance and Investment Private Limited has been amalgamated with M/s Swastik Safe Deposit & Investment Limited w.e.f. 01.04.2010. return of income of assessee was generated from ITD system. On perusal of same it was observed from Schedule C.G. parting to return of income filed by M/s Swastik Safe Deposit & Investment Limited that assessee has only offered sum of Rs.83,34,78,806/ as full value of consideration against which capital gain of Rs.57,87,762/ has been offered. Considering above fact I have reasons to believe that share of M/s Piramal Health of Rs.322,36,60,636/ sold by M/s Savoy Finance and Investment Private Limited which is amalgamated in assessee company i.e. Swastik Safe Deposit & Investment Limited has escaped assessment in hand of assessee company i.e. Swastik Safe Deposit & Investment Limited for A.Y. 2011 12, within meaning of section 147 of I.T.Act, 1961. Permission for issuance of notice u/s. ::: Uploaded on - 20/02/2019 ::: Downloaded on - 21/02/2019 09:48:24 ::: Priya Soparkar 4 16 wp 3390 18 o 148 as per provisions of Sec.151(2) of I.T.Act, 1961 is solicited. 5. Perusal of reasons would show that according to Assessing Officer, Savoy Finance had sold shares of Piramal Healthcare for Rs.322.36 crores during assessment year 2011 12. Savoy Finance had amalgamated with Swastik Safe. In return of income filed by Swatik Safe, only sum of Rs.83.34 crores as full sale consideration of shares was shown, declaring capital gain of Rs.57.87 lakhs. Assessing Officer therefore held belief that sum of Rs.322.36 crores upon sale of shares of Piramal Healthcare by Savoy Finance had escaped assessment. 6. petitioner filed detailed objections to notice of reopening of assessment under communication dated 9 th October, 2018 and followed it up with another set of objections dated 26th October, 2018. Alongwith these objections petitioner had produced several documents. crux of petitioner's objection to notice of reopening of assessment ::: Uploaded on - 20/02/2019 ::: Downloaded on - 21/02/2019 09:48:24 ::: Priya Soparkar 5 16 wp 3390 18 o was that there is no income chargeable to tax which had escaped assessment. petitioner did not dispute that said sum of Rs.322.36 crores was not reflected in return filed for said assessment year. However, on basis of documents produced alongwith objections petitioner contended that shares in question were held by Piramal Healthcare for several years and therefore, in terms of Section 10(38) of Act, there would be no liability of capital gain tax. Assessing Officer disposed of objections by detailed order dated 2 nd November, 2018, upon which this petition has been filed. 7. Appearing for petitioner counsel Shri Mistri raised following contentions: (i) That even in case where return of assessee had been accepted without scrutiny, Assessing Officer must have reason to believe that income chargeable to tax had escaped assessment. Reliance in this respect was made on decision of this Court in case Prashant S. Joshi and anr. Vs. Income Tax Officer and another1 and one dated 20th July, 2016 in Writ 1 (2010) 324 ITR 154 (Bom) ::: Uploaded on - 20/02/2019 ::: Downloaded on - 21/02/2019 09:48:24 ::: Priya Soparkar 6 16 wp 3390 18 o Petition No.1155 of 2016 in case of General Electoral Trust Vs. Income Tax Officer 20(1)(2) Mumbai and ors. (ii) notice of reopening of assessment could not be issued for carrying out fishing inquiry. (iii) In present case assessee had brought to notice of Assessing Officer reliable evidence to show that Piramal Healthcare had held shares in question for long over period over one year and that therefore, sale of such shares would not attract capital gain tax. Assessing Officer did not consider this objection in light of documents produced. (iv) He submitted that merely because in return filed petitioner did not mention factum of sale of shares, would not enable Assessing Officer to reopen assessment if necessary conditions were not fulfilled. 8. On other hand, learned counsel Shri Mohanty opposed petitioner contending that: (i) At stage of issuance of notice, Assessing Officer is not required to establish beyond doubt that invariably additions would be sustained. ::: Uploaded on - 20/02/2019 ::: Downloaded on - 21/02/2019 09:48:24 ::: Priya Soparkar 7 16 wp 3390 18 o (ii) Court while examining reasons recorded by Assessing Officer would not go into sufficiency of such reasons. Reliance was placed on decision of Supreme Court in Raymond Woollen Mills Ltd. Vs. Income Tax Officer and ors. 1 and on observations made by Supreme Court in case of Rajesh Jhaveri Stock Brokers P. Ltd.(supra). (iii) Counsel further submitted that whether Savoy Finance had held shares of Piramal Healthcare for period in excess of one year is matter of inquiry. assessee had not declared such sale in return filed at all. All inquiries can be made by Assessing Officer in assessment proceedings. 9. It is undoubtfully true that in present case assessee's return has been accepted without scrutiny and therefore Assessing Officer can not be stated to have formed any opinion and therefore, concept of change of opinion would have no applicability. In such case Assessing Officer would have much wider latitude to reopen assessment and scrutiny of this Court would be limited. Nevertheless, it is well 1 236 ITR 34 ::: Uploaded on - 20/02/2019 ::: Downloaded on - 21/02/2019 09:48:24 ::: Priya Soparkar 8 16 wp 3390 18 o established principle through series of judgments of this Court and other Courts that even in such case requirement that Assessing Officer forms belief that income chargeable to tax had escaped assessment must exist. Within this narrow confine, it is always open for assessee to argue that reasons recorded by Assessing Officer lack validity. With this, we may revert back to facts of case. It is undisputed that Savoy Finance before its merger with assessee company had sold substantial number of shares of Piramal Healthcare for sale consideration of Rs.322.36 crores. In return of income filed by petitioner for assessment year 2011 12 relevant to period of sale of shares after merger of Savoy Finance with petitioner, this sale was not reflected. In column requiring petitioner to declare if any capital gain exempt from tax is received, petitioner showed figure of Nil . This is undoubtedly not correct declaration. This by itself would not be conclusive of question whether proceeds of sale of shares was otherwise taxable as capital gain and that therefore, reopening of assessment would be necessary. What would be relevant is did Savoy Finance hold shares which ::: Uploaded on - 20/02/2019 ::: Downloaded on - 21/02/2019 09:48:24 ::: Priya Soparkar 9 16 wp 3390 18 o came to be sold later on, for period in excess of one year before sale. This exercise, we are ofcourse are not inclined to undertake in writ petition. 10. Minute perusal of reasons recorded would show ground pressed in service by him is that petitioner had earned capital gain out of sale of shares which was not disclosed and therefore, income chargeable to tax had escaped assessment. This was also line adopted by Assessing Officer in order disposing of objection. We have perused detail objections raised by petitioner and documents produced alongwith same and also order passed by Assessing Officer disposing of such objections. We do not find that Assessing Officer had dealt with contention of petitioner that petitioner is in position to establish that shares in question were held by Savoy Finance for period in excess of one year and therefore, there was no liability to pay capital gain tax on proceeds of sale of shares. 11. In facts of present case, therefore, we ask Assessing ::: Uploaded on - 20/02/2019 ::: Downloaded on - 21/02/2019 09:48:24 ::: Priya Soparkar 10 16 wp 3390 18 o Officer to consider this objection of petitioner and give his specific finding through speaking order. For this limited purpose, we place matter back before Assessing Officer. Assessing Officer shall pass further order dealing with this specific objection of petitioner. In facts of case, Assessing Officer may give personal hearing to authorized representative of petitioner. Further order may be passed preferably within two months from today. For period of four weeks after such order is communicated to petitioner, reassessment shall stand stayed. Petition disposed of accordingly. (M.S.SANKLECHA,J.) (AKIL KURESHI,J.) . ::: Uploaded on - 20/02/2019 ::: Downloaded on - 21/02/2019 09:48:24 ::: Swastik Safe Deposit and Investments Ltd. v. Assistant Commissioner of Income-tax-(8)(3)(1), Mumbai and or