IN HIGH COURT OF JUDICATURE AT BOMBAY O.O.C.J. WRIT PETITION (L) NO.2145 OF 2019 African Daisy Realty Pvt. Ltd. & anr. Petitioners Vs Union of India & Ors. Respondents Mr.Nikhil Rngta with Mr.Rajat Gupta for Petitioners Mr.Sham Walve for Respondents CORAM: AKIL KURESHI & S.J. KATHAWALLA, JJ. DATED: AUGUST 5, 2019 P.C.: 1. This petition is filed by assessee challenging notice of reopening of assessment dated 29.2.2019 passed by Respondent No.2 Assessing Officer seeking to reopen petitioner s assessment for Assessment Year 2012-2013. Assessing Officer provided reasons recorded by him for reopening of assessment which reads as under: REASON FOR REOPENING UNDER SECTION 147 OF INCOME TAX ACT, 1961. assessee filed its return on 30.09.2012 declaring total income of Rs.2200. return was processed u/s 143(1) of Income-tax Act, 1961 (herein after Act ) on 22/02/2013. As per Memorandum of Association, main object of company was to carry on business of developers, builders, masonary, general construction Page 1 of 6 ::: Uploaded on - 07/08/2019 ::: Downloaded on - 09/08/2019 14:15:28 ::: wpl.2145.2019_7.doc contractor etc. However, on perusal of return of income and profit & loss account, no such business activity found to be carried out by assessee. 2. case of assessee was selected for scrutiny under CASS for AY 2013-14 on reason of Large increase in unsecured loans. During course of assessment proceedings for this AY, notices u/s 133(6) were issued to 10 loan creditors. Out these, 8 notices were returned back and balance 2 loan creditors did not replied. Considering these facts and details/documents available on record, Assessing Officer added unsecured loans of Rs.8,71,62,441/- received during FY 2012-13 as income of assessee. CIT (A) confirmed this addition. During course of this assessment proceedings, Assessing Officer has also found that assessee received loan of Rs.10,27,21,810/- from following firms/company. Notices u/s 133(6) were issued these firms by AO, but these notices were either returned back or no reply received. These facts were apprised to assessee during course of assessment proceedings for AY 2013-14 but assessee did not submit any reply. S.No. Name of unsecured loan Amount of loan creditors 1. Himalayan Hogweed Reality Pvt. 3,78,17,872 Ltd. 2. Idea Trading Company 2,20,15,266 3. Nikita Sales Corporation 1,94,23,843 4. Parshwa Aluminium 94,36,412 5. Riddhi Enterprises 88,72,100 6. Sharma Enterprises 51,56,317 Total 10,27,21,810 3. return of income of assessee for this assessment year is verified and found that assessee has unsecured loans of Rs.10,27,21,810/- as per balance sheet. 4. above facts proves that assessee company has received unexplained cash credit u/s 68 of Act of Page 2 of 6 ::: Uploaded on - 07/08/2019 ::: Downloaded on - 09/08/2019 14:15:28 ::: wpl.2145.2019_7.doc Rs.10,27,21,810/- in its books of accounts during AY 2012-13. 2. petitioner raised objections to notice of reopening of assessment. Such objections were however rejected by order dated 31.5.2019. Hence, petition. 3. At outset, we may record that return filed by petitioner to said A.Y. 2012-13 was accepted u/s 143(1) of Income Tax Act ( Act for short), without scrutiny. In that view of matter, as is settled through series of judgments of Supreme Court and this Court, Assessing Officer had much wider latitude in reopening assessment if he had tangible material at his end to enable him to form belief that income chargeable to tax has escaped assessment, he could by recording reasons, issue notice for such reassessment. Reference in this regard, can be made to judgments of Supreme Court in case of Assistant Commissioner of Income Tax vs. Rajesh Jhaveri Stock Brokers (P) Ltd. 1 as well as in case of Deputy Commissioner of Income Tax vs.Zuari Estate Development & Investment Co. Ltd.2 1 (2007) 291 ITR 500 (SC) 2 (2015) 373 ITR 661 (SC) : [2016] 236 Taxman 1 Page 3 of 6 ::: Uploaded on - 07/08/2019 ::: Downloaded on - 09/08/2019 14:15:28 ::: wpl.2145.2019_7.doc 4. In this background, we may refer to reasons recorded. Assessing Officer in his assessment has recorded that assessee has declared total income of Rs.2200 for said Assessment Year in return of income filed. He recorded that return of income of petitioner for Assessment Year 2013-2014 was taken in scrutiny. During such scrutiny assessment, since much increase in unsecured loans was noticed, notices u/s 133(6) of Act were issued to ten loan creditors. Out of these ten creditors, notices to eight returned back. other two loan creditors did not reply. Assessing Officer proceeded to frame assessment on basis of material on record. He made addition of sum of Rs.8.71 crores (rounded off) to unsecured loans received during period relevant to Assessment Year 2012-2013 to income of assessee. CIT (Appeals) confirmed this addition. During course of such assessment, Assessing Officer also noticed that assessee had received loan of Rs.10.27 crores (rounded off) from various firms and companies. Notices u/s 133(6) were issued to such firms also, which were returned back or were not responded to. assessee also did not submit his reply in connection with said loans of Rs.10.27 crores. Assessing Officer had verified return of income of assessee for said Assessment Page 4 of 6 ::: Uploaded on - 07/08/2019 ::: Downloaded on - 09/08/2019 14:15:28 ::: wpl.2145.2019_7.doc Year 2012-2013 and found that assessee had disclosed having received unsecured loans of Rs.10.27 crores. According to Assessing Officer, this would show that assessee had received unexplained cash credit of Rs.10.27 crores in terms of section 68 of Act. He, therefore, had reason to believe that income chargeable to tax had escaped assessment. 5. We do not find that reasons recorded by Assessing Officer are such that it can be stated that reasons lacked validity. learned Counsel for petitioner however submitted that petitioner had made full disclosures about such unsecured loans and in any case, assessment for Assessment Year 2013-2014 is not yet final, assessee had filed appeal which is pending. 6. Neither of these two grounds permit us to quash impugned notice of reassessment. Mere disclosure of receipt of unsecured loans would not be sufficient to avoid reassessment in case where return was accepted without scrutiny. Further, Assessing Officer has only referred to assessment of subsequent Assessment Year to demonstrate nature of unsecured loans received by assessee. There is no provision which would require him to await finality of such assessment Page 5 of 6 wpl.2145.2019_7.doc before issuing notice of reassessment. 7. In result, petition is dismissed. (S.J. KATHAWALLA, J.) (AKIL KURESHI, J.) Page 6 of 6 ::: Uploaded on - 07/08/2019 African Daisy Realty Pvt. Ltd. & anr. v. Union of India & Or