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TMI Blog2023 (6) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the revenue to reopen the assessment after scrutiny assessment, after a period of more than four years, especially, in absence of any circumstances about non-disclosure of true and full material on the part of the assessee, is not permitted. Decided in favour of assessee. - HONOURABLE MR. JUSTICE VIPUL M. PANCHOLI AND HONOURABLE MR. JUSTICE DEVAN M. DESAI Appearance: For the Petitioner(s) No. 1 : Mr B.S. Soparkar (6851) For the Respondent(s) No. 1,2 : Mr. Varun K. Patel (3802) ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE VIPUL M. PANCHOLI) 1. Since, this matter involves a short question of law, at the joint request made by the learned Advocates for the parties, the same was taken-up for final hearing and disposal, at the admission stage. 1.1 Rule. Learned Standing Counsel, Mr. Patel, waives service of Rule for the Respondents. 2. This is a petition, filed under Article 226 of the Constitution of India, whereby, the petitioner has sought the following reliefs; 7. (a) quash and set aside the impugned notice dated 30.03.2021 at Annexure- A to this petition; (b) quash and set aside the impugned order dated 25.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2022. 4.4 Thus, being aggrieved with the impugned notice dated 30.03.2021 as well as the order dated 25.02.2022, the petitioner has preferred the present petition. 5. Learned Advocate, Mr. Soparkar, appearing for the petitioner has raised various contentions in this matter. However, he mainly submitted that the petitioner made full disclosure with regard to exempted income and the interest expenses claimed. 5.1 Learned Advocate, Mr. Soparkar, referred to the order dated 18.06.2021, a copy of which is produced at Page-52 of the compilation, and submitted that even on the face of the reasons recorded, the Respondent has stated that the reasons are recorded on the basis of the information available on the record only and not from any other source, from which it could be held that the petitioner failed to disclose anything, at the time of original scrutiny. 5.2 It was also submitted that the Respondents seek to re-open a completed assessment beyound the period of four years, from the end of the assessment year, which is not permissible, except, the escapement having occasioned for the failure on the part of the assessee to truly and fully disclose all the material facts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions to the aforesaid notice, which are placed on record at Annexures- I to the compilation. 7.3 In the above background, if, the order dated 18.06.2021 passed by Respondent No.2 is seen, in Paragraph-2 thereof, it is stated as under; 2. Scrutiny records revealed that the assessee has made investment of Rs. 2047198478/- in the equity shares of Applewoods Estate Pvt. Ltd. Further, the assessee debited interest expenditure of Rs. 3,27,05,394/- during the year. However, no disallowance u/s. 14A r.w.s. 8D has been made which works out to Rs. 3,20,50,384/-. As per Section 14A of the I.T. Act, 1961 deduction is not admissible in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income. The expenditure incurred by way of interest etc. has to be disallowed as per Rule 8D of the It Rules, 1962. The CBDT has issued Circular No.5 of 2014 dated 11.02.2014 in which the issue as to whether disallowance under Section 14A and Rule 8D can be made in cases where the corresponding exempt income has not been earned during the financial year has been consideration great detail and clarified that section 14A of the Act provides f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same materials, which were relied at the time of original assessment proceedings, has reason to believe that there is escapement of income. Therefore, in this circumstances, we are of the view that, the material available with the Assessing Officer, at the relevant point of time, while making original assessment under Section 143 (3) of the Act and at the time of reopening of the assessment, the materials available with the Assessing Officer were the same and there was no any new material surfaced during the reassessment proceedings. 13. After close scrutiny of the reasons for reopening of assessment, we are of the view that, all the material facts relating to Section 14(A) of the Act were before the Assessing Officer during the course of the original assessment and now, he could not reopen the assessment after 4 years where there is no failure on the part of the assessee to disclose fully and truly all the facts necessary for assessment. It is settled by the Apex Court in the case of CIT Delhi Vs. Kelvinator of India Limited. [(2010) 320 ITR 577] that the existence of tangible material is essential to safeguard against the arbitrarily exercised of power. Therefore, as d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the petition compilation on page 62, again learned counsel for the petitioner has drawn attention about figures which have been reflected pertaining to brokerage and commission and submitted that all the details have been specifically dealt with by the authority and therefore, it is not open on part of the respondent authority to reopen the assessment. From the reasons which are recorded as stated above, a specific reference about the fact that the authority has scanned the entire record of the case and upon verification of the record, reasons have been assigned and therefore, if this be allowed, it would be in clear violation of settled principles of law. It is therefore, submitted that action on part of respondent authority in exercise of jurisdiction under section 148 of the Act is impermissible. In a series of decisions, the Supreme Court as well as this Court has held that powers of reassessment after a period of four years can never be exercised if full and true disclosure is there on the part of the assessee. Here, from the record, it indicates that the petitioner has disclosed true and full materials before the authority not only with the return but, also at the time o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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