$~23
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 11554/2017
Date of decision: 1st May, 2018.
MEADOW INFRADEVELOPERS PRIVATE LIMITED....Petitioner
Through: Mr. Saubhagya Agarwal and Mr.
Aditya Swarup Agarwal, Advocates.
versus
INCOME TAX OFFICER ..... Respondents
Through: Mr. Asheesh Jain, Sr. Standing
Counsel for the Revenue.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE CHANDER SHEKHAR
SANJIV KHANNA, J. (ORAL)
Meadow Infradevelopers Private Limited by the present writ
petition has prayed for setting aside and quashing re-assessment
proceedings initiated vide notice dated 28th March, 2017 under Section
148 of the Income Tax Act, 1961 (Act, for short) for Assessment Year
2010-11.
2. The petitioner has also prayed for quashing of the order dated
28th November, 2017, by which objections raised by the petitioner
against initiation of re-assessment proceedings for the Assessment
Year 2010-11 have been dismissed.
W.P. (C) No. 11554/2017 Page 1 of 10
3. Return filed by the petitioner on 5th October, 2010 for the
Assessment Year 2010-11, declaring ,,Nil income was taken up for
scrutiny assessment for the following reasons recorded by the
Assessing Officer:-
"In the case assesee has declared Nil income. Gross
receipt has been declared at Nil. Company has shown
closing stock at Nil.
As per e-filed return, assessee has shown Securities (sic.
Shares) Premium Account of Rs.1,56,00,000/- against Nil
shown in immediate preceding year, thereby an increase
of Rs.1,56,00,000/- in the year under consideration.
Assessee has shown Issued, Subscribed and Paid up
Capital of Rs.40,00,00/- against Rs. 1,00,000/- shown in
immediate preceding year, thereby an increase of
Rs.39,00,000/- in the year under consideration.
If approved, case may be taken up for scrutiny for
verifying the introduction of capital made by the assessee
company.
Approval of the CCIT Delhi-II, New Delhi is solicited as
per para (j) of th guidelines issued by the CBDT vide F.
No 225/127/2011/ITA-II dated 02.09.2011. "
Thereupon, notice under Section 143 (2) of the Act was issued
to the petitioner on 29th September, 2011, followed by notice under
Section 142 (1) dated 5th January, 2012.
4. Order sheets reveal that questionnaire dated 5th January, 2012
was issued, requiring the petitioner to file, amongst other details,
detailed note on business activities, depreciation chart, names and
addresses of banks along with bank account statements, details of
W.P. (C) No. 11554/2017 Page 2 of 10
sales and gross receipts etc. In particular, the following details were
required to be filed:-
"13. Confirmation along with name, address and
assessment particulars in respect of share application
money received, if any, during the year in the following
format alongwith the bank statement evidencing the
transaction:-
SI No. Name of Share No. of shares Amount
Applicant applied
14. Details of unsecured loans in the following format
alongwith confirmed copy of account, asstt. particulars,
copy of bank statement of the parties:
SI Name of the Opening Recd. Paid Closing Mode of
No. person/Party Balance during during Balance receipt/pa
from whom the the yment
received year year
15. Complete details of share premium received, if any
during F.Y. 2009-10 with names and addresses of the
investors, copy of bank statements, I.T. particulars and
other documentary evidences to substantiate the premium
received. Also furnish the basis and determination of the
value of such premium on shares.
16. Details of shares issued, subscribed and paid during
the F.Y. 2009-10 with names and addresses of the
W.P. (C) No. 11554/2017 Page 3 of 10
applicants, confirmation, assessment particulars, copy of
bank statement.
17. Details of exempt income with applicability of
Section 14A read with Rule 8D. Also explain why
provisions of section 14A should not be invoked. Furnish
complete details of investments.
18. Furnish complete details of current liabilities.
Confirmed copy of account of the parties and details of
statutory liability with evidence of payment.
19. Details of Creditors, with complete addresses
alongwith confirmed copies of account.
20. Please confirm whether stock register is maintained.
File copy of inventory of opening stock and closing stock
quantitative and value wise along with method of
valuation of stocks."
The petitioner had thereupon furnished details before the
Assessing Officer.
5. Order sheet dated 10th December, 2012 recorded by the
Assessing Officer reads as under:-
"10.12.2012 Attends Sh. Sunil Jain, C.A. & files
information as per letter dt. 10.12.2012.
To file statement of Banks a/c, date of
taking possession of farm house.
Adjourned to 17.12.2012."
W.P. (C) No. 11554/2017 Page 4 of 10
The aforesaid order refers to the date of taking possession of the
farm house. This farm house was allotted to the petitioner company
by New Okhla Industrial Development Authority (NOIDA Authority).
6. The petitioner claims and states that they had filed copy of the
original Lease Deed issued by the NOIDA Authority in favour of the
petitioner. Copy of the lease deed has been enclosed as Annexure P-3
to the writ petition. The petitioner relies on letter dated 10th
December, 2012, written by the Chartered Accountant of the petitioner
to the Assessing Officer enclosing documents in support of the
acquisition of land from NOIDA Authority. The petitioner, in this
connection, has in our opinion rightly referred to the order sheet dated
10th December, 2012, which records that the petitioner had filed
details and date of taking possession of the farm house. The aforesaid
submission of the petitioner gets further affirmation from the earlier
order sheet dated 23rd November, 2012, which records that the
petitioner would furnish details of advance against the property with
documentary evidence.
7. The original file produced before us by the respondents reveals
that the petitioner during the course of assessment proceedings, had
filed a copy of transfer memorandum dated 28th September, 2010 with
Vichitra Lata. Copy of the Transfer Deed of the leasehold rights in the
property executed by the petitioner in favour of the transferee was
filed with the Assessing Officer. It is obvious that the Assessing
Officer was aware that the petitioner had entered into a transaction
and purchased a farm house from NOIDA Authority. It would be
W.P. (C) No. 11554/2017 Page 5 of 10
strange to urge that the Assessing Officer had taken on record
documents of transfer of the property by the petitioner to a third party,
which had occurred in the period relevant to the subsequent
assessment year, but not taken on record and examined documents
with regard to purchase of the property by the petitioner from NOIDA
Authority, which was during the period relevant to the current
Assessment Year 2010-11.
8. Upon consideration of the document and explanations offered,
assessment order dated 25th February, 2013 under Section 143 (3) of
the Act was passed, observing that the authorized representative had
attended the assessment proceedings from time to time and filed
details. The case was discussed. It was also recorded that the
business of the assessee company had not commenced. The returned
income of ,,Nil was accepted.
9. The Assessing Officer has thereafter recorded "reasons to
believe" dated 28th March, 2017, which refer to the information
received from the Deputy Director of Income Tax (Inv.), Unit-3(1) on
15th March, 2017 to the effect that the petitioner had purchased a plot
for development of a farm house from NOIDA Authority during the
current assessment year for Rs.6,63,40,000/-, out of which
Rs.1,32,68,000/- had been paid during the current year. The
Assessing Officer has referred to the said information and also given
details on analysis of the lease deed executed between the petitioner
and the NOIDA Authority. Relevant portion of the reasons to believe
for re-opening read:-
W.P. (C) No. 11554/2017 Page 6 of 10
"7 Information in this case has been received from Dy.
Director of Income-Tax (Inv) Unit-3(1), New Delh on
15.03.2017. The officer submitted that the assessee has
purchased a plot for development of farm house from
New Okhla Industrial development Authority (Noida).
Total premium of the plot is Rs.6,63,40,000/- out of
which Rs.1,32,68,000/- has been paid during the F.Y.
2009-10. The officer has also forwarded the copy of
lease deed entered by the assessee company with NOIDA
authority. The analysis of lease deed is detailed as
under:-
The lease deed was signed by the director of the assessee
company Sh. Pradeep Kumar Gupta
It was dated 31.3.2010.
It was for a plot measuring 20,231.59 sq. mtrs. situated at
FH-11 & 22, Sec. 128, Noida.
The land was allotted to the assessee company vide
allotment letter dated 5592 dated 30.10.2009 for setting
up of development of farm house on agricultural land.
Total premium amount was Rs.6,63,40,000/-
In additional to that the assessee company was required to
pay the lease rent in advance of Rs.16,58,500/- in
advance.
The assessee had paid 20% of the total premium amount
and the Noida Authority has granted installments of
Rs.5,30,72,000/- along with the interest @11% per
annum compounded annually. The Noida authority thus
granted twenty half yearly installments starting from
29.4.2010 to 29.10.2019."
W.P. (C) No. 11554/2017 Page 7 of 10
10. For the reasons stated above, we observe that the lease deed was
already with the Assessing Officer when the original assessment under
Section 143 (3) was completed vide assessment order dated 25 th
February, 2013. The lease deed was not a document, which had
unearthed and was furnished by the Investigation Wing to the
Assessing Officer for the first time. The analysis of lease deed
obviously was something which could have been undertaken once the
lease deed was submitted. Re-opening was entirely predicated and
based on the factum that the petitioner had purchased the property
from NOIDA Authority, a factum known and considered by the
Assessing Officer in the proceedings culminating the assessment order
dated 25th February, 2013.
11. For detailed reasons recorded above, we have accepted that
transaction for purchase of the farm house from NOIDA Authority and
copy of lease deed was furnished to the Assessing Officer in the first
round of assessment. The Assessing Officer was also aware that in the
subsequent assessment year the said farm house was sold to a third
party. The amount of premium paid by the petitioner to the NOIDA
Authority was indicated and examined by the Assessing Officer as
copy of the statement of bank accounts was furnished. Pertinently, the
Assessing Officer had specifically examined receipt of
Rs.1,56,00,000/- as share premium. The re-opening is not to re-
examine this receipt on the ground of fresh and new material.
12. Counsel for the respondents has drawn our attention to the fact
that the assessee had not disclosed any fixed asset and investment in
W.P. (C) No. 11554/2017 Page 8 of 10
his return of income. This may be correct as is noticed in the
"reasons to believe". However, this would not be relevant as the
petitioner was asked to furnish and give details with regard to
purchase of farm house in the original assessment. These details and
particulars were submitted as noticed above.
13. We would also record that the "reasons to believe" incorrectly
record that the assessee had made undisclosed investment of
Rs.5,30,72,000/- and had failed to disclose the same for the
assessment year 2010-11. During the year in question, the assessee
had paid premium of Rs.1,32,68,000/- to the NOIDA Authority and
not the entire purchase price. Balance premium was payable in the
subsequent nine equal installments spread over to four years and six
months. The transaction was not between two private individuals, but
by the petitioner with NOIDA Authority. NOIDA Authority is
established by the State of Uttar Pradesh.
14. In the aforesaid background, we do not see that the "reasons to
believe" recorded establish any live nexus that income had escaped
assessment and any fresh material and evidence would show that the
original assessment framed under Section 143 (3) was erroneous and
wrong. For reasons stated above, failure to disclose fully and truly all
material facts is not made out and established. The transaction
between the petitioner-assessee and the NOIDA Authority with regard
to purchase of the farm house was examined and considered. The law
on re-opening does not permit the Assessing Officer to re-examine the
issue already examined in regular assessment under Section 143 (3) of
W.P. (C) No. 11554/2017 Page 9 of 10
the Act. Change of opinion cannot be a ground to re-open scrutiny
assessment.
15. In view of the aforesaid discussion, the present writ petition is
allowed and the impugned notice under Section 148 dated 28th March,
2017 is set aside and quashed. The impugned order dated 28th
November, 2017 passed by the Assessing Officer dismissing
objections to reopening is also set aside. There would be no order as
to costs.
SANJIV KHANNA, J.
CHANDER SHEKHAR, J.
MAY 01, 2018
NA
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