SHOBHABEN KIRANKUMAR VASANI V. INCOME TAX OFFICER, WARD 7(2)(5)

SCA/21600/2017

AI Insights

The case involves Shobhaben Kirankumar Vasani, a partnership firm engaged in real estate development, challenging a notice issued by the Income Tax Officer to reopen their assessment for the Assessment Year 2011-2012. The notice was based on information from a search operation on the Venus Group of Ahmedabad, which revealed unaccounted cash transactions related to land purchases. The petitioner argued that the transactions were completed in the previous year and there was no taxable event in the current year. However, the court dismissed these arguments, referencing a similar case involving the same group and affirming the validity of the reopening based on the prima facie evidence of cash payments made during the relevant year.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 768741 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 14-08-2018
• Assessment Year: misc
• Other Referred Cases: Special Civil Application No.16385 of 2017 and connected petitions
• Laws Referred To: Income-tax Act 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: M R BHATT; MAUNA BHATT
• Assessee Lawyers: B S SOPARKAR; SWATI SOPARKAR
• Keywords: Assessment Year 2011-2012; Income Tax; Real Estate Development; Reopening of assessment; Unaccounted cash transaction
• Section: 147; 143(1); 132; 133A

Judgement Text

"C/SCA/21600/2017 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION No. 21600 of 2017 With R/SPECIAL CIVIL APPLICATION No. 22938 of 2017 ============================================================= SHOBHABEN KIRANKUMAR VASANI Versus INCOME TAX OFFICER, WARD 7(2)(5) ============================================================= Appearance : Mr BS SOPARKAR for Mrs SWATI SOPARKAR, Advocates for the PETITIONER Mr M.R BHATT, Sr Advocate with Mrs MAUNA M BHATT, Advocate for the RESPONDENT ============================================================= CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI and HONOURABLE Mr. JUSTICE B.N. KARIA 14th August 2018. COMMON ORDER (PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) These petitions involve similar facts and would be disposed of by this judgment. We may record facts from Special Civil Application No. 22938 of 2017. The petitioner has challenged a notice dated 30th March 2017 issued by the respondent-Assessing Officer to reopen the assessment of the petitioner for Assessment Year 2011-2012. This notice came to be issued in the following background. Page 1 of 7 C/SCA/21600/2017 ORDER The petitioner is a partnership firm and is engaged in the real estate development. For AY 2011-2012, the petitioner had filed return of income on 29th July 2011 declaring “Nil” income. Such return was accepted without scrutiny under Section 143(1) of the Income-tax Act 1961 [“the Act” for short]. To reopen such assessment, the respondent issued impugned notice. In order to do so, he had recorded the following reasons : “In this case, information has been passed on from the O/o. The Assistant Commissioner of income-tax, Central Central-1(1), Ahmedabad vide letter No. ACIT/CC.1/Venus Gr./Int-AO/2016-17 dated 21.03.2017, alongwith its enclosures. As per information available, a search u/s 132 of the income tax Act was conducted in this case of Venus Group of Ahmedabad on 10.03.2015. Various premises were covered u/s 132/133A of the Act during the search and various incriminating documents were seized on the Terrace of Crystal Arcade, C.G. Road, Ahmedabad, which was also covered u/s 132 of the Act. As per the seized material enclosed as Annexures, it is found that above mentioned assessee is one of the parties to the transaction of several land properties with the Venus Group in various years. The value of the transaction for the land as per the registered documents, is as under :- Page 2 of 7 C/SCA/21600/2017 ORDER Sr. No. Property at Survey No. Registration No. Value of registered Documents 1 Sargasan 430-A, 430/K,430-F, 430-H,430-E/1, 434/1-K, 434/1-D 10488/2009 Rs.3,40,56,100/- 2 Sargasan 430-G 10480/2009 Rs.52,05,200/- The total amount of cash transaction includes in the sale of land at Tarapur/Sargasan carried out by the group is Rs.33,24,89,500/- and the total area is 84,732 Sq. metres and the share of the above mentioned assessee on the land at Sargasan under different survey numbers as appearing in the registered documents is 53,813 sq. Meters, which worked out to 63.51%. Therefore, assessees share in the unaccounted portion of cash transaction is Rs. 21,11,62,931/-. The year wise breakup of the unaccounted cash transaction is as under: Sr No Financial Year Amount (in Rs) 1 2009 18,16,00,121/- 2 2010 2,95,62,810/- Thus, the source of cash investment of Rs. 2,95,62,810/- A.Y. 2011-12 for purchase of land bearing survey no. 430-A, 430/K, 430-F, 430/E/1, 434/a/K, 434/1-D and 430- G admeasuring 53,813 Sq. meters during the previous year is the unaccounted income of the assessee. Further, on verification of the return of income for the A.Y. 2011-12 it is revealed that the assessee filed its return of income at NIL. Thus, source of cash Page 3 of 7 C/SCA/21600/2017 ORDER investment of Rs.2,95,62,810/- for the purchase of above mentioned immovable properties is remained unexplained. In view of the above facts, I have reasons to believe that in this case, the above mentioned unaccounted cash expenditure is escaped assessment within the meaning of section 147 of the I.T Act, 1961. I am satisfied that the income chargeable to tax has escaped assessment and this is a fit case for the proceedings u/s 147 of the I.T. Act, 1961.” Upon being supplied such reasons, the petitioner raised objections to the notice of reopening under letter dated 24th November 2017. Before such objections could be disposed of, these petitions came to be filed. We may record that for the reasons, more elaborate but essentially similar as in the present case, number of assessments were reopened in case of this very assessee and other group entities. All these notices for reopening of assessment were challenged by the respective noticees in Special Civil Application No.16385 of 2017 and connected petitions. These petitions were dismissed by the common judgment dated 2nd April 2018. The present two petitions were separated on the contention of learned counsel for the petitioners that there was no taxable event which arose during Page 4 of 7 C/SCA/21600/2017 ORDER the period relevant to A.Y 2011-2012 so as to enable the Assessing Officer to reopen the assessment. These petitions have thus been heard separately. Appearing for the petitioners, learned advocate Mr. Soparkar has submitted that even if the theory of the Assessing Officer of cash investments made by the petitioners in purchase of land is to be prima facie accepted, there is nothing on the record to suggest that such payments were made during the period relevant to the present assessment year. In any case, admittedly, the sale transactions were completed during the earlier year ie., the period relevant to A.Y 2010-2011 for which notices for reopening have already been issued and reassessments are going on. It would thereafter be not open for the Assessing officer to reopen the assessment of the current year also. On the other hand, learned counsel Shri M.R Bhatt appearing for the Department relied heavily on the judgment of this Court dated 2nd April 2018 passed in Special Civil Application No. 16385 of 2017 and connected petitions and submitted that this Court has allowed the Assessing Officer to continue re-assessment. Under similar circumstances, these Page 5 of 7 C/SCA/21600/2017 ORDER petitions should also be dismissed. He further submitted that even though the sale transactions may have been completed earlier, as per the material collected during the search operations on Venue Group of entities, it was found that part payments were made by the present petitioners during the present year. We may recall that in the present case, assessment of both the assesses were made under Section 143 [3] of the Act without any scrutiny. As per the Assessing Officer, there is prima facie material to suggest cash payments for purchase of land in different proportion by the petitioners. Larger issues were examined by us in the said judgment dated 2nd April 2018 which cover number of assesses of the same group and concerned respective notices for reopening of their assessments for earlier year ie., AY 2010-2011. All contentions for and against were examined and petitions were dismissed. Broadly, the very same issues arose in the present petitions except an additional element contended by learned advocate for the petitioners that no taxing event took place during the present year. Such contention cannot be accepted. Prima facie, the Assessing Officer has material at his command to form a belief Page 6 of 7 C/SCA/21600/2017 ORDER that payments in cash were made not for purchase of land property and these payments were made during the period relevant to the year under consideration. If these facts are ultimately established, the question of taxing the petitioners for such undisclosed investment would immediately arise. Reopening of the assessments therefore cannot be quashed. In the result, both these petitions are dismissed. Rule discharged. Interim relief stands vacated. [Akil Kureshi, J.] [B.N Karia, J.] Prakash Page 7 of 7 "