Reassessment cannot be invoked when Original Assessment concluded after receipt of Satisfactory Reply on Similar Queries: Bombay HC [Read Order]

 A division bench of the Bombay High Court while setting aside the notice issued for reassessment under section 148 of Income Tax Act, 1961 held that Reopening of assessment cannot be invoked when a satisfactory reply is delivered for queries raised by section 133(6) of Income Tax Act while concluding the original assessment.

The petitioner is a limited liability partnership firm engaged in the business of real estate and real estate development, filed an Income Tax Return on 31st July 2014 declaring total income as ‘Nil’ of which various notices were issued for queries under section 133(6) of the Income-Tax Act, 1961 (the Act). The Petitioner filed a reply by providing all details including a note on the nature of business, return of income etc. along with profit and loss account and balance-sheet and relevant scheduled balance-sheet as of 31st March 2014 and details of bank accounts.

The Respondent alleged that the petitioner’s income chargeable to tax for A.Y. 2014-2015 has escaped assessment as the assessee did not explain, the nature and the source of the loan, the creditworthiness of the creditor and genuineness of the transaction and needed to be added to the total income of the assessee.

The Petitioner objected to the re-opening of assessment vide a letter dated 21st October 2021 and contended that a reply was provided to queries raised during assessment proceedings for the loans provided, details have been provided to the assessing officer who had also independently issued notices under Section 133(6) of the Act and after being satisfied the assessment order came to be passed. Further, contended that the respondent conveniently remained silent on the Petitioner’s submission. It was observed that the re-opening is based on a change of opinion and the subject matter of the reasons recorded has been raised during the assessment proceedings.

The Coram consists of Justice K.R. Shriram and N.R. Borkar held that” it is settled law that once the query has been raised and answers have been given, even if the assessment order is silent, the Assessing Officer is supposed to have considered and is deemed to have been satisfied with the explanation offered by the assessee” Mr Rahul Hakani and Mr Akhileshwar Sharma appeared on behalf of Petitioner and Respondent respectively.

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