Dmt 1 wp1727-11 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1727 OF 2011 M/s. Minal Properties (Pvt) Ltd., (Now U.Y. Industries Pvt. Ltd.) .. Petitioner. versus Commissioner of Income Tax 9 – & Ors. .. Respondents. ..... Mr. S.C. Tiwari with Ms. Natasha Mangat for Petitioner. Mr. Vimal Gupta for the Respondents. ...... CORAM : DR.D.Y.CHANDRACHUD & A. A. SAYED, JJ. 20 DECEMBER 2011. P.C. : Rule, by consent returnable forthwith. With the Dmt 2 wp1727-11 consent of Counsel and at their request the Petition is taken up for hearing and final disposal. 2. The challenge in these proceedings is to a notice issued by the Assessing Officer on 28 March 2011 under Section 148 of the Income Tax Act, 1961 seeking to reopen the assessment for the Assessment Year 2004-05. The assessee filed its return of income for AY 2004-05 on 25 October 2004 declaring a total income of Rs. 85,38,110/- An order of assessment was passed under Section 143 (3) on 3 October 2006. The notice which has been issued to the Petitioner contains the following grounds for reopening the assessment : Scrutiny of assessment records of the above “ mentioned company for the A.Y. 2004-05 revealed that the assessee entered into a development agreement dated 01.06.2001, completed a office premises known as Vaman Centre for which “ ” B.M.C. issued Occupation Certificate on 01.01.2003. Dmt 3 wp1727-11 The assessee thereafter entered into a Leave and Licence agreement in February 2003 and accordingly leased out the building developed by the assessee and showed the leased office building in the Fixed Assets which was subsequently reclassified as Investment in the Balance Sheet of the assessee. Further the assessee claimed standard deduction of 30% i.e. Rs.64,23,995/- under section 24 from the rent income of the leased property by treating the rent income as Income from House Property . “ ” Non treatment of lease rent from stock in trade properties as business income in above case, resulted in under assessment of income of Rs. 64,23,995/-.” 3. Learned Counsel appearing on behalf of the Petitioner submits that the notice ex-facie does not fulfill the jurisdictional requirement of reopening the assessment beyond the period of four years. Since the original assessment was Dmt 4 wp1727-11 completed under Section 143 (3), the condition precedent to the exercise of the jurisdiction is that there must be a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for that assessment year. Learned Counsel urged that ex-facie the reasons disclosed are based on the scrutiny of the assessment record. Hence, there can be no possibility of a suppression of material facts and that is not even the allegation in the reasons disclosed. 4. On the other hand, learned Counsel for the Revenue submitted that the Petitioner should be relegated to the remedy of filing its objections to the proposed reopening since such a remedy is available by virtue of the judgment of the Supreme Court in M/s. GKN Driveshafts (India) Ltd. vs. Income Tax Officer1. 5. In M/s. GKN Driveshafts (India) Ltd. (supra), the Supreme Court has held that on receipt of the reasons the 1 (2002) 125 Taxman 963 Dmt 5 wp1727-11 noticee is entitled to file objections to the issuance of the notice for reopening to the assessee and the Assessing Officer is bound to dispose of the objections by passing a speaking order. In the present case, the assessee has waived the remedy of filing objections to the reopening of the assessment on the ground that ex-facie the reasons which are disclosed, even they are accepted as they stand, do not fulfill the jurisdictional requirement set out in Section 147. Hence, we do not consider it appropriate having regard to the facts and circumstances of the case to relegate the Petitioner to filing objections before the Assessing Officer. Ex-facie the reasons which have been disclosed by the Assessing Officer are based on a scrutiny of the assessment record. There is no allegation either in the reasons disclosed or at the stage of these proceedings to the effect that the Petitioner has failed to disclose fully and truly all material facts for assessment. As a matter of fact, reading the reasons as they stand, it is evident that the ground for reopening the assessment is based on facts which were already disclosed before the Assessing Officer and were to his Dmt 6 wp1727-11 knowledge when the original order under Section 143 (3) was passed. The reopening of assessment has taken place beyond a period of four years. The reopening does not meet the requirement that there must be a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment in that assessment year. Consequently, the Petition is allowed by making the Rule absolute in terms of prayer clause (a). There shall be no order as to costs. (Dr. D.Y. Chandrachud, J.) (A. A. Sayed, J.)