Lokhanwala Construction Industries v. Dy. CIT

Case snapshot

Sections / provisions: 147

Questions before the Court / Tribunal

• S. 147 : Reassessment-After the expiry of four years-Builder stock in trade-Notional income-Reassessment notice on the basis of Judgement of Delhi High Court in Ansal Housing Finance and Leasing Company Ltd. (2013) 354 ITR 180 (Delhi)(HC) to assessee the income under section 23 of the Act was quashed. [S. 22, 23(5), 148, Art. 226] The assessment of the petitioner was completed u/s. 143(3) of the Act. In the course of assessment proceedings specific question was raised as regards assessment of stock in trade on notional basis. The assessee has filed the detailed reply and no addition was made. The reassessment notice u/s 148 was issued after four years. In the recorded reason the Assessing Officer relied on Ansal Housing Finance and Leasing Company Ltd. (2013) 354 ITR 180 / 213 Taxman 143 (Delhi)(HC) and Emtici Engineering Ltd v ACIT (1997 ) 58 TTJ 27 (Ahd.)(Trib.). The objection of the…
• Which factual, statutory and procedural conditions controlled the requested relief?
• How did the forum apply the governing provisions to the evidence and procedural history recorded in this case?

Material facts and procedural background

1/3 918-WP-102-2022.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 102 OF 2022 Lokhandwala Construction Industries Private Limited ….Petitioner V/s. Deputy Commissioner of Income Tax Circle 4(3)(1), Mumbai and Anr. …Respondents ---- Dr. K. Shivaram, Senior Advocate a/w Mr. Rahul Hakani for Petitioner. Mr. Suresh Kumar for Respondents. ---- CORAM : K.R. SHRIRAM & N. J. JAMADAR, JJ. DATED : 27th JANUARY, 2022 P .C. : 1. At the outset, in the order dated 10 th January , 2022, in Paragraph No.1 the date "08/11/2021" be corrected and replaced with "12/11/2018". The original order to be corrected. Rest of the order remains unaltered. 2. Paragraph No.1 of the order dated 10 th January , 2022 reads as under : 1. Dr. Shivram for petitioner states that the notice under Section 148 of the Income Tax Act, 1961 ("the Act") for Assessment Year 2016-2017 has been issued purely on change of opinion, which is not permissible in law. Dr. Shivram states that, for the reasons, reliance has been placed in assessment records and the Return filed by the petitioner along with the profit and loss account and balance sheet and secondly, an issue raised is regarding the finished stocks of Rs.65,53,57,872/-, which was for unsold flats of two projects at Kandivali and Bandra and according to respondents, Purti Parab

2/3 918-WP-102-2022.doc petitioner's has not offered tax under the head income from house property . Dr. Shivram states that the same issue was raised during the assessment proceedings as could be seen from Item No.16 in the annexure to notice dated 8 th October, 2018, issued under Section 142(1) of the Act and petitioner has replied to, the same vide petitioner's letter dated 8 th November, 2021. Dr. Shivram states that this issue has not been discussed in the assessment order but still relying on Aaroni Commercials Ltd. vs. Deputy Commissioner of Incometax -2(1)1 submitted that once a query has been raised and it has been replied to, the Assessing Officer is deemed to have applied his mind and considered the same even if that issue has not been discussed in the assessment order.

3. Mr. Suresh Kumar is not disputing the same and naturally he cannot but submits that the Assessing Officer while recording the reasons for re-opening the assessment has relied upon two judgments one of Delhi High Court and other of Ahmedabad ITAT and therefore, the Assessing Officer's satisfaction that there has been escapement from assessment cannot be faulted. 4. We have to note at the outset that the ITAT order is not binding on this court. Secondly , the judgment/order of the Delhi High Court relied upon for the reasons for re-opening has been reported in (2013) 213 Taxman 0143. Therefore, it is a judgment of 2013 or earlier. The assessment order in this case has been passed on 15 th December, 2018 and the query on this issue has been raised on 8 th October, 2018 and replied by petitioner vide its letter dated 12 th November, 2018.

3/3 918-WP-102-2022.doc upon by the Assessing Officer wanting to re-open the assessment but still did not find anything wrong in the case made out by petitioner and proceeded to pass the assessment order. 5. In the circumstances, it is quite clear that it is nothing but change of opinion on the part of the Assessing Officer wanting to re-open the assessment. The re-opening of assessment based on change of opinion goes to the root of the matter and as held repeatedly by various courts, is not permissible. 6. In the circumstances, petition is allowed in terms of prayer clause – (a) which reads as under : (a) that this Hon’ble Court may be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ, order or direction, calling for the records of the Petitioner’s case and after going into the legality and propriety thereof, to quash and set aside the said (i) reopening Notice dated 31 st March, 2021 (issued and signed on 8th April, 2021), u/s 148 for A.Y. 2016-17 (Exh.A), (ii) the impugned order dated 10/12/2021 being (Exh. “B”) and (iii) Notice u/s 143(2) dated 29/12/2021 being (Exh. “C”). 7. Petition disposed. (N. J. JAMADAR, J.) (K.R. SHRIRAM, J.) Purti Parab

Appellant / petitioner / assessee submissions

The judgment does not separately label this side’s submissions in an independently extractable passage. No contention is inferred; read the full record.

Revenue / respondent submissions

The judgment does not separately label the respondent’s submissions in an independently extractable passage. No contention is inferred; read the full record.

Court / Tribunal analysis and reasoning

Therefore, the Assessing Officer had benefit of the judgment of the Delhi High Court relied 1 (2014) 44 taxmann.com 304 (Bombay) Purti Parab

Operative decision and relief

The operative relief must be read from the final paragraphs of the complete packaged judgment.

Ratio and legal principle

The narrow proposition associated with Lokhanwala Construction Industries v. Dy. CIT concerns s. 147 : reassessment-after the expiry of four years-builder stock in trade-notional income-reassessment notice on the basis of judgement of delhi high court in ansal housing finance and leasing company ltd. (2013) 354 itr 180 (delhi)(hc) to assessee the income under section 23 of the act was quashed. [s. 22, 23(5), 148, art. 226] the assessment of the petitioner was completed u/s. 143(3) of the act. in the course of assessment proceedings specific question was raised as regards assessment of stock in trade on notional basis. the assessee has filed the detailed reply and no addition was made. the reassessment notice u/s 148 was issued after four years. in the recorded reason the assessing officer relied on ansal housing finance and leasing company ltd. (2013) 354 itr 180 / 213 taxman 143 (delhi)(hc) and emtici engineering ltd v acit (1997 ) 58 ttj 27 (ahd.)(trib.). the objection of the… The proposition cannot be separated from the judgment’s facts, the governing statutory version, the forum’s jurisdiction, and the exact relief recorded in WRIT PETITION NO. 102 OF 2022.

For working-paper purposes, the decision should be cited only after matching the material facts and reading the passages under the judgment-grounded record above. The editorial outcome label “Quashed / set aside” is a navigation aid; it does not replace the operative order or explain every issue in a multi-issue case.

Why this judgment matters

This decision is relevant when a file raises the same central question identified in the source headnote: S. 147 : Reassessment-After the expiry of four years-Builder stock in trade-Notional income-Reassessment notice on the basis of Judgement of Delhi High Court in Ansal Housing Finance and Leasing Company Ltd. (2013) 354 ITR 180 (Delhi)(HC) to assessee the income under section 23 of the Act was quashed. [S. 22, 23(5), 148, Art. 226] The assessment of the petitioner was completed u/s. 143(3) of the Act. In the course of assessment proceedings specific question was raised as regards assessment of stock in trade on notional basis. The assessee has filed the detailed reply and no addition was made. The reassessment notice u/s 148 was issued after four years. In the recorded reason the Assessing Officer relied on Ansal Housing Finance and Leasing Company Ltd. (2013) 354 ITR 180 / 213 Taxman 143 (Delhi)(HC) and Emtici Engineering Ltd v ACIT (1997 ) 58 TTJ 27 (Ahd.)(Trib.). The objection of the… Its practical value lies in the way the Bombay High Court connected the governing provisions—147—to the procedural posture and evidence before it.

The authority level is High Court. That affects persuasive or binding weight, but authority level alone is never enough. Territorial jurisdiction, statutory period, the identity of the challenged order, and later appellate treatment must all be checked before the case is used in advice, a submission, or litigation strategy.

Practitioner action points

• Begin with the complete judgment and mark the paragraphs supporting the exact proposition relied upon.
• Match the statutory version of 147 and the decision date 2022-01-27; do not assume the current text is identical.
• Compare the notice, assessment, appeal or other procedural sequence with the chronology recorded in this case.
• Verify the stated later-history status and any review, appeal, SLP, curative or rectification proceedings before citation.
• Record why the client’s evidence is materially similar, and also record any fact capable of distinguishing the result.

Does this case match your facts?

Detailed reliance and distinction analysis

Identity check. Confirm that the cited cause title is Lokhanwala Construction Industries v. Dy. CIT, the proceeding is WRIT PETITION NO. 102 OF 2022, and the decision is dated 2022-01-27. These fields are taken from the judgment record and should appear exactly in the citation note.

Bench check. The judgment identifies the coram as K.R. SHRIRAM & N. J. JAMADAR, JJ.. A later order by another bench, a larger bench, or a higher forum may alter the weight or interpretation of the proposition.

Provision check. The source associates the dispute with 147. The practitioner should place the historical statutory text next to the current text and identify every amendment, proviso, explanation, rule or notification that could change the analysis.

Fact check. The source issue is not a free-standing abstract rule. It arises from the concrete record summarized above. A reliable application note should list the common facts, the different facts, and whether each difference affects jurisdiction, admissibility, limitation, burden, computation or relief.

Remedy check. The recorded result is Quashed / set aside. Where a matter is remanded, set aside, partly allowed, or disposed with directions, the exact operative language is more important than a binary winner/loser label.

History check. The current closure state is REVIEW_APPEAL_SLP_CHECK_PENDING. If that state is pending, the page does not assert that no later case exists. It means the check remains open and must be completed at the point of professional reliance.

Section / provision impact

• 147 — apply the exact version considered in the judgment.

Case network

• Adityaraj Builders v. State of Maharashtra — Bombay High Court · Quashed / set aside
• Sanket Vinayak Nagvekar v. ITO — Bombay High Court · Quashed / set aside
• Hero Products India Pvt. Ltd. v. NFAC — Bombay High Court · Quashed / set aside
• Pr. CIT v. Macleods Pharmaceuticals Ltd. — Bombay High Court · Quashed / set aside

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