M/S NAVKAR SHARE AND STOCK BROKERS vs ASSISTANT COMMISSIONER OF INCOME TAX
- Court
- Gujarat High Court
C/SCA/10468/2018 JUDGMENT DATED: 14/10/2026
(GJHC240414092018)
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 10468 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
==========================================================
Approved for Reporting Yes No
==========================================================
M/S NAVKAR SHARE AND STOCK BROKERS
Versus
ASSISTANT COMMISSIONER OF INCOME TAX
==========================================================
Appearance:
MR RK PATEL, SENIOR ADVOCATE with MR DARSHAN R PATEL(8486)
for the Petitioner(s) No. 1
MAUNIL G YAJNIK(9346) for the Respondent(s) No. 1
==========================================================
CORAM: HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Date : 14/10/2026
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. In the present writ petition, the petitioner has prayed for quashing
and setting aside notice dated 27.03.2018 issued under Section 148 of the
Income Tax Act, 1961 (for short ‘the IT Act’) along with the order dated
15.06.2018. The petitioner filed return of income for Assessment Year
(for short ‘A.Y.’) 2011-12 which was subjected to scrutiny assessment
Page 1 of 6
Uploaded by K.K. SAIYED(HC00169) on Wed Oct 21 2026 Downloaded on : Wed Oct 21 16:40:57 IST 2026
C/SCA/10468/2018 JUDGMENT DATED: 14/10/2026
(GJHC240414092018)
under Section 143(3) of the IT Act, and a final assessment order dated
12.03.2014 was passed. Thereafter impugned notice dated 27.03.2018
was served upon the petitioner Company seeking reopening of the
assessment for A.Y. 2011-12 for the two reasons; one, that the petitioner
did not disclose the correct facts and claimed set off of business loss and
unabsorbed depreciation of Rs.32,01,046/- for A.Y. 2011-12 which
resulted into escapement of income, and second, the assessee paid Tax
Deducted at Source (for short ‘TDS’) on commission amounting to
Rs.64,282/- on 31.01.2012 after filing return of income, which resulted
into the under assessment of income as the entire amount is to be
disallowed under Section 40(a)(ia) of the IT Act. Thus, it is alleged that a
total income of Rs.38,43,866/- has escaped assessment.
2. Learned Senior Advocate Mr.R.K. Patel at the outset has submitted
that in the scrutiny assessment both the facets were examined by the
Assessing Officer after the petitioner had pointed out the relevant
documentary evidence and the explanation and the assessment order
under Section 143(3) of the IT Act on 12.03.2014 was passed. He has
invited attention of this Court to both the issues which are pointed out by
the petitioner in his reply which had been examined by the Assessing
Officer.
2.1 It is submitted that second aspect of the TDS which is already paid
by the petitioner was undertaken in the scrutiny assessment but was
thereafter dropped, whereas the non-claiming of the depreciation is
concerned, the petitioner in his reply had also pointed out the same and
ultimately the Assessing Officer has examined the disallowance of
depreciation for A.Y. 2008-09, 2009-10 and 2010-11. While pointing out
Page 2 of 6
Uploaded by K.K. SAIYED(HC00169) on Wed Oct 21 2026 Downloaded on : Wed Oct 21 16:40:57 IST 2026
C/SCA/10468/2018 JUDGMENT DATED: 14/10/2026
(GJHC240414092018)
the assessment order passed under Section 143(3) of the IT Act he has
submitted that the Assessing Officer after computation of the income of
the petitioner has confined the disallowance of amount of Rs.24,73,826/-
and had recomputed the book profit which worked out to be Rs.7,61,312/-
under Section 115JB of the IT Act and the income is ultimately assessed
at Rs.24,73,826/-. Thus, it is submitted that by the impugned notice
issued under Section 148 of the IT Act the Assessing Officer has
attempted to review his own decision after again scrutinizing the
assessment under Section 143(3) of the IT Act, which lacks proprietary as
well as jurisdiction on behalf of the Assessing Officer. Thus, it is
submitted that the provision of Section 147 of the IT Act would not get
attracted in the present case as there is no suppression by the petitioner in
any manner in disclosing the amount as well as the claims in the original
scrutiny assessment.
3. Per contra, learned Senior Standing Counsel Mr.Maunil G. Yajnik
while placing reliance on the affidavit-in-reply, has submitted that the
assessee in the scrutiny assessment has not disclosed the correct facts and
claim set off of business loss and an unabsorbed depreciation of
Rs.32,01,046/- for A.Y. 2011-12 has resulted into escapement of income.
It is submitted that though the assessee was well aware of the income
assessed for the previous years 2009-10 and 2010-11 which was assessed
as a positive income, after having paid the taxes, did not disclose the
correct income of A.Y. 2011-12, and hence on this aspect the reopening
of the assessment may not be disturbed. Similarly, it is submitted that the
assessee paid the TDS on commission amounting to Rs.64,282/- on
31.01.2012 after filing of the return of income of A.Y. 2011-12 i.e. after
the due date of 30.09.2011. Hence, the TDS so deducted was required to
Page 3 of 6
Uploaded by K.K. SAIYED(HC00169) on Wed Oct 21 2026 Downloaded on : Wed Oct 21 16:40:57 IST 2026
C/SCA/10468/2018 JUDGMENT DATED: 14/10/2026
(GJHC240414092018)
be deposited in the government account before due date of filing of the
return, which has resulted into under assessment of income and the entire
amount is to be disallowed under Section 40(a)(ia) of the IT Act. Thus, it
is urged that the reassessment may not be interfered at this stage.
4. Upon close scrutiny of the documents which are produced on
record and on analysis of the scrutiny assessment proceedings for A.Y.
2011-12, we find that the impugned notice issued under Section 148 of
the IT Act seeking reopening of the assessment for A.Y. 2011-12 in case
of the petitioner is required to be quashed. As previously recorded by us
the revenue has attempted to reopen the assessment for A.Y. 2011 on two
aspects; one, relating to the unabsorbed depreciation, and the second on
the deduction of TDS.
5. It is noticed by us that in the scrutiny assessment proceedings when
the petitioner was called upon to explain the nature of all the bank
accounts which were maintained by the petitioner, details on
disallowance under section 14A of the IT Act, the details of dividend
received by the petitioner, details of investment made in mutual funds,
details of preceding years of assessment under Section 143(3) of the IT
Act for years 2008-09, 2009-10 and 2010-11, and the additions made in
the disallowance of depreciation, the petitioner explained the same in
detail.
6. Thereafter, the assessment order on 12.03.2014 under Section 143(3)
of the IT Act was passed by the Assessing Officer, and the income of the
assessee was assessed at Rs.24,73,826/-. We find that the Assessing
Officer computed the income of the assessee after disallowance under
Page 4 of 6
Uploaded by K.K. SAIYED(HC00169) on Wed Oct 21 2026 Downloaded on : Wed Oct 21 16:40:57 IST 2026
C/SCA/10468/2018 JUDGMENT DATED: 14/10/2026
(GJHC240414092018)
Section 14A of the IT Act read with Rule 8D of the Income Tax Rules,
1962, disallowance of bad debts and disallowance of Annual
Maintenance Contract (for short ‘AMC’), and arrived at the total income
of Rs.24,73,826/-. Simultaneously, the sum of Rs.5,02,284/- being
disallowance under Section 14A of the IT Act is added back to the book
profit and the book profit under Section 115JB of the IT Act which was
recomputed and revised to Rs.7,61,312/-. Thus, we find that the petitioner
had fully disclosed the unabsorbed depreciation of the previous years in
the scrutiny proceedings. The petitioner had categorically in its reply had
clarified that it had not claimed the depreciation during the year under
consideration.
7. So far as the aspect of TDS is concerned, the petitioner had
objected the alleged escapement of income on deposit of TDS on
commission of Rs.64,202/- after filing the return of income for A.Y.
2011-12 before the Assessing Officer vide its objection dated 15.05.2018,
and we find that the respondent Assessing Officer has already dropped
the proceedings, and hence, after such dropping of the proceedings, it was
not open for the Assessing Officer to again venture on the such issue by
issuing the notice under Section 148 of the IT Act. Thus, in fact, by
reopening of the assessment and issuance of notice under Section 148 of
the IT Act, the Assessing Officer has attempted to review its own
decision, and the same is reflected from the impugned notice as it
specifically mentions that on the scrutiny of the assessment proceedings
the aforesaid lacuna has been noticed which led to the belief of the
Assessing Officer to reopen the assessment.
8. The Hon’ble Supreme Court in case of Parshuram Pottery Works
Page 5 of 6
Uploaded by K.K. SAIYED(HC00169) on Wed Oct 21 2026 Downloaded on : Wed Oct 21 16:40:57 IST 2026
C/SCA/10468/2018 JUDGMENT DATED: 14/10/2026
(GJHC240414092018)
Company Limited Vs. ITO , 1977 (106) ITR 1, has held that the
provisions of Section 147 of the IT Act can only be attracted if there is a
failure on the part of the tax-payer to fully and correctly disclose the
income. It is also held that the policy of law is that there must be a point
of finality in all legal proceedings and that stale issues should not be
reactivated beyond a particular stage. It was held that the reopening of the
assessment is not permissible after a period of expiry of four years from
the end of assessment year unless there is omission or failure on the part
of assessee to disclose fully and truly all material facts necessary for the
assessment.
9. We find that the petitioner in the scrutiny proceedings had already
disclosed all the aspects by providing the necessary documentary
evidence, which resulted into the assessment order dated 12.03.2014.
10. In light of the foregoing observations, the writ petition stands
allowed. The impugned notice dated 27.03.2018 as well as the order
dated 15.06.2018 are hereby quashed and set aside.
(A. S. SUPEHIA, J)
(VAIBHAVI D. NANAVATI,J)
K.K. SAIYED/16
Page 6 of 6
Uploaded by K.K. SAIYED(HC00169) on Wed Oct 21 2026 Downloaded on : Wed Oct 21 16:40:57 IST 2026