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2020 (12) TMI 1065 - AT - Income TaxReopening of assessment u/s 147 - AO has held that there is an income taxable in hands of the appellant as “perquisites” in terms of section 17(2)(iii) r/w section 2(24)(iv) - HELD THAT:- We fail to appreciate the action of Ld AO in presuming that there is a notional benefit derived by taking into consideration the FMV. As held above, in section 17(2)(iii) legislature has made “Value of benefit” provided directly linked to the “cost” incurred by the employer in either providing the benefit “free of cost” or “at concessional rate”. Undisputedly cost of shares of M/s Eltek for M/s SGS is ₹ 10/- per share and the shares have been transferred by M/s SGS to the appellant at the same price i.e., ₹ 10/- per share, there is therefore no taxable perquisite arising in this case. Unable to uphold the validity to assumption of jurisdiction u/s 147. While recording reasons, Ld AO should have applied his own mind to first determine whether provisions of section 17(2)(iii) are at all applicable. A mere perusal of “reasons recorded” demonstrates that there is no independent application of mind by the AO on following crucial issues, that is - Is there a “Benefit” which is taxable? - What should be the Value? and Under which provision of Act is the income allegedly escaping is taxable? Lack of independent application of mind by the Ld AO is also apparent from the fact that in the ‘reasons recorded’ u/s 148(2), he holds that benefit is taxable in hands of the ‘A’ u/s 17(2)(a)(i) r.w.s. 2(24)(iv) of the Act. Clearly there is no section 17(2)(a)(i) in statute. Even if it is presumed that CIT (A) of M/s SGS and the current Ld Assessing Officer intended to mention section 17(2)(i), then too it is applicable to Rent Free Accommodations and hence not relevant and applicable. This error is noted by Ld CIT (A) in the impugned order. In fact, Ld AO while passing the final order realized this and has therefore upheld taxability u/s 17(2)(iii) and not either u/s 17(2)(a)(i) or 17(2)(i) or section 56. In our considered opinion existence of a “Benefit” is a “Jurisdictional Fact” which at the outset must be demonstrated by the Ld. AO by determinative rules while assuming jurisdiction. Reasons recorded by the Ld AO in the instant case clearly shows that, nowhere Assessing Officer has recorded his satisfaction as to the correctness of the findings of the Ld CIT (A) in case of M/s SGS, nor has he recorded his finding as to how he has reached to a conclusion that income in the hands of the ‘A’ has escaped assessment. Observations made by Ld CIT (A) in case of M/s SGS are not binding upon the Ld. AO. Thus, we hold that assumption of jurisdiction u/s 147 is bad in law. - Decided in favour of assessee.
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