9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (3) TMI 1283 - HC - Income TaxReopening of assessment u/s 147 - ACL and its related parties had entered into the non-genuine transactions and misused the funds/accounts of the company - According to the AO the said communication indicated that ACL had resorted to misrepresentation of accounts and had failed to present a true and fair view of the state of affairs of the said company - HELD THAT - The transaction of immovable properties as explained by the assessee had resulted in a profit of Rs. 60, 00, 000/- during the previous year relevant to the AY 2016-17. Thus the transaction of sale of 1600 square feet space to ACL cannot be stated to have resulted in any income of the assessee escaping assessment. In any view the impugned order does not indicate as to how any income of the assessee had escaped assessment on account of the said transaction. The observation that no TDS was deducted on the said transaction may not be material to reopen the assessment of the assessee. Apart from the fact that the petitioner disputes that any TDS was required to be deducted the obligation to deduct the TDS was on the purchaser and therefore assessee cannot be faulted for non-deduction of TDS assuming that any such obligation existed. Petitioner also purchased 1200 square feet of space in another tower of the same project at the same rate at which it sold the space to ACL. The petitioner had discharged its obligation of deducting TDS at source and also made the part payment by the banking channel. The AO has also not controverted that the balance amount of Rs. 60, 00, 000/- was paid in subsequent financial year (on 15.07.2017) along with interest at the rate of 9.5 per cent per annum). We are unable to ascertain as to how these transactions have resulted in assessee s income escaping assessment. There is no explanation in the impugned order as to how such transactions would lead to this conclusion. Even assuming that the transactions were found to be non-genuine or non- existent the same would not result in petitioner s income escape assessment as the petitioner has in fact declared a profit of Rs. 60, 00, 000/- on sale of 1600 square feet to ACL and surrendered the same to tax. Thus even these transactions are held to be paper transactions as is contended by the learned counsel for the Revenue the same would not result in petitioner s income escaping assessment. Revenue was also unable to explain as to how the facts as narrated in the notice under Section 148A (b) could lead to the conclusion that the petitioner s income for AY 2016-17 had escaped assessment. Availing of loan from HVPL is concerned the impugned order does not indicate as to why such loan transaction is required to be considered as bogus considering that the petitioner has disclosed that HVPL was a NBFC having a paid up capital and reserves of Rs. 20.74 Crores and the turnover of Rs. 10.20 Crores. The impugned order passed under Section 148A (d) of the Act cannot be sustained. Accordingly the impugned notice and impugned order are set aside. Decided in favour of assessee.
ISSUES PRESENTED and CONSIDERED
The Court considered the following core legal questions:
ISSUE-WISE DETAILED ANALYSIS 1. Validity of the Notice and Order under Sections 148A(b) and 148A(d) Relevant legal framework and precedents: The Income Tax Act, 1961, provides the framework for reopening assessments under certain conditions. Section 148A allows the Assessing Officer (AO) to issue notices if there is reason to believe that income has escaped assessment. Court's interpretation and reasoning: The Court found that the AO's notice and order were largely based on SEBI's investigation, which did not specifically implicate the petitioner as a related party to ACL. The Court emphasized that the basis for reopening an assessment must be founded on concrete evidence indicating income escaping assessment. Key evidence and findings: The AO's notice was premised on transactions involving immovable properties and loans, which were allegedly non-genuine. However, the Court noted that the transactions were disclosed in the petitioner's financial statements and tax returns. Application of law to facts: The Court concluded that the AO's reliance on SEBI's findings, without considering the SAT's decision, was insufficient to justify reopening the assessment. Treatment of competing arguments: The petitioner argued that the transactions were genuine and disclosed, while the Revenue contended they were non-genuine. The Court sided with the petitioner, emphasizing the lack of evidence of income escaping assessment. Conclusions: The Court held that the notice and order under Sections 148A(b) and 148A(d) were invalid due to the absence of substantial evidence indicating income escaping assessment. 2. Transactions Involving Immovable Properties and Loans Relevant legal framework and precedents: Transactions must be genuine and properly disclosed in financial statements to avoid being considered as income escaping assessment. Court's interpretation and reasoning: The Court scrutinized the transactions and found them to be genuine, as they were duly recorded and resulted in a disclosed profit. Key evidence and findings: The petitioner provided detailed records of the transactions, including agreements, ledgers, and evidence of TDS deductions, which the AO did not adequately dispute. Application of law to facts: The Court determined that the transactions did not result in income escaping assessment, as the profits were disclosed and taxed. Treatment of competing arguments: The Revenue's argument of non-genuine transactions was not substantiated by evidence, leading the Court to reject it. Conclusions: The Court concluded that the transactions were genuine and did not warrant reopening the assessment. 3. Impact of SEBI and SAT Findings Relevant legal framework and precedents: Findings from regulatory bodies like SEBI can influence tax assessments, but must be directly relevant to the taxpayer in question. Court's interpretation and reasoning: The Court noted that the SAT's decision, which reduced penalties and found no misappropriation, was not considered by the AO, undermining the basis for reassessment. Key evidence and findings: The SAT upheld some SEBI findings but reduced penalties, indicating no disproportionate gain or unfair advantage to ACL or related parties. Application of law to facts: The Court found that the AO's failure to consider the SAT's decision weakened the justification for reopening the assessment. Treatment of competing arguments: The petitioner argued that the SAT's findings should have been considered, which the Court agreed with, emphasizing the need for comprehensive evaluation of all relevant information. Conclusions: The Court held that the AO's reliance on SEBI findings, without considering the SAT's decision, was inadequate for reopening the assessment. SIGNIFICANT HOLDINGS The Court made the following significant holdings:
Core principles established:
Final determinations on each issue:
|
