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2021 (8) TMI 484 - HC - Income TaxRevision u/s 263 - CIT against a decision of the AO dropping the reopening proceedings after issuing notice u/s 148 and after receiving the reply/objections of the assessee - whether or not there was change in beneficial interest in terms of Section 10A(9) - whether the twin ingredients which are required to be satisfied cumulatively for the exercise of power under Section 263 of the Act stood satisfied? - HELD THAT:- CIT had no jurisdiction to invoke his power u/s 263 to examine the correctness of the decision taken by the Assessing Officer dropping the reopening proceedings after issuance of notice under section 148 of the Act and after considering the objections filed by the assessee. In fact to the said extent, the Tribunal was right in its opinion - we do not agree with the finding of the Tribunal wherein the Tribunal has made an observation that issuance of notice under section 148 of the Act was an administrative decision and dropping of the proceedings after verifying the details was also an administrative decision. This observation is incorrect because the decision to be taken before issuance of notice for reopening should be based upon the cogent reasons and the AO who issues notice should record his satisfaction and this cannot be termed as purely an administrative decision but there is a quasi-judicial application of mind required before issuance of notice under Section 148 - Likewise after receiving the objections from the assessee if the AO seeks to sustain his prima facie view and reject the objections submitted by the assessee, then also he is required to apply his mind and pass an order, the correctness of which can be questioned in a proceedings under Article 226 of the Constitution of India. Therefore, to that extent, we do not agree with the finds of the Tribunal. Assessee had submitted an explanatory note clearly explaining the organization structure and established before the Assessing Officer that during 2000-01, Barry-Wehmiller Company Inc. acquired 100% shares in Marquip International Inc. and this does not change the shareholding pattern of the assessee Company and the parent Company continued to be the Mauritius Company with 100% equity. These facts were taken note of and the Assessing Officer had dropped the reopening proceedings. Thus, it is on an opinion formed by the Assessing Officer and after being satisfied that there is no case made out for reopening and after recording that the ownership or beneficial interest of the Company has not changed and continued to be with Mauritius Company and therefore, Section 10A(9) of the Act is not attracted and accordingly, proceedings under Section 147 of the Act was dropped. Unless and until the twin tests which are required to be satisfied that the assessment should be not only erroneous but prejudicial to interest, the power under section 263 of the Act should not have been invoked apart from the fact that this was not a case where such a power was exercised to revise the original assessment. Therefore, the Tribunal was right in coming to the conclusion that the shares were transferred only to comply with the legal requirements and the beneficial ownership was never transferred. Hence, we find that the order passed by the Tribunal does not call for any interference. - Decided in favour of assessee.
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