TMI Blog2018 (2) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... hru Its current partner & others v. ITO [2016 (1) TMI 946 - GUJARAT HIGH COURT] reasons recorded by the Assessing Officer to form belief that the income chargeable to tax had escaped assessment lack validity. - Decided in favour of assessee - Special Civil Application No. 23049 of 2017 - - - Dated:- 14-2-2018 - MR. AKIL KURESHI AND MR. B. N. KARIA, JJ. For The Petitioner : Mr B S Soparkar, Advocate For The Respondent : Mrs Kalpanak Raval, Advocate ORAL ORDER ( PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Petitioner has challenged a notice dated 31.03.2017 issued by the respondent Assessing Officer seeking to reopen the petitioner's assessment for the assessment year 2010-11. 2. Brief facts are as under. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 31/03/2015, upholding the addition of ₹ 14,64,54,53,232/. It is pertinent to note that similarly six other persons (5 individuals and 1 company) had also transferred shares to M/s.Nerka Chemicals Pvt. Ltd. in the F.Y. 200910, relevant to the A.Y. 201011, without any consideration and the A.O. had made addition on account of Capital Gain in the hands of the transferors. On perusal of case records it is seen that the assessee, M/s Sarjan Chemicals filed its return of income on 22/07/2010 and declared its income at Rs.NIL. No scrutiny assessment proceedings have been completed for the year under consideration. Vide office letter dated 01/02/2017 and 20/02/2017, the assessee was asked to submit proof of the said financial tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the assessee had not declared. 6. We are conscious that the return of the assessee was originally accepted without scrutiny and that therefore the Assessing Officer had much greater latitude in reopening such assessment. Nevertheless, even in such cases, reopening of the assessment is not permissible in law unless the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment. In this context, the question of validity of the reason demonstrating formation of belief by the Assessing Officer becomes relevant. 7. Under identical circumstances, this Court had occasion to examine the validity of notice for reopening in case of one M/s.Prakriya Pharmachem thru Its current partner others v. Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cable trust. It is not the case of the Assessing Officer that the present case is not one of transfer of asset under a gift. In terms of sub-clause (iii) of section 47 of the Act, thus such transfer would not be governed by section 45 of the Act. For apparent reasons, the proviso to subsection (iii) of section 47 of the Act would not apply to the present case, since it applies to any transfer under gift or irrevocable trust under capital asset in the nature of shares, debentures or warrants allotted by a company to its employees under Employees' Stock Option Plan or Scheme. Admittedly, this is not such a case. This proviso is in the nature of exclusion to main provisions of sub-clause (iii) of section 47 of the Act. Under the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 45 of the Act in case of certain transfers. By no application of section 48 of the Act, such exclusion can be ignored. Section 48 of the Act only aims to provide for formula for computation of income chargeable as capital gain. Further, this proviso provides for computation of income which is referred to in proviso to sub-clause (iii) of section 47 of the Act, and thus, would cover cases which are to be excluded from the purview of sub-clause (iii) of section 47 of the Act. As noted, the case on hand does not fall within the proviso to sub-clause (iii) of section 47 of the Act, and therefore, mode of computation provided under section 48 of the Act would simply not apply. 14. Under the circumstances, we hold that the reasons reco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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