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TMI Blog2018 (2) TMI 1293X X X X Extracts X X X X X X X X Extracts X X X X ..... DCIT, Central Circle6( 3), Mumbai that the assessee M/s Demuric Holdings Pvt. Ltd. had transferred 6,63,94,642 shares whose market value on the date of transfer was of Rs. 10,08,07,87,686/by way of transfer deed dated 26/02/2010 without any consideration to M/s.Nerka chemicals Pvt. Ltd., during the F.Y. 200910, relevant to the A.Y. 2010-11. During the assessment proceedings in the case of M/s.Nerka Chemicals Pvt. Ltd. (PAN:AAACN9337Q) for the A.Y. 2010-11, the assessing officer had passed order u/s 143(3) of the I. T. Act on 30/03/2013 by making an addition of Rs. 14,64,54,53,232/under the head income from other sources u/s 28(iv) of the I. T. Act. The assessee M/s Demuric Holdings Pvt. Ltd. had transferred 6,63,94,642 shares therefore Capital Gain on the said transfer has escaped assessment. On analysis of the transfer of shares by the assessee to M/s.Nerka Chemicals Pvt. Ltd. also reveals that the this transaction falls within the definition of Dividend as per section 2(22)(a) of the I.T. Act which brings into the ambit of dividend certain distributions / outflows which would otherwise not have been considered as dividend in the ordinary sense. 'Dividend' includes disbur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove issue was not looked into or covered, it requires further verification. From the above, it is clear that the assessee has failed to disclose fully and truly all material facts necessary for his assessment within the meaning of section 147 of the Act. Thus, the assessee's case falls within the explanation 2(c) to section 147 of the I. T. Act, which states "where an assessment has been made but (I) income chargeable to tax has been underassessed or (ii) such income has been assessed at too low a rate .... Under this Act has been computed." I am therefore satisfied and have reason to believe that income chargeable to tax of Rs. 10,08,07,87,686/has escaped assessment within the meaning of section 147 of the Act." 4. The petitioner raised objections to the notice of reopening under letter dated 28.08.2017. Such objections were rejected by an order dated 26.10.2017 by the Assessing Officer. Hence, the petition. 5. Learned counsel for the petitioner submitted that the reasons lack validity. There is no basis for the Assessing Officer to form a belief that income chargeable to tax has escaped assessment. 6. Counsel relied on the judgment of this Court in case of one M/s.Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue was examined by this Court in case of M/s.Prakriya Pharmachem thru Its current partner & others v. Income Tax Officer Ward 7 passed in Special Civil Application No.20492 of 2015. In such case also the Court had examined the validity of notice of reopening of assessment, when the assessee concerned therein had transferred large number of shares to M/s.Nerka Chemicals Pvt. Ltd. without consideration, the Assessing Officer believed that the assessee was liable to pay capital gain tax on such transfer. The Court observed as under: "11. Quite apart from this, even on greater scrutiny of the statutory provisions, we find that the transaction in question did not invite any tax liability on the petitioner. Section 45 of the Act, as is well known, pertains to capital gains. Subsection (1) thereof in particular provides for charging of tax on any profit or gain from transfer of capital assets as deemed income of the assessee for the previous year in which transfer took place. Section 47 of the Act pertains to transaction not regarded as transfer. Subclause (iii), which is relevant for our purpose reads as under: "47. Nothing contained in section 45 shall apply to the following transfers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transferred under a gift or an irrevocable trust, the market value on the date of such transfer shall be deemed to be the full value of consideration received or accruing as a result of transfer for the purposes of this section." 13. For the simple reason this proviso would not apply in the case on hand. Firstly section 48 of the Act itself provides for mode of computation of income chargeable as capital gain. Subclause (iii) of section 47 of the Act excludes application of section 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 subclause (iii) of section 47 of the Act, and thus, would cover cases which are to be excluded from the purview of subclause (iii) of section 47 of the Act. As noted, the case on hand does not fall within the proviso to subclause (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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