9911796707
TMI Blog2018 (7) TMI 1816X X X X Extracts X X X X X X X X Extracts X X X X ..... any Limited, Visakhapatnam. The petitioner in W. P. No. 40706 of 2017, Anne Venkata Vishnu Vara Prasad (hereinafter, "Prasad"), filed his return of income for the assessment year 2010-11 declaring a total income of Rs. 49,69,760, while the petitioner in W. P. No. 40708 of 2017, Yelamanchili Venkata Ramana (hereinafter, "Ramana"), declared a total income of Rs. 54,30,170. Both of them declared long-term capital gains arising out of transfer of their shares in M/s.Vijay Nirman Company Private Limited, as it then was, treating the date of transfer of these unlisted shares as November 24, 2009, the day on which they filed declarations in Form 7B with the purchaser-company. The sale consideration declared by Prasad for these shares was Rs. 1,99,98,613, while Ramana declared a sale consideration of Rs. 99,99,305. Both of them invested part of the sale proceeds in National Highway Authority of India Bonds. Prasad invested Rs. 50,00,000 in these bonds on May 4, 2010, while Ramana invested Rs. 15,00,000 on March 29, 2010. Prasad also purchased a house property through a registered sale deed on October 31, 2011 for Rs. 1,50,00,000. Prasad claimed deductions/exemptions in respect of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessments, disallowing their claims as to deductions/exemptions in relation to capital gains. 6. Aggrieved by these orders passed by the Commissioner of Income-tax- 1, Visakhapatnam, under section 263 of the Act of 1961, the petitioners preferred appeals before the Income-tax Appellate Tribunal, Visakhapatnam (for brevity, the Appellate Tribunal). ITA No. 177/Vizag/2015 was filed by Ramana while ITA No. 178/Vizag/2015 was filed by Prasad. During the pendency of these appeals, the Income-tax authorities filed additional evidence before the Appellate Tribunal, including investment agreement dated August 12, 2009. By a common order dated December 9, 2016, the Appellate Tribunal allowed the appeals and set aside the orders of the Commissioner dated March 20, 2015 and March 25, 2015 passed in exercise of revisionary power under section 263 of the Act of 1961. The Appellate Tribunal opined that the actual transfer of the shares took place on November 24, 2009 when the petitioners filed valid share transfer forms in Form 7B before the purchaser-company. The date of receipt of the monies therefor, i.e., September 10, 2009, was held to be irrelevant for this pur pose. Taken from the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther stated that the transfer of shares took place on the date of execution of this investment agreement within the meaning of section 2(47) of the Act of 1961 and therefore, the investments made by the assessees to claim exemptions were beyond the stipulated time in both cases. She concluded that in view of this new found evidence, she had reason to believe that income chargeable to tax had escaped assessment within the meaning of section 147 of the Act of 1961. Both petitioners thereupon submitted detailed objections. However, the Assessing Officer addressed letters dated November 17, 2017 to both of them rejecting their objections and directing them to co-operate in the reassessment proceedings. Therein, she again reiterated that new information in the form of the investment agreement dated August 12, 2009 had come to light, which was not available at any time during the original assessment proceedings or during the proceedings under section 263 of the Act of 1961. She opined that the date of the said agreement would be the date of transfer, which was not considered earlier ; that the date of the investment agreement, being the date of actual transfer, was not one of the questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITTA No. 751 of 2017 came up for admission on December 5, 2017, the very same Division Bench was informed by Sri K. Raji Reddy, learned senior standing counsel for the Revenue, that ITTA No. 742 of 2017 filed against the same common order had already been dismissed on November 29, 2017. The Division Bench accordingly dismissed ITTA No. 751 of 2017 also. 13. The present Assistant Commissioner of Income-tax, Circle-2(1), Visakhapatnam, filed counters in both these writ petitions. Therein, she claimed that the issue relating to date of transfer of the shares was not adjudicated by the Appellate Tribunal in the proper perspective in the light of Central Board of Direct Taxes Circular No. 704 dated April 28, 1995 ([1995] 213 ITR (St.) 7 ). According to her, neither of the petitioners made full and true disclosure of the facts germane to the date of transfer of the shares. She alleged that while claiming deductions/exemptions, they suppressed the investment agreement dated August 12, 2009. She stated that this new information which was submitted as additional evidence before the Appellate Tribunal was not available earlier, either during the original assessment proceedings or during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Revenue in the appeals under section 260A of the Act of 1961 and therefore, it could not be raised once again. 15. It is surprising to note that having specifically referred to the Appellate Tribunal's common order dated December 9, 2016 in her counters filed on January 19, 2018, the Assessing Officer said nothing whatsoever about dismissal of the appeals preferred by the Revenue, against the said common order, on November 29, 2017 and December 5, 2017, respectively. It is dif ficult to believe that the Assessing Officer, being the Assistant Commissioner of Income-tax Circle-2(1), Visakhapatnam, would have been unaware of the filing of these appeals by the Principal Commissioner of Income-tax-1, Visakhapatnam, and of their dismissal, well before the filing of her counters. Further, the contentions of the Assessing Officer therein that the Appellate Tribunal did not consider the issue in the proper per spective and that Circular No. 704 dated April 28, 1995 was also not considered properly no longer survive for consideration as the Revenue emerged unsuccessful in its appeals against the said common order dated December 9, 2016. It is indeed surprising that the Revenue re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of payment of consideration should be taken to be the effective date for reckoning the date of actual transfer as filing of a form was only a statutory requirement. The Appellate Tribunal took note of the contents of the investment agreement dated August 12, 2009 entered into by Aquarius Capital (Mauritius) Limited, the purchaser-company, and Vijay Nirman Company Private Limited and its shareholders, pursuant to which the petitioners transferred their shares, in the capacity of shareholders. Reference was also made by the Appellate Tribunal to Central Board of Direct Taxes Circular No. 704 dated April 28, 1995 and the clause therein, relied upon presently by the Revenue. Despite the same, the Appellate Tribunal found no merit in the argument advanced by the Departmental representative and concluded that the transfer took place on November 24, 2009 and not on September 10, 2009, when the monies were received. It is not in dispute that if the date of transfer is taken to be November 24, 2009, the investments made by the petitioners would be within time, whereby they could rightfully claim deductions/exemptions, be it under section 54EC and/or section 54F of the Act of 1961. 19. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 149(1)(a) states that no notice under section 148 shall be issued for the relevant assessment year if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c) thereof. Clause (b) covers a situation where four years, but not more than six years, have elapsed from the end of the relevant assessment year, and the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. Clause (c) thereof covers a situation where four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year and the income in relation to any asset located outside India, but chargeable to tax, has escaped assessment. Section 151 stipulates that the notice under section 148 cannot be issued after expiry of four years unless the Principal Chief Commissioner or Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. 22. On facts, it is clear that the notices dated March 31, 2017 under section 148 of the Act of 1961 were issued to the petitioners o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foundation for forming an opinion that income chargeable to tax had escaped assessment in the context thereof. 25. Though Sri K. Raji Reddy, learned senior standing counsel, would argue that the Commissioner was justified in exercising revisionary power under section 263 of the Act of 1961, this issue was also the subject matter of the appeals before the Appellate Tribunal and, thereafter, before this court. Therefore, it does not survive for independent consideration at this stage. 26. The endeavour of the Revenue, as is clear from the arguments of Sri K. Raji Reddy, learned senior standing counsel, is to cloud and confuse the issues which fell for consideration in those appeals with the reopening of the assessments presently by way of the notices under section 148 of the Act of 1961. However, these issues are disparate and distinct. Once the Appellate Tribunal and, thereafter, this court rendered findings on the issues that fell for consideration in the appeals, it is no longer open to the Revenue to try and rake up the same in these writ petitions. 27. It is also to be noted from the counters that the main ground on which the Assessing Officer sought to reopen the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there was any failure on his part to fully and truly disclose material facts necessary for assessment for that assessment year. 30. Similar was the view taken by another Division Bench of the Bombay High Court in ICICI Bank Ltd. v. Deputy CIT [2012] 246 CTR (Bom) 292; [2012] 65 DTR 249 (Bom), wherein assessment for the assessment year 2003-04 was sought to be reopened by issue of a notice under section 148 of the Act of 1961 on March 30, 2010. The Division Bench observed that by virtue of the first proviso to section 147, the jurisdictional condition for exercise of power to reopen the assessment beyond four years is that there must be a failure on the part of the assessee to fully and truly disclose all material facts necessary for the assessment but it was found that there was no statement in the reasons disclosed by the Assessing Officer that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The Division Bench also referred to an earlier judgment of the Bombay High Court in Hindustan Lever Ltd. v. R. B. Wadkar, Asst. CIT (No. 1) [2004] 268 ITR 332 (Bom) ; [2004] 190 CTR (Bom) 166 and the observations m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that when a notice for reassessment is challenged, the burden is on the Revenue to establish that the jurisdictional requirement stands satisfied. 32. In Amar Nath Agrawal v. CIT [2015] 371 ITR 183 (All) (Civil Misc. Writ Petition (Tax) No. 1492 of 2007, dated September 26, 2014), a Division Bench of the Allahabad High Court opined that two distinct conditions must be satisfied before the Assessing Officer can assume jurisdiction to issue a notice under section 148 of the Act of 1961 : (i) he must have reason to believe that the income of the assessee had escaped assessment, and (ii) he must have reason to believe that such escapement was by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment and if either of these conditions are not fulfilled, the notice would be without jurisdiction. It was further observed that section 149(1)(b) makes it imperative that the Assessing Officer, in his reasons, should also state that the escaped income is likely to be rupees one lakh or more, which is an essential ingredient for seeking the approval that is to be accorded by the competent authority under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r did not do so. Thus, as matters stand, the Assessing Officer never opined that issue of the subject notices was warranted on the ground that the petitioners did not disclose fully and truly all material facts necessary for their assessment or that the income that escaped assessment during that year amounted to or was likely to amount to one lakh rupees or more. The absence of these jurisdictional conditions in her reasons for seeking to reopen the assessments beyond four years is fatal to the very issuance of the impugned notices. Trite to 35. state, the reasons communicated by the Assessing Officer to the petitioners must be the same reasons furnished to the competent authority for seeking approval under section 151 of the Act of 1961, as the Assessing Officer cannot modify, add to or delete from such reasons to suit her own purposes at different points of time. Further, when the reasons recorded by the Assessing Officer are the only material that can be looked into by the competent authority for granting approval under section 151 of the Act of 1961, the absence of such jurisdictional conditions therein would invariably vitiate the approval, if any, by the competent authority, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
