TMI Blog2018 (3) TMI 1743X X X X Extracts X X X X X X X X Extracts X X X X ..... to the said audit object ions. Since, as per the Assessing officer, the transfer had taken place in the financial year 2007-08 relevant to assessment year 2008-09 and he was of the view that the said amount was liable for taxation in the year 2008-09, hence, he was of the genuine and reasonable belief that the income of the assessee for assessment year 2008-09 had escaped assessment. Whether the said amount had actually accrued to the assessee or not was a matter of evidence / discussion and deliberation which could have been done during the assessment proceedings. In view of the above, we do not find any infirmity in the action of the Assessing officer so far as the reopening of the assessment is concerned. Ground No.1 & 2 of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant s case. 5. Based on the facts and circumstances of the case and in law, the Ld. Assessing officer has erred in initiating penal ty proceedings u/s 271(1)(c) of the Act. 2. First we take up the issue on merits as raised vide Grounds No.3 4. The brief facts of the case are that the case of the assessee was processed u/s 143(1) at the returned income of ₹ 5,27,15,240/-. The Assessing officer discovered that the assessee has sold his majority shareholding in Telecom (P) Ltd during the financial year 2007-08 relevant to assessment year 2008- 09 and thus was liable to capital gains tax but the assessee had not disclosed part of the capital gain in the year of transfer. The Long Term Capital Gains, however , were shown in asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transferee by raising a claim against the representation and warranties of the transferor and in such a case assessee would not have received any money. Further , the Escrow Agent could not release any consideration to the assessee till the dispute between assessee and transferee was settled. There was an actual dispute raised by the transferee against the Escrow Balance and the same was finally sett led by way of arbitration before the Hon'ble Punjab Haryana High Court vide order dated February 02, 2010 in C.M. No.2127- CH of 2010 in Arbitration Case No.150 of 2008 He further explained that in the present case, however, the very accrual of receipt of ₹ 40,28,748/- was on February 02, 21010 when the same was awarded to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of the agreement in respect of future litigations, the amount was directly transferable to the transferee. In fact, a dispute occurred between the parties about the amount of ₹ 18,000,000/- deposited in Escrow Account which was settled by way of compromise before the Hon'ble High Court vide which transferee got ₹ 40 lakhs out of that amount and the balance amount of ₹ 14,000,000/- along with accrued interest was distributed to the shareholders in the proposition of their shareholding. Hence, the assessee got his share upon the above finalization of the dispute. That before that, the assessee had not got any right to receive the said amount and, hence, it cannot be said that the amount had accrued to the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the assessee. Admittedly, a sum of ₹ 18,000,000/- was deposited in the Escrow Account. Both the transferor and transferee had common rights over the said amount as the said amount was deposited in the Escrow Account as a security in respect of future liabilities of the company / transferor. There was no certainty about the quantum of amount likely to be received by transferor or transferee out of the said amount deposited in Escrow Account . Even there was no certainty of the time of release of the said amount or the part of the amount to either of the parties as a dispute between the par ties had occur red and ligation was going on. In these circumstances, i t cannot be said that the assessee had got a vested right to receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be deleted. 8. The assessee has also agitated the reopening of the assessment vide Grounds No.1 2. Admittedly, the assessee did not offer the amount of ₹ 40,28,748/- for taxation in the return of income for the assessment year 2008-09. Whereas as per the agreement, the assessee had transferred his shareholding in the company. The Assessing officer got the knowledge of the receipt of additional amount of ₹ 40,28,748/- on the basis of the audit objections raised by the audit par ty for assessment year 2010-11. Therefore, the factum of the said receipt of the additional consideration in relation to the transfer of shares came for the first time into the knowledge of the Assessing officer pursuant to the said audit object ..... X X X X Extracts X X X X X X X X Extracts X X X X
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