TMI Blog2020 (2) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of the Act cannot be sustained. This aspect of change of opinion would be suffice to quash the impugned notice without going into the merits of the other arguments advanced by the learned counsel for the petitioner. - Decided in favour of assessee. - Writ Petition No. 11361 of 2016 (T- IT) - - - Dated:- 5-11-2019 - Mrs. S. Sujatha J. For the Petitioner : A. Shankar , Senior Counsel along with M. Lava , Advocate For the Respondent : K. V. Aravind , Advocate JUDGMENT MRS. S. SUJATHA J. - 1. The petitioner has challenged the notice dated March 3, 2015 issued under the provisions of section 148 of the Income-tax Act, 1961 ( Act for short) relating to the assessment year 2008-09. 2. The petitioner filed the return of income for the assessment year 2008-09 declaring the total income of ₹ 1,86,05,928 which includes the income from the capital gains offered by the assessee, ₹ 1,50,00,000 after claiming the applicable exemptions against the receipt of consideration of ₹ 4,00,00,000 in respect of transfer of part of the rights in the brand name MTR . 3. The said return of income was selected for scrutiny and order dated December 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dated March 3, 2015 issued under section 148 of the Act. It is thus submitted that the impugned notice under section 148 of the Act is nothing but change of opinion of the assessing authority. 7. Learned counsel for the Revenue supporting the impugned notice, submitted that the transactions of the petitioner relating to the trademark MTR would not come within the ambit of capital asset. The amount of ₹ 4,00,00,000 received by the assessee from M/s. MTR Food Products for patent right is chargeable to tax as income from business as stipulated under section 28(va)(b) of the Act. Considering the same, the notice issued under section 148 of the Act cannot be held to be unjustifiable. The original records are placed before the court. 8. I have carefully considered the rival submissions of the learned counsel appearing for the parties and perused the material on record. 9. Section 147 of the Act reads thus : Income escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ; (c) where an assessment has been made, but- (i) income chargeable to tax has been under-assessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allow ance under this Act has been computed. (d) Where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the pro ceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Explanation 4.-For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MTR Food Products for patent right is chargeable to tax as income from business as stipulated under section 28(va)(b) of the Income-tax Act. Whereas the assessee has misrepresented the fact treating the amount received as long-term capital gains instead of income from business. As the assessee has treated the amount received from MTR Food Products for patent rights as capital gain, investing part of the amount in REC Bond claiming exemption under section 54EC, also indexing the amount received to avail of non-existent indexation benefit, the income chargeable to tax amounting to ₹ 2,50,00,000 has escaped assessment and also the income admitted was assessed at a lower rate of tax. I have reason to believe that the income chargeable to tax amounting to ₹ 2,50,00,000 has escaped assessment and the income taxed was also at a lower rate than what it ought to have been charged to tax. 12. The reasons recorded by the assessing authority is verbatim similar for issue of both the notices except shown as surrendering the trademark right in the subsequent notice dated March 3, 2015 whereas, the reasons recorded relating to the notice dated January 9, 2014 indicates sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification of its rights and hence this agreement. It is clearly agreed to between the parties herein that the first party shall pay a sum of ₹ 24,50,00,000 as valid consideration to the second party in lieu of the second party agreeing to the concessions granted under this agreement, which are in the nature of modification of its rights held by it as its capital assets, to be distributed amongst the members of the second party as per Attachment 6 . (pages 9 10, para 7). From the above extracted clauses, which clearly and categorically talks about modification of rights in the said trade name and speaks about ceding the rights of the parties in favour of the new party and therefore the same partakes the character of a capital asset and therefore the relinquishment of right therein gives rise to a capital gain, rather than any other business right. It is also important to mention that the parties concerned have held it as their capital asset and have relinquished their rights, partially in favour of the other parties and as such the same is rightfully considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as at the time of survey conducted. 15. In the case of Asst. CIT v. ICICI Securities Primary Dealership Ltd. [2012] 348 ITR 299 (SC), the hon'ble apex court has observed thus (page 301) : The assessee had disclosed full details in the return of income in the matter of its dealing in stocks and shares. According to the asses see, the loss incurred was a business loss, whereas, according to the Revenue, the loss incurred was a speculative loss. Rejection of the objections of the assessee to the reopening of the assessment by the Assessing Officer, vide his order dated June 23, 2006, is clearly a change of opinion. In the circumstances, we are of the view that the order reopening the assessment was not maintainable. 16. In BLB Ltd. v. Asst. CIT reported in [2012] 343 ITR 129 (Delhi), it has been observed thus (page 135) : The Revenue had the option, but did not take recourse to section 263 of the Act, in spite of audit objection. Supervisory and revisionary power under section 263 of the Act is available, if an order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. An erroneous order contrary to law that has c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cases where the Assessing Officer does not and may not raise any written query but still the Assessing Officer in the first round/ original proceedings may have examined the subject matter, claim etc., because the aspect or question may be too apparent and obvious. To hold that the Assessing Officer in the first round did not examine the question or subject matter and form an opinion, would be con trary and opposed to normal human conduct. Such cases have to be examined individually. Some matters may require examination of the assessment order or queries raised by the Assessing Officer and answers given by the assessee but in others cases, a deeper scrutiny or examination may be necessary. The stand of the Revenue and the assessee would be relevant. Several aspects including papers filed and submitted with the return and during the original proceedings are relevant and material. Sometimes application of mind and formation of opinion can be ascertained and gathered even when no specific question or query in writing had been raised by the Assessing Officer. The aspects and questions examined during the course of assessment proceedings itself may indicate that the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assess ing Officer had formed an opinion while framing the assessment under section 143(3) of the Act. The arguments of the learned counsel for the Revenue that the issue was not addressed by the Assessing Officer, is a case of 'no opinion' cannot be countenanced. 20. It is well settled that no reassessment/reopening can be undertaken on the basis of mere audit objections/query raised by the internal auditors of the Department. The notice impugned dated March 3, 2015 does not indicate any independent application of mind by the Assessing Officer. As could be seen from the records, the audit query vis-a-vis the reply of the Assessing Officer makes it clear that the Assessing Officer was of the opinion that the transaction involved herein relates to capital asset and the tax paid on capital gains towards the same has been accepted to be correct. This issue was examined and analysed by the Assessing Officer on multiple times. 21. The foregoing factors would establish that the Assessing Officer had no reason to believe any escapement of income to assessment but is a clear case of change of opinion. Hence, assumption of jurisdiction by the Assessing Officer to invok ..... X X X X Extracts X X X X X X X X Extracts X X X X
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