TMI Blog2020 (10) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... uite apparent that petitioner had placed before the assessing officer during the assessment proceedings all the primary facts wherefrom he made the inference. Now it is not open to the assessing officer to take a second view on the same set of facts treating the earlier view as erroneous. This is not permissible. We find that Tribunal in the case of Jayneer Infrapower and Multiventures Private Limited [2019 (3) TMI 686 - ITAT MUMBAI] examined such transaction of transfer of shares which was held to be a colourable device by the CIT(Appeals) and liable to be taxed on the market value of the shares. Tribunal recorded a categorical finding of fact that such transfer of shares without consideration was a gift which is valid, permissible and genuine. Referring to section 47(iii) Tribunal held that transfer of shares by way of gift is exempt from the provision of capital gains and concluded that transfer made as a gift without consideration is not taxable under the provisions of capital gains. Thus, the very foundation on which the impugned notice was issued no longer survives. - Decided in favour of assessee. - WRIT PETITION NO.2749 OF 2019 - - - Dated:- 28-9-2020 - UJJAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned that petitioner had transferred 4,20,090 equity shares of Re.1.00 each of ZEE to Essel, a related party, to consolidate onshore media assets including shares of listed companies. This information was again furnished to respondent No.1 pursuant to his second notice issued under section 142(1) of the Act in the form of details of investments. 3.5. In its letter dated 31.12.2014, petitioner furnished details of transfer of shares of ZEE to Essel along with board resolution. Petitioner explained that as a part of internal restructuring for consolidation of media assets of the group of companies, holdings in ZEE were transferred at nil consideration by the assessee to Essel for which assessee incurred loss of ₹ 1,41,18,604.00 on transfer of such shares. This was further explained by the petitioner to respondent No.1 in its letter dated 12.02.2015. Responding to a query of the assessing officer as to why market value should not be considered for transfer of shares of ZEE at nil consideration, it was submitted that petitioner had transferred 4,20,090 shares of ZEE, a listed company, at nil consideration to Essel to consolidate the group's onshore media assets includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 3,35,61,611.00 had escaped assessment within the meaning of section 147 of the Act on account of failure on the part of the petitioner to disclose fully and truly all material facts. 8. After perusing the reasons recorded by the assessing officer, respondent No.2 recorded satisfaction that due to default on the part of the petitioner to disclose fully and truly all material facts necessary for assessment, re-opening of assessment under section 148 of the Act was justified and accordingly approved. 9. Following the procedure laid down by the Supreme Court in GKN Driveshafts (India) Limited Vs. Income Tax Officer, 259 ITR 19, petitioner submitted its objections on 18.06.2019 to re-opening of assessment under section 147 of the Act by issuing notice under section 148 thereof. 10. By a long order dated 30.08.2019 communicated to the petitioner on 09.09.2019, respondent No.1 rejected the objections raised by the petitioner. From a perusal of the rejection order it is seen that respondent No.1 stated that information was received from ACIT - 6 (2), Mumbai and ITO - 6(3)(1), Mumbai wherefrom it revealed that transfer of shares of ZEE, a listed company, amongst unlisted group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant Assessment Year. It is the Petitioner s case that the facts which forms the basis of reasons to believe the income chargeable to tax were completely disclosed. Moreover, it was also subject matter of consideration during the regular Assessment Proceedings. Thus, it is clear case of change of opinion. Therefore, without jurisdiction. 4. As none appears for the Respondent, Registry is directed to issue a notice to the Respondent, returnable on 27th November, 2019. Humdust permitted. 5. In the meantime, there shall be ad-interim stay to the impugned notice dated 22nd March, 2019. 14. Respondent No.1 has filed affidavit in reply. Stand taken in the affidavit is that the impugned notice dated 22.03.2019 under section 148 of the Act and the subsequent order dated 09.09.2019 rejecting the objections of the petitioner to re-opening were issued and passed in accordance with the provisions of the Act and hence justified. 14.1. Reference has been made to letters dated 29.02.2018 received from ACIT - 6(2), Mumbai and 29.03.2018 received from ITO - 6(3)(1), Mumbai. Copies of those two letters have been annexed to the affidavit. The two letters referred to order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n capital gains can be levied on such transfer; there being no capital gain on account of the transfer being a gift. All the materials were before the assessing officer whereafter he had accepted the transfer of shares as a gift and completed the assessment after due scrutiny under section 143(3) of the Act. Based on two letters of two income tax officers subsequently a different view was taken by the assessing officer that the transfer of shares was a colourable device used by the petitioner as a mean to evade payment of income tax. This is nothing but change of opinion and as rightly held by this Court in the order dated 16.10.2019, the same is not permissible and therefore, the assessing officer had no jurisdiction to issue the impugned notice under section 148 of the Act. What the petitioner had claimed and initially allowed by the assessing officer is clearly permissible in law under section 47(iii) of the Act. No question of earning any capital gains and consequential levy of tax thereon arises. In this connection, he has placed reliance on the following decisions:- 1) CIT Vs. George Anderson and Company Limited, 66 ITR 622; 2) CIT Vs. Bhanji Lavji, 79 ITR 582; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d notice and the same cannot be said to be fanciful, speculative or based on suspicion. An element of subjective satisfaction while forming reason to believe that income assessable to tax has escaped assessment cannot be ruled out. On that ground, notice of re-opening assessment may not be set aside. In support of his contentions, he has placed reliance on the following decisions:- 1) Raymond Woollen Mills Limited Vs. ITO, 236 ITR 34; 2) ACIT Vs. Rajesh Zaveri Stock Brokers Private Limited, 291 ITR 500; 3) Kalsha Builders Private Limited Vs. ACIT, Writ Petition No.3656 of 2018 (Bombay) decided on 08.02.2019; and 4) Phool Chand Bajrang Lal Vs. ITO, 203 ITR 456. 17. Submissions made by learned counsel for the parties have been duly considered. Also perused the materials on record and carefully gone through the judgments cited at the bar. 18. In the present case, the assessment year under consideration is 2012-13 and the assessment order under section 143(3) of the Act was passed on 27.02.2015. Notice under section 148 of the Act was issued on 22.03.2019. In any case, the impugned notice has been issued beyond four years from the end of the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by reason of the failure on the part of the petitioner to disclose fully and truly all material facts necessary for such assessment. 20. The expressions 'reason to believe' and 'failure on the part of the assessee to disclose fully and truly all material facts' have been subjected to numerous judicial pronouncements, and it is not necessary to burden this judgment by making reference to the long line of judicial precedents. Suffice it say that there must be a live link between the reasons recorded and formation of the belief that income chargeable to tax has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment which must not be fanciful or based on suspicion. Both the conditions must co-exist in order to confer jurisdiction on the assessing officer. Of course, the assessee is required to make a true and full disclosure of the primary facts at the time of the original assessment. Production before the assessing officer books of accounts or other materials from which the required evidence with due diligence could have been discovered by the assessing officer would not necessarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing out of transfer of a capital asset shall be deemed to be the income of the previous year in which the transfer took place chargeable to income tax under the head 'capital gains', section 47(iii) makes it very clear that any transfer of a capital asset under a gift or will or an irrevocable trust shall not be liable to income tax under the head 'capital gains'. Evidently, the proviso is not applicable to the present case. 26. Gujarat High Court in Prakriya Pharmachem (supra) examined a challenge to re-opening of assessment on the ground that transfer of shares by way of a transfer deed led to escapement of income from assessment. The transfer deed was examined whereafter it was found that a certain number of shares were transferred by the said petitioner to its sister concern by way of gift without charging any amount. After referring to sections 45 and 47(iii), Gujarat High Court held that nothing would apply to any transfer of capital assets under a gift or will or an irrevocable trust. Gujarat High Court also held that it was not the case of the assessing officer that the said case was not one of transfer of asset under a gift. In such circumstances, it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding shares of listed companies. Respondent No.1 was requested that the transfer of shares without consideration should be considered as a gift which is not liable to tax under section 45. It was thereafter that the assessing officer passed the assessment order under section 143(3) accepting the above claim of the petitioner. Though the assessment order as such is silent on this aspect, the preceding communications between petitioner and respondent No.1 would clearly demonstrate that petitioner had disclosed all the primary facts regarding transfer of shares of ZEE to Essel without any consideration and as a gift. In any case, it was a scrutiny assessment. 28.4. From the reasons recorded, order rejecting objections of the petitioner and the reply affidavit of respondent No.1 in the present proceeding, it is clearly discernible that the basis for re-opening of assessment was the two letters of departmental authorities dated 29.02.2018 and 29.03.2018. Though petitioner was not furnished copies of the said two letters, copies of the same have been annexed to the affidavit in reply wherefrom it is evident that in the case of a group entity, Commissioner of Income Tax (Appeals) had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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