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TMI Blog2025 (2) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... ner for the Assessment Year 2014-15 and had called up the petitioner to file a Return of Income, within 30 days from the service of the impugned notice. The impugned notice dated 31.03.2021 issued under Section 148 of the IT Act reads as under :- "Whereas I have reasons to believe that your Income chargeable to Tax for the Assessment Year 2014-15 has escaped Assessment within the meaning of section 147 of the Income Tax Act, 1961. I, therefore, propose to assess/re-assess the income/loss for the said Assessment Year and I hereby require you to deliver to me within 30 days from the service of this notice, a return in the prescribed form for the said Assessment Year. This notice is being issued after obtaining the necessary satisfaction of the INTL TAXATION RANGE 2 CHENNAI" 3. Reasons for re-opening of assessment were stated in the order dated 03.03.2022 passed by the Assessing Officer. The said order is extracted hereunder:- "Consequent to the return filed for the above AY in response to notice u/s 148 of the IT Act, 1961, the reasons for re-opening of assessment are communicated to you as under. It is seen that the resident company (Verizon Data Services India Private Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner against the re-opening assessment. The said Speaking Order reads as under :- "The assessee, M/s. Verizon Services of Singapore Pte Ltd (PAN AAICV0891K) incorporated under the laws of Singapore and is a Tax resident of Singapore. The assessee is engaged in the business of global communications and Data Centre in the USA. During the AY 2014-15 relevant to the FY 2013-14, it had received remittances to the tune of Rs. 118,05,00,000/- being the buyback of 3,18,400 shares at the cost of Rs. 3750 per share by the resident company Verizon Data Services India Private Limited. The resident company had entered into a buyback arrangement with Verizon Services Singapore PTE limited for the purchase of 3,18,400 shares(buyback) at the cost of Rs 3750 per share totalling Rs 118,05,00,000 during FY 2013-14. It is seen from the evidence gathered that in December 2012, the share valuation of the company was only Rs 3050/. Subsequently, however the value of share was estimated on 31 March 2013 as per the buyback agreement, just within 3 months at Rs 3750/- per share as per the submissions of the resident entity itself. Such increase, given no significant change in the business model or short ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts in the return of income. 4. As per Section 147 read with the first proviso of the Income Tax Act, 1961, if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment and wherein there was a failure on the part of the assessee to disclose fully and truly all material facts, the case is a fit case for reopening. 5. The assessee vide its reply dated 08.03.2022 & 10.03.2022 after the reasons for reopening was provided to the assessee on 03.03.2022 consequent to filing of its return of income on 02.03.2022, in response to notice u/s. 148, has submitted the following: i. Issue of notice is invalid and in direct contrast with the directions of the Central Board of Direct Taxes; ii. Reassessment is invalid due to an incorrect issuance of notice; iii. Reassessment is invalid due to an improper service of notice; iv. Reassessment should be based on a reason to Believe and not a reason to suspect, v. No computation /valuation mechanism prescribed under the Act vi. Non provision of sanction letter provided by the Principal Commissioner/ Commissioner for initiation of reassessment proceedings; vii. Allegation of Non-filing of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It is the further case of the petitioner that the shares were sold back to the said company under a buyback Agreement during the Financial Year 2013-2014 at Rs. 3,750/- per share, resulting in payment of Rs. 118,05,00,000/- to the petitioner. 8. It is submitted that the petitioner had taken a categorical stand that the petitioner was also not liable to tax even otherwise on account of Double Taxation Avoidance Agreement between India and Singapore which exempts tax on "capital gain" under Section 46A of the IT Act. However, ignoring the same, the Department proceeded to issue impugned notice dated 31.03.2021 which was received beyond the statutory period of limitation of six years and has passed the impugned order dated 03.03.2022, wholly without jurisdiction. 9. The learned Senior Counsel for the petitioner who appears through Video Conferencing has drawn the attention of this Court to the decision of the Division Bench of Delhi High Court in the case of Suman Jeet Agarwal Vs. Income Tax Officer reported in [2022] 143 axmann.com 11 (Delhi) dealing with an identical situation where regarding the non-service of notice in time, the Court held as under:- "28.1. With respect to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciated Enterprises (including the transaction of share buyback in question) was referred to the Transfer Pricing Officer ("TPO") for scrutiny and the TPO in his Order dated 31.10.2017 did not see any requirement to make any adjustment to the valuation at which the buyback was undertaken. 13. It is further submitted that the 1st respondent had earlier formed an opinion in the case of VDSI Pvt. Ltd. i.e., payer, in respect of the buyback transactions in question, pursuant to proceedings initiated under Section 201 of the IT Act and accordingly, concluded the proceedings vide Order dated 29.02.2016 was without making any adjustments to the consideration paid by VDSI Pvt. Ltd. / the petitioner. 14. The learned Senior Counsel for the petitioner submits that the impugned demand is also contrary to the CBDT Circular No.3/2016 dated 26.02.2016. It is therefore submitted that impugned order is liable to be quashed. Relevant portion of CBDT Circular No.3/2016 dated 26.02.2016 is extracted as under :- "4. Accordingly, the CBDT hereby clarifies that consideration received on buyback of shares between the period 01.04.2000 till 31.05.2013 would be taxed as capital gains in the hands of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the assessee and there is no time limit specified u/s 148 of the IT Act for its service. It is submitted that the 1st respondent has complied with the condition laid down u/s 148 of the IT Act, by issuing a notice on 31.03.2021 to the petitioner. The said notice was digitally signed by the 1st respondent and sent through Electronic Mail to the ID of the petitioner provided by the Indian entity viz., VDSI Pvt. Ltd. 20. It is further submitted that the request of the petitioner to furnish a copy of sanction u/s. 151 does not hold good for the reason that Section 151 of the IT Act only specifies the time limit for sanction for issuance of notice and does not prescribe any condition for providing a copy of such sanction to an assessee. 21. Heard the learned Senior Counsel for the petitioner and the learned Senior Standing Counsel for the respondents. 22. Challenge to the impugned notice dated 31.03.2021 issued under Section 148 of the IT Act cannot be countenanced merely because there is an typographical error in the address mentioned therein, notice has not been served to the petitioner's address i.e., M/s.Verizon Services Singapore Pte Ltd., instead of which, the same has b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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