2023 (1) TMI 323 - HC - Income Tax

Court quashes order and notice due to time-barred proceedings and lack of material facts disclosure.

AZIM PREMJI TRUSTEE COMPANY PVT LTD Versus DEPUTY COMMISSIONER OF INCOME TAX, PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, PRINCIPAL COMMISSIONER OF INCOME - TAX 2, CENTRAL BOARD OF DIRECT TAXES

AZIM PREMJI TRUSTEE COMPANY PVT LTD Versus DEPUTY COMMISSIONER OF INCOME TAX, PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, PRINCIPAL COMMISSIONER OF INCOME ... Issues Involved:1. Quashing of the impugned order dated 28.07.2022 under Section 148A(d) of the Income Tax Act, 1961.2. Quashing of the impugned notice dated 28.07.2022 under Section 148 of the Income Tax Act, 1961.3. Applicability of Section 56(2)(vii)(c) of the Income-tax Act, 1961 to the listed shares of Wipro Ltd. gifted to Pioneer Independent Trust.4. Quashing of Circular bearing No.6/2012 dated 03.08.2012.5. Other reliefs deemed fit by the Court.Issue-wise Detailed Analysis:1. Quashing of the impugned order dated 28.07.2022 under Section 148A(d) of the Income Tax Act, 1961:The petitioner contended that the impugned order was passed despite full disclosure of the gift of Wipro shares during the original assessment. The Assessing Officer (A.O.) had all the necessary information during the original scrutiny assessment under Section 143(3). The petitioner argued that there was no omission or failure to disclose material facts. The Court noted that the impugned proceedings were initiated after the amendment of Sections 147 to 151 by the Finance Act, 2021. The Supreme Court in Union of India & Others vs. Ashish Agarwal had laid down guidelines for such cases. The Court found that the impugned proceedings were barred by limitation as per Section 149(1)(a) since the relevant assessment year ended on 31.03.2015, and the notice was issued on 30.06.2021, beyond the permissible period.2. Quashing of the impugned notice dated 28.07.2022 under Section 148 of the Income Tax Act, 1961:The petitioner argued that the notice was issued beyond the period of limitation and was based on information already available with the A.O. during the original assessment. The Court observed that the A.O. had assessed the capital gains from the sale of Wipro shares during the original assessment, indicating full knowledge of the shares' market value. The Court held that the notice was barred by limitation under Section 149(1)(a) and quashed the impugned notice.3. Applicability of Section 56(2)(vii)(c) of the Income-tax Act, 1961 to the listed shares of Wipro Ltd. gifted to Pioneer Independent Trust:The petitioner contended that Section 56(2)(vii)(c) did not apply to the gift of Wipro shares. The A.O. had concluded during the original assessment that this section did not apply. The Court found that the A.O.'s decision was based on full disclosure of all relevant facts by the petitioner. The Court held that it was impermissible for the A.O. to change his mind and initiate reassessment proceedings based on the same material.4. Quashing of Circular bearing No.6/2012 dated 03.08.2012:The petitioner sought to quash the circular, but the Court did not find it necessary to address this issue separately as the primary reliefs sought were granted.5. Other reliefs deemed fit by the Court:The Court granted the primary reliefs sought by the petitioner, quashing the impugned order and notice. The Court did not find it necessary to address other reliefs separately.Conclusion:The Court quashed the impugned order dated 28.07.2022 and the impugned notice dated 28.07.2022, holding that the proceedings were barred by limitation and that there was no failure on the part of the petitioner to disclose material facts. The Court did not find it necessary to address other reliefs sought by the petitioner.