Prima facie basis to reopen assessment under s.148 over undisclosed share transfer gains; s.144C draft set aside, AO remanded

HC held there was prima facie basis to reopen assessment under s.148 based on information about share transfers to a foreign entity suggesting undisclosed capital gains, but found petitioner's newly produced documents potentially material showing the transfer may have occurred in an earlier year. The HC set aside the draft assessment order issued under s.144C, remanded the matter to the AO for fresh consideration, and directed that the petitioner be permitted to file fresh objections and submit relevant documents within two weeks of receiving the order.

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Issues involved:
The challenge to the notice under Section 148 of the Income Tax Act and the draft assessment order issued under Section 144C(1) thereof.

Summary:

Issue 1: Notice under Section 148 of the Income Tax Act
The petitioner received a notice under Section 148 followed by notices under Section 142(1) regarding the transfer of shares. The petitioner objected to the notice citing non-compliance with Section 127 procedure. The petitioner raised objections based on the GKN Driveshafts judgment and a Draft Assessment Order was issued under Section 144C after objections were lodged. The petitioner contended that the share transfer did not occur during the relevant financial year as claimed by the Assessing Officer.

Issue 2: Compliance with Objections
The petitioner argued that the Assessing Officer failed to consider the objections raised and did not pass a speaking order as required. The petitioner provided documents showing the share transfer to another individual in a different financial year with a different consideration amount, which could impact the assessment proceedings.

Issue 3: Dispute Resolution Panel
The Respondent's counsel argued that the petitioner admitted to the share transfer and could raise objections before the Dispute Resolution Panel. However, the petitioner's counsel contended that the Panel's jurisdiction is limited under Section 144C, emphasizing the need to set aside the draft assessment order for reconsideration based on the objections raised.

Judgment:
Upon examining the documents and contentions, it was found that the share transfer might have occurred in a different financial year than claimed by the Assessing Officer. The petitioner was directed to submit additional documents for verification, and the draft assessment order was set aside for reconsideration. The Assessing Officer was instructed to issue a fresh draft assessment order after considering the petitioner's objections and relevant documents within a specified timeframe.

Conclusion:
The draft assessment order was set aside, and the matter was remanded to the Assessing Officer for further consideration. The petitioner was given an opportunity to submit fresh objections and relevant documents within a specified period, with directions for the issuance of a new draft assessment order thereafter. The case was disposed of with no costs incurred.

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