https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=384745 https://www.taxtmi.com/caselaws?id=384745 Reopening of assessment u/s 147 - non filing of return u/s 115A (5) - rejection of objections against notice - investment in shares to be a capital account transaction - HELD THAT:- Respondent failed to notice that u/s 115A (5) r.w.s. 115A (1) (a) there was no need for the Petitioner to file a return of income u/s 139(1). Respondent wrongly adverted to Clause (b) of Explanation 2 when this was a case of no return having been filed and the case if at all would fall under Clause (a). As decided in GKN DRIVESHAFTS (INDIA) LTD. VERSUS INCOME-TAX OFFICER AND OTHERS [ 2002 (11) TMI 7 - SUPREME COURT] when a notice u/s 148 is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. Merely because the notice issued to the Petitioner was a system generated notice since the NMS detected the Petitioner as a non-filer does not automatically mean that the Petitioner has to be issued a notice u/s 147. Even assuming that at the time notice was issued the Respondent was perhaps not fully aware of all the relevant facts, once the Petitioner submitted its objections drawing his attention to the specific legal position, it was obligatory for the Respondent to have applied his mind to those points. The order passed by the Respondent rejecting the objections on 23rd October, 2018 shows that there is no reference whatsoever to the specific objections of the Petitioner. Even a cursory examination of those objections would have dissuaded the Respondent from persisting with the proceedings consequent upon the impugned notice dated 26th March, 2018. Filing of the return by the Petitioner could not have been construed as an admission by it of a legal obligation to file a return. In the Petitioner s case, the admitted facts make it abundantly clear that there was no obligation on the Petitioner to file a return of income for the AY in question. The principal objection of the Petitioner that its investment in the shares of its subsidiary cannot be treated as income is well founded. The decision of the Bombay High Court in Vodafone India Services Pvt. Ltd. v. Union of India [ 2014 (10) TMI 278 - BOMBAY HIGH COURT] holding such investment in shares to be a capital account transaction not giving rise to income was accepted by the CBDT. Therefore, the fundamental premise of the Respondent that the above investment by the Petitioner in the shares of its subsidiary amounted to income which had escaped assessment was flawed. The question of such a transaction forming a live link for reasons to believe that income had escaped assessment is entirely without basis and is rejected as such. This Court sets aside the impugned notice Case-Laws Income Tax Wed, 07 Aug 2019 00:00:00 +0530