TaxTMI 
TaxTMI 
2010 (12) TMI 837
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....ed counsel for the appellant submitted that one other substantial question of law also arises for consideration viz., "reopening of assessment by invoking sections 147 and 148 of the Income-tax Act was not maintainable." 3. Mr. K. Subramanian, learned senior standing counsel for the Revenue however contended that the said issue not having been framed earlier, and not having been specifically raised in the grounds of appeal before this court, the appellant cannot be permitted to raise the said question at this point of time. 4. When we consider the submission of this particular issue viz., as to raising a substantial question of law apart from what has been framed by this court while entertaining this appeal, as a matter of fact, we find that when the appellant was issued with notice under section 148 of the Income-tax Act (hereinafter referred to as "the Act"), on December 20, 2003, the appellant submitted a reply on March 21, 2005. In paragraph (b)(vi) of the reply, the appellant raised a contention to the effect that there was no fresh material to conclude that the transaction has not taken place at all and therefore, the notice issued under section 148 of the Act was not in ac....
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....nt disclosed the receipt of Rs. 542 lakhs as an extraordinary item in the profit and loss account, specifically referring to the same as by way of transfer of division, it cannot be held that there was no true and valid disclosure of the transaction in order to state that the reopening of the assessment under section 148 beyond the four years period was maintainable. According to the learned counsel, there being no fresh material and there being no allegation of lack of true and full particulars in the disclosure of accounts, the reopening of the assessment under section 148 of the Act by notice dated December 20, 2003 was beyond the four year period which ended on March 31, 2002 and consequently, the whole proceedings are liable to be set aside. 8. The learned counsel for the appellant then contended that in the notice dated December 20, 2003, the Assessing Officer proceeded on the footing that the transfer of forex business was like transfer of export import licence which is covered under section 28(iiia) and could be treated as a business income, whereas forex licence issued by the Reserve Bank of India was non-transferable and that, what was really transferred by the appellant....
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....s before it to arrive at the conclusion that there was no true and full disclosure of material facts necessary for making the assessment at the original stage. The proviso to section 147 of the Act, among other things, empowers the assessing authority to invoke section 148 of the Act to issue notice for reopening the assessment beyond the prescribed period of four years, from the end of the relevant assessment year, if the assessee failed to disclose fully and truly all material facts necessary for the assessment for that year. It is true that in the case on hand, the last date for the four year period expired on March 31, 2002 and the notice under section 148 of the Act came to be issued only on December 20, 2003. Assessment under section 143(3) came to be made on March 29, 2000. In the return filed by the appellant, there was no specific reference to the receipt of a sum of Rs. 542 lakhs. However, in the profit and loss account, in the schedule, after ascertaining the profit, an extraordinary item was shown with the additional expression to the effect "from transfer of division". The sum was indicated as Rs. 542 lakhs. That apart, the appellant is stated to have submitted a note ....
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....e are at a loss to understand as to how, for a business that commenced hardly two years prior to the relevant assessment year, there could have been any scope at all for the appellant to negotiate for a substantial receipt of Rs. 542 lakhs by way of non-compete fee. Apparently, the said claim of the appellant on the face of it looks wholly unacceptable and devoid of any merit. 14. Moreover, as rightly pointed out by the Tribunal, the failure of the appellant in not having disclosed the agreement before the Assessing Officer really raises very many doubts as to the genuineness of the alleged transaction by way of transfer of division. In fact, only in the order of the Commissioner (Appeals) there is a reference to the agreement dated March 15, 1997, by which, forex business was stated to have been transferred by the appellant. The two sentences from the agreement which the Commissioner (Appeals) has noted are ". . . EFE confirms that EFE shall not carry on forex service business from the date of this agreement ; and based on the preliminary due diligence both parties agreed that the price payable by the PFL for the transaction shall be INR 5 : 42 crores (INR five crores and forty-t....