TaxTMI 
TaxTMI 
TaxTMI 
2014 (3) TMI 154
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....of the reassessment proceedings. No such reasons were provided; however a questionnaire dated 16.9.2011 was sent, to which the petitioner duly responded. Thereafter, reasons to believe that income had escaped assessment were provided to the petitioner by a letter dated 30.3.2012. In response, Acorus contended that since "2..........................reasons have been supplied after a gap of more than nine months and that is highly belated and as such, in terms of judgment of the Hon'ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. Ltd. Vs. CIT depicted in 308 ITR 38, notice u/s 148 of the Act is without jurisdiction. XXXXXX XXXXXX XXXXXX" 3. Acorus requested a copy of the report prepared by the DIT (Inv.) in respect of the 2G spectrum cases. The DIT responded by a letter dated 2.4.2012, indicating that materials relied upon the Revenue, including the report on the 2G spectrum cases, is confidential and cannot be disclosed. By a letter dated 2.4.2012, the Revenue asked the petitioner to file its objections to the reasons recorded, and supplied to the petitioner. Acorus filed objections by a letter dated 9.4.2012, which were disposed off by the Revenue by an ord....
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....iled its objections to the initiation of proceedings u/s 148 which were duly disposed off by way of speaking order dated 10/4/2012. On 13/4/2012, the assessee company filed Civil Writ Petition challenging the action of the AO for issuance of the notice u/s 148 as well as the merit of the case with regard to the reasons recorded. The Hon'ble High Court, vide their order in ITA No. 2155/2012 dated 28/5/2012, while disposing off the writ petition, has held that the revenue has agreed to and will be bound by the statement to withdraw the notice u/s 148 dated 5th July, 2011, but will have liberty and right to issue fresh notice u/s 147/148, after recording reasons to believe. The court has further held that the said notice will not be barred because the revenue had not initiated proceedings by issue of a notice u/s 143(2) of the act or they had earlier issued notice u/s 147/148 dated 5th July, 2011. Thus, in view of the observations and directions of the Hon'ble Delhi High Court, the fresh reason to believe that the assessee has income which has escaped assessment, are hereby recorded as follows. As per the information received from the DIT (Inv.)-1, New Delhi, vide letter dated 23rd ....
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....e in the shade of benefits arising from business carried on by the assessee amounting to Rs. 7259916150/- taxable under the provisions of Section 28(iv) of the IT Act in the return filed suo-moto and has neither declared this income in the return filed in response to notice u/s 148 for AY 2009-2010. After considering the above facts and the issues involved therein, I have reasons to believe that income Rs. 7259916150/- has escaped assessment for AY 2009-2010 and hence it is a fit case to issue notice u/s 148 of the Income Tax Act, 1961. The notice u/s 148 is issued separately." 6. Acorus filed detailed objections to this notice, which were dismissed by the Revenue by orders dated 15.2.2013 and 12.3.2013. Accordingly, the petitioner has approached this Court under Article 226 impugning this notice under Section 147/148 of the Act. 7. Learned counsel for the petitioner argues that the reasons for initiation of the present reassessment proceedings were recorded on 17.7.2012, which was during the pendency of the proceedings initiated by the previous notice issued under Section 148. It is argued that the plea of the Revenue that the proceedings were dropped on 18.6.2012 was an afterth....
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....pt adopted by the Revenue is baseless, as even if the shares were transferred at a rate less than the rate at which shares were subscribed in the eight telecom companies by the Singapore entity, that fact by itself cannot be made the basis of the allegation that the petitioner has received a benefit in the course of business, which is the requirement under Section 28(iv). Rather, it is argued - as is clear from the record, and the audited balance sheet of the petitioner submitted along with the return under Section 143(1) - that an aggregate consideration Rs.4.63 crores was made for the purchase of 45550000 equity shares of the eight telecom companies from M/s Unitech Limited. The entire purchase consideration, it is urged, was paid out of borrowings raised from Prakausali Investment India (P) Ltd. and by issuing unsecured debentures to M/s Unitech Holding Ltd., which means that the income so-called is not chargeable to tax under Section 28(iv), being outside the course of business. Learned counsel submits that as a condition precedent for invoking Section 28(iv), a benefit must arise from business or exercise of a profession. Thus, before the aforesaid provision could be invoked, ....
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....etween the shares purchased by the petitioner, and the Singapore entity, as the shares purchased by the petitioner were encumbered property (having been pledged by M/s Unitech Ltd. with various banks to obtain loans), whereas the fresh shares allotted to the Singapore entity were free property. Thus, it is argued that in terms of the nature of the shares, the management control, the transfer restrictions, business risks etc., the two transactions are not comparable and thus, the reasons provided by the Revenue cannot sustain reassessment proceedings. 11. In any case, learned counsel argues that the report of the DCIT (Investigation) which forms the basis of the Section 147/148 notice in this case has not been provided to the petitioner, despite a specific request to that effect, thus denying the petitioner the opportunity to present complete objections. Such failure to provide the evidence along with the reasons to believe is, in the argument of the learned counsel, fatal to the proceedings as the petitioner has the right to be supplied the information on the basis of which such proceedings are sought to be imitated. Reliance is placed on the decision of the Allahabad High Court i....
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.....2012, after recording reasons for the fresh notice under Section 147/148 (dated 19.7.2012) on 17.7.2012. However, consequent to the decision of this Court in W.P.(C) 2155/2012, the DCIT dropped the previous proceedings initiated under Section 147/148 by an order sheet entry dated 18.6.2012, proceeding subsequently to record fresh reasons for reassessment. This, however, is countered by the petitioner as an order sheet entry does not by itself end the proceedings, without the necessary intimation to the assessee that such withdrawal has taken place. In this case, the issuance of a fresh notice under Section 147/148 (and the reasons recorded for that purpose) has to be judged in the context of the previous decision of this Court. The fresh notice served upon the assessee was consequent to and within the framework of the earlier order of this Court. While the first round of reassessment proceedings was not withdrawn qua the petitioner by way of an intimation; the fresh reassessment proceedings equally cannot be said to have begun until the notice under Section 147/148 was issued, i.e. on 19.7.2012. The fact that the reasons recorded bore the date 17.7.2012 does not vitiate these proc....
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....lf in this case. The order sheet entries demonstrate a clear and chronological compliance with the earlier order of this Court. In any case, the previous order of this Court expressly bars any objections by the petitioner to the fresh notice on the ground that the Revenue "had earlier issued notice under Sections 147/48 dated 5 July, 2011." In principle, the petitioner"s present argument is that the proceedings are vitiated because the reasons in this case were recorded before the earlier notice was dropped. This plea, in other words, seeks to bar the present notice on the ground that an earlier was issued and not revoked at the time the impugned action took place. This argument - attempting to play the legality of the second notice against the existence of the first notice - was one that the previous order of this Court foresaw and specifically barred in terms of the order dated 28.5.2012, which is now final and binding upon both parties. Indeed, holding that the present notice is to be set aside would set to nought the direction of this Court in the earlier writ petition. Accordingly, this ground argued by the petitioner is rejected. 17. The Court will deal with the second and t....
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....being vague and irrelevant material, these facts constitute new and tangible information supporting the Section 147/148 notice in this case. Importantly, the petitioner in this case has not denied the correctness of these facts either - that such shares were bought at the nominal price of Rs.10/-, while the shares were sold to Telenor at a substantial premium. The petitioner, however, seeks to urge that the inferences drawn by the AO - in terms of the tax effect of these transactions - are incorrect. At this juncture, it is important to remember the words of the Supreme Court in Calcutta Discount Company Ltd. v. ITO, Companies District, I and Anr., [1961] 41 ITR 191 (SC), where the Court noted: "From the primary facts in his possession, whether on disclosure by the assesses, or discovered by him on the basis of the facts disclosed, or otherwise - the assessing authority has to draw inferences as regards certain other facts; and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable." 20. Therefore, primary facts in....
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....he information or material on which the AO records his or her satisfaction is communicated to the asseseee, without mandating the disclosure of any specific document. While the 2G Spectrum Report has not been supplied in this case on grounds of confidentiality, the reasons recorded have been communicated and do provide - independent of the 2G Report - details of the new and tangible information that support the AO"s opinion. These facts are capable of justifying the satisfaction recorded on their own terms, as discussed above. In this context, there is no legal proposition that mandates the disclosure of any additional document. This is not the say that the AO may in all cases refuse to disclose documents relied upon by him on account of confidentiality, but rather, that fact must be judged on the basis of whether other tangible and specific information is available so as to justify the conclusion irrespective of the contents of the document sought to be kept confidential. In cases such as the present, however, where the information and facts communicated by the AO are themselves in accordance with the minimum requirement under Section 147/148, the petitioner cannot compel the disc....
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....ccordingly, the proceedings were set aside for failure to disclose any specific and relevant information. 25. Finally, in Uma Devi Jhawar (supra), the question concerned the validity of reassessment proceedings under Section 147/148. The asssessee had purchased a plot of land, on which she had constructed a building. She had disclosed the cost of construction in her return of income. In the reassessment proceedings, the reasons recorded by the AO indicated that the valuation officer of the Income Tax Department valued the cost of construction at a greater amount than disclosed, leading thus to the belief under Section 147/148 that income had escaped assessment. However, as the Income Tax Appellate Tribunal had - in the course of the assessment itself - earlier held that the increased valuation, which was also questioned at the time of the filing of the return, was incorrect, the Court held that the reasons recorded cannot properly rely on a report of the valuation officer that agitates a question previously decided on appeal, and which was now final and binding between the parties. In holding that the "materials having a natural nexus to the formation of belief have to be disclose....