TaxTMI 
TaxTMI 
2017 (7) TMI 961
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....to as the 'said assessment year' for convenience and clarity. 3(c) Assessee filed return of income for the said assessment year on 31.3.2010, declaring a total income of Rs. 1,93,15,945/-. The return was processed under Section 143(1) of the IT Act on 23.03.2011 and subsequently, the case was selected for scrutiny by issue of notice under Section 143(2) of the IT Act on 20.8.2010. A detailed questionnaire was issued to the Assessee on 28.6.2011. In response to the questionnaire and subsequent notices issued from time to time, the authorised representative of the Assessee appeared before the Assessing Officer (hereinafter referred to as 'AO' for brevity) from time to time and submitted the details called for. On the basis of the details furnished, the assessment was completed. In the assessment order, a sum of Rs. 3.82 crores was added by the AO under Section 28(va) of the IT Act. This sum of Rs. 3.82 Crores was received by the Assessee from a Dutch company for relinquishing her right to sue for damages. Assessee's contention that this is a capital receipt was turned down and the AO treated the same as revenue receipt. 3(d) Thereafter, owing to the above said a....
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....her spouse is the Managing Director of a public limited company incorporated in India in the name and style Ma Foi Management Consultants Ltd. (hereinafter referred to as 'Ma Foi' for brevity). The said company is providing Human Resource Services. It is the case of Assessee that as part of its expansion strategy, the company entered into a strategic alliance with a company based in Netherlands, which goes by name Vedior NV. Through an agreement entered with Vedior NV, Assessee sold 82.48% of the total equity shareholding of her company, i.e., Ma Foi to the said Vedior NV. In the agreement, it is not in dispute that there was a clause, which granted preemptive rights to the assessee to re-acquire the shares of Ma Foi if and when Vedior NV wishes to sell out the shares of Ma Foi to a third party. According to this clause, the Assessee was to be offered such shares at the prices at which any third party has expressed its readiness to purchase. Only if the Assessee is unable to purchase the share at the value stated therein within a period of thirty days from the date of offer, the Netherlands based company, i.e., Vedior NV, will have the right to transfer such shares to a thi....
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.... incorrect and changed the head of income. CIT(A) held it to be taxable under the head 'income from other sources' and invoked the provisions of Section 56 of the IT Act. The matter was carried to ITAT. ITAT held against the appellant and treated the same as revenue receipt. The relevant order of ITAT is dated 20.12.2012 made in I.T.A.No.1776/Mds/2012 and 1777/Mds/2012. Aggrieved by the order of ITAT, the appellant / assessee preferred an appeal before this Court. This Court has admitted the appeal of the assessee vide Tax Case Appeal No.93 of 2013 (spouse K.Pandiarajan's case on the same issue is T.C.A.No.92 of 2013). This court also has granted an interim stay with regard to recovery of tax arrears. That Tax Case Appeals are pending in this court. It is not in dispute before us. 5(c) However, owing to the above said addition alleging that the same is willful concealment and non disclosure of income, separate penalty proceedings were initiated and penalty equivalent to a sum of tax allegedly sought to be evaded was levied. Such penalty was levied under Section 271(1)(c) of the IT Act as mentioned supra. This penalty component alone was assailed by the Assessee before ....
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....o be treated as revenue receipt or capital receipt is clearly res integra in T.C.A.Nos.92 and 93 of 2013 in this Court. In other words, this court in in seizin of the matter. As a consequence, learned counsel for the Revenue is not in a position to debate or dispute that the issue on the date of filing of the returns by the Assessee in the instant case was clearly debatable. As the issue was debatable, Assessee has taken the position that is favourable to her and treated the same as capital receipt. Otherwise, there is no deliberate concealment or non disclosure. 5(h) By a long catena of authorities, Courts have repeatedly held that for imposition of penalty under Section 271(1)(c) of the IT Act, 'mens rea' is most important. In other words, in a plethora of authorities, Courts have repeatedly held that in the absense of mens rea on the part of Assessee to conceal the income or deliberate non disclosure, penalty proceedings cannot be initiated. To be noted, as far as tax component is concerned, the same has been levied and it is now the subject matter of T.C.A.Nos.92 and 93 of 2013, which will be decided independently on the merits of the matter. 5(i) We further put it to....
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....of India. 5(l) In M.Janardhana Rao Vs. Joint Commissioner of Income Tax [2005 273 ITR 50 (SC) = (2005) 2 SCC 324], the Supreme Court remanded to the High Court an appeal under Section 260A of IT Act since substantial questions of law were not framed at the time of admission and were framed after the conclusion of arguments. In doing so, it referred to the Apex Court judgment in Sir Chunilal V. Mehta & Sons Ltd. vs Century Spg. & Mfg. Co. Ltd. [AIR 1962 SC 1314] to enumerate the principles regarding substantial question of law. Though Chunilal Mehta's case dealt with Article 133(1) of the Constitution of India which provides for certificate of appeal to be granted by the High Court, if the case involves a substantial question of law of general importance, it was cited by the Apex Court to enumerate the principles regarding the concept of substantial question of law. The same case was referred to by the Supreme Court in Hero Vinoth Vs. Seshammal [(2006) 5 SCC 545] to lay down the principles regarding substantial question of law in an appeal under Section 100 of CPC. 5(m) With regard to 'substantial question of law', the tests laid down by the Supreme Court of India for ....
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....of law. This Court laid down the following test as proper test, for determining whether a question of law raised in the case is substantial: (Sir Chunilal case [1962 Supp (3) SCR 549 : AIR 1962 SC 1314] , SCR pp. 557-58) The proper test for determining whether a question of law raised in the case is substantial would, in our opinion, be whether it is of general public importance or whether it directly and substantially affects the rights of the parties and if so whether it is either an open question in the sense that it is not finally settled by this Court or by the Privy Council or by the Federal Court or is not free from difficulty or calls for discussion of alternative views. If the question is settled by the highest court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd the question would not be a substantial question of law. 22. In Dy. Commr. v. Rama Krishna Narain [1954 SCR 506 : AIR 1953 SC 521] also it was held that a question of law of importance to the parties was a substantial question of law entitling the appellant to a certificate ....