TaxTMI 
TaxTMI 
2019 (8) TMI 244
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....Petitioner, a partnership firm, entered into a joint venture agreement on 7th August, 2001 with M/s Commercial Union International Holdings Ltd. ('CUIH'), a company incorporated in England and Wales for copromoting a joint venture company. The Petitioner was to subscribe 74% total paid up equity capital of the JV company and CUIH had to subscribe the balance 26%. The JV company was to be promoted as a private limited company for carrying on the business of insurance, subject to statutory and regulatory approvals. 3. In terms of the agreement a refundable option price was receivable by the Petitioner. This was permitted by the Reserve Bank of India. On this basis, a company known as Aviva Life Insurance Company India Limited ('Aviva') was promoted by the JV parties. In terms of Clause 16 of the agreement, on payment of the option price the Petitioner granted CUIH the rights during the ten-year period to acquire such number of shares held by the Petitioner to enable the shareholding of CUIH to be the maximum as permitted in law. The sale consideration received by the Petitioner, pursuant to such exercise of the CUIH option or the Petitioner's option would also be at the market val....
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....to tax the receipt of refundable option money in those years. 7. Based on the conclusion arrived at in AY 2015-2016 by the AO as well as observations/direction of the PCIT for AYs 2013-2014 & 2014-2015, Respondent No.1 commenced re-assessment proceedings under Section 147 of the Act for AYs 2011-2012, 2012 -2013 and 2016-2017 by issuing notice under Section 148 of the Act. Pursuant thereto, the AO completed the assessment on an income of Rs. 250.07 crores, Rs. 247 crores and Rs. 247.67 crores respectively against the returned income of Rs. Nil, Rs. 0.08 crore and Rs. 0.45 crores respectively. Extra demands of tax in interest of the sum of Rs. 148.29 crores for 2011-2012, Rs. 139.67 crores for 2012-2013 and Rs. 103.22 crores for 2016-2017 were raised. 8. Against the orders of re-assessment for AYs 2011-2012, 2012-2013 and 2016-2017 the Petitioner preferred an appeal before the CIT (A). 9. It is pointed out that in AY 2017-2018 the AO treated the option money receipt (Rs. 163 crores), as a business receipt. The AO also treated sum of Rs. 940/- crores, being the market value of 23% stakes sold to CUIH disclosed by the Petitioner under the head 'Long Term Capital Gains', as a ....
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....ares of Aviva for acquisition of controlling stakes in the company. According to the Petitioner, as a result of the above order of the ITAT for AYs 2013-2014 and 2014-2015 the tax paid by the Petitioner in the sum of Rs. 79 crores (39 + 40 crores) became refundable. 15. As far as AY 2015-2016 is concerned, the Petitioner filed an appeal before the ITAT which stayed the demand for six months by an order dated 2nd January, 2019. It is pointed out by the Petitioner that the stay granted by ITAT was conditional upon parties not seeking any adjournment in the appeal. Further in W.P. (C) 4094 of 2019 filed by the Revenue in this Court challenging the aforementioned interim order of the ITAT, this Court while declining to interfere by its order dated 30th May 2019, desired that the appeal be disposed of expeditiously. It fixed 3rd June 2019 as the date on which the appeal would be listed before the ITAT. According to the Petitioner, despite the said order the Respondents sought adjournment before the ITAT. 16. The present petition was listed first on 23rd July, 2019 and the following order was passed: "2. Notice. Notice is accepted by learned counsel for the Respondents. ....
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....e status of demands and recoveries made from the Petitioner for the AYs 2011-12, 2012-2013 and 2016-2017, 2017-2018. The said table reads as under: Status of Demand & Collection Assessment Year Demand raised in Assessment (Rs. in Cr.) Demand Collected (Rs. in Cr.) Percentage of demand collected Demand collected in Excess of 20% (Rs. in Cr.) 2011-12 1,48,28,97,270 20,31,02,454 13.70% (9,34,77,000) 2012-13 1,39,66,96,560 30,00,00,000 21.48% 2,06,60,688 2016-17# 115,54,57,517 35,00,00,000 30.29% 11,89,08,497 2017-18 469,90,79,420 99,87,90,999 21.26% 5,89,75,115 Total 873,41,30,767 185,18,93,453 21.20% 10,50,67,300 19. This Court was informed by Mr. Raghvendera Singh, learned counsel for the Revenue that when the petition was first heard on 30th July, 2019 two of the accounts of the Petitioner have been de-frozen. The matter was then kept today for the hearing. 20. Mr. Rastogi, learned counsel for the Petitioner, pointed out that while two accounts had been de-frozen, the remaining bank accounts of the Petitioner remained frozen. The Petitioner had been pushed to a financiall....
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....s of Section 281B should not be resorted to, except under exceptional circumstances warranting the same, and after strictly complying with the conditions incorporated in section 281-B." 23. A perusal of the impugned order does not indicate that the AO formed an opinion about the reasonable likelihood of the recovery becoming difficult due to inadequacy of the assets of the Petitioner. Even in terms of the CBDT Circular No.179 dated 30th September, 1975 setting out the purpose for insertion of Section 281-B of the Act, it was explained as under:- "This provision has been made in order to protect the interests of the revenue in cases where the raising of demand is likely to take time because of investigations and there is apprehension that the assessee may thwart the ultimate collection of that demand." 24. The impugned order does not talk of any time being taken for completion of investigation. On the other hand, as explained in Motorola Solutions India Pvt. Ltd. v. CIT (supra), once the assessment is complete there would be no justification for continuing with the order under Section 281-B of the Act. The following observations in the said decision explain the legal ....