TaxTMI 
TaxTMI 
2019 (8) TMI 410
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.... notice dated 31st March, 2015 issued by the Respondent/Assistant Commissioner of Income Tax (ACIT) under Section 148 of the Act seeking to reopen the assessment for AY 2008-09 and the consequential order dated 24th September, 2015 disposing of its objections and W.P. (C) No. 10897/2015 which challenges an identical notice and the order disposing of its objections for the AY 2009-10. 3. Mr. Nitin Sabharwal, the brother of Mr. Chetan Sabharwal, has filed the other two writ petitions. While W.P.(C) 11220/2015 challenges notice dated 31st March, 2015 issued under Section 148 of the Act and the order dated 24th September, 2015 passed by the Respondent ACIT disposing of the objections for AY 2008-09, W.P.(C) No. 11215/2015 seeks similar relief qua the notice and order of the same dates for AY 2009-10. 4. There is one distinguishing feature in the two sets of petitions. While the assessments in the case of Mr. Chetan Sabharwal for the two AYs in question in the first instance by the Assessing Officer (AO) were scrutiny assessments under Section 143 (3) of the Act, as far as Mr. Nitin Sabharwal is concerned, there was no scrutiny assessment for the two AYs. Intimations accepting his....
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....erm capital gain (LTCG) and offered for tax in the AY 2009-10. 9. The further facts relevant to the sale of shares of Pawan Impex are that a No Objection Certificate/consent letter was issued by the NOIDA Authority in terms of Article 4 clause 4.2 (a) of the SPA on 22nd May, 2008 approving the change in constitution of Pawan Impex. At the Annual General Meeting (AGM) of Pawan Impex conducted on 29th September 2008, the new Directors were appointed and the previous Directors, viz., the two Petitioners and Mr. Kabul Chawla and Smt. Anjali Chawla ceased to be Directors. This took effect from 23rd June, 2008 as was noted in the Form 20-B dated 30th September, 2008 filed with the Registrar of Companies (ROC). On 17 and 19th November, 2008 the shares of Pawan Impex dematerialised upon a request by GYS and transferred to Religare Securities limited, depository under NSDL, and an associate company of the Religare group. Each of the Petitioners deposited Rs. 28 crores and Rs. 3,91,50,000/- on 25th and 26th September, 2009 in the capital gain savings bank account in accordance with Section 54F (iv) of the Act. 10. Under a separate SPA the equity shares of M/s.SVIIT Software Pvt. Ltd. (....
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....tware within a period of two years. Accordingly, each of the Petitioners claimed the benefit of Section 54F of the Act. 14. On 25th September 2008, Mr. Chetan Sabharwal filed his return of income for A.Y.2008-09 declaring a total loss of Rs. 90,37,369/-. In the return e-filed in Form ITR-4 the particulars of the tax audit report obtained was filed and in part A-BS at column 3(d)1(A), a sum of Rs. 37,64,40,000/- was shown under the head 'sundry creditors' which included a sum of Rs. 37,62,50,000/- being a liability in the name of GYS. 15. Return of Mr. Chetan Sabharal was picked up for scrutiny and a notice under Section 143 (2) dated 9th August, 2009 was issued by the ACIT, Circle25, New Delhi. On 6th August, 2010 a questionnaire was issued by the Assessing Officer (AO) to Mr. Chetan Sabharwal under Section 142 (1) of the Act where 56 queries were raised, inter alia, requiring him to explain the nature of the transaction with GYS and requiring him to file a Memorandum of Association (MOA) and ROC returns for the last five years of the said GYS. On 5th October, 2010 Mr. Chetan Sabharwal replied to these queries. 16. Following this on 30th December, 2010, the AO issued summo....
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....eclaring an income of Rs. 1,40,04,720/-. This included interest income earned by him on FDRs in American Express Bank made with advance received from GYS. According to Mr. Nitin Sabharwal since in terms of Article IV of the SPAs, the share purchase culminated only in FY 2008-09 relevant to AY 2009-10, he reflected the capital gain on sale of the equity share in his return in the subsequent AY 2009-10. As far as his return for AY 2008-09 was concerned, intimation under Section 143(1) of the Act was issued by the AO on 26th October, 2009. 20. For AY 2009-10, Mr. Nitin Sabharwal filed his return of income on 30th September, 2009 declaring a total income of Rs. 89,67,577/. In this return he disclosed his LTCG of Rs. 3,87,14,131/- after claiming the set off in the sum of Rs. 31,04,70,241/-. In this case too, intimation under Section 143(1) was issued by the AO. Notices under Section 147/148 of the Act 21. On 31st March, 2015 notice under Section 148 of the Act was issued by the AO to each of the Petitioners separately for the two AY's stating that he had reason to believe that income chargeable to tax for the two AY's had escaped assessment within the meaning of Section 147 of ....
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....reholders of M/s Pawan Impex Pvt. Ltd. Similarly, share purchase agreement was signed in the case of SVIIT Software Pvt. Ltd. Total sale consideration of Rs. 60.00 crores was determined. The total long term capital gain derived by Mr. Chetan Sabharwal was worked out to Rs. 40,38,40,170/- out of which a sum of Rs. 31,91,50,000/- was deposited in the Capital Gains Saving Bank A/c before 30th September 2009 and the deduction u/s 54F of the Income Tax Act, 1961 was claimed. Similarly, Mr. Nitin Sabharwal has shown capital gains of Rs. 40,40,84,770/- out of which Rs. 35,80,97,629/~ was deposited in the Capital Gains Saving Bank A/c before 30th September 2009 and the deduction u/s 54 F of the Income Tax Act, 1961 was claimed. Mr. Chetan Sabharwal and Mr. Nitin Sabharwal have also purchased 1/4th share each in the Property No. 7, Sikandara Road, New Delhi vide sale deed dated 21.04.2010 for Rs. 9,33,69,928/- each. Mr. Nitin Sabharwal and Mr. Chetan Sabharwal along with the other shareholders (Mr. Kabul Chawla and Smt Anjali Chawla) of Pawan Impex Pvt Ltd have entered into share purchase agreement dated 19th day of October, 2007 with GYS Real Estate Pvt. Ltd which determi....
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....t to the notice issued, counter-affidavits have been filed by the Respondents to which rejoinders have been filed by the Petitioners. It must be noted at this stage that on 1st February, 2018, the following order was passed in the writ petitions filed by Mr. Chetan Sabharwal: "Returns for the Assessment Years ('AY') 2008-2009 and 2009-2010 were subject-matter of orders under Section 143(3) of the Income Tax Act, 1961. First question which arises is whether it is a case of examination and change in opinion. Learned counsel for the petitioner submits that the reopening is after four years and therefore, the question of failure on part of the assessee has to be examined. Learned counsel for the respondent states that in this case, report was received from the Investigation Wing, Lucknow and, therefore, there was fresh evidence and material, which became the basis for reopening of the assessment. For the AY 2008-2009, income from capital gains from sales of shares was not declared. Income from capital gains arose in the said year and not in the assessment year 2009-2010. We have merely recorded the submissions made and not commented on merits. Learne....
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....urities Primary Dealership Ltd. [2012] 348 ITR 299 (SC), CIT v. Mr. Tirath Ram Ahuja [2008] 306 ITR 173 (Del), CIT v. Purolator India Ltd, [2012] 343 ITR 155 (Del), Xerox Modicorp v. DCIT [2013] 350 ITR 308 (Del), Tata Business Support Services v. DCIT [2015] 232 TAXMAN 702 (Bom). Reliance was also placed on the decisions in Wel Intertrade (P) Ltd. v. ITO [2009] 308 ITR 22 (Del), CIT v. Indian Farmers Fertilizer Cooperative Ltd. [2008] 171 Taxman 379 (Del), Haryana Acrylic Manufacturing Company v. CIT [2009] 308 ITR 38 (Del) and Atma Ram Properties (P) Ltd. v. DCIT [2012] 343 ITR 141 (Del). 32. Mr. Vohra further submitted that re-assessment was initiated on the basis of mere change of opinion and this was impermissible in law. Reliance is placed on the decisions in Maruti Suzuki India Ltd. v. DCIT [2013] 356 ITR 209, Mohan Gupta (HUF) v.CIT [2014] 366 ITR 115, Tractebel Industry Engg. v. Asst. Director of Income Tax [2011] 198 Taxman 408 (Del) and CIT v. Atul Kumar Swami [2014] 362 ITR 693(Del). 33. Adverting to the merits of the cases, Mr. Vohra submitted that since the sale of shares is completed only during the Financial Year 2008-09 in terms of the SPAs relevant to AY 200....
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.... intimations under Section 143 (1) of the Act, the proviso to Section 147 of the Act could not be attracted. He placed reliance on the decision in DCIT v. Zuari Estate Development and Investment Company (2015) 15 SCC 248 and CIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2008) 14 SCC 208, to contend that insofar as the earlier assessments in the case of Mr. Nitin Sabharwal was not under Section 143(3) of the Act but the return was accepted under section 143(1) of the Act, there was no question of a notice under Section 147/148 of the Act constituting a 'change of opinion'. Further, in his cases the mere fact that there was investigation report which was made available to the Revenue subsequent to the completion of the assessments was in itself sufficient for formation of an opinion that income had escaped assessment. 37. As far as both cases were concerned, Mr. Hossain maintained that at the present stage the Court only had to be satisfied prima-facie that there was sufficient material for reopening of the assessment. Referring to the assessment orders passed by the AO under Section 143 (3) of the Act in the cases of Mr. Chetan Sabharwal, Mr. Hossain pointed out that there is....
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....147/148 of the Act is concerned. His position has been sufficiently explained in the decision in CIT v. Rajesh Jhaveri Stock Brokers (supra) which is followed in DCIT v. Zuari Estate Development & Investment Company. This has also been highlighted by this Court in Indu Lata Rangwala v. CIT (2016)384 ITR 337. 41. As far as the case of Mr. Chetan Sabharwal is concerned, the original assessment orders for both AYs under Section 143(3) of the Act do not give any indication on the AO having formed any opinion whatsoever on the basis of which the reopening has been ordered. In this context the following observations in Income Tax Officer Ward No. 16 (2) v. Techspan India Pvt. Ltd. are relevant. "18. Before interfering with the proposed reopening of the assessment on the ground that the same is based only on a change in opinion, the court ought to verify whether the assessment earlier made has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable. If the assessment order is non-speaking, cryptic or perfunctory in nature, it may be difficult to attribute to the assessing officer any ....
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.... the facts stated in the letter are true or not is not the concern at this stage. It may well be that the assessee may be able to establish that the fact stated in the said letter are not true but that conclusion can be arrived at only after making the necessary enquiry. At the stage of the issuance of the notice, the only question is whether there was relevant material, as stated above, on which a reasonable person could have formed the requisite belief. Since, we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid. Inasmuch as, as a result of our order, the reassessment proceedings have now to go on we do not and we ought not to express any opinion on merits." 45. Unlike in other writ petitions where a similar challenge is made to the reopening of assessments by issuing notice under Section 148 of the Act, where the Court invariably directs as an interim measure that the re-assessment proceedings may go on but no final order should be passed during the pendency of the petition, in the present case the Court ordered a total stay of further proceedings pursuant to the imp....