TaxTMI 
TaxTMI 
2020 (2) TMI 949
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....ccepting the income returned. Survey proceedings were conducted by the Department on August 22, 2007 in the partnership firm premises, wherein the petitioner was a partner. It is submitted that during the survey proceedings, the petitioner had filed a letter before the Income-tax Officer, Ward-8(1), Bangalore and intimated that the petitioner has received a sum of Rs. 4,00,00,000 from M/s. MTR Food Products and the same is exigible to capital gains tax as long-term capital gains. 4. Subsequently, the learned Assessing Officer had issued the notice dated January 9, 2014 under section 148 of the Act. On the request made by the petitioner, reasons recorded were provided. The petitioner had filed detailed objections dated August 18, 2014 for the notice and to the reasons recorded further, requesting to issue the copy of the audit query and the reply filed by the Department. 5. The petitioner has received yet another notice under section 148 of the Act dated March 3, 2015 issued by the learned Assessing Officer to which reply dated March 30, 2015 was filed requesting the learned Assessing Officer to treat the original return of income filed on July 31, 2008 as return pursuant to t....
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....has escaped assessment and which comes to his notice subsequently in the course of the proceed ings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assess ment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of sec tion 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assess ment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year : Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset [including financial interest in any entity] located outside India, chargeable to t....
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....nance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012." 10. It is not in dispute that the notice dated January 9, 2014 was issued under section 148 of the Act for which the reasons recorded for the purpose of reassessment by the assessing authority reads thus : "On verification of the records, it is seen that the assessee was in receipt of an amount of Rs. 4,00,00,000 from M/s. MTR Food Products for surrendering the patent right. The assessee has wrongly admitted it as income from capital gains and claimed an amount of Rs. 50,00,000 as deduction under section 54EC. The balance amount of Rs. 3,50,00,000 is admitted as income from long-term capital gains after availing of the indexation benefit. The amount of Rs. 4,00,00,000 received by the assessee from M/s. MTR Food Products for patent right is chargeable to tax as income from business as stipulated under section 28(va)(b) of the Income-tax Act. Whereas the assessee has misrepresented the fact treating the amount received as long-term capital gains instead of income from business. As the assessee has treated the amount received from MTR Food....
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....right". 13. The reply given by the Assessing Officer to the audit query reads thus : 1 Name of the assessee P. Hemamalini Maiya 2 PAN/AY ADVPM6914F/2008-09 3 No. and date of objection 18-5-2011 4. If the objection is not accepted detailed report giving full facts should be given and the Assessing Officer's view on most appropriate remedial action. Also mention the limitation date under various sections. The assessee vide agreement dated 5-2-2007, received Rs. 4,00,00,000, regarding modification of her right over the trade name MTR. The income was returned under the head capital gains and the same has been accepted as such in the proceedings under section 143(3) of the Income-tax Act, 1961. The audit pointed out that the same was to be taken as business income as non-compete fee. In the light of the query, the following aspects of the transactions are brought for the reference and better understanding of the facts of the case. The extracts of the agreement dated 5th Feb, 2007 are given below : "Whereas the parties agree that each of them shall have the rights to utilize a trade name in accordance wi....
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....t the order etc., NA (b) if demand varies from the tax effect mentioned in the LAR detailed reasons thereof. NA 6 If the assessee is a firm, whether the assessments of partners are also rectified, whether revised share income communicated to AC/Deputy Commissioner having jurisdiction over the partners. NA 7 If no action has been taken and further if no remedial measures the reasons thereof. NA Bangalore Dated : 18-1-2012 ....
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....aused prejudice can be corrected, when jurisdiction under section 263 is invoked . . . But initiation of reassessment proceedings will be invalid on the ground of change of opinion." 17. It will be appropriate to reproduce the relevant passage from A. L. A. Firm v. CIT reported in [1991] 189 ITR 285 (SC), it is held that "'We think there is force in the argument on behalf of the assessee that, in the face of all the details and statement placed before the Income-tax Officer at the time of the original assessment, it is difficult to take the view that the Income-tax Officer had not at all applied his mind to the question whether the surplus is taxable or not. It is true that the return was filed and the assessment was completed on the same date. Nevertheless, it is opposed to normal human conduct that an officer would complete the assessment without looking at the material placed before him. It is not as if the assessment record con tained a large number of documents or the case raised complicated issues rendering it probable that the Income-tax Officer had missed these facts. It is a case where there is only one contention raised before the Income-tax Officer and it....
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....ing Officer must have applied his mind on the entry, claim or deduction, etc. It may be apparent and obvious to hold that the Assessing Officer would not have gone into the said question or applied his mind. However, this would depend upon the facts and circumstances of each case." 18. It would be apt to refer CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) wherein the hon'ble apex court has held as under (page 564) : ". . . where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assess ment. Therefore, post-April 1, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words 'reason to believe' . . . section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of 'mere change of opinion', which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review ; he has the power to reassess. But reassessment has to be based on ful filment of certain preconditions and if the concept of &....