AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 583
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....E) issued by the JCIT (Joint Commissioner of Income Tax), Bengaluru. By the impugned order, the writ petition has been dismissed reserving liberty to take appropriate defence before the Assessing Officer. 4. Briefly stated the facts pleaded in the writ petition are, pursuant to a search conducted on January 07, 2015, under Section 132 of the Income Tax Act, 1961 ('IT Act' for short), the Assessing Officer passed Assessment orders under Section 153-A of the IT Act for the A.Ys (Assessment Years). 2009-10 to 2015-16 making certain additions by treating the petitioner as a beneficial owner of 'Romulus Assets Ltd., ('RAL' for short). Petitioner's appeals before CIT(A) stood dismissed. Petitioner challenged CIT(A)'s orders before ITAT (Income Tax Appellate Tribunal) and the ITAT has set-aside the additions vide order dated July 30, 2021, holding inter alia that the Assessing Officer has not discharged the burden cast on him to prove that the petitioner is a beneficial owner of RAL. 5. The JCIT, Central Circle, Central Range - I Bengaluru issued the impugned notice dated August 11, 2021 (Annexure-E) under Section 10 of the BM Act for the A.Y. 2022-23 and the....
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....in submissions, Shri. Shashikiran Shetty prayed for allowing this writ appeal. 8. Shri. K.V. Aravind, learned Senior Standing Advocate for the Revenue opposing the appeal, argued in support of the impugned order. He submitted that the procedure for assessment under the BM Act is provided under Section 10 of the said Act. The impugned notice has been issued after receiving information from the JCIT (OSD), Central Circle 1(3). Though the designation of the Officer who has issued the notice under challenge and notices under Section 148 of the IT Act are the same, the Officers are different. He contended that the notice has been issued under Section 10(1) of the BM Act and the assessee has liberty to produce the accounts, documents or evidence and make out a case that the assets in question are not undisclosed assets located outside India. The notice under challenge is an exhaustive notice and contains prima facie material/ information based on the search conducted under Section 132 of the IT Act. He relied upon Commissioner of Central Excise, Haldia Vs. Krishna Wax (P) Ltd (2020)113 taxmann.com 70 (SC) [paras 6 to 12] in support of his case. 9. We have carefully considered rival con....
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....e assessing officer has not discharged the burden cast on him to prove that the appellant is the shareholder/beneficial owner of RAL. (b) The assessing office has merely acted on a suspicion and has not brought on record any legal evidence to prove that the appellant is the beneficial owner/shareholder of RAL. (c) RAL is duly incorporated in respective legal jurisdiction and assessee has discharged his burden by furnishing proper explanation with documents. (d) The assessing officer has failed to carry out the necessary enquiries and investigation to prove the allegation made by him in the assessment order. (e) The quantification of the addition based solely on the amounts mentioned in the Board resolution defies logic and is totally perverse. It is also not known whether the amount mentioned in the Board Resolution has been spent for the purpose mentioned therein. (f) S.28(iv) of the Act is not applicable as the appellant is not carrying on any independent business. (g) S.69C of the Act is not applicable for the very simple reason that the appellant has not incurred the expenditure and the source for various payments is the funds of RAL. (h) No seized material to sus....
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....c]. Whether the Impugned Notice dated 11.08.2021 is impermissible in law because it has not considered the decision by the Income Tax Appellate Tribunal [ITAT] on 30.07.2021 in ITA Nos.1211- 1217/BANG/2019." 20. It is recorded in para 3 of the impugned order that the petitioner's statement under Section 132(4) of the IT Act was recorded with regard to transactions amongst different entities namely: " 1. M/s Karadt Trust 2. M/s Lubimaya Holding Limited [LHL] 3. M/s Romulus Assets Limited [RAL] 4. M/s Fragrant Harbour Limited [FHL] 5. M/s Aceworth Finance Limited [AFL] 6. M/s Insight Capital Limited [ICL] 7. M/s Kaileigh Limited 8. M/s Weisser Limited " 21. It is recorded in para 4 of the impugned order that the Assessing Officer had concluded that petitioner is a benefical owner and that RAL's income and expenditures must be treated as petitioner's business income. It is further noticed that the ITAT has allowed the appeals. 22. In the backdrop of the above undisputed facts, the question that arises for consideration is whether the petitioner is entitled for relief sought in prayer clause (ii) in the writ petition namely, to quash the impugned notice u....
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....the Credit Suisse, it is inferred that the transactions of these entities are carried out as per your instructions. Thus, it appears that you hold the control and management or place of effective management, as the case may be, of these entities and you are admittedly a tax resident of India. " 26. Thus, Revenue's specific case is, assessee is the beneficial owner of RAL and the transactions in the ten Companies referred above are carried out as per assessee's instructions. To substantiate this stand, Revenue has referred to various scanned documents, which have been made part of notice. The documents also include the minutes of the Board Meeting of 'Romulus Assets Ltd. One such document of RAL is minutes of the Board Meeting dated 12.08.2008 (at page 6 of notice). This is in respect of payment of SGD 100,000 to DBS Bank. This precise transaction was subject matter of assessment under Section 143A read with Section 143(3) of the IT Act for A.Y. 2009-10. The said entry is recorded at serial No.18 in the Tabular Column in para 9.1 of the Assessment Order. Similarly, another minutes of the Board Meeting of RAL dated 23.08.2011 in respect of payment of USD100,000 (USD 50,0....
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....gs under BM Act entails serious civil and criminal consequences. The two transactions noted above, show that there is no proper application of mind both at the stage of sending the information by the Income Tax Department and by the Authorities under BM Act before issuing the notice under challenge. It is stated in para 2 of the notice that information was received from the JCIT (OSD). In Para 4.4 of the notice it is stated thus: " 4.4 It has become apparent from the documents and statements recorded during the search, that you are a beneficial owner of RAL. When this was pointed out to you and clarification was sought, you stated that you were not related to RAL in any way, under oath in 2015, you gave a contradictory reply that you discovered that you were a beneficiary of RAL only during the statement recorded on 31.10.2016." (Emphasis supplied) 30. A careful perusal of para 4.4 of the notice clearly indicates that Authority under the BM Act has prejudged and formed an opinion that the petitioner is the beneficial owner of RAL. This contention of the Revenue has not been accepted by the ITAT by holding that the Assessing Officer had not discharged the burden to prove that pe....