TaxTMI 
TaxTMI 
2024 (3) TMI 734
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....spondent No. 3 is the Union of India. 3. In this petition, Petitioner challenges the impugned notices dated 30th March 2021 & 21st June 2021 issued under Section 148 of the Income Tax Act, 1961 ("the Act") for Assessment Year ("AY") 2013-2014 and the impugned order dated 3rd February 2022 passed by Respondent No. 1 rejecting the objections of Petitioner challenging the validity of impugned notices as being ex-facie illegal, unsustainable, untenable, unreasonable and contrary to the provisions of Act. Prior to July 2017, Petitioner's business was collectively housed in the companies viz. Cello Stationery Products Private Limited, Cello Writing Instruments and Containers Private Limited, Cello Tips and Pens Private Limited, Cello Pens Private Limited, Cello Plastic Products Private Limited & Pentek Pen and Stationery Private Limited. In July 2017, pursuant to the scheme of merger duly approved by the National Company Law Tribunal, Mumbai Bench and Ahmedabad Bench vide orders dated 13th July 2017 & 14th July 2017 respectively, which became effective on 20th July 2017, the aforesaid five companies were merged into sixth company viz. Cello Plastic Products Private Limited ("CPPPL"), ....
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....s. 1,87,39,187/- during FY 2012-2013 and that M/s. Cello Stationery Products (Firm) had Nil cash deposits during the subject AY 2013-2014." 7. Petitioner by its letter dated 25th January 2022, filed its objections to the notices and by giving brief background of the activities, submitted that, • The conditions prescribed in Section 147 of the Act are not fulfilled in the facts of present case. Therefore, reassessment proceedings ought to be dropped. • In the impugned reasons to believe, there was duplicity in the amount of cash, alleged to have been deposited in the bank account on account of double counting, i.e., reasons recorded that cash deposits of Rs. 3,73,72,707/- resulted in escapement of income, whereas the fact is CSPPL made cash deposits of only Rs. 1,87,39,187/- during AY 2013-2014. The documents evidencing the same, including list of cash deposits made in the HDFC Bank Account No. 03988640000010, Malad Branch, bank statement for the relevant period as well as certificate from the bank were also enclosed and it was submitted that the said error deserved to be rectified at the threshold. • In absence of any 'income escaping asses....
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.... of relevant assessment year, approval was required to be obtained from Principal Chief Commissioner of Income Tax, Chief Commissioner of Income Tax, Principal Commissioner of Income Tax or Commissioner of Income Tax under Section 151 of the Act. However, the approval was not taken before issuing notices under Section 148 of the Act. If it is taken, it is not provided to Petitioner and therefore, the reassessment proceedings are initiated without jurisdiction. If the approval of Respondent No. 2 is not obtained before issuance of impugned notices, reassessment proceedings are invalid and bad-in-law. 8. The objections filed by Petitioner were rejected by Respondent No. 1 by an order dated 3rd February 2022, which is also impugned in this petition. In the said order, Respondent No. 1 observes that the issue regarding duplicity of alleged amount of cash deposited in the bank account, no income escaping assessment and Explanation-2(c) to Section 147 of the Act not being applicable, are not factually correct and not acceptable as the claim of Petitioner needs to be checked and verified after receiving and perusing the necessary and required details during the course of reassessment p....
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....- 13. In the reasons to believe itself, it is recorded that the firm M/s. Cello Stationery Products used to exist with effect from 1st April 2008 and in the year 2009, the partnership firm was converted into a private limited company. The entities were allotted different PANs due to which while filing AIR Report, bank has erroneously quoted PAN for the firm instead of the company. In the reasons, it is also recorded that in response to a notice under Section 133(6) of the Act, HDFC Bank, Malad (East) Branch vide its letter dated 19th December 2019 has stated that the Account No. 039886400000010 has cash deposits for AY 2013-2014 and the account was opened for CSPPL on 29th May 2008 and assessee has made total cash deposits of Rs. 1,87,39,187/- for FY 2012-2013. The HDFC Bank has also confirmed by its letter dated 23rd December 2019 that there were nil cash deposits for firm Cello Stationery Products. Therefore, the AO should have recorded in the reasons to believe as to how he has come to the conclusion that apart from the amount of Rs. 1,87,39,187/- certified to have been deposited in cash by HDFC Bank, there is another deposit of Rs. 1,86,33,520/-, because admittedly there is ....
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.... Court, considering the reasons as recorded agreed that the only item which could have been stated to have escaped assessment would be the Long Term Capital Gains in the sale of TCS Ltd. shares amount to Rs. 19,32,34,27,592/- and Respondent No. 1 was incorrect in stating that he had reason to believe that the sum of Rs. 22,71,25,79,374/- has escaped assessment. 7. In our view, if the reasons for reopening the assessment is based on incorrect facts or conclusions, certainly the notice issued for reopening cannot be sustained. Moreover, if according to Respondent No. 1 only the sale of shares of TCS Ltd. was 'business income' and not 'profits arising of sale of investment' to say that the amount of Rs. 22,71,25,79,374/- has escaped assessment, also indicates non-application of mind. We would also go a step ahead and observe that if only the approving authority under Section 151 of the Act had considered the reasons properly, either he would have directed Respondent No. 1 to re-work on the reasons or would not have granted the approval. Moreover, we may keep in mind this is a case where the scrutiny assessment was completed and order under Section 143(3) of the Act has been p....