2024 (6) TMI 693

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....were put to challenge. The challenge to the above proceedings was on the premise that the Writ Petitions challenging the order(s) under Section 148A(d) of the Act are premature and that the legal issues arising for consideration in the assessment shall be decided by the assessing authority after detailed consideration of the appellants' argument while rejecting the contention of the appellants that the reasons contained in the order(s) issued under Section 148 A(d) of the Act are different from the reasons which were stated in the notice(s) issued under Section 148 A(b) of the Act. 2. Brief Facts: a) The appellant(s) herein are private limited companies. Litigation involving the appellants and other entities in the company viz., M/s.S.V. Global Mills Limited (hereinafter referred to as "SVGML"), reached the Apex Court consequent upon disputes inter se the six shareholders before the Company Law Board. b) By order dated 17.05.2018, the Hon'ble Supreme Court permitted a buyout of the shares inter se the parties. The Apex Court also directed that a sum of Rs. 100 crores be paid to the appellants for the buyout of their shares. The appellants have admittedl....

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....DS for the assessment year 2019-20 followed by summonses under Section 131(1A) of the Act dated 07.04.2022 and 13.04.2022. 4. The impugned notice(s) under Section 148A(b) of the Act were issued by the respondent(s) stating that the respondent(s) had information which suggests that income chargeable to tax for the assessment year 2019-20 has escaped assessment within the meaning of Section 147 of the Act. The Annexure to the above notice(s) stated the following: "Following information has been disseminated as High Risk CRIU/VRU case pertaining to AY 2019- 20 on Insight Portal selected under Risk Management Strategy (RMS) cycle 2 formulated by the CBDT: The Hon'ble Supreme Cout of India vide order dated 17.05.2018 had approved a buy-out of shares held by following entities in M/s.SV Global Mills Limited: 1. M/s.Satluj Credit (840000 shares). and Holdings Pvt Ltd 2. M/s. Calcom Credit and Holdings (840000 shares) Pvt Ltd 3. M/s.Rajat Chakra Credit and Holdings Pvt Ltd (840000 shares) 4. M/s.Sheetala Credit and Holdings Pvt Ltd (850000 shares) 5. M/s.Twentieth Century Apco Leasing Pvt Ltd (288440 shares) 6. Smt. Raja....

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.... With regard to the interest on short term fixed deposit, it was submitted that the same would be offered to tax in the Financial Year 2022-23 i.e., the year in which the issue is finally settled by the Supreme Court. It was also submitted that as a matter of fact, advanced tax for the Financial Year 2022-23 has also been paid. 6. On consideration of the above, the impugned order(s) under Section 148A(d) of the Act, were passed wherein it was stated that the Supreme Court has nowhere held in its order that the receipt of money toward the buyout of shares from the appellants is exempt. It was further observed that in respect of the impugned transaction, Section 56(2)(x)(a) of the Act, would get attracted. Importantly, it was stated that reopening of assessment is on a prima facie view that income chargeable to tax has escaped assessment and that further opportunity would be available to the assessees to present their case both on facts and under law which the Assessing Officer would consider before passing any order in the matter. The relevant portion of the said order is extracted hereunder: "13. ..... that income chargeable to tax has escaped assessment and during the ....

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.... as detailed as order of assessment and it would suffice that the issue on the basis of which the re-assessment is proposed is outlined broadly therein. It is for the assessees / appellants to respond on all aspects of the matter and seek clarifications, where it so requires. 9. Heard both sides and perused the material on record. 10. The primary contention of the appellants was that the reasons set out in the order(s) under Section 148 A(d) of the Act that the impugned transactions would attract Section 56 (2)(x)(a) of the Act, were raised for the first time. The notice(s) issued under Section 148 A(b) of the Act proposed to tax the above receipts on the premise that it would attract capital gains. The appellants would submit that the departure from the notice(s) issued under Section 148 A(b) of the Act vitiates the order(s) under 148A(d) issued under Section 148. 11. It may be relevant to refer to the judgment of the Hon'ble Supreme Court in the case of Union of India v. Ashish Agarwal, reported in (2023) 1 SCC 617, wherein the object and purpose of inserting Section 148A of the Act was explained after referring to the amendment made to the provisions relating to rea....

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....ve the said object, by the Finance Act, 2021, Sections 147 to 149 and Section 151 have been substituted. 17. Under the substituted provisions of the IT Act vide the Finance Act, 2021, no notice under Section 148 of the IT Act can be issued without following the procedure prescribed under Section 148-A of the IT Act. Along with the notice under Section 148 of the IT Act, the assessing officer ("AO") is required to serve the order passed under Section 148-A of the IT Act. Section 148-A of the IT Act is a new provision which is in the nature of a condition precedent. Introduction of Section 148-A of the IT Act can thus be said to be a game changer with an aim to achieve the ultimate object of simplifying the tax administration, ease compliance and reduce litigation. 18. But prior to pre-Finance Act, 2021, while reopening an assessment, the procedure of giving the reasons for reopening and an opportunity to the assessee and the decision of the objectives were required to be followed as per the judgment of this Court in GKN Driveshafts (India) [GKN Driveshafts (India) Ltd. v. ITO, (2003) 1 SCC 72]. 19. However, by way of Section 148-A, the procedure has now be....

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....ended to put the assessee on notice of the reason on the basis of which the revenue intends to issue a notice under Section 148 of the Act. It is trite law that a notice must contain the reasons to which the noticee is required to respond. In other words, it is essential to disclose the reasons to enable the noticee to give a reply/ response, for, it is rudimentary that the noticee should be made aware of all that which influence the decision maker and which he has to meet. If the reasons which are set out in the notice to which the noticee is required to respond and the reasons contained in the order are different, the issuance of the notice would fail to serve its purpose and would be reduced to an empty formality. That means, it would neither qualify as a notice nor serve the object of issuance of notice. 12. We are conscious that the proceedings/ order under Section 148 A(b) of the Act does not conclude the reassessment proceedings and there is still an opportunity for the assessees after issuance of notice under Section 148 to respond. However, we cannot turn a blind eye to the fact that legislature has introduced Section 148A of the Act, which is an enquiry undertaken befo....