TaxTMI 
TaxTMI 
2023 (8) TMI 1689
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.... of this petition, to stay implementation and operation of the notice at Annexure-'A' to this petition and stay further proceedings for the A.Y. 2014-15;" SPECIAL CIVIL APPLICATION NO. 5998 of 2019 "a. quash and set aside the impugned notice at Annexure-'A' to this Petition; b. pending the admission, hearing and final disposal of this petition, to stay implementation and operation of the notice at Annexure-'A' to this petition and stay further proceedings for the A.Y. 2014-15;" 3. Since the issues involved in these petitions are common they are taken up together. Essentially, facts of Special Civil Application No.14722 of 2019 are referred. 3.1 The petitioner is an individual who resides in the United Kingdom but is an Indian Citizen. In the year 2001, when the petitioner was an ordinary resident of India, he had purchased ten policies of Life Insurance Corporation of India amounting to the total Single premium instalments of Rs.50,00,005. They were purchased on 10.05.2001 and 12.09.2001. 3.2 The petitioner moved out of India in 2006. On 10.4.2013, the policies bought were surrendered at a total value of Rs. 1,42,85,895. The petitioner was a non-....
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....etitioner can also file detailed objections after the Assessment Order is passed. (ii) That the petitioner is a Non-Resident Indian and the case of the assessee was never subjected to regular assessment proceedings under Section 143(3) of the Income Tax Act. The claim therefore could not be verified under Section 143(1). Subsequently, during intelligence gathering, it was found that the assessee had purchased 10 pension/annuity plans. Subsequently, he had surrendered the policies on 10.4.2013 and the amount included an amount of Rs. 92,85,894 being accretion on account of interest and bonus on credit of the assessee in the pension fund. The petitioner did not offer this accretion value for taxation. It was a case of clear failure to truly and fully disclose the particulars. Therefore, after due procedure notice has been issued and there is no illegality in the action of reassessment. (iii) With regard to the contention that the scrutiny was undertaken in case of the wife, Mr. Patel would submit that during the assessment proceedings in the case of the wife she had claimed that under Section 10(10D) any sum received from LIC including the sum allocated as bonus was....
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.... What is also evident from the communication dated 19/12/2016 issued by the Revenue that a specific query with regard to Section 80CCC was framed and the wife was asked to show cause why the 10 policies should not be taxed. The petitioner's wife on 23/12/2016 gave a clear response stating that the view of the revenue was erroneous. 7.2 Based on the communications and exchange of correspondence, an Assessment Order was passed in case of the wife on 23/12/2016 where a positive finding was recorded that in view of the stand of the assessee and in view of the proof furnished by the Petitioner that the assessee had never claimed deduction u/s 80CCC no adverse view has been taken on this issue. 8. In the case of Ami Ashish Shah v. Income-Tax Officer reproted in (2021) 126 taxmann.com 236 (Gujarat) (Special Civil Application No.19328 and 19338 of 2019), a Division Bench of this Court considering the provisions of Section 10(10D) read with Section 148 of the Act this Court held as under: "16 Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the Revenue is j....
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....ions of subclauses shall not apply to any sum received on the death of a person: Provided further that for the purpose of calculating the actual capital sum assured under subclause, effect shall be given to the Explanation to sub-section (3) of section 80C or the Explanation to sub-section (2A) of section 88, as the case may be : Explanation.--For the purposes of this clause, "Keyman insurance policy" means a life insurance policy taken by a person on the life of another person who is or was the employee of the first-mentioned person or is or was connected in any manner whatsoever with the business of the first-mentioned person." From the reading of the section as applicable for the assessment year under consideration, all that is required for an insurance policy to meet the requirements of Section 10(10D) has to be - (a) it should be a life insurance policy; (b) it should be taken by the assessee on its life, and (c) for insurance policies issued after 1st April 2003, premium payable for any of the years during the term of the policy should not exceed 20% of the actual capital sum assured. Once these criteria are fulfilled, any....
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....ided two of the following conditions are satisfied: (a) The premium paid does not exceed 10% (policy taken after 31st March 2012), 15% (policy taken after 31st March 2013 for a person covered under 80C and 80DDB0, and 20% (policy taken between 1st April 2003 to 31st March 2012) of the sum assured and, (b) If the plan is a traditional plan like an endowment plan, money back plan, etc and the premium has been successfully paid for the first two years. (i) If it is a single traditional plan, the policy is surrendered upon completion of the first two years. (ii) If it is ULIP, then the policy is surrendered after five years. If both of the above conditions are fulfilled, then the surrendered value is exempted under Section 10(10D). ● Section 80CCC of the Act: 23 Section 80CCC of the Act reads thus: "80CCC. Deduction in respect of contribution to certain pension funds. (1) Where an assessee being an individual has in the previous year paid or deposited any amount out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India [or an....
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.... the sum for renewal or purchase of a life insurance policy from their taxable income. (ii) The payment of funds from the policy should be made as per the terms of Section 10(23AAB) from the accumulated funds. (iii) If any bonus is received or interest is accrued, it is not eligible for deduction under Section 80CCC. (iv) Any amount received from the policy as a monthly pension is liable for taxation as per the prevailing rates. (v) If the policy is surrendered, the amount would also be subject to taxation. (vi) Any rebates that were available on investment in annuity plans before April 2006 are not allowed under Section 88. (vii) Any amount deposited before April 2006 is not eligible for deduction. The provisions of Section 10(23AAB) are inherently linked with Section 80CCC. It relates to the income earned from a fund that has been set up by a recognized insurer, including the LIC. The fund must have been set up before August 1996 as a pension scheme. The contributions made by the taxpayer to the policy must have been with the intention of earning pension income in the future. The conditions regarding eligibility for d....
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....on 147 of the Act. Further, para 7.3 of the aforesaid Circular deals with deemed cases of income escaping assessment (Explanation 1 to section 147). Explanation 2 to Section 147 is more elaborate and cover those cases where the assessments have been completed (called as the scrutiny cases) as well as those cases where no assessments have been completed (called as the non-scrutiny cases). As per the aforesaid Explanation 2, no distinction has been made between the cases where assessment has been made after scrutiny and those cases where no assessment has been made viz. cases where assessment has been made under Section 143(1) only. From the aforesaid Circular of the CBDT, it is quite evident that no distinction under Section 147 is contemplated between the assessment under Section 143(3) called as the scrutiny assessment and the assessment accepted under Section 143(1) called as the non-scrutiny assessment. Therefore, a tangible material is necessary to reopen even an assessment made without scrutiny under Section 143(1) of the Act. We may refer to the following legal precedents : (1) Ratna Trayi Reality Service P. Ltd. vs. ITO [2013]356 ITR 493 (Guj) : 215 Taxman 650 (Guj)....
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....cases where intimations were issued earlier under Section 143(1), may well lead to an unintended mischief. It would be discriminatory too. An interpretation that leads to absurd results or mischief is to be avoided. In the present case there is no whisper in the reasons recorded, of any tangible material which came into possession of the Assessing Officer subsequent to the issuance of the intimation under Section 143(1). It reflects an arbitrary exercise of the power conferred under Section 147 of the Act. In other words, it was held that even where proceedings under Section 147 are sought to be initiated, with reference to intimation under section 143(1), the ingredients of Section 147 have to be fulfilled. Therefore, there should exist "reason to believe" that income chargeable to tax has escaped assessment. Accordingly, in the absence of any tangible material in possession of the Assessing Officer, subsequent to the intimation under Section 143(1), the reopening was not sustainable. (3) Inductotherm (India) P. Ltd. vs. M. Gopalan, Dy.CIT [2013] 356 ITR 481 (Guj) : [2012] 77 DTR 1 (Guj) In this case for the A.Y. 200203, the assessee's return was processed by....
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.... the provisions of Section 147 for that purpose. The Assessing Officer having no information on the basis of which he could entertain a "reason to believe", the CIT(A) was justified in annulling the reassessment. 28 On the basis of the aforesaid legal precedents, it is clearly established that even where the proceedings under Section 147 of the Act are sought to be initiated with reference to an intimation under Section 143(1), the ingredients of Section 147 are required to be fulfilled. Therefore, even in such a case there should exist "reason to believe" that income chargeable to tax has escaped assessment. Hence, in the absence of any tangible material in possession of the Assessing Officer, subsequent to the intimation under Section 143(1), the reopening will not be sustainable. In other words, even an assessment under Section 143(1), in the form of an intimation, cannot be reopened under Section 147 unless some new / fresh tangible material comes into possession of the Assessing Officer, subsequent to the intimation under Section 143(1) of the Act." 8.1 What is evident from the above is that the Court had held that reference to Section 80CCC was misconceived and th....
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.... Redemption paper from Bajaj Alliance Private Limited of Rs. 59,89,740/- date 23.11.2012. (v) Copy of the bank account of the HDFC and statement of Piyush Ambalal Gandhi. 5.2 In response to further queries raised on 11.12.2017, the assessee filed computation and acknowledgement sheet for all the assessment years to show that he had not claimed deduction under Section 80CCC (1) of the Act for investment under Chapter VI-A. Also furnished was the source of the amount paid on different occasion towards policy which were all by cheques and the details of the cheque numbers were also made available. The assessee informed the Income Tax Officer that since he had not claimed any deduction as expenditure or under Chapter VI-A, the amount received upon premature surrender was not liable to be offered to tax. The computation of income reflected in the returns of income for the three different assessment years that is 2013-14, 2006-07 and 2008-09 were produced, and also figured on the record of the petition which fortified that the deduction was not claimed by the petitioner in respect of the investment in the insurance policy. 5.3 Therefore, it is evident that the ....
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....necessary to reopen the assessment. There was no tangible material and in fact once in the case of the same question the assessment of the wife had undergone a scrutiny the reassessment exercise under Section 147 was barred on the principle of change of opinion. The impugned notice therefore is required to be quashed and set aside. 9. In view of the above, the impugned notice dated 31.3.2019 is quashed and set aside and the petition being Special Civil Application No.14722 of 2019 is allowed accordingly. 10. Special Civil Application No.5998 of 2019 is filed by the wife of the petitioner of Special Civil Application No. 14722 of 2019 challenging the notice under Section 263 of the Act dated 6.3.2019 by which for the same issue the order of the AO is sought to be revised. Having held in Special Civil Application No.14722 of 2019, based on the decisions of the Division Bench in the case of Ami Ashish Shah (supra) and Piyush Gandhi (supra) that the interpretation of the reassessing authority was flawed adopting the said reasons the prayers in the present petition also deserve to be granted. 11. Moreover as held by the Division Bench of this Court in the case of Commissioner o....
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....ays down correct law and the same is not in conflict with the earlier order of this court in Rajendra Singh [1990] 79 STC 10 (Gauhati). Jurisdiction under section 263 can be exercised whenever it is found that the order of assessment was erroneous and prejudicial to the interest of the Revenue. Cases of assessment order passed on wrong assumption of facts, or incorrect application of law, without due application of mind or without following the principles of natural justice are not beyond the scope of section 263 of the Act." 18. In case of Commissioner of Income Tax vs. Arvind Jewellers reported in 259 ITR 502 Division Bench of this Court referring to the judgement of Supreme Court in case of Malabar Industrial Co. Ltd vs. CIT reported in [243 ITR 83] observed as under: "6. From the above observations made by the Supreme Court, it is clear that the provisions of Section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted and incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being....