TaxTMI 
TaxTMI 
2026 (1) TMI 1049
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....r, Ms. Radhika Roy, at the relevant time was having 50% shareholding in a company known as RRPR Holding Private Limited (hereinafter referred to as "RRPR"). For the assessment year (hereinafter referred to as "AY") 2009-2010, she submitted a return of income on 31.07.2009 declaring her income at Rs.1,66,61,534/-. The return so filed was processed under Section 143(1) of the Act of 1961 and was accepted as such. Accordingly, the petitioner came to receive an intimation dated 22.02.2011. 3. Later on, a notice dated 25.07.2011 was issued to the petitioner in exercise of powers under Section 147/148 of the Act of 1961 and reassessment proceedings for AY 2009-10 were initiated against her alleging that her income has escaped assessment on the ground that a transaction of purchase of shares of New Delhi Television Limited (hereinafter referred to as "NDTV"), a listed company had been carried by the petitioner with RRPR at a substantially low consideration than its market value. The aforesaid reason was supplied to the petitioner with the notice dated 25.07.2011. 4. The petitioner claims to have produced the relevant documents, including books of accounts and audited Balance Sheet o....
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....Dr. Prannoy Roy had entered into transactions of purchase and sale of shares of M/s. New Delhi Television Limited ("NDTV"), a listed company, with M/s. RRPR Holding Private Limited ("RRPR") and these transactions included transactions at the rate of Rs. 4 per share, when the shares of NDTV were being traded on those dates at the rate of about Rs. 140 per share. Accordingly, the assessee's case for AY 2009-10 was reopened on the limited issue of capital gains/loss arising out of the above referred transactions of purchase and sale of shares of NDTV entered into by the assessee with RRPR and notice u/s 148 of the Income Tax Act, 1961 (the "Act") was issued to the assessee on 25.07.2011. The assessment was completed u/s 147/143(3) of the Act on 30.03.2013 at an income of Rs. 3,17,39,480/-, which included the main addition of Rs. 1,30,00,394/- on account of short term capital gains apart from disallowance of deduction u/s 80G amounting to Rs. 2,750/- and addition on account of house property income amounting to Rs. 20,74,800/-, the last two Issues having come to the notice of the Assessing Officer ("AO") during the course of proceedings. 2. Subsequent to the completion of ....
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....red an interest expense of Rs. 6,79,23,407/- (i.e. interest @ 19% for 5.5 months on Rs. 70,99,81,710/-) on account of loan taken on interest and advanced to Mrs. Radhika Roy without interest." 11. While supplying the reasons vide communication dated 08.07.2016, the Respondent no.1 called upon the petitioner to furnish her reply/explanation. 12. While contending that the re-initiation of the assessment proceedings is arbitrary and vindictive, Mr. Sachit Jolly, learned senior counsel argued with vehemence that the power has been exercised illegally and without authority of law inasmuch as all the information, including the books of accounts etc. of RRPR had been produced by the petitioner before the Assessing Officer (hereinafter referred to as "AO") during the first reassessment proceedings, which had culminated in the order dated 30.03.2013. 13. He pointed out that during the earlier reassessment proceedings, the bone of contention raised by the Department was the interest-free loan, which the petitioner had received from the RRPR and the essence of the reasons recorded for initiation of reassessment proceedings this time, is also the complaint revolving around 'the intere....
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.... there was apparently an income and the same was liable to be included in petitioner's income by virtue of Section 2(24)(iv) of the Act of 1961. 18. Learned Counsel for the respondents also argued that during the first reassessment proceedings, the Department sought to make addition under Section 2(22)(e) of the Act of 1961, as dividend, whereas this time, the amount proposed to be added in petitioner's hands is, deemed income as per Section 2(24)(iv) of the Act of 1961. 19. He submitted, that above arguments are without prejudice to his basic contention that the petitioner has invoked writ jurisdiction of this court simply against a notice, without filing her reply in response thereto. He prayed that the petitioner be directed to file reply/explanation in response to the notice, which would be considered by the respondent no.1 objectively and in accordance with law, and if the same culminates into an order, the same can be challenged by way of the appellate mechanism provided under the Act of 1961(if necessary). 20. Heard learned counsel for the parties and perused the relevant material. 21. Indubitably, the proceedings subject to the judicial scrutiny before us ar....
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....s to why provisions of Section 2(22)(e) of the Act of 1961 could not be invoked in relation to the loan received from RRPR. Being satisfied with the record and the petitioner's explanation, the assessing officer chose not to make any addition in this regard. 27. Pertinently, on the basis of alleged complaint, the respondents are seeking to treat the interest relating to such interest free loan as deemed income in the hands of the petitioner, as provided under Section 2(24)(iv) of the Act of 1961, whereas the very issue of petitioner having received loan from RRPR (in which the petitioner was Director and 50% shareholder), was before the AO. It was not only an issue before him, rather it was the reason for initiation of earlier re-assessment proceedings and a categorical explanation regarding this very loan was sought from the petitioner by way of notice dated 06.03.2013. 28. So far as the reason for which the reassessment proceedings under consideration were initiated and the alleged information (which as a matter of fact was in the form of complaint) was received was to the following effect: "2. Subsequent to the completion of assessment u/s 147/143(3) on 30.03.....
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....in. Hurling the reassessment proceedings in such situation, hits the very root of fair adjudicatory process. Initiation of reassessment proceedings in such circumstances, leads to unnecessary harassment of an assessee on the one hand and give rise to unpredictability/uncertainty, if not anarchy on the other. 32. The powers under Section 147/148 as envisaged under the Act of 1961 are exception to the normal assessment proceedings. The reassessment proceedings can be undertaken under the provisions, subject of course to the yardsticks and limitations prescribed under the Act of 1961. But once such powers have been exercised and an assessment order has been passed, the income tax department cannot be allowed to reopen the assessment all over again, simply because someone has complained of or suggested a new facet of the very same transaction, which stood examined, scrutinized and subjected to assessment by conscious application of mind. 33. The provisions of Section 147/148 of the Act of 1961 so also the judicial precedents in this regard clearly postulate that in case, for whatever reason, an assessment has been re-opened, then, the AO is justified in bringing to tax such incom....
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....see by the Assessing Officer vide his communication dated 08.07.2016. The same read as follows: "... 7. It is pertinent to mention that the impugned income has escaped assessment on account of failure of the assessee to disclose truly and fully all material facts necessary for making his assessment. The Impugned benefit was clearly within the meaning of income u/s 2(24)(iv) of the Act and the same was chargeable to tax, therefore, the assessee was mandated by law to declare such income in her return of income for AY 2009-10 in the first place. Further, the assessee also had the opportunity to declare this income during the assessment proceedings u/s 147 initiated in respect of the issue of capital gains in his case. However, the assessee failed to make the necessary disclosure. 8. In this case, four years but not more than six years have elapsed from the end of the assessment year under consideration and income chargeable to tax which has escaped assessment is Rs. 6,79,23,407/-, which is more than Rs. 1 lakh, necessary sanction to Issue notice u/s 148 of the Act is being obtained separately from the Pr. Commissioner of Income Tax-6, Delhi under amended pr....
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....7, Hon'ble the Supreme Court has clearly held thus: "It is not required to disclose the 'secondary fact'. The assessee is also not required to give any assistance to the AO by disclosure of other facts. It is for the AO to decide what inference should be drawn from the facts." 42. The facts of the present case themselves speak volumes, as to how the proceedings are arbitrary and contrary to the statutory provisions besides being against the fundamental principles of adjudicatory process. In the facts of the case though, no judicial precedents or pronouncements are required to quash the impugned proceedings. 43. The judgments of Hon'ble the Supreme Court, right from Calcutta Discount Co. Ltd. v. Income Tax Officer reported in AIR 1961 SC 372; Whirlpool of India Ltd. v. Registrar of Trade Marks, reported in (1998) 8 SCC 1, till the recent judgments in Red Chilli International Sales vs. Income Tax Officer and Anr., SLP(C) No. 86/2023 are consistent that the High Courts can exercise their powers under Article 226 of the Constitution of India to quash such proceedings, if they come to a conclusion that the proceedings are arbitrary and contrary to the statute and viol....