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TMI Blog2014 (4) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had failed to disclose fully and truly all material facts necessary for its assessment for the assessment year – Decided in favour of Assessee. - WRIT PETITION NO.18 OF 2013 - - - Dated:- 5-3-2014 - S.J. VAZIFDAR B.P. COLABAWALLA, JJ. For the Appellant : Mr J D Mistri, Senior Counsel With Mr Madhur Agrawal i/b Mr Atul K Jasani For the Respondent : Mr Suresh Kumar JUDGEMENT Per: S J Vazifdar: 1. The petitioner has challenged a notice issued by respondent No.1 Assistant Commissioner of Income Tax, under section 148 of the Income Tax Act, 1961 and an order dated 12.10.2012, passed by respondent No.2 Deputy Commissioner of the Income Tax, Assessing Officer, disposing of its objections challenging the validity of the reassessment proceedings. Respondent No.3 is the Commissioner of Income Tax. 2. An agreement dated 31.05.2004 was entered into between the petitioner, Tiger Elevator Private Limited and Kone Elevator India Private Limited (TEPL). Under the agreement subject to the orders of this Court under sections 391 and 394 of the Act, TEPL and the petitioner agreed to implement the scheme of arrangement whereby the petitioner was to tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is is calculated as the outcome of (2.8 x Annual Value at the Appointed Date), where the Annual Value at the Appointed Date is Rs. 113,400,000/-. Annual Value is defined as being equal to the aggregate amount of the annual customer price of actually transferred Maintenance Contracts. However, for the purposes of calculating the value of factor A only, the Annual Value at the Appointed Date shall be determined on the basis of the list of Maintenance Contracts attached to hereto as Schedule AA 4.2. B = Rs. 13,086,000/- (Rupees Thirteen Million Eighty Six Thousand Only). This is calculated as the outcome of (0.0257548 x New Elevator Sales where the New Elevator Sales) is Rs.508,100,000/-. New Elevator Sales is defined as being equal to the amount of the New Elevator Business Turnover for the 12 month period ending at March 31, 2004, as shown on the 2004 Financial Statements. 4. As the transaction constituted a scheme of arrangement between the petitioner and Tiger Elevator Private Limited, the petitioner filed Company Petition No.832 of 2004, seeking the sanction of this Court under section 391 and 394 of the Companies Act, 1956 in respect thereof. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was therefore, not within the purview of the definition of Slump Sale under section 2(42C) of the Act and that the cost of Undertaking is not ascertainable and therefore, the machinery for computing gains fails. Without prejudice to the same, it was contended that the petitioner had calculated the indexed cost of acquisition of the Undertaking and computed the Long Term Capital Gains. Accordingly, the petitioner deposited a sum of Rs.15.50 crores in section 54EC Bonds within six months from the transfer of the undertaking. It was contended that the long term capital gains were therefore, to be treated as exempt from tax. 7. There followed a series of queries raised and requisitions made by the Assessing Officer, which were replied to and complied with by or on behalf of the petitioner. The same establish clearly that the petitioner disclosed all facts material to the assessment and that the AO was not only aware of but considered the same before making the assessment order. The issues on the basis of which the impugned notice has been issued, were considered in considerable detail and exhaustively by the Assessing Officer before passing the assessment order dated 31.12.2007 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [Annexure VII] . Annexure VII in turn referred to the second to the sixth adjustments and the Settlement Agreement dated 29.08.2005. Against each of the second to the sixth adjustments, the petitioner stated the result of the buyers' and the petitioner's respective interpretations of the adjustments. The petitioner also referred to the Settlement Agreement dated 29.08.2005. G). By a letter dated 29.10.2007, the petitioner furnished the other dates requisitioned by the AO in respect of the escrow money deposited by the purchaser, preference shares redeemed, request for arbitration, NHB bonds investment made of Rs.15.50 crores, reply in the arbitration petition in view of the disputes regarding adjustment, receipt of Rs.3.50 crores towards redemption of the bond from the purchaser, receipt of Rs.8.25 crores towards redemption of the bonds from the escrow account and the details of the face value and redemption value of the bonds. The consideration of the preference shares and the value of bonds of Rs.24.75 crores and Rs.11.11 crores respectively aggregating to Rs.35.86 crores was also mentioned. H). By a further letter dated 30.11.2007, the petitioner submitted a not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s tax liability in considerable detail. After setting out the petitioner's case in detail, the AO considered the same exhaustively. Having done so, he came to the conclusion that the transaction fits into the definition of a slump sale. He held that the transaction of the transfer of the said division was taxable as per the provisions of section 50B of the act and taxed the same accordingly. The AO proceeded thereafter to compute the capital gains on the transfer of the said division himself. He computed taxable long term capital gains at Rs.1,93,61,060/-. 12. The petitioner challenged the order before the CIT (Appeals). By an order dated 25.07.2008, the appeal was dismissed. The petitioner challenged the order before the Income Tax Appellate Tribunal (ITAT). The Tribunal by an order dated 11.03.2011 held that the scheme of arrangement resulted in a transfer of undertaking in exchange for the preference shares and bonds and was a case of exchange and not sale. Consequently neither the provisions of section 2(42C) nor section 50B were applicable. 13. This brings us to the impugned notice dated 13.03.2012 issued by respondent No.1 stating that there was reason to belie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ores was not disclosed. 18. The submission is unsustainable. Firstly, the valuation report was prepared by the transferee's chartered accountants. Even assuming that the petitioner was aware of the same and had a copy of it, it would make no difference. It was not suggested that the report contains any material relevant to the assessment, which was not disclosed during the assessment proceedings. A mere failure to furnish a document would not justify reopening an assessment. It must be established by the department that the contents of the documents relevant to the assessment were not disclosed by the assessee. There may be several documents which may not have been disclosed during the assessment proceedings. If however, the contents of the documents relevant to the assessment had been disclosed and had been considered by the AO, it would not justify reopening of the assessment. Several documents may contain the same information. It would not be necessary for the assessee to disclose every such document unless the existence of such documents themselves would be material to the assessment. 19. We referred in detail to all that transpired during the course of the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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