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TMI Blog2014 (8) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... se, the Tribunal was justified in holding that the re-opening of the assessment u/s 147(a) of the Income Tax Act was valid in law inasmuch as the date of bonus shares was not disclosed and in rejecting the contention of the assessee that the reopening of assessment was invalid because: (I) it was not done at the behest and direction of CIT without applying independent mind. (II) The fact of issue of bonus shares was already declared in the immediately preceding year and there could not be "non disclosure" of facts already known to the department and (III) In the context of the fact that the entire controlling interest with entire shareholding was transferred, the date of issue of bonus shares was irrelevant and immaterial. (B) Whether on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, it would be necessary to set out few facts:- The Assessees were the holders of all the shares of one M/s Paranjpe Engineering and Foundry Co.Ltd. (PEFCO Ltd). On 30th October, 1976 the company issued bonus shares in the ratio of one bonus share for one original share. On 28th November 1977 the Assessees (called vendors) agreed to sell all their shares (including the bonus shares) in PEFCO Ltd. to one Thirani group (called purchasers). After the sale, the Assessee filed their returns. The material part of one of the returns was annexure "A" relating to capital gains. The Income Tax Officer completed the assessment granting exemption under Section 54(c) in respect of capital gains. The assessment order mentioned that "these shares orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany i.e. percentage in the company's equity subsisted as such for more than 36 months before the date of transfer. Therefore, according to the Assessee, the income was received by way of long terms capital gains and the question of escapement of that income did not arise. The Asessee stated that "I have fully and truly stated in the return that my interest or stock in the company with percentage was sold away." Despite this, the Income Tax Officer re-opened the assessment rejecting the assessee's objection on the ground that the assessee had "misled the department by saying vaguely in the return that the share in the equity capital" had been sold and that the assessee intentionally gave false information saying that the share capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the opinion of this Court, in effect, the Tribunal considered only three questions. The first question which was agitated by the Assessee, related to the validity of the re-opening of the assessments. The second question related to the merits of the case and involved the issue as to whether, what was transferred was only the rights of the shareholders or those rights along with the control over the company. The third question involved was whether the Assessees were entitled to the benefit of Section 54E of the Act in respect of the transfer of bonus shares. There was a difference of opinion between the learned Judicial Member and the learned Accountant Member. The learned Judicial Member held that the Assessee had not fully and truly dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares. In view thereof, he held that the sale of bonus shares resulted in short term capital gain. In coming to this conclusion, the Hon'ble President relied upon a judgement of this court in the case of Manecklal Premchand (Deceased) v/s Commissioner of Income Tax reported in 1990 (186) ITR 55. 4. He also held that there was a failure on the part of the Assessee to disclose fully and truly all material facts necessary for the assessment in the original returns filed for the Assessment Year 1978-1979, and therefore, re-assessment was justified in law. On the delivery of the opinion of the third member, the Assessees' Appeals were disposed of in consonance with the view of the majority of the members, and accordingly, dismissed. This ..... X X X X Extracts X X X X X X X X Extracts X X X X
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