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TMI Blog2016 (5) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... ose assets in the hands of the Assessee – whether held as investments or as stock in trade - were plainly the most important aspects of the transaction. Thus, it must be accepted that the AO, after application of mind, had accepted that the shares in question were acquired by Assessee from M/s Unitech Limited at their cost price and were held as investments by the Assessee. It has been held in a number of decisions that once it is shown that the AO had enquired into the transactions, it must be assumed that he had examined the relevant aspects even though the same have not been expressly referred to in the assessment order. In this view, we are unable to accept that AO had not formed an opinion as to various aspects of the transaction in question, including its value insofar as it is relevant for assessing the Assessee's income. Consequently, we must accept the contention that the impugned notices have been occasioned by a change of opinion. It is trite that a mere change of opinion cannot constitute a reason for re-opening the assessment. Reopening quashed - Decided in favour of assessee - W. P. (C) 12325/2015 & CM No. 32738/2015 - - - Dated:- 4-5-2016 - S. Muralidhar And V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjections which were disposed of by the impugned order dated 9th November, 2015. 7. The reasons recorded by the AO for initiation of the re-assessment proceedings indicate that during the assessment proceedings pertaining to the Assessee's holding company, Unitech Limited, it was noticed that Unitech Limited had transferred shares in three joint venture companies, namely, Unitech Developers Projects Limited, Unitech Hi-Tech Structures Limited and Unitech Realty Projects Limited, to the Assessee. The said shares were transferred at the cost price reflected in the books of M/s Unitech Limited, which was significantly lower than the book value of those shares calculated on the basis of the net worth of the said companies. 8. According to the AO, the book value of the shares of the aforesaid three companies transferred by M/s Unitech Limited on the date of the transfer/sale - as on 31st March, 2010 - was ₹ 3,61,40,20,487/- and the said shares were transferred at the cost price of ₹ 41,15,79,320/-. The AO alleged that no working of the fair value of the said shares in question was available at the time of sale/transfer for justifying the value at which they were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lief that the income of the Assessee had escaped assessment. He argued that the sale of shares by Unitech Ltd. at their cost price could not possibly lead to an inference that the income of the Assessee, under Section 28(iv) of the Act, had escaped assessment. 13. Countering the arguments advanced by Mr Aggarwal, Mr Dileep Shivpuri, learned Senior Standing Counsel contended that the AO of Unitech became aware that the shares of the three companies in question had been transferred to the Assessee at a value below their book value, during the course of the assessment proceedings relating to that company. He submitted that this fact was not disclosed by the Assessee during the course of its assessment proceedings for AY 2010-11 and was not in knowledge of the AO at the material time. He contended that, therefore, this information would constitute tangible material for re-opening of the assessment. 14. Mr. Shivpuri further submitted that the letter dated 20th February, 2013 relied upon on behalf of the Assessee, only indicated that the Assessee had disclosed the shares purchased by it and the value at which such purchase had been made. However, the fair value of the said shares w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h that the income chargeable to tax had escaped assessment by reason of the failure on the part of the Assessee to disclose fully and truly all material facts necessary for his assessment. Consequently, Explanation 1 to Section 147(1) of the Act - which provides that the production before the AO of accounts or other evidence from which material evidence could with due diligence have been discovered by the AO would not necessarily amount to disclosure for the purposes of the proviso to Section 147(1) of the Act - is not relevant for the purposes of this petition. 18. Now, turning to the facts of the present case, it cannot be disputed that the transaction of purchase of the shares of the three joint venture companies were subject matter of enquiry by the AO. The questionnaire dated 23rd January, 2012 specifically called upon the Assessee to disclose several details including transactions with related parties along with the copies of the relevant accounts. Indisputably, details of such transaction had been furnished along with the Ledger Accounts of various parties and that included the Ledger Account of Unitech Limited in the books of the Assessee. A bare perusal of the Ledger Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unitech Developers Projects Limited 11103990 Unitech Realty Private Limited 400167010 411579320 20. It is apparent from the above that the transaction dated 31st March, 2010 relating to transfer of investments in the three companies aggregating to ₹ 41,15,79,320/- was a subject matter of enquiry by the AO. The AO having enquired into the transaction of sale and purchase, and having examined the values at which the transactions had taken place had not raised any further issue with regard to the transactions in question. It plainly follows from the above that AO had satisfied himself as to the entire transaction of purchase of shares including the consideration thereof which was duly reflected in the statement furnished by the Assessee. Although the working relating to the books value of the shares - assuming that that is relevant - is not available, it must be presumed that the AO had satisfied himself as to the value of the transaction and also that the same were held as investments by the Assessee. This i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fraid, section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of mere change of opinion , which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review ; he has the power to reassess. But reassessment has to be based on fulfilment of certain preconditions and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of change of opinion as an inbuilt test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, the Assessing Officer has power to reopen, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words reason to believe but also inserted the word opini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f belief that the Assessee's income had escaped assessment. 25. Applying the aforesaid principles, in the facts of the present case, it is difficult to accept that the sale of shares by Unitech Limited at its cost price which is lower than the book value of the shares would result in income (equivalent to the difference between the book value of the shares and the cost price at which they were sold) in the hands of the Assessee. The shares of the three companies in question are held as investments by the Assessee and duly reflected by the Assessee as such. No objection has been raised by the AO in this regard. In the circumstances, we find it difficult to comprehend as to how the acquisition of investments by the Assessee could lead to an inference that the Assessee had earned income under Section 28(iv) of the Act - value of any benefit or perquisite arising from business or profession - chargeable under the head profits and gains of business or profession. 26. The reliance placed by Mr Shivpuri on the decision of the Supreme Court in Selected Dalurband Coal Co. P. Ltd. (supra) is also misplaced. In that case, the AO was in the possession of a letter of the Chief Mining ..... X X X X Extracts X X X X X X X X Extracts X X X X
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