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TMI Blog2019 (2) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... n arising out of such transfer. (b) The return of the petitioner was taken in scrutiny by the Assessing Officer. He passed an order under Section 143(3) of the Income Tax Act, 1961 ("the Act" for short) on 18.3.2016 in which the Assessing Officer did not disturb the petitioner's treatment to the said receipt. To reopen such assessment, the Assessing Officer issued the impugned notice. In order to do so, he had recorded the following reasons:- Reasons for reopening of the assessment in the case of M/s. Integra Garments & Textiles Ltd. for A.Y. 2013-14 u/S. 147 of the Act. 1. The assessee company M/s. Integra Garments & Textiles Ltd. PAN : AABCF1212H has e-filed its return of income for A.Y. 2013-14 on 30.9.2013 declaring total income of Rs. NIL. Subsequently, the case was selected for Scrutiny and order u/S. 143(3) of the Act was passed on 18.3.2016 assessing the Total Income at Nil. 2. Subsequently, information has been received from the O/o ITO 7(3)-2, Mumbai. Accroding to the information during the course of assessment proceedings in the case of M/s. Morarjee Textiles Ltd for A.Y. 2013-14, it was found that M/s. Morarjee Textiles Ltd. had entered into a paper transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court dated 29.6.2012, the Integra Division of Morarjee Textile Limited was demerged as M/s. Five Star Mercantile Limited and M/s. Morarjee Holdings Private Limited was merged with M/s. Five Star Mercantile Limited. The new entity so formed was renamed as M/s. Integra Garments and Textiles Limited i.e the assessee company. 6. As per the Scheme of demerger, the Assets and Liabilities pertaining to Integra Division were to be demerged. The composition scheme of demerger and merger approved by the Hon. Bombay High Court was as under:- PART - II DEMERGER OF INTEGRA DIVISION OF MORARJEE TO FIVE STAR MERCANTILE LTD. 4. VESTING OF INTEGRA DIVISION Upon this scheme becoming effective and with effect from the appointment Date, the Integra Division of Morarjee, as defined in Clause 1.8 shall stand demerged to and vested in or deemed to be demerged to and vested in FSML, as a going concern, in accordance with section 2(19AA) of the Income Tax Act, 1961 and in the following manner. 4.1 With effect from the Appointment Date, the whole of the undertaking including assets, investments and properties of Morajree relatable to the Integra Division shall, under the provisions of Section 391 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had filed inaccurate particulars of income related to the receipt of Rs. 40.51 crore during the year under consideration. 9. In view of the above discussed facts and circumstances, I am satisfied that income chargeable to tax has escaped assessment and have the "reason to believe" that income chargeable to tax, to the tune of Rs. 40,51,00,000/- has escaped assessment for A.Y. 2013-14 within the meaning of Section 147 of the I.T. Act, 1961. 10. As per Section 147 of the I T Act, if the Assessing Officer has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. The expression "has reason to believe" is wider than "is satisfied". "Information" for re-opening may come from external sources or even from materials already on record or may be derived from the discovery of new and important matter or fresh facts. Reliance in this regard is placed on the Judgment of the Apex Court in the case of ACIT V/s. Rajesh Jhaveri Stock Brokers Pvt Ltd. [2007] 291 ITR 500. In this judgment, the Hon'ble Supreme Court has held that - " Section 147 authorizes and permits the Assessing Officer to assess or reassess income chargeable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hased such rights from the present petitioner company. On the basis of such information, respondent No. 1 - Assessing officer recorded in the reasons that the records of the assessee company were verified and upon verification of such records, it was noticed that the assessee had claimed the said transaction giving rise to capital gain of Rs. 32.04 crore. He formed a belief that leasehold rights were owned by Morarjee Textiles Ltd and in view of such facts, not being the owner of such leasehold rights, the petitioner had wrongly claimed to have sold such rights for consideration of Rs. 40.51 crore to Morarjee Textiles Ltd. In the view of the Assessing officer, "Therefore, the receipt of Rs. 40.51 crore during the year under consideration remains unexplained." He thereafter formed a belief that the assessee had filed inaccurate particulars of income in relation to receipt of Rs. 40.51 crore during the year under consideration. In view of such facts, he recorded the satisfaction that the income of the assessee to the tune of Rs. 40.51 crore chargeable to tax had escaped assessment. 4. In view of such facts, learned counsel for the petitioner raised following contentions:- i. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment. In the reasons recorded itself, the Assessing Officer has referred to this transaction as emerging from the assessment records. Thus, in clear terms, the assessee had offered such receipt to tax. However, if the Assessing Officer has sufficient reason to believe that the same ought to have been taxed under a different provisions at a higher rate, the question of reopening of assessment may still become relevant. However, in the present case, the issue stands on a different footing altogether. 7. This is so because if the Assessing Officer is correct in contending that the assessee was not the owner of the leasehold rights and therefore, could not have transferred the same to Morarjee Textiles Ltd, the question of taxing the receipt of Rs. 40.51 crore under appropriate provisions would immediately arise. In other words, if the Assessing Officer is correct in holding a belief that the assessee not being the owner of such leasehold rights, could not have transfered the same to Morarjee Textile, he would also then have to show under which provision, the Department would tax the receipt of Rs. 40.51 crore. In plain terms, it would be a receipt in the hands of the assessee wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, changed by the legislature by insertion of clause (x) to sub-section (2) of Section 57 which would taken within its sweep receipt of any sum of money without consideration in case of any person. This clause was introduced w.e.f. 1.4.2017. This clause would include any person being individual, Hindu undivided family or company. It was for this reason, the legislature has simultaneously limited the applicability of cluase (vii) and (viia) by making corresponding amendments in such clauses by adding following words: "but before the 1st day of April, 2017" and "on or after 1st day of October, 2009". This clause was thus introduced w.e.f. 1.4.2017 and therefore, would not cover the present case. 9. We are conscious, as pointed out by Mr. Mohanty, the learned counsel for the Department that the Assessing Officer attempted to bring the receipt within Section 68 of the Act as unexplained cash credit. However, for obvious reasons, such provision cannot be invoked. Firstly, the receipt was from banking channel. The Assessing Officer does not doubt the creditworthiness of the company paying the amount. He has not even suggested that it is the income of the assessee which is being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submit herewith copy of MIDC circular dated 05.01.2013 evidencing rate of land for transfer in Butibori (Nagpur) at Rs. 1150/- (much less than Rate at which the assessee company has sold the specified Land / Property). 1 12. However, the assessee eloborated the entire transaction in a communicated dated 4.3.2016, the relevant portion of which reads as under:- "In this regard, we submit as under:- A) Working of Long Term Capital Gain on Transfer of Leasehold rights Sr.No. Particulars Relevant Dates Relevant Section Amount in INR A Sale Consideration for Leasehold Rights in Land 25th March, 2013 Sec. 2 40,51,00,000 B Cost of Acquisitions Cost of acquisition and Date of Purchase of Previous Owner considered as date of acquisition in hand of Transfer for computation of Capital Gain 23rd Nov. 1995 34871291 C Indexed Cost of Acquisition Based Year considered for Indexation as previous owner got complete ownership Rights in leasehold Rights in Year 1998. Ref. Clause 1 of Agreement with MIDC dt. 23.11.1995 1998 852/351=2.42 45 8,46,44,843 D Long Term Capital Gain (LTCG) A.Y. 2013-14 45 32,04,55,157 E Current Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of Hon. Bombay High Court dated 29th June 2012 (Demerger of Integra Division of Morarjee Textile Ltd to Five Star Mercantile Ltd (now known as Integra Garment and Textile Limited) w.e.f. 1st April, 2011 and Amalgamation of Morarjee Holdings Private Limited (renamed Integra Garments and Textiles Limited) w.e.f. 1st Jan. 2012 enclosed as Annexure "7" Sale of Leasehold Land by Integra Garments and Textiles Limited (Previously known as to Five Star Mercantile Limited) to Morarjee Textile Limited Sale Consideration Rs. 40,51,00,000/- 8) Deed of Conveyance for Transfer of Lease land dated 25th March 2013 at Annexure "8" Change in name of Five star Mercantile Limited to Integra Garments and Textiles Limited 9) Fresh Certificate of Incorporation consequent upon Change in name is enclosed as Annexure "9" C) Submissions on working of Long Term Capital Gain resulted from Transfer of Lease hold land During the year under consideration Assessee Company has computed Long Term Capital Gain on Transfer of Lease hold land (i.e. Plot No. G-1 situated at MIDC, Nagpur) to Morarjee Textile Limited. The said leasehold land transferred at Rs. 40,51,00,000/- and adopted as a Full Value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contention of the learned counsel for the Revenue would require further consideration. In a given case, the situation may arise where even if the Assessing Officer has examined an issue during the assessment, he may receive additional information and material from outside sources prima facie suggesting that the stand of the assessee and the conclusion of the Assessing Officer on the basis of records of the assessment, were incorrect. In such situation, reopening of assessment may still be permitted. In the present case, however, no such material outside of the assessment records is shown to have been brought to the notice of the Assessing Officer. He only referred to the order of the assessment passed by the Assessing Officer of Morarjee Textiles Ltd. Such assessment was based on the documents which were already part of the assessment in case of the present petitioner. At best therefore, the opinion formed by the Assessing Officer of Morarjee Textiles can be seen to be another view point which may also be valid. However, the formation of the opinion by another Assessing Officer on the same set of documents and materials cannot give justifiable ground to the Assessing Officer of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses between the three manufacturing units for the purposes of claiming deduction under Section 80IA/IB of the Act is in accordance with law. However, issue being examined is whether the Assessing Officer has jurisdiction to issue the re-opening notice. Once an assessment order is being passed, it has some sanctity. If the assessment order is to be disturbed, then the Assessing Officer must strictly satisfy the condition precedent as provided under Section 147/148 of the Act before he can issue a notice, seeking to re-open an assessment. In this case, as we have pointed out herein above, there has been a change of opinion on the part of the Assessing Officer in issuing a notice and, therefore, he has no reason to believe that income chargeable to tax has escaped assessment. In these circumstances, the jurisdictional requirement for issuing a notice is not satisfied and, therefore, the impugned notice and the consequent order dated 14th November, 2007 disposing of the objections, are not sustainable." 16. In case of Commissioner of Income Tax Vs. Aroni Commercial Ltd [2017] 393 ITR 673 [Bombay], this Court observed as under:- "(h) The first contention urged before us by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not to be satisfied for issue of a reopening notice i.e. failure to disclose all material facts truly and fully necessary for assessment. It is also not disputed that in the regular assessment proceedings, queries were raised in respect of claim under Section 80IC of the Act and the same were responded to by the Respondent - Assessee resulting in reduction of claim for deduction under Section 80IC of the Act. In the above facts, it is self evident that the Assessing Officer was conscious of the claim of deduction made by the Respondent - Assessee under Section 80IC of the Act which led to the enquiry. It is for the Assessing Officer to decide the extent and nature of enquiry in respect of claim under Section 80IC of the Act. Therefore, when the Assessing Officer has taken a conscious decision of making enquiry under Section 80IC of the Act then it is not open to him to turn around and claim that certain aspects of the claim under Section 80IC of the Act were not considered by him. It is undisputed as pointed out above, Section 80IC of the Act was a subject matter of enquiry and this resulted in disallowance of Rs. 11.49 Crores out of the claim for Rs. 33.67 Crores made by the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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