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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 ..... et of documents and materials cannot give justifiable ground to the Assessing Officer of the present assessee to contend that there is additional information or material at his command permitting him to have a relook at the situation. In plain terms, what the AO in the present case is attempting to do is to review his own conclusions formed during the original assessment after full examination, with the aid of not new or additional materials but on the basis of the conclusions of another AO; which are based on the same materials available during the original assessment before him. Situation thus, in the present case is that the AO during the assessment examined the transaction in question on the strength of certain documents and accepted the capital gain offered by the assessee arising out of such transaction. Another Assessing Officer in the case of Morarjee Textiles examined the same set of documents and formed a different opinion. When this was placed before him, the Assessing Officer of the petitioner wishes to change his view and adopt the view of the Assessing Officer of Morarjee Textiles, which is wholly impermissible. The concept of change of opinion not permitting re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extiles 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 of ₹ 40.50 crore with the assessee company i.e purchase of land from the assessee company for a sale consideration of the aforesaid sum. It has been informed that on verification of the documents and records of M/s. Morarjee Textiles Ltd., at the time of merger and demerger of M/s. Integra Garments Textiles Ltd (earlier also known as M/s. Integra Apparels P Ltd) to and from M/s. Morarjee Textiles Ltd., the assessee company i.e M/s. Integra Garments Textiles Ltd. did not own the Land, which has been claimed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved 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 391-394 read with Section 100 to 103 and all other applicable provisions, if any, of the Act, without any further act or deed, stand transferred and / or deemed to be transferred to and vested in FSML as a going concern so as to vest in FSML all the rights, title and interest pertaining to the Integra Division . 4.4 Any and all immovable properties (including land together with the building and structure standing thereon) of the Morajree relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 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 tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 40.51 crore to Morarjee Textiles Ltd. In the view of the Assessing officer, Therefore, the receipt of ₹ 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 ₹ 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 ₹ 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 the assessee had already offered the entire consideration to tax. There was, therefore, no question of the income chargeable to tax having escaped assessment; ii. If the Assessing Officer is correct in contending that the property in question does not belong to the petitioner assessee, then, at best, it can be said that the petitioner recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 ₹ 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 ₹ 40.51 crore. In plain terms, it would be a receipt in the hands of the assessee without any consideration in the return being transferred to Morarjee Textiles Ltd. In other words, it would be a receipt without exchange of consideration and therefore, can at best be seen as a gift from Morarjee Textiles Ltd to the assessee company. No provision under the Act was brought to our noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual, 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 routed through Morarjee Textiles Ltd under the present transaction. 10. There is one more reason why we cannot sustain the impugned notice which is, the entire issue was examined by the Assessing Officer during the original scrutiny assessment. As noted, the assessee had disclosed such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) Expenditure of Transfer (biii) NIL iv) Total (bi + bii + biii) (biv) 84644843 c) Balance (3a-biv) 320455157 11. Further, the assessment proceedings, in response to the query raised by the Assessing Officer, the petitioner had explained the transaction giving rise to such long term capital gain by stating as under:- Sr.No. Particulars Annexure No 1 Long term capital gains on Sale of Land / Property: Reference to Computation of Income submitted vide our earlier submissions, the assessee company has sold land during the concerned assessment year. Copy of sale agreement for sale of land at Nagapur has been submitted vide our earlier letter / submissions. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unabsorbed Depreciation considered as Current Year Depreciation U/s. 32(2) - As per Separate Annexure B A.Y. 2013-14 Section 71(2) read with Section 32(2) (4,42,17,567) NET TAXABLE CAPAITAL GAIN LIABLE FOR TAX 0 B) List chronological Events for cost with reference to Certain mode of acquisitions, where the capital assets become property of the assessee by way of certain modes stated under Section 49 of the Income Tax Act. Original Owner of Lease hold rights in Industrial Land Cost Documents Morarjee Legler Private Limited ₹ 3,48,71,291/- (Rs. 1,05,32,100 + ₹ 2,43,39,191,) 1) Lease Agreement between Morarjee Legler Private Limited and Maharashtra Industrial Development Corporation dated 23rd Nov. 1995, enclosed as annexure 1 2) Audited Balance Sheet of Morarjee Legler Private Limited for the year ended 31.03.2003. enclosed as annexure 2 Supplimental Agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 ₹ 40,51,00,000/- and adopted as a Full Value of Sale Consideration for Computation of Long Term Capital Gain u/S. 45. For computation of Capital Gain, Your assessee has considered a Cost of acquisition at ₹ 3,48,71,291/-, which is a cost of acquisition in hand of Last previous owner of the Property i.e (Morarjee Legler Limited) since your assessee has acquired said property by one of the mode specified under Section 49 from previous owner and Previous to previous owner M/s. Morarjee Brembana Limited (i.e. Gift by way of assignment) also acquired said property by one of the mode specified under Section 49. Cost of acquisition means any capital expenditure at the time of acquiring capital asset under Transfer which includes purchase price, various expenses incurred up to date of complete acquisition. The Leased land under consideration was originally acquired by Morarjee Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment 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 the present assessee to contend that there is additional information or material at his command permitting him to have a relook at the situation. In plain terms, what the Assessing Officer in the present case is attempting to do is to review his own conclusions formed during the original assessment after full examination, with the aid of not new or additional materials but on the basis of the conclusions of another Assessing Officer; which are based on the same materials available during the original assessment before him. 14. Situation thus, in the present case is that the Assessing Officer during the assessment examined the transaction in question on the strength of certain documents and accepted the capital gain offered by the assessee arising out of such transaction. Another Assessing Officer in the case of Morarjee Textiles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Revenue is identical to the contentions which was urged by the Revenue in the earlier decision of this Court in respect of the same respondent assessee Aroni Commercials Ltd. Vs. Dy. CIT [2014] 362 ITR 403 / 224 Taxman 13 (Mag) / 44 taxmann.com 304 (Bom). This Court had in the aforesaid decision dealt with the above objections raised by the Revenue as under :- We are of the view that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and / or discussion to disclose its satisfaction in respect of the query raised. If an Assessing Officer has to record the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scious 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 ₹ 11.49 Crores out of the claim for ₹ 33.67 Crores made by the Respondent under Section 80IC of the Act. The decision of this Court in Export Credit Guarantee Corporation of India (Supra), in our view, would have no application to the present facts as in that case admittedly during the regular assessment proceedings, the Assessing Officer has not applied his mind to the issue sought to be raised in the re-opening proceedings. In the aforesaid decision, it was held that the Assessing Officer has ignored relevant material in arriving at an assessment contrary to law. It was also found as a fact in the above case of Export Credit Guarantee Corporation of India (Supra) that no query was raised during the course of the regular assessment proceedings. Thus, the occasion for the Assessing Officer to apply his mind to the claim by the Responden ..... 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