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TMI Blog2021 (8) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... decision. This observation is incorrect because the decision to be taken before issuance of notice for reopening should be based upon the cogent reasons and the AO who issues notice should record his satisfaction and this cannot be termed as purely an administrative decision but there is a quasi-judicial application of mind required before issuance of notice under Section 148 - Likewise after receiving the objections from the assessee if the AO seeks to sustain his prima facie view and reject the objections submitted by the assessee, then also he is required to apply his mind and pass an order, the correctness of which can be questioned in a proceedings under Article 226 of the Constitution of India. Therefore, to that extent, we do not agree with the finds of the Tribunal. Assessee had submitted an explanatory note clearly explaining the organization structure and established before the Assessing Officer that during 2000-01, Barry-Wehmiller Company Inc. acquired 100% shares in Marquip International Inc. and this does not change the shareholding pattern of the assessee Company and the parent Company continued to be the Mauritius Company with 100% equity. These facts we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rship was not transferred and therefore there was no error in the order of the Assessing Officer, without considering the detailed reasons given by the Commissioner of Income Tax in the order u/s.263? 3.The respondent/assessee had filed the appeal before the Tribunal challenging the order passed by the Commissioner of Income Tax [CIT], Chennai-1 dated 30.03.2009 under Section 263 of the Income Tax Act, 1961. The assessee for the year 2001-02 was completed under section 143(3) of the Act on 17.03.2003 on total income of ₹ 74,370/-. The assessment was reopened under Section 147 of the Act on 08.08.2005 and after receiving the response from the assessee, the Assessing Officer dropped the proceedings on 29.12.2006. The CIT after examining the records relating to the assessment proceedings was of the opinion dropping the proceedings under section 147 of the Act was erroneous and prejudicial to the interest of revenue and notice under section 263 of the Act was issued proposing to revise the dropping of the reopening proceedings which in the opinion of the CIT was an order. In the show cause notice, it was stated that the Assessing Officer dropped the proceedings under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g whether there is change in ownership or beneficial interest, the test to be applied is whether there is transfer of beneficial interest beyond 49%. Further the assessee contended that the assessee's shares were held by the Mauritius Company and the Mauritius Company in turn was owned by the US Company and the US Company was taken over and consequent to this, the assessee applied to the Company Law Board for change of its name and the Assessing Officer enquired about the share holding pattern of the US Company which has been taken over by another US Company and after full verification and after having been satisfied that there is no change in the beneficial shareholding of the Company dropped the proceedings. 6.The CIT did not agree with the said submission by taking note of the Company register, change in beneficial interest held that the same has been recorded and consequently, the Assessing Officer without considering the material fact of the beneficial interest and without verifying the Company's registers has passed the order dropping the proceedings and the same is erroneous and prejudicial to the interest of revenue and accordingly set aside the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rala (P) Limited , the Assessing Officer had closed the assessment as 'NA' in view of the fact that the assessee did not have any taxable income for the assessment year under consideration. This fact was taken note of and it was held that the endorsement 'NA' made by the Assessing Officer on the ground that the assessee did not have a taxable income from the assessment year under consideration onwards was held to be an order under Section 144 of the Act and merely because it is not communicated, it would not make such an assessment recorded in the order sheet illegal and therefore, there would not be no bar to initiate proceedings under section 147 of the Act. 12.The facts of the present case are slightly different because the case before us is not an exercise of power under Section 263 of the Act to consider the correctness of the decision taken by the Assessing Officer on an original assessment whether the assessment was erroneous and prejudicial to the interest of revenue. Therefore, the decision in Indo Marine Agencies of Kerala (P) Limited would be distinguishable on facts. Equally so are the other decisions as well. 13.However, the underlying legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and in faovur of the Revenue. As the Tribunal has not examined the merits of the case, we direct the Tribunal to do so now. 17.Therefore, we are of the view that the CIT had no jurisdiction to invoke his power under section 263 of the Act to examine the correctness of the decision taken by the Assessing Officer dropping the reopening proceedings after issuance of notice under section 148 of the Act and after considering the objections filed by the assessee. In fact to the said extent, the Tribunal was right in its opinion. However, we do not agree with the finding of the Tribunal in paragraph No.6 of the impugned order, wherein the Tribunal has made an observation that issuance of notice under section 148 of the Act was an administrative decision and dropping of the proceedings after verifying the details was also an administrative decision. This observation is incorrect because the decision to be taken before issuance of notice for reopening should be based upon the cogent reasons and the Assessing Officer who issues notice should record his satisfaction and this cannot be termed as purely an administrative decision but there is a quasi-judicial application of mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 1997, Marquip Aisa-Pacific Limited was owned by Marquip International Inc., USA. 100% of the shares of Marquip Asia-Pacific Limited were owned by Marquip International Inc., USA. There is no change in the shareholding pattern or the ownership or the beneficial interest in the shares. This has been supported by the certified copy of the duly notarized letter received from Marquip Asia-Pacific Limited, which is attached herewith. This clearly proves that there is no change in ownership or beneficial interest in the Indian Company even after the name change. 19.Further, Marquip Asia-Pacific Limited, Mauritius by their letter dated 16.03.2006 informed the petitioner by confirming that shareholding of Barry-Wehmiller International Resources Private Limited is as follows: (1) 31,156 equity shares of ₹ 100 each held by Marquip Asia-Pacific Limited, Mauritius (MAPL), (2) 2 equity shares of l₹ 100 each heald by Barry- Wehmiller Companies Inc., USA as nominee shareholder on behalf of MAPL, Mauritius. 20.Further, it was stated that since Barry-Wehmiller Company incorporated in USA does not have any beneficial interest in the shares held on behalf of the MAP ..... X X X X Extracts X X X X X X X X Extracts X X X X
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