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TMI Blog2023 (1) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... ble from the explanation offered by assessee and consideration thereof by the authority in the present case on hand. Hence, an attempt has now been made to wriggle out from settled proposition of law by projecting that mistake might have been committed by the authority in not consciously considering the explanation. The said stand is not possible to be accepted by us. Hence, we are of the clear opinion that a case is made out by the petitioner. Special Civil Application is allowed. - R/SPECIAL CIVIL APPLICATION NO. 19332 of 2021 - - - Dated:- 2-1-2023 - HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR and HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI MR B S SOPARKAR(6851) FOR THE PETITIONER(S) NO. 1 FOR THE RESPONDENT(S) NO. 1 MR.VARUN K.PATEL(3802) FOR THE RESPONDENT(S) NO. 1 JUDGMENT ( PER : HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI ) 1. By way of this petition under Article 226 of the Constitution of India, petitioner has challenged the legality and validity of the impugned notice dated 20.3.2021 at Annexure-A and has also sought for quashing and setting aside the impugned order dated 16.11.201 at Annexure-H to the petition. 2. The background ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eously, authority on 16.11.2021 issued notice under Section 142(1) calling upon petitioner to supply details in relation to re-assessment by 1.12.2021. This according to the petitioner is in clear violation of the guidelines contained in a decision delivered by the High Courts, wherein clear period, which is prescribed, is to be given to petitioner so as to enable the petitioner to challenge the notice under Section 148 after the order disposing of the objections is issued and as such, in view of the afore-mentioned circumstances, petitioner has challenged the impugned notice dated 20.3.2021 issued under Section 148 of the Act as also an order disposing of the objections dated 16.11.2021 by invoking extraordinary jurisdiction of this Court. 2.4. The petition was initially entertained by issuance of notice based upon submission vide order dated 20.12.2021 and later on, same has come up for consideration before this Court and after an order dated 19.7.2021. 3. Learned advocate Mr. Bandish Soparkar appearing for petitioner has vehemently contended that action on the part of respondent authority is not only unjust and arbitrary, but also grossly in violation of the fundamental ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued 6,75,00,029 shares to non-resident shareholder and received premium of Rs.41,45,17,700/- in A.Y. 2016-17 and a reading the provisions contained under Section 56(2)(vii) (b), it would indicate that same is applicable only to a resident shareholder and therefore, ex-facie provisions cannot be applied since petitioner has received consideration from non-residents and therefore, reasons which are recorded are also factually incorrect and based upon such material, impugned notice has been issued which deserves to be quashed. 3.2 Additionally, learned advocate Mr. Bandish Soparkar has further submitted that issuance of shares with premium is genuine, true transaction and there is no income that has escaped reassessment in any form. On the contrary, the Assessing Officer has not made any addition as this circumstance has already been explained and as such, issuance of notice under Section 148 of the Act is required to be quashed since reasons which are recorded for reopening are also based on factual error, same also does not stand the test of law. Hence, in this background of facts, the relief prayed for in the petition deserves to be granted in the interest of justice. 3.3 To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t during the year 2016-17, the assessee had issued 6,00,75,029 equity shares and received premium of Rs.41,45,17,700/- and by computing fair market value of these shares by the Assessing Officer at Rs.89,09,12,680/- has arrived at an opinion that Rs.12,43,55,310/- is excess money received, which is liable to be taxed as per Section 56(2) (vii) (b) of the Income Tax Act. It appears from the records that at the time of scrutiny, the Assessing Officer has accepted the replies/explanation of assessee and while passing the assessment order, no addition appears to have been made. In this context, it appears from Annexure-D-1 that authority has called upon petitioner to furnish certain particulars while undertaking assessment proceedings for the assessment year 2016-17 and query nos. 14, 15 and 16 is specifically put to the notice of petitioner, whereby petitioner has been called upon to furnish details of share capital increased during the year along with confirmation and ITR of the persons from whom the same was received. The details of the premium received on shares during the year along with name, PAN, address and confirmation of the persons from whom the premiums have been received. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not to the resident shareholders. The shareholder is non-resident. Hence, no ITR is filed in India and further it has been indicated that there is no transfer of share holding power and as such Section 79 of the Income Tax Act is not applicable and formula/mechanism specified in Rule 11U and 11UA of the Income Tax Rules, 1962 is not relevant to the present controversy. It has further been indicated that petitioner has submitted valuation certificates under FEMA Regulation in previous submission and as such, reiterating such explanation. A request is made to consider the said explanation. It has further been mentioned in the reply that if any further information was required, the petitioner would be ready to supply the same, even in person at the respondent office and it is only after this consideration of material, assessment order has been passed on 15.12.2019 and whatever disallowance has taken place seem to have been accepted by the petitioner. 5.3. Additionally, petitioner is served with reasons for reopening of the assessment on the ground of assessment of M/s. Ball Aerocan India Pvt. Ltd., for the Assessment Year 2016-17 under Section 147 of the Income Tax Act has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion appears to have been placed on record. Hence, in the absence of any fresh tangible material distinct from what was made part of the assessment proceedings, reopening of assessment already concluded is impermissible. 5.6. The background of present facts prevailing on record would lead us to a proposition of law settled by co-ordinate Bench of this Court in some of the decisions which are brought to our notice and since we have considered the same, we deem it proper to reproduce here-under : 5.7. The first decision which has been brought to the notice is a decision dated 28.09.2016 passed by the co-ordinate Bench of this Court in Special Civil Application 15068 of 2010 in which after considering several decisions, it came to be held that reopening of assessment was impermissible. Paragraph 8 of the said decision is indicating a proposition that when the issue has been thoroughly gone through during the assessment proceedings, simply because the assessing officer has not assigned any independent reasons on the issue would not amount that no opinion is formulated and in that context, following reference is taken note of, which is reproduced hereunder: Reference may be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim or partially allows and partially rejects the claim, are all options available with the Assessing Officer, over which the assessee beyond trying to persuade the Assessing Officer, would have no control whatsoever. Therefore, while framing the assessment, allowing the claim fully or partially, in what manner the assessment order should be framed, is totally beyond the control of the assessee. If the Assessing Officer, therefore, after scrutinizing the claim minutely during the assessment proceedings, does not reject such a claim, but chooses not to give any reasons for such a course of action that he adopts, it can hardly be stated that he did not form an opinion on such a claim. It is not unknown that assessments of larger corporations in the modern day, involve large number of complex claims, voluminous material, numerous exemptions and deductions. If the Assessing Officer is burdened with the responsibility of giving reasons for several claims so made and accepted by him, it would even otherwise cast an unreasonable expectation which within the short frame of time available under law would be too much to expect him to carry. Irrespective of this, in a given case, if the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed there is tangible material to come to the conclusion that there was escapement of income from assessment. Reason must have a link with the formation of the belief. 5.8. In the above-said decision, stand of the Revenue was that the action under challenge was within a period of four years and therefore, it is always open for the authority to re-open the assessment. However, said issue was also dealt with and held that in the absence of any tangible material distinct from what was made available during the assessment proceedings, reopening of assessment is impermissible and for arriving at this conclusion, co-ordinate Bench has also referred to the decision rendered in the case of Calcutta Discount Co. Ltd. v. Income Tax Officer reported in [1961] 41 ITR 191 which was also considered and it was found that notice for reopening and order passed upholding notice in said proceedings have been quashed. 5.9. Yet another decision on similar line has also been brought to our notice which is delivered on 19.07.2016 in Special Civil Application 2854 of 2013. In furtherance of this, a decision has also been brought to our notice i.e. the decision of the coordinate Bench of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were refused without adequate reasons, we see that the action on the part of the respondent authority is impermissible in view of aforesaid set of circumstance. The observations made by the Apex Court in case of Calcutta Discount Co. Ltd. v. ITO reported in [ 41 ITR 191 at page 195 head-note (v) are worth to be reproduced hereafter: That though the writ of prohibition or certiorari would not issue against an executive authority, the High Courts had power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority, acting without jurisdiction subjected, or was likely to subject, a person to lengthy proceedings and unnecessary harassment, the High Courts would issue appropriate orders or directions to prevent such consequences. The existence of such alternative remedies as appeals and reference to the High Court was not, however, always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action. When the constitution conferred on the High Courts the power to give relief it becomes the duty of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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