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TMI Blog2024 (6) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions would attract Section 56 (2)(x)(a) were raised for the first time. The notice(s) issued u/s 148 A(b) of the Act proposed to tax the above receipts on the premise that it would attract capital gains - HELD THAT:- Object behind issuance of notice u/s 148 A(b) of the Act is not an empty formality but is a mandatory requirement intended to put the assessee on notice of the reason on the basis of which the revenue intends to issue a notice u/s 148 of the Act. It is trite law that a notice must contain the reasons to which the noticee is required to respond. It is essential to disclose the reasons to enable the noticee to give a reply/ response, for, it is rudimentary that the noticee should be made aware of all that which influence the decision maker and which he has to meet. If the reasons which are set out in the notice to which the noticee is required to respond and the reasons contained in the order are different, the issuance of the notice would fail to serve its purpose and would be reduced to an empty formality. That means, it would neither qualify as a notice nor serve the object of issuance of notice. We are conscious that the proceedings/ order u/s 148 A(b) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utes inter se the six shareholders before the Company Law Board. b) By order dated 17.05.2018, the Hon'ble Supreme Court permitted a buyout of the shares inter se the parties. The Apex Court also directed that a sum of Rs. 100 crores be paid to the appellants for the buyout of their shares. The appellants have admittedly received a sum of Rs. 18,62,03,348/-. c) The impugned proceedings revolve around the liability of monies/ consideration paid to the appellants pursuant to the buyout of shares of the appellants in SVGML by SVGML under the Act. d) Before proceeding further, it may be relevant to refer to the order of the Apex Court dated 17.05.2018, the relevant portion of which is extracted below: By our order dated 10.05.2018, having heard. the learned Senior Counsel on either side, this Court directed that a sum of Rs. 100 Crores be paid to the Respondents for the purchase of all the respondent's shares in the Company. Mr. Kapil Sibal, learned Senior wished to examine on that date in how much time this payment can be made. Today, we are told that Mr.P. Chidambaram's client's own offer in this Court was for land and not for money. We reiterate that we were told thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares) 4. M/s.Sheetala Credit and Holdings Pvt Ltd (850000 shares) 5. M/s.Twentieth Century Apco Leasing Pvt Ltd (288440 shares) 6. Smt. Rajalakshmi (578000 shares) The Hon'ble Supreme Court directed that a sum of Rs. 100 crores es to be paid to the above entities for the buy-out of all their shares in the company. Further, the Hon'ble Supreme Court vide order, dated 25.02.2019 directed M/s.SV Global Mills Ltd to deposit Rs. 100 cores in the registry of Hon'ble Supreme Court within a period of two weeks and registry to invest the said amount in an interest bearing short term fixed deposit. It is observed that shares had been transferred from assessee company to M/s SV Global Mills Ltd through the order of Hon'ble Supreme Court. Hence, capital gain arising out of transfer of shares requires to be taxed in the hands of the assessee company. However, it is observed from the Income Tax return filed by the assessee company for AY 2019-20 that an amount of Rs. 18,62,03,348/- has been claimed as exempt income citing the order of the Hon'ble Supreme Court ie., Direction under Art.142 of the Constitution by SC, whereas the order of the Hon'ble Supreme Court do not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder is extracted hereunder: 13. ..... that income chargeable to tax has escaped assessment and during the course of assessment proceedings, further opportunity would be available to the assessee to present its case both facts and under law and the Assessing Officer would consider the same before passing any order in the matter. 7. The appellants submitted that the reasons set out in the notice(s) under Section 148(b) and the reasons contained in the order(s) under Section 148(d) are different thereby denying the appellants an opportunity to respond to the reasons contained in the order(s) under Section 148(d). 8. The learned Judge had rejected the writ petitions in WP.No.12918 of 2023 dated 26.04.2023 and W.P.Nos.13090 and 13431 of 2023 dated 27.04.2023 inter alia for the following reasons: a) That the assessing officer's line of thinking is thus clear, to the effect that while the assessee has sought exemption in respect of the amount of Rs. 18.62 crores (approx), the assessing authority was of the view that the Apex Court had nowhere indicated that the receipt should be treated as exempt under the Income Tax Act. Furthermore, he has also expressed the view that the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the amendment made to the provisions relating to reassessment under the Act. The relevant portions of the judgment are extracted hereunder: 10. Parliament introduced reformative changes to Sections 147 to 151 of the Income Tax Act, 1961 governing reassessment proceedings by way of the Finance Act, 2021, which was passed on 28- 3-2021 ............. 148-A. Conducting inquiry, providing opportunity before issue of notice under Section 148 . The Assessing Officer shall, before issuing any notice under Section 148 (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under Section 148 should not be issued on the basis of information whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issuing any notice under Section 148, the assessing officer shall: (i) conduct any enquiry, if required, with the approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (ii) provide an opportunity of being heard to the assessee, with the prior approval of specified authority; (iii) consider the reply of the assessee furnished, if any, in response to the show-cause notice referred to in clause (b); and (iv) decide, on the basis of material available on record including reply of the assessee, as to whether or not it is a fit case to issue a notice under Section 148 of the IT Act; and (v) the AO is required to pass a specific order within the time stipulated. 20. Therefore, all safeguards are provided before notice under Section 148 of the IT Act is issued. At every stage, the prior approval of the specified authority is required, even for conducting the enquiry as per Section 148-A(a). Only in a case where, the assessing officer is of the opinion that before any notice is issued under Section 148-A(b) and an opportunity is to be given to the assessee, there is a requirement of conducting any enquiry, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an empty formality/ dead letter. 13. In this regard, we may refer to a few decisions of the Hon'ble Supreme Court wherein the relevance of notice has been explained and departure from the notice has been frowned upon inasmuch as it has been consistently held that notice forms the foundation of proceedings: i) CIT v. ICICI Bank Ltd., reported in 2012 SCC OnLine Bom 917 : (2012) 349 ITR 482: 16.............. Thus, the basis of the order is completely different from the reasons recorded for reopening the assessment. This is clearly not permissible as held by this court in CIT v. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom). The Division Bench of this court in Jet Airways held as under (page 247): Section 147 has this effect that the Assessing Officer has to assess or reassess the income ('such income') which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which comes to his notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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