- vide Decision of High Court of Madras in GE T&D India Ltd. v. Deputy Commissioner of Income Tax, Chennai.
Facts of the case:
- The petitioner is a listed Company incorporated on 13.03.1957 and is engaged in the business of manufacturing of heavy electrical equipment and0020executes projects involving transmission and distribution of power and other turnkey projects.
- The learned counsel appearing for the petitioner, with reference to the
- issues, contended that the initiation of proceedings under Section 147 of the Income Tax Act itself is untenable, in view of the fact that there is no element of reason to believe as mandated under Section 147 and the notice under Section 148 of the Act was issued based on change of opinion.
- In order to substantiate the said contention, the learned counsel solicited the attention of this Court with reference to return of income filed by the petitioner for the assessment year 2013-14 and the consequential assessment order passed by the Assessing Officer after considering all the facts and circumstances.
- The learned counsel added that the details were provided at the time of original assessment itself and the facts and figures were not disputed by the Assessment Officer while scrutinizing.
- Based on the details provided by the petitioner, the Assessing Officer issued a question seeking certain clarification. The petitioner, in detail, furnished all the information as well as the clarification sought for by the Assessing Officer in letter dated 26.10.2016.
- Further, the petitioner has provided the details regarding the sale of fixed asset. Considering all such facts and circumstances as well as the clarifications and additional details provided by the petitioner, the Assessing Officer passed the final order of assessment under Section 143(3) read with 92CA of the Income Tax Act on 19.12.2016 stating that petitioner had furnished all the details and information as well as the documents which are all relevant for the purpose of Assessment.
- Reopening proceedings were initiated under Section 147 of the Act based on audit objections. The learned counsel appearing for the petitioner contended that the audit
- objection, which is extracted in the order providing reason for reopening of the assessment, itself is untenable as all such factual details raised in the reopening order had been dealt with by the Assessing Officer in the original assessment order.
- The learned counsel stated that when the material facts as well as the documents regarding the sale properties were furnished by the assessee and the Assessing Officer also taken into consideration, scrutinized the same and passed final assessment order, then any other initiation based on some materials would be nothing but change of opinion and not the reason to believe.
- The learned counsel appearing for the respondent disputed the contention raised on behalf of the petitioner in entirety by stating that it is not change of opinion as pleaded by the petitioner.
- The learned Senior Standing Counsel made a submission that the fact regarding the appeal filed by the purchaser of the property from the petitioner under Section 47A of the Indian Stamp Act regarding the payment of stamp duty has not been informed to the Department. This apart, the sale deed which is necessary was also not produced to remove the duty in this aspect.
- The learned counsel for the respondent referred to Notes to accounts of the assesee relating to Capital Gains Tax. The Note stated that "the Registering Authority has not accepted the value as per the sale deed and is in the process of fixing the appropriate value for these properties for the purpose of stamp duty. Hence, it is evident that the property is undervalued".
- Further, the order speaks that as per Section 50C of the Income Tax Act, the value of the land would be Rs.77,73,62,250/-. However, the assessee had shown sale consideration of the land as Rs.20,66,25,775/- only. If this is considered, the Long Term Captial Gain would be Rs.75,69,88,005/- and difference in Long Term Capital Gain to be offered to tax is Rs.57,07,36,475/- while indexed cost of acquisition being 2,03,74,245/-.
- In view of difference in LTCG amounting to Rs.57,07,36,475/-, the Assessing Officer reopened the assessment as there is a reason to believe that the income chargeable to tax has escaped assessment.
- The court opined that the sale consideration shown by the assesee in the return of income for the assessment year 2013-14 is not disputed. The document registered, which is now in appeal under Section 147A of the Indian Stamps Act is also not in dispute. The market value as stated in the document is disputed and the actual market value and the stamp duty paid is also in dispute.
- The manner in which the sale deed was valued by the assessee and the stamp duty paid at the time of registration as well as the appeal filed under Section 47A of the Indian Stamp Act and the actual market value prevailing during the relevant point of time with reference to the subject property, provides new information and an additional material, which were not considered by the Assessing Officer at the time of original assessment. Thus, the said factors would be new material for the purpose of reopening of assessment.
Judgement: The High Court of Madras held the case as follows:
- The Court has considered the ground for reopening of assessment under Section 147 of the Act. Therefore, the said ground is not made available to the petitioner as the Court is of the opinion that the initiation of 147 proceedings is in consonance with the provisions of the Act.
- Therefore, there is no perversity or infirmity. Thus, the petitioner is at liberty to prefer an appeal under Section 246A of the Act in order to redress any further grievance with reference to the final assessment order within a period of three weeks from the date of receipt of a copy of this Order.
- In the event of filing any such appeal, the Appellate Authority has to consider the same on merits and in accordance with law and pass appropriate orders and by affording opportunity to the writ petitioner.