| The Tax Publishers2020 TaxPub(DT) 0848 (Mad-HC) INCOME TAX ACT, 1961
Section 147
Where revenue did not record any failure on part of assessee to disclose fully and truly all material facts necessary for purpose of assessment and entire proceedings were based on change of view seeking to treat amount received by assessee as business income instead of capital gains as shown by assessee, therefore, reassessment order was not sustainable.
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Reassessment - Full & true disclosure - Notice issued after expiry of four years -
Assessee assailed reopening of assessment under section 147. Revenue had alleged that non-compete covenant on its own could not amount to transfer of any right and therefore amount received by assessee was to be taxed under section 28(va) of the Income Tax Act, 1961 instead of capital gains.Held: After notice dated 31-3-2016 was issued after invoking the jurisdiction under section 148 read with proviso to section 147, on 08-12-2016, assessee was asked to explain the profit arising from the agreement and why it should be treated as business profit and not as long-term capital gain as shown by assessee. From over all reading of the facts, it was clear that the respondent sought to resurrect a stale issue which had already been examined during the course of regular assessment pursuant to which assessment order was passed on 21-12-2011 but was also a subject matter of discussion pursuant to letter dated 5-2-2014 of the respondent. The last date of the assessment year 2009-10 was 31-3-2010. Therefore, the respondent was entitled to issue such a notice under section 148 on or before 31-3-2014, i.e., within 4 years for the purpose of section 147. Instead, the respondent failed to issue a notice in time and obtained permission from the Pr. Commissioner of Income Tax -- 5, Chennai on 30-3-2016 at the eleventh hour by giving an altogether different reason for issuing notice under section 148.
Distinguished:Kisan Agro Mart (P.) Ltd. v. ITO (2019) 109 taxmann.com 496 (SC) : 2019 TaxPub(DT) 8212 (SC)
REFERRED : P. Singaravelan & Ors. etc. etc. v. The District Collector, Tiruppur and DT & Ors. etc. etc. 2019 SCC OnLine SC 1641, ITO v. TechSpan India (P) Ltd. & Anr. 2018 TaxPub(DT) 1991 (SC), Jeans Knit (P) Ltd. v. Dy. CIT & Ors. (2017) 77 Taxmann.com 176 (SC) : 2016 TaxPub(DT) 5149 (SC), CIT v. Kelvinator of India Ltd. (2010) 2 SCC 723 : 2010 TaxPub(DT) 1335 (SC), GKN Driveshafts (India) Ltd. v. ITO & Ors. (2003) 1 SCC 72 : 2003 TaxPub(DT) 734 (SC), S. Narayanappa & Ors. v. CIT (1967) 63 ITR 219 (SC) : 1967 TaxPub(DT) 198 (SC), Calcutta Discount Company Ltd. v. ITO & Anr. AIR 1961 SC 372 : 1961 TaxPub(DT) 130 (SC), Madras Suspensions Ltd. v. Dy. CIT (2017) 88 Taxmann.com 256 (Madras) : 2018 TaxPub(DT) 175 (Mad-HC), M/s. Martech Peripherals (P) Ltd. v. Dy. CIT (2017) 81 taxmann.com 73 (Madras) : 2017 TaxPub(DT) 1326 (Mad-HC), M/s. Mobis India Ltd. v. Dy. CIT (2018) 90 Taxmann.com 389 (Madras) : 2018 TaxPub(DT) 0744 (Mad-HC), Fenner (India) Ltd. v. Dy. CIT (2000) 241 ITR 672 (Mad.) : 2000 TaxPub(DT) 0453 (Mad-HC)
FAVOUR : In assessee's favour.
A.Y. :
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