Madras High Court
Income Tax Officer vs M/S.Shivsu Canadian Clear Waters ... on 6 October, 2021
W.A.No.2460 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 06.10.2021
CORAM :
THE HON'BLE MR. JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR. JUSTICE SATHI KUMAR SUKUMARA KURUP
W.A.No.2460 of 2021
and
C.M.P.No.15793 of 2021
Income Tax Officer,
Corporate Ward 6(2),
Room No.504, Wanaparthy Block,
5th Floor, 121, MG Road,
Nungambakkam,
Chennai – 600 034. ... Appellant
Vs.
M/s.Shivsu Canadian Clear Waters Limited,
Represented by Mr.C.Satish Kumar,
Executive Director,
No.6B2, II Floor, Parivakkam Road,
Leelavathy Nagar, Senneerkuppam,
Poonamallee,
Chennai – 600 056. ... Respondent
Prayer : Writ Appeal filed under Clause 15 of the Letters Patent to set aside
the order dated 23.01.2020 made in W.P.No.23768 of 2018.
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W.A.No.2460 of 2021
For Appellant : Mr.A.P.Srinivas
Senior Standing Counsel
For Respondent : Mr.Suhrith Parthasarathy
JUDGMENT
(Judgment was delivered by T.S. SIVAGNANAM, J.)
This Writ Appeal filed by Revenue is directed against the order, dated
23.01.2020, in W.P.No.23768 of 2018.
2.The writ petition was filed by the respondent, challenging the
reopening of the assessment on the ground that it is a case of change of
opinion.
3.Mr.A.P.Srinvas, learned Senior Standing Counsel for the appellant
strenuously contended that the reopening of the assessment was not a case of
change of opinion, but it is a case where, from the records, it was seen that,
during the Financial Year relevant to AY 2014-15, the assessee had issued
2,17,870 numbers of 3% cumulative convertible preference shares of face
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W.A.No.2460 of 2021
value of Rs.10/- each at premium of Rs.488/- per share, however, the market
value of each share calculated as per Rule 11UA(2)(a) of the Income Tax
Rules is Rs.25.20 only. Further, the consideration received from the issue of
shares that exceeds the face value of such shares requires to be assessed to
tax under Section 56(2)(viib) of the Income Tax Act, 1961 (“the Act” for
brevity). This having been omitted to be considered in the Assessment Order
under Section 143(3) of the Act, dated 30.12.2016, the reopening of the
assessment has been made. Further, it is pointed out that the Assessing
Officer, after considering objections raised by the assessee to the reopening,
has clearly held that the assessment was reopened within four years from the
end of the Assessment Year and therefore, the first proviso to Section 147 of
the Act is not applicable and therefore, the income chargeable to tax, which
has escaped from assessment, can be assessed by reopening the assessment.
Further, it is submitted that, so far as 2,17,870 numbers of 3% cumulative
convertible preference shares is concerned, the same was not considered by
the Assessing Officer, while completing the assessment under Section 143(3)
of the Act and therefore, the reassessment was valid.
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W.A.No.2460 of 2021
4.We have heard Mr.Suhrith Parthasarathy, learned counsel for the
respondent on the above submissions.
5.On a perusal of the order passed by the learned Single Bench, we
fully agree and subscribe to the views recorded therein. The learned Single
Bench, after noting the facts, found that no tangible material or fresh material
has come to the notice of the Assessing Officer, as could be seen from the
reasons for reopening. After referring to Section 147 of the Act, the learned
Single Bench rightly held that, if such type of reopening is permitted, there
would be no end to the number of times when successive officers might
apply and re-apply their mind to the same set of materials and come to
different conclusions every time.
6.On facts, the Court found that the financials annexed to the return of
income disclose two lot of shares, one numbering 1,00,000 and the second
numbering 2,17,870 and the valuation thereof has also been clearly stated.
After noting the said fact, the learned Single Bench rightly observed that this
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W.A.No.2460 of 2021
has not escaped the attention of the Assessing Officer at the original instance
and he has, in fact, made a modification to the valuation of the first lot of the
shares and for the reasons best known to the Assessing Officer, the second
lot has been left untouched. Thus, the Court rightly held that there is no
material that has come to the notice of the Assessing Officer in the year
2018, warranting re-assessment.
7.The Court has also noted the decision of the Hon'ble Supreme Court
in the case of Commissioner of Income Tax v. Kelvinator India Limited
[(2010) 320 ITR 561 (SC)] and observed that the existence of new tangible
material is a jurisdictional fact and this fact must necessarily exist in order to
validate the assumption of jurisdiction in law. The Court has also noticed the
judgment of the Hon'ble Supreme Court in the case of Parashuram Pottery
Works Co. Ltd. v. Income Tax Officer, Circle I, Ward A, Rajkot [1977 AIR
SC 429].
8.Thus, we are of the clear view that the learned Single Bench had
rightly allowed the writ petition and quashed the impugned proceedings and
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W.A.No.2460 of 2021
the Revenue has not made any ground to interfere with the said order.
Therefore, this Writ Appeal stands dismissed. No costs. Consequently,
connected Miscellaneous Petition is closed.
(T.S.S., J.) (S.S.K., J.)
06.10.2021
mkn
Internet : Yes
Index : Yes / No
Speaking order / Nonspeaking order
To
The Income Tax Officer,
Corporate Ward 6(2),
Room No.504, Wanaparthy Block,
5th Floor, 121, MG Road,
Nungambakkam,
Chennai – 600 034.
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W.A.No.2460 of 2021
T.S. SIVAGNANAM, J.
and
SATHI KUMAR SUKUMARA KURUP, J.
mkn
W.A.No.2460 of 2021
06.10.2021
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