| The Tax Publishers2020 TaxPub(DT) 1703 (SC) : (2020) 424 ITR 0607 : (2020) 314 CTR 0017 : (2020) 271 TAXMAN 0001 INCOME TAX ACT, 1961
Section 147 read with Section 69A
Where AO issued notice for reopening assessment on allegation that funds raised by assessee's foreign subsidiary company by issue of Step UP Coupon Bonds represented its own unaccounted money, considering fact that AO failed to show non-disclosure of material facts by assessee, notice issued to assessee after a period of 4 years was set aside.
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Reassessment - Notice issued after four years period - Allegation that funds raised by assessee's foreign subsidiary company by issue of Step UP Coupon Bonds represented its own unaccounted money -
Assessee-company made investments in UK and Netherlands. Indirect subsidiary of assessee incorporated in UK, raised funds by issuing Step Up Coupon Convertible Bonds for which assessee furnished corporate guarantee. These bonds were redeemable at a premium after expiry of period of 5 years. However, bonds stood redeemed in advance at a discounted price. AO issued reassessment notice based on order of DRP for subsequent year, wherein DRP held that though amount was introduced through its subsidiary companies in Netherlands, it ultimately reached to coffers of assessee through circuitous round tripping. Held: At stage of issuance of notice, AO is required to only form a prima facie view that income had escaped assessment. Since material disclosed in assessment proceedings for subsequent years was sufficient to form such a view, there were reasons to believe that income had escaped assessment in instant case. However, during original assessment assessee made a disclosure about having agreed to stand guarantee for transaction. It also disclosed factum of issuance of convertible bonds and their redemption, thus there being no failure on part of assessee to disclose all material facts, notice issued to assessee after a period of 4 years was to be quashed and set aside.
Followed:Calcutta Discount Co. Ltd. v. ITO AIR 1961 SC 372 : 1961 TaxPub(DT) 0130 (SC)
REFERRED : Claggett Brachi Co. Ltd. v. CIT 1989 Supp. (2) SCC 182 : 1989 TaxPub(DT) 1158 (SC) Phool Chand Bajrang Lal v. ITO (1993) 4 SCC 77 : 1993 TaxPub(DT) 1453 (SC) ESS ESS Kay Engg. Co. (P.) Ltd. v. CIT (2001) 10 SCC 189 : 2001 TaxPub(DT) 0052 (SC) Honda Siel Power Products Ltd. v. Dy. CIT (2012) 340 ITR 53 (Delhi) : 2011 TaxPub(DT) 0904 (Del-HC), Mohinder Singh Gill v. The Chief Commissioner, New Delhi (1978) 2 SCR 272
FAVOUR : In assessee's favour
A.Y. : 2008-09
INCOME TAX ACT, 1961
Section 147 read with Section 149
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