Whether an assessment has escaped assessment or not must be determined by the Assessing Officer himself. The Assessing Officer cannot blindly follow the opinion of an audit authority for the purpose of arriving at a belief that income has escaped assessment.
As regards, more particularly, government securities, and bonds and debentures, the text specifies that premiums or prizes attaching thereto constitute interest. Generally speaking, what constitutes interest yielded by a loan security, and may properly be taxed as such in the State of source, is all that the institution issuing the loan pays over and above the amount paid by the subscriber, that is to say, the interest accruing plus any premium paid at redemption or at issue.
In the present case, it is not in dispute that the original assessment order dated 28/2/1997 was set aside by the ITAT with a direction to pass fresh assessment order. Accordingly, fresh assessment order was passed on 24/12/2006 and the demand notice was served on 24/12/2006. As per Section 220(1) of the Act, the assessee was liable to pay the amount of demand within thirty days from the service of demand notice dated 24/12/2006.
Explanation to section 73 does not operate in respect of a company whose gross total income consists mainly of income which is chargeable under the heads of ‘interest on securities’, ‘income from house property’, ‘capital gains’ and ‘income from other sources’. In the instant case, the income from other sources was the only chargeable income, as the assessee had suffered a business loss otherwise. Therefore, Explanation to section 73 would not apply in the instant case. Further the Judgment of the Bombay High Court in the case of CIT v. Darshan Securities (P.) Ltd. [2012] 206 Taxman 68/18 taxmann.com 142 supports the assessee’s case.
In the first round of the proceedings under Section 179 of the said Act, the Commissioner of Income Tax by order dated 5th November, 2007 set aside the order dated 25th January, 2007 of the Income Tax Officer. However whist setting aside the order, the Commissioner of Income Tax directed the Income Tax officer that before any order under Section 179 of the said Act is passed against the petitioner, the Assessing Officer must give a specific finding to the effect that efforts made to recover the tax dues from the said company had failed and that the petitioner should be heard before any order is passed under Section 179 of the Income Tax Act.
Whether on facts and circumstances of the case and in law, the ITAT was justified in deleting the disallowance made of royalty paid by the respondent to CAMI USA for distribution of software products in India without appreciating that the royalty had been paid on the amount of bad debts even where the software had not worked at all?”
The Transferor Companies are in existence since 1975. It was felt that it would be in the interest of the Transferee Company to merge the five Transferor Companies with the Transferee Company, and to enable the Promoter thereof to hold shares directly in the Transferee Company rather than indirectly. The object of the Scheme is not to avoid any tax. Even today the shares are owned/controlled by the same Promoter albeit through the Transferor Companies. Under the Scheme the only difference is that the Promoter will now hold shares directly in the Transferee Company. It is correctly submitted by the Transferee Company that there is nothing illegal or unlawful or dubious or colourful in the Scheme and the same is a perfectly legitimate scheme and permissible by law.
In terms of the proviso to Section 147of the said Act the jurisdiction to reopen assessments already completed under Section 143(3) of the said Act, after the period of four years from the end of the relevant assessment year can only be exercised on the cumulative satisfaction of two conditions precedent as under: 1. There must be a reasonable belief on the part of the officer that income has escaped assessment; and 2. That there must be a failure on the part of the petitioner to fully and truly disclose all material facts necessary for assessment.
It appears that all facts were available on record and according to the respondents was only erroneously granted. This is a clear case of review of an order. The application of law or interpretation of a statue leading to a particular conclusion cannot lead to a conclusion that tax has escaped assessment for this would then certainly amount to review of an order which is not permitted unless so specified in a statue.
As per section 37C(l)(a), it was mandatory on the part of the Revenue to serve a copy of the order of Commissioner of Central Excise (Appeals) by registered post with acknowledgment due to the assessee. Admittedly in the present case, a copy of the order has not been sent by registered post. In these circumstances, it could not be said that the requirement of Section 37C has been complied with.
