380 October 20 To October 26, 2018 u Taxmann’s Corporate Professionals Today u Vol. 43 u^22
holders could become virtual owners
of such huge corpus without paying
any tax on their investment during
relevant period which can never be
the intention of the legislature.(ix) Though the shares held in YI have
the status of share in not for profit
company, yet the memorandum of
association of the company showed
that any member who desires to quit
the company shall sell the shares for
which the price of the shares shall be
certified by the auditor by ascertaining
the fair selling value thereof.
Decision of the Court
- The Court took note of both the grounds
of the petitioners and the Revenue and its
significant observations were as under:
(i) The time gap between receipt of infor-
mation from the investigation wing
of the Department vis-a-vis the issue
of notice on the last date whether
would constitute a mala fide motive
or non-application of mind, could not
be answered with the support of any
case law. It, accordingly, held that on
the basis of material that is not acted
upon promptly or that the material is
stale, does not have any precedents for
deciding favourably for the petitioners.
(ii) As long as there is some material ger-
mane to the issue, it is not incumbent
on the part of the Assessing Officer
to conduct further investigation even
before issuing a notice under section
148.
(iii) For the purpose of issuing notice under
section 148, the Assessing Officer must
have the reason to believe escapement
of income chargeable to income-tax and
such escapement is due to omission or
failure on the part of the assessee to
disclose fully or truly all material facts
necessary for his assessment of that
year. Both these conditions are required
for issue of notice under section 148,
read with section 147(a). However,
section 147 seeks only the presence
of the first condition; in other words,
if the Assessing Officer has reason to
believe escapement of income, whether
or not there is failure on the part of
the assessee, provisions of section 147
could be triggered.
(iv) As regards the recording of satisfaction by
PCIT it relied on Pr. CIT v. Meenakshi
Overseas [IT Appeal 651 of 2015, dated
11-1-2016] which reads as under:
“For the purpose of section 151(1) of
the Act, what the Court should be
satisfied about is that the Additional
CIT has recorded his satisfaction ‘on
the reasons recorded by the Assessing
Officer that it is a fit case for the issue
of such notice’. In the present case, the
Court is satisfied that by recording in
his own writing the words; “Yes, I am
satisfied”, the mandate of section 151(1)
of the Act, as far as the approval of
the Additional CIT was concerned,
stood fulfilled”.
(v) As regards the objection on improper
mode of communication of notice issued
under section 148 the court held that
they were served through email besides
speed post of the notice. It held that
the communication of notice through
email was before the expiry of time
limit. It held that the object of imposing
time limits is to ensure that both the
assessees and tax administrator have the
same standard on which the extended
periods available under the law are to
be judged. Where the Assessing Officer
had issued the notice and assessee
received the notice within the period
of limitation, the form of notice or the
fact that it was not through a channel
not deemed ‘regular’ is not relevant.CuriOus Case OF ‘naTiOnal Herald’