Asian Satellite Broadcast Pvt. Ltd. … v. Income Tax Officer, Circle 6(1)(3) And Others …

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONWRIT PETITION NO.2749 OF 2019 Asian Satellite Broadcast Pvt. Ltd.…PetitionerVs.Income Tax Officer, Circle 6(1)(3) and others…Respondents Mr. Percy Pardiwala, Senior Advocate a/w. Mr. Madhur Agarwal, Mr. JayBhansali and Ms. Snehal Bamne for Petitioner.Mr. N. C. Mohanty for Respondents. CORAM : UJJAL BHUYAN &MILIND N. JADHAV, JJ.DATE: SEPTEMBER 28, 2020 JUDGMENT and ORDER: (Per Ujjal Bhuyan, J.) Heard Mr. Percy Pardiwala, learned senior counsel along with Mr.Madhur Agarwal, learned counsel for the petitioner and Mr. N. C.Mohanty, learned counsel for the respondents. 2.By filing this petition under Article 226 of the Constitution ofIndia, petitioner seeks quashing of notice dated 22.03.2019 issued byrespondent No.1 under section 148 of the Income Tax Act, 1961 seekingto re-open the assessment of the petitioner for the assessment year 2012-13 as well as order dated 09.09.2019 passed by respondent No.1rejecting the objections raised by the petitioner to the notice issued undersection 148 of the Income Tax Act, 1961 (briefly ‘the Act’ hereinafter). 3.Petitioner is a private limited company having its registered officeat Lower Parel, Mumbai. It is engaged in the business of trading infabric yarn, investment and finance. It is an assesee under the Actassessed to tax under the jurisdiction of respondent No.1. 3.1.For the assessment year 2012-13, petitioner filed e-return ofincome on 30.09.2012 declaring loss of Rs.3,69,126.00. Subsequently, petitioner revised its original income on 30.03.2014 whereby the lossfigure was declared at Rs.1,91,940.00. 3.2.Assessment case of the petitioner for the said assessment year wasselected for scrutiny. Notice under section 143(2) of the Act was issuedon 08.08.2013 followed by notices issued under section 142(1) of theAct on 27.06.2014 and 22.09.2014. 3.3.It may be mentioned that in the previous year relevant to theassessment year 2012-2013, petitioner had transferred 4,20,090 equityshares of ZEE Entertainment Enterprises Limited (for short ‘ZEE’hereinafter) to an associated entity called M/s. Essel Business ProcessesLimited (for short ‘Essel’ hereinafter) as gift i.e., without consideration.Be it stated that cost of the said shares in the hands of the petitioner wasRs.1,41,18,604.00. 3.4.It may also be mentioned that as per Note 14 to the profit and lossstatement submitted before the assessing officer, petitioner hadmentioned loss on transfer of investments for an amount ofRs.1,41,18,604.00. In Note 19, it was mentioned that petitioner hadtransferred 4,20,090 equity shares of Re.1.00 each of ZEE to Essel, arelated party, to consolidate onshore media assets including shares oflisted companies. This information was again furnished to respondentNo.1 pursuant to his second notice issued under section 142(1) of theAct in the form of details of investments. 3.5.In its letter dated 31.12.2014, petitioner furnished details oftransfer of shares of ZEE to Essel along with board resolution. Petitionerexplained that as a part of internal restructuring for consolidation ofmedia assets of the group of companies, holdings in ZEE weretransferred at nil consideration by the assessee to Essel for whichassessee incurred loss of Rs.1,41,18,604.00 on transfer of such shares.This was further explained by the petitioner to respondent No.1 in its letter dated 12.02.2015. Responding to a query of the assessing officer asto why market value should not be considered for transfer of shares ofZEE at nil consideration, it was submitted that petitioner had transferred4,20,090 shares of ZEE, a listed company, at nil consideration to Essel toconsolidate the group's onshore media assets including shares of listedcompanies. Petitioner submitted that transfer of shares withoutconsideration should be considered as a gift. letter dated 12.02.2015. Responding to a query of the assessing officer asto why market value should not be considered for transfer of shares ofZEE at nil consideration, it was submitted that petitioner had transferred4,20,090 shares of ZEE, a listed company, at nil consideration to Essel toconsolidate the group's onshore media assets including shares of listedcompanies. Petitioner submitted that transfer of shares withoutconsideration should be considered as a gift. 4.Ultimately, respondent No.1 passed the assessment order for theassessment year under consideration on 27.02.2015 under section 143(3)of the Act assessing the total income of the petitioner at total loss ofRs.1,91,940.00. 5.After more than four years, respondent No.1 issued notice undersection 148 of the Act to the petitioner on 22.03.2019 stating that he hadreasons to believe that petitioner's income chargeable to tax for theassessment year 2012-13 had escaped assessment within the meaning ofsection 147 of the Act. He, therefore, proposed to re-assess the incomeof the petitioner for the said assessment year and called upon thepetitioner to submit a return in the prescribed form for the saidassessment year within 30 days. It was also mentioned that the saidnotice was issued after obtaining necessary approval of the PrincipalCommissioner of Income Tax - 6, Mumbai i.e., respondent No.2. 6.Vide the forwarding letter dated 17.04.2019 petitioner informedrespondent No.1 that it had filed the return on 15.04.2019 but at thesame time requested respondent No.1 to furnish a copy of the reasonsrecorded for re-opening the assessment along with the sanction of theappropriate authority. 7.By letter dated 24.04.2019, respondent No.1 furnished to thepetitioner a copy of the reasons recorded for re-opening assessmentalong with approval of respondent No.2. Without much elaboration at this stage, it is seen from the reasons recorded that a view was taken byrespondent No.1 that transfer of shares of listed entities at nilconsideration amongst unlisted group entities was made with the solepurpose of evading payment of capital gains tax and such transfer clearlyfell within the scope of a colourable device. Therefore, it was held thatpetitioner had not disclosed fully and truly all material facts with respectto transfer of the shares of ZEE by claiming the same to be a part of theprocess of consolidation of media houses. After working out the capitalgains which had allegedly escaped assessment in the hands of thepetitioner at Rs.3,35,61,611.00, respondent No.1 recorded that he hadreason to believe that petitioner's income chargeable to tax for theassessment year 2012-13 for an amount of Rs.3,35,61,611.00 hadescaped assessment within the meaning of section 147 of the Act onaccount of failure on the part of the petitioner to disclose fully and trulyall material facts. 8.After perusing the reasons recorded by the assessing officer,respondent No.2 recorded satisfaction that due to default on the part ofthe petitioner to disclose fully and truly all material facts necessary forassessment, re-opening of assessment under section 148 of the Act wasjustified and accordingly approved. 9.Following the procedure laid down by the Supreme Court inGKN Driveshafts (India) Limited Vs. Income Tax Officer, 259 ITR 19,petitioner submitted its objections on 18.06.2019 to re-opening ofassessment under section 147 of the Act by issuing notice under section148 thereof. 10.By a long order dated 30.08.2019 communicated to the petitioneron 09.09.2019, respondent No.1 rejected the objections raised by thepetitioner. From a perusal of the rejection order it is seen that respondentNo.1 stated that information was received from ACIT - 6 (2), Mumbaiand ITO - 6(3)(1), Mumbai wherefrom it revealed that transfer of shares 9.Following the procedure laid down by the Supreme Court inGKN Driveshafts (India) Limited Vs. Income Tax Officer, 259 ITR 19,petitioner submitted its objections on 18.06.2019 to re-opening ofassessment under section 147 of the Act by issuing notice under section148 thereof. 10.By a long order dated 30.08.2019 communicated to the petitioneron 09.09.2019, respondent No.1 rejected the objections raised by thepetitioner. From a perusal of the rejection order it is seen that respondentNo.1 stated that information was received from ACIT - 6 (2), Mumbaiand ITO - 6(3)(1), Mumbai wherefrom it revealed that transfer of shares of ZEE, a listed company, amongst unlisted group entities for nilconsideration under the pretext of consolidation of media business wasactually a proper division of business empire of the group amongst thepromoter family. Such transaction was deemed to be a colourable deviceto evade tax on capital gains. 11.Aggrieved, present writ petition has been filed by the petitionerseeking the reliefs as indicated above. 12.Petitioner has contended that it had disclosed fully and truly allmaterial facts necessary for assessment to the assessing officer. Afterseveral rounds of explanations and hearings, assessing officer acceptedthe claim of the petitioner vis-a-vis transfer of equity shares of ZEE toEssel as a gift without consideration whereafter the assessment orderwas passed under section 143(3) of the Act. Now on the basis of certaininformation received from two income tax officers which were notfurnished to the petitioner, the concluded assessment of the petitioner forthe assessment year under consideration has been sought to be re-openedby taking the view that such transfer of shares was a colourable devicefor evading payment of tax on capital gains. 12.1. It is the contention of the petitioner that firstly, there was fulldisclosure of primary facts by the petitioner before the assessing officer.Secondly, a subsequent view taken by the assessing officer on the basisof which the impugned notice has been issued amounts to a clear changeof opinion vis-a-vis transfer of shares. This cannot be a ground for re-opening a concluded assessment. Information on the basis of which theimpugned action was initiated was not furnished to the petitioner. 13.This Court by order dated 16.10.2019 had issued notice andgranted ad-interim stay to the impugned notice dated 22.03.2019 bytaking the view that it is a clear case of change of opinion; thus,impugned notice is without jurisdiction. It was held thus:- “2.This Petition under Article 226 of the Constitution ofIndia, challenges a Notice dated 22[nd] March, 2019 passed byRespondent No.1 – Dy. Commissioner of Income Tax, issuedunder Section 148 of the Income Tax Act, 1961 (the Act). Theimpugned notice seeks to re-open an Assessment for theAssessment Year 2012-13. 3.The regular Assessment Proceedings were completedunder Section 143(3) of the Act. The impugned notice has beenissued beyond a period of four years from the end of therelevant Assessment Year. It is the Petitioner’s case that thefacts which forms the basis of reasons to believe the incomechargeable to tax were completely disclosed. Moreover, it wasalso subject matter of consideration during the regularAssessment Proceedings. Thus, it is clear case of change ofopinion. Therefore, without jurisdiction. 4.As none appears for the Respondent, Registry is directedto issue a notice to the Respondent, returnable on 27[th]November, 2019. Humdust permitted. 5.In the meantime, there shall be ad-interim stay to theimpugned notice dated 22[nd] March, 2019.” 14.Respondent No.1 has filed affidavit in reply. Stand taken in theaffidavit is that the impugned notice dated 22.03.2019 under section 148of the Act and the subsequent order dated 09.09.2019 rejecting theobjections of the petitioner to re-opening were issued and passed inaccordance with the provisions of the Act and hence justified. 4.As none appears for the Respondent, Registry is directedto issue a notice to the Respondent, returnable on 27[th]November, 2019. Humdust permitted. 5.In the meantime, there shall be ad-interim stay to theimpugned notice dated 22[nd] March, 2019.” 14.Respondent No.1 has filed affidavit in reply. Stand taken in theaffidavit is that the impugned notice dated 22.03.2019 under section 148of the Act and the subsequent order dated 09.09.2019 rejecting theobjections of the petitioner to re-opening were issued and passed inaccordance with the provisions of the Act and hence justified. 14.1. Reference has been made to letters dated 29.02.2018 receivedfrom ACIT - 6(2), Mumbai and 29.03.2018 received from ITO - 6(3)(1),Mumbai. Copies of those two letters have been annexed to the affidavit.The two letters referred to order dated 28.02.2018 passed by theCommissioner of Income Tax (Appeals)-12, Mumbai in the appeal of M/s. 25FPS Media Private Limited for the assessment year 2012-13. It waspointed out that the said appellant was part of the group concerns of thepetitioner. In the appellate order, Commissioner of Income Tax(Appeals) has held such transfer of shares as a colourable device andthat the same would not be eligible for exemption from capital gainsunder section 47(iii) of the Act. As a matter of fact, Commissioner ofIncome Tax (Appeals) had directed the assessing officer to take necessary steps for giving effect to the findings of the appellate orderregarding tax liability of the transferred shares with the further directionthat if the assessing officer did not have jurisdiction, he should informthe jurisdictional assessing officer for taking necessary action. Appellateorder dated 28.02.2018 has also been annexed to the affidavit. Therefore,respondent No.1 has contended that the transfer of shares at nilconsideration was made with the sole purpose of evading payment ofcapital gains tax and was a colourable device. Value of the transferredshares was assessed by respondent No.1 whereafter he contended thatRs.3,35,61,611.00 was the escaped capital gains. Thus, contention ofrespondent No.1 is that there was escapement of income to the aboveextent on account of failure of the petitioner to disclose fully and trulyall material facts with respect to transfer of shares of ZEE to Essel.Respondent No.2 had granted approval to re-opening of assessment afterdue application of mind. Therefore, the writ petition should bedismissed. 15.Mr. Pardiwala, learned senior counsel for the petitioner submitsthat there was no new material before the assessing officer post theassessment order to have reason to believe that income of the petitionerfor the assessment year under consideration had escaped assessment onaccount of the failure of the petitioner to disclose fully and truly allmaterial facts necessary for assessment. He submits that it is evidentpetitioner had disclosed all the relevant materials pertaining to transferof the shares of ZEE to Essel as a gift i.e., without consideration. Suchtransfer was made following resolution by the board of directors of thepetitioner. Gift of shares is permissible under section 47(iii) of the Act.Therefore, no tax on capital gains can be levied on such transfer; therebeing no capital gain on account of the transfer being a gift. All thematerials were before the assessing officer whereafter he had acceptedthe transfer of shares as a gift and completed the assessment after duescrutiny under section 143(3) of the Act. Based on two letters of twoincome tax officers subsequently a different view was taken by the assessing officer that the transfer of shares was a colourable device usedby the petitioner as a mean to evade payment of income tax. This isnothing but change of opinion and as rightly held by this Court in theorder dated 16.10.2019, the same is not permissible and therefore, theassessing officer had no jurisdiction to issue the impugned notice undersection 148 of the Act. What the petitioner had claimed and initiallyallowed by the assessing officer is clearly permissible in law undersection 47(iii) of the Act. No question of earning any capital gains andconsequential levy of tax thereon arises. In this connection, he hasplaced reliance on the following decisions:- 1) CIT Vs. George Anderson and Company Limited, 66 ITR622;622; 2) CIT Vs. Bhanji Lavji, 79 ITR 582; 3) K. P. Varghese Vs. ITO, 131 ITR 597; 4) Hindustan Lever Limited Vs. R. B. Wadkar, 268 ITR 332; 5) CIT Vs. M/s. B. Arunkumar & Co., 2016 (3) TMI 768; 6) Prakriya Pharmachem Vs. ITO, (2016) 238 Taxmann 185; 7) CIT Vs. M/s. Morarji Textiles Limited, 217 (2) TMI 122; 8) Integra Garments and Textiles Limited Vs. Income TaxOfficer and others, 418 ITR 139; andOfficer and others, 418 ITR 139; and 9) Swastik Safe Deposit and Investments Limited Vs. AssistantCommissioner of Income Tax, (2019) 265 Taxmann 164.Commissioner of Income Tax, (2019) 265 Taxmann 164. 15.1. Mr. Pardiwala finally submits that the foundation for initiation ofre-assessment proceeding was the appellate order passed by theCommissioner of Income Tax (Appeals) in the case of M/s. 25FPSMedia Private Limited. The issue in question, that is, treating thetransaction of transfer of shares as a colourable device and consequentialdirection to the assessing officer to tax the transaction under capitalgains provision after assigning the market value of the shares as the saleconsideration was examined by the Income Tax Appellate Tribunal,Mumbai Bench 'F', Mumbai ('Tribunal' for short) in Jayneer Infrapowerand Multiventures Private Limited Vs. Deputy Commissioner of IncomeTax, (2019) 103 Taxmann.com 118. Tribunal, after due deliberation,held that the transaction cannot be said to be a colourable device. By no stretch of imagination, the gain can be taxed under the head 'incomefrom other sources'. As regards transfer of shares as gift, Tribunal heldthat there is nothing in the Act which prohibits a company from givingor receiving gifts. There is no requirement of a gift deed. Tribunal finallycame to the conclusion that the transfer of shares by way of gift isexempt from the provisions of capital gains by virtue of the provisionsof section 47(iii) of the Act. In that view of the matter, Mr. Pardiwalasubmits that the very foundation on the basis of which the impugnednotice was issued and the objections raised by the petitioner wererejected by the impugned order no longer survives. He, therefore,submits that the impugned notice is without jurisdiction and the same isliable to be set aside and quashed. 16.Per contra, Mr. Mohanty, learned standing counsel Revenuesubmits that the course of action adopted by respondent No.1 cannot befaulted. He has given due reasons for issuance of the impugned noticeand the same cannot be said to be fanciful, speculative or based onsuspicion. An element of subjective satisfaction while forming reason tobelieve that income assessable to tax has escaped assessment cannot beruled out. On that ground, notice of re-opening assessment may not beset aside. In support of his contentions, he has placed reliance on thefollowing decisions:- 1) Raymond Woollen Mills Limited Vs. ITO, 236 ITR 34; 2) ACIT Vs. Rajesh Zaveri Stock Brokers Private Limited, 291ITR 500;ITR 500; 3) Kalsha Builders Private Limited Vs. ACIT, Writ PetitionNo.3656 of 2018 (Bombay) decided on 08.02.2019; andNo.3656 of 2018 (Bombay) decided on 08.02.2019; and 4) Phool Chand Bajrang Lal Vs. ITO, 203 ITR 456. 1) Raymond Woollen Mills Limited Vs. ITO, 236 ITR 34; 2) ACIT Vs. Rajesh Zaveri Stock Brokers Private Limited, 291ITR 500;ITR 500; 3) Kalsha Builders Private Limited Vs. ACIT, Writ PetitionNo.3656 of 2018 (Bombay) decided on 08.02.2019; andNo.3656 of 2018 (Bombay) decided on 08.02.2019; and 4) Phool Chand Bajrang Lal Vs. ITO, 203 ITR 456. 17.Submissions made by learned counsel for the parties have beenduly considered. Also perused the materials on record and carefully gonethrough the judgments cited at the bar. 2012-13 and the assessment order under section 143(3) of the Act waspassed on 27.02.2015. Notice under section 148 of the Act was issued on22.03.2019. In any case, the impugned notice has been issued beyondfour years from the end of the assessment year in question. It is in thatcontext that we will have to discuss and analyze sections 148 and 147 ofthe Act. 18.1. As per sub-section (1) of section 148, before making assessment,re-assessment or re-computation under section 147, the assessing officeris required to serve upon the assessee a notice requiring him to furnish areturn of his income in the prescribed form and within the specifiedperiod as if such return were a return required to be furnished undersection 139. Sub-section (2) says that before issuing any such notice, theassessing officer is required to record his reasons for doing so. Undersub-section (1) of section 151, no such notice under section 148 shall beissued by the assessing officer after expiry of a period of four years fromthe end of the relevant assessment year unless the higher authority asmentioned in the provision is satisfied on the reasons recorded by theassessing officer that it is a fit case for issue of such notice. 18.2. In so far section 147 is concerned, it says that if the assessingofficer has reason to believe that any income chargeable to tax hasescaped assessment for any assessment year, he may assess or re-assesssuch income. However, as per the first proviso, where an assessmentunder sub-section (3) of section 143 or section 147 has been made forthe relevant assessment year, no action shall be taken under section 147after expiry of four years from the end of the relevant assessment yearunless any income chargeable to tax has escaped assessment for suchassessment year by reason of the failure on the part of the assessee tomake a return under section 139 or in response to a notice issued undersub-section (1) of section 142 or section 148 or to disclose fully andtruly all material facts necessary for its assessment for that assessmentyear. 19.As already noticed above, the present case is one where theimpugned notice has been issued clearly beyond four years from the endof the assessment year in question. It is also not a case where theassessee failed to make a return under section 139 or in response to anotice issued under sub-section (1) of section 142 or section 148.Therefore, what would be relevant to note is that in so far the presentcase is concerned, the assessing officer must have reason to believe thatany income of the petitioner chargeable to tax has escaped assessmentby reason of the failure on the part of the petitioner to disclose fully andtruly all material facts necessary for such assessment. 19.As already noticed above, the present case is one where theimpugned notice has been issued clearly beyond four years from the endof the assessment year in question. It is also not a case where theassessee failed to make a return under section 139 or in response to anotice issued under sub-section (1) of section 142 or section 148.Therefore, what would be relevant to note is that in so far the presentcase is concerned, the assessing officer must have reason to believe thatany income of the petitioner chargeable to tax has escaped assessmentby reason of the failure on the part of the petitioner to disclose fully andtruly all material facts necessary for such assessment. 20.The expressions 'reason to believe' and 'failure on the part of theassessee to disclose fully and truly all material facts' have beensubjected to numerous judicial pronouncements, and it is not necessaryto burden this judgment by making reference to the long line of judicialprecedents. Suffice it say that there must be a live link between thereasons recorded and formation of the belief that income chargeable totax has escaped assessment because of failure on the part of the assesseeto disclose fully and truly all material facts necessary for assessmentwhich must not be fanciful or based on suspicion. Both the conditionsmust co-exist in order to confer jurisdiction on the assessing officer. Ofcourse, the assessee is required to make a true and full disclosure of theprimary facts at the time of the original assessment. Production beforethe assessing officer books of accounts or other materials from which therequired evidence with due diligence could have been discovered by theassessing officer would not necessarily amount to disclosurecontemplated by law. But the duty of the assessee in any case does notextend beyond making a true and full disclosure of primary facts. Oncehe has done that, his duty ends. It is for the assessing officer to draw thecorrect inference from the primary facts. Once such an inference isdrawn which may subsequently appear to be erroneous that cannot be abasis for initiation of action for re-opening assessment as it would amount to change of opinion and change of opinion cannot be a groundfor re-opening concluded assessment. 21.Question for consideration is whether in the facts andcircumstances of the case, respondent No.1 could have formed anopinion that he had reason to believe that income of the petitionerchargeable to tax for the assessment year 2012-13 had escapedassessment by reason of failure on the part of the petitioner to disclosefully and truly all material facts necessary for the assessment? 22.In our view the facts or the materials on record say otherwise. Butbefore we delve into this aspect of the matter it would be apposite tobriefly dilate on the relevant provisions dealing with capital gains andtaxability of capital gains. 23.Chapter IV of the Act deals with computation of total income.Capital gains is one of the heads of income under section 14. Section 45deals with capital gains. Sub-section (1) says that any profits or gainsarising from the transfer of a capital asset effected in the previous yearshall be chargeable to income tax under the head 'capital gains' and shallbe deemed to be the income of the previous year in which the transfertook place. 24.Section 47 deals with transactions not regarded as transfer. Clause(iii) is relevant. Section 47(iii) says that nothing contained in section 45shall apply to any transfer of a capital asset under a gift or will or anirrevocable trust. However, as per the proviso, this clause shall not applyto transfer under a gift or an irrevocable trust of a capital asset beingshares, debentures, etc. allotted by a company, directly or indirectly to itsemployees under any employees' stock option plan or scheme of thecompany offered to such employees in accordance with the guidelinesissued by the central government in this behalf. 24.Section 47 deals with transactions not regarded as transfer. Clause(iii) is relevant. Section 47(iii) says that nothing contained in section 45shall apply to any transfer of a capital asset under a gift or will or anirrevocable trust. However, as per the proviso, this clause shall not applyto transfer under a gift or an irrevocable trust of a capital asset beingshares, debentures, etc. allotted by a company, directly or indirectly to itsemployees under any employees' stock option plan or scheme of thecompany offered to such employees in accordance with the guidelinesissued by the central government in this behalf. 25.From a conjoint reading of the aforesaid provisions it is evidentthat while any profits or gains arising out of transfer of a capital assetshall be deemed to be the income of the previous year in which thetransfer took place chargeable to income tax under the head 'capitalgains', section 47(iii) makes it very clear that any transfer of a capitalasset under a gift or will or an irrevocable trust shall not be liable toincome tax under the head 'capital gains'. Evidently, the proviso is notapplicable to the present case. 26.Gujarat High Court in Prakriya Pharmachem(supra) examineda challenge to re-opening of assessment on the ground that transfer ofshares by way of a transfer deed led to escapement of income fromassessment. The transfer deed was examined whereafter it was foundthat a certain number of shares were transferred by the said petitioner toits sister concern by way of gift without charging any amount. Afterreferring to sections 45 and 47(iii), Gujarat High Court held that nothingwould apply to any transfer of capital assets under a gift or will or anirrevocable trust. Gujarat High Court also held that it was not the case ofthe assessing officer that the said case was not one of transfer of assetunder a gift. In such circumstances, it was held that reasons recorded bythe assessing officer to form the belief that income chargeable to tax hadescaped assessment lacked validity. Therefore, the impugned notice wasset aside. 27.Reverting back to the facts of the present case, we have alreadynoted that while filing the e-return, petitioner had made a note that it hadsuffered loss on transfer of investments to the extent ofRs.1,41,18,604.00. This was explained in Note 19 forming part of thefinancial statement wherein it was stated that during the relevantprevious year petitioner had transferred 4,20,090 equity shares ofRe.1.00 of ZEE to Essel, a related party, at nil consideration toconsolidate onshore media assets including shares of listed companies. 28.In the notice dated 22.09.2014 issued to the petitioner byrespondent No.1 under section 142(1) of the Act, respondent No.1 hadcalled upon the petitioner to file further details of the transfer of4,20,090 shares of ZEE to Essel with documentary evidence includingsale bill and also the details of taxability on such transfer of shares inconnection with the ongoing scrutiny assessment proceedings. 28.1. In response thereto, petitioner submitted details of investmentsincluding opening balance and transfer of investments during the year.This included equity shares of ZEE at serial No.7, which weretransferred to Essel. 28.2. In the letter dated 31.12.2014, petitioner explained to respondentNo.1 about the transfer of shares of ZEE to Essel. It was stated that as apart of internal restructuring for consolidation of media assets of thegroup, the holdings in ZEE were transferred at nil consideration by thepetitioner to Essel. In the process petitioner had incurred loss ofRs.1,41,18,604.00. The related board resolution was enclosed along withthe said letter. It is seen that board of directors of the petitioner in itsmeeting held on 16.08.2011 had approved consolidation of media assetsand in that connection, transfer of holdings in ZEE to Essel. 28.2. In the letter dated 31.12.2014, petitioner explained to respondentNo.1 about the transfer of shares of ZEE to Essel. It was stated that as apart of internal restructuring for consolidation of media assets of thegroup, the holdings in ZEE were transferred at nil consideration by thepetitioner to Essel. In the process petitioner had incurred loss ofRs.1,41,18,604.00. The related board resolution was enclosed along withthe said letter. It is seen that board of directors of the petitioner in itsmeeting held on 16.08.2011 had approved consolidation of media assetsand in that connection, transfer of holdings in ZEE to Essel. 28.3. Responding to a query, petitioner in its further communicationdated 12.02.2015 impressed upon respondent No.1 as to why marketvalue should not be considered for transfer of shares of ZEE to Esselwhich was at nil consideration. It was stated that the said transfer ofshares at nil consideration was done to consolidate the group's onshoremedia assets including shares of listed companies. Respondent No.1 wasrequested that the transfer of shares without consideration should beconsidered as a gift which is not liable to tax under section 45. It wasthereafter that the assessing officer passed the assessment order undersection 143(3) accepting the above claim of the petitioner. Though theassessment order as such is silent on this aspect, the preceding communications between petitioner and respondent No.1 would clearlydemonstrate that petitioner had disclosed all the primary facts regardingtransfer of shares of ZEE to Essel without any consideration and as agift. In any case, it was a scrutiny assessment. 28.4. From the reasons recorded, order rejecting objections of thepetitioner and the reply affidavit of respondent No.1 in the presentproceeding, it is clearly discernible that the basis for re-opening ofassessment was the two letters of departmental authorities dated29.02.2018 and 29.03.2018. Though petitioner was not furnished copiesof the said two letters, copies of the same have been annexed to theaffidavit in reply wherefrom it is evident that in the case of a groupentity, Commissioner of Income Tax (Appeals) had held that suchtransfer of shares was nothing but a colourable device. Further viewtaken was that such a device was adopted so that income assessable totax under the head 'capital gains' remained outside the net of taxation. Itwas held that such transfer of shares attracted section 45(1) andaccordingly, liable to be taxed on the market value of the shares sotransferred. It was on that basis notice under section 148 was issued. 29.As rightly held by this Court in the order dated 16.10.2019, such aview taken by respondent No.1 was nothing but a change of opinion.While initially contention of the petitioner that such transfer of shareswas a gift without consideration was accepted, subsequently the aboveview was revised to treat the transfer of shares not as a gift and to tax thesaid transaction on the market value of the shares; this is nothing butchange of opinion. It is quite apparent that petitioner had placed beforethe assessing officer during the assessment proceedings all the primaryfacts wherefrom he made the inference. Now it is not open to theassessing officer to take a second view on the same set of facts treatingthe earlier view as erroneous. This is not permissible. Jayneer Infrapower and Multiventures Private Limited(supra)examined such transaction of transfer of shares which was held to be acolourable device by the Commissioner of Income Tax (Appeals) andliable to be taxed on the market value of the shares. Tribunal recorded acategorical finding of fact that such transfer of shares withoutconsideration was a gift which is valid, permissible and genuine.Referring to section 47(iii) Tribunal held that transfer of shares by wayof gift is exempt from the provision of capital gains and concluded thattransfer made as a gift without consideration is not taxable under theprovisions of capital gains. Jayneer Infrapower and Multiventures Private Limited(supra)examined such transaction of transfer of shares which was held to be acolourable device by the Commissioner of Income Tax (Appeals) andliable to be taxed on the market value of the shares. Tribunal recorded acategorical finding of fact that such transfer of shares withoutconsideration was a gift which is valid, permissible and genuine.Referring to section 47(iii) Tribunal held that transfer of shares by wayof gift is exempt from the provision of capital gains and concluded thattransfer made as a gift without consideration is not taxable under theprovisions of capital gains. 31.Thus, the very foundation on which the impugned notice wasissued no longer survives. 32.Considering the above, we are of the unhesitant view that theimpugned notice dated 22.03.2019 issued by respondent No.1 and theimpugned order dated 09.09.2019 passed by respondent No.1 rejectingthe objections of the petitioner to re-opening of assessment are herebyset aside and quashed. 33.Writ petition is accordingly allowed but without any order as tocosts. 34.This order will be digitally signed by the Private Secretary of thisCourt. All concerned will act on production by fax or email of a digitallysigned copy of this order. (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) Minal Parab