Assessment under Income Tax requires concrete information indicating escapement of income, which was absent in this case, rendering notices invalid.

JUDGMENT

KRISHNA S.DIXIT, J. -

These two petitions having substantially similar factual matrix and involving identical questions of law, seek to lay a challenge to the orders dtd. 31/3/2022 passed u/s 148A(d) followed by evenly dated notices issued u/s 148 of the INCOME TAX ACT , 1961. The impugned action has been generated at the hands of 1st respondent.

I. FOUNDATIONAL FACTS OF THE CASES:

(a) Petitioner in W.P.No.8815/2022 is the husband of petitioner in companion W.P.No.8797/2022; they are an octogenarian couple. In the year 2010 and up to the year 2016, petitioner-Dr.Ramdas Madhava Pai acquired certain shares in Manipal Education and Medical Group India Private Limited (hereafter 'MEMGIPL'). In March 2017, his son Dr.Ranjan Pai gifted shares held in MEMGIPL to petitioner-Dr.Ramdas Madhava Pai. Likewise, his daughter-in-law gifted shares to petitioner-Smt.Vasanthi Pai. On 16/11/2017, the National Company Law Tribunal (hereafter 'NCLT') approved the scheme of demerger of the property management business of MEMGIPL into another company namely Manipal Integrated Services Private Limited (hereafter 'MISPL'). By way of consideration, 10, 87, 97, 101 shares of MISPL were allotted to the shareholders of MEMGIPL. The appointed day of demerger was denoted as 30/11/2016. Accordingly, petitioner-Dr.Ramdas Pai and petitioner-Vasanthi Pai got to hold 5537216 and 5359885 shares respectively in MISPL. Another order dtd. 30/11/2017 came to be passed by the NCLT approving the demerger of facility management services of MISPL into Quess Corp. Ltd. In consideration of this demerger, the two writ petitioners were allotted shares in Quess Corp. The appointed date for this demerger was 1/12/2016. In February and March 2018, the petitioners are said to have sold the shares in Quess Corp.

(b) On 10/12/2018, both Petitioners filed their Returns of Income for the Assessment Year 2018-19 u/s 139 of the Act. On 11/3/2022, notices u/s 148A(b) of the Act were issued to them, on the following two premises:

(i) that the petitioners were allotted shares in Quess Corp Ltd as a consequence of demerger arrangements and the same are taxable in terms of Sec. 56(2)(x)(c) of the 1961 Act; and

(ii) that the petitioners having sold the shares of Quess Corp before March 2018 ought to have offered the same to tax.

Petitioners sent their replies dtd. 28/3/2022 to the subject Show Cause Notices taking up certain objections and requested for dropping of the proposed action.

However, the Assessing Officer vide orders dtd. 31/3/2022 passed u/s 148A(d), overruled the objections and issued notices u/s 148 of the Act for the Assessment Year 2018-19. These orders and notices are the subject matter of challenge in these petitions.

(c) After service of notice, the Assessing Officer having entered appearance through their Panel Counsel, resisted the Writ Petitions by filing individual Statement of Objections. The learned Additional Solicitor General of India appearing for the Assessing Officer made his submission in justification of the impugned action and the reasons on which the same has been founded. Both the Assessing Officer and the Assessees have filed their Written Submissions as well. Certain rulings have been cited in support of their respective cases.

II. AS TO WHAT THE ASSESSEES HAVE ARGUED:

(a) The primary condition for reopening assessments envisages escapement of income which is absent in the case at hands and thus, the action is without jurisdiction; in any circumstance, it is sans jurisdictional fact.

(b) The order passed under Sec. 148A(d) has gone well beyond the show cause notice and touched matters not even alleged and that the reply of the pe