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2019 Supreme(Bom) 1497
IN THE HIGH COURT OF BOMBAY AT GOA BENCH
M.S. SONAK, C.V. BHADANG, JJ.
P.P. Mahatme, Power Of Attorney Lorna Margaret Pinto, Vasco Da Gama — Appellant
Versus
Asst Commissioner Of Income-Tax, Margao — Respondent
Tax Appeal No. 4 of 2012
Decided on : 08-11-2019
Advocate Appeared:
Mihir Naniwadekar, Adv., Purushottam Karpe, Adv., Amira Abdul Razaq, Adv.
Headnote:
Income Tax Act - Sections 149(3), 148, 160 and 143(3) - Transfer Of Assets Attracting Tax On Capital Gains - Incorrect Appreciation Of Facts - Change Of Position - Family Arrangement - Appellate Tribunal is right in holding on a perverse view that change of position by mere clarification by Assessing Officer regarding status of assessee which is contrary to reasons recorded under Section 148(2) and rule of law laid down by jurisdictional High Court could give jurisdiction to issue impugned notice under Section 148 which is otherwise barred by limitation Whether on facts and in circumstances of case Appellate Tribunal is right in dismissing appeal based on incorrect appreciation of facts and law and taking a perverse view that family arrangement approved by Civil Court was not bonafide and consequently there was a transfer of assets attracting tax on capital gains Held, Assessee constructed a property by taking loans from his family members - As he failed to repay loan family members claimed a share in property - Assessee gave them share in a family settlement by way of a Court Decree and claimed that this being a family settlement no gift tax was chargeable - Division Bench Court however held that merely because loans were not repaid by Assessee to his family members it could not create a title in them in property which would entitle them to claim partition by way of family settlement of property in question - Based upon such reasoning High Court upheld view taken that there was no valid family settlement amongst members of family and based upon such settlement levy of gift tax could not have been avoided - High Court considered and distinguished decision - Appeal Is Dismissed.
JUDGMENT :
M.S. Sonak, J.
Heard Mr. Mihir Naniwadekar with Mr. Purushottam Karpe for the Appellant and Ms. Amira Razaq, Standing Counsel for the Respondent.
2. This Appeal was on board for final hearing, along with Tax Appeals No.3/2012, 9/2012 and 10/2012. All these appeals involve identical issues of both, law and fact. However, the learned Counsel for the parties requested that this Appeal be treated as the lead Appeal. The learned Counsel for the parties agree that the decision in this Appeal will govern the fate of the remaining three appeals, as well.
3. This Appeal was admitted on 13.2.2012, on the following substantial questions of law :
i. Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in holding on a perverse view that the change of position by mere clarification by the Assessing Officer regarding status of the assessee, which is contrary to the reasons recorded under Section 148(2) and rule of law laid down by the jurisdictional High Court could give jurisdiction to issue the impugned notice under Section 148, which is otherwise barred by limitation?
ii. Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in dismissing the appeal based on incorrect appreciation of facts and law and taking a perverse view that the family arrangement approved by the Civil Court was not bonafide and consequently there was a transfer of assets attracting tax on capital gains ?
4. The Appellant is a Power of Attorney holder to Lorna Margaret Pinto, who is a Non-Resident Indian (NRI), about which there is no serious dispute. The present Appellant and the Appellants in connected Appeals, are sisters, who were involved in a dispute relating to an immovable property in the State of Goa. It was the case of these Appellants that the said immovable property was sought to be usurped by Cristovam and Alvaro, relatives of the Appellants. This led to the institution of Special Civil Suit No. 255/1999, which was ultimately disposed of by a Consent Decree dated 17.4.1998. In terms of the Consent Decree, the Appellants received an amount of Rs.5.50 crores during the Assessment Year 1999-2000.
5. In relation to the aforesaid amount, notices under Section 148 of the Income Tax Act, 1961 (IT Act) were issued to the Appellants, seeking to reopen the assessment, inter alia, on the ground that the aforesaid amount was taxable "capital gains". These notices were dated 14.03.2005 and were accompanied by reasons for reopening, in which, it was stated that Mr. Pradip P. Mahatme, the Power of Attorney holder was proposed to be treated as the agent of the Assessee as provided in Section 163 of the IT Act.
6. Upon the Power of Attorney seeking clarification, by a communication dated 22/03/2005, he was informed that he may file return in response to the notice under Section 148 as the 'representative assessee' as per the provisions of Section 160(1) of the IT Act for the Assessee - Lorna Pinto.
7. The aforesaid was, however, followed by yet another communication dated 21.06.2005, in which, the Assessing Officer clarified that the notices under Section 148, dated 14.03.2005 may be read as being served upon Mr. P.P. Mahatme as the 'power of attorney holder' of Mrs. Lorna Margaret Pinto Wallworth.
8. The present Appellant, as well as the Appellants in the connected Appeals, instituted Writ Petitions No.70/2006, 71/2006, 72/2006 and 73/2006, before this Court, questioning the notices dated 14.03.2005, under Section 148 of the IT Act, inter alia, on the ground that the same were barred by limitation as prescribed under Section 149(3) of the IT Act. These petitions were dismissed by Judgment and Order dated 27/03/2006.
9. As against the aforesaid, the Appellants instituted Special Leave Petition before the Hon'ble Supreme Court, which came to be disposed of by order dated 17.07.2006, which reads as follows :
"The short question which is involved in this special leave petition is whether the petitioner
