JUDGMENT :

KAMAL KHATA, J.

These two writ petitions are filed by the same petitioner for two Assessment Years (A.Y.) viz. 2014-15 and A.Y. 2015-16 and has a common issue. Consequently, we shall dispose them of with a common order. For brevity we refer to the facts in W.P. No. 2000 of 2022 for A.Y. 2015-16 as the same was preferred to be argued by the learned senior counsel for the petitioner.

2. The petition challenges the legality and validity of the impugned notice dated 31st March 2021 issued under Section 148 of the Income Tax Act, 1961 (“the Act”), whereby the Assessment Officer (AO) sought reopening of the assessment since he had ‘reason to believe’ that the income chargeable to tax for A.Y. 2015-16 had escaped assessment within the meaning of section 147 of the Act and the impugned reasons dated 9th January 2022 and the impugned order dated 9th March 2022 disposing of the objections raised by the petitioner.

FACTS

3. The petitioner is an investment holding company incorporated in Singapore. The ultimate holding company of the petitioner, Lehman Brothers Holdings Inc. (“LBHI”) filed a petition under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York on 15th September 2008. After LBHI’s filing for bankruptcy, the petitioner was placed into Creditors’ Voluntary Liquidation from 24th October 2008. The petitioner did not conduct any business activity and laid off the entire staff. Hence, the petitioner had no business transaction during the A.Y. 2015-16.

4. The petitioner, inter alia, held 5,70,88,801 shares of Lehman Brothers Capital Private Limited (“LBCPL”) a private limited company as on 31st March 2014. During the year under consideration, this Court by an order dated 5th September 2014, allowed the capital reduction of 4,87,80,488 equity shares held by the petitioner in LBCPL in accordance with Sections 100 to 103 of the Companies Act, 1956 on payment of 1,00,00,00,000 valued at Rs.20.5 per equity share.

5. The petitioner submitted the return of income which provided the details related to capital gain transactions filed under Schedule C.G. - Capital Gains. The Computation of income was submitted with detailed working method of arriving at the capital gain/loss including the details of dates of the purchase and sale of shares and the conversion of amounts in foreign currency as well as the provisions of Companies Act, the Income tax Act and the order of this Court. The petitioner claimed the capital gain in the sum of Rs.25,14,27,640/- u/s. 45 of the Act r.w. the first proviso to Section 48 of the Act after setting off loss for A.Y. 2014-15 in the sum of Rs.19,59,94,085/- and paid taxes at 20% u/s. 112(1)(i)(c)(ii) of the Act.

6. The petitioner filed written submissions on 24th August 2016 against the notice issued under Section 143(2) of the Act dated 4th August 2016 along with the computation of income and Form 3CEB. The petitioner also submitted a response dated 5th September 2017 to the notice issued under Section 142(1) of the Act dated 8th August 2017. In its response, the petitioner categorically mentioned that it had not carried on any business activity since the liquidation/bankruptcy application and also mentioned about the capital reduction. The said submission further highlighted as under:

“During A.Y. 2015-16, the proceeds received by the company pursuant to capital reduction by LBCPL includes deemed dividend under Section 2(22)(d) of Rs.26,599,305. The Company has considered entire proceeds received from capital reduction as sale consideration for the purpose of computing capital gains.”

7. Thereafter on 22nd November 2018, a notice under Section 142(1) of the Act was issued requesting the petitioner to provide the High Court order granting capital reduction and financial statements highlighting the capital reduction in the balance sheet. In re