In an interim order passed last Friday, a Bench of Justices MS Sanklecha and RI Chagla held that the I-T department’s notices were prima facie not based on any concrete evidence or finding.
According to the notice, after the success of IPL, KRSPL issued 5 million shares to a firm in Mauritius and another 4 million shares to Chawla.
These shares were allotted at a value of Rs 10, whereas the actual value of these shares was much higher.
The department claimed that Chawla then sold her shares to the same company in Mauritius for Rs 10 each.
Thus, the foreign company was issued 9 million shares at par value, while the actual cost of share at the time of sale was around Rs 86-99 per share.
This resulted in a loss of foreign exchange to the extent of Rs 735 million.
The Bench, however, noted that in 2013, an assessing officer of the I-T department had looked into the above allegations, and after being satisfied that there was no wrongdoing, he had closed the case.
However, the department issued fresh notices in 2017 after going through a change of opinion and decided to reopen the case.
“The asessing officer being satisfied with the valuation of shares, submitted by the assessee, did not seek any further information. Therefore, when on the same basis, without any reasons in support of the reopening, the notice proceeds, it prima facie appears merely to be change of opinion,” the Bench said.
“We are of the view that the reasons in support of the impugned notice, prima facie, proceed on a change of opinion and, therefore, prima facie, lacks jurisdiction,” it added.