TMI Blog2019 (1) TMI 1840X X X X Extracts X X X X X X X X Extracts X X X X ..... COURT] held that regular Return of income was assessed by Intimation under Section 143(1) of the Act and no scrutiny assessment was done. In the above view, to ascertain the nature and the justification for charging share premium, the Assessing Officer has reason to believe that charging of share premium over and above the intrinsic value of the share is income which has escaped assessment. Notice itself does not indicate the approximate amount of income, which the Assessing Officer has reason to believe has escaped assessment nor does it quantify the extent to which the share premium received was in excess of intrinsic value, which has escaped assessment. It gives no reasons to indicate the basis of coming to the conclusion that share premium is excessive and, therefore, income. Moreover, the Notice also does not dispute that this is a share premium but seek justification for charging the share premium over and above intrinsic value of the share premium. AO has absolutely no material to even suspect, forget believe that income has escaped assessment. Hence, we quash the reopening and accordingly, the issue of assessee s appeal on jurisdiction is allowed. - ITA No. 695 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 4,56,00,000 during the F.Y. 2008-09 relevant to AY 2009-10. As there was no scrutiny assessment done for this year, the so-called share premium having been received by the assessee was not examined. The assessee is an unlisted company and the source of the share premium so received as well as the nature of the share application received (the intrinsic value of the share in comparison to the excess premium received) is not substantiated. The Hon ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd has held that Section 147 authorized and permits the Assessing Officer to assess or re-assess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the assessing Officer should have finally ascertain the fact by legal evidence or conclusion. This judgement was rendered by the Hon ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me cannot be taxed unless specifically taxable under the provisions of the Act. The learned Counsel for the assessee stated that even amendment brought in section 56(2)(viib) of the Finance Act, 2012 with effect from 01-042013 is applicable for and from AY 2013-14. But the AO rejected the objections raised by assessee vide letter dated 21.01.2015 and the relevant paras reads as under: - 3. I have considered the detailed submissions made by the assessee very carefully but I do not find any merit in the argument put forth by the assessee and therefore the objection raised is hereby rejected from the reason discussed in details in the following paragraphs. 3.1 In determining whether commencement of reassessment proceeding is valid, it has to be seen whether there is prima-facie some material on the basis of which the department opened the case. In the present case, the assessing officer has found that the financial year 2008-09 relevant to assessment year 2009-10. Scrutiny assessment was not done in this case, hence, issue of share premium was not examined. The details and evidences related to issue of shares, premium charged per share is not available on the record. As there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h solicitude for the public exchequer with an in-built idea of fairness to taxpayers by giving the opportunity of being heard under section 148/143(2) and 142(1) of the Act and it has been hold to be correct by the Hon ble Apex court in the case of CIT vs. Rajesh Jhaveri Stoch Brokers (P.) Ltd. (supra). 3.5 The assessment is sought to be reopened, then what is required to reason to believe but not established fact of escapement of income. At the stage of reasonable person can form a requisite belief. Something which is tangible need not be something which is new. An Assessing Officer who has plainly ignored relevant material in arriving at an assessment acts contrary to the law. If as a consequence of this there is escapement of income, the jurisdictional requirement of section 147 is fulfilled on the confirmation of a reason to believe that income has escapement assessment. A reason believe is what is relevant and not an established fact of escapement of income. Reliance is also placed on the judgement in the case of M/s. Usha International, 348 ITR 485 (Delhi High Court). 3.6. In the following two cases the Hon ble ITAT Delhi has restore the case to the file of Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it would think of the investment to grow and give benefit in future. But no such fact is seen in the case here. Therefore, AO has correctly formed the belief that income has escaped tax. Hence, I do not find any infirmity in reopening of the assessment and in rejecting the objection raised by the appellant. Aggrieved, now assessee is in appeal before Tribunal. 5. Before us, the learned Counsel for the assessee filed complete detail of shareholders, share allotted and share premium charged from the following 10 parties, which is subject matter of addition: - Name, address and PAN of the disputed shareholders where shares has been issued at ₹ 50/- (Face value of ₹ 10/- and share premium of ₹ 40/-) Sr. No. Shareholders name Address PAN No. of shares allotted Share Capital/ premium 1. Ecro Artisans Pvt. Ltd. 26.28, Nirnay Sagar, 1st Floor, Room 9/c, Satguru Kadam lane, MB Velkar Street, Kalbadevi, Mumbai400 002 AAACE8119M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see first of all drew our attention to the reasons recorded and stated that the AO admitted in the reasons recorded that the information is obtained from the records that the assessee has received share premium amounting to ₹ 4,56,00,000/-. According to AO as there was no scrutiny assessment done in this year, the so called share premium have been received by the assessee was not examined and accordingly, the AO formed opinion or reason to believe that the income in the guise of excess share application money received has escaped assessment in terms of the provisions of section 147 of the Act. The learned Counsel for the assessee stated that exactly on identical facts Hon ble Bombay High court in the case of Khubchandani Healthparks Pvt. Ltd. vs. ITO (2016) 384 ITR 322 (Bom) has held that Regular Return of income was assessed by Intimation under Section 143(1) of the Act and no scrutiny assessment was done. In the above view, to ascertain the nature and the justification for charging share premium, the Assessing Officer has reason to believe that charging of share premium over and above the intrinsic value of the share is income which has escaped assessment. The Notice itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasons to believe is a mandatory requirement, the learned Counsel for the assessee relied on the Hon ble Delhi High court in the case of Madhukar Khosla vs. ACIT (2014) 367 ITR 0165 (Delhi), wherein it is categorically held that the reasons indicates specially the new material facts even though the return income was processed under section 143(1) of the Act on the basis of which reopening is initiated under section 148 of the Act. The learned Counsel for the assessee referred to para 9 and 10 as under: - 9. In this case, the reasons provided under Section 148 are that in absence of the source of the addition with documentary evidence on records, the same is required to be brought on tax net as per provisions of section 68 of the Income tax Act, 1961 as the assessee had offered no explanation about the nature and source of the said additions and thus, must be treated as income which escaped assessment. No details are provided as to what such information is which excited the AO s notice and attention. The reasons must indicate specifically what such objective and new material facts are, on the basis of which a reopening is initiated under Section 148. This reassessment is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s standards which are applicable in the interpretation of the expression when it is applied to the reopening of an assessment earlier made under Section 143(3) cannot apply where only intimation was issued earlier under Section 143(1). It would in effect place an assessee in whose case the return was processed under Section 143(1) in a more vulnerable position than an assessee in whose case there was a full-fledged scrutiny assessment made under Section 143(3). Whether the return is put to scrutiny or is accepted without demur is not a matter which is within the control of assessee; he has no choice in the matter. The other consequence, which is somewhat graver, would be that the entire rigorous procedure involved in reopening an assessment and the burden of proving valid reasons to believe could be circumvented by first accepting the return under Section 143(1) and thereafter issue notices to reopen the assessment. An interpretation which makes a distinction between the meaning and content of the expression reason to believe in cases where assessments were framed earlier under Section 143(3) and cases where mere intimations were issued earlier under Section 143(1)may well lead t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re intimation was earlier issued under section 143(1). It follows that it is open to the assessee to contend that notwithstanding that the argument of change of opinion is not available to him, it would still be open to him to contest the reopening on the ground that there was either no reason to believe or that the alleged reason to believe is not relevant for the formation of the belief that income chargeable to tax has escaped assessment. In doing so, it is further open to the assessee to challenge the reasons recorded under section 148(2) on the ground that they do not meet the standards set in the various judicial pronouncements. 8. Similar view is also taken by the Hon ble Delhi High court in the case of Pr. CIT vs. Tupperware India (P) Ltd. 284 CTR 68 (Delhi), wherein it is held that the Delhi High court in the case of CIT vs. Orient Craft Ltd. held that held that expression reason to believe cannot have two different standards or sets of meaning, one applicable where the assessment was earlier made under Section 143(3) of the Act and another applicable where an intimation was earlier issued under Section 143(1) of the Act. It follows that it is open to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct Assessment year 2012-13 and cannot be invoked. It may be pointed out that this Court in Commissioner of Income Tax vs. M/s. Gangadeep Infrastructure (P) ltd (Income Tax Appeal No.1613 of 2014 decided in 20 March 2017) has while refusing to entertain a question with regard to Section 68 of the Act has held that the proviso to Section 68 of the Act introduced with effect from 1 April 2013 will not have retrospective effect and would be effective only from Assessment year 2013-14. 9. The learned Counsel for the assessee also referred to the CBDT instruction No. 02/2015 dated 29.01.2015, wherein the CBDT has directed the field officers and issue the instructions as under: - To All Principal CCsIT/DsGlT and CCsIT/DsGlT Madam/Sir Subject Acceptance of the Order of the Hon'ble High Court of Bombay in the case of Vodafone India Services Pvt. Ltd.-reg. In reference to the above cited subject, I am directed to draw your attention to the decision of the High Court of Bombay in the case of Vodafone lndi a Services Pvt. Ltd. for AY 200910(WP No.871/2014), wherein the Court has held, inter-alia, that the premium on share issue was on account of o capital account transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove that the AO stated that income in the grab of share application money received in this case has escaped assessment but he could not point out on what basis / material does he belief that the share capital is not genuine. In the similar circumstances, Hon ble Bombay High Court in the case of Khubchandani Healthparks Pvt. Ltd. (supra) held that regular Return of income was assessed by Intimation under Section 143(1) of the Act and no scrutiny assessment was done. In the above view, to ascertain the nature and the justification for charging share premium, the Assessing Officer has reason to believe that charging of share premium over and above the intrinsic value of the share is income which has escaped assessment. The Notice itself does not indicate the approximate amount of income, which the Assessing Officer has reason to believe has escaped assessment nor does it quantify the extent to which the share premium received was in excess of intrinsic value, which has escaped assessment. It gives no reasons to indicate the basis of coming to the conclusion that share premium is excessive and, therefore, income. Moreover, the Notice also does not dispute that this is a share premi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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