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2021 (7) TMI 67 - HC - Income TaxReopening of assessment u/s 147 - excess of share value over the market value - notice issued before expiry of 4 years - Addition u/s 56(2)(viib) on the ground that the petitioner-Company has issued 6,00,000 equity shares of face value of ₹ 10 at a premium of ₹ 90/-. - As per AO petitioner-Company failed to obtain achievement targets as per the forecast the value of share should be recomputed and the excess share value received by the petitioner-Company over the market value has to be disallowed as per Section 56(2) - HELD THAT:- In the present case, the appeal filed by the petitioner before the Commissioner of Income Tax (Appeals) reveals that the Assessing Officer erred in adding the excess of share value over the market value of 6,00,000 fresh issue of equity shares invoking Section 56(2)(viib) of the Act. Reasons for reopening of the assessment furnished in proceedings states that during the year, the Company has converted 50,01,514 preference shares into equity shares in the ratio of 10:1 i.e., 500151 equity shares and ₹ 5,00,00,000/- worth debentures into equity shares of ₹ 10/- each at the premium of ₹ 90 per share i.e., 5,00,000 equity shares. The Total of preference shares and debentures converted into equity shares totals to 10,00,151 Nos. In the assessment order passed under Section 143(3) of the Income Tax Act dated 31.03.2016, the difference between the market value and share value in respect of 1000151 equity shares to the tune of ₹ 2,09,33,160/- (1000151*20.93) was not brought to tax under Section 56(2)(viib) of the Income Tax Act, 1961. Therefore grounds of appeal filed by the petitioner before the Commissioner of Income Tax (Appeals) cannot be a ground for the purpose of quashing the reopening of assessment proceedings issued on certain specific grounds. As far as the ground of change of opinion raised by the petitioner is concerned, this Court is of the considered opinion that reading of Explanation 1 and Explanation 2 (c)(i) of Section 147 is unambiguous that even in case of production of Books of Account or other evidence and also in the cases of underassessment, reopening of assessment is permissible. - Decided against assessee.
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