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2018 (2) TMI 1216 - HC - Income TaxReopening of assessment - validity of reasons to believe - valuation of shares - income has escaped assessment on application of Section 56(2)(vii) - Held that:- 6 Prima facie, the order disposing of the objections, while dealing with the objection of no reason to believe that income has escaped assessment on application of Section 56(2)(vii) of the Act, has completely ignored the Explanation thereto. The Explanation to Section 56(2) (vii) of the Act states that the fair market value is to be determined in accordance with the Income Tax Rules. The office note annexed to the Assessment Order dated 28th February, 2013 passed under Section 143(3) of the Act holds that on application of Rule 11 UA of the Income Tax Rules, the value per share came to less than ₹ 5/per share. The impugned notice indicates a change of opinion, as this very issue namely – valuation of share was a subject matter of consideration during the regular assessment proceedings. Besides, on the application of method of valuation as mandated by the Explanation to Section 56(2)(vii) of the Act, prima facie, the Assessing Officer could not have had reason to believe that income chargeable to tax has escaped assessment. Thus the impugned notice is without jurisdiction. - Decided in favour of assessee
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