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2016 (7) TMI 176 - GUJARAT HIGH COURT

2016 (7) TMI 176 - GUJARAT HIGH COURT - TMI - Reopening of assessment - issuance of share at premium - reasons to believe - Held that:- Question of issuance of share at premium, to whom such shares were allotted and the premium received, the resultant increase in the share premium were all placed before Assessing Officer for his verification of original assessment proceedings. He however, raised no further question and accepted the stand of the assessee. Any re-visit of such an issue without the .....

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as failed to prove the genuineness and justification of huge share premium received in its books of accounts. Hence, such receipts need detailed verification. The approach of AO cannot be approved. His entire focus is on share premium amount of ₹ 1.45 crores and without any tangible material on record, he proceeds on the basis that shares were issued at a high premium. - For any re-assessment, AO must have some tangible material to enable him to form a belief that the income chargeab .....

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ng inquiry. In the present case, we find the vital link missing from the reasons recorded, such link being the material at the command of the Assessing Officer to form such a belief - Decided in favour of assessee. - SPECIAL CIVIL APPLICATION NO. 18513 of 2015 - Dated:- 27-6-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR MANISH J SHAH, ADVOCATE FOR THE RESPONDENT : MR NITIN K MEHTA, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) The petitioner has ch .....

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of revised income of ₹ 2.54 crores (rounded off). The return of the company was taken in scrutiny. The Assessing Officer framed the scrutiny assessment under section 143(3) of the Income Tax Act, 1961 ( the Act for short) on 30.12.2011. During such assessment, he noticed that the assessee had received share premium of ₹ 1.45 crores (rounded off) upon allotment of a total 16200 shares to five different persons. The Assessing Officer did not make any adjustment in the order of assessme .....

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per the information received, assessee company has issued shares at a very high share premium. On verification of Balance sheet ended on 31.3.2009, it has been noticed that assessee has received share premium of ₹ 1,45,80,000/- during the F.Y.2008-09. Hence there is increase in share premium during the year consideration. The assessee has not explained the nature of such credits and has failed to prove the genuineness and justification of huge share premium received in its books of accoun .....

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ent of ₹ 1,45,80,000/- chargeable to tax has escaped assessment by the reason of failure on the part of the assessee to disclose fully and truly all material facts within the meaning of section 147 of the I.T.Act, 1961. 4. In order to bring to tax above mentioned escaped income, as well as any other income which may have escaped assessment, found during the course of proceedings, notice under section 148 is issued. 3. Upon receipt of reasons, the petitioner represented to the Assessing Off .....

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894 Number of shares before allotment 58200 Book value per share 2640.32 So it is clearly indicating that the assessee has issued shares at much less value then book value of shares. Hence the premium on shares is justified. 4. He also raised detailed objections to the notice for re-opening under a communication dated 16.2.2015. Such objections were however rejected by the Assessing Officer by an order dated 27.2.2015. Hence the petition. 5. Taking us through materials on record, counsel for the .....

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s not permissible. The counsel further submitted that the reasons indicate that the Assessing Officer has doubt about genuineness of the share premium paid by different purchasers and therefore, in order to verify further details, the notice has been issued which is not permissible in law. 6. On the other hand, learned counsel Shri Nitin Mehta for the department submitted that the Assessing Officer has recorded proper reasons for issuing notice for re-opening. During the assessment proceeding, t .....

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009 31.3.2008 Sources of Fund (a) Share capital A 7,440,000.00 5,820,000.00 (b) Share Application Money B 121,000,000.00 147,846,894.22. © Reserve and Surplus 316,677,432.40- 162,666,894.22 (a) Secured loans C 79,081,894.21 8. During scrutiny assessment, the Assessing Officer had raised multiple queries including with respect to share premium. In one of the letters written by the assessee to the Assessing Officer, relevant queries are reproduced alongwith the assessee's answers. Relevan .....

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y, Nehru Road, Vile Parle (East), Mumbai 400057 AABPP9011D 3500 3500000 2 Varsha Mahesh Patel B/8, Sardar Patel society, Nehru road, Vile Parle (E), Mumbai 400057 AGVPP2093B 3000 3000000 3 Manish Chandrakant Patel A/3, Sardar Patel society, Nehru road, Vile Parle (E), Mumbai 400057 AGVPP3740K 3000 3000000 4 Yash Mahesh Patel B/8, Sardar Patel society, Nehru Road, Vile Parle, (East), Mumbai 400057 AONPP3367F 3000 3000000 5 Suchit Chandrakant Patel A/3, Sardar Patel society, Nehru road, Vile Parle .....

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t), Mumbai 400057 AGVPP3740K 3000 900 2700000 4 Yash Mahesh Patel B/8, Sardar Patel society, Nehru Road, Vile Parle (East), Mumbai 400057 AONPP3367F 3000 900 2700000 5 Suchit Chandrakant Patel A/3, Sardar Patel society, Nehru Road, Vile Parle (East), Mumbai 400057 AJTPP1790L 3700 900 3330000 16200 14580000 9. It can thus be seen that question of issuance of share at premium, to whom such shares were allotted and the premium received, the resultant increase in the share premium were all placed be .....

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d, which the Assessing Officer has later on at his disposal, in a given situation, it may be open for him to contend that re-opening of the assessment would not be based on a mere change of opinion. However, in the present case, we do not find any such material pointed out to us. 10. In this context as also in the context of the basis for the Assessing Officer to form a belief that income chargeable to tax has escaped assessment, we may refer to reasons recorded by him. In such reasons, he refer .....

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e in share premium during the year under consideration. He therefore, recorded the assessee has not explained the nature of such credit and has failed to prove the genuineness and justification of huge share premium received in its books of accounts. Hence, such receipts need detailed verification. The approach of the Assessing Officer cannot be approved. His entire focus is on share premium amount of ₹ 1.45 crores received by the assessee company. Without there being anything on record, h .....

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