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2016 (12) TMI 616 - MADRAS HIGH COURT

2016 (12) TMI 616 - MADRAS HIGH COURT - TMI - Validity of reopening of assessment - disposal of objections filed by the Assessee - Held that:- In the light of the reasons assigned by the respondent in the impugned order dated 16.11.2016, the case on hand cannot be stated to be one where the respondent has not considered the petitioner's objections and in the process of consideration, the respondent has taken a stand to the extent permissible at this point of time as if any further findings are r .....

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t their remedies available under the Act. - W.P.No.42341 of 2016 and W.M.P.No.36245 of 2016 - Dated:- 7-12-2016 - T. S. Sivagnanam, J. For the Petitioner : Mr.R.Sivaraman For the Respondent : Mr.M.Swaminathan and M/s.V.Pushpa ORDER The petitioner has filed this writ petition challenging the notice under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 30.03.2016 reopening the assessment for the year 2009-2010 and the order dated 16.11.2016 rejecting the objecti .....

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; 240/- per share. The return of income was processed under Section 143(1) of the Act and an intimation was issued to the petitioner on 29.03.2011. Subsequently, the intimation under Section 143(1) of the Act was rectified and an order under Section 154 of the Act was passed on 16.09.2015. 3.Mr.R.Sivaraman, learned counsel for the petitioner vehemently contended that the respondent without any tangible material on hand issued notice under Section 148 of he Act reopening the assessment for the re .....

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spondent without going into the details in a prefuntory manner passed the impugned order dated 16.11.2016. 4.The learned counsel prefaced his submission by stating that when no assessment order has been passed and the assessment is completed by a mere intimation under Section 143(1) of the Act, unless there is reason to believe that income chargeable to tax has escaped assessment, notice for reopening cannot be issued, hence the petitioner is entitled to challenge the notice as being without jur .....

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ent had stated that the transaction in question is not genuine and such introduction of share premium needs to be taxed under Section 68 of the Act. It is submitted that Section 68 of the Act can have no application as such amendment was introduced only on 01.04.2013 and the relevant assessment year is 2009-10. Further it is pointed out that in the objections, the petitioner has specifically stated that the premium received could be brought to tax under Section 56(2)(viib) of the Act and this su .....

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1,20,000 equity shares when they had issued only compulsory convertible cumulative preference shares. It is further submitted that if in the original assessment proceedings all facts had been stated an assessment made the same cannot be reopened without fresh facts coming to light. Further it is submitted that the compulsory convertible cumulative preference shares which have been issued cannot be treated as an income for the relevant assessment year much less the income escaping assessment. The .....

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pondent cannot take a decision on merits at this point of time and all that the respondent is required to do is to pass a speaking order after considering the objections. This requirement has been complied with and the impugned order has been passed and necessarily the petitioner has to avail the remedy under the provisions of the Act. 7.Heard the learned counsels appearing for the parties and perused the materials placed on record. 8.The respondent has issued the impugned notice under Section 1 .....

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t the stage of issuance of a notice under Section 147 of the Act. When the petitioner sought for communicating the reasons for reopening the respondent stated that it is seen from the information available on record, during the financial year 2008-09 the petitioner Company had issued 1,20,000 equity shares raising fresh capital. On a comparison of the financials of the petitioner shows that though the net worth of the Company is low, a very high value of share premium has been introduced during .....

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had to be examined to ascertain whether any unaccounted money was brought as share capital into the books of the Company. 9.While submitting the objections to the reasons for reopening, the first and foremost issue to be addressed is on facts. However, in the instant case, the focus was more on the judicial precedence rather than on facts. While the assessee cannot be faulted for referring to judicial precedence, in the considered view of this Court the assessee was bound to first put forth the .....

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or reopening. In any event this is a factual issue which has to be gone into by the Assessing Officer. The other contention raised is that the transaction cannot be taxed under Section 68 of the Act but liable to be taxed under Section 56(2)(viib) of the Act and if so the said provision cannot be made applicable, as it was introduced with effect from 01.04.2013. After receipt of the objections, the respondent is required to pass a speaking order on the objections given by the petitioner and he i .....

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