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TMI Blog2019 (4) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... wing questions were framed for consideration by this Court: "1. Whether on the facts of the case borne on record, the Appellate Tribunal was right in law in upholding the legal validity of the action of the Assessing Officer in initiating reassessment proceedings against the assessee-appellant company for the assessment year 1986-87 u/s 147/148 of the Income Tax Act, 1961 for its alleged income of Rs. 76,61,408/- on the basis of the observations/ statements of the Assessing Officer in the note recorded by him under the provisions of sub-sec(2) of Section 148 of the Act, by way of the reasons for initiating the re-assessment proceedings? 2. Whether on the facts of the case borne on the record, the Appellate Tribunal was right in law in uph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO decided to make a total addition of Rs. 8348736 for the said three items for AY 1987-88. 4. A perusal of the reasons for reopening of the assessment for 1986-87 as noted in the notice dated 29th March 1990 issued to the Assessee under Section 148 of the Act reveals that "on the same lines" as pointed out by the AO for AY 1987-88, the assessment for AY 1986-87 was examined and the three identical items reflected in the return filed for AY 1986-87 was picked up for disallowance viz., share capital introduced to the extent of Rs. 75 lacs; loss in sale and purchase of shares and expenses for maintenance of an office at Bulandshahar. According to the AO, he had reasons to believe that income chargeable to tax amounting to Rs. 76,61,408 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year). Explanation 1. - For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- (a) where income chargeable to tax has been under-assessed; or (b) where such income has been assessed at too low a rate; or (c) where such income has been made the subject of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter on one aspect to the ITAT. Ultimately, the additions made on all three items were deleted. 8. Mr. Bansal pointed out that for AY 1987-88, specific to the issue of increase in share capital, the CIT (A) had called for a remand report from the AO who in the remand report admitted to the genuineness of the deposits of share capital. He accordingly submitted that since the very basis for reopening the assessment for AY 1986-87 viz., the additions on the said three items AY 1987-88, was rendered non-existent in view of the subsequent developments. Therefore, there could be no justification in persisting with the reopening of the assessment for AY 1986-87. 9. Mr. Bansal relied on the decisions of this Court in Oracle India Pvt.Ltd. v. Assis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Kelvinator of India Ltd. (supra) observed in para 12 as under: "12. Clearly therefore, when the Revenue gets hold of information or material which tends to or has the potential of undermining its findings (previously made in the assessment proceedings) and have an important bearing, invocation of the power to reassessment is warranted. Now in the present case, the Revenue presses several such circumstances: one, that the SEBI application was made in 2014 after a questionnaire was issued by the AO; two there was nothing to justify the premium of 457 per cent over the face value of the shares - even the market value of the share according to the Revenue on the date of issue of the shares was only Rs. 318/- per share. Three, the SEBI appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for this Court at a distance in time of three decades after the event, to be unmindful of the fact that for AY 1987-88, ultimately, there were no additions made to the income of the Assessee. If that was the only basis for reopening the assessment of AY 1986-87 it would be an entirely futile exercise for this Court to allow the reopening of the assessment for 1986-87 to remain. 16. In Income Tax Officer v. Lakhmani Mewal Das (1976) 103 ITR 437 (SC), the Supreme Court was interpreting Section 147 as it then stood, i.e. prior to its amendment with effect from 1st April 1989, and observed thus: "The expression "reason to believe" does not mean a purely subjective satisfaction on the part of the Income-tax Officer. The reason must be held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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