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TMI Blog2020 (12) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... ent appeal against the order dated 07.09.2018 passed by the Commissioner of Income Tax (Appeals)-17, Mumbai (hereinafter referred to as the "CIT(A)") relevant to the assessment year 2010-11. 3. The assessee has raised the following grounds: - "1. The Ld. CIT(A) and erred in law and in facts in not appreciating that the reopening of assessment u/s 147 of the Act was bad in law and invalid. 2. The Ld. CIT(A) has erred in law and in facts in confirming the addition u/s 68 of the Act on account of share application money received during the year from Florence Multimedia Pvt. Ltd. amounting to Rs. 28,00,000/-. 3. The appellant craves leave of your honours to add to alter, amend and/ or delete all or any of the foregoing grounds of appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny could not fetch the certain premium which is no reason to believe that the income has escaped assessment. It is also argued that it is nowhere mentioned in the reasons that the shares were overvalued or what amount the premium exceeds the value of the shares which leads to escape assessments, therefore, the notices u/s 147 is not liable to be sustainable in the eyes of law. In support of these contentions, the Ld. Representative of the assessee has placed reliance upon the decision of the Hon'ble Bombay High Court in the case of Khubchandani Healthparks (P.) Ltd. Vs. Income Tax Officer - 6(3)(4), Mumbai (2016) 68 taxmann.com 91 (Bom) and Balbir Ispat Pvt. Ltd. Vs. ITO in ITA. No. 6953/Mum/2016 dated 28.01.2019. However, on the other hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VS UOI (2012) 19 taxmann.com 176 (Bom) upheld the addition u/s. 68 made by the Settlement Commission on account of share premium holding that the assessee failed to establish the justification for issuing shares at such premium. 6. The Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd. has hold that section 147 authorizes and permits the Assessing Officer to assess or re-assess income chargeable to tax, if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase "reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it be said to have reason to bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the above mentioned reasons, we are of the view that the AO was not justified to reopen the case of the assessee in view of the provisions u/s 147/148 of the Act. No tangible material is on record for reopening the case on the basis of which the AO formed reason to belief that the income has escaped assessment. Mere mentioning the facts as shown by the assessee about the shares premium of Rs. 2,12,66,700/- nowhere gives the plausible reason to the AO to reopen the case u/s 147/148 of the Act. Nothing is on record to which it can be assumed that under which circumstances the income of the assessee has become escaped assessment. The other important thing which came into notice that on the basis of similar facts and circumstances the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication received (the intrinsic value of the share in comparison to the excess premium received) is not substantiated." We also find from the above that the AO stated that income in the grab of share application money received in this case has escaped assessment but he could not point out on what basis / material does he belief that the share capital is not genuine. In the similar circumstances, Hon‟ble Bombay High Court in the case of Khubchandani Healthparks Pvt. Ltd. (supra) held that regular Return of income was assessed by Intimation under Section 143(1) of the Act and no scrutiny assessment was done. In the above view, to ascertain the nature and the justification for charging share premium, the Assessing Officer has reason to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premium received was in excess of intrinsic value, which has escaped assessment. It gives no reasons to indicate the basis of coming to the conclusion that share premium is excessive and, therefore, income. Moreover, the Notice also does not dispute that this is a share premium but seek justification for charging the share premium over and above intrinsic value of the share premium. However, the Hon'ble ITAT in the case Balbir Ispat Pvt. Ltd. (supra) has discussed the decision of Khubchandani Healthparks (P.) Ltd. Vs. Income Tax Officer - 6(3)(4), Mumbai (2016) 68 taxmann.com 91 (Bom). Respectfully following the decision of Hon'ble ITAT as well as Hon'ble Bombay High Court, we are of the view that the AO has absolutely no material to even ..... X X X X Extracts X X X X X X X X Extracts X X X X
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