9911796707
TMI Blog2023 (1) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,25,787/-. Return of the petitioner was processed and case of the petitioner was selected for scrutiny. Notice under Section 142(1) was issued on 11.6.2018, requiring the petitioner to submit specific details relating to (a) increase in share capital along with confirmation and ITR of the persons from whom the same was received, (b) details of premium received on shares along with name, PAN, address and confirmation of the persons from whom same was received and (c) details of method adopted for determining premium of shares. 2.1. Petitioner on receipt of said notice replied in detail vide communication dated 22.6.2018. Another notice under Section 142(1) came to be issued on 10.10.2019 inquiring further into valuation of premium and its conformity with Rule 11U and 11UA of the Income Tax Rules, 1962. This also has been replied to by the petitioner on 22.10.2019 and finally a show cause notice was issued on 3.12.2019 in respect of valuation of premium on shares issued by petitioner. 2.2. Petitioner on receipt of said show cause notice also filed a reply on 6.12.2019, explaining every circumstance and thereafter, Assessing Officer having satisfied with such explanation has not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be issued unless superior authority is satisfied of the reasons recorded by the Assessing Officer. Whereas, in the instant case, sanction which is shown to have been accorded by relevant higher authority is less than few hours on the same day, which clearly indicates that higher authority has not applied its mind while granting sanction and as such, sanction being reflected is merely an empty formality and very issuance of notice under Section 148 of the Act is mechanical exercise of power, without just reasons. Hence, deserves to be quashed. It has also been submitted that respondent is seeking to reopen the assessment only on one issue that petitioner received excess share premium of Rs.12,43,55,310/- against issuance of 6,00,75,029 shares and such share premium is required to be added under Section 56(2)(vii) (b) of the Act and this issue had been clarified by the petitioner and when called for assessing officer after having satisfied himself with the explanation so offered has not made any addition on this issue while passing the assessment order under Section 143(3) on 15.12.2019 and as such, authority is now inclined to take a different view than what has been examined and de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um Finance (P) Ltd. case; (3) [2015] 75 taxmann.com 281 (Gujarat)- Gujarat State Board of School Taxtbooks- on contention of change of opinion; (4) Decision dated 19.7.2016 delivered in Special Civil Application No.2854 of 2013; (5) Decision dated 28.9.2016 passed in Special Civil Application No.15068 of 2010; 4. As against this, learned advocate Mr. Varun Patel appearing for respondent authority has vehemently opposed the petition on the ground that action is sought to be initiated within a period of 4 years and as such, only requirement of satisfaction of assessing authority as stipulated under Section 147 of the Act would be required and same is available. Merely because the Assessing Officer at relevant point of time has not opined or allowed addition, it cannot be construed as a change of opinion; only requirement is satisfaction of an authority especially when same is within the period of 4 years. It has also been contended that valuation which has been projected was not as per the relevant rules. Hence on this ground also, it is open for an authority to reopen the assessment. Mr. Patel has further submitted that all the decisions which are relied upon by the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition compilation. While dealing with the aforesaid queries raised, petitioner has enclosed all details vide Annexure-VII, dealing with the share capital and share premium consideration received from the holding Company based in Netherlands. So, petitioner has explained that filing of ITR is not applicable and they do not have PAN in India as well and the shareholders confirmation was also supplied in the said Annexure. Which method has been adopted is also disclosed in the said reply by indicating that net present value used under discounted free cash-flow method used to determine the premium on shares and in the said reply all details have been furnished as sought for. Based upon such explanation and reply in addition to further details which have been provided, the assessment order in specific has been passed on 15.12.2019 reflecting at Annexure-E on page 106 and in the said order it has been clearly indicated that no addition is made on the said issue by the authority and as such, issue appears to have been considered and no addition was made and this has reached finality. 5.2. Further, it appears that yet another show cause notice was issued on 03.12.2019 at Annexure-D-5, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that reasons for re-opening are merely on the ground of change of opinion and as such reassessment cannot be made after considering such detailed inquiries and explanation in connection with the taxability under Section 56(2) (vii)(b) of the Income Tax Act and, therefore, requested not to precipitate the issue any further. Considering all the aforesaid material on record, a perusal of the order dated 16.11.2021 disposing of the objections filed against notice issued under Section 148 of the Income Tax Act would prima facie indicate that conclusion arrived at is nothing but change of opinion, particularly, when Assessing Officer after having been satisfied with the explanation offered during course of assessment proceedings has not made any addition to the aforesaid issue. As pointed out earlier, said issue which has cropped up and raised for the purpose of re-opening of the assessment has been well explained as indicated above and as such, it appears that issuance of notice under Section 148 of the Income Tax Act is based upon a mere change of opinion. 5.4. In fact, reassessment proceedings appears to have been initiated on the basis of very same material and no new material or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed after full hearing and which has otherwise become final is subject to reopening on certain grounds. Ordinarily, a judicial or quasi-judicial order is subject to appeal, revision or even review if statute so permits but not liable to be re-opened by the same authority. Such powers are vested by the Legislature presumably in view of the highly complex nature of assessment proceedings involving large number of assessees concerning multiple questions of claims, deductions and exemptions, which assessments have to be completed in a time frame. To protect the interest of the revenue, therefore, such special provisions are made under section 147 of the Act. However, it must be appreciated that an assessment previously framed after scrutiny when reopened, results into considerable hardship to the assessee. The assessment gets reopened not only qua those grounds which are recorded in the reasons, but also with respect to entire original assessment, of course at the hands of the revenue. This obviously would lead to considerable hardship and uncertainty. It is precisely for this reason that even while recognizing such powers, in special requirements of the statute, certain safeguards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a claim made by the assessee in the return is not rejected, it stands allowed. If such a claim is scrutinized by the Assessing Officer during assessment, it means he was convinced about the validity of the claim. His formation of opinion is thus complete. Merely because he chooses not to assign his reasons in the assessment order would not alter this position. It may be a non-reasoned order but not of acceptance of a claim without formation of opinion. Any other view would give arbitrary powers to the Assessing Officer. 43. We are, therefore, of the opinion that in a situation where the Assessing Officer during scrutiny assessment, notices a claim of exemption, deduction or such like made by the assessee, having some prima facie doubt raises queries, asking the assessee to satisfy him with respect to such a claim and thereafter, does not make any addition in the final order of assessment, he can be stated to have formed an opinion whether or not in the final order he gives his reasons for not making the addition." 9. In view of aforesaid circumstances, and in addition thereto, it is further appearing to us that the ratio laid down by the Apex Court in the case of Kelvinator o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssesssing Officer (AO) to call upon the assessee to satisfy him (AO) in respect of such claim and thereafter if he does not make any addition in the final order of assessment, it can be stated that AO had formed an opinion whether or not to grant the relief in the final order and also gives his reasons for not making the addition thereafter cannot change his view or opinion. In the case of Gujarat Power Corpn. Ltd. v. Assistant Commissioner of Income Tax reported in [2013] 350 ITR 266, it was opined that reassessment on the basis of mere change of opinion is impermissible. A reference is made to paragraphs 8 and 9 of the said decision. 5.10. In the said decision, in paragraph 11 the stand of the Revenue was also dealt with about the stand that within a period of four years re-opening of assessment can be undertaken. About the entertainability of petition in the context was also dealt with based upon the decision of Calcutta Discount Co. Ltd. (supra). The relevant observations contained in paragraph 11 of the said decision are apposite to be referred to: "11. The contention of the Revenue that the impugned action is within the period of four years and, therefore, it is always ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h have been raised with regard to issues now raised have already been explained by the petitioner and the assessing authority having accepted the replies and explanation, no addition is made and as such, a case is made out by the petitioner calling for our interference, since reopening of assessment appears to be on the basis of change of opinion which is against the settled proposition of law as discussed herein-above. 7. In the context of aforesaid discussion, we proceed to examine the applicability or otherwise of the decision in the case of Gruh Finance Ltd. v. Joint Commissioner of Income-Tax reported in [2002] 123 Tasman 196 (Gujarat) referred to by revenue to justify their action for reopening of assessment by issuance of notice under Section 148 of the Income Tax Act. On perusal of said decision it would clearly emerge that facts of the said case are altogether different and apart from that, it is not possible to construe that at the time of first assessment, there was no conscious consideration of material and no mistake can be said to have been committed by the AO permitting the Revenue to re-open the assessment. No income appears to have escaped assessment as is visible ..... X X X X Extracts X X X X X X X X Extracts X X X X
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