TMI Blog2023 (12) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... ized u/s 143(3) of the Act. In the light of the inquiry made by AO regarding the share capital/premium allotted/received by assessee during the original/abated/scrutiny assessment, the impugned action of AO again to examine the same alleging escapement of income tantamount to review of his own action which is not permissible; and therefore, the action of the AO to reopen the assessment by issuance of notice u/s 148 merely on the basis of change of opinion , cannot satisfy requirement of law u/s 147 of the Act to validily reopen the assessment. We find that AO in the reasons recorded had no tangible material in his possession to reopen the assessment, and he has resorted to reopening only after perusal of balance-sheet of the assessee regarding shares allotted on premium, which action itself vitiates the impugned reopening of assessment. Thus we find that the issue regarding share capital/premium allotted to M/s. Balaji Universal Tradelink Pvt. Ltd from whom assessee collected in the year under consideration was subjected to inquiry by AO during the original assessment and thereafter, he framed the assessment order on 30.12.2011 after consideration assessee s reply and the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal assessment order on 30.12.2011 by determining income at Rs. 16,34,85,660/- as under: - Description Amount (Rs.) Amount (Rs.) Income from business 5,45,372/- Add: Expenses disallowed as discussed above 48,028/- Add: Unexplained investments u/s 69B of the Act as discussed above 13,65,92,256/- Add: Undisclosed investments u/s 69B of the Act as discussed above 2,63,00,000/- 16,34,85,656/- Gross Total Income 16,34,85,656/- Less: Chapter VIA Deductions --- Net Total Income 16,34,85,656/- Rounded off u/s 288A 16,34,85,660/- 5. Thereafter, the AO issued impugned notice u/s 148 of the Act dated 29.03.2014 conveying his desire to reopen the assessment u/s 147 of the Act, alleging escapement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuine transaction, amount received by the assessee in form of share capital, securities premium/share application money amounting to Rs. 14,63,50,000/- is nothing but unaccounted income of the assessee company introduced into the business in the form of share Capital, Securities Premium share application, which is otherwise chargeable to tax u/s.68 of the I. T. Act. 9. Hence, I have a reason to believe that in the case of the assessee, income of Rs. 14,63,50,000/- chargeable to tax escaped assessment for A.Y.2009-10 within the meaning of section 147 of the I. T. Act,1961, and therefore, it is a fit case for issue of notice u/s.148 of the |. T. Act,1961. 10. Issue notice u/s 148 of the I. T. Act, 1961. (Bhopal Singh Bist) Dy. Commissioner of Income Tax, Central Circle-40, Mumbai. 6. On the strength of the aforesaid reasons, the AO reopened the assessment and after verification of material facts made an addition of Rs. 2,85,50,000/- in his re-assessment order dated 26.03.2015, by taking note of the fact that the assessee company in the relevant year had allotted its shares of face value of Rs. 10/- on 03.10.2008 at a premium of Rs. 490/- to M/s. Balaji Universal T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the shares allotted on premium, therefore, the action of AO (to reassess the shares allotted on premium) tantamount to change of opinion, which is not permissible because AO does not have power to review his own order by invoking jurisdiction u/s 147 of the Act. The Ld AR, explained the relevant facts relating to the legal issue by pointing out that pursuant to search operation u/s 132 of the Act on 31.10.2009 (AY. 2010-11), the original assessment for AY 2009-10 was framed in December 2011 u/s 153A/143(3) of the Act. And for purpose of assessment u/s 153A of the Act, assessment proceedings of AY 2009-10 was abated [as per second proviso to section 153A of the Act]; and it is trite law that in an abated proceedings, the AO had power to assess the income of assessee without any restriction, in other words, there was no requirement that addition/disallowance can be made only on the basis of incriminating materials un-earthed during search. Consequently, according to Ld AR, the AO during original assessment proceedings had asked the assessee, about the details of the share capital/premium allotted/received by it vide notice dated 07.09.2011; and pursuant to which, the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eover, according to Ld. AR, from the discussion of facts supra, it can be seen that all the relevant facts related to allotment of shares at premium was in the knowledge of AO in the original assessment proceedings, therefore, the impugned action of the AO to again rack-up the issue (i.e. about equity shares (57,100) allotted to M/s. Balaji Universal Tradelink Pvt. Ltd for a premium of Rs. 490/-) tantamount to change of opinion . According to the Ld. AR, the action of the AO to have resorted to reopening is bad in law. And the Ld. CIT(A) rejecting the legal issue on the specious plea that since the AO had framed the assessment u/s 153A of the Act, he could not have made the addition for absence of incriminating material is fallacious and legally flawed. 8. Per contra, the Ld. DR appearing for the department supported the action of the Ld. CIT(A) and submitted that this issue was not looked into in the original assessment framed by the AO u/s 153A/143(3) of the Act vide order dated 30.12.2011. And therefore, according to him, the AO had the power to reopen the assessment and make addition of Rs. 2,85,50,000/-. According to Ld. DR, the action of the AO in making addition of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warrant the holding of a belief that income chargeable to tax has escaped assessment. In other words, before the AO issues notice u/s 148 of the Act, he must have recorded the reason to believe escapement of income. It is no doubt true that this Tribunal cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the AO on the point as to whether action should be initiated for re--opening the assessment. At the same time, we have to bear in mind that it is not, any and every material, howsoever vague and indefinite or distant or remote and far--fetched, which would warrant the formation of belief relating to escapement of income. Further, it is trite law that AO does not have power to review his own action/assessment. So if an AO during scrutiny assessment has enquired about certain issue/relevant facts pertaining to the income of assessee for the relevant assessment year, and thereafter in the assessment order he has taken a position, then on that issue, he is precluded from reviewing the same and cannot use his jurisdiction to reopen the assessment for doing so. And it is trite law that there should be tangible material in the possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company, or the past record of earnings. According to the AO, it cannot be based on hypothetical presumptions as to the potential growth of earnings that may be achieved at some unspecified date in the future. Therefore, according to the AO, the valuation of the share capital at a premium of Rs. 490/- per share cannot be accepted. And thereafter, he was pleased to make an addition of Rs. 2,85,50,000/- u/s 68 of the Act. 11. From a perusal of the aforesaid reasons recorded by the AO to reopen as well as frame the reassessment, it is noted that he reopened the assessment alleging escapement of income to the tune of Rs. 14,63,50,000/-. And ultimately had made an addition of only Rs. 2,85,50,000/-. According to the Ld. AR, in the original assessment u/s 143(3)/153A of the Act dated 30.12.2011, the AO had conducted inquiry in respect of share capital/premium raised by assessee during the year under consideration by issuance of notice u/s 142(1) of the Act dated 07.09.2011 and drew our attention to the copy of the same wherein he directed the assessee to furnish (relevant portion of notice) as under: - 4. To furnish in writing and verified in prescribed manner, the information c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about 57,100 shares allotted to M/s. Balaji Universal Tradelink Pvt. Ltd and the assessee had disclosed the details of share-subscriber as well as the premium of Rs. 490/- per share and assessment of before AO that no addition u/s 68 of the Act can be made in respect of Rs. 2,85,50,000/- received from M/s. Balaji Universal Tradelink Pvt. Ltd because it was a regular income tax assessee and payments were made through banking channel and it was capital receipt. And the AO had not made any adverse finding in the original assessment. In this factual background, even though the AO has not made any discussion on this issue in the assessment order it is implied that AO has accepted the transaction since no adverse view was recorded by him in the assessment order. In this factual context, it is gainful to refer to the decision of Hon ble Bombay High Court in Aroni Commercials Ltd. Vs. DCIT (2014) 44 taxmann.com 304 (Bom) wherein it was observed by Hon ble High Court that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the assessing officer while completing the assessment. It is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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