TaxTMI 
TaxTMI 
TaxTMI 
2016 (7) TMI 1044
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.... passed an assessment order under section 143(3) read with section 147 of the Act on 17.02.2015 whereby, the total income as declared by the petitioner was accepted by him and the proceedings under section 148 of the Act were also dropped. Subsequently, by the impugned notice dated 31.03.2015 issued under section 148 of the Act, the assessment of the petitioner is once again sought to be reopened for assessment year 2010-11. By a letter dated 16.08.2015, the petitioner requested the respondent to provide the reasons for reopening the assessment of the petitioner, which came to be furnished by a letter dated 19.08.2015. The petitioner vide its letter dated 21.09.2015, raised various objections on the merits of the reopening and requested the respondent to drop the reassessment proceedings. By an order dated 13.10.2015, the respondent disposed of the objections, holding that the objections raised by the petitioner are not acceptable and rejected the same in totality. Being aggrieved, the petitioner has filed the present petition challenging the impugned notice. 3. Mr. B. S. Soparkar, learned advocate for the petitioner, submitted that the impugned notice is liable to be quashed and ....
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.... had noted that on the basis of the order passed by the Commissioner of Income Tax (Appeals) in the case of some other assessees, the satisfaction of the Assessing Officer and the formation of opinion in the case of the assessee therein could not be sustained and the same could be said to be a borrowed satisfaction from another officer. Such borrowed satisfaction in the absence of any application of mind and any real finding in the case of the assessee, would not constitute valid reason to believe that the income has escaped assessment. It was submitted that in the facts of the present case, from the reasons recorded, it cannot be culled out as to how there is any unaccounted income which has escaped assessment. It was pointed out that the reasons are based solely on the human probabilities and not on facts. It was, accordingly, urged that on the reasons recorded, the Assessing Officer could not have formed the belief that income chargeable to tax has escaped assessment. Under the circumstances, the assumption of jurisdiction on the part of the Assessing Officer by issuance of notice under section 148 of the Act is without authority of law and hence, the impugned notice deserves to....
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.... of reopening the assessment. 4.2 Reference was made to the decision of this court in the case of Olwin Tiles (India) (P) Ltd. v. Deputy Commissioner of Income Tax, (2016) 283 CTR (Guj.) 200, wherein, the assessment was sought to be reopened on the ground that the assessee had issued 60,000 shares at a face value of Rs. 10/- per share with a premium of Rs. 990 per share. The Assessing officer had formed the opinion that excess premium amount of Rs. 967/- was unexplained cash credit in the hands of the assessee and therefore, he has reason to believe that income to the extent of Rs. 5,80,20,000/- has escaped assessment. The court, in the facts of the said case, found that the reasons were not perverse or so untenable as to terminate the assessment at that stage on the ground that the Assessing Officer cannot be stated to have any reason to believe or tangible material to form such an opinion that income chargeable to tax had escaped assessment. The court found the facts to be prima facie glaring and was of the view that whether the assessee will be able to discharge the minimal burden of establishing identity, source and creditworthiness of the depositors is a question not possible....
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....e of opinion, does not merit acceptance. It was, accordingly, urged that the petition being devoid of merits, deserves to be dismissed and that the Assessing Officer should be permitted to proceed further pursuant to the impugned notice. 5. In rejoinder, Mr. B. S. Soparkar, learned counsel for the petitioner submitted that the report of I & CI is a quantitative report and not a qualitative report and that the report alone has no legs to stand. It was submitted that if on a perusal of the report the Assessing Officer had made prima facie investigation into the facts and found some material on the basis of which he could have formed an opinion that the income chargeable to tax has escaped assessment, he may be justified in reopening the assessment. However, in the absence of any inquiry having been made, the Assessing Officer has no reason to form requisite belief. Referring to the reasons recorded, it was submitted that there is not even a whisper as to how the amount received by way of investment in shares is escaped income. It was submitted that the I & CI report is not about any income having escaped assessment. Thus, the Assessing Officer can rely upon it for the purpose of mak....
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....to the merits of the rival submissions, it may be germane to refer to the reasons recorded by the Assessing Officer for the purpose of reopening the assessment which read thus: "ORDER SHEET M/s. Kothi Steel Ltd. AY 2010-11 31/03/15 The assessee M/s Kothi Steel Ltd. for AY 2010-11 has filed its Return of Income (RoI) on 10/09/2010. The said RoI has been processed u/s 143(1) on 11/01/2011. Information was received from I & CI that certain corporate entities have issued shares at a premium. Accordingly, on perusal of the P & L account of the said assessee for the Financial Year [FY] 2008-09 relevant to AY 2009-10, it was seen that the assessee has issued 5,00,000 shares of Rs. 10/- each at a premium of Rs. 90/- on private placement basis. The assessee is basically based at Godhra and the said private placement of shares at a premium has been done with entities based at Kolkatta. In the case of the assessee, transactions of this nature had been carried out in AY 2009-10 also to the extent of 6,05,000 shares of Rs. 10/- each at a premium of Rs. 90/- on private placement basis. In the said AY, in the order u/s 143(1) r.w.s. 263, the AO has added the amount of Rs. 6,05,00,000/-. The ....
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....asons recorded reveal that the assessee had filed return of income on 10.09.2010, which came to be processed under section 143(1) on 11.01.2011. The reasons recorded, however, are silent with regard to the passing of assessment order dated 17.02.2015 under section 143(3)(ii) read with section 147 of the Act. In the reasons, it is further recorded that the information was received from I & CI that certain corporate entities have issued shares at a premium and that, on perusal of the profit and loss account of the said assessee for the financial year 2008-09 relevant to assessment year 2009-10, it is seen that the assessee has issued 5,00,000 shares of Rs. 10/- each at a premium of Rs. 90/- on private placement basis. The assessee is basically based at Godhra and the said private placement of shares at a premium has been done with entities based at Kolkatta. It is further the case of the Assessing Officer that the transactions of this nature had been carried out in assessment year 2009-10 also to the extent of 6,05,000 shares of Rs. 10/- each at a premium of Rs. 90/- on private placement basis, and in relation to the said assessment year, the order u/s 143(1) read with section 263 of....
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.... material which has been placed on record, there is nothing to show that during the course of the assessment proceedings, the Assessing Officer had called for any information from the petitioner as regards issuance of shares at a premium and had examined the issue, though the same may not have been reflected in the assessment order. According to the assessee, since in relation to assessment year 2009-10, the Assessing Officer was already considering the issue, such issue was in his mind even at the time of framing assessment in relation to the assessment year under consideration. In the opinion of this court, the issue of change of opinion cannot be stretched to such an extent so as to undertake the exercise of examining as to what was in the mind of the Assessing Officer at the time of framing the assessment, without there being any material on record to show that he had examined such issue. Under the circumstances, the contention that the reopening is based upon a mere change of opinion does not merit acceptance. 11. The learned counsel for the petitioner has also assailed the impugned notice on the ground that on the reasons recorded by the Assessing Officer, he could not have ....
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....ued shares at a premium. It appears that the petitioner's name was also included in such list. However, it cannot be gainsaid that per se an information that the petitioner has issued shares at a premium would by itself not constitute an information for the purpose of formation of belief that the income chargeable to tax has escaped assessment. The Assessing Officer has also placed reliance upon the assessment order for assessment year 2009-10, since the facts of the said year and the facts of the present case are similar, for formation of the belief that in the light of the order passed for the assessment year 2009-10, income chargeable to tax has escaped assessment even in the present year. On a perusal of the reasons recorded, it can be seen that it is nowhere stated by the Assessing Officer that the amount received by way of share premium is the undisclosed income of the petitioner or that the same is in the nature of undisclosed cash credit. According to the Assessing Officer, the payment of share premium on private placement from entities hitherto unknown for a company which is not doing financially well, has given unentitled benefit to the petitioner. However, on a reading o....
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....ced strong reliance upon the decision of this court in the case of Olwin Tiles (India) (P) Ltd. v. Deputy Commissioner of Income Tax (supra) wherein, the court had dismissed the petition challenging the reopening on the ground that the assessee company had issued its shares at a huge premium during the financial year 2010-11. In this regard, a perusal of the said decision reveals that in the facts of the said case, the Assessing Officer had made a detailed analysis of the data furnished by the assessee with its return, which showed that whereas the net worth of the shares issued is Rs. 33, the same have been allotted for Rs. 1,000/-, i.e. an excess of Rs. 967/-. After such detailed analysis, the Assessing Officer came to the conclusion that the excess premium amount of Rs. 967/- was unexplained cash credit in the hands of the assessee and therefore, he has reason to believe that income to the extent indicated in the reasons has escaped assessment. In the facts of the present case, the Assessing Officer has merely placed reliance upon the I & CI information and the assessment order passed in the previous year, without making any inquiry worth the name to form a belief that excess pr....