AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 1560
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.... allotment of equity shares. On 25.09.2010, the assessee filed its return of income for the AY 2010-11 declaring a total income Rs. 37,746/. On 06.04.2011, as a part of the exercise of reorganization of the group and consolidation of shareholding, the right to receive allotment of shares against the said share application money of Rs. 87 crores, was transferred by Shri Analjit Singh to his family trust, i.e. Neeman Family Foundation through a gift. The assessee's return for AY 2012-13 was selected for scrutiny, because a substantial amount was received against unallotted shares. On 16th February, 2015, the AO issued a questionnaire querying the assessee why share application money of Rs. 87 crores received should not be added to its income. 3. The assessee's reply was that the share application money was received during the A.Y. 2012-13 and that it was holding 5% of paid up share capital of Max India Limited as promoter group entity. The allotment of equity shares by assessee to Neeman Family Foundation, would have resulted in change in ownership status of assessee from individual promoters to Trust. The said allotment of shares to trust would then have triggered the requirement ....
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....tes of the meeting of the Board of Directors of M/s Max Venture Investment Holdings Pvt. Ltd. It was quite surprising that the meeting of board of director was held on 06.01.2010 and 20.04.2010 under the name of M/s Max Venture Investment Holdings Pvt Ltd. and Sh. Sanjiv Malik has signed the Board meeting. While on 06.01,2010 and 20.04.2010 neither M/s Max Venture Investment Holdings Pvt. Ltd. was in existence nor Sh. Sanjeev Malik was the director of that company. The name of company was M/s Dynavast India Pvt. Ltd. and this name was subsequently changed to Max Venture Investment Holdings Pvt. Ltd. Sh. Sanjiv Malik was appointed as director of the company on 28.12.2013. Which mean that the assessee has submitted the document which was created after the happening of events thus it does not support its theory of share application money provided by Sh. Analjit Singh. 3.2 It is observed that the authorized share capital of the assessee company was Rs. 20 lakh as on 31.03.2009 and issued capital was Rs. 1,00,000/-. The balance capital to be issued was Rs. 19 lakh. The assessee company is receiving Rs. 87 crore as Share application money against the pending share capital of Rs. 19 lak....
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....it does not support its theory of share application money provided by Sh. Analjit Singh. iv. Further, the contradictory submission of the assessee and M/s Neeman Family Foundation further strengthens the view that the credits of Rs. 87 Crore were not genuine. As per the submission filed by the assessee dated 13.7.2016 "Sh. Analjit Singh had vide gift dated 6.4.2011 conveyed the rights to allotment of shares against the aforesaid application money to Neeman Family foundation without consideration. As per assessee version Sh. Analjit Singh has given gift to M/s Neeman Family Foundation, while M/s Neeman Family Foundation vide its reply dated 9.12.2014 has submitted the copy of balance sheet as on 31.03.2012 and income and expenditure account for the year ended on 31.03.2012. As per this balance sheet Neeman Family Foundation has submitted that Donation received till 31.3.2012 was Rs. 89.16 crores. M/s Neeman Family foundation has never, stated that it has received gift. Hence M/s Neeman Family foundation in its return of income provided receipt of donation and no gift was declared by it. This clearly indicates that there is contradiction between, the submission of the assessee and d....
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....x Act, 1961." 5. Mr. Ajay Vohra, learned senior counsel appearing for the assessee, impugned the reassessment notice and urged that when the scrutiny assessment for AY 2011-12 had examined the matter and the addition made, on the same ground, was deleted on appeal, the revenue could not resuscitate the same issue, without any new material. It was submitted that the revenue's argument that the CIT (A) had issued directions to re-examine the accounts, is an ill-founded submission, unsupported by any such observation in the Appellate Commissioner's order. 6. It is urged that in the facts of the present case, the assessee received share application money from its founder and promoter, i.e., Shri. Analjit Singh, whose identity and creditworthiness is admittedly not in doubt, including by the AO. The reasons recorded doubt the source of receipt of said share-application money from Mr. Singh on various paltry and erroneous reasons explained above, which are factually incorrect and illegal, made on mere pretence with an intent to reopen the concluded assessment; to conduct roving and fishing enquiries and treat the receipt of share application money as unexplained income under Section 68....
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....the assessee to contend that the Income-tax Officer did not hold the belief that there had been such non-disclosure. The existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. 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 in good faith. It cannot be merely a pretence. It is open to the court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of the section. To this limited extent, the action of the Income-tax Officer in starting proceedings in respect of income escaping assessment is open to challenge in a court of law." 9. The revenue contests the writ petition; urging that the reassessment notice is valid and within the bounds of law. It is submitted that the reasoning of the CIT (A) and the documents furnished during miscellaneous proceedings, became a starting point for examining the assessee's returns. In this regard, it is submitted that contradictions were clearly noticed ....
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....hy no shares were issued from F.Y. 2009-10 to 2014-15. The contradiction itself established that the transaction pertaining to credit of Rs. 87 crores was not genuine. 11. Commissioner of Income Tax v. Kelvinator, (2010) 320 ITR 561 (SC) is now the ruling precedent on what are valid considerations that would justify issuance of a reassessment notice, under Section 147/148. These are briefly, when full disclosure of material facts is not made during the original assessment (such as when essential documents are not produced or shown); etc. The Supreme Court held that the A.O. has power to re-open the assessment if there is tangible material to conclude, prima facie that there has been escapement of income. However, the court cautioned that the power of reassessment is not one of review and that it does not admit of formation of a second opinion. The scope of the phrase "reason to believe" was examined by the Supreme Court previously in M/s. Phool Chand Bajrang Lal and Anr. v. Income Tax Officer and Anr., (1993) 203 ITR 456 (SC). In Phool Chand, the court made observations which remain undisturbed in Kelvinator: "Thus, where the transaction itself on the basis of subsequent informat....