TaxTMI 
TaxTMI 
2019 (8) TMI 1336
X X X X Extracts X X X X
X X X X Extracts X X X X
....3 declaring the total income of Rs. 22,23,404/-. The case of the Petitioner was selected for scrutiny by the respondent- authorities. A notice under section 143(2) of the Act was issued on 13 August 2013. The Petitioner participated in the assessment proceedings. The Assessing Officer vide a notice under section 142(1) issued on 21 August 2014 called upon the Petitioner to explain shareholding pattern, details of shareholders, details of share application money/premium, allotment of shares, details of expenditure above Rs. 5 lakh debited to profit and loss account and the comparative figures of gross profit and net profit. The Petitioner submitted details of the information called for on 9 September 2014 and 9 February 2015. The Assessing Officer issued another notice under section 142(1) on 13 February 2015 seeking further details regarding share premium, details of earning per share and profit earned by the Petitioner; the comparative rate of premium charged by other companies; computation of share premium, the net worth of the Petitioner, subscription agreements etc. The details were submitted by the Petitioner on 20 February 2015. One more notice under section 142(1) of the Act....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... proposing to reopen the assessment must reflect an application of mind of the Assessing Officer to this critical facet of section 147 of the Act, i.e. after four years the assessment can be reopened only if there is a failure by the assessee. 9. Turning to the facts, the reasons supplied to the petitioner are as under: "1. The return of income for the AY 2012-13 was e-filed on 30.09.12 declaring total income of Rs. 22,23,404/-. The same was processed u/s 143(1). Subsequently, the assessment was completed u/s 143(3) on 13.03.2015 assessing the total income at Rs. 22,23,404/-. The assessee company is engaged in the business of construction. 2. During the year under consideration, i.e. F.Y. 2011-12 relevant to A.Y. 2012-13, the assessee company has issued 103845 shares of the face value of Rs. 100 at a premium of Rs. 1200 per share. On perusal of the financials of the company from A.Y. 2008-09 onwards it is observed that the assessee company has been continuously showing business losses till A.Y. 2018-19. Because no profits from the business have been offered for tax during the period before the year of issuance of shares, there is no justification for issuing shares at such a h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Y. 2012-13. 7. Therefore, a notice u/s 148 r.w.s. 147 of the Act is being issued to assess such income chargeable to tax, which has escaped assessment, after obtaining necessary approval from the competent authority." The petitioner in his objections had pointed out there is no averment in the reasons that the assessee has failed to disclose fully and truly all material facts necessary for the assessment, and factually there has been no such failure. While rejecting the objections, the Assessing Officer has not even noticed this requirement and has referred to the decision of the courts which do not deal with the situation at hand. Thus, the first jurisdictional requirement that the notice must disclose an application of mind by the authority seeking to reopen the assessment to the additional requirement under section 147 in case of reopening after four years is missing. 10. Secondly, there is no such failure by the Petitioner- assessee to fully and truly disclose all the material facts necessary for the assessment. In the reasons given for reopening the assessment, the Assessing Officer had stated that considering that the Petitioner was showing no profits from the business fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... whom share premium has been collected during F.Yrs. 2009-10 and 2011-12. ii. The earning per share and profit in the past years as against the premium collected per share. iii. The premium charged by the reputed companies in he field of business and the comparative data. iv. The valuation of premium worked out. The financial consultants on whose advice such a premium was worked out. v. The net worth of the company as per Balance Sheet and a presentation on future prospects of the company. vi. The Subscription Agreements with the parties. vii. The minutes of Meeting of the Board of Directors where the premium amount to be charged was fixed. viii. The Resolution authorizing the issuing of shares passed. When was this Resolution intimated to the Registries of Companies: ix. The source of income of all investing companies/ individual? Copy of their ROI for last five years. x. The details of Directors of the investing company/ Companies and whether any Directors partners in these entities are in any way related to any of the Director's / shareholders of the investor. 14. The petitioner submitted a note on valuation of shares at a premium. The relevant part of which r....