TaxTMI 
TaxTMI 
2020 (6) TMI 375
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.... 3. That the Ld. CIT(A) has also erred in holding that there was independent satisfaction with the Assessing Officer of forming the belief for reopening of the assessment. 4. Notwithstanding the above said ground of appeal, the Ld. CIT(A) has erred in confirming the addition of Rs. 3,48,00,000/- in respect of share application money received from investors, who had confirmed the contribution of share capital in the company. 5. That the Ld. CIT(A) has failed to take into consideration the detailed submissions as submitted to him during the course of appellate proceedings. 6. Without prejudice to above ground of appeal, even otherwise the CIT(A) has erred in confirming the action of the Assessing Officer in making the addition of opening balance of share application money amounting to Rs. 25 lacs. 7. That the addition as confirmed by the CIT(A) is against the facts and circumstances of the case. 8. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 3. A perusal of the above grounds of appeal reveal that the assessee inter alia has taken the legal ground regarding ....
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.... within the limitation period of 12 months from the end of the month in which return is furnished as per the proviso to clause (ii) of section 143(2) [as was existing at the time of relevant assessment year]. Once the limitation period as prescribed vide proviso to clause (ii) of sub section (2) of section 143 is expired, it is not open to the AO to assess the income u/s. 143(3) of the Act and the return filed by the assessee u/s. 139 is deemed to be accepted, which however, can be re- opened u/s. 147 of the Act subject to the fulfillment of ingredients of section 147 and within the time period as prescribed u/s. 149 of the Act. So under such circumstances if the return is processed u/s. 143(1) and not u/s. 143(3) and after the prescribed period of limitation, the same cannot be assessed u/s. 143(3) though it may be interpreted as mere intimation assessment or otherwise, but the same shall be deemed to be accepted by the AO. Admittedly, in the case in hand, the return was processed u/s. 143(1) of the Act but the same had attained finality due to the expiry of limitation period of twelve months from the end of the month in which the return was filed. Hence, the assessment is d....
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....uthorized Capital Paid up Capital No. of Shares Issued Share Premium 2010-11 Rs. 2,00,00,000/- Rs. 19577500/- 290000 Rs. 2,61,00,000/- 2. The assessee has filed its return of income electronically on 01.04.2011 declaring Rs. 10,55,280/- income for the A.Y. 2010-11. The return was processed u/s 143(1). 3. From the return of income filed by the assessee, it has been observed that the company has nothing to justify the receipt of share premium at a a higher rate. The company has received share application money at Rs. 3,48,00,000/-.The book value of the shares of the company is just Rs. 10/-. There is nothing on record that could justify such a large premium. The assessee has adopted a modus operandi to introduce its own undisclosed income by way of issuing shares at a high premium. Also the source of capital becomes suspicious. 4. The Hon'ble courts have frowne upon such modus operandi. In the case of Som Nath Maini, 100 TTJ 917 the Hon'ble ITAT has observed that a worthless company cannot fetch a high price of Rs. 55/ share even though the payments are through banking channel and also the transaction is through a st....
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....ising that the High Court has found fault with the ITO for not examining the wife and the father-in-law of the assessee for proving the Department's case. All that we can say is that the High Court has ignored the facts of life. It is unfortunate that the High Court has taken a superficial view of the onus that lay on the Department." 7. The learned CTT(A) only got swayed by the issuance of notice by the AO under s. 131 to both the brokers from whom shares were purchased and sold and came to the conclusion that share transactions were genuine overlooking the material gathered by the AO from the statements recorded of broker M/s S.K. Sharma & Co. and the other facts and circumstances that volume of transactions of Jaipur Stock Exchange is only 600 shares and 1000 shares. Payments have been received from the brokers only in instalments over a period of 6-7 months. It is true that when transactions are through cheques, it looks like real transaction but authorities are permitted to look behind the transactions and find out the motive behind transactions. Generally, it is expected that apparent is real but it is not sacrosanct. If facts and circumstances so warran....
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.... issue. 5. Upon analysing the facts and circumstances of the case there is no basis of issuing the shares at such a high rate. Based on these facts and also the judicial opinion of jurisdictional High Court it gives a strong reason to believe that the assessee has introduced its own undisclosed income under the guise of issuance of share at premium at such high rate. 6. Receipt of such a high premium is against the human probability and and just contrary to very nature of human conduct as held by the Hon'ble Supreme Court in the case of CIT vs. Durga Das More, (1971) 82 ITR 540 (SC). In the said decision the Hon'ble Supreme Court has categorically held that reveune is entitled to lock into surrounding circumstances to find out the reality of recitals made in the documents. Ir the case of Sumati Dayal vs. CIT 214 ITR 801 (SC), the Hon'ble Supreme Court has also held that the matter has to be considered in light of the human probabilities. The assessment has not been framed under scrutiny. Only processing was done u/s 143(1). 7. It is further to be noted that the Hon'ble Supreme Court has also discussed about the meaning of informat....
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....ession ' information ' in the context of Section 147(b) of the Income-tax Act, 1961, must mean instruction or knowledge derived from extraneous sources concerning facts or particulars or as to law relating to a matter* bearing on the assessment. The Bombay High Court, in a recent decision, Commissioner of Income-tax v. A. J. Zaveri, [1968] 68 I.T.R. 594 (Bom.) after a discussion of the relevant case law, came to the conclusion that ' information' within the meaning of Section 34(1)(b) of the Income-tax Act. 1922, may consist of a different view taken of the facts on the record by a higher Tribunal on appeal from the Income-tax-Officer's decision. In that case, it was held that the decision of the Income-tax Appellate Tribunal constituted 'information to the Income-tax Officer as to which of the assessable parties was chargeable for a particular item of income. In the latest decision of this court in KB. Bansilal Abirchand Firm v. Commisioner of Income-tax, when the first assessment of the assessee's income was nade by the Incometax Officer the latter's information was that the assessee was a partner in another concern known as Bisesar House and that ....
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....er, how those decisions were applicable to the facts and circumstances of the present case has not been pointed out by the Assessing Officer in the reasons recorded. The Assessing Officer in this case had received the only information that the assessee had received a high premium along with share application money. However, this information alone, in our view, does not constitute any tangible material or to say any incriminating material to form a belief by the Assessing Officer that the income of the assessee had escaped assessment or to say in other words that the share application money received by the assessee was an unaccounted money of the assessee. The Assessing Officer has not recorded that he had received any information that the assessee had received share application money from some bogus / paper companies. No information has been pointed out in the reasons recorded or receipt of any bogus transactions undertaken by the assessee. Even the name of the companies form whom the share premium received has not been mentioned nor there is any allegation that those share applicants were not traceable or they were bogus / paper companies indulged in sham transactions. Mere inf....
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....isdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. The court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the court. The entire law as to what would constitute "reason to believe" had summed up by Supreme Court in Income Tax Officer v Lakhmani Mewaldas (1976) 103 ITR 437. Reliance in this respect can also be placed on the decision of the Hon'ble Punjab & Haryana High Court in the case of 'CIT vs Paramjit Kaur' (2008) 311 ITR 38 (P&H), wherein, making identical observations the Hon'ble High Court held that the in the absence of sufficient material to form satisfaction of the Assessing Officer that income of the assessee had escaped assessment, the issuance of notices u/s 148 of the Act was not valid. 10. The Ld. Counsel for the assessee at this stage has also invited our attention to the decision of the Coordinate Chandigarh Bench of the Tribunal in the case of 'D.D. Agro Industries Ltd v ACIT', ITA Nos. 349 & 350/Chd/2017 order dated 7.9.2017, wherein, on identical facts and circumstance....