TaxTMI 
TaxTMI 
2025 (5) TMI 4
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....e particulars of its income alongwith the return of income. b) Without prejudice to what has been stated above, the reasons for reopening furnished by the Assessing Officer are vague and merely states that "nature" and "justification" for charging share premium over and above the intrinsic value of the shares remains unexplained and this cannot be reason for reopening and represents mere suspicion in the mind of the Assessing Officer. 2. The CIT(A) erred in upholding the action of the Assessing Officer in treating the share premium of Rs. 2.76.00,000/- received by the appellant as unexplained cash credit under section 68 of the Income tax Act, 1961 (the Act). 3. The appellant submits that the Assessing Officer be directed: a) to delete the addition made amounting to Rs. 2,76,00.000/- under section 68 of the Act; and to modify the assessment in accordance with the provisions of the Act. 4. Each of the above grounds of appeal are independent and without prejudice to each other." 3. In its appeal, the assessee has challenged the validity of the reopening of the assessment under section 147 of the Act and has also raised the grounds on merits challenged the additions ma....
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....he amount of share premium charged has exceeded the intrinsic value of the share, however, there was neither any information with the AO with respect to the intrinsic value of the shares of the assessee nor what part of the share premium is in excess of such intrinsic value. The learned AR submitted that in the reasons recorded for reopening the assessment, there is no mention of the amount of income chargeable to tax which is escaped assessment. 7. On the other hand, the learned Departmental Representative by vehemently relying upon the orders passed by the lower authorities submitted that the proceedings under section 147 of the Act were correctly initiated by the AO in the present case. 8. We have considered the submissions of both sides and perused the material available on record. In the present case, the return filed by the assessee was processed vide intimation issued under section 143(1) of the Act and the same was not selected for scrutiny. Thus, no order under section 143(3) of the Act was passed. The AO, pursuant to the notice issued under section 148 of the Act, initiated reassessment proceedings. The reasons recorded by the AO on 19/03/2014 were provided to the asses....
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....ased on some material which has come to the knowledge of the AO before initiating proceedings under section 147 of the Act. While rejecting the objections raised by the assessee against initiation of reassessment proceedings, the AO vide order dated 06/02/2015 held that as the case was not subject to regular scrutiny assessment under section 143(3) earlier, the issue of share premium received was not examined. Though, it is true that, in the present case, as the return of income filed by the assessee was processed under section 143(1) of the Act and thus no scrutiny assessment was carried out, therefore, the impugned reassessment proceedings cannot be questioned on the ground of "change of opinion" by the AO. However, non-selection of the case for scrutiny does not in any manner belittle/reduce the significance and meaning of the term "reason to believe", which is of paramount importance for initiating proceedings under section 147 of the Act. Further, as has been held in various decisions, the reason to believe that income has escaped assessment should be based on some new or tangible material. Such a requirement also rules out the possibility of initiation of reassessment proceed....
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....ter issue notices to reopen the assessment. An interpretation which makes a distinction between the meaning and content of the expression "reason to believe" in cases where assessments were framed earlier under Section 143(3) and cases where mere intimations were issued earlier under Section 143(1) may well lead to such an unintended mischief. It would be discriminatory too. An interpretation that leads to absurd results or mischief is to be eschewed. 14. Certain observations made in the decision of Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra) are sought to be relied upon by the revenue to point out the difference between an "assessment" and an "intimation". The context in which those observations were made has to be kept in mind. They were made to point out that where an "intimation" is issued under section 143(1) there is no opportunity to the assessing authority to form an opinion and therefore when its finality is sought to be disturbed by issuing a notice under section 148, the proceedings cannot be challenged on the ground of "change of opinion". It was not opined by the Supreme Court that the strict requirements of section 147 can be compromised. On the contrary, from th....
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....the assessee after he accepted the return under Section 143(1) without scrutiny, and nothing more. This is nothing but a review of the earlier proceedings and an abuse of power by the Assessing Officer, both strongly deprecated by the Supreme Court in Kelvinator of India Ltd. (supra). The reasons recorded by the Assessing Officer in the present case do confirm our apprehension about the harm that a less strict interpretation of the words "reason to believe" vis- à-vis an intimation issued under section 143(1) can cause to the tax regime. There is no whisper in the reasons recorded, of any tangible material which came to the possession of the assessing officer subsequent to the issue of the intimation. It reflects an arbitrary exercise of the power conferred under section 147. 16. For the above reasons, we answer the substantial question of law framed by us in the affirmative, in favour of the assessee and against the Revenue. The appeal of the Revenue is accordingly dismissed. There shall be no order as to costs." (emphasis supplied) 11. Further, the Hon'ble Jurisdictional High Court in Balakrishna Hiralal Wani v/s ITO, reported in [2010] 321 ITR 519 (Bombay), emphasise....