TaxTMI 
TaxTMI 
2026 (7) TMI 43
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....ing the case of the case based on reason to suspect and borrowed satisfaction without any independent verification of his own which is not permitted u/s 147 of the Act, hence the entire reopening is bad in law and liable to be quashed. 3. That on the facts and in the circumstances of the case and in law, the ld. AO erred in reopening the case of the assessee based on a mere change of opinion when the issue of raise in share capital during the year was duly considered by the preceding learned AO in the original assessment proceedings." 2.1. After hearing the rival contentions and perusing the material on record, we find that the assessee has raised the above additional ground of appeal challenging the jurisdiction of the AO to make addition. In our opinion the issued raised in the additional ground is a purely a legal issue qua which all the facts are available in the appeal folder and no further verification of facts are required from any quarter whatsoever. In our considered view the assessee is at liberty to raise any legal issue before any appellate authority for the first time even when the same has not been raised before the lower authorities. The case of the asses....
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....the AO formed the reason to believe that income of Rs.5,11,35,000/- has escaped assessment. The ld. AO based on the said reasons added the said share capital / share premium of Rs.5,11,35,000 to the income of the assessee as unexplained cash credit in the assessment framed u/s 147/ 144(3) of the Act. 3.2. The learned CIT (A) affirmed the same on merit. 3.3. The learned AR submitted that reopening of assessment has been made invalidly by the AO on the basis of information received from the Investigation Wing, as the AO has not recorded his own satisfaction and relied on the satisfaction recorded by the Investigation Wing which is borrowed satisfaction. Thus, the AO has reopened the case without application of mind on the wrong facts. The learned AR submitted by referring to the audited balance sheet that during the course assessee has issued only 15,90,000 equity shares of face value at Rs.10 each thereby collecting Rs.1,59,00,000 against the allotment of shares. The learned AR submitted that the observations. As a matter of fact, the shares were never issued at a premium of Rs.90 and thus the said satisfaction of the AO is based on wrong facts. The learned AR referred to the ....
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....uring the course of assessment proceedings. Therefore, ground raised by the assessee may be dismissed. 3.6. We have heard the rival arguments and perused the materials available on record. The undisputed facts are that reopening was made by the AO on the basis of wrong and incorrect facts. As has been stated herein above, there were conflicting amounts mentioned by the AO in the reasons recorded. We note that the AO has observed in the reasons recorded that shares were issued at a face value of Rs.10 each at a premium of Rs.90, thereby collecting Rs.5,11,95,000/- from the investors, whereas as a matter of fact, the assessee has issued shares at a face value only on face value of Rs. 10/- each and no premium was ever collected. We note during the year the assessee has issued 15,90,000 equity shares at a face value of Rs.10 each thereby, thereby collecting from the investors Rs. 1,59,00,000/-. Therefore, the facts mentioned by the AO while forming the belief are totally incorrect. Thereafter, the learned AO also referred to Rs.2,45,00,000/- and Rs. 2,09,00,000/- in the reasons recorded. Again, the facts were wrongly mentioned by the AO. The AO also recorded the reasons that assess....
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....ow that the Assessing Officer had not examined the information received from Investigation Wing before recording his own satisfaction of escapement of income. Though he had mentioned in the reasons recorded that he had examined the information and details so available. Because had he examined the details and information, he would have certainly known that the information was factually incorrect and incomplete. The CIT(A) rightly followed the above decision of Hon'ble Jurisdictional High Court and set aside reassessment notice. CIT vs. Smt. Paramjit Kaur [2009] 311 ITR 38 (P&H)." 3.6.2. Therefore, considering the facts of the case and reasons recorded by the AO without application of mind we hold that the re-opening has been made on the basis of borrowed satisfaction which is not permissible under the Act. Accordingly we hereby quash the reopening of assessment as well as the consequent assessment framed by the AO. 3.6.3. So far as the reopening on the basis of statement of Shri Mahesh Kedia is concerned, that we are in agreement with the Counsel of the assessee that reopening of assessment cannot be made on the basis of mere statement of the Director of the assessee Compa....