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Issues Involved:
1. Validity of reopening the assessment under Section 147/148 of the Income-tax Act. 2. Genuineness of the share subscriptions and applicability of Section 68 of the Income-tax Act. Detailed Analysis: 1. Validity of Reopening the Assessment: The assessee, a public limited company, filed its initial return declaring a loss, which was assessed and accepted. The assessment was later reopened under Section 148, with the Assessing Officer (AO) citing that the shareholders might not be genuine based on returned questionnaires and other facts. The assessee requested the reasons for reopening, which were not provided by the AO, citing Supreme Court decisions that reasons need not be furnished to the assessee. However, the Tribunal found that the reasons for reopening were not recorded or shown to the Tribunal, rendering the reopening invalid. The Tribunal relied on several case laws, including *Morarjee Goculdas Spg. & Wvg. Co. Ltd. v. P.N. Bansal, IAC* and *Sharad L. Patel v. K.J. Chacko*, which emphasized that reasons must be recorded and available for judicial scrutiny. The Tribunal concluded that the reopening was not in accordance with law due to the absence of recorded reasons and lack of fresh, specific, and reliable information justifying the reopening. 2. Genuineness of Share Subscriptions and Applicability of Section 68: The AO questioned the genuineness of the share subscriptions, citing returned questionnaires and denied investments by some shareholders. The assessee provided extensive documentation, including prospectus details, bank certificates, postal acknowledgments, and confirmations from the Managers to the Issue. The AO's suspicion was based on the non-service of summons and the sale of shares at a loss to members of the Mansingka group. The Tribunal found that the AO did not examine the shareholders or provide an opportunity for cross-examination, and the documentary evidence provided by the assessee was substantial. The Tribunal referred to a similar case, *CIT v. Belenje Investment & Trading Co. Ltd.*, where the Bombay High Court held that it was improbable for a newly incorporated company to earn significant profits and that the public issue was genuine. The Tribunal concluded that the AO's evidence was insufficient to prove that the share subscriptions were bogus, and the suspicious circumstances did not substantiate the AO's conclusions. The Tribunal held that the AO's belief was not bona fide and based on vague, irrelevant, and non-specific information, making the addition under Section 68 unsustainable. Conclusion: The Tribunal allowed the assessee's appeals, invalidating the reopening of the assessment and the addition under Section 68, while dismissing the Revenue's appeal. The Tribunal emphasized the necessity of recorded reasons for reopening and substantial evidence to prove the genuineness of share subscriptions.
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