2024 (8) TMI 425 - AT - Income Tax

Reopening of assessment - addition u/s 68 - unexplained cash credit - share application money so received by the assessee company from the mentioned companies is nothing but the assessee s own money - HELD THAT - AO has called for various details during the course of original assessment proceedings and no new tangible material exist for coming to bonafide belief as contemplated u/s 147 of the Act, therefore, such reopening of the assessment in our opinion was merely based on change of opinion which is not in accordance with law as contemplated by the recent decision of Godrej Projects Development Pvt. Ltd. 2024 (2) TMI 166 - BOMBAY HIGH COURT . In view of the detailed reasoning given, we hold that the re-assessment proceeding initiated by the Assessing Officer is merely on account of change of opinion and therefore, is not sustainable. Accordingly, on this ground also, the re-assessment proceedings are quashed. Decided in favour of assessee.

Summary

Issues Involved:
1. Delay in filing Cross Objections (CO)
2. Validity of reassessment proceedings under Section 147 of the Income Tax Act
3. Addition under Section 68 of the Income Tax Act regarding share premium received

Detailed Analysis:

1. Delay in Filing Cross Objections (CO):
The assessee filed the CO with a delay of 30 days, attributing the delay to the spinal problem of the Director. The Tribunal condoned the delay after considering the condonation application and affidavit, and admitted the CO for adjudication.

2. Validity of Reassessment Proceedings under Section 147:
The original assessment was completed under Section 143(3) on 21.03.2014. The reassessment was initiated based on information from a search and seizure operation indicating unexplained share premium received by the assessee. The assessee did not file a return in response to the notice under Section 148, and the jurisdiction was transferred to ACIT, Central Circle - 1, Aurangabad.

The Tribunal noted that the reasons recorded for reopening did not allege any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Citing the proviso to Section 147, the Tribunal emphasized that no action could be taken after four years from the end of the relevant assessment year unless there was a failure to disclose material facts.

The Tribunal referred to multiple judicial precedents, including the Hon'ble Bombay High Court in Akshar Anshul Construction LLP vs. ACIT, which held that reopening beyond four years without alleging failure to disclose material facts is without jurisdiction. The Tribunal concluded that the reassessment proceedings were initiated merely on a change of opinion, which is not permissible.

3. Addition under Section 68:
The Assessing Officer (AO) had added Rs. 24,11,47,250/- under Section 68, treating the share premium received as unexplained cash credit. The CIT(A) deleted the addition, reasoning that share premium is a capital receipt and not taxable as income under Section 68 for the AY 2011-12. The CIT(A) relied on various judicial precedents and CBDT Instructions, which clarified that share premium is a capital transaction and not income.

The Tribunal upheld the CIT(A)'s deletion of the addition, agreeing that the share premium received during AY 2011-12 could not be taxed under Section 68 as the relevant provisions (Section 56(2)(viib)) were applicable only from AY 2013-14 onwards.

Conclusion:
The Tribunal condoned the delay in filing the CO and admitted it for adjudication. It quashed the reassessment proceedings initiated under Section 147, holding them invalid due to the absence of any allegation of failure to disclose material facts by the assessee. Consequently, the Tribunal upheld the CIT(A)'s deletion of the addition under Section 68, rendering the grounds raised by the Revenue academic and not requiring further adjudication. The appeal filed by the Revenue was dismissed, and the CO filed by the assessee was allowed.