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TMI Blog2019 (2) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... rn under Section 143(1) without scrutiny, and nothing more. This is nothing but a review of the earlier deprecated by the Supreme Court in Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ). The "reason to believe" vis-à-vis intimation issued under section 143(1) can cause to the tax regime. There is no whisper in the reasons recorded, of any tangible the issue of the intimation. It reflects an arbitrary exercise of the power conferred under section 147 - Decided against revenue X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 490/- per share from the following four parties; S. N Name of the person No of shares Face value Issue price Premium per share Money Received towards Share capital, share premium & Total (1) (2) (3) (4) (5) (6) (7)=(3)*(4) (8)=(3)*(6) (7)+(8) 1. K.R.C. Trading Co. Pvt. Ltd. 13,400 10 500 490 134000 65,66,000 67,00,000 2. Gyaneshwar Trading & Finance Co. Ltd. 1000 10 500 490 10000 4,90,000 5,00,000 3. Oshin Investment & Finance P. Ltd. 5300 10 500 490 53000 25,97,000 26,50,000 4. Doldrum Investment & Finance Pvt. Ltd. 7600 10 500 490 76000 37,24,000 38,00,000 Total 27,300 2,73,000 1,33,77,000 1,36,50,00 0 4. The assessee was asked to furnish share valuation report to justify the issue of share at a huge premium. In response to the notice of the Assessing Officer, the assessee vide its reply dated 2nd March 2015 furnished the copy of share valuation report. The Assessing Officer issued notice under section 133(6) dated 02.02.2015 to all four parties who have acquired share on payment of premium for identification of parties, business profile and performance, capacity to invest, credit worthiness and source of fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was further submitted that in case the reasons recorded are insufficient to establish any belief of Assessing Officer, such reason cannot be said to be giving rise to the jurisdiction of the Assessing Officer to reassess the income. Unless any tangible evidence is referred and relied upon while recording the reasons, the Assessing Officer have no jurisdiction to reopen the assessment. The ld. AR further submits that the shares were subscribed by the holding and associate company, whose identities cannot be doubted and without group concern valuation cannot be suspected. In support of his submission, the ld. AR of the assessee relied upon the decisions of Hon'ble Bombay High Court in case of NIVI Trading Ltd. vs. Union of India (278 CTR 219), CIT vs. Smt. Maniben Valji Shah [283 ITR 453 (Bom)], Infrastructure and Energy Services Ltd. Vs. ACIT [332 ITR 587(Bom)], Khubchandani Health parks Pvt. Ltd. vs. ITO & Ors [384 ITR 322], Hon'ble Gujarat High Court in case of Krupesh Ghanshyambhai Thakkar vs. DCIT [77 taxmann.com 293], Hon'ble Delhi High Court in CIT vs. Batra Bhatia Company [321 ITR 526], CIT vs. Orient Craft Ltd. [354 ITR 536], Decision of Hon'ble Supreme Court in case of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Rushil Decor for A.Y 2009-2010 is sought to be reopened. 12. In case of Inductotherm (India) (P.) Ltd. (supra), Division Bench of this reopening of assessment could not be exercised. It is further observed that the it were a scrutiny assessment. 12.1 Similar view has been expressed by the Division Bench in case of Deep Recycling Industries (supra) wherein it has been held and observed that for mere scrutiny, reopening of the assessment would not be permissible. It is escaped assessment. The Court has further observed that in order to do so, the escapement of the income on the basis of which he can form a bona fide belief of escapement of income chargeable to tax. It has also been observed that that income chargeable to tax may have escaped assessment. 13. Applying the aforesaid two decisions to the facts of the present two cases Officer wants to have a roving inquiry; as observed hereinabove. Even as per for the purpose of verification/deep verification of the claim, it is necessary to reopen the assessment. Under the circumstances, it cannot be said that the chargeable to tax has escaped the assessment. Under the circumstances, the impugned action of reopening of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t made under Section 143(3). Whether the return is put to scrutiny or is accepted without demur is matter. The other consequence, which is somewhat graver, would be that the return under Section 143(1) and thereafter 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 proceedings cannot be challenged on the ground of "change of opinion". It was be compromised. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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