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TMI Blog2021 (5) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... belief or recorded a finding that income of the assessee has escaped assessment but merely stated in the reason to believe that these facts and information need proper verification and hence reopened the case in order to carry out the verification of these facts which are not permissible under the Act. We are of the considered view that the AO has not formed a prima facie and independent belief in the reasons recorded that income has escaped assessment but initiated proceedings u/s 147 of the Act for carrying out the verification of facts/information qua the share premium raised by the assessee. Under these facts and circumstances, we are in full agreement with the finding of the Ld. CIT(A) holding the proceedings under section 147 of the Act as invalid Under these facts and circumstances, the order of Ld. CIT(A) is required to be upheld on the jurisdictional issue. - Decided against revenue. - ITA NO. 639/MUM/2018 - - - Dated:- 8-3-2021 - Shri Rajesh Kumar, Accountant Member And Shri Pavan Kumar Gadale, Judicial Member For the Appellant : Shri Gaurav Kabra, A.R. For the Respondent : Shri Sajit V. Nair, D.R. ORDER PER RAJESH KUMAR, AM : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is case, the assessee has not filed return of income for the year under consideration. The information gathered from ROC, it is noticed that the assessee has received share premium to the tune of ₹ 1,12,41,000/- during the F.Y. 2007-08 relevant to A.Y.2008-09. Further, the share premium is also not verifiable from the record, as the assessee has not filed any return of income for the above mentioned assessment year and therefore, I have reason to believe that income chargeable to tax as indicated above to the tune of ₹ 1,12,41,000/- has escaped assessment within the meaning of section 141 of the Income-tax Act, 1961. Therefore, I am satisfied that this is a fit case to issue notice u/s. 148 r.w.w. 147 of the Income-tax Act, 1961. 5.4.3 In this case the AO found that the genuineness of the appellant's claim of having received premium of ₹ 1,12,41,000/- during the F.Y. 2007-08 was not verifiable. Based on this fact, the AO formed his belief that income chargeable to tax had escaped assessment. 5.4.4 It is nobody's case that all cases where the assessees declare receipt of premium, are cases where income escapes assessment. Therefore, in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground of appeal no. 1 2. 6. The Ld. D.R. submitted that in this case the assessee has not filed any return of income. The AO on the basis of information from ROC found that the assessee has received huge share application money during the year and issued shares of ₹ 10/- each at a premium of ₹ 90/- and also at ₹ 390/-thereby increasing its share capital and share premium by aggregate amount of ₹ 4,79,90,000/-. The Ld. D.R. argued that in this case the AO has tangible and fresh material to form a belief that income has escaped assessment. The Ld. D.R., while referring to the reasons recorded, submitted that it is clearly mentioned in the reasons recorded under section 148(2) of the Act that share premium to the tune of ₹ 1,12,41,000/- was received by the assessee during the year. The Ld. D.R. submitted that it has been clearly recorded in the reason that the said premium is not verifiable as the assessee has not filed any return of income and needs proper verification and thereafter the AO formed the belief that income chargeable to tax has escaped assessment. The Ld. D.R., therefore, prayed that the ld CIT(A) has wrongly allowed the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.R. argued that AO can not be allowed to take recourse under section 147 of the Act to undertake fishing or robbing enquiry or to seeking to verify claims as if it were a scrutiny assessment. Therefore, the Ld. A.R. submitted that if verification is proposed in the reasons recorded, the same can not be a substitute for reason to believe which empowers the AO to reopen the assessment on the ground that income chargeable to tax has escaped assessment. The Ld. A.R. therefore, argued before the Bench that there is no formation of belief or finding by the AO that income has escaped assessment and therefore the assessment proceedings as well as the consequent assessment order are bad in law and has rightly been held so by ld CIT(A). In defence of his arguments, the Ld. A.R. relied on a series of decisions as under: 1. PCIT v Manzil Dineshkumar Shah (406 ITR 326)(Guj) 2. SLP dismissed by the Hon'ble Supreme Court against the judgment of the Hon'ble Gujrat High Court in the case of PCIT v Manzil Dineshkumar Shah 3. Inductotheran (India) P. Ltd. v DCIT (356 ITR 481) (Gujarat) 4. Chhugamal Rajpal v S P Chaliha and Ors. Ltd. (416 ITR 435) (SC) 5. Nivi Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48 r.w.s. 147 of the Income-tax Act, 1961. 10. Thus we note that the AO has mentioned in the reasons recorded that the facts and information as regards share premium are not verifiable as no return of income has been filed by the assessee and considering these facts, he has reason to believe that income chargeable to tax has escaped assessment and accordingly initiated proceedings under section 147 of the Act. We find merit in the contentions and arguments of the Ld. A.R. that the AO has not formed any independent belief or recorded a finding that income of the assessee has escaped assessment but merely stated in the reason to believe that these facts and information need proper verification and hence reopened the case in order to carry out the verification of these facts which are not permissible under the Act. The case of the assessee is squarely covered by a series of decisions as referred to during the hearing by the ld counsel of the assessee and are discussed hereunder: (a) In the case of PCIT vs Manzil Dinesh kumar Shah (supra), the Hon ble Gujrat High Court has held that formation of independent opinion by the AO is mandatory condition and mere mentioning of need ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercised. The Assessing Officer in the guise of power to reopen ai assessment, cannot seek to undertake a fishing or roving inquiry and see] to verify the claims as if it were a scrutiny assessment. (c) In the case of Chhugamal Rajpal v S P Chaliha and Ors. Ltd. (supra), the Hon ble Supreme Court has held that the AO must have prima facie grounds for issuing notice u/s 148. The operative part is reproduced as under: Held, (i) that the Income-tax Officer had not even come to a prima fade conclusion that the loan transactions to which he referred were not genuine transactions : he appeared to have only a vague feeling that they might be bogus transactions. Such a conclusion did not fulfil the requirements of section 151(2). Under that section he had to give reasons for issuing a notice under section 148. He should have some prima facie grounds before him for taking action under section 148. His conclusion that there was a case for investigating the truth of the alleged transactions was not the same thing as saying that there were reasons for the issue of the notice. The Commissioner had mechanically accorded permission. The important safeguards provided in sections 147 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act and accordingly the appeal of the Revenue was dismissed. (f) In the case of CIT v Batra Bhatia Company (supra) the Hon ble Delhi High Court has held while dismissing the appeal of the Revenue that Ld. CIT(A) as well as Tribunal had given a concurrent finding that there was no material before the AO on the basis of which the AO would have had a belief that agricultural land sold by the assessee was a capital receipt within the meaning of section 2(14) of the Act and expression of the AO requires much deeper scrutiny indicated that he was mere embarking on mere presumptions without any belief much less belief based on reason and material and thus the reassessment was not valid. 11. In view of the ratio laid down in the various decisions as discussed above vis-a-vis facts of the assessee case, we are of the considered view that the AO has not formed a prima facie and independent belief in the reasons recorded that income has escaped assessment but initiated proceedings u/s 147 of the Act for carrying out the verification of facts/information qua the share premium raised by the assessee. Under these facts and circumstances, we are in full agreement with the findi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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