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TMI Blog2023 (11) TMI 1103X X X X Extracts X X X X X X X X Extracts X X X X ..... es at premium - allegation of accomodation transactions - From an analysis of the reasons recorded by AO, it is discerned that in the relevant year under consideration the assessee company had issued shares for a premium of Rs. 40 per share and in that process assessee has collected share- premium of Rs. 52 Lakhs which have escaped assessment. In this factual context it is noted that the settled position of law is that adverse information against an assessee would trigger only reason to suspect . Once the AO found that the assessee had issued 1,30,000 shares of face value of Rs. 10/- for share premium of Rs. 40 per share, then, he ought to have conducted a preliminary inquiry from which he should have found as a matter of fact who were the investors of these 1,30,000 shares; and whether those investors were paper companies providing only accommodation entry etc. And thereafter, he should have recorded the reasons as to whether the assessee had engaged in taking accommodation entry from the entry operators as reveled from search operation conducted at RK Kedia Group/Entry Operators as stated in para 2 3 of reason recorded. Since AO has not carried out even the preliminar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the settled position of law regarding re-opening of assessment u/s 147 of the Act. It must be borne in mind that the very concept of assessment is governed by the time-barring rule; and an assessee acquires a right as to the finality of proceedings. Quietus of the completed assessments can be disturbed only when there is information or evidence regarding undisclosed income or AO had information in his possession showing escapement of income as stipulated u/s 147 of the Act. As per Section 147 of the Act, if the AO had to re- open the assessment, then AO has to record the reason to reopen the assessment, wherein he should record the reason to believe, escapement of income . It is settled position of law that reason to believe postulates a foundation based on an information and belief based on reason. After a foundation based on information is there, still, there must be some reason which should warrant the holding of a belief that income chargeable to tax has escaped assessment. In other words, before the AO issues notice u/s 148 of the Act, he must have recorded the reason to believe, escapement of income . It is no doubt true that this Tribunal cannot go into the sufficienc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of M/s. Shruti Vinimay Pvt. Ltd. Name of the assessee : M/s. Shruti Vinimay Pvt. Ltd. PAN : AAJCS4629R A.Y. : 2010-11 STATUS : Company In this case, return of income was filed electronically on 13.05.2011 declaring total income of Rs. 24,58,276/-. The same was processed u/s 143(1). 2. A search action was carried out on RK Kedia Group of cases on 13.06.2014. During the course of Search action on RK Kedia group of cases, residential and many of the office premises of entry operators were also covered. During the course of search and post search proceedings It was established that adverse, of entitles were managed and controlled by these operators. The main business of the concern managed and controlled by the entry operators Was sale and purchase of shares of listed non-listed companies and giving and taking unsecured loans. 3. It was noticed from the ITD system of the income Tax Department and ROC database that most of these investor /fund providing companies have very weak balance sheet with meager t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the files of the assessing officers to decide reasonableness of premium, thereby impliedly holding that if the quantum of share premium is unreasonable, addition to Total income can be made. 7. In view of the above, I have reason to believe that income chargeable to tax in the garb of share premium to the tune of Rs. 52,00,000/- received by the assessee has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961. Therefore, a notice u/s 148 r.w.s. 147 is therefore, is being issued to re-assess such income and also any other income chargeable to tax which has escaped assessment which comes to my notice subsequently in the course of the assessment proceedings. 8. Reasons for the reopening in this case has been recorded after taking due approval from Pr. CIT(A)-2, Mumbai as per provisions of section 151 of the IT Act, 1961. (N. Ashok Babu) Deputy Commissioner of Income Tax Centre Circle-4(3), Mumbai. 5. On the strength of the reasons stated (supra) the AO has usurped the reopening jurisdiction u/s 147 of the Act, which action of AO is assailed before us. 6. As noted the condition precedent for reopening the assessment u/s 147 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means that assessee s shares could not have commanded high premium of Rs. 40/- per share; And at para 5 6 AO after citing few decisions of the Hon ble High Court and Tribunal was of the opinion that there was reasons to believe income chargeable to tax in the garb of share premium to the tune of Rs. 52 Lakhs have escaped assessment. From an analysis of the aforesaid reasons recorded by AO, it is discerned that in the relevant year under consideration the assessee company had issued shares for a premium of Rs. 40 per share and in that process assessee has collected share- premium of Rs. 52 Lakhs which have escaped assessment. In this factual context it is noted that the settled position of law is that adverse information against an assessee would trigger only reason to suspect . Once the AO found that the assessee had issued 1,30,000 shares of face value of Rs. 10/- for share premium of Rs. 40 per share, then, he ought to have conducted a preliminary inquiry from which he should have found as a matter of fact who were the investors of these 1,30,000 shares; and whether those investors were paper companies providing only accommodation entry etc. And thereafter, he should have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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