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TMI Blog2024 (9) TMI 1572X X X X Extracts X X X X X X X X Extracts X X X X ..... ropped the proceedings initiated u/s 263 of the Act. Thus, it is evident that at the time of initial assessment, as also while conducting proceedings under Section 263, the authorities were aware of shares held by the assessee for a consideration which was considered to be less than fair market value. However, Revenue still proceeded further to purpose initiation of reassessment proceedings by issuing notice under Section 148A(b). It is clear that the reasons for issuing notice under Section 148A (b) were exactly similar to the reasons on which the PCIT invoked Section 263 of the Act. Once the PCIT decided in favour of the petitioner after having considered its reply, AO had no authority to reassess and reopen the assessment under Section 148 of the IT Act. It is a clear case of change of opinion and the reassessment proceedings are in the nature of review of the previous assessment. Grant of approval by the senior authority i.e. PCCIT would not confer legitimacy to the initiation of the reassessment action as the point on which the reassessment was initiated, had already been considered in the previous proceedings. The higher authority cannot grant approval which is in violation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... air market value of the share, then such difference is to be taxed as income of the investor company. Accordingly, consideration for 20,00,000 shares at the rate of Rs. 30/- per share (Rs. 40-Rs. 10) is to be treated as income of company u/s 56 (2) (viia) of the IT Act,1961. 3. In view of the above, the order passed by the AO on 21.12.2016 u/s 143 (3) of the Act is erroneous in so far as it is prejudicial to the interest of the revenue, causing loss of Rs. 6,00,00,000/-. 5. Petitioner submitted reply to the notice under Section 263, stating that he was already an existing subscriber and had received the shares as Right Issue , and therefore, provisions of Section 56 (2) (viia) does not have any application. After considering submissions of the petitioner, PCIT dropped the proceedings initiated vide Show Cause Notice under Section 263 of the Act. 6. After more than two years, a notice dated 28.06.2021 under Section 148 of the Act was issued to the petitioner for the AY 2014-15. 7. Reassessment proceedings of the petitioner and other similar placed assesses were reviewed in the light of the judgment of the Hon ble Supreme Court in the case of Union of India v. Ashish Agarwal (2023) 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear case of escapement of income. It has been submitted that the proceedings under Section 263 of the Act were dropped by the PCIT but fresh proceedings for reassessment have been initiated with due permission from PCCIT, which is a higher authority than the PCIT and therefore the present proceedings are not barred. 12. In order to appreciate the controversy, it would be apposite to refer to Section 147 148 of the IT Act. The relevant extract of Section 147 148 of the Act is reproduced below:- 147. Income escaping assessment:-- If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi vs. Kelvinator of India Limited (supra) as under:- 5. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the assessing officer to make a back assessment, but in section 147 of the Act (with effect from 1st April, 1989), they are given a go-by and only one condition has remained, viz., that where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post 1-4-1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words reason to believe failing which, we are afraid, Section 147 would give arbitrary powers to the assessing officer to reopen assessments on the basis of mere change of opinion , which cannot be per se reason to re-open. 6. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Centrodorstory (India) Pvt. Ltd. for whose shares, the assessee had made investment of Rs. 2 crores. The Assessment Order dated 22.12.2016, clearly reveals that the details called for were filed, examined and placed on record and after considering them, the income was assessed as Nil . 16. The reason for sending the notice under Section 263 of the Act dated 22.02.2019 was as under:- In view of the above, the order passed by the AO on 21.12.2016 u/s 143 143 (3) of the Act is erroneous in so far as it is prejudicial to the interest of the revenue, causing loss of Rs. 6,00,00,000/-. 17. Admittedly, after considering the reply of the assessee, PCIT had dropped the proceedings initiated under Section 263 of the Act. Thus, it is evident that at the time of initial assessment, as also while conducting proceedings under Section 263, the authorities were aware of shares held by the assessee for a consideration which was considered to be less than fair market value. However, Revenue still proceeded further to purpose initiation of reassessment proceedings by issuing notice under Section 148A(b) based on following reasons:- On perusal of assessment records, it has been found that, as per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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