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TMI Blog2025 (2) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial statement, questionnaire issued by AO and the submission made and the order of the Hon'ble High Court approving the Scheme of Amalgamation the impugned assessment has been framed.
The facts recorded in the reason to believe is not correct, as the Assessee did not issue any shares to M/s Allure Imports Pvt. Ltd. in pursuance of the approved Scheme of amalgamation by the Hon'ble High Court, but it was issued to the shareholders of the Amalgamating Company i.e. M/s Allure Imports Pvt. Ltd.
CIT(A) rightly held that the AO has not done the reopening of assessment u/s 147 of the Act in accordance to the provisions of the Act. Since the re-assessment proceedings in the present case have been initiated due to change of opinion without having any fresh information/materials in hands of the AO., we find no error or infirmity in the order of the Ld. CIT(A) and find no merit in the grounds of Appeal of the Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... et value is to be considered as income from other sources. Fair market value is to be determined as based on value on the date of issue of shares under Rule 11UA of 1. T. Rules, 1962. In the said case, the assessment year 2015-16 it was observed that the assessee company had issued shares at Rs. 10 per share with a premium of Rs. 1,918 per share to M/s Allure Imports Pvt. Ltd. The company was incorporated on 01.01.2014 and issued 10000 shares of Rs. 10 each with a paid-up capital on Rs. 1,00,000 only and therefore, the collected premium of Rs. 3,03,40,40,000 in comparison to the net worth of shares of company being Rs. 1,00,000 before issuance of shares. As such exceeding fair market value by Rs. 3,03,40,40,000 should be chargeable in the hands of the company. The share premium received in excess of market value worked out to be Rs. 3,03,40,40,000/- and after set off of current year loss of Rs. 7,86,370/-, balance share premium of Rs. 3,03,31,53,630/- is to be taxed. In view of the above facts, Order passed by the Ld. CIT(A), NFAC is not acceptable. Appellate is prays to add/delete grounds." 3. Brief facts of the case as mentioned in the order of the Ld. CIT(A) are as under: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,32,53,630/- after adjustment of returned loss at Rs. 7,86,370/-." 4. Aggrieved by the assessment order dated 31/03/2022 passed u/s 147 r.w. Section 144B of the Income Tax Act, 1961 ('Act' for short), the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 22/12/2023, held that the reassessment proceeding was initiated by the A.O. due to change of opinion without having any fresh information/material in hands, therefore, set aside the assessment order. Aggrieved by the order of the Ld. CIT(A) dated 22/12/2023,the Department of Revenue preferred the present Appeal on the Grounds mentioned above. 5. The Ld. Departmental Representative vehemently submitted that the Ld. CIT(A) has erred in allowing the Appeal of the Assessee on the ground that the 'A.O. has not done the reopening assessment u/s 147 of the Act in accordance with the provisions of the Act' and erroneously observed that the reassessment proceedings have been initiated due to change of opinion without having any fresh opinion/materials in the hands of the A.O. Further contended that the Ld. CIT(A) failed to consider that at the time of initiation of re-assessment proceedings, only reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue relating to re-opening of assessments, under the provisions of section 147/148 of the Income Tax Act, 1961, there is a long history of detailed and comprehensive orders of the Hon. Constitutional Courts, laying down the legal principles, on the basis of which the re-opening of assessment would be legal and valid process under law." The Ld. Departmental Representative has also relied on several Judgments and sought for allowing the appeal by setting aside the order of the Ld. CIT(A). 7. Per contra, the Ld. Assessee's Representative submitted that the issue of share premium has been duly examined by the A.O. in the original scrutiny proceedings u/s 143(3) of the Act and formed his opinion about non-applicability of provision of Section 56(2)(viib) of the Act. Further submitted that, the reason to believe recorded by the A.O. for initiating re-assessment proceedings on the identical issue does not show any fresh tangible material available with the A.O. after the original assessment order to change his opinion. The Ld. Counsel for the Assessee relying on the findings and the conclusions of the Ld. CIT(A) and also several judicial pronouncements, sought for dismissal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to amalgamating company and the reason to believe recorded for re-opening of the assessment is nothing but a change of opinion of the AO. 9. The Ld. CIT(A) gone through the relevant documents and also the notes on account of audited financial statement of the Assessee for Financial Year 2014-15, wherein it is found that the Assessee had disclosed all the material facts relating to the issues of Rs. 15,80,000/- shares with premium of Rs. 1,918 per share. Thus, the A.O. was aware about the issuance of equity shares at premium under the scheme of amalgamation. The Assessee also furnished the requisite details/information vide letter dated 18/09/2017 before the A.O. and after considering the reply/submission of the A.O. filed during the assessment proceedings, the Ld. A.O. accepted the returned loss in the scrutiny assessment without making any addition with respect to the issue of 'shares at premium'. The A.O. in the Assessment Order framed u/s 143 (3) of the Act dated 03/10/2017, also recorded his findings in by way of office notes which reads as follows: "OFFICE NOTE: The case was selected for Complete Scrutiny under CASS and reason for selection was to examine Large Share Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been considered in the regular assessment proceedings. However, the same has not been considered by the A.O. while recording the reasons for re-assessment or in the re-assessment proceedings. It is found that during the re-assessment proceedings, the A.O. asked the Assessee to furnish the report on merit but did not made any comment on the fact that the equity shares at premium were issued in pursuance of amalgamation and also failed to consider that those facts were examined in the regular assessment proceedings. The Ld. CIT(A) has also sought explanation by way of Remand Report from the A.O. on the very same point, however, A.O. failed to furnish any comment/report on the said issue. It is well settled law that at the time of original assessment, when a specific query was raised by the A.O. which was duly answered by the Assessee and thereafter the assessment was framed, it is not open for the revenue to reopen the assessment on the same issue. The judicial decisions on the said proposition are as under:- "a) In the case of ACIT Vs Meer Gems [2023] 154 taxmann.com 647(SC) dated 25.08.2023, the Hon'ble Supreme Court has held that where AO reopened assessment on ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has held that where revenue had miserably failed to point out any facts or material which had not been disclosed by assessee during original assessment and entire basis for re-opening after expiry of four years from end of relevant assessment year was due to mistake of Assessing Officer that resulted in under assessment, reopening of assessment being on change of opinion, was impermissible in law. f) In the case of ACIT Vs Kalpataru Land (P) Ltd [2022] 145 taxmann.com 77(SC) dated 18.08.2022, the Hon'ble Supreme Court has held that where assessee- company in support of increase in its authorized share-capital had produced evidences in form of details of share allotment, names and addresses of parties from whom share-premium was received etc. and Assessing Officer after considering same had finalized assessment and passed assessment order, subsequent reopening of assessment on same issue was purely on mere change of opinion and, thus, liable to be set aside. g) In the case of PCIT Vs State Bank of India [2022] 145 taxmann.com 33(SC) dated 04.08.2022, the Hon'ble Supreme Court has held that where Assessing Officer issued reopening notice against assessee on ground that a ..... 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