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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 ..... assessment is sufficient to invoke jurisdiction of AO to initiate reassessment proceedings to justify the claim, the following case law affirm the said issue which are given as under:- a) As per Hon'ble Supreme Court's decision in the case of ACIT Vs Rajesh Jhaveri Stock Brokers P. Ltd. 291 ITR500SC which is as under:- At the time of initiating of re assessment proceedings only reason to believe that income chargeable to tax has escaped assessment is sufficient to invoke jurisdiction of AO to initiate re-assessment proceedings. b) As per Hon'ble Punjab and Haryana High Court in the case of Sewak Ram vs. ITO reported in 236 CTR 462 (P&H) which is as under:- After its amendment of S.147 of IT Act, with effect from 1st April, 1989, reassessment can be initiated even if there is disclosure in the return if without considering the particulars of the return, processing is done u/s 143(1) or assessment is made u/s 143(3). No doubt, mere change of opinion by itself is not a ground for reassessment as held in the judgment relied upon on behalf of the assessee but if there are reasons to believe that tax has escaped, reassessment is permissible. Reasons can be even on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant company was incorporated on 01.01.2014 and had issued 10,000 shares of Rs. 10 each with a paid-up capital of Rs. 1,00,000/-only but it had collected premium of Rs. 303,40,40,000/- in comparison to the net worth of the company being Rs. 1,00,000/- only before issuance of such shares. Therefore, the share premium of Rs. 303,40,40,000/- received in excess of market value has resulted in under assessment of income in the hands of the appellant company. Thereafter, notice u/s 148 of the Act was issued on 30.03.2021 but the appellant did not furnished its return of income within 30 days of the issuance of the said notice. Thereafter, notice u/s 142(1) of the Act was issued on 24.11.2021. In compliance to said notice, the appellant furnished its return of income declaring loss of Rs. 7,86,370/- on 25.11.2021. Subsequently, notice u/s 143(2) of the Act was issued on 09.02.2022 and the appellant made a request for providing copy of reasons recorded, approval, proof of service, etc. and the same were provided by the AO on 14.03.2022. Thereafter, show cause notice along with draft assessment order has been issued to the appellant on 25.03.2022. In response to the said notice, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation in respect of the share premium received by the assessee. (iii) Mere furnishing of the information is not sufficient. The AO has not examined as to what was the method or methodology of the valuation of the fair market value of the shares and the premium on such shares. No such documents, reports or other relevant evidence has been examined by the AO. (iv) The AO has made no enquiries which could have shown the compliance of the provisions of Sec. 56(2)(viib) and the Explanation therein. There is no evidence of the application of the prescribed method as under Rule 11UA of the Income Tax Rules or any other method as substantiated by the assessee to the satisfaction of the AO based on the value, date of issue of shares, its assets, intangible assets, any other business or commercial rights, etc. (v) Therefore, the discovery of the fact relating to the receipt of huge premium of Rs. 1918 per share with face value of Rs. 10 only, on the issue of shares by the assessee was definitely a tangible material before the AO. Here, it has to be noted that the assessee company was incorporated only on 1/1/2014 and had paid up share capital of Rs. 1,00,000/- only, whereas it had rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mports Pvt. Ltd. The Assessee objected for the reassessment proceedings mainly on account of change of opinion before the A.O. vide reply dated 28/03/2022 in response to show cause notice dated 25/03/2022. The A.O. recalling the attention of the Assessee made an addition of Rs. 303,40,40,000/- u/s 56(2)(viib) of the Act and passed re-assessment order on 31/03/2022. The Assessee company issued 15,80,000 equity shares of Rs. 10/- each fully paid up at Premium of Rs. 1918/- per share to the shareholders of the amalgamating company namely Allure Imports Private Limited., as per the Scheme of the Amalgamation approved by the Hon'ble High Court of Punjab and Haryana in Company Petition No. 183 of 2014 vide its order dated 01.05.2015, which was made effective from 01.01.2015. The Assessee's case was initially selected for complete scrutiny by issuing notice u/s 143(2) of the Act dated 13.04.2016 and the assessment was completed u/s 143(2) of the Act on 03.10.2017 accepting the returned loss. The said scrutiny was undertaken on the reason of 'large share premium received' during the year, applicability of Section 56(2)(viib) of the Act and amalgamation during the year has been consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss the above income, I proceed to initiate proceedings u/s 147 of the I.T. Act, 1961 in the case for A.Y. 2015-16." 11. On perusal of the reasons recorded for re-opening, it is found that the A.O. did not have any fresh tangible material to form the opinion that there was any escapement of income. The A.O. did not point out any specific information or documents which was not disclosed by the Assessee during the assessment proceedings and thereafter, the Assessee failed to disclose fully and truly all the material facts during the assessment proceedings. 12. The approved scheme of amalgamation approved by Hon'ble Hon'ble High Court of Punjab reveals that 158 equity shares the Assessee company was required to be issued for every one share of the amalgamating company i.e. Allure Imports Pvt. Ltd. to the shareholders of the amalgamating company for the consideration of the assets and liabilities/valuation of the amalgamating company under the Scheme of Amalgamation. Therefore, the Ld. CIT(A) is right in observing that the AO has wrongly recorded the reason that the shares of Rs. 10/- per share with a premium of Rs. 1918 per share were issued to M/s Allure Imports Pvt. Ltd. i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of section 41(1), since said reason for reopening was based on same material facts which were present during original proceedings, impugned reopening notice was to be quashed and set aside. c) In the case of CIT Vs Anjis Developers (P) Ltd [2023] 150 taxmann.com 113(SC) dated 27.02.2023, the Hon'ble Supreme Court has held that where assessee-company paid compensation for cancellation of allotment in premises of proposed building to parties from whom deposits were taken with respect to development project and claimed compensation as expenditure, since during survey genuineness of assessee's claim with respect to compensation payable was examined and AO passed original assessment order after accepting submissions of assessee, reopening on ground that said compensation was capital payment was mere change of opinion. d) In the case of JCIT Vs Cognizant Technology Solutions India (P) Ltd [2023] 146 taxmann.com 197(SC) dated 03.01.2023, the Hon'ble Supreme Court has held that where a reopening notice was issued upon assessee on issue of allowability of deduction of mark-to-market loss on restatement of outstanding forward contracts. since said issue was already ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l assessment order to change his opinion. In fact, the AO didn't even consider the material facts available on record in the form of Note to account, queries and written reply filed during assessment proceedings and scrutiny assessment order including office note, etc. Also, the AO failed to establish that the Assessee did not disclosed all material facts during the original assessment order. Without considering the Note-12 of the audited financial 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. Apart from this, 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. Considering the above facts and circumstances, the Ld. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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