Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI
Before: SHRI AMIT SHUKLA & SHRI OM PRAKASH KANT
PER OM PRAKASH KANT, AM PER OM PRAKASH KANT, AM This appeal by the This appeal by the Revenue and cross objections by the and cross objections by the assessee are directed against order dated 26/12/2016 passed by assessee are directed against order dated 26/12/2016 passed by assessee are directed against order dated 26/12/2016 passed by the Ld. Commissioner of Income Ld. Commissioner of Income-tax (Appeals)-6, Mumbai [in short 6, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2009 ] for assessment year 2009-10.
The grounds raised by the The grounds raised by the Revenue in its appeal in its appeal are reproduced as under: reproduced as under:
"Whether on the facts and circumstances of the case and in "Whether on the facts and circumstances of the case and in "Whether on the facts and circumstances of the case and in Law the Id.CIT(A) was correct in allowing the appeal of the Law the Id.CIT(A) was correct in allowing the appeal of the Law the Id.CIT(A) was correct in allowing the appeal of the assessee and deleting the addition of Rs.2,79,54,39,101/ assessee and deleting the addition of Rs.2,79,54,39,101/ assessee and deleting the addition of Rs.2,79,54,39,101/ made by the Assessing officer on account of Share premi made by the Assessing officer on account of Share premi made by the Assessing officer on account of Share premium treated as unexplained cash credit u/s.68 of the Income tax treated as unexplained cash credit u/s.68 of the Income tax treated as unexplained cash credit u/s.68 of the Income tax Act,1961?" Act,1961?" 2. "Whether on the facts and in the circumstances of the case "Whether on the facts and in the circumstances of the case "Whether on the facts and in the circumstances of the case and in Law, the Ld.CIT(A) was right in deleting the addition and in Law, the Ld.CIT(A) was right in deleting the addition and in Law, the Ld.CIT(A) was right in deleting the addition of Rs.2,79,54,39,101/ and holding that the Share Premium of Rs.2,79,54,39,101/ and holding that the Share Premium of Rs.2,79,54,39,101/ and holding that the Share Premium received by the Company is capital in nature and the same ved by the Company is capital in nature and the same ved by the Company is capital in nature and the same cannot be assessed u/s.68 of the Act, without appreciating cannot be assessed u/s.68 of the Act, without appreciating cannot be assessed u/s.68 of the Act, without appreciating the finding in the assessment order that as the assessee had the finding in the assessment order that as the assessee had the finding in the assessment order that as the assessee had failed to justify charging of such huge premium of failed to justify charging of such huge premium of failed to justify charging of such huge premium of
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 3 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
Rs.46,821/ per share, the very n Rs.46,821/ per share, the very nature of receipt remained ature of receipt remained unexplained, thereby attracting provisions of section 68?" unexplained, thereby attracting provisions of section 68?" unexplained, thereby attracting provisions of section 68?" 3. . "Whether on the facts and in the circumstances of the case . "Whether on the facts and in the circumstances of the case . "Whether on the facts and in the circumstances of the case and in Law, the Id. CIT(A)was correct in deciding the issue and in Law, the Id. CIT(A)was correct in deciding the issue and in Law, the Id. CIT(A)was correct in deciding the issue in favour of assessee solely relying on the decisi in favour of assessee solely relying on the decision of Hon'ble on of Hon'ble ITAT ITAT ITAT in in in the the the case case case of of of Green Green Green Infra Infra Infra Ltd. Ltd. Ltd. (ITA (ITA (ITA No.7762/Mum/2012, order dated 23.08.2013), without No.7762/Mum/2012, order dated 23.08.2013), without No.7762/Mum/2012, order dated 23.08.2013), without appreciating the legal position that the said issue has not appreciating the legal position that the said issue has not appreciating the legal position that the said issue has not attained finality since departments appeal filed us. 260A attained finality since departments appeal filed us. 260A attained finality since departments appeal filed us. 260A against the said decision was s against the said decision was still pending before the till pending before the Hon'ble Bombay High Court?" Hon'ble Bombay High Court?" 4. . "Whether on the facts and circumstances of the case and in . "Whether on the facts and circumstances of the case and in . "Whether on the facts and circumstances of the case and in Law, the Ld. CIT(A) has erred in holding that the Share Law, the Ld. CIT(A) has erred in holding that the Share Law, the Ld. CIT(A) has erred in holding that the Share premium was justified by assessee, ignoring the findings of premium was justified by assessee, ignoring the findings of premium was justified by assessee, ignoring the findings of the Assessing Officer given the Assessing Officer given in the assessment order that the in the assessment order that the assessee company failed to furnish authentic documentary assessee company failed to furnish authentic documentary assessee company failed to furnish authentic documentary evidence to justify basis of charging premium, the Return of evidence to justify basis of charging premium, the Return of evidence to justify basis of charging premium, the Return of assessee company filed for year under consideration as well assessee company filed for year under consideration as well assessee company filed for year under consideration as well as for earlier years showed consistent losse as for earlier years showed consistent losses and hence the s and hence the valuation of shares was not justified?" valuation of shares was not justified?" 5. "Whether on the facts and circumstances of the case and in "Whether on the facts and circumstances of the case and in "Whether on the facts and circumstances of the case and in Law, the Ld.CIT(A) has erred in deleting the addition made Law, the Ld.CIT(A) has erred in deleting the addition made Law, the Ld.CIT(A) has erred in deleting the addition made on account of share premium, ignoring the findings brought on account of share premium, ignoring the findings brought on account of share premium, ignoring the findings brought out in assessment order out in assessment order that the assessee company failed to that the assessee company failed to prove the creditworthiness of the investors and also the prove the creditworthiness of the investors and also the prove the creditworthiness of the investors and also the assessee did not possess any assets in the form of patents, assessee did not possess any assets in the form of patents, assessee did not possess any assets in the form of patents, copyrights, intellectual property rights based on which the copyrights, intellectual property rights based on which the copyrights, intellectual property rights based on which the company would be likely to substantially e company would be likely to substantially enhance its profits nhance its profits
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 4 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
in future and presently command Premium on its shares in future and presently command Premium on its shares in future and presently command Premium on its shares and hence the Share Premium was not justified?" and hence the Share Premium was not justified?" 6. "Whether on the facts and in the circumstances of the case "Whether on the facts and in the circumstances of the case "Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) was correct in deleting the and in Law, the Ld. CIT(A) was correct in deleting the and in Law, the Ld. CIT(A) was correct in deleting the addition of share pre addition of share premium without appreciating the facts mium without appreciating the facts brought out in the assessment order that as the assessee brought out in the assessment order that as the assessee brought out in the assessment order that as the assessee had utilized the amount of so called share premium for non had utilized the amount of so called share premium for non had utilized the amount of so called share premium for non- specified purposes in violation of Companies Act, the receipt specified purposes in violation of Companies Act, the receipt specified purposes in violation of Companies Act, the receipt aracter as share of money of Rs.2,79,54,39,101/ lost its ch of money of Rs.2,79,54,39,101/ lost its character as share premium and hence cannot be treated as capital receipts?" premium and hence cannot be treated as capital receipts?" premium and hence cannot be treated as capital receipts?" 7. "Whether on the facts and in the circumstances of the case "Whether on the facts and in the circumstances of the case "Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) was right in allowing the appeal and in Law, the Ld. CIT(A) was right in allowing the appeal and in Law, the Ld. CIT(A) was right in allowing the appeal of the assessee without appreciating the facts brought out of the assessee without appreciating the facts brought out of the assessee without appreciating the facts brought out by the A.O. that substantial amount of premium amounting the A.O. that substantial amount of premium amounting the A.O. that substantial amount of premium amounting to Rs.1,38,56,88,562/ was invested by Assessee Company in to Rs.1,38,56,88,562/ was invested by Assessee Company in to Rs.1,38,56,88,562/ was invested by Assessee Company in group entity, M. Pallonji & Co. group entity, M. Pallonji & Co. Pvt. Ltd. in the form of t. Ltd. in the form of Convertible Warrants, which was later Convertible Warrants, which was later-on forfeited for non on forfeited for non- payment of balance calls, in payment of balance calls, indicating that the transaction of dicating that the transaction of share premium was not genuine?" share premium was not genuine?"
2.1 The grounds raised by the assessee in its cross objections are grounds raised by the assessee in its cross objections are grounds raised by the assessee in its cross objections are
reproduced as under: reproduced as under:
On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the act law, the Ld. CIT(A) erred in upholding the action of the ion of the Assessing Officer in reopening the assessment despite the Assessing Officer in reopening the assessment despite the Assessing Officer in reopening the assessment despite the fact that the issue of increase in share capital and share fact that the issue of increase in share capital and share fact that the issue of increase in share capital and share premium received was already examined during the premium received was already examined during the premium received was already examined during the
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 5 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
original scrutiny and the Assessing Officer did not find any original scrutiny and the Assessing Officer did not find any original scrutiny and the Assessing Officer did not find any infirmity therein. infirmity therein. Thus, the reopening is nothing but a Thus, the reopening is nothing but a change of opinion. change of opinion. 2. On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the law, the Ld. CIT(A) erred in upholding the action of the law, the Ld. CIT(A) erred in upholding the action of the Assessing Officer in reopening the assessment despite the Assessing Officer in reopening the assessment despite the Assessing Officer in reopening the assessment despite the fact that no new material r fact that no new material received by the Id Assessing eceived by the Id Assessing Officer and he reopened the case based on the existing Officer and he reopened the case based on the existing Officer and he reopened the case based on the existing records. 3. Briefly stated facts of the case stated facts of the case are that the assessee filed return that the assessee filed return of income for the year under consideration on 29/09/2009 of income for the year under consideration on 29/09/2009 of income for the year under consideration on 29/09/2009 declaring total income at declaring total income at ₹ Nil. The scrutiny assessment under The scrutiny assessment under section 143(3) of the Income ) of the Income-tax Act, 1961 (in short in short ‘the Act’) was completed on 26/09/2011, wherein total income was assessed at completed on 26/09/2011, wherein total income was assessed at completed on 26/09/2011, wherein total income was assessed at Nil. Subsequently, the Assessing Officer reopened the assessment Nil. Subsequently, the Assessing Officer reopened the assessment Nil. Subsequently, the Assessing Officer reopened the assessment after recording reasons to bel after recording reasons to believe that income escaped assessment ieve that income escaped assessment and issued notice under section 148 issued notice under section 148 of the Act on 28/03/2014. In on 28/03/2014. In the reassessment completed on 30/03/2015, the Assessing Officer, the reassessment completed on 30/03/2015, the Assessing Officer, the reassessment completed on 30/03/2015, the Assessing Officer, held share capital received from the shareholders during the year share capital received from the shareholders during the year share capital received from the shareholders during the year under consideration as u under consideration as unexplained cash credit under section 68 of dit under section 68 of
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 6 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
the Act. Further, the . Further, the Ld. Assessing Officer held that Assessing Officer held that share premium received by the assessee received by the assessee constitutes revenue receipt and hence revenue receipt and hence brought to tax the same as income from business. Alternatively, he brought to tax the same as income from business. Alternatively, he brought to tax the same as income from business. Alternatively, he also assessed the share premium as unexplained he share premium as unexplained cash cash credit under section 68 of the Act Act. In this manner, he assessed total income at he assessed total income at ₹279,54,39,100/- in the reassessment order dated 30/03/2015. On in the reassessment order dated 30/03/2015. On in the reassessment order dated 30/03/2015. On further appeal, the Ld. CIT(A) further appeal, the Ld. CIT(A), sustained the validity of the sustained the validity of the reassessment proceeding, however deleted the addition made by proceeding, however deleted the addition made by proceeding, however deleted the addition made by the Assessing Officer on merit. Aggrieved, both the the Assessing Officer on merit. Aggrieved, both the the Assessing Officer on merit. Aggrieved, both the Revenue and assessee are before the assessee are before the Tribunal, by way of raising grounds , by way of raising grounds as reproduced above.
Before us, the assessee filed Before us, the assessee filed a paper book in two volumes paper book in two volumes containing pages 1 to 572. ontaining pages 1 to 572.
The cross objection raised by the assessee goes to the root of The cross objection raised by the assessee goes to the root of The cross objection raised by the assessee goes to the root of the assessment and therefore parties the assessment and therefore parties were agreed to argue firstly, agreed to argue firstly, the cross objection of the assessee. the cross objection of the assessee.
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 7 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
5.1 In the cross objection, the assessee has mainly In the cross objection, the assessee has mainly challenged the In the cross objection, the assessee has mainly validity of the reassessment on the ground that validity of the reassessment on the ground that assessment has assessment has reopened without any new or fresh tangible material and based reopened without any new or fresh tangible material and based reopened without any new or fresh tangible material and based merely on the “change of opinion change of opinion” on the material which was on the material which was already available with the Assessing Officer. already available with the Assessing Officer.
Before us the Ld. counsel Ld. counsel of the assessee referred to notice of the assessee referred to notice under section 142(1) of the under section 142(1) of the Act dated 09/08/2011 issue 09/08/2011 issued during the original scrutiny proceedings, which is available on page original scrutiny proceedings, which is available on page original scrutiny proceedings, which is available on pages 35 to 50 of the paperbook. The of the paperbook. The Ld. counsel further referred to reply filed to reply filed by the assessee dated 18/08/2011 containing details of increase the assessee dated 18/08/2011 containing details of increase the assessee dated 18/08/2011 containing details of increase in share capital and increase in share capital and increase in share premium along with bank share premium along with bank statement, which is available on statement, which is available on pages 36 to 50 of the paperbook. 36 to 50 of the paperbook. The Ld. counsel also referred to copy of the assessment order also referred to copy of the assessment order also referred to copy of the assessment order passed under section 143(3) dated 26/09/2011, which is available assed under section 143(3) dated 26/09/2011, which is available assed under section 143(3) dated 26/09/2011, which is available on pages 21 to 24 of the paperbook and submitted that the 21 to 24 of the paperbook and submitted that the 21 to 24 of the paperbook and submitted that the Assessing Officer after verifying all the facts place Assessing Officer after verifying all the facts placed on record by the on record by the
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 8 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
assessee and after satisf satisfying, accepted the returned income o accepted the returned income of the assessee.
6.1 The Ld. counsel Ld. counsel submitted that case has been reopened within submitted that case has been reopened within four years from the end of the relevant assessment year and that too four years from the end of the relevant assessment year and that too four years from the end of the relevant assessment year and that too without any new tangible material, only to tax the share premium without any new tangible material, only to tax the share premium without any new tangible material, only to tax the share premium amount received by the assessee which wa amount received by the assessee which was already verified during s already verified during the course of the original reassessment proceeding. The the course of the original reassessment proceeding. The the course of the original reassessment proceeding. The Ld. counsel submitted that reopening is nothing but change of the opinion and submitted that reopening is nothing but change of the opinion and submitted that reopening is nothing but change of the opinion and same is done without any new or fresh tangible material. The same is done without any new or fresh tangible material. The same is done without any new or fresh tangible material. The Ld. counsel in support of his conte in support of his contention, relied on the decision of ntion, relied on the decision of State Bank of India Vs ACIT (2018) 96 taxmann.com 77 (Bom) Bank of India Vs ACIT (2018) 96 taxmann.com 77 (Bom) Bank of India Vs ACIT (2018) 96 taxmann.com 77 (Bom) and PCIT PCIT PCIT Vs Vs Vs Motilal Motilal Motilal Todi Todi Todi (ITXA (ITXA (ITXA 1287 1287 1287 of of of 2016 2016 2016 dated dated dated 28/01/2019)(Bom- -HC). The Ld. counsel also distinguished the also distinguished the decision in the case of Export Credit Guarantee Corporation of India decision in the case of Export Credit Guarantee Corporation of India decision in the case of Export Credit Guarantee Corporation of India Ltd Vs ACIT (supra) Ltd Vs ACIT (supra) and Dr Amin Pathology laboratory Vs JCIT Dr Amin Pathology laboratory Vs JCIT (supra) relied upon by the Assessing Officer relied upon by the Assessing Officer.
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 9 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
The Ld. DR on the other hand relied on the finding o DR on the other hand relied on the finding o DR on the other hand relied on the finding of the Ld. CIT(A) and the Assessing Officer and the Assessing Officer and submitted that and submitted that the assessment was validly reopened by the Assessing Officer. reopened by the Assessing Officer.
We have heard rival submission of the parties rd rival submission of the parties rd rival submission of the parties on the issue in dispute and perused the relevant material on record. The issue in dispute and perused the relevant material on record. The issue in dispute and perused the relevant material on record. The issue in dispute before us is whether the reasons recorded by the Assessing dispute before us is whether the reasons recorded by the Assessing dispute before us is whether the reasons recorded by the Assessing Officer to believe that income escaped assessment are merely based Officer to believe that income escaped assessment are merely based Officer to believe that income escaped assessment are merely based on change of opinion without there being any tangible material. For on change of opinion without there being any tangible material. For on change of opinion without there being any tangible material. For adjudication of issue in dispute it is relevant to ref adjudication of issue in dispute it is relevant to ref adjudication of issue in dispute it is relevant to refer the reasons recorded by the Assessing Officer, which are available on page 26 to recorded by the Assessing Officer, which are available on page 26 to recorded by the Assessing Officer, which are available on page 26 to 27 of the paperbook. For ready reference, same are extracted as 27 of the paperbook. For ready reference, same are extracted as 27 of the paperbook. For ready reference, same are extracted as under:
"The assessee, M. Pallonji Enterprises Pvt. Ltd. having PAN: "The assessee, M. Pallonji Enterprises Pvt. Ltd. having PAN: "The assessee, M. Pallonji Enterprises Pvt. Ltd. having PAN: AAFCM3357A is an assessee of this charge AAFCM3357A is an assessee of this charge. The assessee for the A.Y. 2009 The assessee for the A.Y. 2009-10 has e- filed its return of income on filed its return of income on 29/09/2009 declaring income at Rs. 29/09/2009 declaring income at Rs. Nil. In this case, assessment u/s. In this case, assessment u/s. 143(3) of the IT. Act was completed on 26/09/2011 143(3) of the IT. Act was completed on 26/09/2011 assessing income assessing income at Rs. Nil. 09 relevant to From the records, it is seen that From the records, it is seen that during the F.Y. 2008-09 relevant to A.Y. 2009-10 assessee has shown receipt of shäre premium amounting assessee has shown receipt of shäre premium amounting assessee has shown receipt of shäre premium amounting
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 10 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
to Rs.279,48,42,181/ to Rs.279,48,42,181/- The issue of share premium was not a subject The issue of share premium was not a subject matter of verification by the A:O. and therefore no opinion has been matter of verification by the A:O. and therefore no opinion has been matter of verification by the A:O. and therefore no opinion has been formed on the iss formed on the issue in original assessment u/s. 143(3). At the same ue in original assessment u/s. 143(3). At the same time, the assessee has also not filed complete details showing the time, the assessee has also not filed complete details showing the time, the assessee has also not filed complete details showing the nature of this share premium (justification for the excess share nature of this share premium (justification for the excess share nature of this share premium (justification for the excess share premium received in comparison to the intrinsic value of the share received in comparison to the intrinsic value of the share received in comparison to the intrinsic value of the share The Hon'ble Bombay High Court in the case of E.C.G.C. v/s. Addl. C.I.T. Hon'ble Bombay High Court in the case of E.C.G.C. v/s. Addl. C.I.T. Hon'ble Bombay High Court in the case of E.C.G.C. v/s. Addl. C.I.T. Writ Petition No. Writ Petition No. 502 of 2012 dated 10-11 January, 2013, their 11 January, 2013, their Lordships have held that when the assessment is sought to be reopened Lordships have held that when the assessment is sought to be reopened Lordships have held that when the assessment is sought to be reopened within a period of four years, then what is required is within a period of four years, then what is required is within a period of four years, then what is required is 'reason to believe' but not established fact of escapement of income. At this stage believe' but not established fact of escapement of income. At this stage believe' but not established fact of escapement of income. At this stage of issue of notice, the only question is where there is relevant material of issue of notice, the only question is where there is relevant material of issue of notice, the only question is where there is relevant material on which the reasonable person can form a requisite belief. When an on which the reasonable person can form a requisite belief. When an on which the reasonable person can form a requisite belief. When an assessment is sought to be re assessment is sought to be reopened within a period of four years, the opened within a period of four years, the test to be applied is whether there is tangible material to do so. test to be applied is whether there is tangible material to do so. test to be applied is whether there is tangible material to do so. Something which is tangible need not be something which is new. Something which is tangible need not be something which is new. Something which is tangible need not be something which is new. An Assessing Officer who has plainly ignored relevant material in arriving Assessing Officer who has plainly ignored relevant material in arriving Assessing Officer who has plainly ignored relevant material in arriving at an assessment acts contrary to the law. If as a consequence of this sessment acts contrary to the law. If as a consequence of this sessment acts contrary to the law. If as a consequence of this there is escapement of income, the jurisdictional requirement of there is escapement of income, the jurisdictional requirement of there is escapement of income, the jurisdictional requirement of section 147 is fulfilled on the confirmation of a reason to believe that section 147 is fulfilled on the confirmation of a reason to believe that section 147 is fulfilled on the confirmation of a reason to believe that income has escapement assessment. A reason to believe i income has escapement assessment. A reason to believe i income has escapement assessment. A reason to believe is what is relevant and not an established fact of escapement of income. Reliance relevant and not an established fact of escapement of income. Reliance relevant and not an established fact of escapement of income. Reliance is also placed on the judgment in the case of M/s. Usha International, is also placed on the judgment in the case of M/s. Usha International, is also placed on the judgment in the case of M/s. Usha International, 348 IT 485 (Delhi High Court). 348 IT 485 (Delhi High Court). In view of the above facts and the judicial decision of the Hon’ble In view of the above facts and the judicial decision of the Hon’ble In view of the above facts and the judicial decision of the Hon’ble Bombay High Court, I have reason to believe that income, in the garb y High Court, I have reason to believe that income, in the garb y High Court, I have reason to believe that income, in the garb of share application money/share premium received in this case has of share application money/share premium received in this case has of share application money/share premium received in this case has escaped assessments in terms of provisions of section 147 of the I.T. escaped assessments in terms of provisions of section 147 of the I.T. escaped assessments in terms of provisions of section 147 of the I.T. Act. Necessary approval reopening the assessee’ case ha Necessary approval reopening the assessee’ case has been obtained s been obtained from the Addl. CIT, Range from the Addl. CIT, Range-1(2), Mumbai before issue of notice u/s 148 1(2), Mumbai before issue of notice u/s 148 of the I.T. Act. Issue notice u/s 148 of the Act of the assessee.” of the I.T. Act. Issue notice u/s 148 of the Act of the assessee.” of the I.T. Act. Issue notice u/s 148 of the Act of the assessee.” 8.1 On perusal of the above reasons recorded perusal of the above reasons recorded, it is evident that it is evident that
there was no new tangible material bef there was no new tangible material before the Assessing Officer to ore the Assessing Officer to
invoke a trigger for making belief that income escaped assessment. trigger for making belief that income escaped assessment. trigger for making belief that income escaped assessment.
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 11 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
The Assessing Officer has himself mentioned that The Assessing Officer has himself mentioned that for reopening the for reopening the assessment within four years from the end of the relevant assessment within four years from the end of the relevant assessment within four years from the end of the relevant assessment year, there should be s assessment year, there should be some tangible material to do so. me tangible material to do so. For reopening the assessment there has to be some trigger by way For reopening the assessment there has to be some trigger by way For reopening the assessment there has to be some trigger by way of a fresh material or information, which of a fresh material or information, which make the Assessing Officer make the Assessing Officer to relook into the completed look into the completed assessment. It cannot be a t cannot be a situation where an Assessing Officer Assessing Officer suddenly wake up a fine morning suddenly wake up a fine morning and say that income had escaped assessment in case of escaped assessment in case of an an assessee. The trigger for reason to believe that income escaped assessment trigger for reason to believe that income escaped assessment trigger for reason to believe that income escaped assessment may be in the form tangible material tangible material, which may be information or which may be information or material external to assessment record or information from ot external to assessment record or information from other external to assessment record or information from ot assessment year etc. etc. (i.e. internal source), but same cannot be by , but same cannot be by way of a dream or rethinking on same material, which will be or rethinking on same material, which will be in the or rethinking on same material, which will be nature of review of the assessment rather than reassessment. In the review of the assessment rather than reassessment. In the review of the assessment rather than reassessment. In the case of CIT & Ars v. Rinku Chakraborthy 56 DTR 227 (Kar) and Ars v. Rinku Chakraborthy 56 DTR 227 (Kar) and Ars v. Rinku Chakraborthy 56 DTR 227 (Kar) and Kalyanji Mavji and Company v. CIT 102 ITR 287 (SC) it is held that Kalyanji Mavji and Company v. CIT 102 ITR 287 (SC) it is held that Kalyanji Mavji and Company v. CIT 102 ITR 287 (SC) it is held that
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 12 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
such information need not be from external sources only. The such information need not be from external sources only. The such information need not be from external sources only. The information obtained in assessment proceedings of subsequent information obtained in assessment proceedings of subsequent information obtained in assessment proceedings of subsequent assessment year can also be utilized for reopening of the completed also be utilized for reopening of the completed assessment (Raymond Woolen Mills Ltd. v. ITO & Others 236 ITR (Raymond Woolen Mills Ltd. v. ITO & Others 236 ITR (Raymond Woolen Mills Ltd. v. ITO & Others 236 ITR 34 34 34 (SC) (SC) (SC) and and and Revathy Revathy Revathy Cp Cp Cp Equipment Equipment Equipment Ltd. Ltd. Ltd. vs vs vs Deputy Deputy Deputy Commissioner of Income Commissioner of Income-tax and Ors. 241 ITR 856 (Mad.) tax and Ors. 241 ITR 856 (Mad.)
8.2 Further, the Ld. counsel Ld. counsel of the assessee has referred to ssee has referred to inquiries made by the Assessing Officer in original assessment inquiries made by the Assessing Officer in original assessment inquiries made by the Assessing Officer in original assessment proceeding on the issue of examination of share capital and security proceeding on the issue of examination of share capital and security proceeding on the issue of examination of share capital and security premium. The Assessing Officer had issued a notice under section premium. The Assessing Officer had issued a notice under section premium. The Assessing Officer had issued a notice under section 142(1) of the Act on 09/08/2011 asking on 09/08/2011 asking the assessee to furnish the assessee to furnish details of increase in share capital and details of security details of increase in share capital and details of security details of increase in share capital and details of security premium. A copy of said notice is A copy of said notice is placed on paper book page No placed on paper book page Nos. 35. A detailed reply filed by the assessee giving detail of increase in share detailed reply filed by the assessee giving detail of increase in share detailed reply filed by the assessee giving detail of increase in share capital and security premium along with bank statement is available premium along with bank statement is available premium along with bank statement is available on pages 36 to 50 of the paperbook. The Assessing Officer 36 to 50 of the paperbook. The Assessing Officer 36 to 50 of the paperbook. The Assessing Officer
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 13 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
completed the original assessment on 26/09/2011 under section completed the original assessment on 26/09/2011 under section completed the original assessment on 26/09/2011 under section 143(3) of the Act accepting the returned income, and no addition accepting the returned income, and no addition accepting the returned income, and no addition was made in respect of i was made in respect of increase in share capital or security ncrease in share capital or security premium, which means that the Assessing Officer has satisfied premium, which means that the Assessing Officer has satisfied premium, which means that the Assessing Officer has satisfied himself and formed an opinion on the issue of share capital and formed an opinion on the issue of share capital and formed an opinion on the issue of share capital and share premium. Thereafter Thereafter, the Assessing Officer has reopened the the Assessing Officer has reopened the assessment by way of notice assessment by way of notice dated 28/03/2014 i.e. within four dated 28/03/2014 i.e. within four years from end of the relevant assessment year, that too without any nd of the relevant assessment year, that too without any nd of the relevant assessment year, that too without any new tangible material new tangible material, for the purpose of taxing the share premium for the purpose of taxing the share premium amount received by the assessee, which stands already verified amount received by the assessee, which stands already verified amount received by the assessee, which stands already verified during the course of t during the course of the original assessment proceeding. The he original assessment proceeding. The reopening in such circumstances, in such circumstances, amounts to based on amounts to based on “change of opinion”, which is not permitted in law. The Hon’ble Bombay High , which is not permitted in law. The Hon’ble Bombay High , which is not permitted in law. The Hon’ble Bombay High Court in the case of Court in the case of State Bank of India vs. ACIT (2018) 96 ACIT (2018) 96 taxmann.com 77 (Bom) 77 (Bom) after considering the judgment judgment in Export Credit Guarantee Corporation vs Credit Guarantee Corporation vs. Add CIT (supra) CIT (supra) held that
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 14 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
reopening within four years on change of opinion and without fresh reopening within four years on change of opinion and without fresh reopening within four years on change of opinion and without fresh material is bad in law. In the case of material is bad in law. In the case of PCIT Vs Motilal Todi (ITXA PCIT Vs Motilal Todi (ITXA 1287 of 2016 dated 28/01/2019) 1287 of 2016 dated 28/01/2019) relied upon by the assessee, the relied upon by the assessee, the Hon’ble Bombay High Court Hon’ble Bombay High Court quashed the reopening on the ground the reopening on the ground that there was no new material despite the case being reopened that there was no new material despite the case being reopened that there was no new material despite the case being reopened within four years from the end of the relevant assessment year. within four years from the end of the relevant assessment year. within four years from the end of the relevant assessment year. Further we know that Hon’ble Supr Further we know that Hon’ble Supreme Court in the case of eme Court in the case of Kelvinator of India Ltd (2010) 320 ITR 561 Kelvinator of India Ltd (2010) 320 ITR 561 held the concept of held the concept of change opinion is an inbuilt test check change opinion is an inbuilt test check on abuse of power of the abuse of power of the Assessing Officer. The relevant finding of the Hon’ble Supreme Court Assessing Officer. The relevant finding of the Hon’ble Supreme Court Assessing Officer. The relevant finding of the Hon’ble Supreme Court is reproduced as under: is reproduced as under:
"Income escaping assessment. caping assessment. 147. If— [a] the Income- -tax Officer has reason to believe that, by reason of the tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under omission or failure on the part of an assessee to make a return under omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income section 139 for any assessment year to the Income-tax Officer or to tax Officer or to disclose fully and truly all material facts ne disclose fully and truly all material facts necessary for his assessment for cessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, that year, income chargeable to tax has escaped assessment for that year, that year, income chargeable to tax has escaped assessment for that year, or [b] notwithstanding that there has been no omission or failure as or [b] notwithstanding that there has been no omission or failure as or [b] notwithstanding that there has been no omission or failure as
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 15 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
mentioned in clause (a) on the part of the assessee, the Income mentioned in clause (a) on the part of the assessee, the Income- - tax Officer has in consequence of information in his possession reason to believe that n consequence of information in his possession reason to believe that n consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment income chargeable to tax has escaped assessment for any assessment income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or year, he may, subject to the provisions of sections 148 to 153, assess or year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or reassess such income or recompute the loss or the depreciation allowance, the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in as the case may be, for the assessment year concerned (hereafter in as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year)." After sections 148 to 153 referred to as the relevant assessment year)." After sections 148 to 153 referred to as the relevant assessment year)." After enactment of Direct Tax Laws (Amendment) Act, 1987, i.e., prior to 1st enactment of Direct Tax Laws (Amendment) Act, 1987, i.e., prior to 1st enactment of Direct Tax Laws (Amendment) Act, 1987, i.e., prior to 1st April, 1989, Section 147 of the Act, reads as under: ction 147 of the Act, reads as under:
"147. Income escaping assessment. "147. Income escaping assessment.-- If the Assessing Officer, for reasons to If the Assessing Officer, for reasons to be recorded by him in writing, is of the opinion that any income be recorded by him in writing, is of the opinion that any income be recorded by him in writing, is of the opinion that any income chargeable to tax has escaped assessment for any assessment year, he chargeable to tax has escaped assessment for any assessment year, he chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess bject to the provisions of Sections 148 to 153, assess or reassess bject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has such income and also any other income chargeable to tax which has such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the escaped assessment and which comes to his notice subsequently in the escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recom course of the proceedings under this section, or recomputed the loss or the puted the loss or the depreciation allowance or any other allowance, as the case may be, for the depreciation allowance or any other allowance, as the case may be, for 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 assessment year concerned (hereafter in this section and in Sections 148 assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year)." to 153 referred to as the relevant assessment year)."
After the Amending Act, 1989, S After the Amending Act, 1989, Section 147 reads as under: "Income ection 147 reads as under: "Income escaping assessment. 147. If the Assessing Officer has reason to believe escaping assessment. 147. If the Assessing Officer has reason to believe escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any that any income chargeable to tax has escaped assessment for any that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assessment year, he may, subject to the provisions of sections 148 to 153, 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 r reassess such income and also any other income chargeable to r reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice tax which has escaped assessment and which comes to his notice tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or subsequently in the course of the proceedings under this section, or subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other recompute the loss or the depreciation allowance or any other recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this as the case may be, for the assessment year concerned (hereafter in this 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 section and in sections 148 to 153 referred to as the relevant assessment section and in sections 148 to 153 referred to as the relevant assessment year)."
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 16 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
On going through the changes, quoted above, made to Section 147 of the On going through the changes, quoted above, made to Section 147 of the On going through the changes, quoted above, made to Section 147 of the Act, we find that, Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re prior to Direct Tax Laws (Amendment) Act, 1987, re- opening could be done under above two conditions and fulfillment of the opening could be done under above two conditions and fulfillment of the opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to said conditions alone conferred jurisdiction on the Assessing Officer to said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with make a back assessment, but in section 147 of the Act [with effect from 1st effect from 1st April, 1989], they are given a go April, 1989], they are given a go-by and only one condition has remained, by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has viz., that where the Assessing Officer has reason to believe that income has viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re escaped assessment, confers jurisdiction to re-open the assessment. open the assessment. Therefore, post- -1st April, 1989, power to re-open is much wider. However, open is much wider. However, one needs to give a schematic interpretation to the words "reason to one needs to give a schematic interpretation to the words "reason to one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary believe" failing which, we are afraid, Section 147 would give arbitrary believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re powers to the Assessing Officer to re-open assessments on the open assessments on the basis of "mere change of opinion", which cannot be per se reason to re "mere change of opinion", which cannot be per se reason to re "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to must also keep in mind the conceptual difference between power to must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review and power to reassess. The Assessing Officer has no power to review and power to reassess. The Assessing Officer has no power to review; he has the power to re review; he has the power to re-assess. But reassessment has to be t reassessment has to be based on fulfillment of certain pre based on fulfillment of certain pre-condition and if the concept of condition and if the concept of "change of opinion" is removed, as contended on behalf of the "change of opinion" is removed, as contended on behalf of the "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re Department, then, in the garb of re-opening the assessment, review opening the assessment, review would take place. One must treat t would take place. One must treat the concept of "change of opinion" he concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. built test to check abuse of power by the Assessing Officer. built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re Hence, after 1st April, 1989, Assessing Officer has power to re Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is "tangible material" to come to the conclusion that provided there is "tangible material" to come to the conclusion that provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. pement of income from assessment. Reasons must have a Reasons must have a live link with the formation of the belief. Our view gets support from the live link with the formation of the belief. Our view gets support from the live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the changes made to Section 147 of the Act, as quoted hereinabove. Under the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the only deleted the words "reason to believe" but also inserted the word "opinion" in Section words "reason to believe" but also inserted the word "opinion" in Section words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the Companies 147 of the Act. However, on receipt of representations from the Companies 147 of the Act. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament re against omission of the words "reason to believe", Parliament re against omission of the words "reason to believe", Parliament re- introduced the said expres introduced the said expression and deleted the word "opinion" on the sion and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer. We ground that it would vest arbitrary powers in the Assessing Officer. We ground that it would vest arbitrary powers in the Assessing Officer. We
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 17 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
quote here in below the relevant portion of Circular No.549 dated 31st quote here in below the relevant portion of Circular No.549 dated 31st quote here in below the relevant portion of Circular No.549 dated 31st October, 1989, which reads as follows: October, 1989, which reads as follows: "7.2 Amendment made by the Amen "7.2 Amendment made by the Amending Act, 1989, to reintroduce the ding Act, 1989, to reintroduce the expression `reason to believe' in Section 147. expression `reason to believe' in Section 147. --A number of A number of representations were received against the omission of the words `reason representations were received against the omission of the words `reason representations were received against the omission of the words `reason to believe' from Section 147 and their substitution by the `opinion' of the to believe' from Section 147 and their substitution by the `opinion' of the to believe' from Section 147 and their substitution by the `opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, ficer. It was pointed out that the meaning of the expression, ficer. It was pointed out that the meaning of the expression, `reason to believe' had been explained in a number of court rulings in the `reason to believe' had been explained in a number of court rulings in the `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give past and was well settled and its omission from section 147 would give past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reo arbitrary powers to the Assessing Officer to reopen past assessments on pen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has mere change of opinion. To allay these fears, the Amending Act, 1989, has mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression `has reason to again amended section 147 to reintroduce the expression `has reason to again amended section 147 to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, believe' in place of the words `for reasons to be recorded by him in writing, believe' in place of the words `for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, opinion'. Other provisions of the new section 147, however, opinion'. Other provisions of the new section 147, however, remain the same." remain the same." (Emphasize supplied externally) (Emphasize supplied externally) 8.3 The Assessing Officer has referred the ratio of the Hon’ble The Assessing Officer has referred the ratio of the Hon’ble The Assessing Officer has referred the ratio of the Hon’ble Bombay High Court in the case of ECGC Bombay High Court in the case of ECGC (supra) that when an (supra) that when an assessment is sought to be reopened within a period of assessment is sought to be reopened within a period of assessment is sought to be reopened within a period of four years, then what is required is reason to believe and not an established fact what is required is reason to believe and not an established fact what is required is reason to believe and not an established fact of escapement of income. This ratio of Hon’ble High Court is of escapement of income. This ratio of Hon’ble High Court is of escapement of income. This ratio of Hon’ble High Court is undisputed and but i undisputed and but in the in the instant case issue is n the in the instant case issue is not related to established fact of escapement of income fact of escapement of income but the issue is absence of but the issue is absence of tangible material which could trigger process of reason to believe. tangible material which could trigger process of reason to believe. tangible material which could trigger process of reason to believe.
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 18 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
The Hon’ble Bombay High Court in the case of Export Credit The Hon’ble Bombay High Court in the case of Export Credit The Hon’ble Bombay High Court in the case of Export Credit Guarantee Corporation of India Ltd (supra) held as under: Guarantee Corporation of India Ltd (supra) held as under: Guarantee Corporation of India Ltd (supra) held as under:
“8. To hold that the Assessing Officer must 8. To hold that the Assessing Officer must be deemed to have accepted be deemed to have accepted what he has plainly overlooked or ignored in the assessment order would what he has plainly overlooked or ignored in the assessment order would what he has plainly overlooked or ignored in the assessment order would be to stretch the interpretation of Section 147 to a point where the be to stretch the interpretation of Section 147 to a point where the be to stretch the interpretation of Section 147 to a point where the provision would cease to have meaning and content. Such an exercise of provision would cease to have meaning and content. Such an exercise of provision would cease to have meaning and content. Such an exercise of excision by judicial interpretation is impermissible. When an assessment is cial interpretation is impermissible. When an assessment is cial interpretation is impermissible. When an assessment is sought to be reopened within a period of four years of the end of the sought to be reopened within a period of four years of the end of the sought to be reopened within a period of four years of the end of the relevant assessment year. the test to be applied is whether there is relevant assessment year. the test to be applied is whether there is relevant assessment year. the test to be applied is whether there is tangible material to do so. What is tangible is something tangible material to do so. What is tangible is something which is not which is not illusory, hypothetical or a matter of conjecture. Something which is illusory, hypothetical or a matter of conjecture. Something which is illusory, hypothetical or a matter of conjecture. Something which is tangible need not be something which is new. An Assessing Officer who tangible need not be something which is new. An Assessing Officer who tangible need not be something which is new. An Assessing Officer who has plainly ignored relevant material in arriving at an assessment acts has plainly ignored relevant material in arriving at an assessment acts has plainly ignored relevant material in arriving at an assessment acts contrary to law. If there is an contrary to law. If there is an escapement of income in consequence, the escapement of income in consequence, the jurisdictional requirement of Section 147 would be fulfilled on the jurisdictional requirement of Section 147 would be fulfilled on the jurisdictional requirement of Section 147 would be fulfilled on the formation of a reason to believe that income has escaped assessment. The formation of a reason to believe that income has escaped assessment. The formation of a reason to believe that income has escaped assessment. The reopening of the assessment within a period of four years is in these reopening of the assessment within a period of four years is in these reopening of the assessment within a period of four years is in these circumstances within jurisdiction. cumstances within jurisdiction.” 8.4 The Hon’ble High Court has justified reopening Hon’ble High Court has justified reopening Hon’ble High Court has justified reopening by the
Assessing Officer, when he when he has plainly ignored the relevant material has plainly ignored the relevant material while arriving at an assessment order, but in the instan while arriving at an assessment order, but in the instan while arriving at an assessment order, but in the instant case the
Assessing Officer had Assessing Officer had raised specific queries on the issue of specific queries on the issue of increase
in share capital and share premium share capital and share premium and after examining the reply of examining the reply of
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 19 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
the assessee, made no addition in original assessment proceedings, made no addition in original assessment proceedings, made no addition in original assessment proceedings, thus the ratio of the decision of the Hon’ble High Court thus the ratio of the decision of the Hon’ble High Court thus the ratio of the decision of the Hon’ble High Court (supra) cannot be applied ove over the facts of the instant case.
8.5 Thus, respectfully following the finding of the Hon’ble Supreme respectfully following the finding of the Hon’ble Supreme respectfully following the finding of the Hon’ble Supreme Court in the case of Kelvinator of India Ltd(supra), we hold that Court in the case of Kelvinator of India Ltd(supra), we hold that Court in the case of Kelvinator of India Ltd(supra), we hold that reopening based on the change of opinion without reopening based on the change of opinion without reopening based on the change of opinion without there being any tangible material, is n is not permitted in law and accordingly ot permitted in law and accordingly, we quash the reassessment proceeding. The ground the reassessment proceeding. The grounds of cross objection f cross objection are accordingly allowed. accordingly allowed.
8.6 As far as the appeal of the As far as the appeal of the Revenue is concerned, we find that is concerned, we find that deletion of addition for share capital deletion of addition for share capital & share premium on share premium on the merit has been challenged and argued by the parties, but we have already , but we have already quashed the reassessment proceeding and therefore adjudic quashed the reassessment proceeding and therefore adjudic quashed the reassessment proceeding and therefore adjudication of the issue of addition on the issue of addition on merit is rendered academic and therefore merit is rendered academic and therefore grounds raised by the grounds raised by the Revenue are dismissed as infructuous. infructuous.
M/s M Pallonji Enterprises M/s M Pallonji Enterprises 20 ITA No. 1907/M/2017 & CO No. 204/M/2018 ITA No. 1907/M/2017 & CO No. 204/M/2018
In the result, the appeal of the In the result, the appeal of the Revenue is dismissed whereas dismissed whereas cross objection of the assessee is allowed. cross objection of the assessee is allowed.
Order pronounced in the open Court in Order pronounced in the open Court in 13/10 /10/2022. Sd/- Sd/- Sd/ (AMIT SHUKLA AMIT SHUKLA) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 13/10/2022 Dragon Legal/Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, BY ORDER, //True Copy// (Sr. Private Secretary) Secretary) ITAT, Mumbai ITAT, Mumbai