IDEACOUNT EDUCATION P. LTD,MUMBAI vs. ACIT 16(1), MUMBAI

2. The first issue in this appeal of assessee is against the order of CIT(A) confirming the action of the Assessing Officer in reopening under section 147 read with section 148 of the Act. For this, assessee has raised the following two grounds:-

Without prejudice to the aforesaid ground of appeal No.1, on the facts and circumstances of the case and in law, the learned assessing officer has erred in making addition under section 68 of the Act, under the situation wherein the assessment was re-opened under section 147 of the Act only for assessing the extra premium charge on allotment of shares, whereas no addition was made in this re-assessment order under section 143 read with section 147 on account of such extra premium charged.”

As per the above reasons, the assessee has issued 10 lakh shares at a price of ₹148 per share, however, the book value per share was ₹118.63 according to Assessing Officer, hence, the sum of ₹9,86,87,002/- being excess on account of charged over book value had escaped taxability and same has to be taxed as income from other sources. During the course of reassessment proceedings, the Assessing Officer issued notices under section 143(2) along with 142(1) of the Act and noted that the assessee failed to justify the premium or prove the identity or creditworthiness or genuineness of the transactions then addition under section 68 of the Act will be made. The assessee vide letter dated 26.03.2015 filed various details regarding receipt of share application money and share allotment to two major investors who paid premium of ₹148 per share. The parties were i.e Business Match Services India Ltd. share in number 5 lakh and and Walkwater Media Ltd. Share in number 5 lakh at a share premium of Rs.148 per share. The assessee has also given details that these two major investors were allotted 10 lakh shares (party paid up) on 30.09.2008. Similarly, the Sr. Name Share No Capital 1. Amit Gupta 15,000 2. Manish Goel 15,000 3. Naveen Kumar Gupta 2,65,000 4. Navneet Singh 1,00,000 5. Niyati Turakhia 3,10,000 6. Reno Subramaniam 15,000 7. SachinBhatnagar 15,000 8. SupreetJhamrah 1,00,000 9. Tajinderjeet Singh 15,000 10. Team India Managers Ltd. 50,000 5. The Assessing Officer framed the reassessment order under section 143(3) read with section 147 of the Act dated 27.03.2015 making addition of share premium amount of Rs.14.80 crores and share capital of Rs.80 lakh received from Businessmatch Services I. Pvt. Ltd. & Walkwater Media Ltd. Further, addition of share capital of Rs. 1.70 crores was made being share capital received from promoters, shareholders. Thereby, the total addition made under section 68 of the Act was Rs.16.50 crores. The assessee challenged the reopening before CIT(A) who confirmed the action of the Assessing Officer by observing in Para 3.2 as under:-

We have heard the rival contentions and gone through the facts and circumstances of the case. The learned Counsel for the assessee argued that the reopening was done by recording the reasons and as per the reasons, the Assessing Officer has invoked the provisions of Secton 56 of the Act. As per the above reason, according to Assessing Officer that the higher premium charged by the assessee than the fair price of the shares, it is to be treated as income from other sources. The learned Counsel for the assessee stated that the Assessing Officer while framing the assessment has made addition under section 68 of the Act.

In view of the above, the learned Counsel for the assessee stated that the Assessing Officer has no jurisdiction to make addition under section 68 of the Act because no addition has been made of the income for which notice under section 148 of the Act is issued. Hence, he argued that there was also no reason to belief that income has escaped assessment at the time of issuance of notice under section 148 of the Act qua the addition made by Assessing Officer under section 68 of the Act. The learned Counsel for the assessee relied on the decisions of Hon’ble Bombay High Court in the case of CIT Vs. Jet Airways (I) Limited [2011] 331 ITR 236 (Bom) and the relevant Para of Hon’ble High court cited before which read as under:-

The learned Counsel for the assessee also relied on the decision of Hon’ble Bombay High Court in the case of Vodafone India Services P Ltd. v. UOI (2014) 50 taxmann.com (Bom) dtd 10.10.2014, wherein it is held that an amount received on issue of shares at a premium is not income because it is capital receipt. It was contended that the above decision of Hon’ble Bombay High Court is accepted by the Revenue and CBDT also issued a Circular F.No 500/15/2014/APA-1 dtd. 29.01.2015. It was contended that the ultimately no addition was made under section 56 of the Act on share premium for which reopening was done after recording of reasons. Hence, reopening is bad in law in view of Hon’ble Bombay High Court decision in Jet Airways (I) Limited. On the other hand, the learned Sr. DR heavily relied on the order of Assessing Officer and that of the CIT(A). Further, the learned Counsel for the assessee relied on the following cases:-

We noted from the facts that the original assessment was framed under section 143(3) of the Act by the Assessing Officer on 23.12.2011 and subsequently, assessment was also reopened and assessment was framed under section 143(3) read with section 147 of the Act vide order dated 10.01.2014. This is second reassessment and for this, the Assessing Officer issued notices under section 148 of the Act on 29.03.2014. In view of the above reasons recorded for the reopening of the assessment done to tax Rs. 9,86,87,002/- being excess the premium charged as revenue income under section 56 of the Act. The reasons recorded for the same, the relevant read as under:-

Ultimately in the reassessment order passed under section 143(3) of the Act read with section 147 of the Act, no addition was made under section 56 of the Act of share premium as recorded in the reasons. However, the Assessing Officer made addition of share capital under

The assessee has also argued that reopening is bad in law on account of change of opinion because both increase in share capital and share premium is completely disclosed in the balance sheet and in the original assessment proceedings, entire details of share capital were available before the Assessing Officer in respect of these two companies Business Match Services India Ltd. and Walkwater Media Ltd. Further, the complete details of share allotted to promoters were also available. Hence, it was contended that proceedings are nothing but change of opinion and even from the reasons recorded it is clear that the reopening is not based on any new material. However, since, we have already quashed the reopening by following the Hon’ble Bombay High Court Judgement in the case of Jet Airways (supra) we need not to go into the change of opinion of the assessee. Even we need not to go into the merits of the case, because we have already allowed the jurisdictional issue of the assessee. This appeal of assessee is allowed.

Coming to assessee’s appeal in for AY 2011-12.