EMSON TOOLS MFG CORP LTD,LUDHIANA vs. DCIT, LUDHIANA

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘A’, CHANDIGARH

BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.845/Chd/2016 (Assessment Year : 2009-10) Emson Tools Mfg. Corpn. Ltd., Vs. The D.C.I.T.,(CC-I), D-2, Focal Point, Ludhiana. Ludhiana. PAN: AAACE3698M (Appellant) (Respondent)

Appellant by : Shri Sarabjit Garg Respondent by : Smt.Chanderkanta, Addl.CIT Date of hearing :30.01.2018 Date of Pronouncement :27.04.2018

ORDER PER ANNAPURNA GUPTA, A.M. :

This appeal has been preferred by the assessee against

the order of Ld. Commissioner of Income Tax (Appeals)-5,

Ludhiana (hereinafter referred to as (‘Ld.CIT(Appeals)’)

dated 25.4.2016 relating to assessment year 2009-10.

validity of the assessment order passed u/s 147 of the

Income Tax Act, 1961 (in short ‘the Act’).

was carried out on the assessee on 28.6.2008. The

Assessing Officer thereafter issued notice u/s 142 r.w.s.

153A of the Act to the assessee company on 8.10.2009 and

assessment was completed vide an order dated 24.12.2010

accepting the return of income filed by the assessee.

Thereafter on the basis of information received from

Directorate of Income Tax (Revenue Intelligence & Criminal

Investigation), Chandigarh the case was reopened after

recording reasons and notice u/s 148 of the Act was issued

to the assessee on 31.3.2014. Thereafter the assessment

was framed making addition of Rs.1,56,50,000/- on account

of share capital and premium received by the assessee

during the year treating the same as unexplained credit in

the books of the assessee as per the provisions of section

68 of the Act.

Ld.CIT(Appeals) raising various grounds before him

challenging the validity of the assessment framed u/s

147/148 of the Act. The Ld.CIT(Appeals) dismissed all the

grounds raised by the assessee thus in turn dismissing the

appeal of the assessee.

appeal before us. The first contention raised by the

assessee was that notice issued u/s 148 was invalid since it

was issued after four years from the end of the relevant

assessment year and hence was time barred. Ground No.I(i)

raised by the assessee in this regard reads as under:

“I. Legal Issues:- That the Ld. CIT(A) has erred in law and in facts of the case in upholding the order of Ld. AO u/s 143(3) r.w.s. 148/147 of the I.T. Act, 1961, despite the fact that:- i) notice u/s 148 was issued after 4 years from the end of relevant assessment year, hence it was time barred as held in case of Kanubhai M. Patel (HUF) vs. Hiren Bhatt 334 ITR 25 (Guj.). In this it was held that date of issue of notice would be date on which notice was actually handed over to post office for purpose of effecting service on assessee.”

hearing before us, drew our attention to his submissions

made before the CIT(A) in this regard reproduced at para

1(a)(i) of the order and which reads as under:

“1.a) That notice issued u/s 148 is invalid due to the following reasons and assessment on the basis of invalid notice is null and void:- i. Copy of the notice u/s 148 is enclosed. On a perusal of the same your honour will kindly observe that it is dated 31.03.2014J-however, as per photo copy of the envelope enclosed, it is clear that it was delivered to postal authorities on 01. 04.2014. Hence, it being time barred is invalid as held in case of Kanubhai M. Patel (HUF) vs. Hren Bhatt (2010) 43 DTR 329 (Guj.). In this case meaning of the word to issue was defined as "to issue" - Meaning send out. Notice signed on 31/3/2010 sent to speed post on 7/4/2010 - It was held to be issued after Six years for the relevant A.Y. 2003-04. The assessee also relies upon the following case law:-

Jashan Textiles Mills P. Ltd. Vs. DCIT (2006) 284 ITR 542 (Bom) German Remdeis Ltd vs. DCIT (2006) 287 ITR 494 (Bom) CIT vs. Former Finance (2003) 264 ITR 566 (SC)” 7. Referring to the above Ld.Counsel for the assessee

stated that though the notice u/s 148 was dated within the

stipulated period of four years from the end of the relevant

assessment year, i.e. 31.03.2014, it was delivered to the

postal authorities only on 01.04.2014, which fact was

evident from the stamp of the postal authorities on the

envelope. This, Ld.Counsel for the assessee contended being

beyond four years from the end of the relevant assessment

year, tantamounted to issue of notice beyond the prescribed

period and hence was invalid.

the order of the Ld.CIT(Appeals) in this regard. The Ld. DR

drew our attention to para 5.2 of the order of the

CIT(Appeals) dealing and rejecting the aforesaid contention

of the Ld. counsel for assessee as under:

“5.2. The 2nd Ground of Appeal is that Ld. AO has erred in law and facts of the case in making reassessment on the basis of notice u/s 148 which is time barred. For this the AR has filed a copy of the envelope through which notice was sent to the assessee. A perusal of the assessment record shows that as per the note sheet the notice was issued on 31.03.2014. The assessment year involved is 2009-10 and as per section 149 of the I.T. Act, 1961 notice u/s 148 can be issued upto six years from the end of the relevant assessment year. That means notice in this case could have been validly issued upto 31.03.2016. Notice issued u/s 148 is dated 31.03.2014, thus it is within the time limit. Hence, the arguments of the AR are found devoid of merits and therefore unacceptable.” The Ld. DR stated that in view of the above findings of

the Ld.CIT(Appeals) that limitation for issuing notice u/s

148 was six years and not four years as contended by the

Ld. counsel for assessee, the notice issued in the present

case was not barred by limitation.

in the order of the Ld.CIT(Appeals). The sole contention of

the Ld. counsel for assessee before us is that the notice

issued u/s 148 of the Act, had become time barred since it

was issued beyond a period of four years from the end of

the relevant assessment year. But as rightly pointed out by

the Ld.CIT(Appeals), notice u/s 148 can be issued up to six

years from the end of the relevant assessment year.

Ld.Counsel for the assessee has not been able to controvert

this finding of the CIT(A),before us and the same is evident

from the bare reading of the section also. Notice in the

present case having been issued well within this period, it

was not barred by limitation. We therefore uphold the

findings of the Ld.CIT(Appeals) in this regard and, reject

the ground of appeal 1(i) raised by the assessee.

assessee before us was vis-a-vis reasons recorded for

reopening the case, which, it was contended, did not

sufficiently meet the requirements of section 147 of the Act.

Ground Nos.1. iv), v) and vi) raised by the assessee in this

regard read as under:

“iv) reasons recorded do not meet the definition of reason to believe as defined by Apex Court in case of Sheo Nath Singh v. Appellate Assistant Commissioner of Income-tax [1971] 82 ITR 147; v) reason to believe recorded on the basis of dictates of higher authorities without independent application of mind; vi) query regarding share application money, on the basis of which notice u/s 148 issued, was duly raised, replied and considered during the course of original assessment proceedings. Reassessment on the basis of issue raised, replied and considered during original assessment proceedings amounts to change of opinion, which is not permissible in law as held in case of CIT vs. Usha International Ltd. (Delhi High Court) (Full Bench) as reported in [2012] 25 taxmann.com 200 (Delhi) (FB); 11. During the course of hearing before us, the Ld.Counsel

for the assessee drew our attention to the reasons recorded

by the Assessing Officer for reopening the case u/s 147 of

the Act, as reproduced at para 4.3 of the CIT(A)’s order as

under:

“4.3. The assessee asked for the reasons recorded for issuing notice u/s 148 and the same were given to the assessee by the AO on 20.06.2014. The reasons recorded are reproduced below:-

Reasons for re-opening of assessment u/s 147 Asstt. Year 2009-10 in the case of M/s Emson Tools Manufacturing Corpn. Ltd., Information has been, received from Directorate of Income Tax (Intelligence 8f, Criminal Investigation), Chandigarh. The directorate has provided the detail of companies which have issued shares at unreasonable share premium. The assessee company has received share capital at a premium of Rs.490 per share. The company has issued 31300 shares of face value of Rs.10 for premium of Rs.490 at Rs.1,53,37,000-. The yearwise details of the share capital of the assessee are as below:

Assessment Year 20O9-1O 2008-09 Share application money 0 1900000 Paid up share capital 16872300 16559300 Total income 14972970 14639870

Prima facie, the premium of Rs. 490 per share seems quite unreasonable and needs to be investigated. Based on the returns, the growth of the company does not justify such high premium. The Hon'ble Courts have frowned upon such modus operandi. In the case of Som Nath Maini, 100 TTJ 917 the Hon'ble ITAT has observed that a worthless company cannot fetch a high price of Rs.55/share even though the payments are through banking channel and also the transaction is through a stock exchange. The Hon'ble ITAT, Chandigarh followed the decision of the Hon'ble Supreme Court in the case of Durga Das More, 82 ITR 540(SC). It may be noted that the decision of the Hon'ble ITAT has been upheld by the Hon'ble Punjab & Haryaria High-Court in. the case of Som Nath Maini, 306 ITR 414. The gist of the decisions is given below:- Assistant Commissioner Of Income-Tax.. v/s Som Nath Maini.

TTJ Citation 100 TTJ 917(CHD)

matrix of the case from start of the purchase of shares at the rate of Rs.3 to the sale of shares at Rs.55 in a short span of time and shares being not quoted at Ludhiana Stock Exchange and the way in which different instalment payments have been received from the brokers and non- availability of the records of the brokers and the shares remaining in the name of assessee even long after the sale of the shares does not stand the test of probabilities. As rightly pointed out by the learned Departmental Representative, these types of companies function in the capital market whose sale price is manipulated to astronomical height only to create the artificial transaction in the form of capital gain. Surrounding circumstances differ from the normal share market transactions in which they are ordinarily carried out. Taking all the steps, together, final conclusion does not accord with the human probabilities. The Hon'ble Supreme Court in the case of CIT vs. Durga Prasad More 1973 . CTR (SC) 500 : (1971) 321TR 540 (SC) held as under. "It is a story that does not accord with human probabilities. It is strange that High Court found fault with the Tribunal for not swallowing that story. If that story is found to be unbelievable as the Tribunal has found and in our opinion, rightly that the decisions remains that the consideration for the-sale proceeded from the assessee and therefore, it must be assumed to be his money. It is surprising that the High Court has found fault with the ITO for not examining the wife and the father-in-law of the assessee for proving the Department's case. AH that we can say is that the High Court has ignored the facts of life. It is unfortunate that the High Court has taken a superficial view of the onus that lay on the Department." 7. The learned CIT(A) only got swayed by the issuance of notice by the AO under s. 131 to both the brokers from whom shares were purchased and sold and came to the conclusion that share transactions were genuine overlooking the material gathered by the AO from the statements recorded of broker M/s S.K. Sharma & Co. and the other facts and circumstances that volume of transactions of Jaipur Stock Exchange is only 600 shares and 1000 shares. Payments have been received from the brokers only in shares installments over a period, of 6-7 months. It is true that when transactions are through cheques, it looks like real transaction but authorities, are permitted to look behind the transactions and find out the motive behind transactions. Generally, it is expected that apparent is real but, it is not sacrosanct. If facts and circumstances so warrant that it does not accord with the test of human probabilities, transactions have been held to be non-genuine.

It is highly improbable that share price of a worthless company can go front Rs.3 to Rs.55 in a short span of time, Mere payment by cheque and receipt by cheque does not render a transaction genuine. Capital gain tax was created to operate in a real world and not that of make belief. Facts of the case only lead to the inference that these transactions are not genuine and make believe only to oft set the loss incurred on the sale of jewellery declared under VDIS. In the totality of facts and circumstances of this case and material on record, we, are of the considered view that the CIT(A) was not justified in deleting the impugned addition. We, accordingly set aside the order of the CIT(A) and restore that of the AO. Som Nath Maini vs commissioner Of Income Tax. Taexpert Citation 1239 of 2006 ITR Citation 306 ITR 414(p&h) The assessee incurred capital loss on account of sale of gold jewellery and also- had short-term capital gain of almost equal amount. The Assessing Officer observed that short-term gain was not genuine inasmuch as the assessee had purchased 45,000 shares of M/s. Ankur International Limited at varying rates from Rs.2.06 to Rs. 3.1 per share and sold them within a short span of six-seven months at the rate varying from Rs.47.75 poise to Rs.55. These shares were purchased through a broker Munish Arora &, Co. and sold through another broker M/s. SK Sharma & Co. The Assessing Officer took by surprise the astronomical rise in share price of a company from Rs.3 to Rs.55 and started further enquiry. We are unable to accept, the submission made. The burden of proving that income is subject to tax is on the Revenue but on the facts, to show that the transaction is genuine, burden is primarily on the assessee. The Assessing Officer is to apply the test of human probabilities for deciding genuineness or otherwise of a particular transaction. Mere leading of evidence that the transaction was genuine, cannot be conclusive. Such evidence is required to be assessed by the Assessing Officer in a reasonable way. Genuineness of the transaction can be rejected even if the assessee leads evidence which is not trust-worthy, even if the Department does not lead any evidence on such an issue. Receipt, of such a high premium is against the human probability and just contrary to very nature of human conduct as held by the Hon'ble Supreme Court in the case of CIT vs. Durga Das .More, (1971) 82 ITR 540 (SC). In the said decision the Hon'ble Supreme Court has categorically held that revenue is entitled to look into surrounding circumstances to find out the reality of recitals made in the documents. In the case of. Sumati Dayal vs. CIT 214 ITR 801 (SC), the Hon'ble Supreme Court has also held that the. matter has to be considered in light of the human

probabilities. The: assessment has not been framed under scrutiny. Only processing was done u/s 143(1). It is further to be noted that the Hon'ble Supreme Court has also discussed about the meaning of information. In the case of Commissioner of Income-tax v. A. Raman and Co., 67 ITR 11 the Supreme Court held: ‘The expression 'information' in the context in which it occurs must, in our judgment, mean instruction or knowledge derived from an external source concerning facts, or particulars,, or as to law relating to a master bearing on the assessment.’ 14. The Supreme Court further held: ‘That information must, it is true, have come into the possession of the Income-tax Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected.’ In Maharaj Kumar Kamal Singh v. Commissioner of Income- tax, : [1959] 35 ITR1(SC) it was held that the word 'information' in Section 34(1)(b) included information as to the true and correct state of law, and so would cover information as to relevant judicial decisions. The following observations may be reproduced with advantage: ‘If the word 'information' used in any other provision of the Act denotes information as to facts or particulars, that would not necessarily determine the meaning of the said word in Section 34(l) (b). The denotation of the said world would naturally depend on the context of the particular provisions in which it is used. It is then contended that Sections 33B and 35 confer ample powers on the specified authorities to revise the Income-tax Officer's orders and to rectify mistakes respectively and so it would be legitimate to construe the word 'information' in Section 34(l)(b) strictly and to confine it to information in regard to facts or particulars. This argument also is not valid. If the word ' information' in its plain grammatical meaning includes information as to facts as well as information as to the state of the law, it would be unreasonable to limit it to information as to the facts on the extraneous consideration that some cases of assessment which need to be revised or rectified, on the ground of mistake of law may conceivably be covered by Sections 33B and 35.' In Commissioner of Income-tax, v. A. Raman & Co., it was said that the expression ‘information ' in the context of Section 147(b) of the Income-tax Act, 1961, must mean instruction or knowledge derived from extraneous sources

concerning facts or particulars or as to law., relating to a matter bearing on the assessment. The Bombay High Court, in a recent decision, Commissioner of Income-tax v. A. J. Zaveri, [1968] 68 I.T.R. 594 (Bom.) after a discussion of the relevant case law, came to the conclusion that ' information' within the meaning of Section 34(1 )(b) of the Income-tax Act, 1922, may consist of .a different view taken of the facts on the record by a higher Tribunal on appeal from the Income-tax Officer's decision. In that case, it was held that the decision of the Income-tax Appellate Tribunal constituted 'information to the Income-tax Officer as to which of the assessable parties was chargeable for a particular item of income. In the latest decision of this court in R.B. Bansilal Abirchand Firm v. Commissioner of Income- tax, when the first assessment of the assessee's income was made by the Income-tax Officer the latter's information was that the assessee was a partner in another concern known as Bisesar House and that the interest had been received from that concern in the capacity of a partner. It was only after the Tribunal and the High Court gave their decision in the proceedings for assessment to tax of Bisesar House that the Income-tax. Officer came to know that the interest was not being received by the assessee-firm in the capacity of a partner but in its capacity of a financier advancing monies to Bisesar House as a banker. It was held that the Income-tax Officer had not acted on his own initiative or on the change of his own opinion when he took proceedings under Section 34(1 j(b). The correct position had been brought to his notice by the decision of the Tribunal and the High Court and that must be- held to be 'information' as a consequence of which he came to believe that the provisions of Section 34(l)(b) were attracted. Reliance is also placed on the decision of Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers P. Ltd. in 291 ITR 500. I am in possession of information based on the analysis of facts and figures of assessment records from A.Y. 2008-09 onwards. The decision of the Hon'ble ITAT, Chandigarh and Hon'ble Punjab & Haryana High Court is applicable on the facts of the case. Income chargeable to tax has escaped assessment because of the failure on the part of the assessee to disclose its income fully & truly. Hence, I have reasons to believe that income chargeable to tax has escaped assessment within the meaning of provisions of section 147 of the I.T. Act. I therefore propose to reassess this income which has escaped assessment arid any other income which comes to my notice subsequently during reassessment proceeding u/s 147.” 12. Referring to the same the Ld. counsel for assessee

raised the following contentions:

a) The reasons recorded showed no independent

application of mind by the Assessing Officer and were

clearly recorded on the dictates of higher authorities

only, being information received from the Directorate

of Income Tax (Intelligence & Criminal Investigation).

b) That there was no new information available with

the Assessing Officer and the reopening was based on

the same set of facts which were already available on

record and duly considered while framing assessment.

c) That there was no live nexus between

information, if any, with the Assessing Officer and the

belief of escapement of income. The Ld. counsel for

assessee pointed out that a bare perusal of the reasons

would reveal that the Assessing Officer had obtained

certain information from the Directorate of Income Tax

(Intelligence & Criminal Investigation), Chandigarh

that certain companies had issued shares at

unreasonable share premium. Thereafter the reasons

note that the assessee company had issued share

capital at premium of Rs.490/- per share issuing

31300 shares of face value of Rs.10/- for a premium of

Rs.490/- at Rs.1,53,37,000/-. The Ld. counsel for

assessee pointed out that in the first place there was

no mention of any connection between the detail

available with the Assessing Officer of issue of shares

at premium and the assesses link with the same. The

Ld. counsel for assessee further pointed out that it is

not clear from the reasons so recorded as to how the

shares issued at premium constituted the income of

the assessee. It was pointed out that only set of

information available with the Assessing Officer was

the issue of shares at premium of Rs.490/- per share

and though the reasons mention the same to be

unreasonable, it is not clear as to how the said

conclusion has been arrived by the Assessing Officer.

The Ld. counsel for assessee, therefore, contended that

the reasons were not sufficient for the formation of belief of

escapement of income and hence the jurisdiction assumed

by the Assessing Officer in the present assessee to frame

assessment u/s 147 of the Act was invalid.

of the Ld.CIT(Appeals) pointing to the same at para 5.3 of

the order which reads as under:

“5.3. The 3rd Ground of Appeal is that issue of shares at a premium cannot form the basis for belief that income has escaped assessment. It appears that notice has been issued on the basis of directions from superior officers without application of mind. Therefore, it is invalid. Reassessment on the basis of invalid notice is bad in law. A perusal of the record shows that the AO has recorded the reasons for the re-opening which are reproduced above. As already noted, a copy of reasons recorded was given by the AO on 20.06.2014. The reasons recorded clearly shows application of mind by the assessing officer. Since, the re-opening was done after receipt of information from Directorate of Income Tax (Intelligence and Criminal Investigation) Chandigarh, the finding of the investigation and inquiries by the Directorate finds mention in the reason recorded by the AO but there was independent application of mind by the AO before issue of notice u/s 148, The report of inquiry may have come through the higher authorities for necessary action but this does not mean that the re-opening has been done on directions/instruction from higher authorities. The re-opening

has been done on the basis of the results of an enquiry throwing new facts having bearing on the taxation of the case and hence the re-opening and the notice issued u/s 148 are valid. This is a case where re-opening has been done on the basis of an enquiry which revealed the facts which were not available at the time of original assessment, consequently the re-assessment order is also as per law. Hence the arguments of the assessee on this [point are rejected.” 14. The Ld. DR pointed out that re-opening was done after

receipt of information from the Directorate of Income Tax

(Intelligence & Criminal Investigation), Chandigarh which

threw new facts having a bearing on the taxation of the

present case and, therefore, the re-opening was valid. It

was contended that the information now available was new

and could not be stated to be on the same set of facts as

that available during assessment proceedings and further

that it was clearly evident that there was independent

application of mind by the Assessing Officer. The Ld. DR,

therefore, vehemently supported the order of the

Ld.CIT(Appeals) upholding the validity of assumption of

jurisdiction in the present case to issue notice u/s 148 of

the Act.

authorities below and carefully gone through the documents

referred to before us. The challenge in the present ground

to the validity of the assessment framed u/s 147 is for the

reason and on the basis that there was no reason for

formation of belief of escapement of income, as emanating

from the reasons recorded by the Assessing Officer.

escapement of income, which gives jurisdiction to re-

asses/re-open a case u/s 147 of the Act, there must be live

link or close nexus between the material coming to the

possession of the Assessing Officer and formation of belief

of escapement of income. It is also settled that re-

assessment cannot be resorted to merely on the basis of

change of opinion by the Assessing Officer. Further that the

belief of escapement of income must be of the Assessing

Officer and not any other authority has also been settled by

the Hon'ble Apex Court in the case of Sheo Narain Vs. ITO,

176 ITR 35.

in the contention of the assessee that the assessment

framed in the present case was invalid since there was no

nexus between the information available with the Assessing

Officer and the formation of belief of escapement of income,

and the re-assessment was based merely on the basis of

change of opinion of the Assessing Officer and that the

belief in the present case was not that of the Assessing

Officer but that of a higher authority. As is evident from the

reasons recorded as reproduced above and as rightly

pointed out by the Ld. counsel for assessee, the information

available with the Assessing Officer was the information

from the Directorate of Income Tax (Intelligence & Criminal

Investigation), Chandigarh providing details of companies

which had issued shares at unreasonable premium. This is

the only information which finds mention in the reasons.

Thereafter what follows is the information which was

available even during assessment proceedings to the effect

that the assessee had issued shares at premium of Rs.490/-

There is, we find, absolutely no link between the

information received from the Directorate of Income Tax

(Intelligence & Criminal Investigation), Chandigarh and the

information regarding issue of shares at premium by the

assessee already available on record. There is nothing in

the reasons which states that the information received from

the Directorate of Income Tax (Intelligence & Criminal

Investigation), Chandigarh giving details of companies

which had issued shares at unreasonable premium included

the name of the assessee also and, therefore, the fact that

the assessee had issued shares at premium of Rs.490/- was

an unreasonable figure of premium. The Assessing Officer

in the reasons has jumped from one information received

from the Directorate of Income Tax Intelligence wing of the

department to another information already available on

record and without establishing any link between the two

information has jumped to the conclusion that the premium

collected by the assessee on shares issued by it during the

year was unreasonable. The information therefore available

with the Assessing Officer, as per the reasons recorded, we

find, does not support the Assessing Officer’s belief of the

share premium in the present case being unreasonable and

therefore the belief of escapement of income.

for assessee that there is no independent application of

mind by the Assessing Officer on the information available

with it leading to the belief of escapement of income as is

evident from the reasons recorded. It is the information

with the Directorate of Income Tax (Intelligence & Criminal

Investigation), Chandigarh which is the basis of re-opening,

that certain companies have issued shares at unreasonable

premium. The Assessing Officer has blindly relied upon that

information and had accepted the premium in assessee’s

case also to be unreasonable. Not even the basic exercise

of verifying whether the assessees name was also included

in the list has been done by the Assessing Officer, since

there is no mention of this fact in the reason. Further the

reasons find no mention of the basis on which the share

premiums were found unreasonable by the Directorate of

Intelligence and whether the same was verified and found to

be applicable in the assessees case also by the Assessing

Officer. The Assessing Officer has simply borrowed the

information provided by the Directorate of Intelligence and

without applying his mind to it and verifying whether the

information lead to the belief of escapement of income in

the present case also, formed belief of the same. In fact, we

find that the Assessing Officer has left the exercise of

verifying the information of unreasonableness of share

premium to be undertaken during assessment proceedings

which were to follow by stating in the reasons that the same

need to be verified. Thus, he has clearly only relied upon

the information passed to him and has not arrived at his

own independent satisfaction which forms the basis of the

assumption of jurisdiction to be reopened.

counsel for assessee that there is no new material available

with the Assessing Officer leading to the belief of

escapement of income. That the shares of assessee company

were issued at premium of Rs.490/- per share was

information which was available even during assessment

proceedings. The other information available with the

Assessing Officer from the Directorate of Income Tax

(Intelligence & Criminal Investigation), Chandigarh, we find,

is of no assistance since it is not evident from the reasons

whether the detail provided by the Directorate of Income

Tax (Intelligence & Criminal Investigation), Chandigarh

included the claim of the assessee also. Therefore, the

reopening is based on the same set of facts with the

Assessing Officer changing his opinion and treating the

premium now to be unreasonable without mentioning any

basis for the same.

we find, are not sufficient for formation of belief of

escapement of income and, therefore, the jurisdiction

assumed by the Assessing Officer on the basis of the said

reasons is held to be not as per law. The order passed u/s

147 is, therefore, set aside. Ground of appeal No.1(iv),(v)

&(vi)raised by the assessee are, therefore, allowed.

Since we have set aside the order of the Assessing

Officer for the above reasons, the rest of the grounds raised

are not being dealt with by us since it would merely be an

academic exercise.

Order pronounced in the Open Court.

Sd/- Sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 27th April, 2018 *Rati* Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR

Assistant Registrar, ITAT, Chandigarh