| The Tax Publishers2020 TaxPub(DT) 2088 (Mad-HC) INCOME TAX ACT, 1961
Section 147
Where no tangible or new material came to the notice of AO to warrant reassessment, it would be said that the reassessment proceedings were nothing but a change of opinion, impermissible in law and hence, the reassessment order was liable to be quashed.
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Reassessment - Validity - No tangible or new material - Change of opinion
Assessee-company issued two lots of shares during year under consideration. One lot contained 1,00,000 shares of face value of Rs. 10 each, at premium of Rs. 490 per share and another lot contained 2,17,870 shares of face value of Rs. 10 each, at premium of Rs. 488 per share. AO passed an order of assessment under section 143(3), wherein he made an addition under section 56(2) (viib) with regard to first lot of 1,00,000 shares issued by the assessee. Subsequently, the AO issued notice under section 148 for reopening the assessment. He alleged that the consideration received from second lot of 2,17,870 shares that exceeded the face value of such shares was required to be assessed to tax under section 56(2) (viib), which was omitted to be considered in the assessment order under section 143(3). Held: The relevant phrase in section 147 is 'reason to believe', and it is settled that such reason must emanate from tangible or new material that has come to the notice of the AO and should not tantamount to review of the material already available on record. In instant case, the financials annexed to return of income disclosed two lot of shares, one numbering 1,00,000 and second numbering 2,17,870. The valuation thereof was also stated clearly and it had not escaped the attention of the AO at the original instance and he in fact made a modification to the valuation of the first lot of shares. However, for reasons best known to him, the second lot had been left untouched. Admittedly, there was no tangible or new material that came to the notice of the AO to warrant reassessment and thus, the reassessment proceedings were nothing but a change of opinion, impermissible in law. Hence, the reassessment order was quashed.
Distinguished:ACIT v. Rajesh Jhaveri Stock Brokers P. Limited (2007) 291 ITR 500 (SC) : 2007 TaxPub(DT) 1257 (SC) Consolidated Photo And Finvest Ltd. v. ACIT (2006) 151 Taxman 41 (Delhi) : (2006) 281 ITR 394 (Delhi) : 2006 TaxPub(DT) 1215 (Del-HC)
REFERRED : CIT v. Kelvinator of India Limited (2010) 320 ITR 561 (SC) : 2010 TaxPub(DT) 1335 (SC) CIT v. Kelvinator Of India Limited (2002) 256 ITR 1 (Del) : 2002 TaxPub(DT) 1348 (Del-HC) Parashuram Pottery Works Co. Limited v. ITO 1977 AIR SC 429 : 1977 TaxPub(DT) 0725 (SC)
FAVOUR : In assessee's favour
A.Y. :
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