ITAT Quashes Reassessment Under Section 147 for Change of Opinion on Share Premium

Ideacount Education Private Limited Vs DCIT (ITAT Mumbai)

The Mumbai Bench of the Income Tax Appellate Tribunal considered the assessee’s appeal against the order of the Commissioner of Income-tax (Appeals) for Assessment Year 2011-12 arising from a reassessment order passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961. The Tribunal first condoned a delay of 70 days in filing the appeal after accepting the assessee’s explanation that the delay resulted from multiple connected proceedings relating to the same assessment year and the time taken to obtain proper legal advice. The Tribunal found the explanation bona fide and, noting the absence of objection from the Departmental Representative, admitted the appeal for adjudication on merits.

The original return declaring a loss was filed on 30.09.2011 and later revised on 30.03.2013. The case was selected for scrutiny, and an assessment under Section 143(3) was completed on 30.03.2014 determining the loss after making various additions, including an addition of ₹1,90,27,725 under Section 68 on account of share premium. Subsequently, the Assessing Officer reopened the assessment by issuing a notice under Section 148 on 30.03.2018. The reassessment proceeded on the basis that the balance sheet reflected share premium of ₹6,62,49,985, whereas only ₹1,90,27,725 had been brought to tax in the original assessment, resulting in an alleged escapement of income of ₹4,72,22,260. The Assessing Officer held that there had been failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment and completed the reassessment by making an additional addition of ₹4,72,22,260 under Section 68 while initiating penalty proceedings under Section 271(1)(c).