Ideacount Education Pvt. Ltd. Vs ACIT (ITAT Mumbai)
Facts- The matter of the assessee was re-opened on the ground that the assessee had issued 10 Lakhs shares at a price of INR 148 per share, however, the book value per share was INR 118.63 as per AO. Hence, the sum of INR 9,86,87,002/- being excess the premium charged as revenue income under section 56 of the Act.
Conclusion- In present case, no addition was made under section 56. However, AO has made addition of share capital under section 68 of the Act. In our view no addition under section 68 of the Act on account of share capital could have been made only if addition under section 56 of the Act on share premium was also made. This is because Assessing Officer had no reasons to belief that income has escaped assessment under section 68 of the Act being cash credit on account of share premium or share application money or share capital as the case may be.
Re-opening is quashed by following the judgement of Hon’ble Bombay HC in the matter of Jet Airways
FULL TEXT OF THE ORDER OF ITAT MUMBAI
These appeals of assessee are arising out of the orders of the Commissioner of Income Tax (Appeals)]-4, Mumbai, [in short CIT(A)], in appeal Nos. CIT(A)-4/IT-30/ACIT- 16(1)/2015-16 & CIT(A)-4/Tr377/Appeal(3)/ACIT-11(1)/2014-15 dated 13.02.2017 & 14.02.2017.
The assessments were framed by Asst. Commissioner of Income Tax, Circle-16(1) & 11(1), Mumbai (in short ‘ACIT/ ITO) for Assessment Years 2009-10 & 2011-12 vide order dated 27.03.2015 & 30.03.2014 under section 143(3) read with section 147 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
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:-
“1. On the facts and circumstances of the case and in law, the learned commissioner of Income Tax (Appeals) has erred in confirming the reopening of assessment under section 147 of the Act.
2. 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.”
3. Briefly stated facts are that the assessee company is engaged in the business of trading and production of Animation Visual Effects and Gaming’s. The assessee for the relevant assessment year 2009-10 field its return of income on 30.09.2009 declaring a loss of Rs. 3,73,34,214/- and therefore revised its return of income, revising the loss at Rs.4,08,06,083/-. The Assessing Officer framed the assessment under section 143(3) of the Act on 23.12.2011 assessing the loss at Rs.3,67,29,710/-. Subsequently, the Assessing Officer received intimation from the DGIT (Investigation) Mumbai vide letter bearing No. DGIT(Inv)/Corr. Field/ 20 12-13 dated 26.12.2012, wherein it was stated that the assessee is a beneficiary of bogus bills of purchases issued by few of the hawala parties, which was received from Sales Tax Department, Govt. of Maharashtra. Accordingly, notice under section 148 of the Act was issued vide dated 23.03.2014 and reassessment was completed under section 143(3) read with section 147 of the Act by making addition of bogus purchase at ₹1352.00/- vide order dated 10.01.2014. Further, after completion of this reassessment, the Assessing Officer issued further notices under section 148 of the Act on 29.03.2014 and in response to the same notice, the assessee vide letter dated 09.02.2015 requested the Assessing Officer to treat the revised return of income filed by the assessee as return in pursuant to this notice under section 148 of the Act. The assessee also requested copy of reasons for reopening of assessment in pursuant to notice under section 24.03.2014. The Assessing Officer vide notice under section 142(1) of the Act vide No. ACIT-16(1)/142(1)/401/2014-15 dated 03.03.2015 along with show cause notice also provided reasons for reopening and the relevant reasons as provided in Para 2 of the letter at page 1 and 2 reads as under: –
“Please refer to this office notice under section 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’) dated 29.03.2014 issued and served on you by speed post on 03.04.2014, wherein you were required to deliver return of income within 30 days on receipt of this notice. In response to the said notice, there was no compliance. However, vide order representative’s letter dated 09.02.2015, you have requested to treat the revised return of income filed on 25.09.2010 as return filed in response to notice under section 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’) and also requested to give the reasons for re-opening the assessment.
2) The reasons for re-opening is given hereunder:
In this case information has been received from Chief Commissioner of Income Tax, Mumbai vide letter No. Mum/CCIT/Coord/ U-III/Share Premium/ 2013-14/ 1514 dated 10.02.2014 that the assessee, during Financial Year 2 008-09, has issued shares on huge premium. On collecting information it came to notice that during Financial Year 2008-09 assessee has issued 1 0,00,000 shares (having face value of ₹10) at a price of ₹1 15 per share. However, book value of share of the assessee, as calculate below, is ₹18.63. Thus, the assessee has issued the share at the price much higher than the fair book value of the shares.
