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).
Before the Assessing Officer, the assessee submitted that all details relating to share application money, share capital and share premium had already been furnished during the original assessment proceedings. It explained that out of share application money of ₹4,00,00,020 received during the year, ₹22,22,220 had been transferred to share capital, ₹1,90,27,725 to the premium account and ₹1,87,50,075 remained under the head “Share Application Money Pending Allotment.” The assessee also stated that complete details regarding share capital, allottees, premium, dates of issue and payment particulars had been submitted in response to notices under Section 142(1), and that both the balance sheet and accompanying statements separately disclosed the share application money and the share premium. It contended that the reassessment merely reconsidered material already examined in the original scrutiny assessment.
The Assessing Officer rejected these submissions, holding that the assessee had failed to justify the share premium through a valuation report or supporting evidence. Referring to the fair market value exercise undertaken during the original assessment, the Assessing Officer concluded that the share premium of ₹6,62,49,985 was excessive, unjustified and unexplained. Since ₹1,90,27,725 had already been taxed, the balance amount of ₹4,72,22,260 was added under Section 68.
Before the CIT(A), the assessee challenged both the reopening and the addition. It also argued that proceedings arising from the original assessment had merged with appellate proceedings pending before the Tribunal. The CIT(A) held that reopening was valid after referring to the decision in GKN Driveshafts (India) Ltd. and observing that reasons had been furnished and objections had been disposed of. The CIT(A) rejected the contention regarding merger of proceedings, treating the reassessment as a separate proceeding. However, the CIT(A) noticed inconsistencies in the reassessment order, including the Assessing Officer’s treatment of an assessed loss as positive income and inconsistencies relating to the share premium figures. The CIT(A) directed recomputation of the assessed loss but did not adjudicate the addition on merits, observing that it depended upon the outcome of the proceedings arising from the Tribunal’s earlier remand.
Before the Tribunal, the assessee submitted that the original assessment had specifically examined share capital, share application money and share premium. The Assessing Officer had issued detailed notices under Section 142(1), and the assessee had furnished replies containing complete particulars of share capital, premium, allotments, payments, share application money, balance sheet and supporting documents. It was argued that the balance sheet itself separately disclosed share premium of ₹6,62,49,985 under “Reserves and Surplus” and share application money of ₹1,87,50,075, demonstrating that no fact had been concealed. According to the assessee, reopening beyond four years was founded entirely on the same material already available during the original scrutiny assessment and therefore amounted to a mere change of opinion. Reliance was placed on CIT v. Kelvinator of India Ltd..
The Department supported the reopening and relied upon Pranawa Leafin (P.) Ltd. v. DCIT, Cairn India Ltd. v. Deputy Director of Income-tax and Pushpa Uttamchand Mehta v. ITO, contending that there had been failure to make full and true disclosure of material facts.
The Tribunal observed that the original assessment under Section 143(3) had specifically examined the issue of share capital, share application money and share premium and had resulted in an addition under Section 68. It found that the balance sheet, replies to notices and tabular statements containing the figures relied upon in the reassessment had all formed part of the original assessment record. The Tribunal held that the figure of ₹6,62,49,985 was not newly discovered material but had been expressly disclosed in the financial statements and supporting details furnished during the original assessment proceedings.
The Tribunal applied the ratio of CIT v. Kelvinator of India Ltd., observing that reassessment cannot be used as a power of review and that reopening requires tangible material having a live link with the formation of belief that income has escaped assessment. It held that the reassessment was founded solely on reappraisal of the same material already examined by the Assessing Officer and therefore amounted to a change of opinion. Since the notice under Section 148 had been issued beyond four years from the end of the relevant assessment year, the Tribunal further held that the Revenue had failed to establish any failure by the assessee to disclose fully and truly all material facts necessary for assessment, as required under the proviso to Section 147.
The Tribunal distinguished the decisions relied upon by the Revenue. It observed that Pranawa Leafin (P.) Ltd. involved failure to disclose a primary material fact, whereas in the present case the share premium and share application money had been expressly disclosed and specifically examined during the original scrutiny assessment. It similarly held that Cairn India Ltd. involved reopening based on tangible material and distinct factual circumstances not present in the assessee’s case. The Tribunal also found that the CIT(A) had not properly examined the jurisdictional challenge, particularly in light of inconsistencies regarding disposal of objections and the reassessment record.
Holding that the reopening was based entirely on the same material available during the original assessment and that the statutory condition under the proviso to Section 147 had not been satisfied, the Tribunal quashed the notice issued under Section 148 dated 30.03.2018 and the reassessment order dated 28.12.2018 passed under Section 143(3) read with Section 147. Grounds relating to merger of proceedings and violation of CBDT Instruction No. 1/2018 were treated as academic. The challenge to the addition under Section 68 was allowed consequentially, as the reassessment itself had been quashed. The appeal was accordingly allowed.
Assessee Represented by Shri Subhash Chhajed a/w Shri Sunil Vankawala, Ld. ARs
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the assessee is directed against the order dated 20.06.2025 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi, [hereinafter referred to as “the CIT(A)”] under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”], for A.Y. 2011-12. The appeal before the learned CIT(A) arose from the reassessment order dated 28.12.2018 passed by the Assessing Officer under section 143(3) read with section 147 of the Act.
Condonation of Delay
2. At the outset, it is noticed that the present appeal filed by the assessee is barred by limitation by 70 days, as pointed out by the Registry. The assessee has filed an application for condonation of delay supported by an affidavit sworn by Mr. Ravi Gupta, Director. In the said affidavit, it has been stated that the appeal against the order of the learned CIT(A) dated 20.06.2025 ought to have been filed on or before 19.08.2025, however, the same came to be filed on 28.10.2025, resulting in delay of approximately 70 days.
3. In the affidavit, the assessee has explained the background leading to the delay. It has been stated that the assessee had originally filed its return of income for A.Y. 2011-12 on 30.09.2011 declaring loss of Rs.7,52,25,711/-, which was revised on 30.03.2013 reducing the loss to Rs.7,38,84,944/-. The case was selected for scrutiny assessment and notice under section 143(2) was issued on 23.09.2013. Thereafter, the assessment was finalised vide assessment order dated 30.03.2014 assessing the loss at Rs.4,15,74,914/-. Against the said assessment, the assessee preferred appeal before the learned CIT(A), who passed order on 14.02.2017. Against the said order of the learned CIT(A) dated 14.02.2017, the assessee preferred appeal before the Hon’ble Tribunal by filing Form No. 36 on 02.05.2017.
4. It has further been stated in the affidavit that during the pendency of the appeal before the Hon’ble Tribunal, the Assessing Officer again reopened the assessment by issuing notice under section 148 on 30.03.2018, and the reassessment was finalised on 28.12.2018. Against the said reassessment order dated 28.12.2018, the assessee preferred appeal before the learned CIT(A) on 31.01.2019. The learned CIT(A), vide order dated 20.06.2025, rejected/dismissed the contentions of the assessee, including the contention that since the assessment proceedings had merged with the appellate proceedings pending before the Tribunal pursuant to filing of Form No. 36 on 02.05.2017, the assessment could not have been reopened. It is further stated that the appeal against the order of the learned CIT(A) dated 20.06.2025, which ought to have been filed on or before 19.08.2025, was filed on 28.10.2025, resulting in delay of approximately 70 days.
5. The assessee has thus explained that, on account of multiplicity of income-tax proceedings arising from the original assessment, first appellate proceedings, appeal before the Tribunal, reopening proceedings and subsequent appellate proceedings before the learned CIT(A), the assessee could not obtain proper legal advice in time regarding filing of the present appeal before the Tribunal. It is stated that the delay was neither deliberate nor intentional, but occurred due to the confusion arising from multiple connected proceedings and due to the time taken in obtaining appropriate legal opinion. The assessee has, therefore, prayed that the delay of approximately 70 days in filing the appeal may be condoned.
6. The learned Departmental Representative, when confronted with the application and affidavit filed by the assessee, did not raise any serious objection to the condonation of delay.
7. We have considered the contents of the affidavit, the explanation furnished by the assessee and the factual background placed before us. The reasons stated by the assessee disclose that the delay occurred in the backdrop of multiple proceedings relating to the same assessment year, including the original assessment order dated 30.03.2014, the order of the learned CIT(A) dated 14.02.2017, the appeal before the Tribunal filed on 02.05.2017, the reassessment proceedings initiated by notice under section 148 dated 30.03.2018, reassessment order dated 28.12.2018 and the appellate order dated 20.06.2025. The explanation of the assessee that, due to multiplicity of proceedings, proper legal advice could not be obtained within the prescribed time, appears to be bona fide.
8. It is settled that while considering an application for condonation of delay, the expression “sufficient cause” should receive a liberal construction so as to advance substantial justice, particularly where no mala fide conduct or deliberate negligence is apparent from the record. In the present case, the delay is of 70 days, the assessee has placed on record a sworn affidavit explaining the circumstances leading to the delay and the learned DR has not objected to the condonation thereof. Having regard to the facts stated in the affidavit and in the interest of substantial justice, we are satisfied that the assessee was prevented by sufficient cause from filing the appeal within the prescribed period.
9. Accordingly, the delay of 70 days in filing the present appeal is condoned and the appeal is admitted for adjudication on merits.
Facts of the Case
10. The brief facts, as emanating from the assessment order, are that the assessee filed its return of income for A.Y. 2011-12 on 30.09.2011 declaring loss of Rs.7,52,25,711/-, which was revised to loss of Rs.7,38,84,944/- by filing revised return on 30.03.2013. The case was selected for scrutiny and the original assessment under section 143(3) of the Act was completed on 30.03.2014 determining the loss at Rs.4,15,74,914/-, after making additions/disallowances, inter alia, addition of Rs.1,90,27,725/- on account of share premium by treating the same as unexplained cash credit under section 68 of the Act. Other additions/disallowances referred to in the appellate order were interest on delayed payment of taxes, advertisement expenses, rent paid to Nehru Centre, Mumbai, and professional fees paid to Ernst and Young.
11. Thereafter, during the course of post-assessment verification, the Assessing Officer recorded that, from the balance sheet of the assessee company as on 31.03.2011, it was seen that during the relevant previous year the assessee had issued 5,00,000 equity shares and had shown Rs.50,00,000/- as “Share Capital”, Rs.6,62,49,985/- as “Share Premium” and Rs.1,87,50,075/- as “Share Application Money Pending Allotment”. The Assessing Officer further recorded that, in the original assessment proceedings, the assessee had submitted certain details vide letter dated 15.01.2014 in response to point no. 8 of notice under section 142(1), but, according to the Assessing Officer, another tabular statement furnished along with the same reply reflected Rs.1,90,27,725/- as share premium and 2,22,222 equity shares issued.
12. The Assessing Officer observed that the amounts received by the assessee in the form of share capital, share premium and share application money were claimed to have been sourced from Business Match Services India Pvt. Ltd., Jagmohan Bhanver and Komal Bhanver. According to the Assessing Officer, in the original assessment proceedings, the share premium received from these parties was found to be excessive and unjustified and the amount of share premium was treated as unexplained cash credit within the meaning of section 68 of the Act. The Assessing Officer further observed that, in the original assessment order dated 30.03.2014, the figure of share premium had been taken at Rs.1,90,27,725/- on the basis of the assessee’s statement, as against Rs.6,62,49,985/- reported in the balance sheet. On this basis, the Assessing Officer recorded that income had been under-assessed by Rs.4,72,22,260/-, being the difference between Rs.6,62,49,985/- and Rs.1,90,27,725/-.
13. On the above basis, the Assessing Officer recorded reasons to believe that income to the extent of Rs.4,72,22,260/- had escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for A.Y. 2011-12 within the meaning of section 147 of the Act. Accordingly, notice under section 148 dated 30.03.2018 was issued and served upon the assessee. In response thereto, the assessee filed return on 28.07.2018 declaring the same loss of Rs.7,38,84,944/- as recorded in the assessment order. Thereafter, notice under section 143(2) dated 24.10.2018 and notice under section 142(1) dated 29.10.2018 were issued. The reasons recorded were furnished to the assessee vide letter dated 29.10.2018. The assessee filed objections against the validity of reassessment proceedings by letter dated 13.12.2018. As per the assessment order, the said objections were disposed of by a speaking letter dated 19.12.2018.
14. In response to the issue involved in the reassessment proceedings, the assessee filed submissions before the Assessing Officer vide letter dated 26.12.2018. The assessee submitted that the details of share application money received during the year had already been submitted vide letter dated 15.01.2014 during the original assessment proceedings under section 143(3). It was further submitted that the assessee company had received Rs.4,00,00,020/- during the assessment year on account of share application money, out of which 2,22,222 shares were allotted. Out of the said amount, Rs.22,22,220/- was transferred to capital account, Rs.1,90,27,725/- was transferred to premium account, and the balance amount of Rs.1,87,50,075/- was reflected in the balance sheet under the head “Share Application Money Pending Allotment”. The assessee submitted that these facts were already stated before the Assessing Officer during the original assessment proceedings and were considered while making the addition of Rs.1,90,27,725/- in the original order under section 143(3).
15. The assessee further submitted before the Assessing Officer that the details of addition to share capital, names of allottees, number of shares allotted, date of issue, premium, particulars of payment received and mode of payment were submitted vide letter dated 14.03.2014 in response to notice under section 142(1). It was the stand of the assessee that the details reproduced in the second tabular statement with reference to share capital issued during A.Y. 2011-12 were separate and independent of the share application money received and explained in the first tabular statement. The assessee also submitted that the amounts of share application money as well as share capital issued at premium were reflected in Schedule 3 and Schedule 4 of the balance sheet and that there was no false statement or misrepresentation, as both tabular statements were independent of each other. The assessee also stated that it was in the process of filing writ petition and requested that the assessment proceedings be kept in abeyance.
16. The Assessing Officer did not accept the aforesaid submissions. He held that the assessee had merely taken the plea that all details connected with the issue under reassessment had already been disclosed during the original assessment proceedings, but no submissions were made on the merits of the issue, namely, whether the amount received towards share premium was justifiable, whether it was in accordance with fair market value, and whether there was any justification of the valuation of share premium. The Assessing Officer recorded that, during the original assessment proceedings, the assessee had failed to justify the share premium charged by the company through proper valuation report and other supporting evidence. He further recorded that no concrete evidence or documents were submitted by the assessee in support of the share premium charged at the time of allotment of shares.
17. The Assessing Officer further observed that the assessee had not disputed the correctness of the amount received as security premium of Rs.6,62,49,985/-. He referred to the working of fair market value made during the original assessment proceedings and recorded that the fair market value of the shares was negative and that the value per share should not have been more than Rs.10/-, being the face value. The Assessing Officer also referred to the decision of the Hon’ble Bombay High Court in the case of Major Metals Ltd. v. Union of India and to the earlier appellate order confirming addition in respect of premium received by way of issue of share capital to M/s. Businesswatch Services (I) Pvt. Ltd. Thereafter, the Assessing Officer held that the entire security premium of Rs.6,62,49,985/- was excessive, unjustified and its genuineness remained unexplained and unproved. Since Rs.1,90,27,725/- had already been brought to tax in the original assessment order, the Assessing Officer brought to tax the further amount of Rs.4,72,22,260/- under section 68 of the Act. Penalty proceedings under section 271(1)(c) were also initiated separately.
19. While computing income in the reassessment order, the Assessing Officer adopted the income as per order under section 143(3) dated 30.03.2014 at Rs.4,15,74,914/- and reduced therefrom relief stated to have been granted by the Hon’ble ITAT on account of disallowance out of cash expenses of Rs.6,26,672/-and disallowance of foreign shooting expenses of Rs.7,62,786/-. The total income was accordingly computed at Rs.4,00,44,352/-and rounded off to Rs.4,00,44,350/-. This computation subsequently formed part of the assessee’s grievance before the learned CIT(A), as according to the assessee, the assessed figure of Rs.4,15,74,914/- in the original assessment order was a loss and not positive income.
20. Before the learned CIT(A), the assessee challenged the validity of reopening and submitted that the reassessment was based on the very same details which were already furnished and considered in the original assessment order under section 143(3) dated 30.03.2014. The assessee submitted that it maintained two accounts for premium collected on shares, namely, premium on share capital issued and share application money. It was further submitted that the assessee company had issued 5,00,000 shares of face value of Rs.10/- at premium of Rs.170/- as per share subscription agreement and Board resolution, and had accounted for the transaction in the accounts of share capital and share application money. The assessee also submitted that the details of addition to share capital, names of allottees, number of shares allotted, date of issue, premium, particulars of payment received and mode of payment were duly submitted to the Assessing Officer vide letter dated 14.03.2014, and details of share application money were also submitted vide letter dated 15.01.2014. According to the assessee, the same details were again reproduced during reassessment proceedings vide submission dated 13.12.2018, and therefore the addition of Rs.4,72,22,260/- under section 68 was based on conjectures and surmises.
21. The assessee further contended before the learned CIT(A) that reopening under section 147 on the basis of details already submitted and considered in the original assessment order deserved to be quashed, as there was no tangible material showing escapement of income. The assessee also challenged the computation of total income on the ground that the Assessing Officer had wrongly treated the assessed loss of Rs.4,15,74,914/- as positive income and consequently determined profit of Rs.4,00,44,350/- and levied demand of Rs.1,36,07,600/-. The assessee also objected to the reduction of relief of Rs.6,26,672/-and Rs.7,62,786/- on the ground that those disallowances were never incurred or claimed by the assessee and were never subject matter of any proceeding or appeal.
22. The assessee also submitted before the learned CIT(A) that the earlier appellate proceedings arising from the original assessment had travelled to the Tribunal. It was stated that the learned CIT(A) had passed order dated 14.02.2017, against which the assessee filed appeal before the Hon’ble ITAT in Form 36 on 02.05.2017, and the Hon’ble ITAT, vide order dated 23.07.2021, remanded the matter to the learned CIT(A) for fresh adjudication. The assessee therefore contended that the proceedings arising from the original assessment order dated 30.03.2014, the learned CIT(A)’s order dated 14.02.2017 and the Hon’ble ITAT’s order dated 23.07.2021 had merged into a single proceeding and that the present appellate proceedings should be considered infructuous or proper guidance should be given to avoid duplication of proceedings.
23. The learned CIT(A), on the issue of reopening, referred to the ratio laid down by the Hon’ble Supreme Court in GKN Driveshafts (India) Ltd. reported in 259 ITR 19 and observed that when notice under section 148 is issued, the proper course of action for the assessee is to file return and, if so desired, seek reasons for issuance of notice; the Assessing Officer is bound to furnish reasons within a reasonable time; and on receipt of reasons, the assessee is entitled to file objections which the Assessing Officer is bound to dispose of by passing a speaking order. The learned CIT(A) held that the assessee was provided with the reasons to believe and that the objections raised by the assessee had been duly disposed of by the Assessing Officer vide letter dated 29.10.2018, as stated to be evident from paragraph 3 of the assessment order. The learned CIT(A) further recorded that the assessee had not uploaded the objections raised and the order disposing of the objections and, therefore, the merit of such order could not be examined. The learned CIT(A) also observed that there was pre-assessment verification which resulted in the finding of escapement of income of Rs.4,72,22,260/- and accordingly held the reopening and notice under section 148 dated 30.03.2018 to be valid. It may be noted that the assessment order records disposal of objections vide letter dated 19.12.2018, whereas the learned CIT(A) has referred to letter dated 29.10.2018.
24. As regards the contention of merger of proceedings, the learned CIT(A) held that the said contention could not be accepted, since the impugned assessment order was passed on 18.12.2018 when the order dated 23.07.2021 of the Hon’ble ITAT was not in existence. The learned CIT(A) observed that the order dated 30.03.2014, which was subject matter before the Hon’ble ITAT, and the impugned reassessment order were two separate proceedings and were required to be adjudicated separately. It may be noted that while the assessment order under appeal is otherwise recorded as dated 28.12.2018, the learned CIT(A) in paragraph 5.3.1 has referred to the impugned assessment order as dated 18.12.2018.
25. The learned CIT(A), however, noticed inconsistencies in the reassessment order. He recorded that the returned income was loss of Rs.7,38,84,944/- both as per the documents uploaded and the impugned assessment order. He further recorded that the assessed income vide order dated 30.03.2014 was loss of Rs.4,15,74,914/-, whereas in paragraph 7 of the impugned assessment order the Assessing Officer had adopted the same as positive Rs.4,15,74,914/-. The learned CIT(A) also recorded that the amount of addition on account of share premium was Rs.1,90,27,725/- as per the documents uploaded, whereas paragraph 6.7 of the impugned assessment order mentioned Rs.6,62,49,985/-. The learned CIT(A) held that the main problem lay in the Assessing Officer adopting the positive figure of Rs.4,15,74,914/- instead of loss of Rs.4,15,74,914/-. The learned CIT(A) further observed that the merit of addition of Rs.4,72,22,260/- in the impugned order was squarely dependent on the outcome of the order to be passed pursuant to the order of the Hon’ble ITAT and, therefore, did not adjudicate the issue on merits.
26. In view of the aforesaid inconsistencies, the learned CIT(A) directed the total income to be computed, subject to the outcome of the order to be passed pursuant to the order of the Hon’ble ITAT, by taking returned income at loss of Rs.7,38,84,944/- and adding Rs.6,62,49,985/- under section 68, including Rs.1,90,27,725/- added vide order dated 30.03.2014. The assessed income was thus directed to be computed at loss of Rs.76,34,959/-. The learned CIT(A) accordingly disposed of the grounds and partly allowed the appeal.
27. Aggrieved by the order of the learned CIT(A), the assessee is in appeal before us and has raised the following grounds of appeal:
1. On the facts and circumstances of the case and in law, the Learned CIT(A) has erred in summarily rejecting the objections of the Assessee for reopening of the Assessment without going into the objections raised by the Assessee.
2. On the facts and circumstances of the case and in law, the Learned CIT(A) has erred in rejecting and brushing aside the Appellant‘s contention that Hon‘ble ITAT‘s Order dated 23.07.2021 have now merged into a single Proceedings the same cannot be accepted because the impugned Asst. Order was passed on 18.12.2018 when the Order dated 23.07.2021 of Hon‘ble ITAT was not in existence.
3. On the facts and circumstances of the case and in law, the Learned CIT(A) has also erred in not giving further opportunity and not considering the requests of the Assessee for giving guidance on future course of action to avoid duplication of Proceedings and to merger of judicial process on the matter of merger of judicial proceedings from the Original Asst. dated 30.03.2014 to the Learned CIT(A)‘s Order dated 14.02.2017 to the Hon‘ble ITAT‘s Order dated 23.07.2021 for which Form 36 was filed on 02.05.2017.
4. On the facts and circumstances of the case and in law, the Learned CIT(A) has erred in not adjudicating other Grounds of Appeal raised in Form 35 Viz. Grounds of Appeal (1) – “The Learned Assessing Officer has erred in re-opening the assessment u/s 147 of the Income Tax Act, 1961 by holding that the Share Premium of Rs. 4,72,22,260/- charged to the Shareholders by the Appellant has escaped Assessment.”
5. On the facts and circumstances of the case and in law, the Learned CIT(A) has erred in not adjudicating other Grounds of Appeal raised in Form 35 Viz. Grounds of Appeal (2) – “The Appellant also respectfully submits that since the details with respect to Share Premium received were already submitted to the then Learned Assessing Officer, the said Learned Assessing Officer has already considered the said details while passing the Assessment Order u/s 143(3) of the Income Tax Act, 1961 dated 30.03.2014”.
6. The appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.
27. The assessee has also raised following additional grounds of appeal:
Ground No. 6:
On the facts and circumstances of the case and in law, the Ld. CIT(Appeals) NFAC Delhi erred in confirming the assessment order passed under section 143(3) r.w.s 147 of the Income Tax Act, 1961 dated 28.12.2018 which is illegal, bad in law and without prejudice as the same is passed in violation of CBDT Instruction No. 1/2018 [F.No. 225/157/2017-ITA.II). dated 12.2.2018 and as such the said assessment order is liable to be quashed.
Ground No.7:
On the facts and circumstances of the case and in law, the Ld. CIT(Appeals) NFAC Delhi erred in confirming the addition of Rs. 4,72,22,260/- made by the Ld. AO as unexplained cash credit u/s 68 of the IT Act.,1961 on account of share premium received on allotment of shares.
Ground No. 8
The Appellant craves leave to add/alter or amend all or any of the above grounds of appeal on or before the final date of hearing.
28. Since Ground Nos. 1, 4 and 5 relate to the validity of reopening under section 147 of the Act and the grievance that the learned CIT(A) did not adjudicate the objections and grounds relating to reopening, and Ground Nos. 2 and 3 relate to the assessee’s contention regarding merger/duplication of proceedings arising from the original assessment order dated 30.03.2014, the earlier appellate order dated 14.02.2017 and the order of the Hon’ble ITAT dated 23.07.2021, the same being interconnected are considered together. Ground No. 6 is general in nature.
Validity of Reopening of Assessment u/s 147
29. We shall first take up Ground Nos. 1, 4 and 5, which are inter-connected and relate to the validity of reopening of assessment under section 147 of the Act and the grievance of the assessee that the learned CIT(A) failed to properly adjudicate the objections and grounds raised by the assessee on the issue of reopening.
30. The learned Authorised Representative submitted that the original assessment under section 143(3) of the Act was completed on 30.03.2014 after due examination of the issue relating to share capital, share application money and share premium. He invited our attention to the notice issued under section 142(1) of the Act during the course of original assessment proceedings, wherein the Assessing Officer had specifically called for the details of addition to share capital (as per Sr. No. 6,7 and 8 of Annexure to Notice u/s 142(1) dated 13-11-2013) , including the name of allottee, number of shares allotted, date of issue, share premium, particulars of payment received and mode of payment. The Assessing Officer had also specifically called upon the assessee to furnish particulars of share application money received during the year (as per Sr. No. 9 of the said notice).
31. The learned AR submitted that, in response thereto, the assessee, through its Chartered Accountant, filed reply dated 15.01.2014 before the Assessing Officer, which forms part of the paper book. Along with the said reply, the assessee furnished, inter alia, computation of income, audit report, profit and loss account, balance sheet, details of business activities, details of addition to share capital, details of share premium, amount received and mode of payment. The assessee also furnished details of share application money received during the year, including name of party, amount received, number of shares allotted, amount transferred to capital account and amount transferred to premium account.
32. The learned AR further pointed out that the details filed before the Assessing Officer showed that the assessee had received aggregate share application money of Rs.4,00,00,020/-during the year from Business Match Services India Pvt. Ltd., Jagmohan Bhanwar and Komal Bhanwar. Out of the said amount, 2,22,222 shares were allotted, Rs.22,22,220/- was transferred to share capital account, Rs.1,90,27,725/- was transferred to premium account and the balance amount of Rs.1,87,50,075/- was shown as outstanding as on 31.03.2011. It was submitted that these very figures were considered by the Assessing Officer in the original assessment proceedings.
33. The learned AR further invited our attention to the balance sheet placed at pages 8 and 17 of the paper book. He submitted that the share application money amounting to Rs.1,87,50,075/-was duly disclosed in the balance sheet. He further pointed out that the share premium on equity shares issued during the year amounting to Rs.6,62,49,985/- was separately disclosed under the head “Reserves and Surplus” in Note No. 4 to the balance sheet. Therefore, it was submitted that the figure of Rs.6,62,49,985/- was not discovered subsequently by the Assessing Officer, but was part of the financial statements already filed before him in the original assessment proceedings.
34. On the basis of the aforesaid factual position, the learned AR submitted that the reassessment proceedings were initiated only by comparing the very same two statements and the balance sheet figures which were already available with the Assessing Officer during the original assessment proceedings. He submitted that there was no new material, no external information and no subsequent tangible material which came into possession of the Assessing Officer after completion of the original assessment under section 143(3) dated 30.03.2014. Therefore, the allegation that the assessee failed to disclose fully and truly all material facts necessary for assessment is contrary to the record.
35. The learned AR submitted that the Assessing Officer, in the original assessment, had specifically examined the issue and made addition of Rs.1,90,27,725/- on account of share premium under section 68 of the Act. If the Assessing Officer subsequently formed a view that the correct figure ought to have been Rs.6,62,49,985/- instead of Rs.1,90,27,725/-, such exercise, according to the learned AR, would amount to reappraisal of the same material already on record and review of the earlier assessment order. It was submitted that reassessment cannot be resorted to for correcting an alleged error of inference drawn in the original assessment, particularly when all primary facts were disclosed by the assessee.
36. The learned AR relied upon the decision of the Hon’ble Supreme Court in CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) and submitted that the Assessing Officer has no power to review and reassessment must be based on tangible material having a live link with formation of belief that income has escaped assessment. He submitted that, in the present case, the reopening is founded only on a change of opinion on the same set of facts and material which were already before the Assessing Officer in the original assessment proceedings. Therefore, according to the learned AR, the notice issued under section 148 and the reassessment order passed under section 143(3) read with section 147 of the Act are without jurisdiction and liable to be quashed.
37. The learned Departmental Representative, on the other hand, supported the orders of the Assessing Officer and the learned CIT(A). The learned DR submitted that the reassessment was not based on a mere change of opinion, but on post-assessment verification of the assessment record, wherein the Assessing Officer noticed that the assessee had shown share premium of Rs.6,62,49,985/- in the balance sheet, whereas in the original assessment order only Rs.1,90,27,725/- was brought to tax under section 68 of the Act. It was submitted that the assessee had furnished two tabular statements and, according to the Assessing Officer, the particulars furnished by the assessee were incorrect and had resulted in under-assessment of income of Rs.4,72,22,260/-. The learned DR submitted that there was failure on the part of the assessee to make full and true disclosure of all material facts and, therefore, reopening beyond four years was justified.
38. In support of the above contentions, the learned DR relied upon the decision of the Hon’ble Bombay High Court in PranawaLeafin (P.) Ltd. v. DCIT [2013] 33 com 454 (Bom.). The learned DR submitted that in the said case also reopening beyond four years was upheld where there was failure on the part of the assessee to make true and complete disclosure in respect of share transactions.
39. The learned DR also relied upon the decision of the Hon’ble Madras High Court in Cairn India Ltd. v. Deputy Director of Income-tax [2021] 130 com 227 (Mad.) and submitted that where the competent authority finds that the submissions of the assessee are incorrect or misleading and where tangible material is available, reopening of assessment is justified.
40. The learned DR also placed reliance on the decision of the Hon’ble Gujarat High Court in Pushpa Uttamchand Mehta v. ITO [2022] 139 com 409 (Guj.). Referring to paragraph 18 of the said judgment, the learned DR submitted that where the Assessing Officer has applied his mind to the material available on record and the reopening is not based on vague or unspecific information, reassessment proceedings cannot be held to be invalid merely because the assessee contends that the issue had earlier been examined.
41. We have considered the rival submissions and perused the material available on record. Ground Nos. 1, 4 and 5 are interconnected and go to the root of the validity of reopening under section 147 of the Act. The core grievance of the assessee is that the reassessment has been initiated on the very same material which was already placed before the Assessing Officer during the original assessment proceedings completed under section 143(3) of the Act on 30.03.2014, and, therefore, the reopening is nothing but a review of the earlier assessment order on a mere change of opinion.
42. The original assessment was completed under section 143(3) of the Act on 30.03.2014. In the said original assessment, the Assessing Officer had examined the issue of share capital, share application money and share premium and made addition of Rs.1,90,27,725/- under section 68 of the Act on account of share premium. Thereafter, the reassessment proceedings were initiated by issuing notice under section 148 dated 30.03.2018, i.e., beyond four years from the end of the relevant assessment year. Therefore, the first proviso to section 147, as applicable to the year under consideration, squarely comes into play. Once the reopening is beyond four years from the end of the relevant assessment year and the original assessment was completed under section 143(3), the jurisdictional requirement is not merely escapement of income, but escapement by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment.
43. The reasons for reopening, as culled out from the reassessment order itself, show that the Assessing Officer reopened the assessment on the premise that the share premium reflected in the balance sheet was Rs.6,62,49,985/-, whereas in the original assessment order only Rs.1,90,27,725/- was brought to tax. Thus, the alleged escapement of Rs.4,72,22,260/- was worked out as the difference between Rs.6,62,49,985/- and Rs.1,90,27,725/-. The reassessment order itself records that the assessee had furnished details during the original assessment proceedings vide letter dated 15.01.2014 and the tabular statements were part of the original assessment record. The reassessment order also records that the figure of Rs.6,62,49,985/- was reported in the balance sheet and that the figure of Rs.1,90,27,725/- was adopted in the original assessment order on the basis of the assessee’s statement.
44. The assessee has demonstrated from the paper book that, in the original assessment proceedings, the Assessing Officer had specifically called for details of addition to share capital, including name of allottee, number of shares allotted, date of issue, share premium, particulars of payment received and mode of payment. The assessee had also been called upon to furnish particulars of share application money received during the year. In response, the assessee filed reply dated 15.01.2014 furnishing, inter alia, computation of income, audit report, profit and loss account, balance sheet, details of addition to share capital, details of share premium, amount received, mode of payment and details of share application money received during the year. The assessee also filed details showing receipt of share application money of Rs.4,00,00,020/-, allotment of 2,22,222 shares, transfer of Rs.22,22,220/- to share capital account, transfer of Rs.1,90,27,725/- to premium account and balance of Rs.1,87,50,075/- outstanding as on 31.03.2011.
45. The learned AR has further shown that the balance sheet placed in the paper book disclosed share application money of Rs.1,87,50,075/- and the share premium on equity shares issued during the year of Rs.6,62,49,985/- was separately disclosed under “Reserves and Surplus” in Note No. 4 to the balance sheet. Thus, the figure of Rs.6,62,49,985/- was not a fact subsequently discovered by the Assessing Officer. It was part of the financial statements already before the Assessing Officer during the original assessment proceedings.
46. In these facts, it is difficult to accept the stand of the Revenue that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The material facts relating to share capital, share premium and share application money were not merely disclosed in the financial statements, but were also specifically furnished in response to the queries raised under section 142(1) during the original assessment proceedings. The issue was examined and culminated in addition of Rs.1,90,27,725/- under section 68 in the original assessment order. If, subsequently, the Assessing Officer formed a view that the addition ought to have been made at Rs.6,62,49,985/- instead of Rs.1,90,27,725/-, such view is based on reappraisal of the same material and not on any fresh tangible material.
47. The Hon’ble Supreme Court in CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) has authoritatively held that reassessment cannot be resorted to on a mere change of opinion. The relevant observations are as under:
“However, one needs to give a schematic interpretation to the words „reason to believe‟ failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of „mere change of opinion‟, which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain pre-condition and if the concept of „change of opinion‟ is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of „change of opinion‟ as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1-4-1989, Assessing Officer has power to reopen, provided there is „tangible material‟ to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief.” (para 4)
48. The ratio of the aforesaid decision squarely applies to the facts before us. The Assessing Officer, in the present case, has not referred to any tangible material coming into his possession after completion of the original assessment. The reopening is based on the very balance sheet, the very tabular statements and the very replies which were before the Assessing Officer during the original scrutiny assessment. The reassessment has therefore been initiated for correcting what, according to the subsequent Assessing Officer, was an incorrect figure adopted in the original assessment. Such an exercise amounts to review of the original assessment order and is not permissible under section 147.
49. We have carefully considered the decisions relied upon by the learned DR. In support of the validity of reopening, the learned DR has specifically relied upon paragraph 7 of the decision of the Hon’ble Bombay High Court in PranawaLeafin (P.) Ltd. v. DCIT, paragraphs 6, 7, 8 and 9 of the decision of the Hon’ble Madras High Court in Cairn India Ltd. v. Deputy Director of Income-tax, and paragraph 18 of the decision of the Hon’ble Gujarat High Court in Pushpa Uttamchand Mehta v. ITO.
50. The learned DR relied upon paragraph 7 of the decision of the Hon’ble Bombay High Court in PranawaLeafin (P.) Ltd. v. DCIT. In the said case, reopening was beyond four years from the end of the relevant assessment year and, therefore, the proviso to section 147 was directly attracted. The Hon’ble High Court considered the effect of Explanation 1 to section 147 and held that mere production before the Assessing Officer of account books or other evidence, from which material evidence could have been discovered by the Assessing Officer with due diligence, would not necessarily amount to disclosure within the meaning of the proviso to section 147. The Hon’ble High Court found, on the facts of that case, that the assessee had claimed long-term capital loss by stating that the shares were acquired on 09.12.1994, whereas the material fact that the final call money of Rs.2.57 crores was paid only on 30.01.2004 was not candidly disclosed in the computation or in the assessee’s subsequent reply. The Hon’ble High Court further noted that merely enclosing the share certificate as part of several annexures one day prior to the assessment order, which contained an endorsement regarding payment of final call money, would not amount to full and true disclosure as contemplated by the proviso to section 147 read with Explanation 1 thereto.
51. Thus, in PranawaLeafin (P.) Ltd., the reopening was sustained because there was a specific failure on the part of the assessee to disclose a primary material fact, namely, the actual date of payment of final call money, which had a direct bearing on the nature of the capital gain/loss. In that factual background, the Hon’ble High Court applied Explanation 1 to section 147 and held that the assessee could not take shelter under the plea that the relevant evidence was somewhere embedded in the documents filed before the Assessing Officer. The decision, therefore, proceeds on the principle that disclosure must be full, true, candid and not hidden in the crevices of documentary material.
52. In the present case, however, the factual position is materially different. The assessee had not merely produced voluminous records leaving it to the Assessing Officer to discover the relevant facts. The Assessing Officer had specifically called for details of addition to share capital, share premium, amount received, mode of payment and share application money during the original assessment proceedings. In response, the assessee furnished specific details of share application money received, the amount transferred to share capital, the amount transferred to premium account, the balance share application money outstanding and the particulars of shares allotted during the year. The statement placed before the Assessing Officer showed share premium of Rs.6,62,49,985/-. The balance sheet also disclosed share application money of Rs.1,87,50,075/- and share premium on equity shares issued during the year of Rs.6,62,49,985/- under “Reserves and Surplus” in Note No. 4.
55. Therefore, the present case is not one where the assessee merely produced documents from which the Assessing Officer could have discovered the material fact by due diligence. It is also not a case where the material fact was concealed, suppressed, garbled or hidden in the record. The figures of share application money and share premium were specifically disclosed in the balance sheet and in the details furnished in response to specific statutory queries. The issue of share premium was in fact examined in the original assessment proceedings and resulted in an addition of Rs.1,90,27,725/- under section 68 of the Act.
54. Accordingly, Explanation 1 to section 147 does not advance the case of the Revenue in the present factual matrix. Explanation 1 prevents an assessee from contending that mere production of books or evidence amounts to disclosure where the relevant primary fact is hidden and has not been truly and fully disclosed. It does not permit reopening where the primary facts were expressly disclosed, were the subject matter of enquiry, and were actually considered by the Assessing Officer in the original scrutiny assessment. If, on the same disclosed material, the subsequent Assessing Officer forms a view that the original Assessing Officer ought to have adopted a different figure, such exercise is a review of the earlier assessment and not a reassessment based on failure of disclosure.
55. Thus, paragraph 7 of PranawaLeafin (P.) Ltd., read with the proviso to section 147 and Explanation 1 thereto, does not support the Revenue on the facts of the present case. On the contrary, the distinction lies in the fact that in PranawaLeafin (P.) Ltd. the primary material fact was not candidly disclosed, whereas in the present case the share premium of Rs.6,62,49,985/- and share application money of Rs.1,87,50,075/- were specifically and expressly disclosed before the Assessing Officer during the original assessment proceedings.
Therefore, the jurisdictional condition under the proviso to section 147, namely failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, is not satisfied.
56. The learned DR also relied upon the decision of the Hon’ble Madras High Court in Cairn India Ltd. v. Deputy Director of Income-tax. The learned DR specifically invited our attention to paragraphs 6, 7, 8 and 9 of the said judgment. Referring to paragraph 6, it was submitted that the Revenue had contended before the Hon’ble High Court that the Assessing Officer had “reason to believe” that income chargeable to tax had escaped assessment and that the conditions stipulated in the proviso to section 147 were complied with. It was also contended therein that mere production of books of account and material evidence would not be sufficient where the Assessing Officer had reasons and material for reopening the assessment.
57. The learned DR further referred to paragraph 7 of the said judgment, wherein the Hon’ble High Court noted that reopening in that case was made in the backdrop of reopening of assessments in respect of the very same assessee for A.Ys. 200405 and 2006-07 and, therefore, the implications of tangible material continued for reopening of proceedings for A.Y. 2005-06 also. It was submitted that the Hon’ble High Court accepted the existence of “reason to believe” on the basis of such tangible material which had bearing on the year under consideration also.
58. The learned DR also placed reliance on paragraph 8 of the judgment, wherein the Hon’ble High Court examined the reasons recorded for reopening. The reasons in that case were, inter alia, that the assessee had deducted tax at a lower rate on payments made to non-residents towards geological studies, seismic data acquisition and processing and charter hire charges, though such payments, according to the Revenue, were in the nature of fees for technical services/royalty and were not eligible for the lower rate applicable under section 44BB of the Act. The reasons also recorded that the assessee had claimed deduction of Rs.3,09,81,422/- towards exploration and development expenditure in the computation, which did not agree with the expenditure booked in the financials and for which no separate details were available. It was further noticed that the assessee had received surplus of Rs.94,20,22,786/- on assignment of participating interest in an oil and gas block, which was netted off against depletion and cost written off, and according to the Revenue, the same was required to be brought to tax in terms of section 42(2)(b) of the Act.
59. The learned DR particularly relied upon paragraph 9 of the judgment to submit that the objections filed by the assessee were duly considered by the Revenue and were rejected by passing a speaking order. In paragraph 9, the Hon’ble High Court noted that the findings recorded in the order disposing of objections dated 05.03.2013 showed that the objections raised by the assessee and the case laws relied upon by it had been considered.
The order disposing of objections in that case recorded that the assessee’s objections were not acceptable; that the Hon’ble Supreme Court in Honda Siel Power Products Ltd. had held that failure to disclose fully and truly all material facts is not restricted only to disclosures made at the time of filing of return but extends also to assessment proceedings; that the Delhi High Court in Consolidated Photo and Finvest Ltd. had held that even where the Assessing Officer could have obtained necessary information from the record on investigation, it could not necessarily be said that there was full and true disclosure of material facts; that at the stage of reopening there is no question of sufficient or insufficient reasons, but only existence of reason to believe; and that the assessee’s plea of change of opinion was rejected on the ground that the submissions of the assessee were incorrect and misleading. The order further recorded that the merits of the issues were to be examined during reassessment proceedings and concluded that the objections were legally and factually unsustainable.
60. Placing reliance on the aforesaid paragraphs, the learned DR submitted that once the Assessing Officer has reasons to believe that income has escaped assessment, and once the objections of the assessee are considered and rejected by a speaking order, the assessee cannot seek to invalidate reassessment proceedings merely by contending that certain materials were already available on record. It was submitted that, in the present case also, the Assessing Officer noticed from post- assessment verification that the share premium disclosed in the balance sheet was Rs.6,62,49,985/-, whereas only Rs.1,90,27,725/- was brought to tax in the original assessment order. According to the learned DR, the assessee’s disclosure was not full and true and the case fell within the proviso to section 147.
61. We have carefully considered the above reliance. There can be no dispute with the proposition that where reopening is supported by tangible material, where the Assessing Officer has recorded reasons showing a live link between the material and escapement of income, and where objections raised by the assessee have been considered and rejected, reassessment proceedings cannot be quashed merely on a general plea of change of opinion. However, the applicability of the decision in Cairn India Ltd. has to be tested on the facts of the present case.
62. In Cairn India Ltd., the reopening was founded on specific reasons involving substantive factual and legal aspects, namely, deduction of tax at a lower rate on payments to non-residents, claim of exploration and development expenditure in the computation not agreeing with the financial statements, absence of separate details in support of the claim, and taxability of surplus arising on assignment of participating interest in an oil and gas block. The Hon’ble High Court also noticed that reopening for the year under consideration was linked with reopening for other assessment years of the same assessee and that the implications of tangible material continued to the year in question. Further, the order disposing of objections dealt with the objections and the case laws relied upon by the assessee and recorded reasons why such objections were not acceptable. It is in that factual background that the Hon’ble High Court held that the reopening was justified and that the assessee would have to establish its case in reassessment proceedings.
63. The present case stands on a different footing. Here, the reopening is not based on any tangible material traced subsequently, any third-party information, any external enquiry, any investigation report, or any fresh material having a live link with escapement of income. The very basis of reopening is comparison of two figures already forming part of the original assessment record, namely, the figure of share premium of Rs.6,62,49,985/- disclosed in the balance sheet and details furnished during original assessment proceedings, and the figure of Rs.1,90,27,725/- adopted in the original assessment order while making addition under section 68. Thus, unlike Cairn India Ltd., there is no later discovery of contradiction, no material from connected years, and no fresh tangible material which came into possession of the Assessing Officer after completion of the original scrutiny assessment.
64. Even on the aspect of disposal of objections, the present case is materially different. InCairn India Ltd., paragraph 9 of the judgment shows that the order disposing of objections considered the objections, dealt with the judicial precedents relied upon by the assessee and recorded reasons for rejecting them. In the present case, the learned CIT(A) himself recorded that the objections raised by the assessee and the order disposing of objections were not uploaded and, therefore, the merit of such order could not be examined. Further, the assessment order records that the objections were disposed of by letter dated 19.12.2018, whereas the learned CIT(A) has referred to letter dated 29.10.2018. This inconsistency shows that the learned CIT(A) has not examined the assessee’s jurisdictional objection in the manner in which the objections were examined in Cairn India Ltd.
65. Therefore, the reliance placed on paragraphs 6, 7, 8 and 9 of Cairn India Ltd. does not assist the Revenue in the facts before us. The said judgment proceeds on the existence of tangible material, specific reasons involving fresh or unexamined aspects, and proper consideration of objections. In the present case, the reopening is based on the same material already disclosed and considered during the original assessment proceedings. Hence, the decision is distinguishable and does not dilute the binding ratio of the Hon’ble Supreme Court in CIT v. Kelvinator of India Ltd.(supra) that reassessment cannot be used as a power of review on a mere change of opinion.
66. The Revenue’s contention that the assessee filed two tabular statements and thereby misled the Assessing Officer also cannot be accepted in the facts of the present case. The first statement related to share application money received during the year and the transfer thereof to capital and premium accounts. The second statement related to shares allotted during the year and contained particulars of share premium, amount received and share capital. Both statements were filed before the Assessing Officer during the original assessment proceedings and the balance sheet itself disclosed the share application money and share premium separately. If the Assessing Officer adopted one figure in the original assessment while making addition under section 68, the subsequent opinion that the other figure ought to have been adopted cannot be characterised as failure of the assessee to disclose primary facts.
67. We also find merit in the assessee’s grievance that the learned CIT(A) did not examine the validity of reopening in its correct legal perspective. The learned CIT(A) held the reopening to be valid mainly on the basis that the reasons were supplied and objections were disposed of. However, the learned CIT(A) himself noted that the objections and the order disposing of objections were not uploaded and, therefore, the merit of the order disposing of objections could not be examined. Having so observed, the learned CIT(A) ought to have examined the jurisdictional ground on the basis of the reasons recorded, the assessment record and the material available before him. Further, the assessment order records that the objections were disposed of by letter dated 19.12.2018, whereas the learned CIT(A) refers to letter dated 29.10.2018. This inconsistency also shows that the legal challenge was not properly examined.
68. In view of the above discussion, we hold that the reopening is based on the very same material which was already before the Assessing Officer in the original assessment proceedings. There was no new tangible material having live link with the formation of belief that income chargeable to tax had escaped assessment. Further, since the notice under section 148 was issued beyond four years from the end of the relevant assessment year, and since the Revenue has failed to establish any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, the jurisdictional condition prescribed under the proviso to section 147 is not satisfied. Accordingly, the reassessment proceedings are invalid.
69. We, therefore, quash the notice issued under section 148 dated 30.03.2018 and the reassessment order dated 28.12.2018 passed under section 143(3) read with section 147 of the Act. Consequently, Ground Nos. 1, 4 and 5 raised by the assessee are allowed.
70. As regards Ground Nos. 2 and 3 relating to the assessee’s contention regarding merger/duplication of proceedings arising from the original assessment order dated 30.03.2014, the order of the learned CIT(A) dated 14.02.2017 and the order of the Tribunal dated 23.07.2021, the same do not require separate adjudication in view of our finding quashing the reassessment proceedings. These grounds are therefore rendered academic and are left open.
71. Additional Ground No. 6 challenges the reassessment order on the ground that it was passed in violation of CBDT Instruction No. 1/2018 dated 12.02.2018. Since we have already quashed the reassessment order on the fundamental ground that the reopening under section 147 itself is invalid, this additional legal ground is also rendered academic and does not call for separate adjudication.
72. Additional Ground No. 7 challenges the addition of Rs.4,72,22,260/- made under section 68 of the Act on account of share premium. Since the reassessment order itself has been quashed, the addition made therein does not survive. Accordingly, Additional Ground No. 7 is allowed as consequential.
73. Ground No. 6 in the original grounds and Additional Ground No. 8 are general in nature and do not require separate adjudication.
74. In the result, the appeal filed by the assessee is allowed in the terms indicated above.
Order pronounced on 23/07/2026 as per Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963.
