Case Note & Summary
The petitioner, Rajshree Realtors Private Limited, a real estate company, filed its return of income for Assessment Year 2012-2013 declaring income of Rs.1,05,318/- under the head 'Profit and Gains from Business and Profession'. The return was initially processed under Section 143(1) of the Income Tax Act, 1961, and later selected for scrutiny under CASS norms. During the assessment proceedings, the Assessing Officer (respondent no.3) issued notices under Sections 142(1) and 143(2) and specifically called upon the petitioner by letter dated 24th March 2015 to explain the huge share application money and share premium received. The petitioner responded with letters dated 14th November 2014, 27th February 2015, and 27th March 2015, providing all documents including valuation reports and details of the two subscribers, Shubhshree Hirise Pvt Ltd and Subhdrishti Complex Pvt Ltd. After considering these submissions, the Assessing Officer passed an assessment order under Section 143(3) on 30th March 2015, adding the entire sum of Rs.3,00,00,000/- received as share application money (including both face value of Rs.10 per share and premium of Rs.9 per share) as income under Section 68 of the Act, thereby assessing the taxable income at Rs.3,01,05,318/-. Aggrieved, the petitioner appealed to the Commissioner of Income Tax (Appeals). Subsequently, on 19th March 2019, respondent no.3 issued a notice under Section 148 of the Act seeking to reopen the assessment for A.Y. 2012-2013. The petitioner challenged this notice by way of a writ petition before the Bombay High Court. The court examined the reasons recorded for reopening, which stated that the Assessing Officer had not examined the share premium aspect during the original assessment. However, the court found that the original assessment order under Section 143(3) was a detailed order that specifically dealt with the share application money and share premium, and the Assessing Officer had called for and examined all relevant documents. The court held that the reassessment notice was based on a mere change of opinion and lacked any fresh tangible material, and therefore quashed the notice. The court also noted that the petitioner had disclosed all material facts fully and truly during the original assessment, and the reassessment was initiated beyond four years from the end of the relevant assessment year, which required the Assessing Officer to show that income had escaped assessment due to failure on the part of the assessee to disclose material facts, which was not established.
Headnote
A) Income Tax - Reassessment - Section 147/148 of Income Tax Act, 1961 - Change of Opinion - Reassessment notice based on same material examined during original assessment under Section 143(3) is invalid as it amounts to change of opinion - Held that where the Assessing Officer had called for and examined all details regarding share application money and share premium, and passed a detailed assessment order, reopening on the same issue without fresh tangible material is not permissible (Paras 1-17). B) Income Tax - Share Premium - Section 68 of Income Tax Act, 1961 - Addition of Premium - During original assessment, the Assessing Officer added both face value and premium as unexplained cash credits under Section 68 after examining valuation reports and subscriber details - Held that the reassessment notice seeking to re-examine the same issue is a change of opinion and liable to be quashed (Paras 3-17).
Issue of Consideration
Whether the notice under Section 148 of the Income Tax Act, 1961 for reassessment of income for A.Y. 2012-2013 is valid when the Assessing Officer had already examined the share application money and share premium during the original assessment under Section 143(3) and passed an order, and the reassessment is based on the same material without any fresh tangible material.
Final Decision
The Bombay High Court allowed the writ petition and quashed the notice dated 19th March 2019 issued under Section 148 of the Income Tax Act, 1961.
Law Points
- Reassessment under Section 147/148 of Income Tax Act
- 1961 cannot be initiated on mere change of opinion
- Section 68 addition of share premium requires fresh tangible material
- Original assessment under Section 143(3) after due inquiry bars reopening without new facts
