INCOME TAX ACT, 1961

Section 147

Reassessment - No valid reason to belive as to tax escapement - AO took plea of processing of original return under section 143(1) -

AO received information from Directorate of Income Tax (Intelligence & Criminal Investigation), Chandigarh. The Directorate provided detail of companies including assessee-company which received share premium at very unreasonable rate. Accordingly, AO reopened assessment and made addition of share premium amount. Assessee challenged this on the ground of no valid reason as to tax escapement. AO's case was that return was processed under section 143(1), and not under section 143(3) and intimation issued under section 143(1) could not be equated to 'assessment'. Held: Merely because assessment was framed under section 143(1), it would not lead to the conclusion that requirement of section 147 with regard to 'reasons to believe' can be dispensed with. AO only received information that assessee had received high share premium. No information had been pointed out in reasons recorded of any bogus transactions undertaken by the assessee. Even name of companies from which share premium was received was not mentioned nor there was any allegation that share applicants were not traceable or they were bogus/paper companies indulged in sham transactions. Mere information that assessee had received a high premium, could lead to suspicion but it was not enough to frame reason to believe as to tax escapement and, therefore, reassessment was quashed as invalid.

Relied:ITO v. Lakhmani Mewaldas (1976) 103 ITR 437 (SC) : 1976 TaxPub(DT) 0742 (SC). 'CIT v. Paramjit Kaur' (2008) 311 ITR 38 (P&H) : 2009 TaxPub(DT) 0118 (P&H-HC) Orient Craft Ltd. (2013) 354 ITR 536 (Del) : 2013 TaxPub(DT) 1623 (Del-HC) and Kelvinator (I) Ltd., (2010) 320 ITR 561 (SC) : 2010 TaxPub(DT) 1335 (SC).

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2010-11

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