Wp/2897/2014 Of M/S. Rockstar Real Estate Pvt. Ltd v. Income Tax Officer - 10(1)(4)

Digitallysigned byPURTIPURTIPRASADPRASADPARABPARABDate:2022.03.1517:34:55+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 2897 OF 2014 Rockstar Real Estate Pvt. Ltd. ….Petitioner V/s.Income Tax Officer – 10(1)(4), Mumbai …Respondent---- Mr. S.C. Tiwari a/w Ms. Rutuja N. Pawar for Petitioner.Mr. Arvind Pinto for Respondent. ---- CORAM : K.R. SHRIRAM &N. J. JAMADAR, JJ. DATED : 11[th] MARCH, 2022 P.C. : 1.Petitioner is impugning the notice dated 29[th] March, 2014issued under Section 148 of the Income Tax Act, 1961 (the Act) on thegrounds, interalia, that the notice has been issued without application ofmind and based on unconfirmed, unverified and incorrect information.Petitioner had files its return for assessment year 2009-10 on 31[st] August,2009 declaring total income of Rs.6,26,208/-. The return was processedunder Section 143(1) of the Act. Thereafter, petitioner received theimpugned notice dated 29[th] March, 2014 stating that respondent had reasonto believe that petitioner’s income chargeable to tax for A.Y. 2009-10 hasescaped assessment within the meaning of Section 147 of the Act. 2.Petitioner was also provided the reasons for re-opening whichreads as under : The assessee Company M/s. Rockstar Real Estate Pvt. Ltd.having PAN AADCR59641 is assessed in this charge. The return of income for A.Y. 2009-10 has been filed u/s. 139(1)on 31.08.2009, declaring total income at Rs.6,26,208/- The information is received that, during the year assesseeCompany has issued 24,00,000 Equity Shares of face value ofRs.1 per share at Rs.14.76 premium per share and receivedshare premium of Rs.14,76,00,000/- on cash, on 10.05.2008and the same was reflected in the Reserves and Surplus. Thepaid up capital of the company is of Rs.50.00 lacs. TheCompany was incorporated on 29.01.2007. The companyhas not carried out any business activity incidental to itsbusiness during the year and only received dividend andinterest income. On perusal of the records it is seen that,there is no any material on record to substantiate suchunreasonable premium charge by the assessee company forissue of Equity Shares. In view of the aforesaid facts, the share application andshare premium received by the assessee needs to be verifiedas per provisions of the I.T. Act, 1961. Hence, taking intoconsideration the provisions of the I.T. Act, 1961, theundersigned has reason to believe that the income hasescaped the assessment within the meaning of Section 147along with Explanation 2(b) of the I.T. Act, 1961. On the basis of the above mentioned reasons recorded, Iam satisfied that this is a fit case for issue of notice u/s. 148of the I.T. Act, 1961. 3.Mr. Pinto submitted that the re-opening has been proposed within four years from the end of the relevant assessment year and thereforeproviso to Section 147 of the Act would not apply. Mr. Pinto submitted thatonly tangible material has to be shown by the Revenue to re-open theassessment. 4.Though there can be no dispute on the proposition submittedby Mr. Pinto, we have to see whether the reasons disclose any tangiblematerial. In our view, it does not and it has been proposed to re-open onincorrect facts. 5.The entire basis to re-open is that the Revenue has receivedinformation that during the assessment year 2009-10 petitioner had issued24,00,000 Equiry Shares of face value of Rs.1 per share at a premium ofRs.14.76 per share and has received share premium of Rs.14,76,00,000/- incash on 10[th] May, 2008 whereas the paid up capital of the company is onlyRs.50,00,000/-. According to Revenue the company was incorporated onlyon 29[th] January, 2007 and its only source of income was dividend andinterest income. Therefore, since there was nothing to substantiatevaluation of such huge premium on the company’s equity shares, there hasto be escapement of income. 5.The entire basis to re-open is that the Revenue has receivedinformation that during the assessment year 2009-10 petitioner had issued24,00,000 Equiry Shares of face value of Rs.1 per share at a premium ofRs.14.76 per share and has received share premium of Rs.14,76,00,000/- incash on 10[th] May, 2008 whereas the paid up capital of the company is onlyRs.50,00,000/-. According to Revenue the company was incorporated onlyon 29[th] January, 2007 and its only source of income was dividend andinterest income. Therefore, since there was nothing to substantiatevaluation of such huge premium on the company’s equity shares, there hasto be escapement of income. 6.In the petitioner’s reply objecting to the re-opening, petitionerhas made categorical statement that during the assessment year 2009-10 noshare of the company was issued to any party let alone at a premium andmoreover the payment that was received was through banking channels andnot in cash. In the order rejecting objections, the Assessing Officer has notconsidered or dealt with this factual aspect. 7.Even in the petition there is averment to this effect. Though thepetition came to be admitted on 24[th] November, 2014, no reply has beenfiled even denying these averments. 8.Therefore, in our view there is no reason to believe that incomechargeable to tax has escaped assessment. Moreover, even for a moment we assume that the share premium charged was unjustifiable still on receipt ofshare premium and share application money no income arises as the receiptis on capital account. 9.In the circumstances, we hereby hold that the notice issuedunder Section 148 of the Act dated 29[th] March, 2014 is unsustainable andaccordingly quashed and set aside. Subsequently, the order on objectionsalso has to go and is hereby quashed and set aside. 10.Petition disposed. (N. J. JAMADAR, J.) (K.R. SHRIRAM, J.)