M PALLONJI ENERPRISES P. LTD, MUMBAI V. ITO 1(2)(3), MUMBAI

CO 204/MUM/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0889 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 05-09-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 10-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Depreciation; Search and seizure; Tangible material; Difference of opinion; Assessment record; Capital receipt; Reason to believe; Change of opinion
• Section: 147; 68; 148; 139; 143(3); 142(1); 260A; 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D” MUMBAI BEFORE SHRI AMIT SHUKLA (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 1907/MUM/2017 Assessment Year: 2009-10 ITO-1(2)(3), R. No. 527, 5 th floor, Aayakar Bhavan, M.K. Road, Mumbai-400020. Vs. M/s M Pallonji Enterprises Pvt. Ltd., 46/A, Cawasji Patel Street, Fort, Mumbai-400020. PAN No. AAFCM 3357 A Appellant Respondent CO No. 204/MUM/2018 (ITA No. 1907/MUM/2017) Assessment Year: 2009-10 M/s M Pallonji Enterprises Pvt. Ltd., 46/A, Cawasji Patel Street, Fort, Mumbai-400020. Vs. ITO-1(2)(3), R. No. 527, 5 th floor, Aayakar Bhavan, M.K. Road, Mumbai-400020. PAN No. AAFCM 3357 A Appellant Respondent Assessee by : Dr. K. Shivaram, Sr. Adv. & Mr. Rahul Hakani, Adv. Revenue by : Mr. T. Shankar, CIT-DR Date of Hearing : 06/09/2022 Date of pronouncement : 13/10/2022 PER OM PRAKASH KANT, AM This appeal by the assessee are directed against order dated 26/12/2016 passed by the Ld. Commissioner of Income ‘the Ld. CIT(A)’] for assessment year 2009 2. The grounds raised by the reproduced as under: 1. "Whether on the facts and circumstances of the case and in Law the Id.CIT(A) was correct in allowing the appeal of the assessee and deleting the addition of Rs.2,79,54,39,101/ made by the Assessing officer on account of Share premi treated as unexplained cash credit u/s.68 of the Income tax Act,1961?" 2. "Whether on the facts and in the circumstances of the case and in Law, the Ld.CIT(A) was right in deleting the addition of Rs.2,79,54,39,101/ and holding that the Share Premium received by the Company is capital in nature and the same cannot be assessed u/s.68 of the Act, without appreciating the finding in the assessment order that as the assessee had failed to justify charging of such huge premium of M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue and cross objections by the assessee are directed against order dated 26/12/2016 passed by Ld. Commissioner of Income-tax (Appeals)-6, Mumbai [in short ] for assessment year 2009-10. The grounds raised by the Revenue in its appeal reproduced as under: "Whether on the facts and circumstances of the case and in Law the Id.CIT(A) was correct in allowing the appeal of the assessee and deleting the addition of Rs.2,79,54,39,101/ made by the Assessing officer on account of Share premi treated as unexplained cash credit u/s.68 of the Income tax Act,1961?" "Whether on the facts and in the circumstances of the case and in Law, the Ld.CIT(A) was right in deleting the addition of Rs.2,79,54,39,101/ and holding that the Share Premium ved by the Company is capital in nature and the same cannot be assessed u/s.68 of the Act, without appreciating the finding in the assessment order that as the assessee had failed to justify charging of such huge premium of M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 2 and cross objections by the assessee are directed against order dated 26/12/2016 passed by 6, Mumbai [in short in its appeal are "Whether on the facts and circumstances of the case and in Law the Id.CIT(A) was correct in allowing the appeal of the assessee and deleting the addition of Rs.2,79,54,39,101/ made by the Assessing officer on account of Share premium treated as unexplained cash credit u/s.68 of the Income tax "Whether on the facts and in the circumstances of the case and in Law, the Ld.CIT(A) was right in deleting the addition of Rs.2,79,54,39,101/ and holding that the Share Premium ved by the Company is capital in nature and the same cannot be assessed u/s.68 of the Act, without appreciating the finding in the assessment order that as the assessee had failed to justify charging of such huge premium of Rs.46,821/ per share, the very n unexplained, thereby attracting provisions of section 68?" 3. . "Whether on the facts and in the circumstances of the case and in Law, the Id. CIT(A)was correct in deciding the issue in favour of assessee solely relying on the decisi ITAT in the case of Green Infra Ltd. (ITA No.7762/Mum/2012, order dated 23.08.2013), without appreciating the legal position that the said issue has not attained finality since departments appeal filed us. 260A against the said decision was s Hon'ble Bombay High Court?" 4. . "Whether on the facts and circumstances of the case and in Law, the Ld. CIT(A) has erred in holding that the Share premium was justified by assessee, ignoring the findings of the Assessing Officer given assessee company failed to furnish authentic documentary evidence to justify basis of charging premium, the Return of assessee company filed for year under consideration as well as for earlier years showed consistent losse valuation of shares was not justified?" 5. "Whether on the facts and circumstances of the case and in Law, the Ld.CIT(A) has erred in deleting the addition made on account of share premium, ignoring the findings brought out in assessment order prove the creditworthiness of the investors and also the assessee did not possess any assets in the form of patents, copyrights, intellectual property rights based on which the company would be likely to substantially e M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 Rs.46,821/ per share, the very nature of receipt remained unexplained, thereby attracting provisions of section 68?" . "Whether on the facts and in the circumstances of the case and in Law, the Id. CIT(A)was correct in deciding the issue in favour of assessee solely relying on the decision of Hon'ble ITAT in the case of Green Infra Ltd. (ITA No.7762/Mum/2012, order dated 23.08.2013), without appreciating the legal position that the said issue has not attained finality since departments appeal filed us. 260A against the said decision was still pending before the Hon'ble Bombay High Court?" . "Whether on the facts and circumstances of the case and in Law, the Ld. CIT(A) has erred in holding that the Share premium was justified by assessee, ignoring the findings of the Assessing Officer given in the assessment order that the assessee company failed to furnish authentic documentary evidence to justify basis of charging premium, the Return of assessee company filed for year under consideration as well as for earlier years showed consistent losses and hence the valuation of shares was not justified?" "Whether on the facts and circumstances of the case and in Law, the Ld.CIT(A) has erred in deleting the addition made on account of share premium, ignoring the findings brought out in assessment order that the assessee company failed to prove the creditworthiness of the investors and also the assessee did not possess any assets in the form of patents, copyrights, intellectual property rights based on which the company would be likely to substantially enhance its profits M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 3 ature of receipt remained unexplained, thereby attracting provisions of section 68?" . "Whether on the facts and in the circumstances of the case and in Law, the Id. CIT(A)was correct in deciding the issue on of Hon'ble ITAT in the case of Green Infra Ltd. (ITA No.7762/Mum/2012, order dated 23.08.2013), without appreciating the legal position that the said issue has not attained finality since departments appeal filed us. 260A till pending before the . "Whether on the facts and circumstances of the case and in Law, the Ld. CIT(A) has erred in holding that the Share premium was justified by assessee, ignoring the findings of in the assessment order that the assessee company failed to furnish authentic documentary evidence to justify basis of charging premium, the Return of assessee company filed for year under consideration as well s and hence the "Whether on the facts and circumstances of the case and in Law, the Ld.CIT(A) has erred in deleting the addition made on account of share premium, ignoring the findings brought that the assessee company failed to prove the creditworthiness of the investors and also the assessee did not possess any assets in the form of patents, copyrights, intellectual property rights based on which the nhance its profits in future and presently command Premium on its shares and hence the Share Premium was not justified?" 6. "Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) was correct in deleting the addition of share pre brought out in the assessment order that as the assessee had utilized the amount of so called share premium for non specified purposes in violation of Companies Act, the receipt of money of Rs.2,79,54,39,101/ lost its ch premium and hence cannot be treated as capital receipts?" 7. "Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) was right in allowing the appeal of the assessee without appreciating the facts brought out by the A.O. that substantial amount of premium amounting to Rs.1,38,56,88,562/ was invested by Assessee Company in group entity, M. Pallonji & Co. Convertible Warrants, which was later payment of balance calls, in share premium was not genuine?" 2.1 The grounds raised by the assessee in its cross objections are reproduced as under: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the act Assessing Officer in reopening the assessment despite the fact that the issue of increase in share capital and share premium received was already examined during the M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 in future and presently command Premium on its shares and hence the Share Premium was not justified?" "Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) was correct in deleting the addition of share premium without appreciating the facts brought out in the assessment order that as the assessee had utilized the amount of so called share premium for non specified purposes in violation of Companies Act, the receipt of money of Rs.2,79,54,39,101/ lost its character as share premium and hence cannot be treated as capital receipts?" "Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) was right in allowing the appeal of the assessee without appreciating the facts brought out the A.O. that substantial amount of premium amounting to Rs.1,38,56,88,562/ was invested by Assessee Company in group entity, M. Pallonji & Co. Pvt. Ltd. in the form of Convertible Warrants, which was later-on forfeited for non payment of balance calls, indicating that the transaction of share premium was not genuine?" grounds raised by the assessee in its cross objections are reproduced as under: On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Assessing Officer in reopening the assessment despite the fact that the issue of increase in share capital and share premium received was already examined during the M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 4 in future and presently command Premium on its shares "Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) was correct in deleting the mium without appreciating the facts brought out in the assessment order that as the assessee had utilized the amount of so called share premium for non- specified purposes in violation of Companies Act, the receipt aracter as share premium and hence cannot be treated as capital receipts?" "Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) was right in allowing the appeal of the assessee without appreciating the facts brought out the A.O. that substantial amount of premium amounting to Rs.1,38,56,88,562/ was invested by Assessee Company in t. Ltd. in the form of on forfeited for non- dicating that the transaction of grounds raised by the assessee in its cross objections are On the facts and in the circumstances of the case and in ion of the Assessing Officer in reopening the assessment despite the fact that the issue of increase in share capital and share premium received was already examined during the original scrutiny and the Assessing Officer did not find any infirmity therein. change of opinion. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Assessing Officer in reopening the assessment despite the fact that no new material r Officer and he reopened the case based on the existing records. 3. Briefly stated facts of the case of income for the year under consideration on 29/09/2009 declaring total income at section 143(3) of the Income completed on 26/09/2011, wherein total income was assessed at Nil. Subsequently, the Assessing Officer reopened the assessment after recording reasons to bel and issued notice under section 148 the reassessment completed on 30/03/2015, the Assessing Officer, held share capital received from the shareholders during the year under consideration as u M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 original scrutiny and the Assessing Officer did not find any infirmity therein. Thus, the reopening is nothing but a change of opinion. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Assessing Officer in reopening the assessment despite the fact that no new material received by the Id Assessing Officer and he reopened the case based on the existing stated facts of the case are that the assessee filed return of income for the year under consideration on 29/09/2009 declaring total income at ₹ Nil. The scrutiny assessment under ) of the Income-tax Act, 1961 (in short completed on 26/09/2011, wherein total income was assessed at Nil. Subsequently, the Assessing Officer reopened the assessment after recording reasons to believe that income escaped assessment issued notice under section 148 of the Act on 28/03/2014. In the reassessment completed on 30/03/2015, the Assessing Officer, share capital received from the shareholders during the year under consideration as unexplained cash credit under section 68 of M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 5 original scrutiny and the Assessing Officer did not find any Thus, the reopening is nothing but a On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Assessing Officer in reopening the assessment despite the eceived by the Id Assessing Officer and he reopened the case based on the existing that the assessee filed return of income for the year under consideration on 29/09/2009 The scrutiny assessment under in short ‘the Act’) was completed on 26/09/2011, wherein total income was assessed at Nil. Subsequently, the Assessing Officer reopened the assessment ieve that income escaped assessment on 28/03/2014. In the reassessment completed on 30/03/2015, the Assessing Officer, share capital received from the shareholders during the year dit under section 68 of the Act. Further, the received by the assessee brought to tax the same as income from business. Alternatively, he also assessed the share premium as unexplained section 68 of the Act ₹279,54,39,100/- in the reassessment order dated 30/03/2015. On further appeal, the Ld. CIT(A) reassessment proceeding, however deleted the addition made by the Assessing Officer on merit. Aggrieved, both the assessee are before the reproduced above. 4. Before us, the assessee filed containing pages 1 to 572. 5. The cross objection raised by the assessee goes to the root of the assessment and therefore parties the cross objection of the assessee. M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 . Further, the Ld. Assessing Officer held that received by the assessee constitutes revenue receipt and hence brought to tax the same as income from business. Alternatively, he he share premium as unexplained cash Act. In this manner, he assessed total income at in the reassessment order dated 30/03/2015. On further appeal, the Ld. CIT(A), sustained the validity of the proceeding, however deleted the addition made by the Assessing Officer on merit. Aggrieved, both the assessee are before the Tribunal, by way of raising grounds Before us, the assessee filed a paper book in two volumes ontaining pages 1 to 572. The cross objection raised by the assessee goes to the root of the assessment and therefore parties were agreed to argue firstly, the cross objection of the assessee. M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 6 Assessing Officer held that share premium revenue receipt and hence brought to tax the same as income from business. Alternatively, he cash credit under he assessed total income at in the reassessment order dated 30/03/2015. On sustained the validity of the proceeding, however deleted the addition made by the Assessing Officer on merit. Aggrieved, both the Revenue and , by way of raising grounds as paper book in two volumes The cross objection raised by the assessee goes to the root of agreed to argue firstly, 5.1 In the cross objection, the assessee has mainly validity of the reassessment on the ground that reopened without any new or fresh tangible material and based merely on the “change of opinion already available with the Assessing Officer. 6. Before us the Ld. counsel under section 142(1) of the original scrutiny proceedings, which is available on page of the paperbook. The the assessee dated 18/08/2011 containing details of increase share capital and increase in statement, which is available on The Ld. counsel also referred to copy of the assessment order passed under section 143(3) dated 26/09/2011, which is available on pages 21 to 24 of the paperbook and submitted that the Assessing Officer after verifying all the facts place M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 In the cross objection, the assessee has mainly validity of the reassessment on the ground that assessment has reopened without any new or fresh tangible material and based change of opinion” on the material which was already available with the Assessing Officer. Ld. counsel of the assessee referred to notice under section 142(1) of the Act dated 09/08/2011 issue original scrutiny proceedings, which is available on page of the paperbook. The Ld. counsel further referred to reply filed the assessee dated 18/08/2011 containing details of increase share capital and increase in share premium along with bank statement, which is available on pages 36 to 50 of the paperbook. also referred to copy of the assessment order assed under section 143(3) dated 26/09/2011, which is available 21 to 24 of the paperbook and submitted that the Assessing Officer after verifying all the facts placed on record by the M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 7 In the cross objection, the assessee has mainly challenged the assessment has reopened without any new or fresh tangible material and based on the material which was of the assessee referred to notice 09/08/2011 issued during the original scrutiny proceedings, which is available on pages 35 to 50 to reply filed by the assessee dated 18/08/2011 containing details of increase in share premium along with bank 36 to 50 of the paperbook. also referred to copy of the assessment order assed under section 143(3) dated 26/09/2011, which is available 21 to 24 of the paperbook and submitted that the on record by the assessee and after satisf assessee. 6.1 The Ld. counsel four years from the end of the relevant assessment year and that too without any new tangible material, only to tax the share premium amount received by the assessee which wa the course of the original reassessment proceeding. The submitted that reopening is nothing but change of the opinion and same is done without any new or fresh tangible material. The counsel in support of his conte Bank of India Vs ACIT (2018) 96 taxmann.com 77 (Bom) PCIT Vs Motilal Todi (ITXA 1287 of 2016 dated 28/01/2019)(Bom- decision in the case of Export Credit Guarantee Corporation of India Ltd Vs ACIT (supra) (supra) relied upon by the Assessing Officer M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 satisfying, accepted the returned income o Ld. counsel submitted that case has been reopened within four years from the end of the relevant assessment year and that too without any new tangible material, only to tax the share premium amount received by the assessee which was already verified during the course of the original reassessment proceeding. The submitted that reopening is nothing but change of the opinion and same is done without any new or fresh tangible material. The in support of his contention, relied on the decision of Bank of India Vs ACIT (2018) 96 taxmann.com 77 (Bom) PCIT Vs Motilal Todi (ITXA 1287 of 2016 dated -HC). The Ld. counsel also distinguished the decision in the case of Export Credit Guarantee Corporation of India Ltd Vs ACIT (supra) and Dr Amin Pathology laboratory Vs JCIT relied upon by the Assessing Officer. M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 8 accepted the returned income of the submitted that case has been reopened within four years from the end of the relevant assessment year and that too without any new tangible material, only to tax the share premium s already verified during the course of the original reassessment proceeding. The Ld. counsel submitted that reopening is nothing but change of the opinion and same is done without any new or fresh tangible material. The Ld. ntion, relied on the decision of State Bank of India Vs ACIT (2018) 96 taxmann.com 77 (Bom) and PCIT Vs Motilal Todi (ITXA 1287 of 2016 dated also distinguished the decision in the case of Export Credit Guarantee Corporation of India Dr Amin Pathology laboratory Vs JCIT 7. The Ld. DR on the other hand relied on the finding o CIT(A) and the Assessing Officer was validly reopened by the Assessing Officer. 8. We have heard rival submission of the parties dispute and perused the relevant material on record. The issue in dispute before us is whether the reasons recorded by the Assessing Officer to believe that income escaped assessment are merely based on change of opinion without there being any tangible material. For adjudication of issue in dispute it is relevant to ref recorded by the Assessing Officer, which are available on page 26 to 27 of the paperbook. For ready reference, same are extracted as under: "The assessee, M. Pallonji Enterprises Pvt. Ltd. having PAN: AAFCM3357A is an assessee of this charge The assessee for the A.Y. 2009 29/09/2009 declaring income at Rs. 143(3) of the IT. Act was completed on 26/09/2011 at Rs. Nil. From the records, it is seen that A.Y. 2009-10 assessee has shown receipt of shäre premium amounting M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 DR on the other hand relied on the finding o and the Assessing Officer and submitted that reopened by the Assessing Officer. rd rival submission of the parties dispute and perused the relevant material on record. The issue in dispute before us is whether the reasons recorded by the Assessing Officer to believe that income escaped assessment are merely based on change of opinion without there being any tangible material. For adjudication of issue in dispute it is relevant to ref recorded by the Assessing Officer, which are available on page 26 to 27 of the paperbook. For ready reference, same are extracted as "The assessee, M. Pallonji Enterprises Pvt. Ltd. having PAN: AAFCM3357A is an assessee of this charge. The assessee for the A.Y. 2009-10 has e- filed its return of income on 29/09/2009 declaring income at Rs. Nil. In this case, assessment u/s. 143(3) of the IT. Act was completed on 26/09/2011 assessing income From the records, it is seen that during the F.Y. 2008-09 relevant to assessee has shown receipt of shäre premium amounting M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 9 DR on the other hand relied on the finding of the Ld. and submitted that the assessment rd rival submission of the parties on the issue in dispute and perused the relevant material on record. The issue in dispute before us is whether the reasons recorded by the Assessing Officer to believe that income escaped assessment are merely based on change of opinion without there being any tangible material. For adjudication of issue in dispute it is relevant to refer the reasons recorded by the Assessing Officer, which are available on page 26 to 27 of the paperbook. For ready reference, same are extracted as "The assessee, M. Pallonji Enterprises Pvt. Ltd. having PAN: filed its return of income on In this case, assessment u/s. assessing income 09 relevant to assessee has shown receipt of shäre premium amounting to Rs.279,48,42,181/ matter of verification by the A:O. and therefore no opinion has been formed on the iss time, the assessee has also not filed complete details showing the nature of this share premium (justification for the excess share premium received in comparison to the intrinsic value of the share The Hon'ble Bombay High Court in the case of E.C.G.C. v/s. Addl. C.I.T. Writ Petition No. Lordships have held that when the assessment is sought to be reopened within a period of four years, then what is required is believe' but not established fact of escapement of income. At this stage of issue of notice, the only question is where there is relevant material on which the reasonable person can form a requisite belief. When an assessment is sought to be re test to be applied is whether there is tangible material to do so. Something which is tangible need not be something which is new. Assessing Officer who has plainly ignored relevant material in arriving at an assessment acts contrary to the law. If as a consequence of this there is escapement of income, the jurisdictional requirement of section 147 is fulfilled on the confirmation of a reason to believe that income has escapement assessment. A reason to believe i relevant and not an established fact of escapement of income. Reliance is also placed on the judgment in the case of M/s. Usha International, 348 IT 485 (Delhi High Court). In view of the above facts and the judicial decision of the Hon’ble Bombay High Court, I have reason to believe that income, in the garb of share application money/share premium received in this case has escaped assessments in terms of provisions of section 147 of the I.T. Act. Necessary approval reopening the assessee’ case ha from the Addl. CIT, Range of the I.T. Act. Issue notice u/s 148 of the Act of the assessee.” 8.1 On perusal of the above reasons recorded there was no new tangible material bef invoke a trigger for making belief that income escaped assessment. M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 to Rs.279,48,42,181/- The issue of share premium was not a subject matter of verification by the A:O. and therefore no opinion has been formed on the issue in original assessment u/s. 143(3). At the same time, the assessee has also not filed complete details showing the nature of this share premium (justification for the excess share received in comparison to the intrinsic value of the share Hon'ble Bombay High Court in the case of E.C.G.C. v/s. Addl. C.I.T. Writ Petition No. 502 of 2012 dated 10-11 January, 2013, their Lordships have held that when the assessment is sought to be reopened within a period of four years, then what is required is believe' but not established fact of escapement of income. At this stage of issue of notice, the only question is where there is relevant material on which the reasonable person can form a requisite belief. When an assessment is sought to be reopened within a period of four years, the test to be applied is whether there is tangible material to do so. Something which is tangible need not be something which is new. Assessing Officer who has plainly ignored relevant material in arriving sessment acts contrary to the law. If as a consequence of this there is escapement of income, the jurisdictional requirement of section 147 is fulfilled on the confirmation of a reason to believe that income has escapement assessment. A reason to believe i relevant and not an established fact of escapement of income. Reliance is also placed on the judgment in the case of M/s. Usha International, 348 IT 485 (Delhi High Court). In view of the above facts and the judicial decision of the Hon’ble y High Court, I have reason to believe that income, in the garb of share application money/share premium received in this case has escaped assessments in terms of provisions of section 147 of the I.T. Necessary approval reopening the assessee’ case has been obtained from the Addl. CIT, Range-1(2), Mumbai before issue of notice u/s 148 of the I.T. Act. Issue notice u/s 148 of the Act of the assessee.” perusal of the above reasons recorded, it is evident that there was no new tangible material before the Assessing Officer to trigger for making belief that income escaped assessment. M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 10 The issue of share premium was not a subject matter of verification by the A:O. and therefore no opinion has been ue in original assessment u/s. 143(3). At the same time, the assessee has also not filed complete details showing the nature of this share premium (justification for the excess share received in comparison to the intrinsic value of the share Hon'ble Bombay High Court in the case of E.C.G.C. v/s. Addl. C.I.T. 11 January, 2013, their Lordships have held that when the assessment is sought to be reopened within a period of four years, then what is required is 'reason to believe' but not established fact of escapement of income. At this stage of issue of notice, the only question is where there is relevant material on which the reasonable person can form a requisite belief. When an opened within a period of four years, the test to be applied is whether there is tangible material to do so. Something which is tangible need not be something which is new. An Assessing Officer who has plainly ignored relevant material in arriving sessment acts contrary to the law. If as a consequence of this there is escapement of income, the jurisdictional requirement of section 147 is fulfilled on the confirmation of a reason to believe that income has escapement assessment. A reason to believe is what is relevant and not an established fact of escapement of income. Reliance is also placed on the judgment in the case of M/s. Usha International, In view of the above facts and the judicial decision of the Hon’ble y High Court, I have reason to believe that income, in the garb of share application money/share premium received in this case has escaped assessments in terms of provisions of section 147 of the I.T. s been obtained 1(2), Mumbai before issue of notice u/s 148 of the I.T. Act. Issue notice u/s 148 of the Act of the assessee.” it is evident that ore the Assessing Officer to trigger for making belief that income escaped assessment. The Assessing Officer has himself mentioned that assessment within four years from the end of the relevant assessment year, there should be s For reopening the assessment there has to be some trigger by way of a fresh material or information, which to relook into the completed where an Assessing Officer say that income had escaped assessment in case of trigger for reason to believe that income escaped assessment be in the form tangible material material external to assessment record or information from ot assessment year etc. way of a dream or rethinking on same material, which will be nature of review of the assessment rather than reassessment. In the case of CIT & Ars v. Rinku Chakraborthy 56 DTR 227 (Kar) and Kalyanji Mavji and Company v. CIT 102 ITR 287 (SC) it is held that M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 The Assessing Officer has himself mentioned that for reopening the assessment within four years from the end of the relevant assessment year, there should be some tangible material to do so. For reopening the assessment there has to be some trigger by way of a fresh material or information, which make the Assessing Officer look into the completed assessment. It cannot be a Assessing Officer suddenly wake up a fine morning escaped assessment in case of an trigger for reason to believe that income escaped assessment tangible material, which may be information or external to assessment record or information from ot etc. (i.e. internal source), but same cannot be by or rethinking on same material, which will be review of the assessment rather than reassessment. In the Ars v. Rinku Chakraborthy 56 DTR 227 (Kar) and Kalyanji Mavji and Company v. CIT 102 ITR 287 (SC) it is held that M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 11 for reopening the assessment within four years from the end of the relevant me tangible material to do so. For reopening the assessment there has to be some trigger by way make the Assessing Officer t cannot be a situation suddenly wake up a fine morning and an assessee. The trigger for reason to believe that income escaped assessment may which may be information or external to assessment record or information from other , but same cannot be by or rethinking on same material, which will be in the review of the assessment rather than reassessment. In the Ars v. Rinku Chakraborthy 56 DTR 227 (Kar) and Kalyanji Mavji and Company v. CIT 102 ITR 287 (SC) it is held that such information need not be from external sources only. The information obtained in assessment proceedings of subsequent assessment year can assessment (Raymond Woolen Mills Ltd. v. ITO & Others 236 ITR 34 (SC) and Revathy Cp Equipment Ltd. vs Deputy Commissioner of Income 8.2 Further, the Ld. counsel inquiries made by the Assessing Officer in original assessment proceeding on the issue of examination of share capital and security premium. The Assessing Officer had issued a notice under section 142(1) of the Act on 09/08/2011 asking details of increase in share capital and details of security A copy of said notice is detailed reply filed by the assessee giving detail of increase in share capital and security premium along with bank statement is available on pages 36 to 50 of the paperbook. The Assessing Officer M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 such information need not be from external sources only. The information obtained in assessment proceedings of subsequent also be utilized for reopening of the completed (Raymond Woolen Mills Ltd. v. ITO & Others 236 ITR 34 (SC) and Revathy Cp Equipment Ltd. vs Deputy Commissioner of Income-tax and Ors. 241 ITR 856 (Mad.) Ld. counsel of the assessee has referred to inquiries made by the Assessing Officer in original assessment proceeding on the issue of examination of share capital and security premium. The Assessing Officer had issued a notice under section on 09/08/2011 asking the assessee to furnish details of increase in share capital and details of security A copy of said notice is placed on paper book page No detailed reply filed by the assessee giving detail of increase in share premium along with bank statement is available 36 to 50 of the paperbook. The Assessing Officer M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 12 such information need not be from external sources only. The information obtained in assessment proceedings of subsequent also be utilized for reopening of the completed (Raymond Woolen Mills Ltd. v. ITO & Others 236 ITR 34 (SC) and Revathy Cp Equipment Ltd. vs Deputy tax and Ors. 241 ITR 856 (Mad.) ssee has referred to inquiries made by the Assessing Officer in original assessment proceeding on the issue of examination of share capital and security premium. The Assessing Officer had issued a notice under section the assessee to furnish details of increase in share capital and details of security premium. placed on paper book page Nos. 35. A detailed reply filed by the assessee giving detail of increase in share premium along with bank statement is available 36 to 50 of the paperbook. The Assessing Officer completed the original assessment on 26/09/2011 under section 143(3) of the Act accepting the returned income, and no addition was made in respect of i premium, which means that the Assessing Officer has satisfied himself and formed an opinion on the issue of share capital and share premium. Thereafter assessment by way of notice years from end of the relevant assessment year, that too without any new tangible material amount received by the assessee, which stands already verified during the course of t reopening in such circumstances, opinion”, which is not permitted in law. The Hon’ble Bombay High Court in the case of taxmann.com 77 (Bom) Credit Guarantee Corporation vs M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 completed the original assessment on 26/09/2011 under section accepting the returned income, and no addition was made in respect of increase in share capital or security premium, which means that the Assessing Officer has satisfied formed an opinion on the issue of share capital and Thereafter, the Assessing Officer has reopened the assessment by way of notice dated 28/03/2014 i.e. within four nd of the relevant assessment year, that too without any new tangible material, for the purpose of taxing the share premium amount received by the assessee, which stands already verified during the course of the original assessment proceeding. The in such circumstances, amounts to based on , which is not permitted in law. The Hon’ble Bombay High Court in the case of State Bank of India vs. ACIT (2018) 96 77 (Bom) after considering the judgment Credit Guarantee Corporation vs. Add CIT (supra) M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 13 completed the original assessment on 26/09/2011 under section accepting the returned income, and no addition ncrease in share capital or security premium, which means that the Assessing Officer has satisfied formed an opinion on the issue of share capital and the Assessing Officer has reopened the dated 28/03/2014 i.e. within four nd of the relevant assessment year, that too without any for the purpose of taxing the share premium amount received by the assessee, which stands already verified he original assessment proceeding. The amounts to based on “change of , which is not permitted in law. The Hon’ble Bombay High ACIT (2018) 96 judgment in Export CIT (supra) held that reopening within four years on change of opinion and without fresh material is bad in law. In the case of 1287 of 2016 dated 28/01/2019) Hon’ble Bombay High Court that there was no new material despite the case being reopened within four years from the end of the relevant assessment year. Further we know that Hon’ble Supr Kelvinator of India Ltd (2010) 320 ITR 561 change opinion is an inbuilt test check Assessing Officer. The relevant finding of the Hon’ble Supreme Court is reproduced as under: "Income escaping assessment. 147. If— [a] the Income- omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income disclose fully and truly all material facts ne that year, income chargeable to tax has escaped assessment for that year, or [b] notwithstanding that there has been no omission or failure as M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 reopening within four years on change of opinion and without fresh material is bad in law. In the case of PCIT Vs Motilal Todi (ITXA 1287 of 2016 dated 28/01/2019) relied upon by the assessee, the Hon’ble Bombay High Court quashed the reopening on the ground that there was no new material despite the case being reopened within four years from the end of the relevant assessment year. Further we know that Hon’ble Supreme Court in the case of Kelvinator of India Ltd (2010) 320 ITR 561 held the concept of change opinion is an inbuilt test check on abuse of power of the Assessing Officer. The relevant finding of the Hon’ble Supreme Court is reproduced as under: caping assessment. -tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or [b] notwithstanding that there has been no omission or failure as M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 14 reopening within four years on change of opinion and without fresh PCIT Vs Motilal Todi (ITXA relied upon by the assessee, the the reopening on the ground that there was no new material despite the case being reopened within four years from the end of the relevant assessment year. eme Court in the case of held the concept of abuse of power of the Assessing Officer. The relevant finding of the Hon’ble Supreme Court tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under tax Officer or to cessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or [b] notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year)." After enactment of Direct Tax Laws (Amendment) Act, 1987, i.e., prior to 1st April, 1989, Section 147 of the Act, reads as under: "147. Income escaping assessment. be recorded by him in writing, is of the opinion that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recom depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year)." After the Amending Act, 1989, S escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year)." M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 mentioned in clause (a) on the part of the assessee, the Income- n consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year)." After enactment of Direct Tax Laws (Amendment) Act, 1987, i.e., prior to 1st ction 147 of the Act, reads as under: "147. Income escaping assessment.-- If the Assessing Officer, for reasons to be recorded by him in writing, is of the opinion that any income chargeable to tax has escaped assessment for any assessment year, he bject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recomputed the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year)." After the Amending Act, 1989, Section 147 reads as under: "Income escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, r reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 15 - tax Officer n consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year)." After enactment of Direct Tax Laws (Amendment) Act, 1987, i.e., prior to 1st If the Assessing Officer, for reasons to be recorded by him in writing, is of the opinion that any income chargeable to tax has escaped assessment for any assessment year, he bject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the puted the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 ection 147 reads as under: "Income escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, r reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment On going through the changes, quoted above, made to Section 147 of the Act, we find that, opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with April, 1989], they are given a go viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re Therefore, post- 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 "mere change of opinion", which cannot be per se reason to re must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to re based on fulfillment of certain pre "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re would take place. One must treat t as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament re introduced the said expres ground that it would vest arbitrary powers in the Assessing Officer. We M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re-open the assessment. -1st April, 1989, power to re-open is much wider. 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 "mere change of opinion", which cannot be per se reason to re must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to re-assess. But reassessment has to be based on fulfillment 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" built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re provided there is "tangible material" to come to the conclusion that pement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament re introduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer. We M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 16 On going through the changes, quoted above, made to Section 147 of the prior to Direct Tax Laws (Amendment) Act, 1987, re- opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to effect from 1st by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has open the assessment. open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to t reassessment has to be condition and if the concept of "change of opinion" is removed, as contended on behalf of the opening the assessment, review he concept of "change of opinion" built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is "tangible material" to come to the conclusion that Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the only deleted the words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament re- sion and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer. We quote here in below the relevant portion of Circular No.549 dated 31st October, 1989, which reads as follows: "7.2 Amendment made by the Amen expression `reason to believe' in Section 147. representations were received against the omission of the words `reason to believe' from Section 147 and their substitution by the `opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reo mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same." 8.3 The Assessing Officer has referred the ratio of the Hon’ble Bombay High Court in the case of ECGC assessment is sought to be reopened within a period of then what is required is reason to believe and not an established fact of escapement of income. This ratio of Hon’ble High Court is undisputed and but i established fact of escapement of income tangible material which could trigger process of reason to believe. M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 quote here in below the relevant portion of Circular No.549 dated 31st October, 1989, which reads as follows: "7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression `reason to believe' in Section 147. --A number of representations were received against the omission of the words `reason to believe' from Section 147 and their substitution by the `opinion' of the ficer. It was pointed out that the meaning of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, opinion'. Other provisions of the new section 147, however, remain the same." (Emphasize supplied externally) The Assessing Officer has referred the ratio of the Hon’ble Bombay High Court in the case of ECGC (supra) that when an assessment is sought to be reopened within a period of what is required is reason to believe and not an established fact of escapement of income. This ratio of Hon’ble High Court is undisputed and but in the in the instant case issue is fact of escapement of income but the issue is absence of tangible material which could trigger process of reason to believe. M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 17 quote here in below the relevant portion of Circular No.549 dated 31st ding Act, 1989, to reintroduce the A number of representations were received against the omission of the words `reason to believe' from Section 147 and their substitution by the `opinion' of the ficer. It was pointed out that the meaning of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give pen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, opinion'. Other provisions of the new section 147, however, (Emphasize supplied externally) The Assessing Officer has referred the ratio of the Hon’ble (supra) that when an assessment is sought to be reopened within a period of four years, what is required is reason to believe and not an established fact of escapement of income. This ratio of Hon’ble High Court is n the in the instant case issue is not related to but the issue is absence of tangible material which could trigger process of reason to believe. The Hon’ble Bombay High Court in the case of Export Credit Guarantee Corporation of India Ltd (supra) held as under: “8. To hold that the Assessing Officer must what he has plainly overlooked or ignored in the assessment order would be to stretch the interpretation of Section 147 to a point where the provision would cease to have meaning and content. Such an exercise of excision by judicial interpretation is impermissible. When an assessment is sought to be reopened within a period of four years of the end of the relevant assessment year. the test to be applied is whether there is tangible material to do so. What is tangible is something illusory, hypothetical or a matter of conjecture. Something which is tangible need not be something which is new. An Assessing Officer who has plainly ignored relevant material in arriving at an assessment acts contrary to law. If there is an jurisdictional requirement of Section 147 would be fulfilled on the formation of a reason to believe that income has escaped assessment. The reopening of the assessment within a period of four years is in these circumstances within jurisdiction. 8.4 The Hon’ble High Court has justified reopening Assessing Officer, when he while arriving at an assessment order, but in the instan Assessing Officer had in share capital and share premium M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 The Hon’ble Bombay High Court in the case of Export Credit Guarantee Corporation of India Ltd (supra) held as under: 8. To hold that the Assessing Officer must be deemed to have accepted what he has plainly overlooked or ignored in the assessment order would be to stretch the interpretation of Section 147 to a point where the provision would cease to have meaning and content. Such an exercise of cial interpretation is impermissible. When an assessment is sought to be reopened within a period of four years of the end of the relevant assessment year. the test to be applied is whether there is tangible material to do so. What is tangible is something which is not illusory, hypothetical or a matter of conjecture. Something which is tangible need not be something which is new. An Assessing Officer who has plainly ignored relevant material in arriving at an assessment acts contrary to law. If there is an escapement of income in consequence, the jurisdictional requirement of Section 147 would be fulfilled on the formation of a reason to believe that income has escaped assessment. The reopening of the assessment within a period of four years is in these cumstances within jurisdiction.” Hon’ble High Court has justified reopening when he has plainly ignored the relevant material while arriving at an assessment order, but in the instan Assessing Officer had raised specific queries on the issue of share capital and share premium and after examining the reply of M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 18 The Hon’ble Bombay High Court in the case of Export Credit Guarantee Corporation of India Ltd (supra) held as under: be deemed to have accepted what he has plainly overlooked or ignored in the assessment order would be to stretch the interpretation of Section 147 to a point where the provision would cease to have meaning and content. Such an exercise of cial interpretation is impermissible. When an assessment is sought to be reopened within a period of four years of the end of the relevant assessment year. the test to be applied is whether there is which is not illusory, hypothetical or a matter of conjecture. Something which is tangible need not be something which is new. An Assessing Officer who has plainly ignored relevant material in arriving at an assessment acts escapement of income in consequence, the jurisdictional requirement of Section 147 would be fulfilled on the formation of a reason to believe that income has escaped assessment. The reopening of the assessment within a period of four years is in these Hon’ble High Court has justified reopening by the has plainly ignored the relevant material while arriving at an assessment order, but in the instant case the specific queries on the issue of increase examining the reply of the assessee, made no addition in original assessment proceedings, thus the ratio of the decision of the Hon’ble High Court cannot be applied ove 8.5 Thus, respectfully following the finding of the Hon’ble Supreme Court in the case of Kelvinator of India Ltd(supra), we hold that reopening based on the change of opinion without tangible material, is n the reassessment proceeding. The ground accordingly allowed. 8.6 As far as the appeal of the deletion of addition for share capital has been challenged quashed the reassessment proceeding and therefore adjudic the issue of addition on grounds raised by the M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 made no addition in original assessment proceedings, thus the ratio of the decision of the Hon’ble High Court over the facts of the instant case. respectfully following the finding of the Hon’ble Supreme Court in the case of Kelvinator of India Ltd(supra), we hold that reopening based on the change of opinion without is not permitted in law and accordingly the reassessment proceeding. The grounds of cross objection accordingly allowed. As far as the appeal of the Revenue is concerned, we find that deletion of addition for share capital & share premium on and argued by the parties, but we have already quashed the reassessment proceeding and therefore adjudic the issue of addition on merit is rendered academic and therefore grounds raised by the Revenue are dismissed as infructuous. M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 19 made no addition in original assessment proceedings, thus the ratio of the decision of the Hon’ble High Court (supra) respectfully following the finding of the Hon’ble Supreme Court in the case of Kelvinator of India Ltd(supra), we hold that reopening based on the change of opinion without there being any ot permitted in law and accordingly, we quash f cross objection are is concerned, we find that share premium on the merit , but we have already quashed the reassessment proceeding and therefore adjudication of merit is rendered academic and therefore infructuous. 9. In the result, the appeal of the cross objection of the assessee is allowed. Order pronounced in the open Court in Sd/- (AMIT SHUKLA JUDICIAL MEMBER Mumbai; Dated: 13/10/2022 Dragon Legal/Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 In the result, the appeal of the Revenue is dismissed whereas cross objection of the assessee is allowed. Order pronounced in the open Court in 13/10 Sd/ AMIT SHUKLA) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary) ITAT, Mumbai M/s M Pallonji Enterprises ITA No. 1907/M/2017 & CO No. 204/M/2018 20 dismissed whereas /10/2022. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, Secretary) ITAT, Mumbai