The Suminter Organic and Fair Trade Cotton Ginning Mill Pvt. Ltd. v. Dy. CIT (Bombay High Court)

S. 147: Reassessment-After the expiry of four years-Valuation of equity shares-Share premium-Income from other sources-No failure to disclose material facts-Notice of reassessment and order disposing objection was quashed. [S. 56(2)(viib), 148, Art. 226]
The reason for reopening of the assessment was the petitioner had issued premium of Rs. 17 per share, which was not valued correctly in terms of Rule 11UA, read with section 56(2)(viib) of the Act and the correct valuation of equity shares as per the rule worked out at Rs. 6.48 per share. It was thus stated that an amount of Rs.1,68,30,000/-. Received as premium was required to be added as income from other sources. The objection of the assessee was rejected by the Assessing Officer. On writ allowing the petition the Court held that in the original assessment proceedings, valuation report obtained by the Chartered Accountant was filed. The Chartered Accountant has followed Discounted Cash Flow Method. The specific queries were raised in the course of assessment proceedings and material was supplied and thereafter the order was passed. The Court held that there was no failure to disclose fully and truly the material facts, nor there was any tangible material with the A.O. which would have otherwise justified the reopening of the assessment. Accordingly notice of reassessment and order disposing the objection was quashed and set aside. (WP No. 2179 of 2022 dt. 10-2-2023)(AY. 2015-16)