Reassessment u/s. 147

This query is : Resolved

Dishank Shah (Querist)
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25 July 2014 A private limited company has issued 3,00,000 equity shares having face value of Rs. 10 at a premium of Rs. 29.70 per share in during F.Y. 2008-09 relevant to A.Y. 2009-10. The company was incorporated on 16.01.2007. No regular assessment has been completed for A.Y. 2009-10.

Can the assessing officer reopen the case?
Please provide your valuable suggestion with some case law..

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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25 July 2014 see the time limit is 4 years (6 years in case if income escaping assessment exceeds rs 1,00,000) from the end of relevant ay.

so still max time of 6 years is not elapsed and yet they can open by issuing notice u/s 148.

Dishank Shah

Dishank Shah (Querist)
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28 July 2014 Can they reopen the case on the grounds of issue of shares at premium?

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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20 July 2025 Here’s a detailed answer on the possibility of reassessment under Section 147 for the case of issuing shares at a premium:

Facts Recap:
Private Limited Company issued 3,00,000 equity shares of Rs. 10 face value at Rs. 29.70 premium during FY 2008-09 (AY 2009-10).
Company incorporated on 16.01.2007.
No regular assessment done yet for AY 2009-10.
Question: Can the AO reopen the case (issue notice under Section 148)?
Legal Provisions and Time Limits:
Section 147 empowers the Assessing Officer (AO) to reopen an assessment if there is reason to believe that income chargeable to tax has escaped assessment.
The time limit to issue notice under Section 148:
4 years from the end of relevant AY, or
6 years if income escaped exceeds Rs. 1,00,000.
Since AY 2009-10 ended in March 2010, as of 2014 (when query was raised), the 6-year period is not expired.
So, AO can legally issue notice under Section 148 if income has escaped assessment.
Can AO Reopen on Grounds of Issue of Shares at Premium?
Issue of shares at premium can attract scrutiny on whether the premium is genuine or is a device to inflate capital without proper consideration.
If the AO has reason to believe that the premium amount should be treated as income (e.g., undisclosed income), AO can reopen the case.
The premium received is generally credited to Securities Premium Account, which is a capital receipt and not taxable income.
However, if the AO suspects the transaction to be sham or not genuine, it can be treated as income escaping assessment.
Relevant Case Laws:
CIT vs. Kelvinator of India Ltd. [1981] 128 ITR 294 (SC)
Issue of shares at premium is a capital receipt.
Not income unless premium is on account of services or other income yielding consideration.
CIT vs. Wallace Pharmaceuticals Ltd. (2007) 291 ITR 1 (SC)
Genuine premium is not income.
However, AO can reopen if there is reason to believe premium is not genuine.
PCIT vs. Essel Propack Ltd. (ITAT Mumbai, 2019)
Reopening justified if AO has material to believe that share premium was inflated and income escaped assessment.
Conclusion:
Since no regular assessment was done, AO can issue notice under Section 148 within 6 years.
AO can reopen the case if there is reason to believe that the premium amount received is not genuine and income has escaped assessment.
Mere issuance of shares at premium is not sufficient ground, AO must have tangible material or new information to justify reopening.

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