The main legal point established in the judgment is the requirement for the belief to be based on reasonable grounds and the need for the assessee to disclose fully and truly all material facts necessary for assessment.

JUDGMENT :

K.R. SHRIRAM, J.

1. Petitioner is impugning the notice dated 19th March 2019 issued by respondent no. 3 under Section 148 of the Income Tax Act, 1961 (the Act).

2. Petitioner is engaged in the business of real estate and was regularly assessed to tax. For A.Y.2012-2013, petitioner had filed its return of income on 21st September 2012 declaring an income of Rs.1,05,318/- and had shown the said income under the head “Profit and Gains from Business and Profession”. The return of income was initially processed under Section 143(1) of the Act. Subsequently, petitioner’s case was selected for scrutiny under Computer Aided Scrutiny Selection (CASS) norms and statutory notices under Section 142(1) and 143(2) of the Act were issued to petitioner.

3. During the course of the assessment proceedings, petitioner was, by a letter dated 24th March 2015, called upon to explain huge share application money and share premium received by petitioner. Petitioner by its letters dated 14th November 2014, 27th February 2015 and 27th March 2015 replied and also provided all documents. Petitioner also provided the valuation report and the explanation for the share premium charged as also the details of the two subscribers, viz., Shubhshree Hirise Pvt Ltd (SHPL) and Subhdrishti Complex Pvt Ltd. (SCPL). Respondent no. 3 proceeded to pass the assessment order dated 30th March 2015 under Section 143(3) of the Act and added as income under Section 68 of the Act, a sum of Rs.3,00,00,000/- that petitioner had received as share application money. The face value of the share was Rs.10 and was subscribed by SHPL and SCPL at the premium of Rs.9 each. Respondent No. 3 added under Section 68 of the Act, not only the face value of the share, i.e., Rs.10/- but also the premium paid for the shares as income of petitioner. Against return of income of Rs.1,05,318/-, respondent no. 3, in his order under Section 143(3), assessed petitioner’s taxable income to Rs.3,01,05,318/-.

4. Aggrieved by the order of respondent no. 3, petitioner preferred an appeal before the Commissioner of Income Tax (Appeals)[CIT(A)]. CIT(A) after hearing the parties and considering the documents and evidence by an order dated 27th January 2017, deleted the said sum of Rs.3,00,00,000/- added by respondent no. 3. This order of CIT(A) was impugned by respondent no. 3 by filing an appeal before the Income Tax Appellate Tribunal (ITAT). By an order dated 8th February 2019, the ITAT upheld the order of CIT(A). Respondent No. 3 has challenged the order of ITAT by filing an appeal in this court, which appeal is still pending.

5. Later, petitioner received a notice dated 19th March 2019 from respondent no. 3 under Section 148 of the Act in which it is stated that respondent no. 3 had reasons to believe that income chargeable to tax for A.Y.-2012-2013 has escaped assessment. As required, petitioner provided all information and material called for as per the notice. Petitioner was provided a copy of the reasons to believe recorded for initiating reassessment proceedings under Section 147 of the Act. As per the reasons recorded by respondent no. 3, information had been received from the Deputy Commissioner of Income Tax, Central Circle-3(1),Kolkata(DC.CC-K), vide letter DCIT/CC-3(1)/PKA/Kol/2018-19/5096, dated 1st March 2019. Respondent no. 3 further mentioned that DC.CC-K had enclosed letter No. F.No. 35/2012-13/3606-14, dated 6th February 2013 from DIT (Inv.), Kolkata, that as per the information a search and seizure operation was conducted at the business and residential premises of one Mr. Praveen Agarwal and his group companies on 13th September 2012, that in his statement recorded in the course of search, Mr. Agarwal had accepted in his statement that he had registered a large number paper companies for providing various accommodation entries, that SCPL and SHPL were two such paper companies f