2019 (5) TMI 1546 - AT - Income Tax

Assessing Officer's Order Upheld, Revisionary Jurisdiction Set Aside

M/s. Sarda Energy & Minerals Limited Versus The Pr. Commissioner of Income Tax (Central), Bhopal (MP)

The Tribunal held that the Assessing Officer's order was not erroneous or prejudicial to the Revenue's interests. The Principal Commissioner of Income ... Revision u/s 263 - CIT was of the opinion that the order passed by the AO without conducting any enquiry and just taking documents of the assessee and therefore, the order of the Assessing Officer is erroneous so as to prejudicial to the interest of the Revenue - HELD THAT:- On the same issue i.e. with regard to M/s. L.B. India Holding Mauritius-II Limited and its transactions, specific documentary evidences and details have been filed by the assessee before AO along with detailed written submissions. This was done by the assessee since the AO had specifically enquired from the assessee regarding transactions from the company. This is evident from the various documents placed before us and annexed in the paper book. AO had conducted enquiry and after various rounds of hearing and deliberation with the assessee and scrutinizing the documents filed before him as well as submissions of the assessee, the Assessing Officer had passed an order. Such assessment order is neither erroneous nor prejudicial to the interest of the Revenue. The facts demonstrate that necessary enquiry have been conducted by the Assessing Officer and relevant documents regarding the issue was received by the Assessing Officer still the Ld. CIT may be of the opinion that it is erroneous but in no way it can be prejudicial to the interest of the Revenue since there is always a difference between any enquiry conducted or no enquiry conducted. Therefore, section 263 gets triggered only when the order is erroneous and also prejudicial to the interest of the Revenue. On the basis of binding principles as laid down by the Hon'ble Supreme Court of India in CIT Tax Vs. Max India Ltd [2007 (11) TMI 12 - SUPREME COURT] and MALABAR INDUSTRIAL CO. LTD. VERSUS CIT [2000 (2) TMI 10 - SUPREME COURT] , we set aside the order of the Ld. Pr. CIT passed u/s.263 and allow the appeal of the assessee. Issues Involved1. Assumption of revisionary jurisdiction by the Principal Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961.2. Validity of the Assessing Officer's (AO) assessment order under Section 147 read with Section 143(3) of the Income Tax Act, 1961.3. Adequacy of the AO's enquiry into the share application money received from L.B. India Holding Mauritius-II Limited.4. Whether the AO's order was erroneous and prejudicial to the interests of the Revenue.Detailed AnalysisAssumption of Revisionary Jurisdiction by the Principal Commissioner of Income TaxThe primary issue in this appeal is the assumption of revisionary jurisdiction by the Principal Commissioner of Income Tax (Pr. CIT) under Section 263 of the Income Tax Act, 1961. The Pr. CIT passed an order under Section 263, indicating that the AO's order was erroneous and prejudicial to the interests of the Revenue. The Pr. CIT observed that the AO accepted the assessee's documentary evidence without making any enquiries or verifications regarding the share application money received from L.B. India Holding Mauritius-II Limited.Validity of the AO's Assessment OrderThe AO reopened the assessee's case for the assessment year 2008-09 and passed an order under Section 147 read with Section 143(3) on 29.03.2016. The AO accepted the assessee's documentary evidence and did not make any additions regarding the issue under consideration. The Pr. CIT believed that the AO's acceptance of the assessee's evidence without further enquiry rendered the order erroneous and prejudicial to the interests of the Revenue.Adequacy of the AO's EnquiryThe assessee argued that the AO conducted a detailed enquiry into the share application money received from L.B. India Holding Mauritius-II Limited. The AO issued a notice under Section 142(1) along with a questionnaire specifically seeking details about the said company. The assessee provided comprehensive documentary evidence, including agreements, certificates, and approvals from various authorities, to support the genuineness of the transactions. The AO scrutinized these documents and passed the assessment order after multiple rounds of hearings and deliberations.Erroneous and Prejudicial to the Interests of the RevenueThe assessee contended that the AO's order was neither erroneous nor prejudicial to the interests of the Revenue. The AO conducted a thorough enquiry and accepted the documentary evidence provided by the assessee. The assessee cited the Supreme Court's rulings in Commissioner of Income Tax Vs. Max India Ltd. and Malabar Industrial Co. Ltd. Vs. Commissioner of Income Tax, which state that an order is not erroneous and prejudicial to the Revenue if the AO adopts one of the permissible courses in law or if two views are possible, and the AO takes one view with which the Commissioner does not agree.The Tribunal observed that the AO conducted an enquiry and scrutinized the documents and submissions provided by the assessee. The Tribunal held that the AO's order was not erroneous or prejudicial to the interests of the Revenue. The Tribunal set aside the Pr. CIT's order under Section 263 and allowed the appeal of the assessee.ConclusionThe Tribunal concluded that the AO conducted a proper enquiry into the share application money received from L.B. India Holding Mauritius-II Limited and that the AO's order was neither erroneous nor prejudicial to the interests of the Revenue. The Tribunal set aside the Pr. CIT's order under Section 263 and allowed the appeal of the assessee. The appeal was pronounced on 16th May 2019.