Tribunal quashes section 263 proceedings, reinstates reassessment order. Assessee appeal allowed.

The Tribunal quashed the proceedings under section 263, reinstating the reassessment order dated 30.11.2018. The appeal of the assessee was allowed as the Tribunal found that the Assessing Officer had properly conducted inquiries on the issues raised, and the Principal Commissioner's invocation of section 263 was deemed legally incorrect and untenable.

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Issues Involved:
1. Delay in filing the appeal.
2. Jurisdiction and legality of the order passed under section 263 of the Income Tax Act, 1961.
3. Alleged failure of the Assessing Officer (AO) to make proper enquiries regarding accommodation entry of Rs.60,00,000/-.
4. Alleged involvement in S.K. Jain Hawala Scam.
5. Non-enquiry into share application money of Rs.2,85,67,000/- received during FY 2010-11.

Detailed Analysis:

1. Delay in Filing the Appeal:
The appeal was filed with a delay of 92 days due to the COVID-19 pandemic. The Tribunal acknowledged the pandemic situation and referred to the Hon’ble Supreme Court's decision in Suo Moto Writ Petition (Civil) No. 3 of 2020, which excluded the limitation period from 15.03.2020 to 14.03.2021. The delay was condoned, and the case was heard on merits.

2. Jurisdiction and Legality of the Order Passed Under Section 263:
The assessee challenged the jurisdiction of the Principal Commissioner of Income Tax (Pr. CIT) under section 263, arguing that the original assessment order was neither erroneous nor prejudicial to the interest of the revenue. The Tribunal examined whether the AO conducted due enquiries and whether the Pr. CIT had valid grounds for invoking section 263.

3. Alleged Failure to Make Proper Enquiries Regarding Accommodation Entry of Rs.60,00,000/-:
The Tribunal found that the AO had conducted detailed enquiries regarding the alleged accommodation entry from M/s. Pushkar Trading and Holding Pvt. Ltd. The AO examined bank statements and other documents, concluding that the transaction was legitimate. The Tribunal held that the AO's order could not be termed erroneous or prejudicial to the interest of the revenue on this ground.

4. Alleged Involvement in S.K. Jain Hawala Scam:
The AO issued a notice during reassessment proceedings regarding the alleged transaction of Rs.10,00,000/- in the S.K. Jain Hawala Scam. The assessee denied any such transaction and provided bank statements. The AO, after examining the submissions, made no additions. The Tribunal held that since the AO conducted a detailed enquiry and accepted one permissible view, the Pr. CIT could not invoke section 263 on this issue.

5. Non-Enquiry into Share Application Money of Rs.2,85,67,000/- Received During FY 2010-11:
The Tribunal observed that the Pr. CIT incorrectly stated the figure of share application money. The actual increase in share capital was Rs.17,60,000/-, and the share premium received was Rs.4,22,40,000/-. The Tribunal noted that these details were available in the financial statements and had been examined by the AO during the original assessment. The Tribunal held that the Pr. CIT did not examine the issue on merits before holding the AO's order as erroneous and prejudicial to the revenue.

Conclusion:
The Tribunal quashed the proceedings under section 263, holding that the AO had conducted necessary enquiries on the issues raised, and the Pr. CIT's invocation of section 263 was based on incorrect facts and was legally untenable. The reassessment order dated 30.11.2018 was restored, and the appeal of the assessee was allowed.

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