TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 474
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....e return of income for the Asst Year 2012-13 was filed by the assessee company on 27.9.2012 declaring total income of Rs Nil. The assessment was completed u/s 143(3) of the Act on 31.3.2015 determining the total income of Rs. 3,31,87,540/- after making addition of Rs. 2,79,00,000/- on account of share application money by applying the provisions of section 68 of the Act and addition of Rs. 91,65,000/- on account of deemed dividend u/s 2(22)(e) of the Act and further disallowance of Rs. 78,45,083/- u/s 14A of the Act. Later the ld CIT assumed jurisdiction u/s 263 of the Act and issued show cause notice dated 9.2.2017 and supplementary show cause notice dated 28.2.2017, alleging that the assessment order passed in the assessee's case u/s 143(3) of the Act by the ld AO for the Asst Year was prima facie, erroneous and prejudicial to the interests of the revenue on the following grounds:- a) That the assessee having issued 1457000 equity shares of Rs. 10 each at a premium of Rs. 15 per share and thereafter raising share capital of Rs. 1,45,74,000/- and share premium of Rs. 2,18,61,000/- cannot be considered as genuine since the assessee was not involved in any genuine business activit....
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....appeal before us on the following grounds:- 1. That, on the facts and in the circumstances of the case, the ld. Principal CIT erred in law in assuming jurisdiction u/s. 263 of the Act on mere possibilities and guess work in order to impose his own views on the A.O. on the same set of facts & evidences considered by the A.O., by holding that the order passed by the A.O. u/s. 143(3) of the Act on 31.03.2015 was prima facie erroneous and prejudicial to the interests of the revenue. 2. That, the Ld. Pr. CIT erred in assuming jurisdiction u/s.263 on his alleged assumption that the A.O. has not discussed in the assessment order the genuineness of issuance of 14,57,400 shares of face value of Rs. 10/- (Rs.1,45,74,000) at a premium of Rs. 15/- per share (Rs.2,18,61,000) when as per record vide Order Sheet entry dated 05.03.2016 the A.O. had in-depth enquired/verified the details of source of the entire share capital received from the group companies with supporting documents, leaving no scope in law to interfere with u/s.263 of the Act. 3. That, The Ld. Pr. CIT ought to have considered that addition of Rs. 2.79 crores made u/s.68 in the impugned assessment order has rather caused pre....
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....n-trade' and hence the notional loss of Rs. 7,30,608/- cannot be allowed to be set off without considering that the assessee has taken closing stock of share scrips at lower of cost price or net realizable value/market value in accordance with AS-2. 9. That, the Ld. Principal CIT grossly erred on facts and in law in invoking jurisdiction u/s. 263 of the Act and referring the case back to the A.O. for fresh examination of addition u/s. 68 of the Act. 10. That, the Ld. Pr. CIT wrongly invoked provisions of sec. 263 against the settled law that when the A.O. forms an opinion and frames assessment on the basis of his enquiry and verification of the documents requisitioned and available on record, even if inadequate, the same does not mean no enquiry at all, inasmuch as inadequate enquiry by itself does not give occasion to invoke provisions of sec. 263 merely because the Ld. Pr. CIT has different opinion in the matter. 11. That, the Ld. Pr. CIT without bringing on record any conclusive material/evidence to prove that the view taken by the A.O. was unsustainable in law has termed the assessment order erroneous and prejudicial to the interests of revenue when it is settled law ....
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....eceived during the preceding assessment year. The details of amounts received during the year together with their respective sources as explained before the ld AO as well as before the ld CIT in section 263 proceedings are as under:- Regard Fin-Cap Pvt Ltd - Rs. 62,45,000/- Kamayani Commotrade Pvt Ltd - Rs. 24,20,000/- Baba Basuki Distributors Pvt Ltd - Rs. 50,00,000/- ------------------------ Rs. 136,65,000/- Regard Fin-Cap Pvt Ltd - Rs. 62,45,000/- a) Refund of Loan from Crescent Technology Pvt Ltd - Rs. 15,90,954/- b) Sale of investments to Neelima Kansal Dhruv Kansal and DSE Financial Services Ltd - Rs. 39,50,380/- c) Dividend received from Simplex Infrastructures Ltd - Rs. 2,11,000/- d) Refund of margin money from BSE/NSE - Rs. 1,96,942/- Kamayani Commotrade Pvt Ltd - Rs. 24,20,000/- Refund of Share application money from Ambar Vinimay Pvt Ltd - Rs. 64,20,000/- Baba Basuki Distributors Pvt Ltd - Rs. 50,00,000/- Refund of Share application money from Startrade Vyapaar Ltd - Rs 50,00,000/- 5.1. The above receipts in the respective companies accounts are duly reflected in the bank statements of respective companies which are a....
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....cluding premium of Rs. 15 per share. This goes to prove the genuineness of the transactions beyond doubt. The identity of the share applicants have been proved beyond doubt by those share applicants being regularly assessed to income tax . Similarly the creditworthiness of the share applicants also were proved beyond doubt in the instant case in as much as even the source of source was proved by the assessee. The entire details called for by the ld AO in notice u/s 133(6) of the Act were duly filed by the share applicants before the ld AO. The ld AO even sought to verify the veracity of their claims by issuing summons u/s 131 of the Act to all the share applicants in the assessment proceedings. All the directors of the share applicant companies appeared before the ld AO and deposed before him confirming the entire fact of transactions and investment made in the assessee company together with sources and purpose for such investment. The ld AR also argued that the entire share applicant companies are group companies and they are all disclosed promoter companies of Simplex Infrastructure Ltd, having common directors. 5.3. We also find from the order sheet copies enclosed in the paper....
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....um of Rs. 2.79 crores towards share capital (added in excess by the ld AO) could only be treated as an act which is prejudicial to the interests of the assessee and not the revenue. Hence the condition precedent for invoking revisionary jurisdiction u/s 263 of the Act fails squarely on that count. In other words, even assuming the addition towards share capital is to be made u/s 68 of the Act , it could be made only to the extent of Rs. 1.3665 crores being the amount received during the year, whereas the ld AO had added a sum of Rs. 2.79 crores. Hence where is the prejudice caused to the revenue here ? Moreover, since adequate enquiries were made by the ld AO in the course of assessment proceedings and relevant documents were duly filed by the assessee as stated supra, it could be safely concluded that the issue has been thoroughly examined and enquired by the ld AO. Hence it cannot be stated as 'lack of enquiry' on the part of the ld AO. 5.5. We also find that the decision rendered by the Hon'ble Calcutta High Court in the case of Rajmandir Estates Pvt Ltd vs PCIT reported in 70 taxmann.com 124 (Cal) is not applicable to this case and is factually distinguishable. In the said cas....
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.... upon hereinabove, we hold that the order passed by the ld AO by adding a sum of Rs. 2.79 crores towards share capital cannot be termed as one which is prejudicial to the interests of the revenue warranting revisionary jurisdiction u/s 263 of the Act in the facts and circumstances of the case. 6. With regard to the issue of alleged notional loss representing changes in inventories of shares and securities, the ld AR stated as under:- The closing stock of the assessee on 31.3.2012 was shown in Note 13 of the Profit and Loss Account for the relevant financial year under the head 'changes in inventories of finished goods, WIP and stock in trade' at Rs. 1,15,07,191/-. A tabular representation of the valuation of closing stock is reproduced below:- 6.1. The assessee has taken closing stock of the aforementioned share scrips at lower of cost or net realizable value / market value in accordance with the Accounting Standard 2 (AS 2) issued by The Institute of Chartered Accountants of India (in short ICAI) and also notified by the CBDT. In the supplementary show cause notice dated 28.2.2017 , the ld CIT, having observed that the assessee has valued its closing stock for the relevant Asst....
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....differential figure between the opening stock and closing stock of shares. There there was no error in the accounts or claim of loss which the ld AO could have disallowed. We find that the ld CIT wrongly presumed the claim of differential figure in the valuation of closing stock of shares as MTM loss arising on account of revaluation of forex derivatives. We find that the assessee had filed the details of closing stock of shares as tabulated above before the ld AO which is enclosed in page 231 of the paper book filed before us. The ld AO on examining the same rightly came to the conclusion that no disallowance / addition is warranted thereon. Accordingly there was no occasion for him to discuss about the same in the assessment order. Merely because there was no mention regarding this issue in the assessment order, it cannot be presumed that the ld AO had not made any enquiry in this regard in the assessment proceedings. We hold that the ld AO cannot be expected to discuss each and every item of his verification in the assessment order and he could be expected to address only those issues on which he is not in agreement with , in his assessment order. We hold that the ld AO had made....