2020 (4) TMI 845

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....PCIT served a notice which reads as under: GOVERNMENT OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, OFFICE OF THE PR. COMMISSIONER OF INCOME TAX, HSIIDC BUILDING, VANIJYA NIKUNJ, UDYOG VIHAR, PHASE PHASE-V, GURGAON F No. PCIT/GGN/TECH/263/78/2018-19/5391 Dated 29.11.2018 To, The Principal Officer, M/s. Sunray Cotspin Pvt. Ltd., Plot No.116, Udyog Vihar, Phase Phase-IV, Sir/ Madam Subject: Notice u/s 263 in case of M/s. Sunray Cotspin Pvt. Ltd. (PAN-AAPCS 2728 D) for A.Y. 2014-15 - Reg - The assessment in this case was completed u/s 147/143(3) of the I.T. Act vide order dated 18.08.2016 by the then Assessing Officer declaring a returned income of Rs. 12,350/- 2. The assessment records of the above noted assesse for the A.Y. 2014-15 were examined. On examination of the assessment records, following discrepancies are noticed. On the basis of discrepancies, it is observed that the assessment framed by the AO u/s 143(3) is erroneous and pre-judicial to the interest of revenue due to following reasons: 3. During the year under consideration, company had issued 1833300/- shares ....

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....hich is placed at pages 182 to 233 of the paper book. 5. The ld. PCIT was not convinced with the detailed submissions made by the assessee and set aside the assessment order by observing as under: "In view of the above facts and circumstances of the case, I am of the confirmed view that the A C), by not pursued the inquiries to their logical end has made the order erroneous and prejudicial to the interest of revenue. Hence the same deserves to be revised u/s 263 of I.T. Act, 1961. Therefore, the said order passed by the Assessing Officer is set aside on this particular issue only. The assessing officer is directed to pass fresh assessment order after making thorough and detailed inquiries-on this particular issue only. The assessing officer should pass a speaking order after providing adequate opportunity to the assessee." 6. Before us, the ld. counsel for the assessee pointed out that the PCIT has grossly erred in not understanding the facts in its true perspective. It is the say of the ld. counsel for the assessee that during the F.Y. 2012-13, relevant to Assessment Year 2013-14, share application money was Rs. 5,46,80,000/- and share capital was Rs. 1 lakh and the....

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.... As per our report of even date For and on behalf of Board of Directos For Bhudladia & Company     Chartered Accountants     Firm Regn. No. 002511N Pankaj Sharda Director Mahesh Sharda Director CA RAMESH KUMAR     Partner     Membership No.503354     Place : Sirsa     Date: 3rd September 2014     10. It can be seen from the above that the share application money of Rs. 5,46,80,000/- was taken in Assessment Year 2013-14 and not in the year under consideration. Reserve and surplus account is as under: NOTE To the financial statements for the year ended 31st March 2014 (Contd.) (All Amounts in Rs., Unless otherwise stated) 4) RESERVES AND SURPLUS   As at 31^st March, 2012 Additions Deductions As at 31^st March, 2013 Additions Deductions As at 31^st March, 2014 Capital Reserve 0 0 0 0 0 0 0 Capital 0 0 0 0 0 0 0 Redemption               Reserve         ....

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....e at my office at Gurgaon on 08-06-2016 at 11.00AM, specified overleaf or below*. Yours faithfully, (P. B. Verma) Income Tax Officer, Ward-4(3), Gurgaon (Assessing Officer) 4. Copy of Audit Report with annexure. 5. Details of Share premium 6. Give the details of Bank A/c maintained by you & your family members with all Bank statements. 7. Computation of income. 12. It would not be out of place to make it clear that the return was selected under scrutiny through CASS and the main reason was to examine the share premium. Being a limited scrutiny case, we fail to persuade ourselves to believe that the Assessing Officer did not make any enquiry on the issue on the basis of which return was selected for scrutiny assessment. It is a settled proposition of law that in a return selected for limited scrutiny, the Assessing Officer cannot go beyond the issue and from the notice u/s 142(1) of the Act exhibited elsewhere, it can be seen that the Assessing Officer made specific query in relation to details of share premium. 13. The assessee had furnished complete details in respect of share application money received and the same is placed a....

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....1 220000   26.08.2011 348000   09.12.2011 327000   30.12.2013 480000 4155000 MAHESH SHARDA DATE AMOUNT   Opening Balance 110000   09.08.2011 2780000   11.08.2011 220000   27.08.2011 348000   10.12.2011 327000   19.07.2012 100000   30.12.2013 270000 4155000 PRIYANKA SHARDA DATE AMOUNT   09.08.2011 2780000   10.08.2011 220000   27.08.2011 348000   09.12.2011 327000   30.12.2013 480000 4155000 ANUJ SHARDA DATE AMOUNT   08.08.2011 2780000   10.08.2011 220000   26.08.2011 348000   09.12.2011 327000   30.12.2013 480000 4155000 PANKAJ KUMAR SHARDA DATE AMOUNT   08.08.2011 2780000   11.08.2011 220000   .08.2011 348000   09.12.2011 327000   16.12.2013 320000   0.12.2013 160000 4155000 SHWETA GOYAL DATE AMOUNT   06.08.2011 1085000   10.08.2011 7....

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....amounts and whether they were genuine corporate entities." 17. As mentioned elsewhere, since the case was for a limited scrutiny in respect of share premium received during the year, it cannot be examined in piecemeal manner but has to be examined in respect of share capital as a whole and since reason for selection for scrutiny confined to share premium received during the year and did not extend to the share capital, therefore, the assumption that creditworthiness of subscribers has to be examined vis a vis share premium received is misconceived/misplaced. In our understanding of the law, share premium during the year ought to be confined to examination of application of section 56(2)(vii)(b) of the Act and have nothing to do with the application of section 68 of the Act. Moreover, u/s 68 of the Act, the opening balances cannot be added. 18. In our understanding of the facts, there was a specific query from the Assessing Officer to which a specific reply alongwith supporting documents were submitted by the assessee during the course of scrutiny assessment proceedings itself. 19. Considering these facts in totality, it can be safely concluded that the Assessing Officer di....