TaxTMI 
TaxTMI 
2021 (2) TMI 64
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....e company at Rs. 7,17,04,500/- inter alia making additions u/s. 68 of the Act and disallowance u/s. 14A of the Act. In the assessment order, the Assessing Officer held as follows:- "In the light of the facts of the case and aforesaid exposition of the legal position, with regard to the identity and creditworthiness of the subscriber companies and the genuineness of the transaction, it can be said that assessee has introduced its own unaccounted fund in the form of share application money to legalize its own black money. Accordingly, the credit of Rs. 7,15,00,000/- in the books of the assessee is considered as income of the assessee for the instant previous year and charged to income-tax. Considering the aforesaid facts and discussion, share application money of Rs. 7,15,00,000/- received by the assessee during the year is added to the total income of the assessee as unaccounted cash credit in the books of the assessee as per the provisions of section 68 of the I.T. Act." 2.1. The ld. Pr. CIT, issued a show cause notice to the assessee u/s. 263 of the Act on 04/08/2016 proposing to revise of the original assessment order dt. 04/03/2015 u/s. 263 of the Act. There....
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....mpany which was never known for its line of business and also they invested at huge premium without verifying the financial position. (iii) The A.O further failed to examine the rationale behind raising the said share premium and also did not verify the method adopted by assessee for determining such abnormally huge premium specially keeping in view that prima facie there was no material in the balance sheet of the assessee warranting/justifying such huge premium. (iv) The A.O failed to collect the relevant evidences in order to reach a logical conclusion regarding the genuineness of controlling interest. (v) The A.O. failed to examine all the bank accounts for the entire period in the course of verification to find out the money trail of the share capital. (vi) The A.O. failed to adequately trace out the money trail to ascertain the genuineness of source of fund invested by share holders in the assessee company. (vii) On the whole the impugned order dated 26-12-2016 passed u/s. 263/143(3) of the Income Tax Act, 1961 prima facie suffers from lack of independent and adequate enquiry on the aforesaid issues." 2.2.1. The assessee filed a....
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....umstances of the instant case, I am of the considered opinion that the assessment order passed by the A.O. is erroneous in so far as it is prejudicial to the interest of revenue in accordance with the Explanation 2(c) below section 263 (1) of the Act on the ground of lack of enquiry. Accordingly, the assessment made by the Assessing officer is set aside on the issues as outlined in para 2 above. The A.O. is directed to provide reasonable opportunity to the assessee company to produce documents & evidences which it may choose to rely upon for substantiating its own claim. Thereafter a fresh assessment order may be passed in accordance with the relevant provisions of law." 3. Aggrieved, the assessee is in appeal before us on the following grounds:- 1. For that the order dated 14.03.2019 passed u/s. 263 by the Ld. Principal CIT is barred by the law of limitation and liable to be quashed. 2. (a) For that on the facts and in the circumstances of the case, the order passed by the Ld. Principal CIT u/s. 263 of the Act is bad in law and is liable to be quashed. (b) For that on the facts and in the circumstances of the case the Ld. Principal CIT was not justifi....
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....ssessee company and after getting cogent replies, accepted the same. c) That the Assessing Officer had issued notice u/s. 131 of the Act to all the shareholders and that the shareholders had appeared before him on 20/12/2016 to 22/12/2016. That the Assessing Officer recorded the deposition of each of these shareholders and that this fact is evident from the order sheet entries and the deposition on record. d) That the Assessing Officer had taken pro-active steps in making independent enquiries, only after which he was satisfied that all the necessary ingredients of Section 68 of the Act, are existing in these transactions. e) That the ld. Pr. CIT has not asked the Assessing Officer to examine the Directors on the issue of genuineness of controlling interest as the same was not relevant. He submitted that the ld. Pr. CIT in the first round has directed the Assessing Officer to examine all the bank accounts of the investors and also to examine the source of share applicant which investigation was done by the Assessing Officer and that there was not direction to trace out the money trails so as to ascertain the source of funds. 4.1. He argued that the Ass....
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.... to justify the receipt of share capital and share premium to the satisfaction of the Assessing Officer. He submitted that the order of the Assessing Officer is a non-speaking order and that a perusal of the same demonstrates that the assessment order is erroneous insofar as it is prejudicial to the interest of the revenue. On a specific query from the Bench, though not leaving his ground, the ld. D/R could not distinguish the orders of this Bench of the Tribunal, on facts, in identical circumstances, in the case of Amritrashi Infra Private Ltd. vs. Principal Commissioner of Income-tax (supra) and M/s. Omkar Infracon Private vs ITO (supra). He prayed that the order of the ld. Pr. CIT passed u/s. 263 of the Act to be upheld. 5.1. In reply, the ld. Counsel for the assessee, submitted that the judgment of the Hon'ble Supreme Court in the case of NRA Iron & Steel (P.) Ltd. (supra), is not applicable as, in that case, the shareholders were not traceable and whereas in the case of hand each of the shareholder companies' representatives appeared before the Assessing Officer in response to summons and that the Assessing Officer recorded statements on oath from them and that they....
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....e First Ld. Pr. CIT has recorded a finding after perusal of the first assessment records/folder that during the first round of scrutiny proceeding, the assessee company produced the following documents before the first AO in the original assessment to satisfy the AO in respect of identity, creditworthiness and genuineness of share subscribers:- (i) audited financial statements; (ii) copy of Form filed with the ROC; (iii) copy of PAN Card of the assessee company; (iv) details and copy of share applicants; (v) bank statement reflecting the transaction; (vi) records relating to investors in order to establish identity, genuineness and creditworthiness of the share subscribers. 47. We note that the First Ld. Pr. CIT in his first revisional order, found that AO in the first assessment proceedings though has been provided with the aforesaid documents has not examined these documents, which according to him, should have been carried out by the AO. The First Ld. Pr. CIT at para (4) of his first revisional order has clearly made a finding that " From the above discussion it is evident that the assessment proceedings in the case ....
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.... carry out proper examination of the books of accounts and bank account of the investors; iii) AO to examine the source of the share applicants; iv) The AO to examine the identity of the investor and its genuineness; Sl. No . Name of company CIN PAN ITR filed for AY 2012-13 1. M/s. K. R. Overseas Pvt. Ltd. U51109WB1994PTC061965 AACCK0101B yes 2. M/s. Kakrania Trading Pvt. Ltd. U70101WB1994PTC062137 AABCK151611 yes 3. M/s. AmbalaTrafin Pvt. Ltd. U67120WB1995PTCO74397 AACCA1184G yes 4. M/s. Subhiksha Pvt. Ltd. U52190WB2011PTC157073 AAPCS2068E yes 5. M/s. Shivarshi Construction Pvt. Ltd. U45400WB2011PTC170957 AAQCS7848M yes 6. M/s. Shivashiv Pvt. Ltd. U74999WB2012PTC 173749 AARCS0094C yes 7. M/s. Flowtop Agency Pvt. Ltd. U52190WB2012PTC 173352 AABCF9036D yes 8. M/s. SukhSagar Residency Pvt. Ltd. U45400WB2011PTC170958 AARCS1553N yes 9. M/s. Kamaldhan Developers Pvt. Ltd. U45400WB2011PTC170944 AAECK6810D yes 10 . M/s. LabhdhanImpex Pvt. Ltd. U51909WB2011PTC171524....
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.... knowledge that in this computer/digital era, the AO on a click of the mouse, could have easily verified the identity of the share applicant which is available in the website of Ministry of Corporate Affairs and the ITR Acknowledgments filed by them, will enable the AO to cross verify and collect details from the AO of the respective share applicants and independently from the Revenue's departmental data base. We note that all the share subscribing parties filed all the documents called for by the AO [PB-2] and were also examined by the AO along with audited accounts from which these details show their identity. 51. Thus, we note that the AO after verification as aforesaid, has not drawn any adverse opinion or doubted the identity of the share applicants which view of AO is a possible view in the light of the documents referred to and we also by applying the presumption in section 114 of Indian Evidence Act 1872, we presume that the quasi-judicial act of the second AO have been regularly performed. Coming to the contention of Ld. CIT, DR, that order sheet maintained by the Second AO does not reveal that AO had issued notice u/s. 133(6) of the Act to the share subscribe....
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....the AO and the Ld. Pr. CIT and we note that their source of investment and net worth as per balance sheet as on 31.03.2012 as well as the sum invested by them in the assessee is discernible as under: Name Source of investment Capital & Reserves Sum invested in assessee's business M/s. K. R. Overseas Pvt. Ltd. Page 8 Paper Book-2 Rs. 66,77,47,921 (page 22 PB-2) Rs. 1,30,000/- M/s. Kakrania Trading Pvt. Ltd. Page 45Paper Book-2 Rs. 66,52,71,914 (page 62 PB-2) Rs. 1,39,00,000/- M/s. AmbalaTrafinpvt. Ltd. Page 88Paper Book-2 Rs. 624,711,003 (page 101 PB- 2) Rs. 4,40,00,000/- M/s. Subhiksha Pvt. Ltd. Page 115Paper Book- 2 Rs. 222,397,317 (page 128 PB-2) Rs. 45,00,000/- M/s. Shivarshi Construction Pvt. Ltd. Page 146Paper Book-2 Rs. 53,89,95,046 (page 153 PB-2) Rs. 4,66,00,000/- M/s. Shivashiv Pvt. Ltd. Page 170Paper Book-2 Rs. 14,29,56,146 (page 178 PB-2) Rs. 6,55,00,000/- M/s. Flowtop Agency Pvt. Ltd. Page 193Paper Book-2 Rs. 15,38,94,946 (page 200 PB-2) Rs. 4,49,00,000/- M/s. Sukh Sagar Residency Pvt. Ltd. Page 212 Paper Book-2 Rs. ....
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....cond AO's factual view on the identity, creditworthiness and genuinity of the share transaction. In such a scenario, the second AO's view based on the documents referred to by him is a plausible view and in consonance with judicial precedents (supra) which we would like to discuss/examine each share subscribers totaling thirteen (13) infra;- (i) On perusal of the paper book-2, it reveals that the documents are placed at page 12 to 37 of share applicant M/s. K.R. Overseas Pvt. Limited which is a Private Limited Company, and which has Permanent Account No. AACCK0101B and CIN U51109WB1994PTC061965 and its Net-worth as on 31.03.2012 (in total)- share capital & reserve is to the tune of Rs. 66,77,47,921/- (PB page 22) and the investment made in the assessee-company including the share premium comes to Rs. 1,30,00,000/-. The payment has been made through banking channel and deposit amount of Rs. 1,05,00,000/- took place as on 01.03.2012 by NEFT and Rs. 25,00,000/- as on 06.03.2012. The Board Resolution for investment of the Company is filed and the share application form, ITR acknowledgment, Bank statement, explanation of source of funds as well as financial statements h....
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....2,47,11,003- (PB-page 101) and investment made in the assessee company is to the tune of Rs. 4,40,00,000/- and this share applicant has made the transaction through banking channel on 01.03.2012 Rs. 25 lakhs; and on 03.03.2012 Rs. 40 lakhs through NEFT; and by cheque on Rs. 3,75,00,000/- on 27.3.2012. There is board resolution for investment in assessee's company and Share Application Form, Bank statement, ITR acknowledgement, explanation of source of fund as well as financial statement available in the PB-page 79 to 111 in the PB-II. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. This company has furnished the details of source of Funds and has duly filed financial statements. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Further, it is noted that the share applicants had furnished the source of investment made in the assessee-company after getting the notice u....
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.... Funds and has duly filed financial statements. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement and thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Thus the assessee has discharged the onus to prove the identity, creditworthiness and genuineness of the transactions. Further, it is noted that the share applicants had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. (vi) We note from a perusal of the paper book pages-2, 160 to 184 the details of share applicant M/s. Shivashiv Dealcom Pvt. Ltd. It is a Private Limited Company which has a PAN AARCS0094C and its CIN number is U74999WB2012PTC 173749 and the net worth of this company as on 31.3.2012 Rs. 14,29,56,146/- (PB-page 178) and investment made in the assessee company is to the tune of Rs. 6,55,00,000/- and this share applicant has made th....
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.... and genuineness of the transactions. Further, it is noted that the share applicants had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. (viii) We note from a perusal of the paper book pages-2, 207 to 226 the details of share applicant M/s. Sukh Sagar Residency Pvt. Ltd. It is a Private Limited Company which has a PAN AARCS1553N and its CIN number is U45400WB2011PTC170958 and the net worth of this company as on 31.3.2012 Rs. 56,18,93,960/- (P.B-2 pages-220) and investment made in the assessee company is to the tune of Rs. 2,31,00,000/- and this share applicant has made the transaction through banking channel on 31.3.2012 Rs. 2,31,00,000/- through NEFT. There is board resolution for investment in assessee's company and Share Application Form, Bank statement, ITR acknowledgement, explanation of source of fund as well as financial statement available in the PB-page 208-226 in the PB. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. This company has furnished the details of source of Funds and has duly filed financial statements and thus we note that t....
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.... CIN number is U51909WB2011PTC171524 and the net worth of this company as on 31.3.2012 Rs. 56,18,94,080/- (P.B-2, page 277) and investment made in the assessee company is to the tune of Rs. 3,80,00,000/- and this share applicant has made the transaction through banking channel on 31.03.2012 a sum of Rs. 3,80,00,000/- through NEFT. There is board resolution for investment in assessee's company and Share Application Form, Bank statement, ITR acknowledgement, explanation of source of fund as well as financial statement available in the PB-page 163-283 in the PB. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. This company has furnished the details of source of Funds and has duly filed financial statements. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Thus the assessee has discharged the onus to prove the identity, creditworthiness and genuineness of the transactions. Further, it is noted that the share applicants had furnished the source of investment made in the assessee-company after getting the notice under sect....
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.... discharged the onus to prove the identity, creditworthiness and genuineness of the transactions. Further, it is noted that the share applicants had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. (xiii) We note from a perusal of the paper book-2 pages 327 to 352 the details of share applicant M/s. Sristi Sales Pvt. Ltd. It is a Private Limited Company which has a PAN AAICS8900L and its CIN number is U51109WB2005PTC 102121 and the net worth of this company as on 31.3.2012 Rs. 1,12,25,612/- and investment made in the assessee company is to the tune of Rs. 50 lakhs and this share applicant has made the transaction through banking channel on 28.02.2012 a sum of Rs. 50 lakhs through Cheque. There is Share Application, Bank statement, ITR acknowledgement, financial statement available in the PB-2, page 328 to 352. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Thus the assessee has discharged t....
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....ssee from the respective share subscribers. Since the aforesaid exercise was carried out by the second AO in the reassessment proceedings and the documents referred to above are in the assessment folder, the Second Ld. Pr. CIT erred in holding the reassessment order of the AO in respect of share capital and premium collected by the assessee as erroneous as well as prejudicial to the interest of the revenue. In the light of the aforesaid discussions and on perusal of the documents, we are of the view that AO's view to accept the identity, creditworthiness and genuineness of the share capital and premium collected from the share subscribers was a plausible view and at any rate can be termed as an unsustainable view on law or facts. 55. Further, we also take note that while he proposed to interfere u/s. 263 of the Act, he had opined that there was no detailed or independent enquiry but finally concluded that there was lack of enquiry. So, the Ld. Second Pr. CIT accepts that there was enquiry made by the second AO, however, he concludes that there was lack of enquiry. So when there was an enquiry conducted by AO then the AO has discharged the duty of an investigator. And w....
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....ducted enquiry is incorrect and is flowing from suspicion only. And as discussed, the allegation/fault pointed out by the Second Ld. Pr. CIT that the Second AO failed to collect total facts also cannot be accepted for the simple reason that Ld. Pr. CIT has not spelt out in the impugned order what he meant by total facts or in the alternative when the assessee has discharged its onus, as required by the law in force in this AY 2012-13, then the Ld. Pr. CIT ought to have called for which ever additional documents/materials or issued summons or issued notices and collected those facts which according to Second Ld. Pr. CIT, the AO omitted to collect and then demonstrated that those actions/documents which he collected in that process gave result to a different finding of fact which will turn upside down the claim of the assessee and thus able to show that the actions/omission of AO in conducting the investigation was erroneous, which unfortunately is not the case before us. And equally bad is the bald allegation/fault that second AO has not collected total facts cannot be accepted being vague and based on conjectures and surmises and so meritless. Since the assessee company has dischar....
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....t done, so the second Ld. Pr. CIT cannot be permitted to again ask the AO to start the investigation in the way he thinks it proper on the very same subject on which merger has taken place by virtue of the order of First Ld. Pr. CIT. And if this practice is allowed, then there will be no end to the assessment proceedings meaning no finality to assessment proceedings and that is exactly why the Parliament in its wisdom has brought in safe-guards, restrictions & conditions precedent to be satisfied strictly before assumption of revisional jurisdiction. Be that as it may be, as discussed above, we find that the Second Ld. Pr. CIT without satisfying the condition precedent u/s. 263 of the Act has invoked the revisional jurisdiction (second time), so all his actions are ab initio void." 8. On similar facts, when the revisionary jurisdiction u/s. 263 of the Act, was exercised second time by the ld. Pr. CIT, this Bench of the Tribunal in the case M/s. Omkar Infracon Private (supra) held as under:- "13. Further, we note that even though the re-assessment order dated 5.11.2016 was set aside again by the impugned order of Pr. CIT, we note that one of the faults pointed out by the....
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....sment order, the AO had accepted the genuinity of the transaction, so nothing turns around in respect of this fault raised by the Ld. Pr. CIT. (c) The next fault found by the Ld. Pr. CIT is that the AO failed to examine the rationale behind the premium. From the aforesaid reasons (supra) (b), the AO has accepted the transaction which on the factual background is a probable view. (d) The other fault noted by Ld. Pr. CIT is that the AO failed to collect relevant evidences in order to reach a logical conclusion. We do not countenance this fault pointed out by ld. Pr. CIT for the simple reason that it is first of all a vague allegation without spelling out what relevant evidences were not collected by the AO. We note that assessee had filed documents before AO, copies of which are produced before us, which is running to three (3) volumes. [Volume I-201 pages, volume II 231 pages, volume III-362 pages;] and the AO after personally summoning the individual share holders and directors of corporate shareholders and after recording their statements, and after verifying the documents produced before him, has accepted the share capital/premium infused into the asses....
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.... it is noted that independent and adequate enquiry was made and further it is not pointed out by Ld. Pr. CIT as to what further enquiry was needed or how the enquiry made by AO is wrong, without which in the facts of the case as discussed supra, the ld. Pr CIT cannot term the order of AO as erroneous. 15. Thus, we find that during the reassessment proceeding pursuant to the first revisional order under section 263 of the Act dated 10.06.2016 and pursuant to the specific directions of the Ld. Pr. CIT, the AO in the second round had summoned the directors of Group companies as well as that of assessee and examined the books and the bank statement and other documents furnished by them to discharge the onus on them about the identity, creditworthiness and genuineness of the transactions and the AO has recorded their statement during reassessment proceedings wherein he has questioned and elicited answers about the identity, creditworthiness and genuineness of the transaction as well as the source of the investment etc. So, from the aforesaid actions carried out by the AO during the reassessment proceeding cannot be found fault with for lack of enquiry and thus, we note that AO ....
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.... the light of the aforesaid discussions and on perusal of the documents, we are of the view that AO's view to accept the identity, creditworthiness and genuineness of the share capital and premium collected from the share subscribers as a plausible view and at any rate can be termed as an unsustainable view on law or facts. 25. Thus, in the light of the judicial precedents of the Hon'ble Apex/High court/Tribunal, we are of the view that the action/view taken by the AO after enquiry made by him as per the direction of the Ld. Pr. CIT in the set aside proceedings dated 10.06.2016 pursuant to which the AO has reassessed the assessee after inquiry and accepted the share capital and premium collected by assessee is a plausible view and cannot be held to be unsustainable view in facts or law, therefore, the impugned action of the Ld. Pr. CIT to interfere with the reassessment order of the AO, is without jurisdiction and liable to be quashed. 26. Therefore, in the light of the discussion on fact as well as on law, we are of the considered opinion that AO's action (reassessment) pursuant to the first revisional order of Ld. Pr. CIT dated 10.06.2016, to accept ....
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....urn/Acknowledgment 2) Copy of annual audited accounts 3) Balance sheet and profit & loss a/c statement 4) Copy of Bank Statement These documents prove the genuineness of the transactions. A perusal of these documents show that the Assessing Officer has followed the directions of the ld. Pr. CIT, issued in his first order dt. 09/09/2016 passed u/s. 263 of the Act and has taken a plausible view. It is not a case of lack of enquiry, nor a case of inadequate enquiry. A decision was taken after examination of all evidences and documents. Such a view cannot be termed as erroneous insofar as it is prejudicial to the interest of the revenue. 10. The Hon'ble Andhra Pradesh High Court in the case of Spectra Shares and Scrips Pvt. Ltd. V CIT (AP) 354 ITR 35 had considered a number of judgments on this issue of exercise of jurisdiction u/s. 263 of the Act by the Principal Commissioner of Income Tax and culled out various principles laid down in different judgments by the Courts as below: "24. In Malabar Industrial Co. Ltd. (Supra), the Supreme Court held that a bare reading of Sec. 263 makes it clear that the prerequisite for the exercise of jurisd....
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....e, Sec. 80HHC(3) as it then stood was interpreted by the Assessing Officer but the Revenue contended that in view of the 2005 Amendment which is clarificatory and retrospective in nature, the view of the Assessing Officer was unsustainable in law and the Commissioner was correct in invoking Sec. 263. But the Supreme Court rejected the said contention and held that when the Commissioner passed his order disagreeing with the view of the Assessing Officer, there were two views on the word "profits" in that section; that the said section was amended eleven times; that different views existed on the day when the Commissioner passed his order; that the mechanics of the section had become so complicated over the years that two views were inherently possible; and therefore, the subsequent amendment in 2005 even though retrospective will not attract the provision of Sec. 263. 26. In Vikas Polymers (Supra), the Delhi High Court held that the power of suo motu revision exercisable by the Commissioner under the provisions of Sec. 263 is supervisory in nature; that an "erroneous judgment" means one which is not in accordance with law; that if an Income Tax Officer acting in accordance ....
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....Commissioner simply because, according to him, the order should have been written more elaborately; there must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than what was just, has been imposed. In that case, the Delhi High Court held that the Commissioner in the exercise of revisional power could not have objected to the finding of the Assessing Officer that expenditure on tools and dies by the assessee, a manufacturer of Car parts, is revenue expenditure where the said claim was allowed by the latter on being satisfied with the explanation of the assessee and where the same accounting practice followed by the assessee for number of years with the approval of the Income Tax Authorities. It held that the Assessing Officer had called for explanation on the very item from the assessee and the assessee had furnished its explanation. Merely because the Assessing Officer in his order did not make an elaborate discussion in that regard, his order cannot be termed as erroneous. The opinion of the Assessing Officer is o....
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....M.S. Raju (Supra), this Court has held that the power of the Commissioner under Sec. 263 (1) is not limited only to the material which was available before the Assessing Officer and, in order to protect the interests of the Revenue, the Commissioner is entitled to examine any other records which are available at the time of examination by him and to take into consideration even those events which arose subsequent to the order of assessment. 30. In Rampyari Devi Saraogi(Supra), the Commissioner in exercise of revisional powers cancelled assessee's assessment for the years 1952-1953 to 1960-61 because he found that the income tax officer was not justified in accepting the initial capital, the gift received and sale of jewellery, the income from business etc., without any enquiry or evidence whatsoever. He directed the income tax officer to do fresh assessment after making proper enquiry and investigation in regard to the jurisdiction. The assessee complained before the Supreme Court that no fair or reasonable opportunity was given to her. The Supreme Court held that there was ample material to show that the income tax officer made the assessments in undue hurry; that he ....
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....rted by adequate reasons for doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision. e) The Commissioner cannot initiate proceedings with a view to start fishing and roving inquiries in matters or orders which are already concluded; that the department cannot be permitted to begin fresh litigation because of new views they entertain on facts or new circumstance; that if this is permitted, litigation would have no end except when legal ingenuity is exhausted f) Whether there was application of mind before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Sec. 263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made b....
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..... If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing Officer to investigate the facts required to be examined and verified to compute the taxable income. If the Assessing Officer fails to conduct the said investigation, he commits an error and the word "erroneous" includes failure to make the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not been made and not because a wrong order has been passed on merits. Thus, in cases of wrong opinion or finding on merits, the CIT has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under s. 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. In cases where there....
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....t the order is erroneous and is unsustainable in law. It may be noticed that the material which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT. Nothing bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous. COMMISSIONER OF INCOME TAX vs. J. L. MORRISON (INDIA) LTD. 366 ITR 593 As regard the submission on behalf of the Revenue that power under Section 263 of the Act can be exercised even in a case where the issue is debatable, it was held that the case of CIT vs. M.M. Khambhatwala was not applicable. The observation that the Commissioner can exercise power under Section 263 of the Act even in a case were the issue is debatable was a mere passing remark which is again contrary to the view taken by the Apex Court in the case of Malabar Industrial Company Ltd. & Max India Ltd. If the Assessing Officer has taken a possible view, it cannot be said that the view taken by him is erroneous nor the order of the Ass....