TaxTMI 
TaxTMI 
2021 (3) TMI 217
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....4 declaring total loss at Rs. 96,30,335/- on 26.09.2013. The same was processed u/s. 143(1) of the I.T. Act, 61 on the returned income. Subsequently, the case was selected for scrutiny through CASS. Accordingly, statutory notices u/s. 143(2) dated 02.09.2014 and u/s. 142(1) dated 09.07.2015 of the I.T. Act, 61 were issued and served upon the Assessee Company asking to produce the relevant supporting documentary evidences required to produce in respect of the return of income. Pursuant to the notices Mr. Rajesh Agarwal, A/R appeared and submitted documents from time to time. Finally, the case was completed u/s. 143(3) of the I.T. Act, 61 on 04.02.2016 determining assessed income at Rs. 5,04,94,158/- with the following addition." 3. Thereafter the Assessing Officer noted each para of the order of the Ld. Pr. CIT passed u/s. 263 of the Act on 23/08/2016 called for information and documents. Statement was also recorded on oath from the share applicant company. Thereafter, the Assessing Officer completed the assessment by holding as follows:- "After careful consideration of all the documentary evidences submitted on behalf of the Assessee Company as well as by the share hold....
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....onded to summons u/s. 131 with the evidences as asked for. Moreover, addresses have been verified with the PAN database and found correct. Statement of all the directors of share holding companies have been recorded and duly placed on the records. The case is heard and discussed." 4. The Ld. Pr. CIT, issued a show cause notice u/s. 263 of the Act dt. 03/02/2020, proposing to revise the assessment order passed u/s. 263/143(3] of the Act dt. 22/12/2017. After considering the detailed reply given by the assessee on 12/02/2020, the Ld. Pr. CIT at para 9 held as follows:- "9. I have carefully considered and perused the material available on record and submission made during this proceedings and found that the issues pointed out in the show-cause needs verification as merely accepting submission without calling for logically relevant material/evidences in order to have an overview of totality of facts and circumstances during the course of assessment proceedings, the A.O. failed to examine the above referred issue, rendering the assessment order erroneous on the ground of lack of enquiry. After having considered the position of law and facts and circumstances of the instant c....
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....ginal assessment order passed u/s. 143(3) of the Act. The Ld. Pr. CIT, set aside this assessment u/s. 263 of the Act on 28/03/2016, giving certain directions to the Assessing Officer. He argued that and the Assessing Officer in a fresh assessment proceedings undertaken in pursuance of the order passed u/s. 263 of the Act had meticulously followed the directions given by the Ld. Pr. CIT and had completed a fresh assessment order u/s. 143(3)/263 of the Act. He submitted that the Director of the shareholder company appeared in response to summons u/s. 131 of the Act before the Assessing Officer and filed all necessary details and evidences in support of the genuineness of the transactions and to prove the identity and creditworthiness of the share applicant companies. He took this Bench through each of the directions of the Ld. Pr. CIT and the action of the Assessing Officer in the second assessment proceedings and argued that these directions were meticulously followed and the Assessing Officer had no jurisdiction to go beyond these directions. For the proposition that the Assessing Officer cannot go beyond the directions of the Pr. CIT, he relied on the judgment of the Hon'ble D....
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....ed with premium and shares issued on face value without premium. He pointed out that the assessment order was passed hurriedly and the assessment proceedings were not completed in a casual manner and without following the procedures of quasi judicial proceedings. He took this Bench through the order of the Ld. Pr. CIT u/s. 263 of the Act and supported the same. He relied on the case-law cited by the Ld. Pr. CIT in his order. He submitted that the Ld. Pr. CIT can invoke his powers u/s. 263 of the Act as the Assessing Officer occupies the position of an investigator and an adjudicator in discharge of his functions and when the Assessing Officer does not properly discharge his functions, it would be a case of the assessment order being erroneous to the extent it is prejudicial to the interest of the revenue. He prayed that the order of the Ld. Pr. CIT be upheld. 10. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 11. The Assessing Officer in his order records that the assessee company has offered income u/s. 115JB ....
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....the transaction being sham and the activity being a case of laundering of unaccounted income etc., is against facts. In fact, the Assessing Officer has in detail described the enquiries made by him and his findings on such enquiries. The Ld. Pr. CIT further comments as follows:- "The interests of the revenue are not to be equate to rupees or paisa merely." Then, he goes on to state that, the Commissioner may think that the order is prejudicial to the revenue administration. These observation are not in accordance with law as can be seen from various judgments which are dismissed by us. 12. This Bench of the Tribunal under identical circumstances, in the case of Amritrashi Infra Pvt. Ltd. vs. PCIT in ITA No. 838/Kol/2019, dt. 12/08/2020, held as follows:- ""46. In the light of the aforecited judicial precedents, let us examine the case in hand and find out whether pursuant to the specific direction of First Ld. Pr. CIT, the second AO has discharged his role as an investigator in respect of share capital and premium collected by the assessee or whether the AO failed to enquire on this issue and whether his re-assessment/second assessment order is a plausible view or....
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.... 143(3) of the Act dated 26-03-2015 was against the principle of natural justice and, therefore, he found it fit to order denovo assessment and gave specific direction in respect of share capital & premium collected by assessee. 48. Thereafter, the ld. Pr. CIT was pleased to direct "...............assessment order passed on 26.03.2015 is set aside de novo with the direction to the AO to carry out proper examination of books of account and bank statement of the assessee as well as the investor. The AO is also directed to examine the source of share application, entity of investor and its genuineness". (emphasis given by us). He also directed that the assessment proceedings to be initiated at the earliest and to be completed without waiting for time bar limit. With the aforesaid specific direction, the First Ld. Pr. CIT has set aside the first original assessment order dated 26-03-2015. 49. So we note that the second AO was specifically directed by the First Ld. Pr. CIT to carry out the followings actions in addition to de-novo assessment which means the second AO is free to assess the income of assessee afresh, however, he has to do the following specific actions a....
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....ails of increase in share capital, (vii) Form 2, (viii) Form 5, (ix) bank statements evidencing payment through banking transaction, which fact the AO has acknowledged in the reassessment order. [And here we should keep in mind that the First Ld. Pr. CITs finding of fact after perusal of original assessment records that assessee in the first round before AO has produced PAN, ROC details, audited financial statements, details and copy of share applicants, bank statements reflecting the transaction, records relating to investors to establish identity, creditworthiness & genuineness. And the finding of First Ld. Pr. CIT that assessee had discharged its onus by furnishing/documents before the AOJ Secondly, after examining these documents, we also find that the second AO issued notices u/s. 133(6) of the Act to all the thirteen (13) share applicants and pursuant to the notice, all the shareholders have filed their respective (i) PAN details, (ii) CIN detail, (iii) Audited Annual Report for FY 2011-12 (AY 2012-13), (iv) ITR acknowledgment for AY 2012-13 which the AO acknowledges that he verified the same and thus we note that the identity of the investors were duly furnished by the asses....
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..... Pr. CIT and it is not the fault for which the Ld. Pr. CIT exercised his power u/s. 263 of the Act. Thus, we note that second AO issued sec. 133(6) notice and collected documents running more than 352 pages. Moreover, the First Ld. Pr. CIT while setting aside the first AO's order has returned a finding that assessee in the first round itself has filed the relevant documents to prove the identity, creditworthiness and genuineness of the share capital and that assessee had discharged its onus by filing the same. So we find that during the second round, the AO issued notices to share-holders u/s. 133(6) and after perusing their replies and supporting documents and thereafter having verified their veracity, the second AO was satisfied with the explanation of assessee in respect to the nature and source of share capital which view of second AO cannot be faulted. And we also note that all the share-holders are regular income tax assessee's. Therefore in the light of the aforesaid documents discussed their identity cannot be disbelieved and the AO's satisfaction in respect of identity of the shareholders is a possible view and cannot be termed as unsustainable in law or facts....
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.... before the second AO the source from which they subscribed to shares of assessee (though not required as per law in force for A.Y. 2012-13), bank statement, audited balance sheet etc except M/s. Maharaja and M/s. Sristi Sales. Thus the assessee had discharged the onus on it about the creditworthiness of the share-holders. So we note that the source of the investments has been clearly brought to the notice of the second AO during the assessment/reassessment proceedings. Further, the bank statements of all the shareholders as well as that of assessee were filed before the AO, which revealed that the share capital and premium have been subscribed by them through banking channel (NEFT or cheque) which goes on to show that the assessee has discharged the onus in respect of genuineness of the transaction. Based on the documents and materials called for by the AO who accepted the same after verification is an act of enquiry. And we note that revenue has not brought on record any material to challenge the veracity of the documents referred to above. Moreover, the second Ld. Pr. CIT in his impugned order has not brought any material to rebut the presumption of second AO to justify his inte....
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....; and on 7.3.2012 and by cheque on 12.3.2012 Rs. 25 lakh each. There is board resolution for investment in assessee's company and Share Application Form, Bank statement, ITR acknowledgement, and explanation of source of fund as well as financial statement available in the PB-page 39 to 77. 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 the assessee had duly discharged its onus to prove the identity of the share applicant by adducing PAN as well as income-tax returns. The financial statement shows that the share applicants had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Further, it is noted that the share applicant had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. (iii) We note from a perusal of the paper book-2 pages 78 to 111, the details of share applicant M/s. Ambala Trafin Pvt. Ltd. It is a Private Limited Company which has a PAN AACCA1184G and its CIN number is ....
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....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 under section 133(6) of the Act. (v) We note from a perusal of the paper book-2, pages 138 to 159 the details of share applicant M/s. Shivarshi Construction Pvt. Ltd. It is a Private Limited Company which has a PAN AAQCS7848M and its CIN number is U45400WB2011PTC170957 and the net worth of this company as on 31.3.2012 Rs. 53,89,95,046/- (PB-page 153) and investment made in the assessee company is to the tune of Rs. 4,66,00,000/- and this share applicant has made the transaction through banking channel on 29.03.2012 Rs. 4,66,00,000/- through Cheque. 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 139 to 159 in the PB. This share applicant regularly filed Income Tax Return (ITR) and it ha....
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.... of the Act. (vii) We note from a perusal of the paper book-2, pages 185 to 206 the details of share applicant M/s. Flowtop Agency Pvt. Ltd. It is a Private Limited Company which has a PAN AABCF9036D and its CIN number is U52190WB2012PTC173352 and the net worth of this company as on 31.3.2012 Rs. 15,38,94,946/- (PB-page 200) and investment made in the assessee company is to the tune of Rs. 4,49,00,000/- and this share applicant has made the transaction through banking channel on 30.03.2012 Rs. 4,49,00,000/- through Cheque.. 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 186 to 206 the PB. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statements 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 ....
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....solution 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 228 to 261 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. 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 section 133(6) of the Act. (x) We note from a perusal of the paper book-2, pages 262 to 283 the details of share applicant M/s. Labhdhan Impex Pv....
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....ppened 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. (xii) We note from a perusal of the paper book-2, pages 304 to 326 the details of share applicant M/s. Maharaja Merchants Pvt. Ltd. It is a Private Limited Company which has a PAN AAECM224E and its CIN number is U51109WB2005PTC102343 and the net worth of this company as on 31.3.2012 Rs. 1,54,58,399/- (page 313 of P.B.-2) 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 Form, Bank statement, ITR acknowledgement, financial statement available in the PB-page 304 to 326 in the PB. 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 an....
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....ection given by the First Ld. Pr. CIT dated 23.08.2016 while setting aside the original assessment order passed by the AO dated 26.03.2016. In other words, in the impugned order the second Ld. Pr. CIT has not found fault with the action of the second AO in giving effect to the specific directions given by him while passing the first revisional order on 23.08.2016. Thus, we note that when the second AO while framing the reassessment order pursuant to the specific direction of the First Ld. Pr. CITs order dated 23.08.2016 (first revisional order) has complied with the specific directions of the First Ld. Pr. CIT and based on the inquiry conducted and after perusal of the documents running more than 352 pages which reveals the identity, creditworthiness and genuineness of the share capital and premium collected by the assessee from the share subscribers, the satisfaction of AO as envisaged in sec. 68 of the Act is a plausible view and the fact that the share subscribers responded to sec. 133(6) notice and produced all documents along with the audited financial statements and other documents referred supra, the assessee had discharged the onus upon it about the identity creditworthines....
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....lf had conducted an enquiry or at least conducted a preliminary enquiry and was able to bring some evidence/material on record to upset the AO's satisfaction in respect of identity, creditworthiness or genuineness of the share subscribers and thus recorded a finding of fact that the decision of AO's enquiry was faulted or wrong and in that process tried to show that it has resulted in a view which is "unsustainable in law" which would have justified his action of passing the impugned order u/s. 263 of the Act, which unfortunately is not the case. Since the AO's view on the facts collected and discussed is definitely a possible view, so in the factual background discussed in detail, we are of the considered opinion that Ld. second Pr. CIT ought not to have interfered with the AO's reassessment order which in any case can be classified as 'unsustainable in law' since it is in line with plethora of judicial decisions of the subject. 56. To sum up, we find from the above said facts that the Second AO has conducted enquiry as directed by the First Ld. Pr. CIT on the specific subject matter i.e. share capital and premium collected by the assessee-company.....
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.... the full facts necessary to decide the issue of share capital & premium. So we note that the Second AO, the assessing authority who is a quasi-judicial office has discharged his dual role as an investigator as well as an adjudicator. Looking from another angle of doctrine of merger canvassed before us, we note from the facts of this case that the second Ld. Pr. CIT - 4 by passing the second revisional order dated 14.03.2019 has substituted the First Pr. CITs order passed u/s. 263 of the Act dated 23.08.2016 with his own order which he cannot do since the second assessment order/re-assessment of the Second AO dated 07.12.2016 was pursuant to the first revisional order of the First Ld. Pr. CIT and on the very same subject matter on which specific directions/instructions were given by the First Ld. Pr. CIT, which direction since having been complied by the AO, brings into operation the doctrine of merger the subject matter i.e. share capital & premium collected by assessee company. Resultantly the second Ld. Pr. CIT, again cannot rake-up the same subject matter without the second Ld. Pr. CIT in the second revisional order spells out where the error happened to second AO as an investi....