TaxTMI 
TaxTMI 
2021 (3) TMI 1057
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....ee from M/s Victory Software Pvt. Ltd., Zenith Automotive Pvt. Ltd. and Humtum Marketing Pvt. Ltd. Based on the above, the AO issued notice u/s 148 after recording the reasons. 3. Subsequently, the AO issued notice u/s 143(2)/142(1) of the Act to which the assessee filed the requisite details. Thereafter, the AO completed the assessment u/s 147/143(3) of the Act on 20th February, 2015 accepting the income returned therein. 4. The AO made a proposal u/s 263 of the Act for revising the assessment order dated 22nd February, 2015 stating that certain facts have emerged which were not available on record at the time of assessment u/s 147 of the Act. The AO held the order as erroneous and prejudicial to the interest of the Revenue. According to the AO, the enquiries of the Investigation Wing, Delhi have unearthed huge accommodation entry racket being operated by accommodation entry operator Jain brothers by way of more than 100 companies/firms, etc. The Investigation Wing has compiled a report and data of the beneficiaries of such entries. The name of the assessee company figures in the list of beneficiaries of share capital, premium/loan. On the basis of the proposal given by the ....
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....s 147 of the Act has been without taking into account the fact that Jain Brothers have provided the accommodation entries in lieu of certain commission charged from the beneficiary parties from various companies/firms, which are being controlled by Jain Brothers. The finding is factually incorrect, legally misconceived, contrary to record and untenable. 1.2 That further the learned Principal Commissioner of Income Tax has failed to appreciate that the voluminous documentary evidence had been led to discharge the onus on the appellant u/s 68 of the Act and therefore the order of assessment could not be regarded as an order having been framed without application of mind and thus the impugned order is based on surmiseful, whimsical and fanciful assumptions and presumptions hence is not in accordance with law. 1.3 That further more the learned Principal Commissioner of Income Tax has proceeded to set aside the order on mere speculation, generalized observations, theoretical allegations and assertions, without there being any supporting evidence and is therefore not in accordance with law. 1.4 That the learned Principal Commissioner of Income Tax while framing....
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....plication of mind much less independent application of mind and without having any tangible, relevant credible material to form a reason to believe that income of the appellant has escaped assessment therefore the order of assessment u/s 147/143(3) of the Act was without jurisdiction and as such the impugned order is also without jurisdiction. 3. That the learned Principal Commissioner of Income Tax has also failed to appreciate that, u/s 263 of the Act, an order of assessment cannot be set-aside to simply to make further enquiries and thereafter pass fresh order of assessment and as such, impugned order is contrary to law and hence, unsustainable. It is therefore prayed that, impugned order made under section 263 of the Act dated 23.3.2017 be held to be without jurisdiction and, therefore be quashed and appeal of the appellant be allowed." 7. The ld. Counsel for the assessee strongly challenged the order of the ld. PCIT invoking the provisions of section 263 of the Act. Referring to page 6 of the paper book, which is the balance sheet of the assessee company as on 31.03.2010, he drew the attention of the Bench to the share capital which has gone up to Rs. 5 la....
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.... the assessment year 2010-11. Referring to page 41 and 42 of the paper book, he drew the attention of the Bench to the order passed u/s 153C/153A on 28th March, 2013 in respect of M/s Humtum Marketing Pvt. Ltd. for A.Y. 2009-10. Referring to page 44 of the paper book, he drew the attention of the Bench to the reply given by M/s Victory Software Pvt. Ltd. to the AO in response to notice u/s 133(6) of the Act in the case of M/s Kalinga Conduits Electricables (P) Ltd. Referring to page 45 of the paper book, he drew the attention of the Bench to the reply given by Humtum Marketing Pvt. Ltd. in response to the notice u/s 133(6) in respect of M/s Kalinga Conduits Electricables (P) Ltd. Referring to page 46 of the paper book, the ld. Counsel for the assessee drew the attention to the reply given by Zenith Automotive Pvt. Ltd., in response to the notice u/s 133(6) in the case of M/s Kalinga Conduits Electricables (P) Ltd. Referring to page 47-59 of the paper book, the ld. Counsel for the assessee drew the attention of the Bench to the various other details filed by the assessee explaining the share capital/share premium received from the above three companies. 8.1 Referring to page 60 o....
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....een supplied to tile assessee. It is submitted thus the following material as referred in the notice may kindly be made available to the assessee company: i) Copy of seized material namely Annexure A-l to A-163, specifically pages 38, 19 & 20 of Annexure A-22 and pages 13 & 58 of Annexure A- 16 seized from premises of Jain Brothers along with Panchnama; ii) Copy of statements recorded of Jain Brothers on the date of search; iii) Copy of pages extracted in the notice at page 4 to 7 of the notice; iv) Copy of order of assessment and order of CIT (Appeal) in the case of Sh. S.K.Jain; v) Copy of report of Investigation Wing; and vi) Copy of list of beneficiaries prepared and filed by Investigation Wing; 3.5 It is submitted that in the absence of the aforesaid material having been supplied to the assessee, the notice otherwise too fails to meet the test of principles of natural justice and is, therefore, without jurisdiction." 9. He submitted that it was stated before the PCIT in para 3.8 of the said letter that share application money stands duly explained and accepted in the assessment proceedings and there is no materi....
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....before framing the assessment. All what is being alleged is that, the learned AO has not conducted the enquiries in the manner indicated by your goodself in the notice, which is based on no material but mere assumptions, presumptions, surmises, conjectures and, suspicion. Infact, the learned Assessing Officer had made all necessary enquiries provided in law and thereafter alone had accepted claimed of the assessee. Hence, by no justification, it could be alleged that, the order of assessment framed by the learned officer is erroneous within the meaning of section 263 of the Act and as such, notice is without jurisdiction." 12. Referring to various other decisions placed in his synopsis and case law compilation, he submitted that since in the present case enquiries were certainly conducted by the AO and it is not a case of no enquiry, therefore, the PCIT should not have set aside the order and directed the AO to conduct further enquiries. 12.1 Referring to the decision of the coordinate Bench of the Tribunal in the case of Dwarkadhis Buildwell (P) Ltd. vs. CIT, Hisar, 109 taxmann.com 5 (Del), he submitted that under identical circumstances, the Tribunal had set aside the order....
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....No.2158/Del/2017 (ITAT Delhi); 9. Surya Financial Services Ltd. vs. PCIT, ITA No.2158/Del/2017 (ITAT Delhi) 15. The Ld. Counsel for the assessee in his rejoinder submitted that in the case of Deniel Merchants Private Limited (supra) no enquiry was conducted by the AO whereas in the instant case enequiries were during the reassessment proceedings and order was passed u/s. 143 (3)/ 147. Further, all the investing companies are assessed u/s 153C/153A prior to completion of the assessment in the instant case u/s 147/143(3). Therefore, it cannot be said that in the instant case no proper enquiry was conducted. He accordingly submitted that the order of Hon'ble Supreme Court in the case of Daniel Merchants (P) Ltd. (supra) is not applicable to the facts of the present case. 16. So far as various other decisions are concerned, he submitted that all those decisions are distinguishable and not applicable to the facts of the present case. 17. We have considered the rival arguments made by both the sides, perused the orders of the AO and the PCIT and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both the ....
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....assessment proceedings. Further, at the relevant time of assessment, it was the decision of the Hon'ble Supreme Court in the case of Lovely Exports Pvt. Ltd., wherein it was held that even if the shareholders are bogus, addition cannot be made in the hands of the assessee and addition can be made only in the hands of such bogus shareholders if their identity is known to the Department. It is also his submission that for invoking the jurisdiction u/s 263, the order must be both erroneous as well as prejudicial to the interest of the Revenue. The twin conditions must be satisfied and absence of any one cannot empower the CIT to invoke jurisdiction u/s 263 of the Act. It is also his submission that the AO in the instant case had conducted thorough enquiry and it is not a case of no enquiry or lack of enquiry. 19. We find, some force in the above argument of the ld. Counsel. The assessment year involved in the instant case is 2010-11. The Hon'ble Supreme Court in the case of Lovely Exports which was applicable at the relevant time, has held that even if the shareholders are bogus, addition cannot be made in the hands of the assessee and addition can be made only in the hands of such....
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....tant case thorough enquiries were conducted by the AO at the time of reassessment proceedings. Full details giving the names, addresses, number of shares of nominal value and share premium amount of all the share holders alongwith their bank statements, copy of IT returns, PAN etc. were filed before the AO. Even if the share holders were bogus as per allegation of the revenue in view of the reasons recorded for reopening, however, as per prevailing law at that time in view of decision of Hon'ble Supreme Court in the case of Lovely Exports (P) Limited (surpa) addition could not have been made in the hands of the assessee and addition, if any, could have been made only in the hands of such bogus share holders. Since AO has taken a plausible view, therefore, it cannot be said that the order of the AO is erroneous. 22. We find the Hon'ble Delhi High Court in the case of PCIT Vs. Delhi Airport Metro Express Private Limited vide ITA No.705/2017 order dated 05.09.2017 has held that for the purpose of exercising jurisdiction u./s. 263 of the Act, the conclusion that the order of the AO is erroneous and prejudicial to the interest of the revenue has to be preceded by some minimal....