TaxTMI 
TaxTMI 
2021 (8) TMI 1209
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....m quoted. And that the same was raised from the directors of the assessee company and their wives. The Ld. PCIT has also taken note that the share premium of Rs. 200 per share face value of Rs. 10 was in accordance to law [i.e. Rule 11UA(2)(c) of the Income Tax Rules, 1962 (hereinafter referred to as the Rules) read with Section 56(2)(viib) of the Act] and that in this regard the assessee company had produced before the AO the copy of board resolution passed for issuance & allotment of shares. The only fault pointed out by the Ld. PCIT for interdicting the order of the AO was by alleging that source of investment of share capital was not enquired into by issuance of notice u/s. 133(6) of the Act. According to Ld. A.R., the AO had specifically asked for the 'source of source' and the same has been answered by the assessee by showing that the source of source was from sale of blue-chip scrips in the recognized stock exchange and by selling immovable property (refer Page 55 of PB). So therefore in the light of the aforesaid facts according to Ld. A.R. it is clear that Ld. PCIT misdirected himself by assuming wrong facts to hold that the AO has not enquired the source of source....
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....th share premium were paid by account payee cheques. The source of share subscribers for subscription was given at page 55 of PB which is reproduced as under: 6. From a perusal of the aforesaid source of source it can be seen that Mr. Kishan Gopal Biyani has received money from the sale of quoted equity shares on NSE (contract notes and balance sheet filed). Likewise Shri Samir Biyani has received funds from sale of quoted equity shares on NSE platform. Likewise Lila Devi Biyani received Rs. 50,000/- from the partnership farm M/s. Lovely and Rs. 6,00,000/- form sale of shares of M/s. Lovely Floriculture Pvt. Ltd. received from Shri Mukesh Kumar Somani. And Varsha Biyani received Rs. 29 lakhs against the sale of her immovable property. In order to substantiate the 'source of source' the assessee had filed contract note of M/s. Eastern Financiers Ltd. through which the directors and his wife had sold the scrips of Bluechip company in the National Stock Exchange (NSE) which is seen placed from [69-102, 114-115, 130-131 and 144-149 of PB]. All the shareholders had filed their copy of income tax return acknowledgment which is seen placed at [page 56, 107,118,134-135 of PB]. The....
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....hat she had shown income over Rs. 12 lakhs and the immediate source was from proceeds of sale of shares evidenced by contract notes and receipt were deposited in the bank accounts. Similarly, for Smt. Varsha Biyani filed copy of acknowledgement of filing of return, copy of bank statement, computation of income, balance sheet, shareholding in blue-chip companies, immoveable properties, and statement of profit and loss account reveals income over Rs. 6.5 lakhs and the immediate source was from sale of immovable property and receipt were deposited into bank accounts. In the aforesaid facts, the AO did not draw any adverse inference against the nature and source of the share subscription which was allotted to the directors and their wives as noted (supra). This action of the AO has been interdicted by the Ld. PCIT by exercising his revisional jurisdiction u/s. 263 of the Act. In his show cause notice the Ld. PCIT has pointed out two issues (a) that AO has not verified the source of money invested by the subscribers of shares and the capacity of such subscribers during the course of assessment proceedings (b) that the AO has passed the assessment order on 20.12.2018 at an assessed loss ....
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....CIT has found AO's order to be erroneous as well as prejudicial only one issue i.e. "AO failed to conduct enquiries u/s. 133(6) of the Act regarding source of investment of such huge share capital of directors and their wives.'' This fault according to Ld. PCIT makes the order of the AO erroneous as well as prejudicial to the interest of the revenue which he was pleased to set aside for fresh assessment as per his directions given at Para 12 of his impugned order. i.e. to enquire into the source of share capital of Rs. 1,08,15,000/-. 9. Before we advert to the facts and law involved in this lis before us, let us revise the law governing the legal issue before us. The assessee has challenged in the first place, the very usurpation of jurisdiction by ld. Principal CIT to invoke his revisional powers enjoyed u/s. 263 of the Act. Therefore, first we have to see whether the requisite jurisdiction necessary to assume revisional jurisdiction is existing in this case before the Pr. CIT rightfully exercises his revisional power. For that, we have to examine as to whether in the first place the order of the Assessing Officer found fault by the Principal CIT is erroneous as well ....