TaxTMI 
TaxTMI 
2022 (8) TMI 1128
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....in "lead" case in ITA No.49/SRT/2021 are as follows: "1. The Learned Pr. Commissioner of Income Tax grossly erred in setting aside the order of AO holding that the order passed by the AO is erroneous and prejudicial to the interests of law. 2. On the facts and under the circumstances of the case, the Ld. Pr. Commissioner of Income Tax, erred in initiating the proceedings under section 263 without appreciating that case of the appellant was selected for assessment u/s 148 of the Act. Hence revision u/s 263 and directing the AO to make fresh assessment is bad in law. 3. The Ld. Pr. Commissioner of Income Tax grossly erred in law by issuing notice at the fag-end of the extension period. Revising Order without providing adequate opportunity is not only unjustified but also against the principle of natural justice and bad in law. 4. The Ld. Pr. Commissioner of Income Tax grossly erred in law and on facts of the case in confirming order u/s 263 by invoking provisions of Section 68 by ignoring the fact that the proviso to Section 68 was introduced by Finance Act, 2012 with prospective effect from April 01, 2012. Hence, revising order is bad in law.Therefore, it is prayed that the ....
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....263 of the Income Tax Act, 1961 - A. Y. 2010-11 dated 25/03/2021 -Request for dropping the proceeding. Ref: ITBA/REV/F/REV1/2020-21/ 1031741614(1) In view of above show cause notice, details/explanations are given hereunder for your honour reference: First and foremost, the Assessee repeats and reiterates that whatever has been stated by your honour in the show cause is far from the truth and therefore the Assessee denies each and every contention, averment and allegation made in the show cause. The show cause served by your honour is vague and bad in law. Nothing contained in the reply to the above show cause should be deemed to have been admitted by the Assessee for want of specific denial. 1. Firstly, it is pertinent to note that Assessment Order u/s 143(3) r.w.s. 147 which is allegedly sough to be revised was passed on 26/12/2017. hence limitation period for revision u/s 263 of the Act was originally ended on 31/03/2020. But said limitation was extended by Section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 up to 31/03/2021. The impugned show cause notice u/s 263 was issued on 25/03/2021, which is at the fag-end of extende....
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....d by Hon'ble CIT(A)-3, Surat is attached herewith as per ANNEXURE - 4. As Hon'ble CIT(A)-3 had already favored the assessee company on the very same issue, hence no adverse view in this regard may please be drawn. Moreover, during AY 2009-10, on the very similar issue, Hon'ble CIT(A)-3, Surat had already favored the assessee company on the very same issue, hence no adverse view in this regard may please be drawn. Copy of order is enclosed herewith as per ANNEXURE-5 9. Furthermore, first proviso to Section 68 of the Act was inserted by Finance Act, 2012 w.e.f. 01/04/2013. Please appreciate that, insertion of first proviso led to paradigm shift in the law, wherein onus of proof was placed on the company to prove the genuineness of money received by the shareholder. 10. Your Honours attention is invited to Bombay High Court's ruling in case of CIT v. M/s Gagandeep Infrastructure Private Limited (ITA 1613 of 2014), wherein it was held that insertion of first proviso is prospective in nature, relevant portion of ruling is reproduced below for your Honour's reference: Proviso to Section 68 of the Act has been introduced by the Finance Act, 2012 with effect fro....
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....9;s case, pre-amended Section 68 is applicable and law declared by the Hon'ble Supreme Court in case of CIT Vs. Lovely Exports (P.) Ltd (Supra) needs to be upheld- At this juncture assessee company places reliance on the following judicial pronouncements: CIT vs. Steller Investment Ltd. SUPREME COURT OF INDIA, [2001] 115 TAXMAN 99 (SC) 4. It is evident that even if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances can the amount of share capital be regarded as an undisclosed income of the assessee. It may be that there are some bogus shareholders in whose name the shares had been issued and the money may have been provided by some other persons. If the assessment of the persons, who are alleged to have really advanced the money, is sought to be reopened, that would have made some sense but we fail to understand as to how this amount of increased share capital can be assessed in the hands of the company itself. C.I.T Vs. KAMDHENU STEEL & ALLOYS LTD [Petition(s) for Special Leave to Appeal (Civil)....../2012 (CC 15640/2012), dated 17/09/2012 [2012] 19 taxmann.com 26 (Delhi)] Section 68 of the Income ....
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....cross examine the concerned persons and even the relevant information and allegation, if any, made therein, which has been used against the assessee, was not provided to the assessee. At this stage, we add here that mere information is not enough rather it has to be substantiated with facts. The information may and may not be correct. For fastening the liability upon anybody, the Department has to provide the authenticity of the information to the person against whom such information is used. The principle of natural justice, demands that without confronting the assessee of such evidence, if any. or the information, no addition can be made. Even otherwise, as per Article-265 of the Constitution of India, only legitimate taxes have to be levied and collected. In our humble opinion, the assessee has duly discharged the onus caste upon it, therefore, respectfully following the decisions from Hon'ble Apex Court, Hon'ble High Courts and Hon'ble jurisdictional High Court, we reverse the order of the Ld. Commissioner of Income Tax (Appeal), resultantly, this ground of the assessee is allowed." 14. Accordingly, the Apex Court & various High Court cited supra had already decid....
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....ver, the Assessing Officer is required to examine the fund flow of the shareholders for at least 5 layers and unearth cash deposits into Bank Accounts of the shareholders or their shareholders in the case for inquiry into money laundering, as per mandate of the Hon'ble Supreme Court of India in Rajmandir Estates (P.) Ltd. v. PCIT (supra). (6) The Assessing Officer to make an independent and detailed enquiry of the so-called investor companies from Kolkata to verify the credit-worthiness of the parties, the source of funds invested, and the genuineness of the transactions, as per the directions of the Hon'ble Apex Court in PCIT-1 v. NRA Iron & Steel (P.) Ltd. (supra); (7) Further, the Assessing Officer is to make an inquiry into the commission expenses to arrange for accommodation entries (bogus share capital/share premium), if it is the case; (8) The A.O. is directed to inquire, call for, appreciate and if required; accept or, controvert nor disapprove the material filed by the assessee as the case may be. 8. In the light of the above discussions, the re-assessment order in the case of the assessee-company passed for A.Y. 2010-11, u/s 143(3) r.w.s. 147 of the Act mad....
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....ve to see whether the requisite jurisdiction necessary to assume revisional jurisdiction is there existing before the Pr. CIT to exercise his 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 as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedents laid down by the Hon'ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer's order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not inves....
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....to unaccounted investment / payments of Shri Naresh Chopra director of the assessee- company. These transactions are not recorded in the personal books of accounts of the said director and the company. Various opportunities were provided to the assessee company & its directors during the post survey proceedings as well as in the scrutiny assessment of the company (AY 2014-15) to verify the impounded material with the relevant regular books of accounts. But no compliance was made by the assessee. Hence, impounded materials are not reconciled from the regular books of accounts of the assessee. 2. Later on, the assessee filed application before the Settlement Commission Addl. Bench -II, Mumbai on 01.12.2016 for the AY 2014-15, 2015-16, 2016- 17. In the application, the applicant stated before the ITSC that it maintain unaccounted transactions on the system in the name of Saree Sansar till 31.03.2013. But from 01.04.2013, it maintain unaccounted transactions in the name GC (i.e. GC means GUPT CODE) on the tally software by shifting data in tally from the old software. Hence, transactions maintained in the name of Saree Sansar and GC are not accounted for in the regular books of accou....
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....Creation for the FT; 2009-10 was impounded, according to which the assessee has paid Rs. 3,60,292/- to Jainam Creation through cash on various dates. The above transactions are not accounted for in the regular books of accounts. Hence, assessee concealed the income of Rs.3,60,292/-. It is clear from the above discussion that the assessee has not disclosed fully and truly material fact, which are necessary for the assessment. In the light above discussion it is clear that the assessee has concealed income of Rs.2,44,52,518 (36,78,991 + 2,50,000 + 27,38,235 + 1,74,25,000 + 3,60,292) during the year. Therefore, I have reason to believe that the assessee has concealed the income to the extent of Rs. 2,44,52,518/- which is an escaped assessment within the meaning of section 147 of the Income Tax Act, 1961. Hence, this is a fit case for issuing notice u/s. 148." 14. From the above reasons recorded, it is vivid that there is nothing mentioned about share capital and share premium. Thus, assessment was not reopened to examine the issue relating to share capital and share premium. The reassessment proceedings were initiated to tax the unaccounted payment, loans and advances and various....
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.... effected in 1984 and the assessment order was passed in the assessment year 1985-86. The validity of the approval was till December 1985. It may be a make-believe transaction or may be a true transaction, but this Court will not enquire into these facts at this stage. The writ petitioner pursuant to the aforesaid approval had acted upon it and donation having been made and the same having been accepted by the department, all these have been accepted by all concerned. Therefore, it is not open for the department concerned to reopen the assessment on the aforesaid fact within the sweep and purview of section 263. The retrospective effect cannot be given while seeking a withdrawal of the approval as it has been rightly pointed out by Dr. Pal and I also find support for the aforesaid proposition from the judgment rendered by Mrs. Justice Pal. I am also of the view that this case does not fall within the purview of section 263 for revision of the order prejudicial to the revenue. The revisional authority will exercise the aforesaid power under section 263 only when the order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue. The t....
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....e Revenue as no question with regard to that has been formulated. All other issues considered in the order passed under section 263 of the Act by the Commissioner of Income-tax were not the subject matter of the reassessment order dated June 28, 2006, but of assessments done earlier under section 143(1) of the Act. Therefore, the issues on which the revisional jurisdiction is being exercised were admittedly issues which arose in the proceeding/assessment done prior to reopening of the assessment. In view of passage of time the jurisdiction to exercise powers under section 263 of the Act with regard to assessment done under section 143(1) of the Act had lapsed. Ms. Vasanti Patel further submits that the Tribunal has merely followed the binding decisions of the apex court in the matter of Alagendran Finance Ltd.'s (supra) and of this court Ashoka Buildcon Ltd.'s (supra). Consequently, no question of law arises for consideration by this court. 12. We have considered the rival submissions. It is not disputed that save and except the issue of non-genuine purchases all other issues dealt with by the Commissioner of Income-tax in the order dated March 30, 2009, were not a subjec....
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....t Ashoka Buildcon Ltd.'s case (supra) being inapplicable merely on the ground that they do not deal with the issues of bogus bills or non-genuine purchases is in fact no distinction. The principle laid down in the aforesaid decisions is that a notice under section 263 of the Act cannot be issued beyond the period of two years from the date when the order sought to be revised is passed. The case law relied upon in the impugned order are clearly applicable to the present facts. 14. In view of the fact that the impugned order has applied the binding decisions of the apex court and this court, we see no reason to entertain the three questions of law as proposed by the Revenue. 15. Accordingly, the appeal dismissed with no order as to costs." 17. We note that assessee filed its return of income for assessment year 2010-11 on 29.09.2010 showing total income at Rs. Nil and current year losses to the tune of Rs. 1,51,162/-. Later on, assessee`s case was re-opened by issue of notice u/s 148 of the Income Tax Act 1961 for assessment year 2010-11, after recording the reason. Notice under section 148 of the Act was issued on 31.03.2017. Thus, the reassessment proceedings were initiate....