TaxTMI 
TaxTMI 
2022 (10) TMI 1131
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....der passed u/s.143(3) on Dt. 31.03.2016 to be erroneous in so far it is prejudicial to the interest of the revenue and therefore the impugned order passed is bad in law besides being wrong on facts. 3. That the learned principal CIT in the facts and circumstances of the case has erred in adjudicating the assessment order to the erroneous due to alleged lack of enquiry by the learned assessing officer, more so when the overriding document filed in support of the transactions by the appellant along with the reply received from the investor company in response to notice issued u/s.133(6) and subsequent documents submitted personally by the Director of the investor company proved the genuineness of the transactions beyond doubt and hence rightly accepted by the Assessing officer. 4. That having regard to the fact and circumstances of the case no addition was possible and permissible under section 68 or any other section of the I.T.ACT 1961 on the given matter and hence the order cannot be termed as prejudicial to the interest of the revenue. The appellants craves leave, to add, amend, alter any or all ground of the appeal." 2. Succinctly stated, the assessee company which is eng....
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.... financial statements and copy of Income-tax return, therefore, the primary onus that was cast upon it to substantiate the nature and source of the cash credit appearing in its books of account was duly discharged. In sum and substance, it was the claim of the assessee that now when the A.O had after exhaustive deliberations on the aforesaid issue under consideration, i.e the authenticity of the assessee's claim of having received genuine share application money from the aforesaid investor company, had after thoroughly vetting the same in the backdrop of substantial documentary evidence which were placed on his record, therein, found it in order, therefore, the Pr. CIT in the garb of his revisionary jurisdiction u/s.263 of the Act could not have sought for substitution of his view as against that of the A.O. However, the Pr. CIT was not persuaded to subscribe to the aforesaid claim of the assessee. It was observed by him that as the financial statements of the investor company revealed that it was a shell company, therefore, the A.O had grossly erred in accepting the assessee's claim of having received genuine share application money from the said investor company. The Pr. CIT was ....
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....-adjudicate the issue afresh after carrying out necessary verification and affording a reasonable opportunity of being heard to the assessee. 5. The assessee being aggrieved with the order passed by the Pr. CIT u/s.263 of the Act, dated 30.03.2018 has carried the matter in appeal before us. 6. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 7. Admittedly, it is a matter of fact borne from record that the case of the assessee company for the year under consideration was selected for limited scrutiny for the purpose of verifying and examining a solitary issue, i.e., large share application money that was received against unallotted shares. On a perusal of the assessment order it transpires that the A.O in the course of the assessment proceedings had specifically called upon the assessee to furnish details both as regards the issuance of shares and receipt of share application money during the year under consideration. The relevant observation ....
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....achin Verma, Director of M/s. Sakshi Real Estate Pvt. Ltd. appeared and submitted the copy of assessment order of M/s. Sakshi Estate Pvt. Ltd. The contention of the counsel of the assessee is examined visà- vis books of account produced, documents submitted by Shri Sachin Verma and assessment order of M/s. Sakshi Real Estate Pvt. Ltd. of AY 2013-14 and no untoward inference is drawn." 8. On a perusal of the aforesaid observation of the A.O, it transpires that he had in the course of the assessment proceeding specifically called upon the assessee to furnish requisite details as regards the share application money which was received by him from the investor company, viz. M/s. Sakshi Real Estate Pvt. Ltd. As per the records the A.O had vide his notice issued u/s.142(1) of the Act, dated 18.01.2016 at Query No.5 directed the assessee to furnish complete name and address, PAN of the parties from whom share application money was received during the year under consideration. Further the A.O in order to verify the authenticity of the transaction of receipt of share application money by the assessee company had issued notice u/s.133(6) of the Act, dated 29.01.2016 to the investor ....
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....ssee company, therefore, for the said reason shares could not be allotted even after receipt of share application money. On being queried by the A.O as to how it had came in touch with the assessee company, it was submitted by the director of the investor company that they were well acquainted with the directors of the assessee company. Also the director of the investor company, viz. Shri. Sachin Verma in the course of the assessment proceedings had appeared in person before the A.O and confirmed the transaction in question. As is discernible from the record Shri. Sachin Verma (supra) had appeared before the A.O and furnished the requisite documentary evidences a/w. copy of the assessment order which was passed in the case of the investor company u/s.143(3) of the Act, dated 22.03.2016 for A.Y.2013-14 by the ITO, Ward- 5(1), Kolkata. Apart from that it was brought to the notice of the A.O that the credit appearing in the bank account of the investor company, viz. M/s Sakshi Real Estate Pvt. Ltd. out of which investment was made in the assessee company were the amounts which was received on liquidation of certain investments in favor of M/s. Natural View Software (P) Ltd. 9. We hav....
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....". Not only the A.O had called for the requisite details from the assessee company to substantiate the authenticity of the transaction of receipt of share application money, but had also while vetting the said claim of the assessee had independently called for substantial details from the investor company u/s 133(6) of the Act. In compliance to the notice issued u/s.133(6), dated 01.03.2016 the director of the investor company, viz. Shri. Sachin Verma had appeared before the A.O and confirmed the transaction by placing on record supporting documentary evidences. Also, we cannot remain oblivion of the fact that the assessment framed by the Income-tax department u/s. 143(3), dated 22.03.2016 by the ITO, Ward-5(1), Kolkata in the case of aforesaid investor company, viz. M/s. Sakshi Real Estate Pvt. Ltd. (as was filed by the investor company in the course of the assessment proceeding) carries sanctity not only as regards the latter's existence but also the genuineness of its business transactions. 11. Be that as it may, we are of the considered view that it is not a case where the A.O had failed to carry out any enquiry, but as observed by the Pr. CIT in the body of his order it could....
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....(2007) 213 CTR 266 (SC). Once again it was observed that where two views are possible and the Income-Tax Officer has taken one of the view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue, unless the view taken by the Income Tax Officer is unsustainable in law. Also support is drawn from the order of the Tribunal in the case of Ashfaque Quamar Vs. Pr. CIT, Raipur- 1(C.G.), ITA No.83/RPR/2021 dated 06.04.2022, wherein it was observed that as the A.O while framing the assessment vide his order passed u/s.147 r.w.s. 143(3), dated 05.12.2018 had carried out necessary verifications, therefore, even if the same were to be held as inadequate it would by no means justify the invoking of the revisional jurisdiction by the Pr. CIT u/s. 263 of the Act. 12. Coming to "Explanation 2" to Sec. 263 as had been made available on the statute vide the Finance Act, 2015 w.e.f 01.06.2015, the same in a way expands the scope of the term "erroneous" as provided in the statutory provision. Ostensibly, the rationale for inserting the "Explanation 2", specifically clause (a), was to render the assessment orders which had been....
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....onfirmation of having paid share application money to the assessee company alongwith a supporting affidavit. Apart from that, the investor company had in its reply stated that the payment towards share application money was sourced out of, viz. (i). bank balance as on 01.04.2012 : Rs. 25,03,571/-; and (ii). loan received from M/s Natural View Software (P) Ltd. : Rs. 40 lac. Also in order to fortify its aforesaid claim the investor company had alongwith its reply appended the audited balance sheet of M/s Natural View Software (P) Ltd. In sum and substance, the primary onus that was cast upon the assessee company as per the '1st proviso' to Sec. 68 i.e to prove the source of source of the credit appearing in its books of accounts stood duly discharged in the backdrop of the aforesaid documentary evidence. Also, the A.O on verifying as to why shares were not allotted against the share application money was specifically informed by the investor company that as it had certain dispute with the assessee company on the issue of the price at which the shares were to be subscribed, therefore, for the said reason those could not be allotted even after receipt of share application money. In fa....
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....essment order. Our said view is fortified by the judgment of the Hon'ble High Court of Delhi in the case of Pr. CIT-1, New Delhi Vs. M/s Brahma Centre Development Pvt. Ltd., ITA No. 116 & 118/2021; dated 05.07.2021, which in turn relying on its earlier order in the case of the CIT Vs. Sunbeam Auto Ltd. (2011) 332 ITR 167 (Del) and that of the Hon'ble High Court of Bombay in the case of CIT Vs. Gabriel India Ltd. (1993) 203 ITR 108 (Bom), after pointing out the fine distinction between "lack of inquiry" and "Inadequate inquiry" had observed that if there was any inquiry, even inadequate, that would not by itself, give occasion to the CIT to pass order under Sec. 263 of the Act merely because he has a different opinion in the matter; albeit in a case of "lack of inquiry" such course of action was open. For the sake of clarity the relevant observations of the Hon'ble High Court are culled out as under: "10.1. The fact that the AO has not given reasons in the assessment order is not indicative, always, of whether or not he has applied his mind. Therefore, scrutiny of the record, is necessary and while scrutinising the record the Court has to keep in mind the difference between lack o....
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....fficer is 'erroneous insofar as it is prejudicial to the interests of the revenue'. It is not an arbitrary or unchartered power. It can be exercised only on fulfilment of the requirements laid down in sub-section (1). The consideration of the Commissioner as to whether an order is erroneous insofar as it is prejudicial to the interests of the revenue must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. [See : Parashuram Po....
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....ply because in his order he did not make an elaborate discussion in that regard . . ." (pp. 113-117) xxx xxx xxx 15. Thus, even the Commissioner conceded the position that the Assessing Officer made the inquiries, elicited replies and thereafter passed the assessment order. The grievance of the Commissioner was that the Assessing Officer should have made further inquires rather than accepting the explanation. Therefore, it cannot be said that it is a case of 'lack of inquiry'." 10.2. This view was followed by another Division Bench of this Court in Commissioner of Income-tax vs. Anil Kumar Sharma, (2010) 194 taxman 504 (Delhi)." Analyzing the scope and gamut of "Explanation 2" to Sec. 263 of the Act, the Hon'ble High Court in the case of M/s Brahma Centre Development Pvt. Ltd. (supra) while approving the order of the Tribunal had, inter-alia, observed that as the A.O in the case before them while framing the assessment had conducted enquiry on the issue involved and arrived at a possible view, therefore, the Pr. CIT could not have assumed jurisdiction u/s 263 of the Act. The Hon'ble High Court in the said case was, inter alia, seized of the following issue : "i. Was ....
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....elating to interest of Rs.9,47,04,585/- to which the assessee has issued reply dated 12.10.2017 where under it was explained that the company was engaged in the business of promotion, construction and development of commercial projects on the project land allotted by Haryana State Industrial and Infrastructure Development Limited (HSIIDC). Consequent to the arrangement with HSIIDC, the assessee was required to make payment in instalments to HSIIDC towards acquisition of land. In this regard the company raised funds from non- resident shareholders outside India through Compulsory Convertible Debentures (CCDs) to fulfil its payment obligations towards HSIIDC and in that connection they temporarily parked the funds in FDRs, which earned interest. The assessee, therefore, submitted that in this way, such an interest has intrinsic nexus with the Real Estate Projects undertaken and therefore, they have adjusted the same against the project expenditure. The ld. AR submitted that the proceedings u/s. 148 were dropped. 12. In view of the above, we find it difficult to agree with the ld. DR that there was no enquiry conducted by the Ld. Assessing Officer by putting any specific question to....