AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 1016
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....ssessee, however the assessee has filed written submission before the Bench dated 20.12.2022 and stated that considering the written submissions, the appeal may be adjudicated. 4. Brief facts qua the issue are that assessee company, (M/s. Komal Industries Pvt. Ltd.) had filed its return of income for A.Y. 2017-18 on 14.10.2017 declaring total income at Rs. nil. Thereafter, the case was selected for complete scrutiny and scrutiny assessment under section 143(3) of the Act was finalized on 13.11.2019 accepting the return of income. 5. Later, the Ld. PCIT has exercised his jurisdiction under section 263 of the Act. On perusal of records, it was noticed by ld PCIT that company had issued 3,74,000 shares on 20.06.2016 to its directors and their relatives at a premium of Rs.40 and face value of Rs.10 per share aggregating to Rs.50 per share. By issuing shares at a premium rate, company received the share premium of Rs.1,49,60,000/- during the year under consideration. The company has adopted fair market value/book value of shares and premium on the basis the certificate issued under Rule 11UA of the IT. Rule dated 01.03.2016 by the Chartered Accountant Shri Chetan Joshi (M. No. 132207)....
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....ent Chartered Accountant other than the Auditor of the company was not submitted by the company staff. The company requested to consider the reply and accepted the mistake committed due to clerical lapse. The assessee submitted copy of Valuation certificate issued on 09.06.2016 by the Chartered Accountant, Shri Dali J. Shah, the CA other than its statutory auditor. 7. The ld PCIT, then rejected the contention of the assessee and held as follows: " All the details in respect to issuance of shares with premium has submitted by the assessee company during the assessment proceedings. However, fair market value/book value of shares and premium was adopted on the basis of the Valuation Certificate issued by same CA who was appointed by the company as an auditor under section 44AB of the Act, which is a violation of the sub-Rule (a)(i) of the Rule 11UA of the IT. Rule: The relevant para of the Rule 11U of the Rule reproduced as under- "(a) "accountant" ,- (i) for the purposes of sub-rule (2) of rule 11UA, means a fellow of the Institute of Chartered Accountants of India within the meaning of the Chartered Accountants Act, 1949 (38 of 1949) who is not appointed by the company as an ....
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..... Firstly, the order sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the Revenue. The expression prejudicial to the interest of the Revenue is of wide import and is not confined to merely loss of tax. The term erroneous means a wrong/incorrect decision deviating from law. This expression postulates an error which makes an order unsustainable in law. The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing Officer to investigate the facts required to be examined and verified to compute the taxable income. If the Assessing Officer fails to conduct the said investigation, he commits an error and the word erroneous includes failure to make the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not been made and not because a wrong order has been passed on merits." The Hon'ble Delhi High Court has also considered the ratio laid....
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....s relief in respect of depreciation allowance during the course of assessment proceeding. For the sake of brevity, Explanation 2 to section 263 (1) has been reproduced here under: 263. Revision of orders prejudicial to revenue. Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; In view of the facts and circumstances of the case and the discussions made in the foregoing paragraphs, the assessment order u/s 143(3) of the IT. Act passed by the Assessing Officer in the case of the assessee for the A.Y. 2017-18 on 13.11.2019 is held to be erroneous in so far as it is prejudicial to the interest of Revenue. Accordingly, the assessment order u/s.143(3) of the Income-tax Act, 1961 dated 13.11.2019 for A.Y. 2017-18 in the instant case is set aside with a direction to the Assessing Officer to pass fresh assessment order after taking into consideration the issues as m....
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.... said valuation instead of the Certificate issued by CA Dali J Shah (Membership No.132203) dated 09.06.2016, an independent Chartered Accountant. The learned PCIT, considered the assessment order dated 13.11.2019 as erroneous as was prejudicial to the interest of the revenue with the remark that the certificate of CA Dali J Shah was not submitted during the course of assessment proceedings and therefore genuineness of the certificate needs to be verified...." 10. We have heard the Ld. Departmental Representative (Ld. DR) for the Revenue and gone through the written submission filed by the assessee. We have also gone through the order passed by the Ld. PCIT and noted that no inquiry was made by the Assessing Officer. We have gone through the assessment order passed by the Assessing Officer u/s 143(3) dated 13.11.2019 and noted that assessing officer has not discussed the issue raised by ld PCIT. It is a case of no inquiry on the part of Assessing Officer, therefore Ld. PCIT has rightly exercised his jurisdiction under section 263 of the Act. 11. We note that company has adopted fair market value/book value of shares and premium on the basis the certificate issued under Rule 11UA o....