2023 (3) TMI 329

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....the total income at Rs.2,23,64,110/-. Subsequently, the said order was revised by the Ld. Pr. CIT u/s. 263 of the Act vide order dated 01.06.2016 setting aside the assessment order to be framed de novo vide order dated 13.03.2015. The AO while giving effect to the order u/s. 263 of the Act passed the assessment u/s. 143(3) read with sec. 263 of the Act vide order dated 09.08.2016 assessing the total income at NIL. Subsequently, the Ld. Pr. CIT upon examination of the assessment records again observed that the order framed by the AO u/s. 143(3) read with sec. 263 of the Act dated 09.08.2016 is erroneous in so far as prejudicial to the interest of the revenue as the AO has failed to carry out detailed investigation into the investment by shareholders and also the huge share premium thereon without verifying the financial positions of the investors. Accordingly, a show cause notice was issued u/s. 263 of the Act on 31.12.2018 which is reproduced as under: 4. The assessee replied the said show cause notice vide written submissions dated 11.02.2019 before the PCIT by submitting that the issue of share capital and share premium were examined in detail by the AO by specifically raising....

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....to the assessee by the said revising of assessment u/s. 263 of the Act as assessee would be given a fair and sufficient opportunity in the setting aside proceeding again and, therefore, the order of Ld. Pr. CIT may kindly be sustained. 7. We have heard rival submissions, carefully perused the material available on record, the impugned appellate order, the assessment order passed in the set aside proceeding and the decision cited before us in the case of Omkar Infracon (P) Ltd. (supra) and the decision of jurisdictional High Court in the case of PCIT Vs Bhagwati vintrade Pvt Ltd(supra). We observe on the basis of the records before us that Ld. Pr. CIT has revised the assessment on the ground lack of enquiry on the part of the AO into the issue of investment of share capital and share premium. However, we note that in the set aside assessment proceeding in the first inning the AO examined the issue in detail after calling information from the assessee as well as investors u/s 133(6) of the Act and based on that detailed enquiry on the issue accepted the investments made in the assessee company. The relevant findings of the AO in the assessment order as framed u/s 143(3) r.w.s. 263....

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....and give statement along with relevant papers. In view of the above observations, the total income of the assessee is computed as per separate computation sheet attached. Assessed u/s. 264/143(3) for a total income of Rs. NIL." 8. We note from the above findings of the AO that while giving effect to the directions of the Ld. Pr. CIT, AO issued notice u/s. 142(1) of the Act to the assessee which was duly complied with by filing necessary documents and informations. We note that the AO also issued notices u/s. 133(6) on 12.07.2016 to the parties from whom the funds were raised by the assessee and verified the source of investments, identity and genuineness. The said investor companies duly responded to the said notice and thereafter the AO recorded his satisfaction accepting the said investments in the hands of the assessee. Considering the above facts, we are of the view that the jurisdiction u/s. 263 of the Act by Ld. Pr. CIT has not been validly exercised. The case of the assessee finds support from the decision of the coordinate bench in Omkar Infracon (P) Ltd. (supra) wherein under similar facts, wherein the show cause notice is verbatim same, the coordinate....

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....Refer to the above. 1. 2. In the instant case, the assessee company filed its return of income for the assessment year 2012-13 on 30-09-2012 declaring total income of Rs. Nil. The case was selected scrutiny through [ PASS and assessment order under section 143(3) of the Income Tax Act, 1961 (to be referred to as Act hereinafter) was passed on 13-03-2015 determining the total income at Rs. 2,23,64,100. Subsequently, order u/s 263 of the income Tax Act, 1961 was passed on 01-06-2016 setting under hereto the order passes u/s 143(3) of the Income Tax Act, 1961 on 13-03-2015. The assessing officer while giving effect in the order u/s 263 of the Income Tax Act, 1961 passed order u/s 143(3) of the Income Tax Act, 1961 on 09- 08-2016 determining total income at Rs. Nil. Subsequently, the assessment records of the assessee were called for & on the basis of the verification of the material available on records, it was found that the order of assessment was erroneous so far as it is prejudicial to the interest of revenue on the following grounds- (i) The A.O passed the order without carrying out detailed investigation/ verification independen....