AI Drafter 
TaxTMI 
TaxTMI 
2023 (3) TMI 406
X X X X Extracts X X X X
X X X X Extracts X X X X
....rovided despite our request and it was provided to us only on 24.8.2022 As soon as such order was brought to knowledge of the Management, the matter was forwarded by them to the tax consultant. Although such order (certified copy) has been received on 24.8.2022, as a matter of abundant precaution it is presumed that such order was /could have been served by 12.3.2019, the date of order as 12.3.2019 is being treated as date of service of order although certified copy has been provided only on 24.8.2022 (since the original order was never served on us). Hence the delay of 1206 days (i.e. including 60 days of appeal filing). Hence the appeal couldn't be filed against the said order u/s 263 within time for filing the appeal i.e. by 12.5.2019 and is being filed now after delay of 1206 days due to reasonable cause only. Hence, the appeal has been prepared along with a petition for condonation of delay of 1206 days. Your goodselves may kindly appreciate that such delay was due to reasonable cause only. Further your goodselves may kindly appreciate that delay is only of 1206 days (from 12.5.2019) and hence your goodselves may kindly take a considerate view in the matter and the de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ous and prejudicial" and hence the order so passed by Ld. CIT is bad in law and it may be held accordingly. 5. Without prejudice to Grounds No. 1, 2, 3 & 4 above, the order passed by Ld. CIT u/s 263 dt. 12.3.2019 is barred by limitation particularly in view of the judgment of Hon'ble Supreme court and various High Courts in such respect and in view of the facts and in the circumstances the impugned order u/s 263 is liable to be quashed / cancelled and it may be held accordingly. 6. For that your petitioner craves the right to put additional grounds and/or to alter/ amend/ modify the present grounds at the time of hearing." 4. From perusal of the grounds, we find that the sole grievance of the assessee is that ld. PCIT erred in invoking jurisdiction u/s 263 of the Act and holding that the assessment order framed u/s 143(3) of the Act dated 20.03.2015 is erroneous and prejudicial to the interests of the Revenue. 5. Brief facts of the case are that the assessee is a private limited company. Loss of Rs. 74,252/- declared in e-return filed on 06.02.2013. Case selected for scrutiny through CASS followed by serving of notices u/s 143(2) & 142(1) of the Act. Various....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the submission of the assessee in this regard. (ii) That A.O. has also failed to carry out detailed investigation of the shareholders on the very issue that how they decided to invest in such a company which was never known for its line of business and also they invested at huge premium without verifying the financial position. (iii) The A.O. further failed to examine the rationale behind raising the said share premium and also did not verify the method adopted by assessee for determining such abnormally huge premium specially keeping in view that prima facie there was no material in the balance sheet of the assessee warranting/justifying such huge premium. (iv) The A.O. failed to collect the relevant evidences in order to reach a logical conclusion regarding the genuineness of controlling interest. (v) The A.O. failed to examine all the bank accounts for the entire period in the course of verification to find out the money trail of the share capital. (vi) The A.O. failed to adequately trace out the money trail to ascertain the genuineness of source of fund invested by shareholders in the assessee company. (vii) On the whole th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the table of A.O on the issue as outlined in para- 2 above. The A.O. is directed to provide reasonable opportunity to the assessee company to produce documents & evidences which it may choose to rely upon for substantiating its own claim The AO is further directed to adjudicate the said Issue de novo and pass a fresh assessment order in accordance with the relevant provisions of law." 9. Aggrieved, the assessee is now in appeal before this Tribunal. Ld. Counsel for the assessee submitted that in compliance to the directions given by ld. CIT(A) in the order u/s 263 of the Act dated 17.10.2016 complete details were called before ld. AO and they have been examined in detail. Further, he submitted that the summons u/s 131 of the Act were issued to the directors of the investor companies to prove their identity, creditworthiness and genuineness and these directors have appeared and their statements were recorded u/s 131 of the Act on oath. Ld. Counsel for the assessee also referred to various details filed before ld. AO in the course of assessment proceedings carried out vide order dated 30.12.2016 which are as follows: Index V-1: "1. Assessment order of the appe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Suppliers Pvt Ltd. 37. Letter dated 25.9.2014 of Arham Packaging Goods Private Limited. 38. Letter of Arrowlink Realtors Private Limited. 39. Balance Sheet, Profit & Loss Account for the Assessment Year 2012-13, Bank Statements. Allotment Advice, Source of Investment, Share Application documents and others of Blockdeal Developers Pvt Ltd. 40. Letter of Aryadeep Synthetics Pvt Ltd. 41. Letter dated 25.9.2014 of Capable Fashion Pvt Ltd. 42. Letter dated 31.10.2014 of Channing Distributors Pvt Ltd. 43. Letter dated 24.9.2014 of Diganta Distributors Pvt Ltd. 44. Letter dated 26.9.2014 of Dishika Marketing Pvt Ltd. 45. Letter dated 26.9.2014 of Fastspeed Marketing Pvt Ltd. 46. Letter of Historic Agencies Pvt Ltd. Index V-2: With reference to the above we hereby furnishing the following information as required by you. 1) Our PAN No. is AACCE9349K. 2) Xerox Copy of Balance Sheet, Profit & Loss Account and Income Tax Acknowledgement for the Assessment year 2012- 2013 are enclosed for your reference. 3) Xerox copy of Bank Statement for the F. Y. 2011-12 of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r cancelling the assessment and directing a fresh assessment. Explanation- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120; (b) record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ss the order. This is the 4th compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. He may set aside the order and direct the Assessing Officer to pass a fresh order. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the ld. Pr. CIT taken u/s 263. 13.3. Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) has laid down following ratio with regard to provisions of section 263 of the Act: "There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mpermissible. It should not be presumed that initiation of power under suomoto revision is merely an administrative act. It is an act of a quasi-judicial authority and based on formation of an opinion with regard to existence of adequate material to satisfy that the decision taken by the AO is erroneous as well as prejudicial to the interests of the Revenue. The concept of "prejudicial to the interests of the Revenue" has to be correctly and soundly understood. It precisely means an order which has not been passed in consonance with the principles of law which has in ultimate eventuate affected realization of lawful revenue either by the State has not been realized or it has gone beyond realization. These two basic ingredients have to be satisfied as sine qua non for exercise of such power. On a perusal of the material brought on record and the order passed by the CIT it is perceptible that the said authority has not kept in view the requirement of s. 263 of the Act inasmuch as the order does not reflect any kind of satisfaction. As is manifest the said authority has been governed by a singular factor that the order of the AO is wrong. That may be so but that is not enough. What wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... his mind to the issue in question, the ld. CIT cannot invoke section 263 of the Act merely because he has different opinion. Relevant observation of the High Court reads as under: "63. We find the Hon'ble Delhi High Court in the case of Vikas Polymer reported in 341 ITR 537 has held as under: "We are thus of the opinion that the provisions of s. 263 of the Act, when read as a composite whole make it incumbent upon the CIT before exercising revisional powers to: (i) call for and examine the record, and (ii) give the assessee an opportunity of being heard and thereafter to make or cause to be made such enquiry as he deems necessary. It is only on fulfilment of these twin conditions that the CIT may pass an order exercising his power of revision. Minutely examined, the provisions of the section envisage that the CIT may call for the records and if he prima facie considers that any order passed therein by the AO is erroneous insofar as it is prejudicial to the interest of the Revenue, he may after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstance....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e above discussion, we hold that the assumption of jurisdiction by the DIT u/s 263 of the Act is not in accordance with law. We, therefore, quash the same and grounds raised by the assessee are allowed." 13.9. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy vs. ITO, Mumbai, 101 TTJ 1095, analyzed in detail various authoritative pronouncements including the decision of Hon'ble Supreme Court in the case of Malabar Industries 243 ITR 83 and has propounded the following broader principle to judge the action of CIT taken under section 263: "(i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing that the order passed by the Assessing Officer was erroneous. He came to the conclusion and finding that the Assessing Officer had examined the said aspect and accepted the respondent's computation figures but he had reservations. The CIT in the order has recorded that the consideration receivable was examined by the Assessing Officer but was not properly examined and therefore the assessment order is "erroneous". The said finding will be correct, if the CIT had examined and verified the said transaction himself and given a finding on merits. As held above, a distinction must be drawn in the cases where the Assessing Officer does not conduct an enquiry; as lack of enquiry by itself renders the order being erroneous and prejudicial to the interest of the Revenue and cases where the Assessing Officer conducts enquiry but finding recorded is erroneous and which is also prejudicial to the interest of the Revenue. In latter cases, the CIT has to examine the order of the Assessing Officer on merits or the decision taken by the Assessing Officer on merits and then hold and form an opinion on merits that the order passed by the Assessing Officer is erroneous and prejudicial to the inte....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the addition of Rs. 79,14,00,000 /- on account of unexplained cash credit and Rs. 78,000/- due to disallowances of 'preliminary expenses written-off. Subsequently Ld. Principal Commissioner of Income Tax - 4, Kolkata passed order u/s. 263 on 17/10/2016 set aside de novo with direction to A.O. to carry out proper examination of books of accounts and bank accounts of assessee as well as investors. A.O. was also directed to examine the source of share application, identity of investors and its genuineness. Accordingly notice u/s. 142(1) was issued on 11/11/2016 and duly served on the assessee company. The case was fixed from time to time. Shri Vinay Kr. Singh, A/R of the assessee company appeared on different dates and produced copy of ITR, audited accounts, computation of income, details of directors, details of business activities, details of increase in share capital, Form 2 & Form 5, list of share-holders, details of bank account. He also produced the books of accounts and supporting documents to explain the balance sheet items and investment which is checked with bank statement entries. The said details were examined. The case was discussed & heard. Summons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t proceedings. Even in the first round of the proceedings also all the share applicants replied directly to ld. AO enclosing the details of bank statement, financial audited balance sheet and profit and loss account, income tax return and other identity proof. Again in the second round, each and every detail have been examined by ld. AO. Therefore, complete enquiry has been conducted. Directors of the investor companies were called for and they have appeared and accepted the transactions. It is not the case of no enquiry or incomplete enquiry. 17. In our view, this is a case of complete enquiry conducted by ld. AO taking into consideration all the angles which need to be taken for examining such type of transactions which in some cases are bogus or in the nature of accommodation entries. We also find that ld. Pr. CIT has merely given directions but for coming to this conclusion he ought to have first discussed that what details remained to be called for by ld. AO. Ld. Pr. CIT ought to have conducted the preliminary enquiry and had found some discrepancies or some glaring fact which could indicate that the alleged share capital and share premium are bogus in nature. In the first ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 11. The Assessing Officer in his order records that the assessee company has offered income u/s 115JB of the Act, by declaring book profits and this is a company which is doing business in the real sense. He also gives a finding that this is not a case of laundering of unaccounted income in the garb of share premium. He gave a specific finding that the investments made had every potential for appreciating in future and this justifies the share premium. At page 5 & 6, the Assessing Officer refers to the directions of the Id. Pr. CIT and the results of the enquiry done by him in compliance with these directions of the Id. Pr. CIT. He records that summons were issued u/s 131 of the Act to the share holding company M/s. Lakshmi Dealmark Private Limited, for personal appearance. He gave a finding of fact that the share holding company is in investment activities and had undertaken several transactions of investments. He recorded that departmental inspector was deputed for inspect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n hand and find out whether pursuant to the specific direction of First Ld. Pr. CIT, the second AO has discharged his role as an investigator in respect of share capital and premium collected by the assessee or whether the AO failed to enquire on this issue and whether his re-assessment/second assessment order is a plausible view or it can be termed as an unsustainable view in law. We on a conjoint reading of the First Revisional Order of the First Pr. CIT dated 23.08.2016 and the reassessment /Second assessment of the AO dated 07.12.2016, the following facts can be discerned:- (a)The First Ld. Pr. CIT has recorded a finding after perusal of the first assessment records/folder that during the first round of scrutiny proceeding, the assessee company produced the following documents before the first AO in the original assessment to satisfy the AO in respect of identity, creditworthiness and genuineous of share subscribers:- (i) audited financial statements; (ii) copy of Form filed with the ROC; (iii) copy of PAN Card of the assessee company; (iv) details and copy of share applicants; (v) bank statement reflecting the transaction; ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessment order dated 26-03-2015. 49. So we note that the second AO was specifically directed by the First Ld. Pr. CIT to carry out the following actions in addition to de-novo assessment which means the second AO is free to assess the income of assessee afresh, however, he has to do the following specific actions as directed in respect of share-applicants who applied for shares in assessee-company. The specific directions of Ld. Pr CIT to AO are as under: i) To carry out proper examination of the books of accounts and bank account of the assessee; ii) To carry out proper examination of the books of accounts and bank account of the investors; iii) AO to examine the source of the share applicants; iv) The AO to examine the identity of the investor and its genuineness; Sl. No. Name of company CIN PAN ITR filed for AY 2012- 13 1. M/s. K. R. Overseas Pvt. Ltd. U51109 WB1994PTC061965 AACCK0101B yes 2. M/s. Kakrania Trading Pvt. Ltd. 870101WB1994PTC062137 AABCKI51611 yes 3. M/s. AmbalaTrafin Pvt. Ltd. U67120WB1995PTC0743 97 AACCA1184G yes 4. M/s. Subhiksha Pvt. Ltd. U52190W....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the notice, all the shareholders have filed their respective (i) PAN details, (ii) CIN detail, (Ui) Audited Annual Report for FY 2011-12 (AY 2012-13), (iv) ITR acknowledgment for AY 2012-13 which the AO acknowledges that he verified the same and thus we note that the identity of the investors were duly furnished by the assessee's director; and the AO verified the veracity of the same from all the share applicants by issuing notice u/s 133(6) of the Act and moreover it is common knowledge that in this computer/digital era, the AO on a click of the mouse, could have easily verified the identity of the share applicant which is available in the website of Ministry of Corporate Affairs and the ITR Acknowledgments filed by them, will enable the AO to cross verify and collect details from the AO of the respective share applicants and independently from the Revenue's departmental data base. We note that all the share subscribing parties filed all the documents called for by the AO [PB-2] and were also examined by the AO along with audited accounts from which these details show their identity. 51. Thus, we note that the AO after verification as aforesaid, has not drawn any ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e also note that all the share-holders are regular income tax assessee's. Therefore in the light of the aforesaid documents discussed their identity cannot be disbelieved and the AO's satisfaction in respect of identity of the shareholders is a possible view and cannot be termed as unsustainable in law or facts. 52. Coming to the creditworthiness of the shareholders, our attention was drawn to the balance sheet of the shareholders (PB- 2) which was filed before the AO and the Ld. Pr. CIT and we note that their source of investment and net worth as per balance sheet as on 31.03.2012 as well as the sum invested by them in the assessee is discernible as under: Name Source of investment Capital & Reserves Sum invested in assessee's business M/s. K. R. Overseas Pvt. Ltd. Page 8 Paper Book-2 Rs.66,77,47,921 (page 22 PB-2) Rs.1,30,000/- M/s. Kakrania Trading Pvt. Ltd. Page 45Paper Book-2 Rs.66,52,71,914 (page 62 PB-2) Rs.1,39,00,000/- M/s. AmbalaTrafinpvt. Ltd. Page 88Paper Book-2 Rs.624,711,003 (page 101 PB-2) Rs.4,40,00,000/- M/s. Subhiksha Pvt. Ltd. Page 115Paper Book- 2 Rs.222,397,317(page 128 PB-2) Rs.45....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ry. And we note that revenue has not brought on record any material to challenge the veracity of the documents referred to above. Moreover, the second Ld. Pr. CIT in his impugned order has not brought any material to rebut the presumption of second AO to justify his intervention u/s. 263 of the Act and which would have upset the decision of the second AO's factual view on the identity, creditworthiness and genuinity of the share transaction. In such a scenario, the second AO's view based on the documents referred to by him is a plausible view and in consonance with judicial precedents (supra) which we would like to discuss/ examine each share subscribers totaling thirteen (13) infra:- (i) On perusal of the paper book-2, it reveals that the documents are placed at page 12 to 37 of share applicant M/s. K.R. Overseas Pvt. Limited which is a Private Limited Company, and which has Permanent Account No. AACCK0101B and CIN U51109WB1994PTC061965 and its Net-worth as on 31.03.2012 (in total)- share capital & reserve is to the tune of Rs.66,77,47,921/- (PB page 22) and the investment made in the assessee-company including the share premium comes to Rs.1,30,00,000/-. The paym....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the notice under section 133(6) of the Act. (iii) We note from a perusal of the paper book-2 pages78 to 111, the details of share applicant M/s. Ambala Trafin Pvt. Ltd. It is a Private Limited Company which has a PAN AACCA1184G and its CIN number is U67120WB1995PTC074397 and the Net worth of this company as on 31.3.2012 Rs.62,47,11,003- (PB-pagelOl) and investment made in the assessee company is to the tune of Rs. 4,40,00,000/- and this share applicant has made the transaction through banking channel on 01.03.2012 Rs. 25 lakhs; and on 03.03.2012 Rs. 40 lakhs through NEFT; and by cheque on Rs. 3,75,00,000/-on 27.3.2012 . There is board resolution for investment in assessee's company and Share Application Form, Bank statement, ITR acknowledgement, explanation of source of fund as well as financial statement available in the PB-page 79 to 111 in the PB-II. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. This company has furnished the details of source of Funds and has duly filed financial statements. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9;s company and Share Application Form Bank statement, ITR acknowledgement, explanation of source of fund as well as financial statement available in the PB-page 139 to 159 in the PB. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. This company has furnished the details of source of Funds and has duly filed financial statements. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement and thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Thus the assessee has discharged the onus to prove the identity, creditworthiness and genuineness of the transactions. Further, it is noted that the share applicants had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. (vi) We note from a perusal of the paper book pages-2, 160 to 184 the details of share applicant M/s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Thus the assessee has discharged the onus to prove the identity, creditworthiness and genuineness of the transactions. Further, it is noted that the share applicants had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. (viii) We note from a perusal of the paper book pages-2,207 to 226 the details of share applicant M/s. SukhSagar Residency Pvt. Ltd. It is a Private Limited Company which has a PAN AARCS1553N and its CIN number is U45400WB2011PTC170958and the net worth of this company as on 31.3.2012 Rs.56,18,93,960/-(P.B-2 pages-220) and investment made in the assessee company is to the tune of Rs.2,31,00,000/- and this share applicant has made the transaction through banking channel on 31.3.2012 Rs. 2,31,00,000/- through NEFT. There is board resolution for investment in assessee's company and Share Application Form, Bank statement, ITR acknowledgement, expla....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. (x) We note from a perusal of the paper book-2, pages 262 to 283 the details of share applicant M/s. Labhdhan Impext Pvt. Ltd. It is a Private Limited Company which has a PAN AACCL2111J and its CIN number is U51909WB2011PTC171524 and the net worth of this company as on 31.3.2012 Rs.56,18,94,080/- (P.B-2, page 277) and investment made in the assessee company is to the tune of Rs.3,80,00,000/- and this share applicant has made the transaction through banking channel on 31.03.2012 a sum of Rs.3,80,00,000/- through NEFT. There is board resolution for investment in assessee's company and Share Application Form, Bank statement, ITR acknowledgement, explanation of source of fund as well as financial statement available in the PB-page 163-283 in the PB. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. This company has furnished the details of source of Funds and has duly filed financial statements. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the trans....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4 to 326 in the PB. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Thus the assessee has discharged the onus to prove the identity, creditworthiness and genuineness of the transactions. Further, it is noted that the share applicants had furnished the source of investment made in the assessee- company after getting the notice under section 133(6) of the Act. (xiii) We note from a perusal of the paper book-2 pages 327 to 352 the details of share applicant M/s. Sristi Sales Pvt. Ltd. It is a Private Limited Company which has a PAN AAICS8900L and its CIN number is U51109WB2005PTC 102121 and the net worth of this company as on 31.3.2012 Rs.1,12,25,612/- and investment made in the assessee company is to the tune of Rs.50 lakhs and this share applicant has made the transaction through banking channel on 28.02.2012 a sum of Rs. 50 lakhs through Cheque. There is Share Application, Bank statement, ITR acknowledgement, financial statement available in the PB-2, page 328 to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....subscribers responded to sec. 133(6) notice and produced all documents along with the audited financial statements and other documents referred supra, the assessee had discharged the onus upon it about the identity creditworthiness and genuineness of the share capital and premium collected by the assessee from the respective share subscribers. Since the aforesaid exercise was carried out by the second AO in the reassessment proceedings and the documents referred to above are in the assessment folder, the Second Ld. Pr. CIT erred in holding the reassessment order of the AO in respect of share capital and premium collected by the assessee as erroneous as well as prejudicial to the interest of the revenue. In the light of the aforesaid discussions and on perusal of the documents, we are of the view that AO's view to accept the identity, creditworthiness and genuineness of the share capital and premium collected from the share subscribers was a plausible view and at any rate can be termed as an unsustainable view on law or facts 55. Further, we also take note that while he proposed to interfere u/s. 263 of the Act, he had opined that there was no detailed or independent en....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 56. To sum up, we find from the above said facts that the Second AO has conducted enquiry as directed by the First Ld. Pr. CIT on the specific subject matter i.e. share capital and premium collected by the assessee-company. Therefore, the finding of Second Pr. CIT that the Second AO has not conducted enquiry is incorrect and is flowing from suspicion only. And as discussed, the allegation/fault pointed out by the Second Ld. Pr. CIT that the Second AO failed to collect total facts also cannot be accepted for the simple reason that Ld. Pr. CIT has not spelt out in the impugned order what he meant by total facts or in the alternative when the assessee has discharged its onus, as required by the law in force in this AY 2012-13, then the Ld. Pr. CIT ought to have called for which ever additional documents/materials or issued summons or issued notices and collected those facts which according to Second Ld. Pr. CIT, the AO omitted to collect and then demonstrated that those actions/documents which he collected in that process gave result to a different finding of fact which will turn upside down the claim of the assessee and thus able to show that the actions/omission of AO in condu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llected by assessee company. Resultantly the second Ld. Pr.CIT, again cannot rake-up the same subject matter without the second Ld. Pr.CIT in the second revisional order spells out where the error happened to second AO as an investigator or adjudicator, which exercise the Second Ld. Pr.CIT has not done, so the second Ld. Pr. CIT cannot be permitted to again ask the AO to start the investigation in the way he thinks it proper on the very same subject on which merger has taken place by virtue of the order of First Ld. Pr. CIT. And if this practice is allowed, then there will be no end to the assessment proceedings meaning no finality to assessment proceedings and that is exactly why the Parliament in its wisdom has brought in safe-guards, restrictions & conditions precedent to be satisfied strictly before assumption of revisional jurisdiction. Be that as it may be, as discussed above, we find that the Second Ld. Pr. CIT without satisfying the condition precedent u/s 263 of the Act has invoked the revisional jurisdiction (second time), so all his actions are ab initio void." 13. In the case on hand, the Assessing Officer has at page 5, considered the specific directions given....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee is allowed. 4. Consistent with the view taken therein, we hold that the exercise of the revisionary powers by the Id. Pr. CIT u/s 263 of the Act vide order dt. 31/01/2020, is bad in law. Hence, we quash the same. 5. In the result appeal of the assessee is allowed." 19. We notice that the issues raised in the instant appeal and facts brought before us are almost identical to the issues dealt by this Tribunal in the case of Bhagwati Vintrade Private Limited (supra) and this decision of this Tribunal was challenged by the Revenue before the Hon'ble Jurisdictional High Court but Revenue failed to succeed as the decision of this Tribunal stands confirmed by the Hon'ble Jurisdictional High Court observing as follows: "The Court This appeal filed by the revenue is directed against the order dated 17.02.2021 passed by the Income Tax Appellate Tribunal, "A" Bench, Kolkata (Tribunal) in ITA No. 303/Kol/2020 for the assessment year 2013-2014. The revenue has raised the following substantial questions of law for consideration : i) Whether the Learned Tribunal has committed substantial error in law by not upholding the order passed u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e view. That apart we note that the assessing officer conducted thorough enquiry and has also examined the directors of the holding company. Thus the learned Tribunal rightly dismissed the appeal filed by the revenue. Considering the facts and circumstances of the case we find that there is no question of law much less substantial question of law arising for consideration in this appeal. Accordingly, the appeal fails and dismissed." 20. The above judgment of Hon'ble Jurisdictional High Court has recently been followed by this Tribunal in the case of Swasti Realinfra Pvt. Ltd. (supra) where also similar issue came for adjudication and the order u/s 263 of the Act has been quashed by this Tribunal observing as follows: "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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f source of funds have been submitted by all the shareholders. (iii) None of applicants have been made otherwise than by banking channels. (iv) All the investors have submitted their Annual reports and I. T. Returns. (v) In all the cases the investments is duly reflected in the Annual Accounts of the investor. (vi) Moreover, summon u/s. 131 was also issued to the director of the company. In response to the summon u/s. 131 the director of the company appeared 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 i....