TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 715
X X X X Extracts X X X X
X X X X Extracts X X X X
....thout jurisdiction, barred by limitation and is opposed to the principles of law, weight of evidence, probabilities, equity, natural justice, fair play and the facts and circumstances of the case of the appellant. 2. For that the PCIT-3, Chennai erred in passing the impugned revision order u/s.263 in spite of the fact that the order of assessment dated 31.10.2017 passed by the Assessing Officer u/s.143(3) was neither erroneous nor prejudicial to the interests of the revenue. 3. For that the PCIT-3, Chennai erred in not appreciating that no addition u/s.56(2)(viib) is warranted in the hands of the appellant company since 'the consideration of Rs.33/per share, received towards allotment of right shares to the existing shareholders, is lesser than the Fair Market Value of Rs.34.05/- per share. 4. For that the Fair Market Value of Rs.15.14/- per share stated by the PCIT-3, Chennai in the revision order is erroneous and not in alignment with the valuation methodology prescribed for the purpose of section 56(2)(viib) of the Act. 5. For that the PCIT-3, Chennai is not justified in holding that the excess premium of Rs.4,32,96,962/- is taxable in the hands of the appellant comp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(2)(viib) of the Act, where a company not being the company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares is taxable in the hands of the company. As per Rule 11 UA of the Income Tax Rules, the fair market value of the assessee company is Rs..15,139/- as on 31.03.2014 adopting the formula (A-L)/(PE)*(PV). The assessee had issued 24,24,242 shares to Resident Indians at Rs..33/- per share (including premium of Rs..23/- per share). Hence, the excess share premium issued to be taxed which works out to Rs..4,32,96,962/- [2424242 shares x 17.86(33-15.14). 4.2 The Assessing Officer has failed to verify the above issue while passing the assessment order under section 143(3) of the Act. According to the ld. PCIT, the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue, issued a show cause notice under section 263 of the Act to the assessee on 07.02.2020 and 22.02.2021. 4.3 In response to th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessment order under section 143(3) of the Act dated 31.10.2017. Therefore, the assessment order passed by the Assessing Officer cannot be said as erroneous order. 5.1 He further submitted that the ld. PCIT was of the opinion that the order passed by the Assessing Officer is cryptic order. However, the ld. Counsel for the assessee has submitted that once the Assessing Officer examined all the details in respect of the issue involved in this appeal, particularly, the case was selected for limited scrutiny and in that regard all the details are examined. Once the details are examined, it was not necessary that detailed assessment order is required to be passed. Therefore, the ld. Counsel for the assessee pleaded that the order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of Revenue and submitted that the revision order passed by the ld. PCIT has to be quashed. 5.2 The ld. Counsel for the assessee has submitted that the case was selected for scrutiny to examine the application of section 56(2)(viib) of the Act in connection with the share premium received. The Assessing Officer issued notice under section 142(1) of the Act dated 08.06.2017 to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubmitted that the Assessing Officer has examined the issue in depth, called for all the relevant details and documents and after examining all those details, the assessment was completed under section 143(3) of the Act. Therefore, the ld. PCIT was not correct in setting aside the assessment order passed by the Assessing Officer and directing him to redo the assessment and prayed for quashing the revision order passed under section 263 of the Act. In this context, he relied on the judgement of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC). He also relied on the judgement of the Hon'ble Madras High Court in the case of CIT v. Smt. Padmavathi [2020] 120 taxmann.com 187 (Mad). 6. On the other hand, the ld. DR strongly supported the order passed by the ld. PCIT and submitted that the Assessing Officer has called for the details and not examined and thus, the assessment order is erroneous and prejudicial to the interest of Revenue. 7. We have heard both the sides, perused the materials available on record and gone through the order passed under section 263 of the Act including various details filed in the form of paper book by the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....exercising the power under section 263 of the Act and noted that the order passed by the Assessing Officer must be erroneous and prejudicial to the interest of Revenue i.e., both the conditions are required to be cumulatively satisfied and if one of them is absent, section 263 of the Act cannot be exercised. In this case, the Assessing Officer, after examining all the details, the assessment order was passed. Therefore, it cannot be said that the order passed by the Assessing Officer is erroneous. Therefore, as per the above decision of the Hon'ble Supreme Court, the provisions of section 263 of the Act cannot be invoked in this case. 9. In the case of CIT v. Smt. Padmavathi (supra), the Hon'ble Jurisdictional High Court has held that where the Commissioner by invoking his power under section 263 of the Act, faults with the Assessing Officer on the ground that he did not make proper enquiry, in absence of any clarity as to why in opinion of Commissioner, enquiry was not proper, invocation of power under section 263 of the Act was not justified. 10. In this case, the ld. PCIT simply noted that the assessment order passed by the Assessing Officer is cryptic. The ld. PCIT ought to h....