TaxTMI 
TaxTMI 
2023 (7) TMI 745
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.... assailed the impugned order on the following grounds of appeal before us: "1. In the facts and circumstances of the case, ld. Pr. CIT (Central) erred in holding that the assessment order passed by the AO is erroneous and prejudicial to the interest of Revenue. He erred in setting aside the assessment order. The twin conditions of sec. 263 are not satisfied. 2. In the facts and circumstances of the case, ld. Pr. CIT (Central) erred in passing the revisional order u/s. 263 in violation to principles of natural justice. The revisional order passed without following principles of natural justice is illegal and liable to be quashed. 3. The appellant reserves the right to amend, modify or add any of the grounds of appeal." 3. Although the registry has pointed out a delay of 314 days but as stated by the Ld. AR and, rightly so, the aforesaid period is covered by the order of the Hon'ble Supreme Court of India in Suo Moto Writ Petition (Civil) No.3 of 2020 dated 23.03.2020, which was thereafter modified vide further order(s) dated 08.03.2021, 27.04.2021, 23.09.2021 and 10.01.2022, wherein as per Para 5 (iii) the present appeal could have been filed well withi....
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....record that there was no business rationale with the credited sum which was received from other concerns and had no logic. It is clear that it shall be used for layering purpose. During the financial year 2009-10, Rs. 51 lakh has been credited in the bank account (account No.518011045909) of M/s Cherry Vintrade Pvt. Ltd. Out of which Rs. 21,20,000/- was transferred to M/s Spectrum Infonet Pvt. Ltd. on 27-09-2009 which is to be treated as beneficiary. Considering the above facts I am believed & satisfy that there was an escapement of income of Rs. 21,20,000/-. Proceedings u/s 147 of the I. T. Act, 1961 should be initiated. SD/- (SAGAR KANTI SARKAR) ITO, Ward-15(2), Kolkata The AO framed assessment vide his order passed u/s. 143(3)/147 of the Act dated 29.12.2017, wherein no adverse inferences as regards share capital of Rs. 21.20 lac received by the assessee company from M/s Cherry Vintrade Pvt. Ltd. was drawn by him. The Pr. CIT observed that the A.O while framing the assessment had failed to make enquiries and verifications which he should have made to ascertain the identity, creditworthiness and genuineness of the transaction of receipt of s....
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....id transaction were available on record. Also, it was observed by the Pr. CIT that despite the fact that case of the assessee company was reopened by the AO u/s 147 of the Act on the basis of specific details/information that were shared with him by the Dy. DIT (Inv.), Kolkata, but he had neither carried out any verification nor made any effort to enquire about the existence of the aforesaid investor company and its creditworthiness, as well as had failed to verify the genuineness of the transaction under consideration. The Pr. CIT further observed that no details of investment sold; the number of shares sold; the date of purchase of the investment which was sold; copy of contract note and bills raised etc. were filed by the assessee company during the course of scrutiny proceeding though the same were specifically asked for by the A.O vide his notice(s) u/s. 142(1) of the Act dated 15.06.2017, 07.09.2017 and 03.10.2017. Also, it was observed by the Pr. CIT that though as per information shared by the Dy. DIT, (Inv.), Kolkata the aforesaid investor company, viz. M/s. Cherry Vintrade Pvt. Ltd. was not into any genuine business activities, but no effort was made by the A.O to carry o....
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....his regard, reference is drawn to clause(a) of Explanation 2 to sub section 1 of section 263 of the Income Tax Act, 1961 which reads as under: "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; From the plain reading of the aforesaid section, it is abundantly clear that the jurisdiction u/s 263 of the Income Tax Act, 1961 gets invoked if the enquiries made by the Assessing Officer are not adequate and comprehensive enough vis-a-vis the impugned issue leading to framing of erroneous order in so far as it is prejudicial to the interests of revenue. Further with respect to the submissions of the assessee, it is observed as under - 1. The mere fact that the company is active as per the records of ROC does not substantiate its creditworthiness. 2. The assessee did not furnish copy of confirmation, genuineness and creditworthiness of the im....
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....ion from DDIT (Inv.), Kolkata. It is also strange that no details of investment sold, the no. of shares sold, date of acquisition/purchase of the investment which was sold, copy of Contract Note and Bills raised etc. were filed by the assessee during the period of scrutiny though the same were specifically asked by the AO vide Notices u/s 142(1) dated. 15/06/2017, 07/09/2017 & 03/10/2017. Further, the DDIT (Inv.) had given information that M/s Cherry Vintrade Pvt. Ltd did not have any genuine business activity even then no effort was made by the AO to find out the truth from DDIT (Inv.), Kolkata who had passed such important information to the AO or from the Assessee or from M/s Cherry Vintrade Pvt. Ltd. The Balance-sheet of the assessee company as on 31/03/2010 shows that investment of the Assesses company was Rs. 2,44,72,500/- in comparison to preceding year's figure of Rs. 2,44,50,000/- i.e. its investment had increased from last year by Rs. 22,500/-. Further, neither the Balance-sheet contained any schedule of investment nor the assessee had submitted details of investment though the same was asked for by the AO vide Notices u/s 142(1) Dated 15/06/2017, 07/09/2017 ....
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....ement of the Hon'ble Supreme Court of India in the case of Rampyari Devi Saraogi Vs CIT(SC) 67 ITR 84 and in the case of Malabar Industrial Company Ltd. Vs CIT(SC) 243 ITR 83, I am satisfied that the order passed by the Assessing Officer u/s 147 r.w.s 143(3) of the Income Tax Act, 1961 for A.Y. 2010-11 on 29.12.2017 is erroneous and prejudicial to the interest of the revenue. Therefore, the assessment order passed by the Assessing Officer u/s 147 r.w.s 143(3) of the Income Tax Act, 1961 for A.Y. 2010-11 on 29.12.2017 is set aside. The Assessing Officer is directed to reframe the assessment after examining the above said issue and after affording sufficient opportunity of being heard to the assessee." 10. We have deliberated at length on the issue in hand in the backdrop of the observations of the lower authorities. As observed by the Pr. CIT and, rightly so, though the case of the assessee company was reopened on the basis of specific information that M/s. Cherry Vintrade Pvt. Ltd., i.e. a company which was stated to have made an investment of Rs. 21.20 lac with the assessee company was identified as a paper/bogus/shell company with dummy directors under the control and mana....
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....n non-descript information, therefore, assumption of jurisdiction u/s. 147 of the Act was in itself bad in law. It was submitted by him that the proceedings initiated on the basis of invalid assumption of jurisdiction u/s 147 of the Act; as well as the consequential assessment order so passed could not be sustained and was liable to be vitiated. Carrying his contention further, it was the claim of the Ld. AR that now when the case of the assessee had been reopened in absence of valid assumption of jurisdiction, therefore, the reassessment order passed by the AO being non-est in the eyes of law could not have been subjected to proceedings u/s. 263 of the Act. 12. We have given a thoughtful consideration to the aforesaid contentions of the Ld. AR and are unable to persuade ourselves to subscribe to the same. On a perusal of the "reasons to believe" which had formed the very basis for reopening of the assessee's case u/s. 147 of the Act, it transpires that the A.O was in receipt of information from the Dy. DIT, Investigation Wing, Unit- II, Kolkata, which revealed that M/s. Cherry Vintrade Pvt. Ltd., as per the information gathered by the Investigation Wing, Kolkata was identified ....