TaxTMI 
TaxTMI 
2023 (5) TMI 1298
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....ome Tax Act 1961 issued by the learned Commissioner of Income Tax was without jurisdiction and the order passed on the basis of such notice was bad in law hence the same be quashed and or annulled. (3) For that in the facts and circumstances of the case the Learned Commissioner of Income Tax erred in holding that the assessment order passed by the learned assessing officer in the case of the appellant with inadequate inquiry and hence erroneous and prejudicial to the interest of revenue and thereby setting aside the said assessment order u/s 263 of the Income Tax Act 1961. (4) For that in the facts and circumstances of the case the Learned Commissioner of Income Tax erred in holding that the assessment order passed by the learned assessing officer in the case of the appellant was erroneous and prejudicial to the interest of revenue and thereby setting aside the said assessment order u/s 263 of the Income Tax Act 1961. (5) For that in the facts and circumstances of the case the Learned Commissioner of Income Tax failed to appreciate that the assessment order was not erroneous and prejudicial to the interest of revenue and as such the Learned Commissioner o....
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....nd finally completed the assessment without making any addition on account of share capital received during the year but disallowed the expenses of Rs.1,00,750/- and assessed the income at Rs.1,17,690/-. 4. Subsequently ld. CIT called for the assessment records and noticed that the ld. Assessing Officer has not examined the transactions of share capital and share premium received by the assessee during the year and thus assumed jurisdiction under section 263 of the Act. In the show-cause notice dated 01.02.2023, it was stated that "on examination of records, it was found that 14,69,500 shares were issued by the said company at face value of Rs. 10/- each at a premium of Rs.90/- per share. In other words, the assessee company raised a paid up share capital of Rs.146 lacs with premium of Rs.13.23 crores. Further on perusal of the assessment records it is found that requisite inquiries were not conducted regarding the issue as to what prompted the subscribers to the shares to pay such substantial premium on shares of a little known company having no or insignificant business activities. It is apparent that the order was passed without application of mind". 5. The assessee filed ....
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....the detailed written submissions placed on record and referred to various documents placed in the paper book running into 425 pages and made twofold arguments. Firstly it is contended that the reopening proceedings carried out by the assessee vide issuance of notice under section 148 of the Act on 07.12.2010 and thereafter proceedings completed on15.02.2011, are bad-in-law and non-est since statutory notice under section 143(2) of the Act was not issued to the assessee and, therefore, since the subject matter of the revisionary proceedings i.e. assessment order dated 15.02.2011 is nullity, bad-in-law and non-est, therefore, revisionary proceedings under section 263 cannot be carried out on the basis of such non-est assessment and the same deserves to be quashed. 9. The second fold of contention is that extensive inquiries and investigations were carried out by the ld. Assessing Officer before drawing one of the possible views and the same is evident from the order-sheet, which is part of the assessment records which indicate that all the relevant documentary evidences regarding the alleged share capital and share premium received were filed including the financials, bank stateme....
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....Hon'ble High Court of Calcutta 50 - 57 11. Concord Infra Projects Pvt. Ltd. Vs. PCIT (2021) 63 CCH 0117 The Hon'ble ITAT, Kolkata Bench 58 - 68 12. Classic Flour and Food Processing vs ITO, Wd-11(4), Kolkata, 764 to 766/Kol/ 2014 dated 05.04.2017. The Hon'ble ITAT, Kolkata Bench 69 - 80 13. M/s Charam Vincom Pvt. Ltd. vs. I.T.O.,Ward-3(1), Kolkata 758/Kol/2019 dated 01.01.2020 The Hon'ble ITAT, Kolkata Bench 81 - 85 14. Minimax Commerce (P.) Ltd. vs. ACIT, Raipur (2021) 133 taxmann.com 188 The Hon'ble ITAT, Raipur Bench 86 - 90 15. Parveen Kumar Mittal vs. PCIT (2021) 63 CCH 0256 The Hon'ble ITAT, Chandigarh 91 - 101 16. Supersonic Technologies (P) Ltd. Vs. PCIT (2019) 175 DTR 30 Hon'ble ITAT, Delhi Bench 102 - 121 17. Pioneer Distilleries Limited Vs. PCIT-1, Aurangabad ITA No. 479/PUN/2017 The Hon'ble ITAT, Pune Bench 122 - 129 Argument:- No addition u/s 68 if identity of subscribers has been furnished. 18. CIT vs Lovely Exports (P) Ltd (2008) 216 CTR 195 ....
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.... Fibers Limited (2018) 98 taxmann.com 173 The Hon'ble Supreme Court of India 300 - 301 32. PCIT vs. Himachal Fibers Limited (2018) 98 taxmann.com 172 The Hon'ble High Court of Delhi 302 Argument:- No addition merely by reference to notorious practice:- 33. Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 The Hon'ble Supreme Court of India 303-318 34. CIT vs. Discovery Estates P. Ltd TS-63-HC-2013(Del) The Hon'ble High Court of Delhi 319 - 327 Argument:- No addition merely by referring to the surrounding circumstances 35. CIT vs. Bedi & Co. Pvt. Ltd. (1998) 230 ITR 0580 The Hon'ble Supreme Court of India 328 - 332 36. Bedi & Co. Pvt. Ltd. vs. CIT (1983) 144 ITR 0352 The Hon'ble High Court of Karnataka 333 - 336 37. Baba Bhoothnath Trade & Commerce Ltd. vs. ITO ITA No. 1494 /Kol./2017 The Hon'ble ITAT, Kolkata 337 - 362 38. CIT vs. Roseberry Mercantile (P) Ltd. GA No.3296 of 2010 ITA No. 241 of 2010 The Hon'ble High Court of Kolkata 363 - 365 Argument:- Jurisdiction u/s 263 cannot be assumed for making roving or fishing inquiry 39. Jagu Dnyanu (2022) De....
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....iction and further erred in carrying out the revisionary proceedings ignoring the fact that firstly the reassessment proceedings carried out by the assessment order dated 15.02.2011 are itself bad-in-law since statutory notice under section 143(2) of the Act was not issued and served upon the assessee before carrying out reassessment proceedings, and secondly thorough inquiry has been conducted by the ld. Assessing Officer regarding the issue of equity shares of 14,69,500 at a face value of Rs.10/- each and charging share premium of Rs.90/- per share. 12. So far as the first contention of the assessee that the impugned proceedings are bad-in-law because the subject matter of the revisionary proceedings i.e. reassessment proceedings were itself bad-in-law and non-est since notice under section 143(2) of the Act was not issued and served upon the assessee, we notice that in the body of the assessment order, it is stated by the ld. Assessing Officer that notices under section 143(2) and 142(1) of the Act were issued and duly served upon the assessee. However, our attention is drawn to the RTI application dated 31.12.2020 filed by the assessee for providing the certified copies of r....
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..... (2018)2 NYPCTR 708 (Cal) The Hon'ble High Court of Calcutta 7 4 ACIT & Anr. vs. Hotel Blue Moon (2010) 321 ITR 0362 The Hon'ble Supreme Court 8-13 5 Alok Mittal vs. DCIT (2017) 167 ITD 325 (Kol) The Hon'ble ITAT, Kolkata Bench 14-17 6 CIT vs. Sri Moins Iqbal ITA No. 168/2009 The Hon'ble High Court of Allahabad 18-28 7 PCIT-1 vs. M/s Consortium Nussli Comfort Net ITA No.62/2022 dated 24.03.2022 The Hon'ble High Court of Delhi 29-33 14. It has been consistently held that the assessment completed u/s 143(3) r.w.s. 147 without issuance of notice u/s 143(2) renders the assessment order as non est. The assessee placed reliance on following judicial pronouncements wherein it has been held that the assessment order passed u/s 143(3) r.w.s. 147 without issuing notice u/s 143(2) is bad in law and is a nullity. Sl. No. TITLE CITATION . AUTHORITY Page No. of LPB I. PCIT vs. Silver Line (2016) 383 ITR 455 (Del) Hon'ble High Court of Delhi 34-40 2. PCIT-08 ....
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....tion 263 of the Act are quashed. 17. Now dealing with the second fold of contention made by the assessee challenging the assumption of jurisdiction under section 263 of the Act, since the issue before us pertains to the invocation of jurisdiction u/s 263 of the Act, we find that the provisions of Section 263 of the Act has a direct bearing on the issue raised before us, therefore, it is pertinent to take note of this Section which reads as under: "263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or 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 aft....
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....t required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show ITA cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass 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 dire....
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....ereof is placed on Page No. 4 of the PB filed on 24.6.2022. The assessee duly furnished the complete particulars of all the shareholders, which is evident from Page No.408 to 409 of the PB filed on 24.06.2022, 21. The Learned A.O himself carried out extensive inquiries and investigation by exercising the powers conferred on him u/s 133(6) Income Tax Act, 1961 which is evident from documents obtained from the assessment record and placed on Page No. 34 to 414 of the PB filed on 24.6.2022, the copies of notices issued u/s 133(6) of the Income Tax Act, 1961 by the Ld. AO to the shareholders are placed on following Page Number of the Paper Book filed on 24.6.2022 (Page No.79 to 91 of the Paper Book): SI. No. Name of the Shareholder Amount of Investment in share capital of assessee Copy of notice under section 133(6) placed on following page 1 Rasraj Dealer Pvt. Ltd. 95,00,000/- 79 2 Shambhu Agencies Pvt. Ltd. 1,15,00,0000/- 80 3 Pearl Distributors Pvt Ltd. 72,00,000/- 81 4 Tanisha Vyapaar Pvt. Ltd. 75,00,000/- 82 5 Destiny Heights Pvt. L....
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....oks of accounts of the assessee with reference to the relevant documentary evidences which is evident from the notings in the order sheet which is placed on Page No. 76 to 77 of the PB filed on 24.06.2022. The books of accounts were produced on 25.01.2011 and which was cross checked with the bank account statement of the assessee and the Learned A.O duly considered the Inspector's report which is evident from order sheet entry dated 10.02.2011. Thus, the observation of Learned CIT that the assessment order was passed without application of mind is bereft of merit. 24. Further we find that the Learned PCIT has held that proper enquiry was not conducted regarding the identity and creditworthiness of shareholders, but no doubt was expressed as far as genuineness of the receipt of share capital is concerned, in other words, genuineness of the receipt of share capital has not been doubted either in the show cause notice or in the impugned order u/s 263 which is evident from Para 3 of the impugned order u/s 263. We also note that the assessee had duly furnished the name and address of all the subscriber companies. Based on the result of the enquiry conducted by the Learned A.O, it was....
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.... AACCT2326B 75,00,000/- TOTAL 11,67,50,000/- Moreover, the existence of the subscriber companies stood established from the fact that all the subscriber companies were found at their given addresses by the Inspector of Income Tax and that the notices issued u/s 133(6) were duly served on all the subscribers and the subscribers had duly responded to the notices issued u/s 133(6), thus, the identity of the subscribers stood established beyond all shadows of doubt. 25. As far as creditworthiness of the subscriber companies is concerned, the same was evident from the audited financial statements of the subscriber companies from which the Learned A.O found that all the subscriber companies had sufficient Tangible Net Worth as tabulated herein below:- Sl.No. Name of the subscriber company Amount of share capital subscribed Tangible net worth as on 31.03.2009 based on the audited financial statement 1 Destiny Heights Pvt. Ltd. 91,50,000/- 18,62,94,107/- 2 Ganesh Vincom Pvt. Ltd. 87,50,000/- 29,70,00,000/- 3 GoodwardVyapaar Pvt. Ltd.....
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.... Vs. M/s Chain House International Pvt. Ltd., (2019) 2 SLPCTO 60, (2019) 262 Taxman 207 The Hon'ble Supreme Court 461 2 PCIT vs. Goodview Trading Pvt. Ltd. ITA No. 377/2016, dated 26.11.2016 The Hon'ble High Court of Delhi 4 Baba Bhoothnath Trade & Commerce Ltd. vs. ITO ITA No.1494/Kol./2017, dated 15.04.2019 The Hon'ble ITAT Kolkata 29. We further observe that the Learned CIT himself admitted that enquiry was conducted by the Learned A.O, however, he resorted to a assumption of jurisdiction u/s 263 merely because the Learned A.O did not conduct those enquiries which according to Learned CIT, ought to have conducted. Thus, admittedly, it's not a case of lack of enquiry, at the most, it may be stated that it is a case of inadequate enquiry, however, it's a trite law that jurisdiction u/s 263 cannot be assumed in the case where there has been an enquiry though inadequate and jurisdiction u/s 263 can be validly assumed where there is lack of enquiry and not in case of inadequate enquiry and for this view reliance placed on following judicial pronouncements:- 1 PCIT vs. Singhal Enterprises....
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....ce of notice u/s 133(6) of the Income Tax Act, 1961 and held it to be sufficient inquiry and formation of plausible view by the Learned A.O based on the results of inquiry conducted by issuing notices u/s 133(6). The Hon'ble Calcutta High Court relying upon the decision of the Hon'ble Supreme Court in Malabar Industries Company Ltd. vs. CIT reported in 243 ITR 83 as well as the decision of the Hon'ble Supreme Court in CIT vs. Max India Ltd reported in 166 Taxman 188 dismissed the appeal of the revenue and thereby accepted that once the Learned A.O had conducted inquiry by issuing notices u/s 133(6) then jurisdiction u/s 263 cannot be assumed. 32. Further this Tribunal in its order dated 03.08.2022 in the case of Salarpuria Properties Private Limited vs. PCIT reported in 197 ITD 490 relied upon the decision of the Hon'ble Delhi High Court in the case of Sunbeam Auto Ltd. reported in 227 CTR 133, wherein the issue of lack of inquiry and inadequate inquiry was discussed at length and it was held that the jurisdiction u/s 263 cannot be assumed in case of inadequate inquiry, conversely, jurisdiction u/s. 263 can be assumed only in case of lack of inquiry. 33. We further find that ....
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....36 3 Baba Bhoothnath Trade & Commerce Ltd. vs. ITO ITA No. 1494/Kol./2017 The Hon'ble ITAT, Kolkata 337 - 362 4 CIT vs. Roseberry Mercantile (P) Ltd. GA No.3296 of 2010 ITA No. 241 of 2010 The Hon'ble High Court of Kolkata 363 - 365 Jurisdiction u/s 263 cannot be assumed for making roving or fishing inquiry; S.No. TITLE CITATION AUTHORITY Following Page No. of LPB 1 Shringar Marketing (P) Ltd. vs. PCIT (2021) 190 ITD 16 (Kol) The Hon'ble ITAT, Kolkata *C' Bench 155-174 2 Jagu Dnyanu Deokate vs. ITO (2022) 36 NYPTTJ 1504 (Pune) The Hon'ble ITAT, Pune "A" Bench 366-371 35. Further we find that It's a trite law that where two views are possible and if the A.O. has drawn one of the possible views, then such an order cannot be said to be erroneous and therefore, jurisdiction u/s 263 cannot be assumed and same has been held in following judicial pronouncements:- S.No. TITLE CITATION . AUTHORITY Following pages 1. Malabar Industrial Co. Ltd. Vs. CIT (2000) 243 HR 83 (SC) The H....
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....t. Ltd., 5/1, Clive Row, 3rd Floor, Kolkata-700 001. 2) Ganesh Vincom (P) L 6, N. G. Basak Road, Block-A, Phase-, PAN AADC02325G AADC00228N Flat No.-IE, Kolkata-700080 3) Destiny Heights (P Ltd. AACCD75631 Netai Dey, TATA Cate, Ananda Thirtha, Kolkata-700 119, 4) Greenfield Vinimay (P) Ltd., AADC001830 137/12, Narikeldanga Main Road, Kolkata-700012 5) Idea Vialmay (P) Lad, 4,0.C Avenue, Kalkata-700012 6) Ms. Kasturi Barter (P) Lad. 4. C. C. Avem Kolkata-700012 AABC19051P AADCK2518H 7) Ms. Pavitra Trexim (P) Ltd. AABCP5170C 5/1, Clive Row, 3rd Floor, Kolkata-700 001. 8) M's Pearl Distributers (P) Ltd. ЛÐВСР3592Ðœ 50, Dakshindari, Lake Town, Kolkata-700048. 9) Ms. Rasraj Denier Pvt. Ltd. $1, Clive Row, 3rd Floor, Kolkata-700 001. AADCR7489N 10) M.Sekar Sales (P) Ltd. AALCS2545L 13, 1 3, K.B. Sorani, 2 floor, R. No.204A, Kolkata-700080 11) M's. Tanisha Vyapar (P) Ltd. P41, Princep Street, 3 Floor, AACCP2326B Kolkata-700072. 12) M/s. Reliable Height (P) Ltd. 498/H/1, Rabindra Sarani, 8, Shyamapukur, Kolkata-700005. 13) M's....
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....22 No No No No No 176 176 No 177 177 No 178 179 No 180 180 No 181 186 No 22222 Document 4 187 187 189 195 196 196 201 201 202 215 Trexim Pvt Ltd. Reply to Notice u/s 133(6) Confirmatory Letter • Bank statement •Income Tax Return for A.Y 2009-10 Audited Balance Sheet as on 31.03.2009 30. Documents pertaining to Subscriber Namely Pearl Distributors Pvt Ltd. Reply to Notice u/s 133(6) Confirmatory Letter Bank statement Income Tax Return for A.Y 2009-10 22222 216 216 216 216 217 218 219 219 220 232 22222 No No No No No Audited Balance Sheet as on 31.03.2009 31. Documents pertaining to Subscriber Namely Rasraj Dealers Pvt Ltd. ⚫ Reply to Notice u/s 133(6) Confirmatory Letter Bank statement Income Tax Return for A.Y 2009-10 233 234 235 244 245 245 246 246 247 257 22222 No No No No No Audited Balance Sheet as on 31.03.2009 32. Documents pertaining to Subscriber Namely Reliable Heights Private Limited Reply to Notice u/s 133(6) ....