TaxTMI 
TaxTMI 
2025 (5) TMI 1708
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....is revisionary powers in terms of Expl. 1(c) to Section 263(1) of the Act." 3. The brief facts of the case are that for the impugned year under consideration, the assessee filed return of income declaring total income at Rs. 1,03,630/-. Subsequently, the assessment of the assessee was completed under Section 143(3) r.w.s. 147 of the Act wherein share capital amounting to Rs. 6.70 crores received by the assessee from paper / shell companies having no business activities, was added to the total income of the assessee. 4. During the course of assessment proceedings, the Assessing Officer observed that the assessee company had received share capital of Rs. 6.70 crores from three companies namely Prabhav Industries Ltd., Shri Ganesh Spinners Ltd. and Juliet Merchants Pvt. Ltd. The Assessing Officer was in possession of information that the aforesaid companies are bogus / paper companies, managed and controlled by Shri Shirish Chandrakant Shah of Mumbai. Therefore, the Assessing Officer made addition of Rs. 6.70 crores under Section 68 of the Act, by treating the share capital introduced as bogus accommodation entry received through the companies controlled by Shri Shirish Chandrak....
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....g the appellate order and allowing the relief to the assessee has not appreciated the nature of transaction of share capital received by the assessee from paper / shell companies by way of accommodation entries and did not comprehend the situation in light of the statements of Shri Shirish Chandrakant Shah and Directors of the companies from whom the share capital was claimed to have been received. Further, the PCIT noted that since the Department has filed appeal before the Tribunal in the matter, which is pending adjudication therefore, there is no restriction on the PCIT in initiating 263 proceedings, in the instant facts. Accordingly, the PCIT set-aside the assessment order as being erroneous, in so far as prejudicial to the interest of the Revenue. 7. The assessee is in appeal before us against the aforesaid order passed by Ld. PCIT holding the assessment order is being erroneous in so far as prejudicial to the interest of the Revenue. 8. Before us, the Counsel for the assessee submitted that in this case when Ld. CIT(A), in a detailed speaking order, taking into consideration the totality of the facts of the assessee's case had deleted the addition made on account of bo....
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....f initiating 263 proceedings with respect to commission paid towards bogus share capital, when such share capital have been held to be genuine by Ld. CIT(A). In the case of Commissioner of Income Tax vs. Nirma Chemicals Works Pvt. Ltd. 182 Taxman 183 (Gujarat), the Hon'ble Gujarat High Court held that the assessee company claimed relief under Section 80-I of the Act. The Assessing Officer allowed claim of the assessee partially by reworking / reducing the relief available. In appeal, Commissioner (Appeals) allowed the assessee's claim in entirety. Thereafter, Principal Commissioner passed an order under Section 263 disallowing the claim under Section 80-I on the ground that new industrial undertaking of the assessee was formed by reconstruction / splitting up of old business. In appeal, the assessee challenged jurisdiction of Principal Commissioner to exercise powers under Section 263 on ground that order of Assessing Officer having been merged with order of Commissioner (Appeals), it could not be revised under Section 263 of the Act. The Tribunal rejected the assessee's contention holding that Commissioner (Appeals) had not considered the issue regarding eligibility under ....
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....ed in charitable activity. The Assessing Officer was of view that assessee was not a Local Authority within the meaning of Section 10(20), and further, in view of nature and activities carried out by the assessee and its legal status, assessee's claim for exemption under Section 11 could not be entertained. However, Commissioner (Appeals) allowed assessee's claim and granted exemption under Section 11. Subsequently, the Principal Commissioner initiated revision proceedings under Section 263 of the Act on the ground that by virtue of Section 2(15) of the Act, activities of assessee could not be considered as charitable in nature and thus, he directed assessment to be made afresh after considering proviso to Section 2(15) of the Act. The Tribunal was of view that on principle of merger, it was not open for the Principal Commissioner to revise the order of assessment in revisionary proceedings. In further appeal the Bombay High Court held that when the Assessing Officer disallowed the claim of the assessee for benefit of exemption under Section 11 of the Act and Commissioner (Appeals) allowed the said claim of the assessee, it being a case of merger of assessment order with th....
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....ne but added certain amount on the premise that the assessee's profit from such dealings would have been higher than disclosed. The entire issue was at large before the Appellate Commissioner. It is well known that the Commissioner (Appeals) while hearing the assessee's appeal has powers to even enhance the assessment. If he was of the opinion that not only limited additions made by the Assessing Officer but much larger additions were justified, he could have certainly exercised such powers, of course after putting the assessee to notice. In this context, we may refer to clause (c) of Explanation 1 to sub-section (1) of section 263 of the Act. As is well known sub-section (1) of section 263 of the Act empowers the Principal Commissioner or the Commissioner to call for and examine the record of any proceeding and revise the same if he considers that the order passed therein by the Assessing Officer was erroneous insofar as it is prejudicial to the interest of the Revenue. Clause (c) of Explanation 1 of sub- section (1) provides that for removal of doubts it is hereby declared that, for the purpose of the said sub-section,- "(c) where any order referred to in this su....