TaxTMI 
TaxTMI 
2025 (9) TMI 171
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.... is a public limited company and filed its return of income on 29.11.2014, declaring total income of NIL after claiming set off of brought forward losses/ unabsorbed depreciation. The assessee is engaged in the business of manufacturing of steel tubes, pipes, cold rolled strips, different variety of lamps and allied items and the assessment was completed u/s 143(3) vide order dated 09.12.2016 on return of income. During the year under appeal, in terms of the order of National Law Tribunal, Chandigarh dated 11.12.2017, the company Surya Global Steel Tubes Ltd. was merged with Surya Roshni Ltd. In the case of Surya Global Steel Tubes Ltd., the return was filed on 29.11.2014, declaring NIL income and same was assessed u/s 143(3) of the Act by making addition of INR 20,26,63,720/-. As a result of the merger with the assessee company, the proceedings u/s 147 of the Act in the case of assessee company were initiated on the basis of the information that M/s. Surya Global Steel Tubes Ltd. had received share capital and unsecured loans from various companies which includes Diwakar Marketing Pvt. Ltd. from whom the share capital was received and Rackson Motors Pvt. Ltd. from whom loan was re....
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....d Pr. CIT has erred both on facts and in Jay in getting aside the order of the A.O. without herself giving a finding as to the error and prejudice caused to the revenue by the assessment order. 7. That on the facts and circumstances of the case, the issue under revision i.e. share capital / share application money received by the assessee company from the companies alleged to be shell companies as per list of Task Force have been duly inquired and verified by the A.O. thrice during original assessment u/s 143(3), rectification proceedings u/s 154/155 and re-assessment proceedings u/s 147. 8. That on the facts and circumstances of the case, the action taken against the assessee company again and again under different proceedings under the Act on the basis of audit objection, which were completed after due verification of said investor companies, so again initiation of revisionary proceedings u/s 263 on the basis of same audit objection, is bad in law and is liable to be quashed. 9. That the appellant craves leave to add, amend or alter any of the grounds of appeal." 5. Before us, Ld. AR submits that in the instant case, assessment was originally complet....
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....nies and not the shell companies. Ld. AR further submits that necessary copy of confirmations, bank statement of the relevant party, financial statement of the subscriber companies and above all, copies of the assessment orders passed u/s 143(3) in the case of all five share applicant companies for the AY 2014-15 were filed wherein the Department has not only accepted the existence of these share applicant companies but also accepted the activities carried out by these companies. It was thus submitted by Ld. AR that these companies are not shell companies. Ld.AR further stated that based on the information filed by the assessee, AO in the re-assessment order passed u/s 147/143(3) dt. 11.03.2022 accepted the share capital alongwith the premium thereof, totaling to INR 11,01,50,000/- as genuine and no addition is made on this account. The relevant replies filed alongwith the copy of the reasons and objections filed by the assessee are available at pages Nos 242 to 582 of the Paper Book filed by the assessee. Thereafter, Ld. Pr. CIT in terms of notice dated 03.01.2024 issued for initiation of the revisional proceedings, it is alleged that the AO has not examined the genuineness of the....
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....ue is justified and rhus, the same deserves to be uphold. He prayed accordingly. 6.1. Ld.CIT DR placed reliance on the following judgments:- (i) Rajmandir Estates (P.) Ltd. [2017] 77 taxmann.com 285 (SC); (ii) Paramount Propbuild (P.) Ltd. [2024] 161 taxmann.com 85 (Delhi); (iii) Rajmandir Estates (P.) Ltd. [2016] 70 taxmann.com 124 (Calcutta). 7. Heard the contentions of both the parties and perused the material available on record. It is observed by us that in the instant case, there were three occasions when the Revenue has examined the identity and genuineness of the share capital and share premium received by the assessee during the year under appeal. 8. Firstly, in the proceedings u/s 143(3), AO has made specific query with respect to the identity, genuineness and creditworthiness of the applicant companies which is evident from the perusal of the notice issued u/s 142(1) dated 01.08.2016 wherein the AO has asked the assessee to file as many as 23 details of the share applicant companies comprising of their names, PAN, addresses, date of applications, nos. of shares applied, amount of application, amount of share premium, total amount inves....
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....ing the details filed by the assessee in which the assessee has filed the documentary evidence in respect of receipt of share capital of Rs. 12,01,50,000/- and share premium of Rs. 69,65,000/- aggregating to Rs. 12,71,15,000/-(in the hands of M/s Surya Global Steels Tubes Ltd.) against shares issued to M/s Jits Courier & Finance Pvt Ltd, Ms/ Raxon Motor Finance Pvt Ltd, Ms/ Sadabahar Tradecomm Pvt Ltd, Diwakar Marketing Pvt Ltd and M/s Shreyansh Mercantile Pvt Ltd during the financial year under consideration. Further, the assessee company has filed company master data from the portal of ministry of corporate affairs in respect of these investor companies along with copies of acknowledgements of their ITRs for the A.Y. 2014-15, copies of their audited balance sheet profit and loss account with annexures, copies of their bank statements showing date wişe payments made and copies of their ledger accounts as also the copies of their assessment orders passed u/s 143(3) of the Income tax Act, 1961 which has been perused and placed on record." 12. As is evident from the observations of the AO that he has not only made detailed enquiries and investigation in the matter however, af....
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....e Tax Act, 1961. The notice under Section 148 of the 1961 Act referred to two reasons. The first reason was with regard to non-declaration of the account in ING Vysya Bank with a credit of Rs. 70,13,43,319/- (Rupees seventy crores thirteen lakhs forty three thousand three hundred and nineteen only). The second reason was with regard to the claim of deduction under Section 10AA of the 1961 Act. It is accepted that a reassessment order under Section 148 read with Section 143(3) of the 1961 Act was passed. Addition was not made for the first reason. In the given facts, the assertion by the Revenue that inquiry and verification in re the bank account was not made is ex-facie incorrect. This being the position, this is not a case of failure to investigate, but as no addition was made, the Revenue can argue that it is a case of wrong conclusion and decision in the re-assessment proceedings. Therefore, to exercise jurisdiction under Section 263 of the 1961 Act, the Commissioner of Income Tax should have examined the merits and only on reaching a finding that the re-assessment order was erroneous and prejudicial to the interest of the Revenue made an addition. ....
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....rest rate swap was an actual loss and only the net loss of Rs. 114.05 lacs after setting of gain of interest rate swap was claimed as deduction. However, we find that both these issues were duly examined by the AO vide Questionnaire dated 2.11.2004 (Page 1- 2 of the Paper Book) to which replies dated 9.12.2004, 20.12.2004 and 6.1.2005 (Page No. 3-39 of Paper Book-1) were furnished and, therefore, the finding of the Ld. CIT that the issues were not examined properly was not correct. Even the Ld. CIT has not pointed out the definite and specific error in the original assessment order and observed that the inquiry made by the AO was inadequate or improper without first pointing out the error in the original assessment order passed by the AO, particularly because both the aforesaid issues were duly examined at the stage of the original assessment proceedings, hence, the impugned order is beyond jurisdiction, bad in law and void-ab-initio." 29. It is discernible from the aforenoted findings of the ITAT that both the claims were duly examined during the original assessment proceedings itself and neither there was any error nor the same was prejudicial to the interests of the Rev....
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....visions of Explanation-2 of section 263 which conferred power to the PCIT/CIT to give directions to the AO for making fresh examination and verification, which is inserted by Finance Act, 2015 in Section 263 with effect from 01.06.2015. As per this Explanation, to declare an order to be erroneous in so far as it is prejudicial to the interest of the revenue, if in the opinion of appropriate authority- (i) the order was passed without making inquiries or verifications which should have been made; (ii) the order is passed allowing any relief without inquiring into the claim; (iii) the order is not in accordance with any direction or instructions etc. issued by the Board u/s 119; or (iv) the order was not in accordance with binding judicial precedent. 15. In the instant case, the ld. PCIT has given direction to the AO for making further examination and verification on the issue of share capital and loans received from two parties error in the reassessment order by ld. PCIT. As per the provisions of Section 263 of Income Tax Act, 1961, the PCIT/CIT is vested with the supervisory powers of suo-motto revision of any order passed by the Assessing Officer [AO]. For the said purpose, the....
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....er should have been written differently or more elaborately. The Section does not visualize the substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is not in accordance with law. Further, each and every erroneous order cannot be the subject matter of revision because the second requirement also must be fulfilled. There must be material on record to show that tax which was lawfully leviable has not been imposed as held in Gabriel India Ltd.(supra). However, the expression "prejudicial to the interest of the revenue", as held by the Supreme Court in the Malabar Industrial Co. Ltd. (supra), is not an expression of art and is not defined in the Act and, therefore, must be understood in its ordinary meaning. The Commissioner's exercise of revisional jurisdiction under the provisions of Section 263 cannot be based on whims or caprice. It is trite law that it is a quasi-judicial power hedged in with limitation and not an unbridled and unchartered arbitrary power. The exercise of the power is limited to cases where the Commissioner on examining the records comes to the conclusion that the earlier finding of the I....
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....mated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. x x x x There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. 19. The Hon'ble Supreme Court in the case of CIT vs Amitabh Bachchan reported in the case of 69 Taxmann.com 170 held that the power of appeal and revision is contained in Chapter XX of the Act which includes section 263 that confers suo-motto power of revision in the Commissioner. The different shades of power conferred on different authorities under the Act has to be exercised within the areas specifically delineated by the Act....
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....s of the material and the details supplied. 21. The judgements cited by the revenue are on the issue where no enquiry was made by the AO or lack of enquiry on the part of the assessee or where AO has raised the issue but was not replied by the assessee to the satisfaction of the appropriate authorities. In the instant case, Ld. Pr. CIT invoked the Explanation 2 section 263 of the Act to hold the order passed is without making enquiries and verification. However, as observed above in the present case, detailed enquiries and verifications were made on three occasions and after considering the submissions of the assessee on every occasion, AO was of the opinion that the assessee has been able to discharge the burden casted upon it of proving the genuineness of the share capital received during the year under appeal. 22. In view of these facts and detailed discussion made herein above, in our considered opinion, Ld. Pr. CIT has failed to appreciate the facts that proper enquiry and examination was made in the instant case and therefore, there is no error in the order of the AO thus, it is not pre-judicial to the interest of the Revenue. Accordingly, we quash the order passed by L....