TaxTMI 
TaxTMI 
2026 (2) TMI 1132
X X X X Extracts X X X X
X X X X Extracts X X X X
....Act was issued without any adjustments. On 30.03.2021 reassessment was reopened for the reason that share capital of Rs. 36.06 crores received from HCI WTL, UAE was alleged to be unaccounted income of the assessee. As a matter of fact, during the relevant previous year assessee received share capital of Rs. 36.06 crores including share premium from M/s RCI World Trade Link DMCC a company incorporated in UAE on 20.03.2015 and its subsidiaries M/s RCI Industries and Technologies Pvt. Ltd. The share capital was received through Vijaya Bank, New Delhi in terms of automatic route of Foreign Direct Investment (FDI Scheme) of Government of India. The reasons for reopening mentioned in Financial Year 2011-12 NV Group had received share capital from RCI & T (holding company) and the same was offered to tax before Settlement Commission and thus, it was believed that the capital received by the assessee from RCI WTL, UAE a subsidiary of RCI & T was also unaccounted income. The assessment was completed on 30.03.2022 without any addition in respect of this disputed share capital. 3. Notice u/s 263 of the Act was issued on 20.09.2023 by revisionary authority interalia alleging that the Assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssions of the assessee in reassessment proceeding if, were examined at all would have led to a different conclusion and as the impugned assessment order is too short and cryptic with regard to issue required to be examined in the reassessment proceedings of submissions of the assessee the impugned reassessment order has been rightly held to be without inquiry and the ground rightly held to be prejudicial to the interest of revenue. 6. We have given our thoughtful indulgence to the material cited and submissions and what strikes us foremost is the manner in which ld. Revisionary authority has narrated the facts surrounding transaction and thus drawing assumption that the transaction was tainted but ld. AO has not conducted necessary enquiry. The ld. Revisionary authority has repeatedly observed about the failure of Assessing Officer to make inquiries in respect of the source of funds from the investor companies and that no inquiry was made with regard to genuineness and creditworthiness of share applicants and lenders of M/s RCI World Trade Link DMCC. Thus based on same in para 5.2 of its order the Ld. Revisional Authority points out as to what inquiries or verification should ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er the annexure annexed thereto. In connection to the same, on behalf of and under instructions from our subject client, the point wise reply is being submitted as under: 1. Reply to Point No.1 The company was incorporated on 4th July '1995 under the Companies Act 1956 with the main objects of trading in goods. At present company is acting as franchise of Liquor companies for selling of their products in Delhi. 2. Reply to Point No.2 The copy of computation of income of the assessee company along with the copy of Balance sheet, Profit and Loss Account with notes, cash flow statement, Form- 3CD, Form-26AS for AY 16-17 are enclosed at page No.1 to 40 3. Reply to Point No.3 The company was not having any foreign bank account during the year under consideration. The copy of ledger account of Share application money received from RCI World Trade Link DMCC in the books of the assessee company along with the copy of bank statement of Vijaya Bank highlighting therein the amounts received by the assessee company form RCI World Trade Link DMCC is enclosed at Page No. 133to 138 4 Reply to Point No. 4, 5 & 6 wherein it has been....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Vijaya Bank on account of remittances made by RCI World Trade Link DMCC towards investment in the assessee company are enclosed herewith at Page No. 96 to Lo,to verify the genuineness of the amounts received from the investor i.e RCI World Trade Link DMCC. Further after having received the FDI, the assessee had duly filed all the report in the Form FC-GPR regarding receipt of amount towards consideration for the issue of equity shares in the assessee company through the bank (Vijaya Bank) in which funds have been received from RCI World Trade Link DMCC to the Reserve bank of India. The same are enclosed herewith to further establish the genuineness of the share capital received by the assessee company as under: 1. Intimation for allotment of equity shares in favour of M/s RCI World Trade LinkDIMCC filed by the assessee company to Vijaya Bank,pg-80. 2. Copy of Form-FC-GPR. pg. 81 - 85 3. Copy of declaration by the Company Secretary regarding the allotment of shares to the investor company and all the requirement of the companies Act' 1956 & 2013and Government of India have been complied with. Pg. - 86 4. Valuation report from the SEBI Regis....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Assessing Officer's indulgence on the issue involved in reopening lacked a prudent approach to hold the assessment as erroneous so far as prejudicial to the interest of revenue. There is nothing in impugned order that AO has proceeded on an incorrect assumption of facts or an incorrect application of law to hold the order being erroneous. The AO has made enquiries and after applying his own judgment about the inquiries to be carried out, accepted the returned income. The record is speaking about the inquiries showing that very apt and relevant queries were raised. In such a situation, if ld. Revisionary authority feels that a particular inquiry should have been carried out in a particular manner which has not been done or the AO should have taken particular view about a particular income and on such ground of failure of inquiry, action for revision is invoked then for such situations, the Hon'ble Bombay High Court in the case of CIT vs. Gabriel India Ltd. (203 ITR 108) has held that an order cannot be termed as erroneous unless it is not in accordance with law. If AO acting in accordance with law makes certain assessment, the same cannot be branded as erroneous simply because acco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to be given to the word "erroneous'' in section 263 emerges out of this context. It is because it is incumbent on the Income- tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct." 11.2 Further in Universal Products P. Ltd. vs. CIT ITA No. 2056/Del/2013 relied the Hon'ble Delhi High Court Judgment In CIT v. Vikas Polymers 341 ITR 537 where it has held that : "This is for the reason that if a query is raised during the course of scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer was reflected in the assessme....