TaxTMI 
TaxTMI 
2026 (9) TMI 24
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....as framed u/s 147 /143(3) of the Income-tax Act, 1961 (the Act) on 30.06.2010, assessing the total income at Rs.26,010/-. Thereafter, the ld. PCIT vide order passed u/s 263 of the Act vide dated 07.03.2013, set aside the assessment and sent the issue to the file of the ld. AO for conducting fresh enquiry and doing necessary verification into the share capital with compulsory appearance of the directors of the said assessee company as well as the directors of the subscriber companies, who had invested in the share capital in the assessee company during the said assessment year by issuing summons u/s 131 of the Income-tax Act, 1961 (the Act). Subsequently, the order u/s 263/ 147/143(3) of the Act was passed on 26.03.2014, wherein the ld. AO added the said amount of share capital/ share premium of Rs.20,04,00,000/- to the income of the assessee by stating that the share capital/ share premium is nothing but assessee's own money. Thereafter, the assessment order was upheld by the ld. CIT (A) by dismissing the appeal of the assessee. The Tribunal vide order dated 15.12.2022, in ITA No. 300/KOL/2021, directed that in the interest of justice, the matter is restored to the file of the ld. ....
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....ed the amount of share capital/share premium as unexplained cash credit and added to the income of the assessee in the assessment framed u/s 143(3) of the Act. 2.2. In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee by upholding the order of the ld. AO on the ground that assessee has not filed cogent evidences of the loan creditors, whereas the money was received by issuing of share capital/ share premium. Finally, the ld. CIT (A) upheld the order of the ld. AO by dismissing the appeal of the assessee. 2.3. The ld. AR vehemently submitted before us that the assessee was incorporated on 17.01.2008, and has been engaged in the business of manufacturing iron and steel, telecom and power transmission, TMT bars etc. During the year the assessee raised share capital / share premium of Rs.20,04,00,000/- by issuing equity shares to 18 subscribers. The ld. AR submitted that pursuant to the order of the ITAT, restoring the issue to the file of the ld. AO, the AO issued notice u/s 142(1) of the Act, dated 16.06.2023, and further issued notice on 06.01.2024. The same were replied on 06.03.2024, filing the ITRs audited accounts, bank statements, master data....
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....6) of the Act but the ld. AO has not provided any information to the assessee as to when the notices were issued to the shareholders and at what addresses these were issued. The ld. AR submitted that some of the shareholders has ceased to be the shareholders of the assessee company and therefore, the not share holders during the financial year 2023-24. 2.3.2. The ld. AR stated that the ld. AO has not recorded any finding that notices were not served to those non-existent companies. The ld. AR submitted that these shareholders were not associated with the assessee company since long. The ld. AR referred to the balance sheet for F.Y. 2014-15 and submitted that it is evident that shareholders were not shareholders of the assessee company in F.Y. 2013-14 and 2014-15 and now since, more than 10 years have elapsed, those companies are not the shareholders of the assessee company. The ld. AR referred to the master data along with summary of those shareholders with MCA records which are available at page no.30 to 67 of the Paper Book. The ld. AR submitted that it is evident from the said details that some of the shareholders have ceased and some shareholders have shifted from to another....
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....s exercised the jurisdiction u/s 263 of the Act when all the information and detail/ evidences/confirmation are available on record in the assessment folder. The ld. AR therefore, preferred that the addition may kindly be deleted. 2.4. The ld. DR, on the other hand, relied heavily on the order of the authorities below. The ld. DR submitted that the ld. AO during the course of set aside proceedings by the co-ordinate bench issued notice u/s 142(1) of the Act and all the evidences comprising names, addresses, confirmations, bank statements, audited balance sheets, etc., were filed by the assessee qua share subscribers. However, the fact remains that the letters issued u/s 133(6) of the Act for enquiring into the issue of raising share capital /share premium by the assessee company remained unverified as nobody responded. Therefore, the ld. AO has rightly made the addition which was also confirmed by the ld. CIT (A) and therefore may kindly be upheld. The ld. DR further submitted that that it is not necessary for the ld. AO to follow the specific instruction/guidelines given in the order by higher authorities and the scope of the assessment would be wide and open even when instruct....
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....lable on record, including the written submissions filed by the parties, we note that in this case the assessment was framed by the ld. AO u/s 143(3) / 147 of the Act, assessing the income at Rs.26,010/- as against the returned loss of Rs.31,088/-.Thereafter, the ld. PCIT exercised the revisionary jurisdiction u/s 263 of the Act and passed the order accordingly, setting aside the assessment order passed u/s 143(3)/ 147 of the Act directing the ld. AO to conduct a fresh enquiry on the amount of share capital / share premium of Rs.20,04,00,000/- as raised by the assessee. In the said revisionary order, the ld. PCIT directed specifically to the ld. AO to issue summons u/s 131 of the Act and to conduct enquires from the directors of the assessee company as well as the of investing companies. We note that during the set aside proceedings before the ld. AO, the ld. AO did not issue any summons u/s 131 of the Act, but a notice u/s 142(1) of the Act, was issued which was compiled by the assessee by filing all the evidences qua the shareholders comprising the names, addresses, bank accounts, PANs and audited accounts, etc. The ld. AO issued letters u/s 133(6) of the Act to the share subscri....
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.... on 06.03.2024 by submitting all the requisite details as called for by the ld. Assessing Officer. We note that the ld. AO in the order passed u/s 143(3)/ 263 of the Act dated 30.03.2024, noted that 'on perusal of reply of the assessee to notice u/s 142(1) of the Act dated 06.03.2024, it is observed that the assessee has submitted paper documents containing ITRs, financial statements etc. of all the share allottees." Thus, it is clear that assessee has filed all the details as called for by the ld. AO however, we note that the ld. AO has not followed the direction to issue summons u/s 131 of the Act for compulsory appearance of the Directors of the assessee company as well as the directors of the investor companies and thus, the ld. AO has failed to follow the directions of ld. PCIT to issue summons u/s 131 of the Act. We note that the ld. AO has issued notices u/s 133(6) of the Act calling for details and documents which were not replied by the allottees. Thus, the ld. AO has failed to conduct the enquiries in terms of direction from the ld. PCIT and again failed to conduct enquires in terms of Tribunal direction. 2.6.2. So far as the non-reply of the letters issued u/s 133(6) ....
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....ction 149(1)(b) of the Act. 3. That, there is no power to make search assessment under section 147 of the Act in absence of incriminating material found during course of search." 4.1. After hearing the rival contentions and perusing the material on record, we find that the assessee has raised the above additional grounds of appeal challenging the jurisdiction of the AO to make addition. In our opinion the issues raised in the additional ground are purely legal issues qua which all the facts are available in the appeal folder and no further verification of facts are required from any quarter whatsoever. In our considered view the assessee is at liberty to raise any legal issue before any appellate authority for the first time even when the same has not been raised before the lower authorities. The case of the assessee is squarely covered by the decisions of the Apex court in the case of i) Jute Corporation of India Ltd. Vs CIT in 187 ITR 688, ii) National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 and also by the decision of Hon'ble Calcutta High Court in PCIT vs. Britannia Industries Ltd. [2017] 396 ITR 677 (Cal). Therefore, we are inclined to admit the same for ad....
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....ed that the issue regarding applicability of provisions of Section 148 has been amended by Finance Act, 2021, and whether it is prospective or retrospective has been decided by the Hon'ble Supreme Court in the case of Union of India vs. Ashish Agarwal [2022] 138 taxmann.com 64 (SC)/[2022] 286 Taxman 183 (SC)/[2022] 444 ITR 1 (SC)[04-05-2022], wherein it has been held that 149(1)(b) applies prospectively. The Similar ratio has been laid down by the Hon'ble Delhi High Court in case of Manju Somani v. ITO (2024)466 ITR 758/165 taxmann.com 675 /300 Taxman 516 /340 CTR 946 / 242 DTR 241 (Delhi)(HC) and also in Gopal Bansal Vs. ACIT in W.P.(C) 15489/2025 & CM APPL. 63310/2025 dated 9th October, 2025. The ld. AR therefore submitted that the notice was to be issued within the period of 6 years as per the old provisions of Section 149(1)(b) of the Act which expired on 31.03.2022, so the notice should be issued on or before 31.03.2022, whereas notice u/s 148 of the Act was issued on 23.03.2023, which is barred by limitation. The ld. AR therefore submitted that the notice u/s 148 of the Act as well as consequent assessment are invalid and may be quashed. 5.3. The ld. DR other hand ....
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....tion has expired on31.03.2022. So far as the applicability of Provisions of Section 148 of the Act as amended by finance Act, 2021, are concerned, the same is prospective in nature as has been held by the Hon'ble Supreme Court in case ofUnion of India Vs. Rajeev Bansal (2024) 167 taxmann.com 70 (SC), wherein it has held has under:- "49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the esc....