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2019 (9) TMI 91 - ITAT DELHIRevision u/s 263 - AO simply accepted the case decision relied on by the assessee in the case of Lovely Exports (P) Limited [2008 (1) TMI 575 - SC ORDER] and the AO had not made any further enquiry regarding such share applicants - enquiries were conducted twice i.e. once during the original assessment proceedings passed u/s. 143 (3) and subsequently during the reassessment proceedings where order was passed u/s. 143 (3)/ 147 - HELD THAT:- We find the AO in the order passed u/s. 143(3) /147 has followed the decision of Hon’ble Supreme Court in the case of Lovely exports (P) Limited (supra) in letter and spirit. In the office note, copy of which is available in the paper book, it is seen that the Assessing officer had forwarded information to the concerned AO of the investor companies for taking further necessary action against them. When the AO passed the order u/s. 147 / 143 (3), we find he has followed the decision of Hon’ble Supreme Court in the case of Lovely Exports (P) Limited (supra) in letter and spirit. So far as the allegations of the Ld. CIT that subsequent decision had come for which he referred to the decision of Hon’ble Delhi High Court in the case of Nova Promoters Finlease [2012 (2) TMI 194 - DELHI HIGH COURT] is concerned we find the Hon’ble Delhi High Court pronounced the said decision on 15.02.2012 whereas the AO in the instant case has passed the order u/s. 143(3)/147 on 13.12.2011. Therefore, we do not find any merit in the allegation of the Ld. CIT of non consideration of the above decision since the same was not available at the time of passing of the assessment order. So far as the allegation of the Ld. CIT that the AO should have conducted further enquiry which were necessary to gather relevant material which the AO failed to do and there was non application of mind on the part of the AO is concerned, we find in the instant case thorough enquiries were conducted by the AO both at the time of original assessment and at the time of reassessment proceedings. Full details giving the names, addresses, number of shares of nominal value and share premium amount of all the share holders alongwith their bank statements, copy of IT returns, PAN etc. were filed before the AO. Even if the share holders were bogus as per allegation of the revenue in view of the reasons recorded for reopening, however, as per prevailing law at that time in view of decision of Hon’ble Supreme Court in the case of Lovely Exports (P) Limited (surpa) addition could not have been made in the hands of the assessee and addition, if any, could have been made only in the hands of such bogus share holders. Since AO has taken a plausible view, therefore, it cannot be said that the order of the AO is erroneous. AO in the instant case cannot be held as erroneous. Since for invoking jurisdiction u/s. 263 the twin conditions i.e. order must be erroneous and the order must be prejudicial to the interest of revenue must be fulfilled and since, we have held that the order is not erroneous, therefore, the twin conditions are not satisfied. Therefore, the Ld. CIT in our opinion could not have invoked jurisdiction u/s. 263 of the IT Act. We, therefore, set aside the order of the CIT passed u/s. 263 of the IT Act and the grounds raised by the assessee are allowed.
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