2016 (1) TMI 487 - AT - Income Tax

Validity of revision u/s 263 - addition u/s 68 - Held that - In view of the discussion and following the view taken in Subhlakshmi Vanijya Pvt. Ltd. 2015 (8) TMI 174 - ITAT KOLKATA we have drawn the following conclusions - A. Contention of the assessee that since the AO of the assesseecompany was not empowered to examine or make any addition on account of receipt of share capital with or without premium before amendment to section 68 by the Finance Act, 2012 w.e.f. A.Y. 2013-14 and hence the CIT by means of impugned order u/s 263 could not have directed the AO to do so, is unsustainable. B. Failure of the AO to give a logical conclusion to the enquiry conducted by him gives power to the CIT to revise such assessment order, by holding that - i) the enquiry conducted by the AO in such cases can t be construed as a proper enquiry; ii) CIT u/s 263 can set aside the assessment order and direct the AO to conduct a thorough enquiry, notwithstanding the jurisdiction of the AO in making enquiries on the issues or matters as he considers fit in terms of section 142(1) and 143(2) of the Act, which is relevant only up to the completion of assessment ; iii) Inadequate inquiry conducted by the AO in the given circumstances is as good as no enquiry and as such, the CIT was empowered to revise the assessment order ; iv) The order of the CIT is not based on irrelevant considerations and further in the present circumstances, he was not obliged to positively indicate the deficiencies in the assessment order on merits on the question of issue of share capital at a huge premium ; and v) the AO in the given circumstances can t be said to have taken a possible view as the revision is sought to be done on the premise that the AO did not make enquiry thereby rendering the assessment order erroneous and prejudicial to the interest of the revenue on that score itself. C. In the given facts and circumstances of all such cases, the notices u/s 263 were properly served through affixture or otherwise. Further the law does not require the service of notice u/s 263 strictly as per the terms of section 282 of the Act. The only requirement enshrined in the provision is to give an opportunity of hearing to the assessee, which has been complied with in all such cases. D. Limitation period for passing order is to be counted from the date of passing the order u/s 147 read with sec. 143(3) and not the date of Intimation issued u/s 143(1) of the Act, which is not an order for the purposes of section 263. In all the cases, the orders have been passed within the time limit. E. The CIT having jurisdiction over the AO who passed order u/s 147 read with section 143(3), has the territorial jurisdiction to pass the order u/s 263 andnot other CIT. F. Addition in the hands of a company can be made u/s 68 in its first year of incorporation. G. After amalgamation, no order can be passed u/s 263 in the name of the amalgamating company. But, where the intention of the assessee is to defraud the Revenue by either filing returns, after amalgamation, in the old name or otherwise, then the order passed in the old name is valid. H. Order passed u/s 263 on a non-working day does not become invalid, when the proceedings involving the participation of the assessee were completed on an earlier working day. I. Order u/s 263 cannot be declared as a nullity for the notice having not been signed by the CIT, when opportunity of hearing was otherwise given by the CIT. J. Refusal by the Revenue to accept the written submissions of the assessee sent after the conclusion of hearing cannot render the order void ab initio. At any rate, it is an irregularity. K. Search proceedings do not debar the CIT from revising order u/s passed u/s 147 of the Act. - Decided against assessee

Summary

Issues:
1. Correctness of orders passed by CIT u/s 263 of the Income-tax Act, 1961.
2. Additional grounds raised regarding limitation and proper service of notice.
3. Similarity of facts in various cases and disposal of appeals through a consolidated order.
4. Admission of additional grounds for disposal on merits.
5. Dismissal of additional grounds based on previous tribunal decisions.
6. Relevance of earlier judgments in similar cases.
7. Applicability of conclusions drawn in Subhlakshmi Vanijya Pvt. Ltd. case.
8. Jurisdictional aspects related to passing orders u/s 263.
9. Validity of orders passed u/s 263 on non-working days.
10. Impact of search proceedings on revision of orders u/s 147.

Analysis:
The Appellate Tribunal ITAT Kolkata addressed a batch of appeals challenging the correctness of orders passed by CITs u/s 263 of the Income-tax Act, 1961. The appeals were based on similar facts where companies with low income filed returns, received intimations u/s 143(1), and faced notices u/s 148 leading to assessment orders u/s 143(3) with nominal additions. The Tribunal consolidated the cases for convenience due to common grounds. Additional grounds were raised regarding the limitation and proper service of notice, which were admitted for disposal on merits following the National Thermal Power Company Limited vs. CIT judgment. The Tribunal dismissed these additional grounds as they had been previously decided against the assessee in a lead order. The Tribunal referred to the Subhlakshmi Vanijya Pvt. Ltd. case for guidance, where conclusions were drawn on various aspects including the power of CIT to revise assessment orders and the validity of notices u/s 263. The Tribunal upheld the impugned orders based on the conclusions from the earlier case and the similarity of facts in the appeals. The Tribunal clarified jurisdictional aspects related to passing orders u/s 263 and addressed the validity of orders passed on non-working days. Additionally, the impact of search proceedings on the revision of orders u/s 147 was discussed. Ultimately, all appeals were dismissed in line with the decisions made in the Subhlakshmi Vanijya Pvt. Ltd. case.