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2018 (12) TMI 1886 - AT - Income TaxRevision u/s 263 - Revising the completed assessment under section 143(3) on the issue that the sum of receipt consisting of share capital and share premium from a company Secunderabad Healthcare Ltd. - HELD THAT - We find that the assessee has filed complete details of all share holders of the company with full name and address of all share holders along with details of PAN. Even while completing assessment for AY 2012-13, all these details were filed before the AO regarding allotment of 1.40 lakhs shares at a premium to Secunderabad Healthcare Ltd. and all details resolution copies, bank statements, payment of call money letters and PAN Card Xerox were filed. We are of the view that in the given facts of the present case the issue is covered on merits in the case of CIT vs. Orchid Industries Pvt. Ltd. 2017 (7) TMI 613 - BOMBAY HIGH COURT wherein honorable High court has considered the decision of division Bench of Bombay High Court in the case of CIT vs. Gagandeep Infrastructure P. Ltd 2017 (3) TMI 1263 - BOMBAY HIGH COURT Hon ble Supreme Court in the case of CIT vs. Lovely Exports (P) Ltd 2008 (1) TMI 575 - SC ORDER . Revision order passed by PCIT under section 263 of the Act is not sustainable because the very basis of the order is that as per the information received from DCIT, Central Circle 2(2), Mumbai the assessee company is one of the beneficiaries of accommodation entry of bogus share premium from Secunderabad Healthcare Pvt. Ltd., the company operated by Shirish Shah, the company has been declared as shell company. We find that the PCIT has no where brought on record what was the information with him in regard to this aspect and how the receipts in the shape of share application money from Secunderabad Healthcare Pvt. Ltd. is part of bogus share premium as alleged by the PCIT. The assessment order framed by the AO is neither prejudicial to the interest of the Revenue nor erroneous for the reason that this information was not available at the time of framing assessment if at all it is true and for this the order cannot be held to be erroneous and prejudicial to the interest of the Revenue. Hence, we are of the view that the revision order be cannot be sustained and accordingly, quash. The appeal of the assessee is allowed.
Issues Involved:
1. Validity of the revision order passed by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act, 1961. 2. Examination of the share capital and share premium received by the assessee from Secunderabad Healthcare Ltd. 3. Applicability of section 56(2)(viib) of the Income Tax Act on the share premium received. Issue-wise Detailed Analysis: 1. Validity of the Revision Order under Section 263: The primary issue in this appeal was the challenge against the revision order passed by the PCIT, revising the completed assessment under section 143(3) of the Income Tax Act. The assessee argued that the Assessing Officer (AO) had already verified various evidences and facts, and there was no error prejudicial to the interests of the Revenue to warrant a revision under section 263. The assessee contended that the PCIT's order was ultra vires the provisions of Section 263 and required cancellation. The Tribunal noted that the original assessment was completed under section 143(3) and the AO had made inquiries into the share capital and share premium received by the assessee. The Tribunal referenced the case of Torrent Pharmaceuticals Ltd. vs. DCIT, emphasizing that the revisional powers under section 263 cannot be exercised merely for directing a fuller inquiry when a view was already taken after inquiry. The Tribunal found that the AO had conducted inquiries and verifications and had passed the order after due application of mind. Therefore, the foundation for exercising revisional jurisdiction under section 263 was missing in this case. 2. Examination of Share Capital and Share Premium: The PCIT issued a show-cause notice stating that the assessee received ?5.60 crores as share capital and share premium from Secunderabad Healthcare Ltd., which was alleged to be a shell company operated by Mr. Shirish Shah. The PCIT claimed that the AO had not properly examined this transaction, making the assessment order erroneous and prejudicial to the interest of the Revenue. The assessee responded that it had provided all necessary details regarding the creditworthiness, identity, and genuineness of Secunderabad Healthcare Ltd. during the original assessment proceedings. The assessee explained that the shares were allotted in the preceding AY 2012-13 as partly paid, and the balance call money was received in AY 2013-14. The Tribunal observed that the assessee had filed complete details of all shareholders, including PAN, bank statements, and other relevant documents, both during the original assessment and in response to the PCIT's notice. The Tribunal found that the AO had accepted the creditworthiness, identity, and genuineness of the transaction after considering the details filed by the assessee. The Tribunal concluded that the AO's assessment order was neither erroneous nor prejudicial to the interest of the Revenue, as the necessary inquiries and verifications were conducted. 3. Applicability of Section 56(2)(viib): The PCIT argued that the provisions of section 56(2)(viib) of the Income Tax Act, which were applicable for AY 2013-14, were not examined by the AO. This section deals with the taxation of share premium received in excess of the fair market value of shares. The assessee contended that the shares were allotted in AY 2012-13, and the balance call money was received in AY 2013-14. Since the shares were not issued in AY 2013-14, the provisions of section 56(2)(viib) were not applicable. The Tribunal agreed with the assessee, noting that the shares were issued in the preceding year, and only the balance call money was received in the year under consideration. Therefore, the provisions of section 56(2)(viib) did not apply to the assessee's case. Conclusion: The Tribunal quashed the revision order passed by the PCIT under section 263, holding that the assessment order framed by the AO was neither erroneous nor prejudicial to the interest of the Revenue. The appeal of the assessee was allowed, and the Tribunal emphasized that the PCIT had not provided sufficient evidence to support the claim that the share premium received was part of a bogus transaction. The Tribunal's decision was in line with the principles established in previous judicial precedents, ensuring that the assessee was not subjected to undue hardship without proper justification.
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