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2020 (3) TMI 1386 - AT - Income TaxRevision u/s 263 by CIT - AO had erred in observing that the amendment in Section 68 and Section 56(2)(viib) were applicable only from A.Y. 2013-14 - HELD THAT - In the reassessment order passed, the issue had been duly examined and on the basis of the examination of the relevant records and the application of law, one of the possible opinion had been drawn by the A.O., which cannot be said to be erroneous so far as prejudicial to the interest of revenue. As decided in MALABAR INDUSTRIAL CO. LTD. VERSUS COMMISSIONER OF INCOME-TAX 2000 (2) TMI 10 - SUPREME COURT AO after going through the material on record and after considering the explanation of the assessee, had applied his mind. His view was that the amendment are not applicable in the case of the assessee for the year under consideration which is a possible view. The CIT did not agree with the conclusion reached by the ITO - Section 263 of the Act does not empower him to take action on these facts to arrive at the conclusion that the order passed by the ITO is erroneous and prejudicial to the interest of the revenue. Since the material was there on record and the said material was considered by the ITO and a particular view was taken, the mere fact that different view can be taken, should not be the basis for an action U/s 263 of the Ac and it cannot be held to be justified. In the present case it cannot be said that there is an incorrect application of law so that the order being erroneous. The amendments were from A.Y. 2013-14 and the judicial decisions were also to the effect that it cannot be made in relation to share capital where identity is proved. The phrase prejudicial to the interests of the Revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. The view of the AO that the amendments were not retrospective is also one of the possible view and such a view cannot be said to be erroneous. Unless there are words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only. In view of above we find that there is no error in the conclusion drawn by the AO while passing the order and therefore, the impugned order U/s 263 of the Act is not justified and the same is hereby quashed. - Decided in favour of assessee.
Issues involved:
1. Validity of the order passed by the ld. CIT under Section 263 of the Income Tax Act, 1961 for the assessment year 2008-09. 2. Examination of share capital money received during the year under consideration. 3. Applicability of amendments in Section 68 and Section 56(2)(viib) from A.Y. 2013-14. 4. Justification of setting aside the order based on judicial decisions. 5. Consideration of whether the AO's order was erroneous or prejudicial to the interest of revenue. Detailed Analysis: 1. The appeal was filed against the order of the ld. Pr. CIT-I, Jodhpur under Section 263 of the Income Tax Act, 1961 for the assessment year 2008-09. The grounds of appeal challenged the validity of the order, claiming it to be bad in law and factually incorrect. The appellant argued against the observations made by the ld. CIT regarding the original assessment and the share capital money received during the year under consideration. The appellant also contended that the AO's decision was based on judicial decisions and should not have been set aside. 2. The facts of the case revealed that the AO initiated proceedings under Section 148 of the Act for the assessment year 2008-09, and the assessment was completed accepting the income as originally assessed. Subsequently, proceedings for the assessment year 2009-10 were initiated based on an increase in share capital, which was later deleted in appeal. The action taken for the year under consideration was based on the findings of the appellate proceedings for AY 2009-10. 3. The appellant argued that the proceedings for the year under consideration were initiated for verification of share capital based on the same grounds as AY 2009-10. The AO, after examining the details submitted by the assessee, concluded that no addition should be made as the amendments in Section 68 and Section 56(2)(viib) were applicable only from A.Y. 2013-14. The appellant emphasized that the share capital issue was adequately supported by evidence. 4. The appellant cited various judicial decisions to support their claim that no addition could be made in the hands of the assessee if the identity of the shareholders was established. The appellant provided detailed evidence regarding the share capital received and contended that no addition under Section 68 of the Act was justified. 5. The Tribunal, after hearing both parties and considering the material on record, concluded that the AO's order was not erroneous or prejudicial to the interest of revenue. The Tribunal referred to the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. Vs CIT and emphasized that the AO had applied his mind and arrived at a reasonable conclusion based on the law applicable at the time. The Tribunal held that the order passed by the AO was not erroneous and quashed the order under Section 263 of the Act. In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that the AO's decision was based on a valid interpretation of the law and was not prejudicial to the interest of revenue.
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