2015 (11) TMI 1881 - AT - Income Tax

Validity of Revision u/s 263 by CIT - Addition u/s 68 - Limitation period for passing order HELD THAT - As decided in Subhlakshmi Vanijya Pvt. Ltd. 2015 (8) TMI 174 - ITAT KOLKATA 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. 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 - 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 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. 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 and not other CIT. Addition in the hands of a company can be made u/s 68 in its first year of incorporation. 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.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. 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. 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. Search proceedings do not debar the CIT from revising order u/s passed u/s 147 of the Act. All the appeals are dismissed.

Summary

Issues Involved:
Assessment under section 263 of the Income-tax Act, 1961.

Analysis:
The judgment by the Appellate Tribunal ITAT Kolkata dealt with appeals challenging orders passed by the Commissioners of Income-tax under section 263 of the Income-tax Act, 1961 for various assessment years. The appeals were consolidated due to similar facts and grounds. The assessees had previously sought adjournments, but during the hearing, no one appeared, leading to an ex parte disposal. The cases involved companies with low income, issuance of notices under section 148, and assessments under section 143(3) with nominal additions. The jurisdictional CITs had passed orders under section 263, which were contested before the Tribunal.

The Tribunal noted that similar issues had been addressed in previous cases, including a significant order related to Subhlakshmi Vanijya Pvt. Ltd. vs. CIT. The Tribunal emphasized that the CIT could revise assessment orders if the AO failed to conclude inquiries logically. It was established that inadequate inquiries were equivalent to no inquiry, empowering the CIT to revise orders. The Tribunal upheld that notices under section 263 were properly served, and the limitation period for passing orders was correctly calculated from the date of the assessment order under section 147. It was clarified that the CIT with jurisdiction over the AO who passed the order had territorial jurisdiction under section 263.

Furthermore, the Tribunal affirmed that additions under section 68 could be made in the first year of a company's incorporation. It was clarified that after amalgamation, orders could not be passed in the name of the amalgamating company unless there was an intention to defraud the Revenue. The judgment also addressed procedural aspects, such as the validity of orders passed on non-working days, notice requirements, and the impact of search proceedings on revision orders. Ultimately, the Tribunal upheld the impugned orders based on the principles established in previous cases, leading to the dismissal of all appeals.