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2019 (8) TMI 21 - HC - Income TaxRevision u/s 263 - PCIT requiring AO to revisit the assessment made earlier of the Assessee u/s 147/143 (3) - addition u/s 68 - ITAT setting aside the order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 - HELD THAT - ITAT noted that the AO did undertake a detailed inquiry and got the entire records from the 15 companies and therefore, it could not be said that he failed to investigate the genuineness and creditworthiness of the source of funds. The identities of the parties were not in dispute. The genuineness of the transaction was held to have been fully proven by the fact the companies had given shares to the Assessee in lieu of the shares allotted to them. And lastly, there was no requirement to examine the creditworthiness of any sum advanced or invested because in fact, there was no transaction in terms of cash/money. Having examined the impugned orders of the PCIT and the ITAT, and having considered the submissions of Revenue, this Court is of the view that in the facts and circumstances of the case on hand, the interpretation placed by the ITAT on Section 68 of the Act, its reasoning and conclusions in the impugned order are consistent with the legal position and cannot be said to be suffering from any legal infirmity. No substantial question of law arises from the impugned order. - Decided against revenue.
Issues Involved:
- Appeal against ITAT order in AY 2010-11 - Justification of setting aside PCIT order under Section 263 of the Act - Investments made in Assessee company not receiving enough attention in original assessment order - Interpretation of Section 68 of the Act regarding investments received in form of equity shares - Examination of creditworthiness in transactions involving shares and investments Analysis: 1. The appeal was filed against an ITAT order in the Assessment Year (AY) 2010-11. The main issue raised was whether the ITAT was justified in setting aside the order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961, which required the Assessing Officer (AO) to revisit the assessment made earlier of the Assessee. The PCIT invoked jurisdiction under Section 263 specific to the investments made in the Assessee company, stating that it had not received enough attention in the original assessment order. 2. The ITAT concluded that the invocation of Section 263 was not warranted. It highlighted a crucial factor where the Assessee had received investments in the form of equity shares held by companies, which were duly disclosed in their income tax particulars. The ITAT interpreted Section 68 of the Act in light of these facts, emphasizing that the creditworthiness to be examined under this section can be with regard to transactions involving any form of money, not just cash or cheques. 3. The ITAT further emphasized that the credit appearing in the books of account should be with reference to any sum received by the Assessee. In this case, as the Assessee had not received any sum in terms of cash or cheque, the deeming provision of section 68 did not apply. The ITAT noted that the AO had conducted a detailed inquiry, obtained records from the companies, and established the genuineness and creditworthiness of the source of funds. The identities of the parties were not in dispute, and the transaction's genuineness was proven by the shares given to the Assessee in exchange for shares allotted to them. 4. After examining the impugned orders of the PCIT and the ITAT, the Court concluded that the ITAT's interpretation of Section 68, reasoning, and conclusions were consistent with the legal position. It was held that no substantial question of law arose from the impugned order, leading to the dismissal of the appeal.
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