2020 (3) TMI 963 - AT - Income Tax

Revision u/s 263 - addition u/s 68 - HELD THAT - We are of the view that the action/view taken by the AO after enquiry made by him as per the direction of the Pr. CIT in the set aside proceedings dated 12.05.2016 pursuant to which the AO has reassessed the assessee after inquiry and accepted the share capital and premium collected by assessee is a plausible view and cannot be held to be unsustainable view in facts or law, therefore, the impugned action of the Pr. CIT to interfere with the reassessment order of the AO, is without jurisdiction and liable to be quashed. In the light of the discussion on fact as well as on law, we are of the considered opinion that AO s action (reassessment) pursuant to the first revisional order of Ld. Pr. CIT dated 12.05.2016, to accept the share capital and premium as a possible view in facts and law as per the ratio laid by the Hon ble Supreme Court in Malabar Industrial Co. Ltd. Vs. CIT 2000 (2) TMI 10 - SUPREME COURT the AO s action/reassessment order cannot be termed as erroneous and prejudicial to the interest of the Revenue. Therefore, the condition precedent for usurping revisional jurisdiction u/s. 263 of the Act is absent and, therefore, the Ld. Pr. CIT lacked jurisdiction to assume second time revisional jurisdiction u/s. 263 of the Act. Therefore, the assessee succeeds on the legal issue raised and, therefore, on the facts and circumstances discussed (supra), we are inclined to quash the impugned order of Ld. Pr. CIT dated 14.03.2019. - Decided in favour of assessee.

Summary

Issues Involved:
1. Jurisdiction of Ld. Pr. CIT to invoke revisional jurisdiction u/s. 263 of the Income-tax Act, 1961 for the second time.
2. Whether the reassessment order passed by the AO dated 11.06.2016 was erroneous and prejudicial to the interest of revenue.

Detailed Analysis:

1. Jurisdiction of Ld. Pr. CIT to Invoke Revisional Jurisdiction u/s. 263 for the Second Time:
The appellant challenged the jurisdiction of the Ld. Pr. CIT to invoke the provisions of section 263 of the Income-tax Act for the second time. The appellant argued that the reassessment order dated 11.06.2016 was passed in accordance with the directions of the Ld. Pr. CIT as per his first order dated 12.05.2016. The appellant contended that the Ld. Pr. CIT did not point out any specific error or non-compliance with his earlier directions. The Tribunal noted that the Assessing Officer (AO) had complied with the specific directions given by the Ld. Pr. CIT in the first revisional order, including summoning the directors of the investor companies, examining their statements, and verifying the identity, creditworthiness, and genuineness of the transactions. The Tribunal emphasized that the AO's reassessment order was based on a plausible view and could not be termed unsustainable in law or facts. Therefore, the Tribunal held that the Ld. Pr. CIT lacked jurisdiction to assume revisional jurisdiction u/s. 263 for the second time.

2. Whether the Reassessment Order Passed by the AO Dated 11.06.2016 was Erroneous and Prejudicial to the Interest of Revenue:
The Tribunal examined whether the reassessment order passed by the AO dated 11.06.2016 was erroneous and prejudicial to the interest of revenue. The Tribunal referred to the judicial precedent laid down by the Hon'ble Supreme Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83 (SC), which stated that the twin conditions for invoking jurisdiction u/s. 263 are that the AO's order must be erroneous and prejudicial to the interest of revenue. The Tribunal noted that during the reassessment proceedings, the AO had conducted a detailed investigation as per the directions of the Ld. Pr. CIT, including summoning the directors of the investor companies, recording their statements, and verifying the identity, creditworthiness, and genuineness of the transactions. The Tribunal found that the AO had duly discharged his duty as an investigator and that the reassessment order was based on a plausible view. The Tribunal emphasized that the AO's acceptance of the identity, creditworthiness, and genuineness of the share capital and premium collected by the assessee was a plausible view and could not be termed unsustainable in law or facts. Therefore, the Tribunal held that the reassessment order was not erroneous and prejudicial to the interest of revenue.

Conclusion:
The Tribunal concluded that the Ld. Pr. CIT lacked jurisdiction to invoke revisional jurisdiction u/s. 263 for the second time as the AO had complied with the specific directions given in the first revisional order. The Tribunal also held that the reassessment order passed by the AO dated 11.06.2016 was not erroneous and prejudicial to the interest of revenue. Consequently, the Tribunal quashed the impugned order of the Ld. Pr. CIT dated 14.03.2019 and allowed the appeal of the assessee.