9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (3) TMI 1057 - AT - Income TaxRevision u/s 263 - certain facts have emerged which were not available on record at the time of assessment u/s 147 - addition u/s 68 - allegation of the Ld. PCIT that the AO should have conducted further enquiry which were necessary to gather relevant material which the AO failed to do and there was non application of mind on the part of the AO - HELD THAT - We find in the instant case thorough enquiries were conducted by the AO at the time of reassessment proceedings. Full details giving the names, addresses, number of shares of nominal value and share premium amount of all the share holders alongwith their bank statements, copy of IT returns, PAN etc. were filed before the AO. Even if the share holders were bogus as per allegation of the revenue in view of the reasons recorded for reopening, however, as per prevailing law at that time in view of decision of Hon'ble Supreme Court in the case of Lovely Exports (P) Limited 2008 (1) TMI 575 - SC ORDER addition could not have been made in the hands of the assessee and addition, if any, could have been made only in the hands of such bogus share holders. Since AO has taken a plausible view, therefore, it cannot be said that the order of the AO is erroneous. We find from a perusal of the paper book that the assessee during the course of reassessment proceedings had filed the requisite details as called for by the AO and the Assessing Officer after considering the same completed the assessment which is in consonance with the decision of the Hon ble Supreme Court in the case of Lovely Exports prevailing at that time. Therefore, in view of our discussion in the preceding paragraphs the order of the AO in the instant case cannot be held as erroneous. Since for invoking jurisdiction u/s. 263 the twin conditions i.e. order must be erroneous and the order must be prejudicial to the interest of revenue must be satisfied and since, we have held that the order cannot be held to be erroneous since the view of the AO in accepting the share capital is a plausible view, therefore, the twin conditions are not satisfied. Therefore, the Ld. PCIT in our opinion could not have invoked jurisdiction u/s. 263 of the IT Act. We, therefore, set aside the order of the PCIT passed u/s. 263 of the IT Act and the grounds raised by the assessee are allowed.
Issues Involved:
1. Validity of the order passed under Section 263 of the IT Act, 1961. 2. Whether the assessment order was erroneous and prejudicial to the interest of the Revenue. 3. Adequacy of the enquiries conducted by the Assessing Officer (AO) during the assessment proceedings. 4. Jurisdictional validity of the notice issued under Section 148 of the IT Act, 1961. Detailed Analysis: 1. Validity of the Order Passed Under Section 263: The Principal Commissioner of Income Tax (PCIT) issued an order under Section 263 of the IT Act, 1961, setting aside the assessment order passed by the AO. The PCIT held that the AO's order was erroneous and prejudicial to the interest of the Revenue. The assessee challenged this order, arguing that the statutory preconditions for invoking Section 263 were not satisfied and that the PCIT's order was based on assumptions and lacked jurisdiction. 2. Erroneous and Prejudicial Order: The PCIT argued that the AO failed to conduct proper enquiries regarding the share application money received by the assessee, which was allegedly part of an accommodation entry racket. The PCIT believed that the AO did not fully appreciate the evidence gathered by the Investigation Wing and failed to conduct necessary further enquiries. The assessee contended that the AO had conducted thorough enquiries and that the PCIT's order was based on incorrect assumptions and lacked supporting evidence. 3. Adequacy of Enquiries by AO: The Tribunal found that the AO had conducted adequate enquiries during the reassessment proceedings. The AO had issued multiple notices and collected various details from the assessee, including the identity and creditworthiness of the share applicants and the genuineness of the transactions. The AO had also considered the replies from the share applicant companies and the orders passed under Sections 153C/153A in related cases. The Tribunal noted that the AO's assessment order was in line with the prevailing legal principles, including the Supreme Court's decision in the case of Lovely Exports Pvt. Ltd., which held that additions could not be made in the hands of the assessee if the shareholders were bogus, and such additions could only be made in the hands of the bogus shareholders. 4. Jurisdictional Validity of Notice Under Section 148: The assessee argued that the notice issued under Section 148 was illegal and without jurisdiction, as it was issued mechanically without proper application of mind and without any tangible evidence. The Tribunal found that the reopening of the assessment was based on information from the Investigation Wing, and the AO had recorded reasons for issuing the notice. The Tribunal did not find any fresh material that surfaced after the completion of the assessment under Sections 147/143(3), and the PCIT did not provide any such material to the assessee despite being requested. Conclusion: The Tribunal concluded that the AO had conducted thorough enquiries during the reassessment proceedings and that the PCIT's order under Section 263 was not justified. The Tribunal found that the AO's assessment order was a plausible view and not erroneous. Since the twin conditions for invoking Section 263—order being erroneous and prejudicial to the interest of the Revenue—were not satisfied, the Tribunal set aside the PCIT's order and allowed the assessee's appeal.
|
