2022 (5) TMI 217 - AT - Income Tax

Revision u/s 263 by CIT - Reopening of assessment u/s 147 as high share premium - Addition u/s 68 - HELD THAT - The assessee explained to the AO all the documentary evidences at the time of reassessment proceedings. Merely not commenting on the evidences in assessment order by the AO does not tantamount to non-application or non-verification of documents. CIT cannot exercise revisionary power in the decided issue which was specifically reopened on the very same ground and for which the assessee has submitted the details. The revisionary power u/s 263 can be issued/exercised when the assessment order is erroneous and prejudicial to the interest of the Revenue. In the present case the element of prejudicial to the interest of revenue element does not come into picture as the relevant inquiries were made by the AO. The decision relied by the Ld. DR that in case of NRA Iron and Steel Pvt. Ltd. 2019 (3) TMI 323 - SUPREME COURT is not applicable in the present case as in that decisions as per the facts of that case Assessee Company - Respondent failed to discharge the onus required under Section 68 AO was justified in adding back the amounts to the Assessee s income. But in the present case, the assessee company has discharged its onus required in respect of high share premium. Thus, order under Section 263 passed by the Principal Commissioner of Income Tax is not just and proper. The appeal of the assessee is allowed.

Summary

Issues:
Appeal against order u/s 263 of the Income Tax Act, 1961 for assessment year 2009-10.

Analysis:
1. The appeal was filed against the order u/s 263 by the Principal Commissioner of Income Tax-14, Mumbai. The assessee raised grounds of appeal challenging the revision order dated 22.03.2019, which set aside the order u/s 143(3) r.w.s. 147 of the Act passed by the Assessing Officer. The Principal Commissioner observed that no inquiry regarding the source of high share premium received by the subscriber entities was conducted during the proceedings u/s 147. Consequently, the assessment order was set aside for fresh adjudication on the issue of high share capital/premium with reference to the genuineness of transactions and creditworthiness of the subscriber parties.

2. The assessee contended that the reopening u/s 147 was based on the fact that the share subscriber entities showed meagre or Nil income from business activities. The assessee explained that due to recession and business expansion plans, it raised capital by issuing equity shares. The subscribers' investments were made from their own and borrowed funds, with details submitted during assessment proceedings u/s 147. The Principal Commissioner's revision was challenged on the grounds that the reasoning for reopening the case was high share premium, which was not commented on by the Principal Commissioner. The assessee argued that the revision under section 263 was unjust, citing relevant legal precedents.

3. The Principal Commissioner's order was challenged by the assessee, arguing that the Assessing Officer had properly established the creditworthiness and genuineness of the subscriber entities during the reassessment proceedings. The assessee provided documentary evidence to support the allotment of shares, balance sheets, and other relevant documents. It was emphasized that the Assessing Officer had considered these details, and the Principal Commissioner's revisionary power under section 263 was not justified as the assessment order was not erroneous and did not prejudice the revenue's interests. The decision cited by the Departmental Representative from the Supreme Court was deemed inapplicable to the present case as the assessee had fulfilled its onus regarding high share premium.

4. After hearing both parties and examining the records, the Tribunal found that the Principal Commissioner's revisionary power under section 263 was not justified. The Tribunal noted that the relevant inquiries were made by the Assessing Officer, and the assessee had provided necessary details. As the assessee had discharged its onus regarding high share premium, the order under section 263 was deemed unjust and improper. Consequently, the appeal filed by the assessee was allowed, and the order pronounced in the open court on 05/04/2022 upheld the decision in favor of the assessee.