2022 (6) TMI 141 - AT - Income Tax

Revision u/s 263 - Addition u/s 68 on account of share capital and share premium - HELD THAT - AO came to a conclusion that identity, genuineness and creditworthiness of investor entities were duly established by the assessee and therefore, these transactions were accepted to be genuine transactions. The fact that due enquiries were made by AO is also evident from the perusal of order-sheet entries of the assessment proceedings. Therefore, it could be concluded that the issue of receipt of share capital and share premium was specifically examined by Ld. AO with due application of mind and accepted after carrying out necessary enquiries and verification. Simply because the revisionary authority felt that various other aspects were also to be examined or the same very issue was to be examined from another angle, the same could not be a valid ground to revise the assessment order. If this is allowed, there would be no end to litigation and there would not be finality to the assessment. The pre-conditions to revise the order is that there should be lack of enquiry on the part of Ld. AO which made the order erroneous as well as prejudicial to the interest of the revenue - as noted in preceding paragraphs, the issue was duly examined and subjected to due verification by Ld. AO during earlier assessment proceedings and there was due application of mind to the issue. This being so, the second revision on the same very issue could not be held to be sustainable in the eyes of law. Therefore, by quashing the revisionary order we allow the appeal of the assessee.

Summary

Issues:
1. Revisional order passed u/s 263 by Ld. Pr. Commissioner of Income Tax -2 Kolkata
2. Validity of revision u/s 263
3. Proper examination of books of accounts and source of funds
4. Lack of independent and adequate enquiry
5. Quashing of revisionary order

Analysis:

Issue 1: Revisional order passed u/s 263 by Ld. Pr. Commissioner of Income Tax -2 Kolkata
The appeal by the assessee for Assessment Year (AY) 2012-13 arose from a revisional order passed by the Ld. Pr. Commissioner of Income Tax -2 Kolkata u/s 263. The grounds raised by the assessee challenged the validity of the revisional order and the jurisdiction of the Ld. Pr. CIT to initiate the proceedings u/s 263.

Issue 2: Validity of revision u/s 263
The Ld. AR argued that the revision was improper as the claim had been accepted by the Ld. AO after due verification during earlier assessment proceedings. Judicial pronouncements were cited to support this argument. On the other hand, the Ld. CIT-DR contended that the failure of the Ld. AO to conduct proper enquiries led to the initiation of proceedings u/s 263. The Tribunal considered these submissions and relevant judicial pronouncements before reaching a decision.

Issue 3: Proper examination of books of accounts and source of funds
The assessment for the year was initially framed u/s 143(3) with an addition of Rs. 166 Lacs u/s 68 on account of share capital and share premium. A revision u/s 263 was done, directing the Ld. AO to conduct a thorough examination of the books of accounts, bank accounts, and the genuineness of the source of funds. The Ld. AO issued summons to investor entities, verified documents, and established the identity, genuineness, and creditworthiness of the investor entities. The Tribunal noted that necessary verifications were carried out during the assessment proceedings.

Issue 4: Lack of independent and adequate enquiry
Despite the detailed examination and verification conducted by the Ld. AO during the assessment proceedings, the assessment order was subjected to a second revision u/s 263. Allegations were made regarding the failure to conduct a detailed investigation of shareholders and verify the method for determining high premium. The Tribunal observed that the Ld. AO had already examined the issue thoroughly, and the revisionary authority's dissatisfaction with certain aspects did not justify a second revision on the same issue.

Issue 5: Quashing of revisionary order
After careful consideration, the Tribunal concluded that the second revision on the same issue was not sustainable in the eyes of the law. The Tribunal found that the Ld. AO had conducted due enquiries and verification during the earlier assessment proceedings, and the revisionary order lacked a valid ground for revision. Consequently, the revisionary order dated 29.03.2019 was quashed, and the appeal of the assessee was allowed.

This detailed analysis of the issues involved in the legal judgment provides a comprehensive understanding of the Tribunal's decision and the reasoning behind quashing the revisionary order.