2023 (12) TMI 545 - AT - Income Tax

Revision u/s 263 - share capital and share premium undisclosed - second round of revision u/s 263 on the ground that the AO has not conducted any enquiry into the issues as pointed out by the ld. Pr. CIT - HELD THAT - This is not a case of no enquiry or lack of enquiry as the AO has made in enquiry and taken a view on the basis of examination of the evidences furnished by the assessee as well as by the subscribers. In our opinion, the PCIT cannot exercise the revisionary jurisdiction to set aside the assessment where the AO has conducted enquiries and taken a plausible view accepting the contentions of the assessee. Where the PCIT was of the view that AO has not conducted enquiry to come to the conclusion on the issue, then the ld. PCIT is duty bound to make an enquiry and reach a conclusion that order is erroneous and prejudicial to the interest of the revenue. The case of the assessee is squarely covered by the decision of Hon ble Delhi High Court in the case of D G Housing Projects Ltd. 2012 (3) TMI 227 - DELHI HIGH COURT Twin conditions have to be satisfied as envisaged in section 263 of the Act in absence of which the revisionary jurisdiction is not available to the Pr. CIT . Even if one of the two condition is satisfied the jurisdiction is not available. However in the present case the twin conditions were not satisfied as the order is neither erroneous nor prejudicial to the interest of the revenue as all the facts were examined by the AO on the basis of details and explanation of the assessee before the AO and he has taken a correct view based on his examination of records furnished by the assessee as well as by the subscribers. The case of the assessee squarely covered by the decision of Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd 2000 (2) TMI 10 - SUPREME COURT wherein it has been held that the jurisdiction is not available to the Pr. CIT where the twin conditions as envisaged by section 263 of the Act were not satisfied. The Hon ble Court has even held that where one of the two conditions are satisfied, the provisions of section 263 of the Act cannot be invoked. We also find merit in the second plea of the assessee that revisionary jurisdiction u/s 263 of the Act is not available on the same issue for the second time and this has been held in a series of decisions of Bhagwati Vintrade Pvt Ltd. 2022 (11) TMI 1324 - CALCUTTA HIGH COURT and PCIT Vs M/S Intent Dealers Pvt Ltd 2022 (11) TMI 1432 - CALCUTTA HIGH COURT - Appeal of assessee allowed.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of the revisionary order passed under section 263 of the Income Tax Act, 1961.
3. Adequacy of the Assessing Officer's investigation into share capital and share premium.

Summary:

Condonation of Delay:
The assessee filed the appeal with a delay of 147 days. After reviewing the reasons for the delay, the Tribunal was convinced that the delay was due to sufficient cause and thus condoned it, admitting the appeal for hearing.

Validity of Revisionary Order under Section 263:
The assessee challenged the revisionary order passed by the Principal Commissioner of Income Tax (Pr. CIT) under section 263 of the Income Tax Act, 1961. The Tribunal noted that the Pr. CIT had directed the Assessing Officer (AO) to conduct another investigation despite the AO having already complied with the predecessor Pr. CIT's directions in a previous order under section 263 dated 09/09/2016.

Adequacy of Investigation into Share Capital and Share Premium:
- Background: The assessee filed a return declaring an income of Rs. 1,240/-. The case was selected for scrutiny, and the AO assessed the total income at Rs. 6,21,01,240/- after adding share capital/share premium. The predecessor Pr. CIT set aside this assessment and directed a de novo assessment, which the AO completed by assessing the income at Rs. 1,240/- after detailed investigation.
- Pr. CIT's Concerns: The Pr. CIT found the AO's order erroneous and prejudicial to the revenue, citing inadequate investigation into the identity, creditworthiness of shareholders, genuineness of transactions, rationale behind share premium, and money trail.
- Tribunal's Findings: The Tribunal observed that the AO had conducted a detailed enquiry during the set-aside proceedings, including issuing notices under section 133(6) to shareholders and obtaining necessary details. The Tribunal held that the Pr. CIT could not exercise revisionary jurisdiction under section 263 when the AO had conducted adequate enquiries and taken a plausible view based on the evidence provided. The Tribunal cited the Delhi High Court's decision in D G Housing Projects Ltd. and the Supreme Court's decision in Malabar Industrial Co. Ltd., emphasizing that both conditions of the order being erroneous and prejudicial to the interest of the revenue must be satisfied for section 263 to be invoked.

Conclusion:
The Tribunal concluded that the revisionary jurisdiction under section 263 was invalidly exercised by the Pr. CIT, as the AO had already conducted a detailed investigation and taken a justified view. It also noted that a second round of revision on the same issue is not permissible, citing decisions from the Calcutta High Court. Consequently, the Tribunal quashed the revisionary order and allowed the assessee's appeal.

Order Pronouncement:
The appeal of the assessee was allowed, and the order was pronounced on 8th December 2023 at Kolkata.