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2018 (7) TMI 366 - AT - Income TaxRevision u/s 263 - addition u/s 68 - Held that - CIT has not stated anything against the propositions of law laid down by the Hon ble Bombay High Court in the case of CIT vs. Gagandeep Infrastructure (P) Ltd. (2017 (3) TMI 1263 - BOMBAY HIGH COURT) and the judgment in the case of CIT v. M/s. Orchid Industries Pvt. Ltd. 2017 (7) TMI 613 - BOMBAY HIGH COURT and the judgment in the case of Pr. CIT v. Veedhata Tower Pvt. Ltd. 2018 (4) TMI 1004 - BOMBAY HIGH COURT where in it is held that the amendment to the proviso to Section 68 is not retrospective and thus cannot be applied for the assessment years prior to the assessment year 2013-14. We make it clear that the Assessing Officer, should not while framing fresh assessment order consequent to the order passed u/s 263 of the Act, take a view that the ld. CIT in the impugned order u/s 263 has concluded that the amendment to Section 68 of the Act is retrospective in nature. He is directed to follow the ratio of the judgment in the case of Rajmandir Estates Pvt. Ltd.(2016 (5) TMI 801 - CALCUTTA HIGH COURT) and the judgement of the Hon ble Bombay High Court and Tribunals on this issue and decide the issue in accordance with law - Appeal of the assessee dismissed.
Issues:
1. Challenge to order passed under section 263 of the Income Tax Act, 1961. 2. Examination of genuineness and source of share capital. 3. Examination of directors and circumstances necessitating change in directorship. 4. Examination of source of realization from liquidation of assets. 5. Natural justice principles not followed. 6. Retrospective or prospective nature of the amendment to Section 68 of the Act. Analysis: Issue 1: The appeal challenges the order passed under section 263 of the Income Tax Act, 1961, relating to the Assessment Year 2009-10. The Commissioner set aside the assessment order passed by the Assessing Officer and directed further inquiries regarding the share capital and other related matters. Issue 2: The Commissioner directed the Assessing Officer to examine the genuineness and source of share capital by conducting independent inquiries for each shareholder. It was emphasized that a thorough examination, not on a test check basis, was necessary to trace the money trail of the share capital. Issue 3: Further directions were given to examine the directors, circumstances leading to changes in directorship, and the source of realization from asset liquidation after directorship changes. The Assessing Officer was instructed to reach logical conclusions based on these examinations and provide the assessee with an opportunity to be heard. Issue 4: The order under challenge was based on the premise that the assessment order was erroneous and prejudicial to revenue due to inadequate inquiries and lack of application of mind. The Tribunal upheld the Commissioner's order based on similar conclusions drawn in previous cases, emphasizing the importance of a thorough examination by the Assessing Officer. Issue 5: Regarding the objection on natural justice principles, the Tribunal found that the assessee was given a showcause notice and provided an opportunity to make written submissions. The Tribunal concluded that there was no violation of natural justice principles in this case. Issue 6: The Tribunal addressed the retrospective or prospective nature of the amendment to Section 68 of the Act. It clarified that the Commissioner's statements did not suggest the retrospective application of the amendment. Citing relevant judgments, the Tribunal directed the Assessing Officer to follow the law and not consider the amendment retrospective for assessment years before 2013-14. In conclusion, the Tribunal dismissed the appeal of the assessee, upholding the Commissioner's order passed under section 263 of the Income Tax Act, 1961. The Tribunal's decision was based on thorough examinations, adherence to natural justice principles, and the correct interpretation of the law regarding the retrospective nature of the amendment to Section 68 of the Act.
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