2021 (6) TMI 569 - AT - Income Tax

Revision u/s 263 - undisclosed of share application and share premium - HELD THAT - Assessee failed to bring any material that issue related with the transaction of share application money and share premium of all these three entities was examined by AO. No submission with regard to the identity, creditworthiness or genuineness of the transaction of these three companies were made before us. Assessee rather insisted that assessment order is illegal and bad in law. We find that none of the case law relied by the assessee is helpful to the assessee. As during the assessment the assessing officer has not examined the issue related with the receipt of share premium received form three companies i.e. identity, creditworthy and genuineness of transaction of the share application and share premium, nor added to the total income of the assessee. In our view the failure of AO to examine the above facts during the assessment proceedings the assessment order is not only erroneous but prejudicial to the interest of the Revenue. Thus, the twin conditions of the provisions of section 263 is fulfilled. Hence, we affirm the order of ld. PCIT. In the result the grounds of appeal raised by the assessee are dismissed.

Issues:
1. Validity of assessment order under section 263 of the Income Tax Act for the assessment year 2010-11.
2. Consideration of share application and share premium money received by the assessee from various companies.
3. Examination of the identity, creditworthiness, and genuineness of transactions related to share application and share premium money.

Issue 1: Validity of assessment order under section 263:
The appeal by the assessee challenged the order of the Principal Commissioner of Income Tax, Surat-1, under section 263 of the Act for the assessment year 2010-11. The assessee contended that the assessment order passed under section 143(3) r.w.s 147 was illegal and bad in law as it was based on reopening the case without any funds received from Inland Vanijya Pvt. Ltd. The Tribunal noted that the AO failed to make any addition based on the reopening issue, and the assessee argued that the assessment order being illegal, the revision under section 263 was not valid. However, the Tribunal upheld the order of the Principal Commissioner, stating that the AO's failure to examine crucial facts made the assessment order erroneous and prejudicial to the Revenue's interest.

Issue 2: Share application and share premium money:
The assessee received share capital and share premium from several companies, leading to additions in the assessment. The Principal Commissioner observed that the AO did not consider the identity, creditworthiness, and genuineness of the transactions related to share application and share premium money. The Principal Commissioner issued a show cause notice, stating that the assessment order was erroneous and prejudicial to the Revenue's interest due to lack of proper enquiries. The Tribunal found that the AO had not examined these aspects during the assessment proceedings, making the assessment order faulty.

Issue 3: Examination of transactions related to share application and share premium:
The Tribunal noted that the AO failed to address the issue of share application and share premium money from specific companies in the assessment order. The assessee's argument that the assessment order was illegal and bad in law was not accepted by the Tribunal. The Tribunal highlighted that the facts of the case law cited by the assessee did not align with the present case, emphasizing that the AO's failure to examine critical aspects rendered the assessment order erroneous and prejudicial to the Revenue's interest. The Tribunal affirmed the order of the Principal Commissioner under section 263 of the Act, dismissing the grounds of appeal raised by the assessee.

In conclusion, the Tribunal upheld the order of the Principal Commissioner under section 263, emphasizing the importance of examining crucial aspects related to share application and share premium money to ensure the correctness of the assessment order and protect the Revenue's interest.

← Previous Next →