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2021 (12) TMI 1286 - AT - Income TaxRevision u/s 263 by CIT - addition of share premium - addition u/s 68 - CIT in second assessment/re-assessment order proposed to exercise his revisional jurisdiction - second round before the AO for de novo re-assessment, the second AO as per the direction of the First Ld. Pr. CIT conducted the reassessment proceeding - HELD THAT - Second AO has conducted enquiry on the specific subject matter i.e. share capital and premium collected by the assessee-company (CASS items). Therefore, the finding of Second Pr. CIT that the Second AO has not conducted enquiry is incorrect and is flowing from suspicion only. And as discussed, the allegation/fault pointed out by the Second Ld. Pr. CIT that the Second AO failed to collect total facts also cannot be accepted for the simple reason that Ld. Pr. CIT has not spelt out in the impugned order what he meant by total facts or in the alternative when the assessee has discharged its onus, as required by the law in force in this AY 2012-13, then the Ld. Pr. CIT ought to have called for which ever additional documents/materials or issued summons or issued notices and collected those facts which according to Second Ld. Pr. CIT, the AO omitted to collect and then demonstrated that those actions/documents which he collected in that process gave result to a different finding of fact which will turn upside down the claim of the assessee and thus able to show that the actions/omission of AO in conducting the investigation was erroneous, which unfortunately is not the case before us. Second Pr. CIT has not carried out any such exercise or even spelled out in his impugned order, which all documents the second AO failed to collect for considering the total facts; and even if we presume he has conducted such an exercise, then he has not been able to bring out any adverse factual finding to upset the view of Second AO. So we find no merit in the vague allegation of second Pr. CIT that the second AO has not collected the full facts necessary to decide the issue of share capital premium. Second Ld. Pr. CIT 4 by passing the second revisional order dated 15.03.2019 has substituted the First Pr. CIT s order passed u/s. 263 of the Act dated 28.03.2016 with his own order which he cannot do since the second assessment order/re-assessment of the Second AO dated 08.06.2016 was pursuant to the first revisional order of the First Ld. Pr. CIT and on the very same subject matter which inter alia was the issue flagged by CASS, which exercise since having been complied by the AO, brings into operation the doctrine of merger the subject matter i.e. share capital premium collected by assessee company. Resultantly the second Ld. Pr.CIT, again cannot rake-up the same subject matter without the second Ld. Pr.CIT in the second revisional order spells out where the error happened to second AO as an investigator or adjudicator, which exercise the Second Ld. Pr.CIT has not done, so the second Ld. Pr. CIT cannot be permitted to again ask the AO to start the investigation in the way he thinks it proper on the very same subject on which merger has taken place by virtue of the order of First Ld. Pr. CIT. And if this practice is allowed, then there will be no end to the assessment proceedings meaning no finality to assessment proceedings and that is exactly why the Parliament in its wisdom has brought in safe-guards, restrictions conditions precedent to be satisfied strictly before assumption of revisional jurisdiction. We find that the Second Ld. Pr. CIT without satisfying the condition precedent u/s 263 of the Act has invoked the revisional jurisdiction (second time), so all his actions are ab initio void. Pr. CIT has made a bald statement that the AO s assessment order attracts Explanation 2(c) u/s. 263 of the Act. However, he failed to spell out in his impugned order how the action of AO while framing the assessment order is not in accordance to any order, direction or instruction issued by the Board under section 119 of the Act. So, the deeming fiction as envisaged in Explanation (2) u/s. 263 of the Act cannot be used to interfere with the order of AO. This action of Ld. Pr. CIT is bad for non-application of mind. - Decided in favour of assessee.
Issues Involved:
1. Validity of invoking revisional jurisdiction under section 263 of the Income-tax Act, 1961 for the second time. 2. Examination of whether the second assessment order was erroneous and prejudicial to the interest of the revenue. 3. Doctrine of merger and its applicability in the case. 4. Satisfaction of statutory condition-precedent under section 263 of the Act. 5. Adequacy and extent of enquiry conducted by the Assessing Officer (AO). Issue-wise Analysis: 1. Validity of Invoking Revisional Jurisdiction under Section 263 for the Second Time: The main grievance of the assessee was against the invocation of the second revisional jurisdiction by the Principal Commissioner of Income-tax (Pr. CIT) under section 263 of the Income-tax Act, 1961. The assessee contended that the second Pr. CIT could not have exercised this jurisdiction again since the second assessment order dated 08.06.2016 was pursuant to the specific directions given by the first Pr. CIT in the first revisional order dated 28.03.2016. The assessee argued that the order of the first Pr. CIT had merged with the second assessment order, and therefore, the second Pr. CIT’s action was without jurisdiction. 2. Examination of Whether the Second Assessment Order Was Erroneous and Prejudicial to the Interest of the Revenue: The second Pr. CIT alleged that the second assessment order was erroneous due to a lack of enquiry on the part of the AO. The AO had accepted the share capital and premium collected by the assessee without conducting a detailed enquiry. The second Pr. CIT opined that the AO's decision was not based on the totality of facts, making the order erroneous and prejudicial to the interest of the revenue as per Explanation 2(c) below section 263(1) of the Act. 3. Doctrine of Merger and Its Applicability: The assessee argued that the second Pr. CIT's action of passing the second revisional order effectively substituted the first Pr. CIT’s order passed under section 263 of the Act, which is not permissible. The doctrine of merger was invoked, suggesting that the subject matter had already been adjudicated and merged with the first revisional order. Therefore, the second Pr. CIT could not interfere with the same subject matter again. 4. Satisfaction of Statutory Condition-Precedent under Section 263 of the Act: The statutory condition-precedent for invoking revisional jurisdiction under section 263 of the Act requires that the assessment order must be erroneous and prejudicial to the interest of the revenue. The Tribunal examined whether these twin conditions were satisfied in the present case. It was noted that the AO had conducted an enquiry and collected relevant documents, including audited accounts, bank statements, and other details from the share applicants. The Tribunal found that the AO had discharged his role as an investigator and adjudicator, and his view was a plausible one. 5. Adequacy and Extent of Enquiry Conducted by the AO: The Tribunal observed that the AO had issued notices under section 142(1) and 133(6) of the Act, and the share applicants had responded with the requisite documents to prove their identity, creditworthiness, and genuineness of the transactions. The AO had verified these documents and found them satisfactory. The Tribunal held that the AO’s enquiry was adequate, and the second Pr. CIT’s allegation of lack of enquiry was not substantiated. Conclusion: The Tribunal concluded that the second Pr. CIT's action of invoking revisional jurisdiction under section 263 for the second time was without jurisdiction and ab initio void. The Tribunal found that the AO had conducted a proper enquiry and that the second assessment order was a plausible view. The Tribunal allowed the appeal of the assessee, quashing the impugned order of the second Pr. CIT.
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