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2022 (8) TMI 890 - AT - Income TaxRevision u/s 263 - Reopening of assessment initiated for one reason that the assessee company is the beneficiary of unaccounted money taken in the form of accommodation entry - assessee failed to discharge the onus to prove the identity and creditworthiness of the cash creditors to advance money and the genuineness of the transaction - HELD THAT - In the light of the provisions of section 263 and a settled position of law, powers u/s 263 of the Act can be exercised by the Pr. Commissioner/Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and also prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the AO has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. See SHRI NIRAV MODI 2016 (6) TMI 1004 - BOMBAY HIGH COURT As in the present case series of facts prove beyond doubt that the ld. AO has conducted a detailed enquiry about the issue of alleged transaction of the assessee with M/s. Pushkar Trading and Holding Pvt. Ltd. and after examining the documents filed by the assessee, AO was satisfied that the assessee has not entered into any bogus/accommodation entry/transaction with this party and there is no element of undisclosed income and further, the transaction was not of Rs.60,00,000/- but it was transaction of Rs.30,00,000/- as the loan received on 13.10.2010 and the same amount repaid on 25.11.2010. We are of the considered view that the order of the AO dated 30.11.2018 cannot be termed as erroneous and prejudicial to the interest of the Revenue on the basis of this issue of the alleged transaction with M/s. Pushkar Trading and Holding Pvt. Ltd. S.K. Hawala Scam - Copies of bank statements were filed which were examined by the ld. AO, and after doing necessary examination concluded that no addition needs to be made in the hands of the assessee on this issue. Since there is a detailed enquiry conducted by the ld. AO and he has accepted one of the permissible view after examining the records it cannot be said that it is a case of no enquiry or incomplete enquiry and therefore, there is no room for ld. Pr. CIT to assume jurisdiction u/s 263 of the Act on this issue. Whether AO did not make any enquiry in respect of the share application money received in the financial year 2010-11? - Re-assessment proceeding was carried out for the specific reasons recorded attached to the notice issued u/s 148 of the Act. No addition has been made on the issues mentioned in the reasons recorded which in itself precludes the ld. AO from making any other addition in view of the ratio laid down by Hon ble Bombay High Court in the case of Jet Airways (I) Ltd. 2010 (4) TMI 431 - HIGH COURT OF BOMBAY wherein it has been held that If after issuing a notice u/s 148 of the Act, the ld. AO accepts the contentions of the assessee and holds that the income for which he had initially formed a reason to believe that it had escaped assessment, has, as a matter of fact, not escaped assessment, it is not open to him to independently assess some other income, and if he intends to do so, a fresh notice u/s 148 of the Act would be necessary, the legality of which would be tested in the event of a challenge by the assessee . Since ld. AO had not made any addition for the reasons recorded, no addition could be made on any other issue without issuing a fresh show cause notice u/s 148 of the Act. Under these circumstances, invoking the provisions of Section 263 of the Act was bad in law. Out of the three issues raised in the show cause notice u/s 263 of the Act, in two issues ld. AO has conducted complete enquiry during re-assessment proceedings and on the third issue, the very basic facts adopted by ld. Pr. CIT for involving provision of Section 263 of the Act suffers from defect and, therefore, the proceedings u/s 263 of the Act are bad in law. Further, in view of the settled legal position, legally also, no addition can be made on any new issue without issuing a fresh show cause notice u/s 148 of the Act if no addition has been made by the AO in the re-assessment proceedings on the issue raised in the reasons recorded. We, therefore, hold that ld. Pr. CIT erred in invoking the jurisdiction u/s 263 of the Act and thus the impugned proceedings are quashed and the reassessment order is restored. Appeal of assessee allowed.
Issues Involved:
1. Delay in filing the appeal. 2. Jurisdiction and legality of the order passed under section 263 of the Income Tax Act, 1961. 3. Alleged failure of the Assessing Officer (AO) to make proper enquiries regarding accommodation entry of Rs.60,00,000/-. 4. Alleged involvement in S.K. Jain Hawala Scam. 5. Non-enquiry into share application money of Rs.2,85,67,000/- received during FY 2010-11. Detailed Analysis: 1. Delay in Filing the Appeal: The appeal was filed with a delay of 92 days due to the COVID-19 pandemic. The Tribunal acknowledged the pandemic situation and referred to the Hon’ble Supreme Court's decision in Suo Moto Writ Petition (Civil) No. 3 of 2020, which excluded the limitation period from 15.03.2020 to 14.03.2021. The delay was condoned, and the case was heard on merits. 2. Jurisdiction and Legality of the Order Passed Under Section 263: The assessee challenged the jurisdiction of the Principal Commissioner of Income Tax (Pr. CIT) under section 263, arguing that the original assessment order was neither erroneous nor prejudicial to the interest of the revenue. The Tribunal examined whether the AO conducted due enquiries and whether the Pr. CIT had valid grounds for invoking section 263. 3. Alleged Failure to Make Proper Enquiries Regarding Accommodation Entry of Rs.60,00,000/-: The Tribunal found that the AO had conducted detailed enquiries regarding the alleged accommodation entry from M/s. Pushkar Trading and Holding Pvt. Ltd. The AO examined bank statements and other documents, concluding that the transaction was legitimate. The Tribunal held that the AO's order could not be termed erroneous or prejudicial to the interest of the revenue on this ground. 4. Alleged Involvement in S.K. Jain Hawala Scam: The AO issued a notice during reassessment proceedings regarding the alleged transaction of Rs.10,00,000/- in the S.K. Jain Hawala Scam. The assessee denied any such transaction and provided bank statements. The AO, after examining the submissions, made no additions. The Tribunal held that since the AO conducted a detailed enquiry and accepted one permissible view, the Pr. CIT could not invoke section 263 on this issue. 5. Non-Enquiry into Share Application Money of Rs.2,85,67,000/- Received During FY 2010-11: The Tribunal observed that the Pr. CIT incorrectly stated the figure of share application money. The actual increase in share capital was Rs.17,60,000/-, and the share premium received was Rs.4,22,40,000/-. The Tribunal noted that these details were available in the financial statements and had been examined by the AO during the original assessment. The Tribunal held that the Pr. CIT did not examine the issue on merits before holding the AO's order as erroneous and prejudicial to the revenue. Conclusion: The Tribunal quashed the proceedings under section 263, holding that the AO had conducted necessary enquiries on the issues raised, and the Pr. CIT's invocation of section 263 was based on incorrect facts and was legally untenable. The reassessment order dated 30.11.2018 was restored, and the appeal of the assessee was allowed.
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