2024 (3) TMI 883 - AT - Income Tax

Validity of Revision u/s 263 - Exercise of revision jurisdiction for second time on the same issue - As per CIT AO had passed the order without making enquiries or a claim has been allowed without enquiring into the claim or that the same is not in accordance with any order or direction or instruction issued by CBDT, that shall be deemed to be erroneous in so far as its prejudicial to the interest of Revenue - HELD THAT - Merely because in the assessment carried out pursuant to the revision order passed u/s 263 of the Act has resulted into acceptance of the claim of the assessee, that cannot be, in our view, a ground for exercise of revision jurisdiction for second time on the same issue. In this case, the earlier assessment order was set aside for de novo assessment which means that all the issues were open before the Assessing Officer. The assessee, under the circumstances, was entitled to furnish explanations and evidences on each of the issue that was open before the Assessing Officer and in relation to which the details were called upon by the Assessing Officer. There was neither any statutory power nor otherwise any other law requiring the Assessing Officer to only enhance or assess the same income which was earlier assessed. Such a proposition would be against the spirit of the law. Scope of deeming fiction created in section 263 by the amendment made by Finance Act, 2015 w.e.f. 01.06.15 - HELD THAT - The said deeming provisions above in our view, are not applicable for the assessment year under consideration i.e., A.Y. 2012-13 Even otherwise, a perusal of the revision order passed by the PCIT shows that the ld. PCIT has not pointed out any error or discrepancy in the evidence furnished by the assessee and without examining such evidence and without counter questioning the assessee on the relevant points and even without considering the submission of the assessee furnished in reply to the show-cause notice, the ld. PCIT, in our view, was not justified in setting aside the order, simply stating that in his view more enquiries were needed to be carried out by the AO - As observed PCIT without examining the details of the share applicants and the evidence furnished by the assessee has passed a general order observing that in his view the order passed by the Assessing Officer was on an incorrect assumption of facts or incorrect application of law without mentioning as to what facts were incorrect what was the incorrect law, that was applied by the AO. Simply because the ld. PCIT felt that the Assessing Officer should have made further enquiries on the same issue or that the case was to be examined from some another angle, the same, in our view, cannot be a valid ground to set aside the assessment order. If such an action is allowed by the ld. PCIT in revision jurisdiction then, there would be no end to litigation and there would not be any finality to the assessment. The Explanation 2(c) to Section 263(1) of the Act does not give unbridled powers to the ld. PCIT to simply set aside the assessment order by saying that the AO was required to make further enquiries without pointing out as to what was lacking in the enquiries made by the Assessing Officer and why the ld. PCIT was not satisfied with the reply and evidence furnished by the assessee. Thus as relying on Amritrashi Infra Private Ltd. 2020 (8) TMI 407 - ITAT KOLKATA , we do not find justification on the part of the ld. Pr. CIT in setting aside the impugned assessment order which was passed by the Assessing Officer on the directions of the ld. PCIT issued u/s 263 of the Act. Decided in favour of assessee.

Summary

Issues Involved:
1. Condonation of Delay
2. Validity of Revision Order u/s 263
3. Examination of Share Capital and Premium
4. Jurisdiction of PCIT in Second Revision

Condonation of Delay:
The appeal was time-barred by 1722 days. The assessee explained that the impugned order dated 12.03.2019 was not served upon them, and they only became aware of it after receiving a subsequent assessment order. The delay was further justified by the Covid Pandemic. Considering these submissions, the delay in filing the present appeal was condoned.

Validity of Revision Order u/s 263:
The assessee contested the validity of the revision order passed by the PCIT. The original assessment u/s 143(3) was framed by the Assessing Officer (AO) on 24.03.2015, making an addition of Rs. 14,26,00,000/- under section 68 as unexplained income. The PCIT observed that the AO made this addition without examining the evidence provided by the assessee. Consequently, the PCIT set aside the original assessment order for de novo assessment, directing the AO to specifically examine the source of share application money, identity of investors, and genuineness of the transaction.

Examination of Share Capital and Premium:
The AO, following the PCIT's direction, re-examined the details and evidences furnished by the assessee and concluded that the assessee had successfully discharged its onus. However, the second PCIT again set aside the second assessment order, holding that the AO failed to make proper and independent enquiries. The PCIT emphasized that any order subsequent to u/s 263 must favor the revenue, either by enhancing the assessed income or maintaining it with enhanced enquiries.

Jurisdiction of PCIT in Second Revision:
The Tribunal found that the exercise of second revision jurisdiction by the PCIT on the same issue was not justified. The Tribunal noted that the original scrutiny assessment was carried out on the issue of "large share premium received," and the AO had verified the necessary details and evidences furnished by the assessee. The Tribunal emphasized that merely because the assessment resulted in acceptance of the assessee's claim, it cannot be a ground for exercising revision jurisdiction for the second time. The Tribunal held that there must be finality to the proceedings, and the assessment cannot be kept open in perpetuity.

Conclusion:
The Tribunal quashed the impugned order of the PCIT, holding that the second revision jurisdiction was exercised without justification. The appeal of the assessee was allowed.