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TMI Blog2017 (12) TMI 1547X X X X Extracts X X X X X X X X Extracts X X X X ..... , since the income of Rs. 10,732/- had escaped assessment by issuing notice u/s. 148 of the Act. Later, the ITA No.291/Kol/2016 M/s. Sukanya Merchandise Pvt. Ltd., AY 2008-09 assessment was processed u/s. 147/143(3) of the Act by making addition on preliminary expenses written off of Rs. 10,732/-. 4. The Ld. CIT-2, Kolkata on perusal of the assessment record observed that assessee had infused fresh equity share capital of Rs. 16,12,000/- on a premium of Rs. 490/- per share and the assessee company received Rs. 8,06,00,000/-. The Ld. CIT noted that the AO had not issued any notice u/s. 133(6) of the Act to the subscribers of the shares and had not made any independent enquiry. The Ld. CIT after taking note of the racket under which large number of companies were floated in identical manner apparently showing to have introduced share capital at a huge premium by rotating the unaccounted money, the Ld. CIT was pleased to invoke her revisional jurisdiction u/s. 263 of the Act and set aside the order of the AO and directed the AO to investigate deeply into the source of source by giving the following direction: "xxxiv) Examine the genuineness and source of share capital, not on a tes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m sale of shares of another such company on the very same day or immediate earlier day and the average balance in the bank account was very nominal. Thereafter the AO in order to unearth the real fact behind the investment made by the share applicants to the assessee company, the AO summoned vide notice dated 26.02.2014 for recording statement on oath of the directors of the assessee company. The AO had reproduced the summons issued on 26.02.2014 at page 4 of his order. Thereafter, the AO notes that the assessee had asked for adjournment to 14.03.2014 and since there was no compliance he summoned the director of the assessee company vide summons dated 24.03.2014 for personal appearance and recording of statement on oath on 26.03.2014. However, since neither anybody appeared from the assessee company nor from the investor companies, he concluded that the share application money received with premium amounting to Rs. 8,06,00,000/- remains unexplained, so it was added u/s. 68 of the Act. On appeal, the Ld. CIT(A) was pleased to confirm the same. Aggrieved, the assessee is before us. 6. We have heard rival submissions and gone through the facts and circumstances of the case. The main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on the order of (three judge bench) the Hon'ble Supreme Court in Tin Box Company Vs. CIT (2001) 249 ITR 216 (SC) wherein the Hon'ble Supreme Court has held as unde "It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus : "We will straightaway agree with the assessee's submission that the Income-tax Officer had not given to the assessee proper opportunity of being heard." That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of setting out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard. ITA No.291/Kol/2016 M/s. Sukanya Merchandise Pvt. Ltd., AY 2008-09 Two questions were placed before the High Court, of which the second question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note that the Ld. CIT had given the following directions: xxxiv) Examine the genuineness and source of share capital, not on a test check basis, but in respect of each and every shareholder by conducting independent enquiry not through the ITA No.291/Kol/2016 M/s. Sukanya Merchandise Pvt. Ltd., AY 2008-09 assessee. The bank account for the entire period should be examined in the course of verification to find out the money trail of the share capital. xxxv) Further the AO should examine the directors as well as examine the circumstances which necessitated the change in directorship if applicable. He should examine them on oath to verify their credentials as director and reach a logical conclusion regarding the controlling interest. xxxvi) The AO is directed examine the source of realization from the liquidation of assets shown in the balance sheet after the change of Directors, if any after conducting the inquiries & verification as directed above, the AO should pass a speaking order, providing adequate opportunity of being heard to the assessee." We note that the AO pursuant to the order of Ld. CIT had taken note of the directions of the Ld. CIT and issued notice u/s. 142( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced assessees had challenged the exercise of revisional jurisdiction u/s. 263 of the Act before this Tribunal in those cases one of it of Subha Lakshmi Vanijya Pvt. Ltd. Vs. CIT in ITA No. 1104/Kol/2014 dated 30.07.2015, wherein the Tribunal was pleased to uphold the order passed by the Ld. CIT passed u/s. 263 of the Act, which we learn to have been confirmed by the Hon'ble jurisdictional High Court and the SLP preferred against the decision of the Hon'ble jurisdictional High Court has been dismissed by the Hon'ble Supreme Court. Therefore, similar order of the Ld. CIT passed u/s. 263 of the Act has been upheld. We note that the AO while giving effect to the CIT's 263 order has noted that the assessee company has in fact furnished the documents sought by him to his notice u/s. 142(1) of the Act. However, the AO took the adverse view against the assessee on the plea that the directors of the assessee company and share subscribing companies had not appeared before him on 26.03.2014 and t after taking note that none appeared on 26.03.2014 concluded on the same day 26.03.2014 that entire amount of share application money received along with premium amounting to Rs. 8, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the fact of the allegations of the Revenue that the account statements reveal uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice under Section148 issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or causing to be made a 'further inquiry' in exercise of the power under Section 250(4). His approach not having been adopted, the impugned order of ITAT, and consequently that of CIT(Appeals), cannot be approved or upheld." In view of the aforesaid order and in the light of the Hon'ble Supreme Court's decision in Tin Box Company (supra) and taking into consideration the fact the order of the Ld. CIT passed u/s. 263 of the Act in similar cases being upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X
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