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TMI Blog2019 (1) TMI 1192X X X X Extracts X X X X X X X X Extracts X X X X ..... hat these investee companies have the requisite creditworthiness to subscribe to shares at a premium at the relevant point in time when the investment were made is not emanating from the records. Further, it is not a case where there was an audit objection and a different view so suggested by the auditor has been blindly applied by the CIT. No doubt, there was an audit objection in the present case but at the same time, there was lack of adequate enquiry on part of the AO and the ld CIT has given a specific finding in this regard on examination of documents so submitted during the course of assessment proceedings. No infirmity in the order of the CIT exercising her jurisdiction under section 263 of the Act in holding the order passed under section 147 r/w 143(3) as erroneous in so far as prejudicial to the interest of Revenue - decided against assessee. - ITA. No. 698/JP/2018 - - - Dated:- 10-12-2018 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri P.C. Parwal (CA) For the Revenue : Shri Varinder Mehta (CIT) ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. Pr. CIT, Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PCIT initiated proceedings u/s 263 vide show cause notice dt.27.03.2018 which was replied by the assessee vide letter dt. 28.03.2018. 4. The ld. AR further submitted that in the order passed by Ld. CIT u/s 263, it is stated that out of 18 companies, only 3 investing companies have provided the copies of bank statement narrating the sources of funds out of which the investment was made in the assessee company. Thus, the genuineness of transactions as well as the creditworthiness of the remaining 15 companies are still pending for making necessary verification. Accordingly, after relying on the amendment made by the Finance Act, 2015 w.e.f. 01.06.2015 u/s 263, it was held that the assessment order passed u/s 148/ 143(3) is based on non-making of proper verification/ examination of the genuineness of transactions as well as creditworthiness of the investing companies on the basis of any substantive evidences of the source of the funds available with them provided either by the assessee company or by such companies. Thus, the order was treated to be erroneous in so far as it is prejudicial to the interest of revenue and set aside to the AO for fresh assessment after proper enquiry. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue. In support, reliance was placed on the decision in case of Honda Motorcycle Scooters India Pvt. Ltd. vs. PCIT (2018) 53 CCH 0241 (Trib) (Del) and GE Capital Services India vs. ACIT (2018) 52 CCH 0372 (Trib) (Del). 6. The ld. AR further submitted that after completion of assessment, an audit objection was raised on 30.12.2016 and assessee was asked by the AO to meet with the audit objection. In the audit objection it is stated that assessee has thwarted the AO s query by saying that concept of FMV of the shares does not apply to AY 2008-09 and though each of the 18 investing companies have responded to notice u/s 133(6) but they have not provided the bank statement or other records stating that the same is time barred and they have destroyed the record and therefore, assessment was completed without verification. Against this objection, the assessee has filed the reply dt. 28.07.2017 in which all the objection of the audit has been explained. All these facts shows that detailed enquiries were made by the AO as has been stated in the audit objection itself and therefore, it cannot be said that assessment order is passed by the AO without making proper enquiry. Thus, only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entries. In this connection, a chart provided by the Authorized Representative of the assessee company has been placed on the record containing the list of the 18 companies to whom the equity shares were allotted during the year. The list contains the details of the numbers of the equity shares allotted to each, their PANs or the copies of their earlier year ITRs filed and the availability of such company's Master Data, Share Application Form Balance Sheet. Further, the confirmation of having been invested in the equity shares of the assessee company by those companies details of such companies having been provided their confirmations with copies of their accounts, copies or their ITRs filed their bank statements. In the confirmation given by all these companies, the investment made by such companies in the equity shares of the assessee company have been duly accepted and payments made in this regard have been mentioned through cheques with dates. The confirmations received from such companies have also been attached with the copies of Balance Sheets as downloaded from the official website of Ministry of Corporate Affairs (MCA) and made a submission that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds available with them provided either by the assessee company or by such companies. Thus, the order is treated to be erroneous in so far as it is prejudicial to the interest of the revenue. I, therefore, cancel the assessment order passed by the Assessing Officer u/s 148/143(3) on 30.03.2016 with the direction to the Assessing Officer to pass the assessment order afresh after considering the above mentioned issue(s), apart from other issue(s) discussed in the assessment order u/s 148/143(3) dated 30.03.2016 and also the issue(s) which may subsequently come into the notice of Assessing Officer, during the assessment proceedings u/s 148/143(3) r.w.s. 263 of the Income Tax Act, 1961. Consequently, the order passed u/s 148/143(3) of the Income Tax Act dated 30.03.2016 is set-aside under section 263 of the Income Tax Act with the direction that the Assessing Officer should properly examine the issue(s) raised in the foregoing paras and pass the assessment order afresh after making proper enquiries and after affording adequate opportunity to the assessee company. 9. We have heard the rival contentions and perused the material available on record. It is a case where the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in support thereof on face value and has not carried out adequate enquiry and has completed the reassessment proceedings in a summarily manner and in that sense, erroneous. It is a case where the issuance of share capital at a premium was the precise reason for reopening the assessment proceedings. In other words, where the AO has the reasons to believe that income has escaped assessment at the start of the reassessment proceedings, in order to dislodge his own self- belief, to our mind, the AO should have carried out requisite enquiry and verification as warranted in such circumstances and thereafter, he should have reached the necessary conclusion. It is not a question of determining the nature and extent of investigation that the AO should carry out in the present circumstances, rather it is a case where a person of reasonable intellect and understanding of tax laws and procedures will carry out the requisite enquiry as warranted in the facts and circumstances of the present case. 13. As we have noted above, the AO besides issuing notices u/s 133(6) has taken the assessee s submissions on face value without carrying out further examination and verification. There is no fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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