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TMI Blog2018 (4) TMI 1743X X X X Extracts X X X X X X X X Extracts X X X X ..... the seized material and therefore, the provisions of section 263 are of the Act are attracted. 3. That the Ld. Pr. CIT has erred in invoking the provisions of section 263 of the Act in the present case on the ground that no proper inquiry was made by the Assessing Officer during the proceeding u/s 147 of the Act whereas the extensive inquiry had been made by the Assessing Officer. 4. That the Ld. Pr. CIT has not considered that inadequate inquiry does not amount to lack of inquiry so as to attract the provisions of section 263 of the Income Tax Act in view of even newly inserted provisions of Explanation 2 to section 263 of the Act. 5. That the Ld. Pr. CIT himself had not examined as to whether there was any nexus between the cash deposited & cheques issued to the assessee so as to make the order passed by the Assessing Officer erroneous within the ambit of section 263; hence the directions given by the Pr. CIT to frame the fresh assessment is contrary to law. 6. That the order passed by the Ld. Pr. CIT is not sustainable in law as it amounts to change of opinion. 7. That the Ld. Pr. CIT has erred in invoking the powers u/s 263 of the Act on the basis of diary found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamine the seized material in the form of cash book and the books containing the details of cheques issued by such concerns seized from the premises of Shri S K Jain during the course of search. A show cause notice under Section 263 of the Income Tax Act was issued to the assessee on 19.01.2017. The Pr. CIT vide order dated 23.03.2017 passed u/s 263 of the Income Tax Act, 1961 held that the reassessment order passed by the Assessing Officer is not only prejudicial to the interest of the revenue but is also erroneous in so far as the Assessing Officer has failed to look into the seized material. Therefore, the said order was set aside with a direction to the AO to examine the seized material and confront the same to the assessee. The Assessing Officer was further directed to examine the reasons for transferring such shares, if any, at a nominal rate to the directors or their relatives or the concerns in which the assessee company is interested and pass a speaking order after affording an opportunity of hearing to the assessee. The Pr. CIT further held that if after verification of the seized material and the explanation regarding the transfer of shares in the name of the directors o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. AR further submitted that thereafter, surprisingly, assessee received a show cause notice issued by the Pr. CIT u/s 263 of the Act on 19.01.2017, requiring the assessee to explain as to why the re-assessment order framed by the Assessing Officer on 31.03.2015 for AY 2007-08 be not set aside as the same is not only erroneous to the extent that the Assessing Officer had not examined the seized material (pertaining to the assessee company) in the case of S K Jain group of cases but also prejudicial to the interest of revenue as the Assessing Officer had failed to tax the same amount of Rs. 20 lakh as unexplained credits in the books of assessee. Since apparently the amount of Rs. 20 lakh received from M/s Hillridge Investments Ltd. M/s Vogue Leasing & Finance (P) Ltd., M/s Pitambra Securities Pvt. Ltd. and M/s Pelicon Finance & Leasing Ltd. is an accommodation entry taken in lieu of cash of Rs. 20 lakh given by the assessee as the same cheque numbers from the same bank as mentioned in the notice were found credited in the bank account of assessee. The Pr. CIT also enclosed copies of seized material relating to the assessee, to the said notice. The Ld. AR further submitted that a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther as stated by the Pr. CIT himself on page 6 & 7 of the order u/s 263 of the Act, the appraisal report had summarized the details of beneficiaries and the shell companies along with the details of cheques issued as per the seized material in one of the annexures in the format as reflected a page 7 of the order. This chart revealed the name of the mediator also. The details incorporated in various annexures were tabulated in the appraisal report. Accordingly, the observation of Pr. CIT that the Assessing Officer had not looked into the seized material is incorrect on the face of record. The Ld. AR further submitted that the Pr. CIT has misdirected himself in ignoring the material fact & that all possible inquiries had been made by the Assessing Officer during the re-assessment proceeding. A specific query had been made by the Assessing Officer which had been duly replied with by the assessee along with various evidences as stated in the preceding paras. Assessing Officer had also made independent inquiries by issuing notices u/s 133(6) of the Act which had been duly complied by the 04 share applicant companies. Even summons u/s 131 had been issued by the Assessing Officer in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sulted in loss of revenue, or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of revenue unless the view taken by the Income -Tax Officer is unsustainable in law. In the present case, after considering all the details filed by the assessee, the Assessing Officer has taken a view which is permissible in law and therefore, the Pr. CIT cannot substitute his own view treating the view taken by the Assessing Officer as erroneous. It is the lack of inquiry on the part of Assessing Officer which confers jurisdiction the Pr. CIT to assume jurisdiction u/s 263 of the Act. Following cases are relied upon: (1) CIT vs Ashish Rajpal (2010) 320 ITR 674 (Del) (2) ITO vs. D G Housing Projects Ltd. (2012) 343 ITR 329 (Del) (3) DIT vs Jyoti Foundation ITA No.267/2013 decided on 09.07.2013 (4) CIT Delhi-V vs New Delhi Television 39 Taxmann.com 135 (Del) (5) CIT vs Galileo India (P) Ltd. 41 Taxmann.com 34 (Del) The Ld. AR further submitted that where the Assessing Officer had made a query which had been duly explained by the assessee to the sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer had not looked into the seized material particularly when in the appraisal report (which was the basis for issuing notice u/s 147) the details of seized material was depicted in the tabular form. Moreover, Pr. CIT has not arrived at a definite conclusion that the order passed by the Assessing Officer is erroneous. Rather he has given direction to the Assessing Officer to make roving and fishing inquiry of general nature, specially when the share applicant companies are still holding the shares and have not sold the-same-to the Directors Order passed by Pr. CIT u/s 263 reflects that the Pr. CIT is prejudiced by the general facts existing in the market which are not the facts in the present case. Hence, the order passed by Pr. CIT u/s 263 is liable to be set aside in the interest of justice. The Ld. AR further submits that Section 133(6) was also issued. The Ld. AR submitted that the statement of Directors was recorded as Section 131 notice was issued and Directors appeared before the Assessing Officer. 6. The Ld. DR submitted that Pr. CIT rightly passed order u/s 263 of the Act as the Assessing Officer has not taken into consideration the material seized during the search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case to the extent of erroneous and thus, Section 263 of the Act is attracted in the present case. Section 263 of the Act is not invoked simply for correcting mistake or error committed by the Assessing Officer in the present case. It can be observed that the Pr. CIT has considered all the contentions of the assessee and thereafter rightly come to the conclusion that the Assessing Officer failed to consider the seized material. The Pr. CIT held as under vide order dated 23.03.2017 passed under Section 263 of the Act: "11. There is another point of not making proper enquiry in this case. Subsequent to issue of shares to the concerns of SK Jain Group, most of the beneficiary companies got the shares transferred at a nominal rate in the name of their directors or their relatives originally issued to such shell companies. Even though, the shares were issued at a premium, in most of the cases such shares were transferred within one or two years in the name of directors of the beneficiary company or to the concerns in which such directors were interested, at very nominal price. The AO did not make any enquiry whatsoever on this aspect. He ought to have asked the beneficiary c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessment Order itself which proves that the order is passed without making inquiries or verification which should have been made by the Assessing Officer. Thus, it is prejudicial to the interest of the Revenue and there is loss of revenue. The Pr. CIT after issuing the Show Cause Notice u/s 263 of the Act given ample opportunity to the Assessee for explanation and dealt with the reply/details filed by the assessee in proper manner. Thus, proper opportunity was given by the Pr. CIT to the assessee during the proceedings u/s 263 of the Act. The present case is covered by the decision of the Hon'ble Apex Court in case of Deniel Merchants Private Limited & Anr. Vs. Income Tax Officer (Appeal No. 2396/2017 order dated 29.11.2017). The Hon'ble Supreme Court held as under: "In all these cases, we find that the Commissioner of Income Tax had passed an order under Section 263 of the Income Tax Act, 1961 with the observations that the Assessing Officer did not make any proper inquiry while making the assessment and accepting the explanation of the assessee(s) insofar as receipt of share application money is concerned. On that basis the Commissioner of Income Tax had, after setting a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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