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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 ..... sing 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. See DENIEL MERCHANTS P. LTD. ANOTHER VERSUS INCOME TAX OFFICER ANOTHER [ 2017 (12) TMI 476 - SUPREME COURT] In the present case the Assessing Officer has though rightly re-opened the Assessment Proceedings has not properly adjudicated the issue for reopening therefore, the Pr. CIT has rightly invoked Section 263 of the Act and passed the order. Therefore, the Order under Section 263 of the Income Tax Act, 1961 passed by the Principal Commissioner of Income Tax is just and proper. - Decided against assessee - ITA No. 2999/DEL/2017 - - - Dated:- 16-4-2018 - MS SUCHITRA KAMBLE, JUDICIAL MEMBER AND SH. PRASHANT MAHARISHI, ACCOUNTANT MEMBER For the Appellant : Smt. Prem Lata Bansal, Sr. Advocate Sh. Ram Avtar Bansal, Adv For the Respondent : Sh. S. S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court in the case of Sahara India i.e. Common Cause vs Union of India is not applicable to the facts of present case. 9. That the order passed by Ld. Pr. CIT u/s 263 of the Act is bad in law as no sufficient opportunity has been afforded to the assessee to defend his case particularly when the assessee had requested for the personal hearing. 10. That the proceeding and the order passed by the Ld. Pr. CIT u/s 263 is perverse as it is based on general observation and not specific to the facts of the case. 11. That the Ld. Pr. CIT has passed the order u/s 263 of the Act on surmises and conjectures and therefore is liable to be set aside. 12. That the appellant seeks leave to add, amend, alter, abandon or substitute any of the above grounds during the hearing of the appeal. 3. The return of income declaring income of ₹ 21,600/- was filed on 19.10.2007. The return was processed u/s 143(1) of the Income Tax Act, 1961. The case was reopened u/s 148 with the prior approval of the CIT and notice u/s 148 dated 25.03.2014 was issued and served upon the assessee. The assessee vide letter dated 09.06.2014 requested to treat the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transfer of shares at lower price in the name of directors, relatives and the concerns in which the assessee company is interested, then the same may be considered as an accommodation entry and taxed accordingly as per provisions of the Income Tax Act. 4. Being aggrieved by the order u/s 263 of the Act, the assessee is before us. 5. The Ld. AR submitted that in respect of share capital for which the shares were allotted by the assessee company, the assessee filed the following documents which included the documents of all the 04 companies from whom the share application money was received : (i) Company master data from ROC website, (ii) share application form, iii) Board resolution authorizing the share application, iv) Confirmation regarding receipt of sharers, v) Confirmation from the company, vi) Memorandum and AOA of the applicant company, vii) Copy of ITR return acknowledgment, viii) Copy of audited Balance Sheet as on 31.03.2006 ix) Copy of bank statement reflecting the amount of share application x) Affidavit from the then director of the company xi) Copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had made a detailed inquiry including inquiry u/s 133(6) of the Act and had also recorded the statements of representative /directors of such share applicant companies from whom the share application money was received by the assessee. It was only after making proper inquiries and after satisfying himself that the Assessing Officer had framed the assessment u/s 143(3) / 147 of the Act on 31.03.2015. Assessee also relied upon certain case laws and requested that the proceeding initiated u/s 263 may kindly be dropped in the interest of justice. Assessee also requested for the personal hearing if the Pr. CIT was still not satisfied with the submissions put forth by the assessee. The Ld. AR further submitted that however without affording any opportunity to the assessee, the Pr. CIT passed an order u/s 263 of the Act, observing that the reassessment order was passed by the Assessing Officer without making proper verifications and inquiries and therefore, the assessment order framed by the Assessing Officer was not only prejudicial to the interest of revenue but also erroneous in so far as the Assessing Officer had failed to look into the seized material. The Ld. AR further submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the presence of income tax inspector. Their identity and creditworthiness was examined by the Assessing Officer and genuineness of the transactions were also examined. In such circumstances to invoke the powers u/s 263 of the Act is nothing but a change of opinion. Thereof, no error of law or fact in the assessment order which can be revised by the Pr. CIT by invoking powers u/s 263 of the Act. The Ld. AR further submitted that in the present case, the Assessing Officer had inquired and considered all the aspects of the matter, he had examined and verified all the documents furnished by the assessee and after satisfying himself after making inquiry u/s 133(6) and 131 of the Act that he had framed the assessment order, allowing share capital in the hands of the assessee. The Ld. AR further submitted that this is not the case where no inquiry had been made by the Assessing Officer. The grievance of the Pr. CIT u/s 263 of the Act is that no proper inquiry had been made by the Assessing Officer in respected of the issues stated in the notice. There is a distinction between lack of inquiry and inadequate inquiry. The former confer power on the Pr. CIT to invoke jurisdiction u/s 263 but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussion on the issue in the assessment order which lead to assumption that Assessing Officer did not apply his mind. The Ld. AR relied upon the decision of CIT vs Vodafone Essar South Ltd. 212 Taxmann 184 (Del), 1 ITR - OL 526 (Del) and CIT vs Vikas Polymers (341 ITR 537). As regards the scope and ambit of expression erroneous , the Hon ble Delhi Court relied upon the judgment of Bombay High Court in case of CIT vs Gabriel India Ltd. (1993) 203 ITR 108, wherein, after discussing the dictionary meaning of the term erroneous have held that it is clear that an order cannot be termed as an erroneous unless it is not in accordance with law. The Ld. AR submitted that these principles are again reiterated by the ITAT Delhi Bench in the case of Technic UK Ltd. vs DIT International Taxation in (2017) 81 Taxmann.com 311 (Del) and Pri. CIT vs Mera Baba Reality Associates Pvt. Ltd. (ITA No.637 of 2007 decided on 21.08.2017) as well as the Hon'ble Supreme Court decision in case of CIT vs Kwality Steel Suppliers Complex (2017) 84 Taxmann.com 234 (SC). Thus, the Ld. AR submitted that it is clear from the above that where two view are possible and the Assessing Officer has taken one vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion 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 Ld. DR also relied upon following decision of the various Hon ble High Courts and Tribunal: (a) Malabar Industrial Co. Ltd. Vs. CIT (2000) 243 ITR 83 (SC) (b) Rajmandir Estates (P) Ltd. vs. PCIT (2016) 386 ITR 162 (Cal.) (c) Rajmandir Estates (P.) Ltd. vs. PCIT (2017) 245 Taxman 127 (SC) (d) Shree Manjunathesware Packing Products Camphor Works vs. CIT (1998) 231 ITR 53 (SC) As regards the issue of Notice u/s 143(2) and reopening of cases u/s 147 of the Act, the Ld. DR relied upon the following decisions: (a) CIT vs. Madhya Bharat Energy Corporation Ltd. 337 ITR 399 (Del) (b) Yogendrakumar Gupta vs. ITO (2014) 227 Taxman 374 (SC) (c) Ankit Financial Services Ltd. Vs. DCIT (2017) 78 taxmann.com 58 (Guj.) (d) PCIT vs. Paramount Communication (P.) Ltd. 2017-TIOL-253-SC-IT (e) PCIT vs. Paramount Communication (P.) Ltd. (2017) 392 ITR 444 (Del) 7. We have heard both the parties and perused all the records. We have taken cong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to why the shares issued at premium were transferred by the investor companies (shell companies) to the directors or their relatives or concerns of the beneficiary company at a very discounted price. What was the face value of the shares at the time of the allotment and transfer. What happened suddenly that the value of such shares went down ranging from 50% to 90%. This unusual even had taken place in most of the cases before the AOs completed the assessment proceedings during financial year 2014-15 but the AO did not make any enquiry whatsoever on this aspect. In this case, the assessee did not furnish the details of shares transferred from the above mentioned companies of SK Jain Group to other persons despite my specific query in the show cause notice. .. 16. In view of the above discussion, I am satisfied that the reassessment order passed by the AO on 31/3/2015 for Assessment year 2007-08, is not only prejudicial to the interest of the revenue but is also erroneous in so far as the AO has failed to look into the seized material. Therefore, the said order is set aside with a direction to the AO to examine the seized material and confront the same to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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