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TMI Blog2019 (9) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... including books of accounts have been furnished / obtained in the course of assessment proceedings. We note that section 263 of the Act cannot be invoked to make deeper enquiry. We note that notice u/s. 263 of the Act issued by the Pr. CIT is vague and only for making deeper enquiry and re-considering the evidences already on record duly considered during assessment proceedings based on purported proposal that fresh facts have been emerged subsequent to the order of assessment which is factually incorrect and untenable and the conditions or the factors enabling the Ld. Pr. CIT to invoke his jurisdiction u/s 263 have not been satisfied. There must be positive material for the Commissioner to consider objectively and not subjectively that the order of the Assessing Officer was erroneous, in so far as it was prejudicial to the interest of revenue. - Decided in favour of assessee. - I.T.A. No. 2519/DEL/2019 - - - Dated:- 19-9-2019 - Shri H.S. Sidhu, Judicial Member And Shri O.P. Kant, Accountant Member For the Assessee : Sh. Gautam Jain, Adv. And Sh. Lalit Kumar, Adv. For the Department : Smt. Sulekha Verma, CIT(DR) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce dated 16-17/-5/2018 which the assessee has placed at page no.159-163 of the Paper Book. In response to the same, assessee filed adjournment application which was accepted by the Pr. CIT and finally the case was adjourned for 15.11.2018. On 15.11.2018 the Assessee nor his AR appeared nor filed any written submissions and the Ld. Pr. CIT had decided the case of the assessee by declaring the AO order dated 16.12.2016 as erroneous in so far prejudicial to the interest of revenue and set aside the same with the directions to make the assessment afresh, after giving adequate opportunity to the assessee of being heard and after taking into account the provisions of section 68 of the Act vide order dated 18/21-01-2019. Aggrieved with the impugned order, assessee is in appeal before the Tribunal. 3. At the time of hearing, Ld. Counsel for the assessee filed 02 Paper Book containing pages 1-180 in which he has attached the various documentary evidence for establishing the case of the assessee that the order passed by the Assessing Officer dated 16.12.2016 is not prejudicial to the interest of the revenue and the AO has partly examined the amount of ₹ 1,50,00,000/- r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has sold the shares of M/s Allders Khannas (P) Ltd. To M/s Parikatha Buildwell Pvt. Ltd; Sadabhujs Realtors Pvt. Ltd; RG Enterprise; Sunita Bindal which has been accepted in order of assessment and has not been disputed in proceedings u/s. 263 of the Act. Hence, by no justification, it could be alleged that, the order of assessment framed by the AO is erroneous within the meaning of Section 263 of the Act and as such, notice is without jurisdiction. He further submitted that the observations in the notice are vague and only for making deeper enquiry and reconsidering the evidences already on record duly considered during assessment proceedings based on purported that fresh fact have been emerged subsequent to the order of assessment which is factually incorrect and untenable. He further submitted that in the instant case the Pr. CIT has not satisfied the twin conditions required for invoking the provisions of section 263 of the Act, hence, the impugned order passed u/s. 263 of the Act is without jurisdiction and, therefore, the same is illegal, untenable and unsustainable and needs to be set aside. 4. On the other hand, Ld. CIT(DR) controverted the various submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d notice issued u/s. 148 of the Act and in response thereof the detailed replies of the assessee from time to time. We have also perused the Paper Books filed by the Assessee wherein he has attached the copy of notice u/s. 148 of the Act of the AO dated 28.3.2016 to the assessee (PB Pg.1); assessee s reply vide its letter dated 4.4.2016 enclosing therewith the copy of acknowledgement of return of income for financial year 2008-09 relevant to assessment year 2009-10 and copy of power attorney (PB Pg. 2-5); reasons for opening the case for assessment year 2009-10 (PB Pg. 6-17); copy of notice issued by the AO u/s. 142(1) of the Act on 13.6.2016 and notice u/s. 143(2)/142(1) of the Act on 22.9.2016 (PB Pg. 18-22); copy of Assessee filed its reply in response to notice u/s. 148 of the Act vide letter dated 18.10.2016; copy of reply filed by the assessee before the AO in response to notice u/s. 148 of the Act on 21.10.2016 (PB Pg. 25-38) and copy of reply dated 26.10.2016 filed by the before the AO in response to notice u./s. 148 and 142(1) of the Act alongwith enclosures i.e. copy of certification of incorporation alongwith memorandum of association and article of association; copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. Ashish Bhala, CA/AR of the assessee company present and made submissions. 3. During the year under consideration assessee company is trading shares. Assessed at NIL income. Issue demand notice and challan. Charge interest u/s. 234B, 234C and 234D of the I.T. Act. Withdraw interest u/s. 244A of the Act. 5.2 Ld. Pr. CIT-7, New Delhi issued a show cause notice u/s. 263 of the Act on 17.5.2018, the contents thereof are reproduced as under:- On examination of the assessment records in your case for the said assessment year it reveals that the assessment order passed u/s 147/143(3) on 16.12.2016 by the ITO, Ward 21 (1). New Delhi is found to be erroneous in so far as it is prejudicial to the interest of the revenue due to the following reason. 2 The case of the assessee company, M/s Rajgul Creditnvest Pvt. Ltd. was re-opened for A.Y. 2009-10 vide notice u/s 148 Issued by then I TO, Ward-21 (I) on 28.03.2016 after recording reason to believe. As per the reasons recorded, assessee had received accommodation entries from companies controlled by the entry operator Sh S.K. Jain through intermedia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Capital Services Pvt Ltd It was noticed that assessee company was registered as. NBFC Company and engaged in the business of trade of shares/security The assessee contended that the alleged transaction with Mis Virgin Capital Services Pvt Ltd of ₹ 1,50,00,000/- was made on account of sale of shares. As per submissions the assessee had sold shares of different entities to M/s Virgin Capital Services Pvt. Ltd for which consideration of ₹ 1.5 cr was received. It was also observed that the said sale of share was offered for taxation in the profit loss account by the assessee. Such submission of the assessee is verified from the profit and loss account filed by the assessee in which sale of shares has been shown at an amount of ₹ 4,38,54,348/- (schedule -11) purchases has been shown at an amount of ₹ 4,42,07,159/-. 2.2 Further, vide its submission the assessee has contended the reason recorded that the assessee has taken accommodation entry in the form of share capita/. This fact is also verified that there is no increase in the share capital of the assessee during the relevant assessment year as compared to last year. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19.11.2008 CASH This is the same amount which is reflected on the back side of page 36 of Annexure A-29 whose details is given above and is as below:- S.NO. PAGE/ANNEXURE OF INFORMATION DATE AND CHEQUE/PO ISSUED BEARING NO. AMOUNT NAME OF DUMMY COMPANIES CONTROLLED BY SK JAIN BY WHOM CHEQUE ISSUED NAME OF PERSON TO WHOM ISSUED (BENEFICIARY) NAME OF THE MIDDLE MAN / MEDIATOR 1 A-29, 36 PASGE BACK SIDE CHEQUE BOOK 29952 DT. 1911.08 1,50,00,000 m/S Virgin Capital Services Pvt. Ltd. M/s Rajgul Creditnvest Pvt. Ltd. (Assessee) Bhallaji From the above table it is clear that amount, date and intermediary are same. Hence, the alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee sought adjournment on 5.10.2018, (page 169 of PB) and hearing adjourned to 30.10.2018 (page 170 of PB) and 15.11.2018 respectively. On 15.11.2018 no compliance was made by the counsel for the assessee. On 21.01.2019 an order u/s 263 of the Act was passed by the Ld. Pr. CIT-7, New Delhi by holding as under:- 4) On the said date of hearing, neither assessee/ AR attended the proceedings nor filed any written submission. In the light of above fact and considering the above proposal regarding information/ incriminating documents available with AO, there is no denial that the assessee company has not increased its shares capital neither its reserves towards share premium account has changed since immediately preceding previous year. However it is also established and admitted by assessee himself during re-assessment proceedings stated that a sum of ₹ 1,50,00,000/- had been received from M/s Virgin Capital Services Pvt Ltd. The contention of AO that accommodation Entry can be in the form of sale of shares can-not be denied. The incriminating seized document i.e. A-29, 36 page Back side contains the exact information in respect of taki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enclosures i.e. details of transaction in given form, copy of confirmation of accounts, copy of acknowledgement of return of income dated 13.9.2009 for assessment year 2009-10 and copy of bank statement and M/s GCP Capital Finance (P) Ltd. Reply dated 22.11.2016 alongwith its enclosures i.e. details of transaction in the given form, copy of confirmation of accounts, copy of acknowledgement of return of income dated 28.9.2009 for assessment year 2009- 10 (Page no. 171 180 of the Paper Book). We note that the show cause notice itself would show that it has not been denied or disputed that all relevant information including books of accounts have been furnished / obtained in the course of assessment proceedings. We note that section 263 of the Act cannot be invoked to make deeper enquiry. The Hon'ble High Court of Delhi in the case of CIT vs. Leisure Wear Exports Ltd. reported in 341 ITR 166 has held that where the assessment order been passed by the Assessing Officer after taking into account the assessee's submissions and documents furnished by him and no material whatsoever has been brought on record by the Commissioner which showed that there was any discrepancy or falsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not change the scope of section 263 of the Act, the Mumbai Tribunal in the case of Narayan Tatu Rane vs. ITO reported in 70 taxmann.com 227 has also held that in a case where learned Pr. CIT has not brought any material on record by making enquiries or verifications to substantiate his inference, the learned PCIT is not justified in holding that the impugned assessment order was erroneous. The relevant portion of the decision is as under:- 21. In the instant case, as noticed earlier, the AO has accepted the explanations of the assessee, since there is no fool proof evidence to link the assessee with the document and MIs RNS Infrastructure Ltd, from whose hands it was seized, also did not implicate the assessee. Thus, the assessee has been expected to prove a negative fact, which is humanely not possible. No other corroborative material was available with the department to show that the explanations given by the assessee were wrong or incorrect. Under these set of facts, the AO appears to have been satisfied with the explanations given by the assessee and did not make any addition. We have noticed that the Hon'ble Supreme Court has held in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complete interpretation, a lesser tax than what was just, has been imposed. On the anvil of the aforesaid rule, it will be seen that the order made u/s 263 of the Act was entirely without any jurisdiction as there was absolutely no material to justify such an assumption nor has any material been brought on record or the materials which are on record have been disputed justifying such an assumption that the tax lawfully eligible has not been imposed. Hence, the same deserve to be cancelled. The judicial decision relied by the representatives of both the sides have been duly considered. In our considered view, we do not find any parity in the facts of the decisions relied upon by the Ld. CIT(DR) with the peculiar facts of the case in hand. 9. In the background of the aforesaid discussions and respectfully following the precedents, as referred above, we hold that the impugned order passed by the Ld. Pr. CIT-7, New Delhi dated 18/21-01.2019 issued u/s. 263 of the Act is not sustainable in the eyes of law. Accordingly, the impugned order dated 18/21-01/2019 passed u/s. 263 of the Income Tax Act, 1961 is quashed. 10. In the result, the Appeal filed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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