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TMI Blog2018 (12) TMI 1886X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of CIT vs. Gagandeep Infrastructure P. Ltd [ 2017 (3) TMI 1263 - BOMBAY HIGH COURT] Hon ble Supreme Court in the case of CIT vs. Lovely Exports (P) Ltd [ 2008 (1) TMI 575 - SC ORDER] . Revision order passed by PCIT under section 263 of the Act is not sustainable because the very basis of the order is that as per the information received from DCIT, Central Circle 2(2), Mumbai the assessee company is one of the beneficiaries of accommodation entry of bogus share premium from Secunderabad Healthcare Pvt. Ltd., the company operated by Shirish Shah, the company has been declared as shell company. We find that the PCIT has no where brought on record what was the information with him in regard to this aspect and how the receipts in the shape of share application money from Secunderabad Healthcare Pvt. Ltd. is part of bogus share premium as alleged by the PCIT. The assessment order framed by the AO is neither prejudicial to the interest of the Revenue nor erroneous for the reason that this information was not available at the time of framing assessment if at all it is true and for this the order cannot be held to be erroneous and prejudicial to the interest of the Revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards share capital and the view of Hon'ble Pr. CIT that the case have not been enquired into and the claim of the Appellant has been allowed without proper enquiry and this error of the Ld AO is resulted into prejudice to the revenue is not within the meaning of section 263 of the Act. 5. The Hon'ble Pr. CIT failed to appreciate the facts the Appellant had provided all the details of the above party, its creditworthiness, identity and genuineness vide Appellant's letter dated 21.3.2016 and which was as per the provision of section 68 of the Act. The provision of section 68 is invoked when identity, the nature and source of such amount credited, is not explained. 6. The Hon'ble Pr. CIT failed to appreciate the facts there is no direct evidence against the Appellant and there is no reference to any direct statement against the Appellant, if any, recorded from Mr. Shirish Shah in respect Secunderabad Healthcare Ltd, the investor and issue of notice u/s 263 on the basis of third party information does not result into prejudice to the revenue within the meaning of section 263 of the Act. 7. The Hon'ble Pr. CIT failed to appreciate the facts that the notice is issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Mumbai issued show cause notice vide No. Pr. CIT-8/263/Show-cause/Taper-Trading/17-18 date: 09.11.2017, wherein he observed that the assessee company has issued 15.40 lacs equity shares to Secunderabad Healthcare Ltd.at the face value of ₹ 10 and premium of ₹ 490 per share and out of these 1.40 lacs shares were issued in FY 2011-12 relevant to AY 2012-13 and balance 14 lacs shares, the assessee has credited the share premium of ₹ 5,48,80,000/- and face value at ₹ 11,20,000/- for AY 2013-14 relevant to FY 2012-13. Further, it is seen from records that Secunderabad Healthcare Ltd has been allotted 1.40 lacs shares on which assessee has received ₹ 2 per share and a premium of ₹ 98 per shares i.e. partly paid share in FY 2011- 12 relevant to AY 2012-13. Accordingly, the assessee has disclosed share premium received in balance sheet of ₹ 1,37,20,000/- and an amount of ₹ 2.80 lakhs on account of partly paid share in AY 2012-13. The remaining amount of share face value and share premium i.e. amounting to ₹ 5,48,80,000/ was received by assessee as share premium and ₹ 11,20,000/- balance face value of ₹ 8 per share i.e. in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity and genuineness vide Assessee's letter dated 21.3.2016. Hence, the assesse had complied with the provisions of section 68 and all the enquiries are made by the Ld. AO were within the provision of Act. As such, the action Ld. AO had not resulted into prejudice to the revenue within the meaning of section 263 of the Act. 8. In respect of accommodation entries as mentioned in your notice u/s 263, there is no reference to any direct statement against the Assessee, if any, recorded from Mr. Shirish Shah in respect Secunderabad Healthcare Ltd. Your office had issued the notice simply expressing the view that the assessing officer had not conducted proper enquiry and verification of the facts without considering that there is no direct evidence against the Assessee. The notice is issued without scrutinizing the nature of enquiry or verification carried out by the Ld. AO vis-à-vis its reasonableness in the facts and circumstances of the case. Hence, the notice issued on basis of third party information against the assesse to cancel the assessment order/revision u/s 263 is void. 9. The Assessee submits that it had allotted share in preceding year i.e. AY 2012-13 and in A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Dec 5,2017 is attached herewith, wherein the status is shown as "Active"." 7. The PCIT consider the submissions of the assessee and noted that the assessee company is one of the beneficiaries of accommodation entries of bogus share premium from Secunderabad Healthcare Ltd., the company operated by one Mr. Shirish Shah and the said company has been declared as shell company in public domain. The learned PCIT also noted that Mr. Shirish Shah of Ahmedabad, arranged these book entries through one of his group companies operated by him and this aspect was never examined by the AO while completing the assessment. According to him, the assessment order is erroneous and prejudicial interest of the Revenue as the share capital and share premium received by assessee company during the year amounting to ₹ 5.60 crores is not examined and even the provisions of section 56(2)(Viib) of the Act was also not examined which was inserted vide Finance Act, 2013 with effect from 01.04.2013 and applicable for this AY 2013-14. Aggrieved, assessee preferred the appeal before Tribunal. 8. Before us, the learned Counsel for the assessee filed paper book containing pages 1-98 filing details a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w taken is erroneous particularly when a view was already taken after inquiry. If such course of action as interpreted by the Revisional Commissioner in the light of the Explanation 2 is permitted, Revisional Commissioner can possibly find fault with each and every assessment order without himself making any inquiry or verification and without establishing that assessment order is not sustainable in law. This would inevitably mean that every order of the lower authority would thus become susceptible to Section 263 of the Act and, in turn, will cause serious unintended hardship to the tax payer concerned for no fault on his part. Apparently, this is not intended by the Explanation. Howsoever wide the scope of Explanation 2(a) may be, its limits are implicit in it. It is only in a very gross case of inadequacy in inquiry or where inquiry is per se mandated on the basis of record available before the AO and such inquiry was not conducted, the revisional power so conferred can be exercised to invalidate the action of AO. The AO in the present case has not accepted the submissions of the assessee on various issues summarily but has shown appetite for inquiry and verifications. The AO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. CIT vs. Sophia Finance Ltd. (1993) (152 CTR 17 (Calcutta) 19. CIT vs. Korlay Trading Co. (1999) 152 CTR 17 (Calcutta) 20. Sumati Dayal Vs. CIT (1995) 80 taxmann89(SC). 21. Power Drugs Ld. Vs. CIT (2011) 13 taxmann.com56 (Punjab & Haryana). 22. CIT vs. Nova Promoters & Finlease (P) Ltd. (2012) 18 taxmann.com217(Delhi) 23. Sunrise Academy of Medical Specialities (India) P. Ltd. vs. ITO (2018) 96taxmann.com43(Kerala) 24. CIT vs. Lovely Exports (P.) Ltd. (2018) 216 CTR 195 (SC)." 11. We have heard rival contentions and gone through the facts and circumstances of the case. We find from the facts of the case that during the course of scrutiny assessment proceedings under section 142(1) of the Act, the AO required the information of balance amount of share premium and balance face value of share and assessee replied to the same that during AY 2012-13 pertaining to FY 2011-12, the assessee had issued 1,40,000/- shares of 10/- each at a premium of ₹ 490 per share. It was explained that during the FY 2011-12, the assessee has received ₹ 2 per share as face value and a premium of ₹ 98 per share thus making the share partly paid up. The assessee co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC) and held as under: - "5. The Assessing Officer added ₹ 95 lakhs as income under Section 68 of the Income Tax Act only on the ground that the parties to whom the share certificates were issued and who had paid the share money had not appeared before the Assessing Officer and the summons could not be served on the addresses given as they were not traced and in respect of some of the parties who had appeared, it was observed that just before issuance of cheques, the amount was deposited in their account. 6. The Tribunal has considered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. It was also observed by the Tribunal that the Assessee has also produced the entire record regarding issuance of shares i.e. allotment of shares to these parties, their share application forms, allotment letters and share certificates, so also the books of account. The balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the share ..... X X X X Extracts X X X X X X X X Extracts X X X X
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