9911796707
TMI Blog2021 (11) TMI 999X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order dated 20.04.2017 passed under s. 143(3) of the Act by way of a show cause notice dated 26.02.2020 served upon the assessee, which is reproduced hereunder: "Subject: Notice for Hearing in respect of Revision proceedings u/sec 263 of the THE INCOME TAX ACT, 1961 - Year 2015-16. In this regard, a hearing in the matter is fixed on 05/03/2020 at 04:30 PM. You are requested to attend in person or through an authorised representative and file any additional information/documents in support of your application. Attendance is not necessary, if you wish that the Revision application be decided on the basis of your written submission which may be furnished in this office, on or before the said date. You also have the option to file your submission from the e-filing portal using the link: incometaxindiaefiling.gov.in This is to inform you that the undersigned has examined your assessment records for the A.Y. 2015-16 and from the examination of the assessment order passed in your case u/s. 143 of the Act dated 20/04/2017, it is seen and observed that the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of revenue. In the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce sheet he has made investment of Rs. 14,79,500/- in this company only and he has no other asset. 06 KK Mishra ( HUF) 524000 Cash deposit of Rs. 1,60,000/- on 21.04.2014. Cash deposit of Rs. 2,00,000/- and transfer amount of Rs. 1,60,000/- on 15.01,2015 and 20.01.2015 respectively. The bank account shows no other significant transactions. Further returned income is only Rs. 2,44,100/- and as per balance sheet he has made investment of Rs. 18,22,300/- in this company only and he has no other asset. 07 Madan Sahu 459000 Cash deposit of Rs. 65,000/- on 05.01.2015 and transfer amount of Rs. 3,92,000/- on 21.01.2015 and 25.02.2015 respectively. The bank account shows no other significant transactions. Further returned income is only Rs. 2,67,300/- and as per balance sheet he has made investment of Rs. 13,68,950/- in this company only and he has no other asset. 08 Raj Bahadur Tiwari 302000 Cash deposit of Rs. 3,02,000/- on 05.01.2015. The bank account shows no other significant transactions. Further returned income is only Rs. 2,68,500/- and as per balance sheet he has made investment of Rs. 13,49,900/- in this company only and he has no other asset. 09 Ramkumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome and bank statements of the share applicants. The AO has not properly verified and examined this aspect of the case. 2.2 Record reveals that you have received total fund of Rs. 3,96,52,350/- by way of share capital (Rs. 86,29,290 (share capital) + Rs. 3,10,23,060 (Security premium)). The AO has not verified and examined this aspect of the case. 2.3 Record reveals that there is inventory of land of Rs. 3,03,07,934/-. The AO has not verified and examined this aspect of the case. 2.4 P & L account reveals that there are purchases of Rs. 1,85,27,550/- against sale of goods of Rs. 1,77,15,556/- i.e. showing loss. The AO has not verified and examined this aspect of the case. 3. In view of the above lapses on the part of the AO and lack of examination and verification on the part of the AO in respect of the above issues and points, 1 find that the assessment order passed by the AO as on 20/04/2017 to be erroneous in so far as it is prejudicial to the interest of the revenue. Hence, it is proposed to revise the said order of assessment by virtue of the power vested in me u/s. 263 of Income Tax Act 1961. 4. You are requested to submit your written explanation alongwith the do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry information & explanation taken from them. Necessary enquiries made for identity, creditworthiness and genuineness of the transaction including source of share application money. During the assessment proceedings assessee has explained source of deposit in bank account of the share applicants. A list explaining those details is enclosed herewith for kind reference. Therefore, with regard to this issue also, the order of the ld. Assessing Officer is not erroneous is so far as prejudicial to the interest of revenue. The list so submitted is reproduced as under:- S.No. Name Amount Source 01 Amritlal Kashyap 1061200 1,08,000 Cash from Own Past savings 9,41,224 Loan given to M/s S K Minerals in earlier years, received back 11,976 Bank Balance 02 Baldev Rajpoot 271000 2,70,000 Cash from Own Past savings 1,000/- Bank Balance 03 B N Gupta 36000 3,60,000 Cash from own past savings 04 B N Gupta(HUF) 949910 1,90,000 Cash from own past savings 5,85,003/- Loan given to Shri Laxman Kedia in Earlier years, Received back in Earlier years, received back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Security Premium 2,61,16,760/- 49,06,300/- 3,10,23,060/- Total 3,33,44,240/- 63,08,100/- 3,96,52,350/- From above chart it is clear that during the year assessee has received fresh share application money which was duly verified and examined by the Ld. Assessing Officer. Details are furnished at para 2.1 above. Therefore with regard to this issue also, the order of the Ld. assessing officer is not erroneous in so far as it is prejudicial to the interest of the revenue. Para 2.3 - Regarding inventory of land Submitted that there was inventory of land of Rs. 3,03,07,934/-, details of which are as under:- Opening balance as on 01-04-2014 - 2,95,77,814/- Add : Land purchased during the year - 7,30,120/- TOTAL - 3,03,07,934/- Submitted that at the time of assessment proceedings assessee has produced purchase deed and supporting documents of land purchase of Rs. 7,30,120/-. Ld. assessing officer examined the document and source. Copy of purchase deed and copy of accounts are enclosed herewith for kind reference. Therefore with regard to this issue also, the order of the Ld. assessing officer is not erroneous in so far as it is prejudicial to the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rused the revisional order of the PCIT as well as the show cause notice issued for assumption of jurisdiction as well as the case laws cited. The assumption of jurisdiction under s. 263 of the Act by the PCIT and revisional order passed as a sequel thereto seeking to set aside the completed assessment under s. 143(3) of the Act is in controversy. 8.1 Supervisory jurisdiction vested under Section 263 of the Act enables the concerned Pr. CIT/CIT to review the records of any proceedings and order passed therein by the AO. It empowers the Revisional Commissioner concerned to call for and examine the records of another proceeding under the Act and if he considers that any order passed therein by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue, then he may (after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary), pass such order thereon as the circumstances of the case justify, including the order enhancing or modifying the assessment or cancelling the assessment and directing afresh assessment. Thus, the revisional powers conferred on the Pr. CIT/CIT under s. 263 of the Act are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee that PCIT himself has categorically agreed that it is not a case of complete lack of enquiry but a case of inadequate enquiry as perceived by him. It is thus contended that the assumption of jurisdiction by the PCIT under s. 263 of the Act is without any legal foundation and consequently the revisional order is required to be quashed. 9. In short, as per the revisional order, the PCIT alleged that proper enquiry was not adequately made on the nature and source of share application money received by assessee. 10. On facts, we notice that it is demonstrated on behalf of the assessee with the help of submissions and evidences as placed before AO that requisite enquiries were made towards identity, capacity and genuineness of share application money received during the year. The issue was very much present to the mind of the AO. The relevant documents were also shown to have been filed in the assessment proceedings. We simultaneously notice a pertinent fact that the share applicants were summoned by the AO for this purpose and were examined on oath under s. 131 of the Act to weigh the surrounding circumstances. On such facts, one cannot say that it is a case of no e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) and so on. 12. In the background of the tenets of law relevant to the present case as digested above, we take a look at the facts emerging from the record. As noted, the assessee has established not only the source of loan obtained but has also adequately demonstrated before the AO the source of money in the hands of the share applicants. A small portion of cash deposited by lender doesn't necessarily signify any collusion with assessee. The relevant facts were present before AO and were scrutinized. Thus, the burden of proof cast upon the assessee was broadly discharged. Needless to say, such onus can seldom be discharged to the hilt. In this background, a presumption can be safely drawn that the AO was armed with reasonable evidences to draw satisfaction with the explanation offered by the assessee towards receipt of share application money from various parties and consequently it can be said that the statutory discretion was exercised in favour of the assessee based on tell-tale evidences furnished by the assessee in this regard. The action of the AO thus cannot be wholly disregarded as untenable or implausible more so, where share applicants attended the enquiry and dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. 263 proceedings cannot be inflicted upon the assessee in these circumstances. 14. In support of such view, we also take note of the decision rendered by Hon'ble Bombay High Court in the case of CIT vs. Nirav Modi 390 ITR 292 (Bom.) where in somewhat similar circumstances, the decision of the Tribunal to cancel the order passed under s. 263 of the Act was upheld. Thus, driven by the precedent, where the inquiry towards 'source of source' is not found to be the sacrosanct requirement of law, the alleged inadequacy in this respect should not be fastened on the assessee. Notwithstanding, any doubt in the capacity of the lender would ordinarily invite action against the lender who is shown to have received major component of money through banking channel from other source prior to its lending and is also a regular tax assessee. Therefore, the prejudice contemplated under s. 263 of the Act, if any, is qua the lender and not the assessee. 15. While concluding, we are also alive to clause (a) of Explanation (2) to Section 263 of the Act inserted by Finance Act, 2015 w.e.f. 01.06.2015 which seeks to clarify that the order passed by the lower authorities to be erroneous in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
