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TMI Blog2023 (1) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... ore before him. Also, it is not the case of the Ld. AR that the observation of the Pr. CIT that the name of the aforementioned investor company, viz. M/s. Alipore Vinimay Pvt. Ltd., Kolkata figured in the list of the shell companies as was circulated by the ITD/SEBI was ill-founded or incorrect. Pr. CIT had set-aside the matter to the file of the A.O with a direction to re-adjudicate the same after affording sufficient opportunity to the assessee, therefore, no infirmity could be attributed to his directions considering the totality of the facts and material as was there before him at the time of passing of the order u/s.263 No infirmity in the view taken by the Pr. CIT who had rightly set-aside the order passed by the A.O u/s.143(3) dated 27.12.2019, i.e., to the extent he had accepted the loan transaction received by the assessee from M/s. Alipore Vinimay Private Limited, for re-adjudication, i.e., after affording a reasonable opportunity of being heard to the assessee, therefore, uphold his order to the said extent. Appeal of the assessee is partly allowed in terms of our aforesaid observations. - ITA No. 55/RPR/2022 - - - Dated:- 23-1-2023 - Shri Ravish Sood, Judicia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o show cause as to why the assessment order passed by the A.O may not be revised u/s.263 of the Act. In reply, the assessee tried to impress upon the Pr. CIT that the assessment order could not be revised u/s.263 of the Act, for the reason, viz. (i) that the issues in question had been deliberated at length by the A.O while framing assessment u/s.143(3) dated 27.12.2019; (ii) that assessment framed by the A.O was with the approval of his superior authority; (iii) that even otherwise in the absence of any error in approach, error in computation, error in applying relevant laws and error in selecting a principle the order passed by the A.O could not be subjected to revision u/s.263 of the Act; (iv) that the A.O had made necessary enquiries as regards the genuineness of unsecured loan of Rs.20 lac raised by the assessee from M/s. Alipore Vinimay Private Limited, Kolkata; and (v) that as the repayment of loans to 7 companies were in context of those which were raised in the earlier years, thus, the same not being in the nature of an expenditure could not be brought with the realm of addition contemplated u/s.69C of the Act. Also, it was the claim of the assessee that as they were absol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may Pvt. Ltd. AAACH7761G 211 10,00,000 3. Improve Vincom Pvt. Ltd. AACCI0550Q 3338 15,00,000 4. IRIS Commercial Pvt. Ltd. AACI5557R 234 80,00,000 5. Star Merchants Pvt. Ltd. AAMCS9169F 10475 50,00,000 6. Wellknown Vincom Pvt. Ltd AABCW0649K 15878 22,08,327 7. Macro Dealers Pvt. Ltd. AAFCM5256N 7804 10,53,210 8. Total 2,07,61,437 Observing, that the names of all the aforementioned companies figured in the list of shell companies that was circulated by the ITD/SEBI, the Pr. CIT was of the view that the amount of bogus repayments to such shell companies should have been assessed by the A.O as an unexplained expenditure u/s.69C of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year :] [Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income.] As stated by the Ld. AR, and, rightly so, as it is not a case that the assessee was found to have incurred any unexplained expenditure, but admittedly a case of repayment of outstanding loans by the assessee firm to 7 companies which are stated to be shell companies, we find substance in the claim of the Ld. AR that it is beyond comprehension as to how the repayment of the said amounts could have been subjected to addition u/s.69C of the Act. We, thus, not being able to persuade ourselves to subscribe to the aforesaid observation of the Pr. CIT, i.e., to the extent he had directed to A.O to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was available to the income Tax Officer at the time of passing of the assessment order. Further, we do not think that such a narrow interpretation of the word record' was justified, in view of the object of the provision and the nature and scope of the power conferred upon the Commissioner. The revisional power conferred on the commissioner under Section 263 is of wide amplitude. It enables the Commissioner to call for and examine the record of any proceeding under the Act. It empowers the commissioner to make or cause to be made such enquiry as he deems necessary in order to find out if any order passed by the assessing officer is erroneous insofar as it is prejudicial to the interests of the revenue. After examining the record and after making or causing to be made an enquiry if he considers the order to be erroneous then he can pass the order thereon as the circumstances of the case justify. Obviously, as a result of the enquiry he may come in possession of new material and he would be entitled to take that new material into account. If the material, which was not available to the Income-Tax Officer when he made the assessment could thus be taken into consideration by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms in dispute so as to exclude the jurisdiction of the Commissioner of Income-Tax under sec 263? Thus the amendment made in clause @ was held applicable to the orders passed before 1st June, 1988. In South India Steel Rolling Mills, Madras vs. Commissioner of Income Tax, Madras [1997 (9) SCC 728], the Commissioner in exercise of his power under Section 263 had withdrawn the development rebate granted for the years 1962- 63, 1963-64, 1967-68 and 1968-69 on the ground that since the partnership stood dissolved on 3.3.1968 on the death of one of the two partners, before the expiry of eight years the assessee firm was not entitled to the benefit of the development rebate under Section 33(1) (a) of the Act. The said order passed by the Commissioner was challenged before the Tribunal but the assessee's appeal had failed. At its instance the following question was referred to the Madras High Court:- Whether on the facts and circumstances of the case the revision of assessment under section 263 by the Commissioner for withdrawing the development rebate granted for Assessment years 1962-63, 1963-64, 1967-68 and 1968-69 is proper and justified. The High Court also decided aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation of the term 'record'. It has been held in some cases that the word 'record' in section 263 (1) could not mean the record as it stood at the time of examination by the Commissioner but it meant the record as it stood at the time of examination by the Commissioner but it meant the record as it stood at the time when the order was passed by the Assessing Officer. Such an interpretation is against the legislative intent and defeats the very objective sought to be achieved by such provisions, since the purpose is to revise the order on the basis of the record as is available to the Commissioner at the time of examination. xxxxxxxxx To eliminate litigation and to clarify the legislative intent in respect of the provisions in the three Direct tax Acts, it is proposed to clarify the legal position in this regard the Explanation to the relevant Sections. The proposed amendments are intended to make it clear that 'record' would include all records relating to any proceedings under the concerned direct tax laws available at the time of examination by the commissioner. The relevant part of the explanation after its substitution read as follows: Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered and decided in an appeal. The above Explanation was incorporated in the Finance Act, 1988, to clarify this legal position to have always been in existence. Some Appellate Authorities have, however, decided that the Explanation will apply only prospectively, i.e., only to those orders which are passed by the Commissioner after 1.6.1988. Such an interpretation is against the legislative intent and it is, therefore, proposed to amend section 263 of the income tax Act, so as to clarify that the provisions of the explanation shall be deemed to have always been in existence. Amendments on the above lines have been proposed in section 25 of the Wealth-tax Act and section 24 of the Gift-tax Act also. On the basis of our aforesaid observation, we are of the considered view that though the A.O might have examined the loans transaction of the assessee with the aforementioned party, viz. M/s. Alipore Vinimay Private Limited, Kolkata, but in the backdrop of the very fact that the information circulated by the ITD/SEBI revealed that the name of the said lender party figured in the list of shell companies (Sr. No.9976), therefore, it was rightly observed by the Pr. CIT that the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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