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TMI Blog2023 (6) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case. Inquiry on the parameters of Section 68 - On an enquiry from the Bench,counsel placed the assessment order passed by the AO in pursuance of the impugned revisional order and submitted that the additions has been carried out u/s 56(2)(viib) by re-determining the Fair Market Value. Assessee thus contends that the Assessing Officer was thus also satisfied with the parameters of Section 68 towards such nature and source of such credits in the post revisional proceedings. A revisional action of the Pr.CIT in the context of the facts of the case thus appears to be wholly unjustified and without meeting the jurisdictional requirement of Section 263 - We find wholesome merit in the plea of the assessee for cancellation of the revisional order and restoration of the order of the Assessing Officer. Decided in favour of assessee. - I.T.A. No.4895/DEL/2019 - - - Dated:- 31-5-2023 - Shri Challa Nagendra Prasad, Judicial Member And Shri Pradip Kumar Kedia, Accountant Member For the Appellant : Shri Rajiv Jain, CA For the Respondent : Shri Kanv Bali, Sr.DR ORDER PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been filed at the instanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout any modifications. Thereafter, the Pr.CIT in exercise of his revisionary powers issued show cause notice dated 29.11.2018 under Section 263 of the Act requiring the assessee to show cause notice as to why the assessment so framed under Section 143(3) was not modified/set aside on the ground that such order is erroneous in so far as it is prejudicial to the interest of the Revenue. The show cause notice issued in this regard is extracted herein for ready reference. In this case, the assessee company had furnished its return of income for the A.Y. 2014-15 on 30.11.2014 declaring an income/loss of Rs. Nil. Assessment was completed accepting returned income under section 143(3) of the I.T. Act, 1961 vide order dated 15.12.2016. 2. The assessment records of the aforesaid assessee company for the A.Y. 2014-15 were examined. On perusal of the assessment records, it was noticed that the case was selected under scrutiny through CASS with the reasons Large Share premium received during the year . During the year under consideration, the assessee company has issued total 513978 share @ Rs. 1284.10/- per share to various parties against the face value of Rs. 10/- each and rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the failure of the Assessing Officer to examine the genuineness of the transaction, creditworthiness of the persons from whom share premium have been received has rendered, the assessment erroneous and prejudicial to the interest of the Revenue. 6. The Pr.CIT did not find the reply of the assessee in response to the show cause notice to be satisfactory and concluded that the assessment order so passed is erroneous and prejudicial to the interest of the Revenue on the ground that the Assessing Officer has not pursued the inquiries to their logical end resulting in the assessment order erroneous and prejudicial to the interest of the Revenue. The Pr.CIT accordingly set aside the assessment order and directed the Assessing Officer to pass fresh assessment order after making thorough and detailed inquiries on the particular issue of issuance of shares at huge premium. 7. Aggrieved by the aforesaid action of the Pr.CIT, the assessee is in appeal before the Tribunal agitating the assumption of supervisory jurisdiction usurped by the Pr.CIT as well consequential order passed under Section 263 of the Act. 8. The ld. counsel for the assessee broadly reiterated its submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. counsel thus submitted that requisite inquiries were diligently carried out by the Assessing Officer as warranted in the facts of the case and the Pr.CIT, on the other hand, has omitted to take note of the glaring facts of allotment of shares to its holding company carrying out substantial business in energy sector. It was thus alleged that the action of the Pr.CIT is perfunctory. The ld. counsel thus urged for cancellation of the revisional order and restoration of the stands of the Assessing Officer. 9. The ld. DR for the Revenue, on the other hand, referred to and relied upon the revisional order and submitted in furtherance that the Assessing Officer has failed to discharge its quasi judicial functions obligated under the statute and has perfunctorily accepted the position taken by the assessee without any meaningful inquiry. The ld. DR thus supported the action of the Pr.CIT and submitted that such blatant lack of inquiry has resulted in an erroneous order causing grave prejudice to the Revenue. It was submitted that the action of the Pr.CIT is covered by the wide amptitude of the revisional powers. 10. We have carefully and dispassionately considered the rival subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany where no income can be said to accrue to the ultimate beneficiary, i.e., holding company. The chargeability of deemed income arising from transactions between holding and subsidiary or vice versa militates against the solemn object of Section 56(2)(viib) of the Act. In this backdrop, the extent of inquiry on the purported credibility of premium charged does not really matter as no prejudice can possibly result from the outcome of such inquiry. Thus, the condition for applicability of Section 263 for inquiry into the transactions between to interwoven holding and subsidiary company is of no consequence. We also affirmatively note the decision of SMC Bench in the case of KBC India Pvt. Ltd. vs. ITO in ITA No.9710/Del/2019 order dated 02.11.2022 (SMC) where it was observed that Section 56(2)(viib) could not be applied in the case of transaction between holding company and wholly owned subsidiary in the absence of any benefit occurring to any outsider. 12. Preliminary enquiry, if undertaken, by Pr.CIT would have thus possibly changed the discourse in the present case. 13. As regards inquiry on the parameters of Section 68 is concerned, it is the case of the assessee that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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