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TMI Blog2022 (6) TMI 1407X X X X Extracts X X X X X X X X Extracts X X X X ..... s of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Thus the order framed u/s 263 of the Act deserves to be set aside and that of the AO deserves to be restored. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... of shares: Transfer by HCS of the shares held in Genpact India to Empower India would tantamount to transfer of capital asset as per Section 2(47) of the Act. However, in view of the specific exemption provided in Section 47{iv) of the Act, the aforesaid transfer would not be considered as a "transfer" for the purpose of computing capital gains under Section 45 of the Act and hence will not result into taxable capital gains in the hands of HCS, since Empower India was a wholly owned Indian subsidiary of HCS at the time of above transfer. Without prejudice to above, the gains arising to HCS from the above transfer of shares would also be exempt in India in view of the provisions of Article 13 of the DTAA. 4. Filing of Return of Income Although the gains arising to HCS on transfer of shares held in Genpact India to Empower India would not result In any taxable capital gains in the hands of HCS in India (in view of the provisions of Section 45 read with Section 47{iv) of the Act as well as provisions of Article 13 of DTAA), the Company is filing its return of income under the provisions of the Act declaring Nil taxable income in India. 5. The Company craves leave t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Commissioner of Income Tax. International Taxation, Circle 2(1)(1) New Delhi, 9. Alongwith the following Annexure: ANNEXURE M/s HEADSTRONG Consulting {Singapore PTE Ltd. PAN : AADCH4943D - A.V. 2015-16 1. Please give detailed background of the company alongwith its activities and sources ofrevenue with particular reference to business model and activities carried out in India during the year under consideration. Give a detailed note regarding nature of your business activities and furnish details in respect of the works undertaken/executed in India during the year. 2. Please give assessment history in your case from beginning, file copy of last, assessment order and status of appellate proceeding, if any. 3. Please intimate as to whether you had a Permanent Establishment (in the form of Fixed place PE, Agency PE. Installation PE, Service PE...) or Business Connection m India during the year. If so, please furnish names and complete addresses of such concerns. Also furnish details of Branch Offices/Project offices/Liaison office/Godowns and Warehouses and construction or other business sites in India. 4. Please furnish copy of the tax residency certificate for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 2. Accordingly, for the purpose of compliance to the aforesaid notice, the Company will be filing the requisite information/documents manually with your goodselfs office and also to all future notices that may be issued during the course of captioned assessment proceedings until the facility of uploading the documents for AY 2015-16 is made available on the e-filing portal of the income Tax department. We trust that filing the required information/documents manually with your office would be treated as a sufficient compliance of the aforesaid notice and subsequent notices that may be issued if: the course of captioned assessment proceedings. We request your office to take the above information on record. Further, the Company is in process of collating/compiling the information sought for by your goodself as per the captioned notice which would be furnished in due course. We request your office to provide us with an opportunity to personally represent this case before finally concluding the present proceedings. Thank you Yours faithfully, Authorised Signatory End; As Above 12. And then on 06.11.2018, the following reply was filed: "November 6, 2018 Assistant Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r goodself's office vide submission dated August 16, 2017. 8. Order of Advance Ruling Authority It is submitted that the Company has not sought any advance ruling from the Authority for Advance Rulings in India 9. Large International Transactions Detail of the international transactions as per the form 3CEB for the captioned year, already filed before your gcodself' submissions dated August 16, 2017 Copy of the Form 3CEB is enclosed herewith for your good self's ready reference as Annexure We request your office to take the above information on record. In addition to above, the Company would be obliged to furnish further information / documentation on hearing from yaur gondself's office We request your office you provide us with an opportunity to personally represent this case before finally concluding the present proceedings, Thank you Yours faithfully, Authorized Signatory Encl: : As Above." 13. It can be seen from the above at Point No. 9 that the assessee has given details of International Taxation as per Form No. 3CEB. On 27.11.2018, the Assessing Officer again issued a notice u/s 142(1) of the Act to which the assessee replied on 03.12.2018 expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and/or provide clarifications in this respect so as to substantiate its claim, on hearing from your goodself. 3. In view of the specific exemption provided under Section 47(iv) of the Act, the gains accrued to the Company on transfer of shares, as discussed under point 1 above, are not chargeable to tax in India. However, only with a view to explain the transaction in detail, the Company has prepared a working of gains, not chargeable to tax in India. The same is hereby respectfully submitted as Annexure Z. 4. Copy of the valuation report for the valuation of the shares of Genpact India is enclosed herewith as Annexure 3. We request your office to take the above information on record. In addition to above, the Company would be obliged to furnish further information / documentation on hearing from your goodself's office. We request your office to provide us with an opportunity to personally represent this case before finally concluding the present proceed Thank you Yours faithfully Authorised signatory 14. On 27.11.2018, alongwith notice u/s 142(1) of the Act, the following was annexed by the Assessing Officer: 1. The details of the share transactions underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble Supreme Court in the case of Daniel Merchants Pvt Ltd Vs. ITO Appeal No. 2396/2017 order dated 29.11.2017. In our considered opinion, the facts of that case are totally different from the facts of the case in hand in as much as in that case, the Assessing Officer did not make any proper enquiry while making assessment and accepting the explanation of the assessee in so far as receipt of share application money is concerned, whereas in the case in hand, after receiving information relating to share transfer proper enquiries were made which is also evident from the office note exhibited elsewhere. 22. Another decision relied upon by the ld. DR is the case of Surya Financials Services Ltd ITA No. 2158/DEL/2017 where the Assessing Officer failed to carry out adequate enquiry about the alleged accommodation entries and the co-ordinate bench upheld the order of the PCIT framed u/s 263 of the Act. 23. As mentioned elsewhere, in the case in hand, the Assessing Officer had not only made sufficient enquiries, but after satisfying himself, assessment was framed u/s 143(3). 24. The ld. DR also referred to the decision of the Hon'ble Delhi High Court in the case of Ashok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; and "erroneous judgment" have been defined in Black's Law Dictionary. According to the definition, "erroneous" means "involving error; deviating from the law". "Erroneous assessment" refers to an assessment that deviates from the law and is, therefore, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, "erroneous judgment" means "one rendered according to course and practice of court, but contrary to law, upon mistaken view of law; or upon erroneous application of legal principles". 12. From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order can be said to be prejudicial to the interests of the Revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the court it would be open to the courts to examine whether the relevant objective factors were available from the records called for and examined by such authority. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justify the genuineness of the gifts. The Respondent Assessee responded to the same by giving evidence of the communications received from his father and his sister i.e. the donors of the gifts along with the statement of their Bank accounts. On perusal, the Assessing Officer was satisfied about the creditworthiness/capacity of the donors, the source from where these funds have come and also the creditworthiness/ capacity of the donor. Once the Assessing Officer was satisfied with regard to the same, there was no further requirement on the part of the Assessing Officer to disclose his satisfaction in the Assessment Order passed thereon. Thus, this objection on the part of the Revenue cannot be accepted." 29. We find that the Hon'ble Delhi High Court in the case of CIT Vs Sunbeam Auto reported in 332 ITR 167 has held as held as under: "12. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the CIT under s. 263 of the IT Act. As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order, t ..... 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