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TMI Blog2024 (3) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to which the details were called upon by the Assessing Officer. There was neither any statutory power nor otherwise any other law requiring the Assessing Officer to only enhance or assess the same income which was earlier assessed. Such a proposition would be against the spirit of the law. Scope of deeming fiction created in section 263 by the amendment made by Finance Act, 2015 w.e.f. 01.06.15 - HELD THAT:- The said deeming provisions above in our view, are not applicable for the assessment year under consideration i.e., A.Y. 2012-13 Even otherwise, a perusal of the revision order passed by the PCIT shows that the ld. PCIT has not pointed out any error or discrepancy in the evidence furnished by the assessee and without examining such evidence and without counter questioning the assessee on the relevant points and even without considering the submission of the assessee furnished in reply to the show-cause notice, the ld. PCIT, in our view, was not justified in setting aside the order, simply stating that in his view more enquiries were needed to be carried out by the AO - As observed PCIT without examining the details of the share applicants and the evidence furnished by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order passed u/s 144 r.w.s. 263 of the Act. The assessee filed appeal against the said order bearing ITA No.84/Kol/2021, which was, however, withdrawn with permission to file afresh and this Tribunal had condoned the time consumed in prosecuting the appeal ITA No.84/Kol/2021 w.e.f. 09.3.2021 till the date of receiving of the copy of the Tribunal order dated 05.01.2022. Thereafter, the assessee obtained the copy of the impugned order of the ld. PCIT and filed the present appeal. It has also been submitted that the earlier period was also marred by the Covid Pandemic. Considering the above submissions, the delay in filing the present appeal is hereby condoned. 3. The assessee in this appeal has contested the very validity of the revision order passed by the ld. PCIT. 4. The brief facts of the case are that the assessee company e-filed its revised return of income on 18-03-2013 declaring nil total income. The case was selected for scrutiny under CASS citing the reason large share premium received and accordingly statutory notices under section 143(2) 142(1) of the Income Tax Act, 1961 were issued calling upon the assessee to furnish details relating to the receipt of share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te details and evidence in response to the show-cause notices issued by the Assessing Officer, however, the Assessing Officer without examining the same made the addition of share capital. The ld. PCIT in this respect further observed that the Assessing Officer did not gather any adverse inference from the reply/documents furnished by the assessee. The ld. PCIT observed that the assessment was framed ignoring the evidences on record, ignoring the replies filed u/s 133(6), non-compliance of order-sheet, making allegation of non-compliance, ignoring that the assessee had discharged its onus. That the Assessing Officer jumped to the conclusion that the aforesaid share capital was unexplained income of the assessee with pre-conceived mind-set. He observed that the addition made by the Assessing Officer would not stand the judicial scrutiny of the higher appellate courts and, therefore, the order of the Assessing Officer was erroneous and prejudicial to the interest of the revenue. The ld. PCIT, therefore, vide order dated 01.06.2016 passed u/s 263 of the Act set aside the original assessment order dated 24.03.2015 passed u/s 143(3) of the Act for de-novo assessment and directed the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order passed u/s 143(3) r.w.s. 263 was erroneous as addition made u/s 68 on account of unexplained share capital/premium was not added back . 10. Being aggrieved by the said order of the ld. PCIT, the assessee has come in appeal before us. 11. We have heard the rival contentions and gone through the record. The ld. AR has submitted that the first PCIT, vide order dated 01.06.2016 while setting aside the original assessment order dated 24.03.2015, had given specific directions for the purpose of verification of the identity, creditworthiness of the share subscribers and nature and genuineness of the transaction. That all the aforesaid directions of the PCIT were followed by the Assessing Officer while passing the second assessment order dated 19.08.2016 u/s 143(3) r.w.s 263 of the Act. In order to demonstrate that the Assessing Officer had conducted enquiry, the ld. AR brought our attention to the assessment order dated 19.08.2016, wherein, it has been mentioned that the assessee had produced copy of ITR, audited accounts, details of directors, registered office, details of increase of share capital, Form-2 Form-5, shareholders list, bank a/c details and details of source of fund. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act were also duly furnished which fact has also been noted by the Assessing Officer in the original assessment order dated 24.03.2015. It is to be noted here that as per the settled law by various decisions of the Hon ble High/Highest Courts, the Assessing Officer is required to examine the details and evidences furnished by the assessee and he is supposed to confront the assessee in respect of any document or evidence if he is not satisfied with the same and thereafter he has to form an opinion whether the assessee has discharged the initial onus vested upon him to prove the identity and creditworthiness of the subscribers and genuineness of the transaction. That the additions cannot be made solely on the ground that the directors of the assessee company/subscriber companies have not appeared without pointing out any defect or infirmity in the evidences furnished by the assessee. The then ld. PCIT observing that such an order of the Assessing Officer would not stand the judicial scrutiny of the higher courts asked the Assessing Officer to make further detailed investigations. The Assessing Officer thereafter examined the details and evidences furnished by the assessee and come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction for the second time or thereafter, there must be mention of specific and strong grounds warranting such revision of assessment order. The revision jurisdiction for want of mere enquiries cannot be exercised at the whims and wishes of the PCIT. 14. In this case, the assessee, during the year, raised share capital/premium amounting to Rs. 14,25,00,000/- from 10 share applicants as detailed hereunder: Sl Name, Address PAN of the subscribers No. of shares Face Value Premium Total 1. Mohit Barter (P) Ltd PAN:AAHCM5927A 1000000 1000000 - 1000000 2. Amarlaxmi Conclave (P) Ltd PAN:AAKCA3661N 1000000 1000000 - 1000000 3. Aakarshan Dealers (P) Ltd PAN: AAJCA4948F 63250 63250 126436750 126500000 4. Aspiration Commercial (P) Ltd. PAN:AAICA2224K 1000 1000 1999000 2000000 5. Vista Nirman (P) Ltd PAN:AADCV5473G 500 500 999500 1000000 6. Wezard Infra Developers (P) Ltd PAN: AABCW0060C 500 500 999500 1000000 7. Bholanath Dealcom (P) Ltd PAN: AADCB9871E 1000 1000 1999000 2000000 8. Indraloke Realty (p) Ltd PAN: AACCI5302A 1000 1000 1999000 2000000 9. Ford Developers (P) Ltd PAN: AABCF5896R 2500 2500 4997500 5000000 10. Merit Vanijya (P) Ltd PAN: AAGCM3672B 500 500 999500 1000000 20,70,250 20,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the assessment and directing a fresh assessment. 17. As per the provisions of section 263 as enumerated above, after getting the explanation from the assessee, the Ld. PCIT was supposed to examine the contention of the assessee. Before passing an order of modifying, enhancing or cancelling the assessment, he was supposed either to himself make or cause to make such an enquiry as he deems necessary. The words as he deems necessary , in our view, do not mean that the Ld. PCIT is left with a choice either to make or not to make an enquiry. As per the relevant provisions of section 263 of the Act, it was incumbent upon the Ld. PCIT to make or cause to make an enquiry. So far as the words as he deems necessary are concerned, the said words suggest that the enquiries which are necessary to form a view as to whether the order of the Assessing Officer is erroneous and prejudicial to the interest of Revenue or not? A perusal of the impugned order of the ld. PCIT reveals that the Ld. PCIT had asked the assessee about the validity of the assessment order for want of necessary enquiries and verifications by the Assessing Officer relating to share application money and premium, to which the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t points and even without considering the submission of the assessee furnished in reply to the show-cause notice, the ld. PCIT, in our view, was not justified in setting aside the order, simply stating that in his view more enquiries were needed to be carried out by the Assessing Officer. As observed above, the ld. PCIT without examining the details of the share applicants and the evidence furnished by the assessee has passed a general order observing that in his view the order passed by the Assessing Officer was on an incorrect assumption of facts or incorrect application of law without mentioning as to what facts were incorrect what was the incorrect law, that was applied by the Assessing Officer. 18.2. The ld. PCIT, taking shelter in Explanation 2(c) to Section 263(1) of the Act, held that the order of the Assessing Officer was erroneous and prejudicial to the interest of the revenue on the ground of lack of enquiry, which, in our view, is a general observation and no specific observation has been made in respect of any of the details or evidence furnished by the assessee and as to why the ld. PCIT was not satisfied about such details/replies furnished by the assessee. Simply be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO in conducting the investigation was erroneous, which unfortunately is not the case before us. And equally bad is the bald allegation/fault that second AO has not collected total facts cannot be accepted being vague and based on conjectures and surmises and so meritless. Since the assessee company has discharged its onus as discussed supra, and still if the Second Pr. CIT had to find the order of Second AO erroneous for lack of enquiry or for not collecting the entire facts, then the Second Pr. CIT ought to have called for the additional facts which he thinks that the Second AO has not collected from the assessee or the shareholders and then explained in his impugned order as to what effect those additional documents would have made on the second assessment order/reassessment order or in other words the impact on the decision making process of framing the second assessment order due to the failure of second AO's omission to collect the additional documents. However, we note that the Second Pr. CIT has not carried out any such exercise or even spelled out in his impugned order, which all documents the second AO failed to collect for considering the total facts; and even if we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is erroneous in so far as it is prejudicial to the interest of the Revenue in accordance with Explanation 2(c) to section 263(1) of the Act.[ For ready reference it is reproduced.] Explanation 2 under section 263 of the Act reads as under:- For the purpose of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if in the opinion of the Principal Commissioner or Commissioner,- (a).......... (b)........... (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or 58. However, we note that the Ld. CIT(A) has made a bald statement that the AO's assessment order attracts Explanation 2(c) u/s. 263 of the Act. However, he failed to spell out in his impugned order how the action of AO while framing the assessment order is not in accordance to any order, direction or instruction issued by the Board under section 119 of the Act. So, the deeming fiction as envisaged in Explanation (2) u/s. 263 of the Act cannot be used to interfere with the order of AO. This action of Ld. Pr. CIT is bad for non- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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