TMI Blog2023 (3) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... by the very inherent nature of such power, it does not allow for substitution of the view taken by the AO. The appreciation of the material placed on record before the AO is exclusively within the four corners of its domain and it cannot overlap with exercising revisionary powers u/s 263 on the ground that the AO should have arrived at a different conclusion basis the material on record. Case of the Assessee is squarely covered by the coordinate bench decision in the case of Pawansut Media Services vs. PCIT [ 2021 (11) TMI 924 - ITAT DELHI] wherein on near identical facts, the Tribunal quashed the revisionary order u/s 263. Thus in the present case after examining the Explanation 2 to Section 263, submission of the ld. DR, ratio given by the ld. PCIT to treat the Assessment Order as erroneous so far it is prejudicial to the interest of the Revenue in the present case is concerned, we are of the view that the revisionary powers so conferred cannot be exercised to invalidate the action of AO and the Ld. PCIT was not justified in invoking the provisions of Section 263 of the Act to set aside the assessment order passed by AO u/s 143(3) of the Act. Ergo, the order of ld. PCIT pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the order u/s. 143(3) without appreciating that there is no error, much less prejudicial to the interests of the Revenue to warrant a revision and therefore the order passed by the Ld. Pr.CIT is ultra vires to the scope of Section 263 and consequently the impugned order passed is bad in law and is liable to be cancelled. 6. Without prejudice to the above, the Ld. Pr.CIT has erred in computing the purported addition u/s. 56(2)(viia) at Rs. 136,62,06,725/- and directing the Ld. AO accordingly, contrary to facts and relevant provisions of the Act and Rules. 7. Without prejudice to the above, the Ld. Pr.CIT has erred in computing the purported addition u/s. 56(2)(viia) and directing the AO, as in Ground No.6, disregarding the findings and directions of the Hon ble ITAT vide order dated 09.08.2019 in I.T.A. No.881/DEL/2019 for AY 2015-16, that was placed on record, in the case of M/s. Raj Sheela Growth Fund Pvt. Ltd., a sister concern, involving similar share transfer transactions. 3. Heard the arguments of both the parties and perused the material available on record. 4. The Assessee is a private limited company and it filed its return of income on 28.09.2015, dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escapement was not shared in the said notice. 10. Subsequently, the ld. PCIT issued another SCN dated 17.03.2020 wherein the ld PCIT modified its earlier SCN to state that the AO had not verified facts in respect of applicability of Section 56 of the Act which one of the reasons for limited scrutiny. The ld. PCIT reproduced a chart of 26 companies in which the assessee had invested to state that income of Rs. 106.78 crores had escaped assessment during the relevant Assessment Year. In the said SCN, ld. PCIT did not draw any reference to Rajsheela assessment order and also removed the specific reference to Section 56(2)(viib) of the Act. 11. In response, the assessee vide submission dated 20.03.2020 provided its detailed contentions against invocation of Section 263 in the instant case. 12. The AO was directed by the ld. PCIT to make a fresh assessment i.e. de novo consideration. Pertinent to note that contrary to the amount of Rs. 106.78 crores stated in the earlier notice, the ld. PCIT stated that income escapement was to the tune of Rs. 136.62 crores. 13. Aggrieved by the said order, the assessee filed appeal before the Tribunal. 14. At the outset, it was argued th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Principal Commissioner or Commissioner, (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Foard under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. In the above case, it is humbly submitted that the following decision may kindly be considered with regard to validity of proceedings u/s 263 of I.T. Act: 1. Surya Jyoti Software Pvt. Ltd. Vs PCIT (I.T.A. No.2158/DEL/2017) ITAT Delhi Hon ble ITAT Delhi held that the Pr. CIT has amply demonstrated in his impugned order that this issue was neither enquired into nor was verified by the Assessing Officer once the information and the material in hard copy and in form, of CD was made available to him. Hence, assessment order is not only erroneous but also prejudicial to the interest of revenue. 2. CIT Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew that Assessing Officer had wrongly accepted that said amount was received by assessee from 'S' and 'D' because said fact was totally contrary to stand taken by assessee and evidence and material produced by assessee himself to show that said credits were received by him from four persons - Therefore, Commissioner directed Assessing Officer to add a sum of Rs. 3.08 lakhs to income of assessee in respect of credits - Tribunal confirmed order of Commissioner - Whether Tribunal was justified in its action - Held, yes 5. [2016] 69 taxmann.com 170 (SC)- Commissioner of Income-tax, Mumbai vs. Amitabh Bachchan- Section 263 does not require any specific show cause notice detailing specific grounds on which revision of assessment order is tentatively being proposed affecting initiation of exercise in absence thereof or to require commissioner to confine himself to terms of notice and foreclosing consideration of any other issue or question of fact; Commissioner is free to exercise his jurisdiction on consideration of all relevant facts, provided an opportunity of hearing is afforded to assessee to contest facts on basis of which he had exercised revisional jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s during the year. Please furnish explanation regarding the above reasons of selection. 21. In response, Assessee vide submission dated 21.08.2017 (refer page 101 of Paper book) stated that in pursuance to the discussion in relation to the ongoing assessment proceedings, Assessee has submitted details of source of investment, copy of ledger account along with bank statements of the concerned parties. Furthermore, the Assessee also provided a copy of the valuation report under Rule 11UA depicting the FMV of investments made in unlisted shares and supporting balance sheet of the relevant companies. Therefore, it is clearly evident that AO has undertaken an inquiry within the parameter of the scrutiny which involved examination of the FMV of investment in unlisted equity shares, and hence it cannot be said that there was any absence of an inquiry resulting in invocation of Section 263 in the instant matter. 22. A detailed chart in relation to date wise notices and responses which represents detailed inquiry and due application of mind by the AO is as under: Sl. No. Particulars Date of issue/sub mission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an AO has carried out enquiry or verification, all that the Court is required to ascertain is whether AO applied his mind. Relevant para reads as under: 10. The standard to be adopted while dealing with the issue as to whether or not an AO has carried out an enquiry or verification, all that the Court is required to ascertain is as to whether the AO applied his mind. 10.1. The fact that the AO has not given reasons in the assessment order is not indicative, always, of whether or not he has applied his mind. Therefore, scrutiny of the record, is necessary and while scrutinizing the record the Court has to keep in mind the difference between lack of enquiry and perceived inadequacy in enquiry. Inadequacy in conduct of enquiry cannot be the reason based on which powers under Section 263 o f the Act can be invoked to interdict an assessment order. 27. Further reliance is placed on the decision of Delhi High Court in CIT v Sunbeam Auto Ltd 332 ITR 167, wherein the jurisdictional Delhi High Court 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 considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 263 of the Act. Relevant excerpts are as under: 14. ..It is an undisputed fact that during the year under consideration assessee had made Investment in 2500 equity shares of Mukund Coalfields Pvt. Ltd. @ Rs. 10 per share. (Investment Rs. 25,000/-) and Investment in 7,70,000 equity shares of Indian Steel Power Pvt. Ltd. @ Rs. 10 per share (Investment Rs. 77,00,000/-). We find that to examine the issue for which the case of the assessee was selected for limited scrutiny, notice u/s 143(2) and 142(1) of the Act was issued by AO along with questionnaire and the assessee was also asked to submit the various details contained therein. The paper book filed by the assessee reveals that in response to the notice issued by AO, assessee had made submissions on various dates wherein assessee had interalia filed the details of the shares purchased, from whom the shares were purchased, copies of bank account evidencing payment to sellers, contract note for purchase note, computation of the book value of shares that were purchased. In view of the aforesaid facts we are of the view that AO had applied his mind to the information and details furnished by the assessee and after considering ..... X X X X Extracts X X X X X X X X Extracts X X X X
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