2015 (8) TMI 1541 - AT - Income Tax

Revision u/s 263 by CIT - Addition u/s 68 - HELD THAT - As decided in M/S SUBHLAKSHMI VANIJYA PVT. LTD. TULSI TRACOM PVT. LTD. KOLKATA AND OTHERS 2015 (8) TMI 174 - ITAT KOLKATA contention of the assessee that since the AO of the assessee company was not empowered to examine or make any addition on account of receipt of share capital with or without premium before amendment to section 68 by the Finance Act 2012 w.e.f. A.Y. 2013-14 and hence the CIT by means of impugned order u/s 263 could not have directed the AO to do so is unsustainable. Failure of the AO to give a logical conclusion to the enquiry conducted by him gives power to the CIT to revise such assessment order - the notices u/s 263 were properly served through affixture or otherwise. Further the law does not require the service of notice u/s 263 strictly as per the terms of section 282 of the Act. The only requirement enshrined in the provision is to give an opportunity of hearing to the assessee which has been complied with in all such cases. Limitation period for passing order is to be counted from the date of passing the order u/s 147 read with sec. 143(3) and not the date of Intimation issued u/s 143(1) of the Act which is not an order for the purposes of section 263. In all the cases the orders have been passed within the time limit. CIT having jurisdiction over the AO who passed order w/s 147 read with section 143(3) has the territorial jurisdiction to pass the order u/s 263 and not other CIT. Addition in the hands of a company can be made u/s 68 in its first year of incorporation.After amalgamation no order can be passed u/s 263 in the name of the amalgamating company. But where the intention of the assessee is to defraud the Revenue by either filing returns after amalgamation in the old name or otherwise then the order passed in the old name is valid. Order passed u/s 263 on a non-working day does not become invalid when the proceedings involving the participation of the assessee were completed on an earlier working day. Order u/s 263 cannot be declared as a nullity for the notice having not been signed by the CIT when opportunity of hearing was otherwise given-by the CIT. Refusal by the Revenue to accept the written submissions of the assessee sent after the conclusion of hearing cannot render the order void ab initio. At any rate it is an irregularity. Search proceedings do not debar the CIT from revising order u/s passed u/s 147 of the Act. Appeal dismissed.

Summary

Issues involved:
- Correctness of orders passed by Commissioners of Income-tax (CIT) u/s 263 of the Income-tax Act, 1961
- Empowerment of AO to examine or make additions on account of receipt of share capital
- Failure of AO to conclude an enquiry leading to revision by CIT
- Proper service of notices u/s 263
- Limitation period for passing orders
- Territorial jurisdiction of CIT to pass orders u/s 263
- Addition in the hands of a company u/s 68 in its first year of incorporation
- Validity of orders passed after amalgamation
- Validity of orders passed on a non-working day
- Validity of orders without signed notice by CIT
- Refusal to accept written submissions of the assessee
- Revision of orders u/s 147 despite search proceedings

Analysis:

Empowerment of AO to examine or make additions on account of receipt of share capital:
The contention that the AO was not empowered to examine or make additions on share capital receipt is deemed unsustainable due to the Finance Act amendment. The CIT was within rights to direct the AO for such examination post-amendment.

Failure of AO to conclude an enquiry leading to revision by CIT:
The failure of the AO to provide a logical conclusion to the enquiry conducted empowered the CIT to revise the assessment order. Inadequate inquiry was considered equivalent to no enquiry, justifying the revision by the CIT.

Proper service of notices u/s 263:
Notices u/s 263 were deemed properly served through affixture or otherwise, meeting the requirement of providing an opportunity of hearing to the assessee as mandated by law.

Limitation period for passing orders:
The period for passing orders was correctly counted from the date of the order u/s 147 read with sec. 143(3), not from the date of Intimation u/s 143(1), ensuring all orders were passed within the specified time limit.

Territorial jurisdiction of CIT to pass orders u/s 263:
The CIT with jurisdiction over the AO who passed the order had the authority to pass orders u/s 263, highlighting the importance of territorial jurisdiction in such matters.

Validity of orders passed after amalgamation:
Orders could not be passed u/s 263 in the name of an amalgamating company post-amalgamation unless there was evidence of fraudulent intent to defraud the Revenue, justifying the validity of orders in the old name.

Validity of orders on a non-working day:
Orders passed on a non-working day were upheld as valid if the proceedings involving the assessee were completed on an earlier working day, ensuring procedural integrity.

Validity of orders without signed notice by CIT:
Orders u/s 263 were not deemed nullities for unsigned notices if the opportunity of hearing was provided by the CIT, emphasizing the substance over form principle.

Refusal to accept written submissions of the assessee:
Refusal to accept written submissions post-hearing was considered an irregularity, not rendering the order void ab initio, maintaining the importance of procedural fairness.

Revision of orders u/s 147 despite search proceedings:
Search proceedings did not bar the CIT from revising orders u/s 147, underscoring the CIT's authority to revise orders despite ongoing investigations.

In conclusion, the Appellate Tribunal upheld all impugned orders based on the comprehensive analysis of various legal issues and precedents, resulting in the dismissal of all appeals.