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2021 (10) TMI 79 - AT - Income TaxRevision u/s 263 - as per CIT assessment framed by the AO under section 143(3) read with section 147 of the Act as erroneous insofar prejudicial to the interest of Revenue - Addition u/s 68 - whether the learned Principle CIT can extend the area of examination under section 263 by revising the assessment order framed under section 147 r.w.s. 143(3)? - HELD THAT:- As finding of the learned principal CIT was not correct to some extent. It is for the reason that the company namely M/s. Rachna Finelease Pvt. Ltd. and M/s. Capaxo Logistics Pvt. Ltd. (Arham Properties Pvt. Ltd.) have filed income tax return in response to the notice issued under section 148 of the Act and accordingly assessment was completed under section 147 read with section 143(3) of the Act. The respective assessment orders of M/s. Capaxo Logistics Pvt. Ltd. and M/s. Racna Finless Pvt. Ltd. are placed where huge additions made in the hands of these companies on account of unexplained credit under section 68 of the Act. However, subsequently the learned CIT(A) was pleased to delete the addition made by the AO in their hands.Therefore, the finding of the learned CIT(A) is not correct upto this extent. Once the source of fund in the hand of above companies were held as explained by ld. CIT(A) then amount received by the assessee from these companies cannot be held as unexplained under section 68 of the Act in the proceedings carried out under section 263. All the document it is established that identity, genuineness of transaction and credit worthiness/sources of fund has been established. Further the learned principal CIT have not pointed out any deficiency in these documentary evidences neither any contrary evidences brought by the learned DR before us. Thus the finding of the learned CIT that the creditworthiness of the parties were not proven was not based on the cogent reasons. Thus the finding of the learned PCIT appears to be arbitrary and non-speaking. To our understanding the answer stands negative for the reason that proceeding under section 147 is limited to the extent of reason recorded. Though the provision section 147(1) authorizes AO to make addition with regard to any other issue if it comes to his/her notice during the proceeding. Here it is not the case. Hence the learned principal CIT cannot held the order under section 147 r.w.s. 143(3) for non-enquiry of share capital which was not the part of the proceeding. If he wanted to do so then he has to revise the order under section 143(1) of the Act as the case may be. See M/S. LARK CHEMICALS LTD. [2013 (9) TMI 959 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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