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2022 (8) TMI 1128 - AT - Income TaxRevision u/s 263 by CIT - Scope of the Reassessment order - AO made no inquiry/addition in respect of bogus share capital received from Kolkata-based shell /paper companies - Reopening of assessment initiated against assessee - HELD THAT:- From the reasons recorded, it is vivid that there is nothing mentioned about share capital and share premium. Thus, assessment was not reopened to examine the issue relating to share capital and share premium. The reassessment proceedings were initiated to tax the unaccounted payment, loans and advances and various unaccounted transactions. There is no whisper about the share capital and share premium in the reasons so recorded by the assessing officer under section 147. AO has not discovered any other income which is chargeable to tax and has escaped assessment during the reassessment proceedings as per third proviso to section 147 of the Act, hence it is quite clear that the share capital and share premium, was not the subject matter before assessing officer, during the reassessment proceedings under section 147. We note that ld PCIT has exercised his jurisdiction under section 263 of the Act, to the effect that assessing officer has not examined share capital and share premium. However, as we have noted that this issue was not there before the assessing officer in the reasons recorded by him under section 147 of the Act. Therefore, the issue relating to share capital and share premium, cannot be examined by the assessing officer in reassessment proceedings, as it was not the part of reasons recorded by the assessing officer. Jurisdiction exercised by ld PCIT under section 263 of the Act is not in accordance with law. PCIT has selected the item (share capital and share premium) which is not subject matter of reassessment proceedings therefore, order passed by the assessing officer under section 147 r.w.s. 143(3) is neither erroneous nor prejudicial to the interest of revenue. Therefore, jurisdiction exercised by the ld PCIT under section 263 of the Act to tax the share capital and share premium is not valid in the eye of law. The issues on which the revisional jurisdiction is being exercised were admittedly issues which arose in the proceeding/assessment done prior to reopening of the assessment. In view of passage of time the jurisdiction to exercise powers under section 263 of the Act with regard to assessment done under section 143(1) of the Act had lapsed. Thus, the jurisdiction under section 263 of the Act cannot be exercised on issues ( share capital and share premium) which were not subject matter of consideration while passing the order of reassessment under section 143(3)/147 of the Act but a part of an assessment done earlier under the Act. Thus, the jurisdiction exercised by ld PCIT is not in tune with the provisions of section 263 of the Act. AO has passed the reassessment order under section 143(3) r.w.s 147 after calling for details on the issue and after considering the reply and documents and after verification of the same and after due application of mind passed the assessment order, so it cannot be termed as erroneous and prejudicial to the interest of the revenue. So, the Ld. PCIT’s finding fault, with the order of the Assessing Officer is erroneous as well as prejudicial to the interest of revenue, on account of lack of inquiry in respect of issue of share capital and share premium, has to fail. Based on these facts and circumstances, we quash the orderpassed by the ld PCIT under section 263 - Appeal of assessee allowed.
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