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2015 (12) TMI 1241 - ITAT KOLKATA

2015 (12) TMI 1241 - ITAT KOLKATA - TMI - Revision u/s 263 - Addition u/s 68 - whether insertion of proviso to section 68 is retrospective - Held that:- When the AO chose not to make any addition by exercising his discretion as per the mandate of section 68, then the ld. CIT in the instant cases was not obliged to hold against the assessees. - But in the present case, AO did not make befitting inquiry in the given circumstances and the CIT has held the assessment order to be erroneous and prejud .....

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nly the right but the duty of the CIT to revise such an erroneous assessment, which is prejudicial to the interest of the revenue. This is what has exactly happened in this case. If the contention of the ld. AR is accepted and taken to a logical conclusion, it will amount to rendering the provisions of section 263 otiose. We, therefore, refuse to accept this contention.

After making an elaborate analysis of the nature of amendment, memorandum explaining the provisions of the Finance B .....

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013, ITA No.1498/Kol/2014, ITA No.1215/Kol/2014 - Dated:- 4-11-2015 - R. S. Syal, AM And N. V. Vasudevan, JM For the Appellant : Mr Sujay Sen, Adv For the Respondent : Shri S Srivastava, CIT-DR ORDER Per Bench Appeal in Subhdhan Commodities P. Ltd. VS. CIT (ITA no. 171/K/2015) is delayed by 43 days. The assessed has filed petition for condonation of delay. We are satisfied with the reasons of delay. As such, the delay is condoned and the appeal is taken up for hearing on merits. 2. Through these .....

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were filed by such companies with meagre income; intimations were issued u/s 143(1); thereafter notices u/s 148 were issued either at the instance of such companies divulging a paltry escapement of income or otherwise; assessment orders were passed u/s 143(3) read with section 147 after making nominal additions and the AOs, during the course of such assessment proceedings, made some formal enquiries about shares issued by such companies at huge premium by issuing notices u/s 133(6) to some of t .....

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1104/Kol/2014) dated 30.7.2015 for the A.Y. 2009-10. 5. Both the sides have fairly admitted that facts and circumstances of the cases under consideration are mutatis mutandis similar to those decided earlier, except for the separate arguments made, which we will advert to shortly. In our aforesaid order in Subhlakshmi Vanijya Pvt. Ltd., vs. CIT (ITA No. 1104/Kol/2014 A.Y. 2009-10), we have drawn the following conclusions: - A. Contention of the assessee that since the AO of the assesseecompany w .....

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cases can't be construed as a proper enquiry; ii) CIT u/s 263 can set aside the assessment order and direct the AO to conduct a thorough enquiry, notwithstanding the jurisdiction of the AO in making enquiries on the issues or matters as he considers fit in terms of section 142(1) and 143(2) of the Act, which is relevant only up to the completion of assessment ; iii) Inadequate inquiry conducted by the AO in the given circumstances is as good as no enquiry and as such, the CIT was empowered t .....

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t order erroneous and prejudicial to the interest of the revenue on that score itself. C. In the given facts and circumstances of all such cases, 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. D. Limitation p .....

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can be made u/s 68 in its first year of incorporation. G. 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. H. 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 ear .....

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ly made on behalf of the above assessees, which the ld. AR claimed to be relevant for all the instant appeals. Firstly it was argued that section 68 uses the word 'may' and hence a discretion has been given by the legislature to the AO to make or not to make any addition under this section if he is not satisfied with the explanation furnished by the assessee. This proposition was bolstered with the help of a judgment from the Hon'ble Supreme Court in CIT vs. Smt. P.K. Noorjehan (1999 .....

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sfied with the explanation given by the assessee. But we are confronted with a situation in which the AO did not make befitting inquiry in the given circumstances and the CIT has held the assessment order to be erroneous and prejudicial to the interest of the revenue on this count and directed the AO to pass a fresh assessment order as per law. He has not substituted his opinion for that of the AO and confirmed the addition. He has simply restored the matter to the AO for deciding the issue as p .....

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again not persuaded by this argument. We are concerned with a case in which the AO did not discharge the burden cast on him as regards the framing of assessment. In such circumstances, the ld. CIT stepped in to check his action. All the aspects of the assessment are required to be examined by the AO alone and no other authority. But if such an examination has not been done which has rendered the assessment order erroneous and prejudicial to the interest of the Revenue, then it is not only the r .....

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n which the contention of the assessee as regards the genuineness of the receipt of share capital at premium, has been accepted. This judgment has no application to the facts of the instant case because in that case appeal was filed against the tribunal order upholding the order of the CIT(A) in which it was observed by the ld. CIT(A) as well as the tribunal that the receipt of share application money with premium was through genuine transactions. Moreover that was appeal against the deletion of .....

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