TMI Blog2016 (5) TMI 1453X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the AO. Therefore, it cannot be held that in the instant case the AO’s order was erroneous and prejudicial to the interest of the revenue within the terms of section 263 of the Act. Once the issue of share capital was considered and examined by the Assessing Officer, Ld. Commissioner cannot set aside the order without recording contrary finding. - Decided in favour of assessee - ITA No. 2469/Del/2012 - - - Dated:- 30-5-2016 - SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER Appellant by: Shri Sudesh Garg, Adv. Respondent by: Shri Pankaj Vidharthi, CIT DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER This appeal has been preferred by the assessee against the order dated 26/3/2012 passed u/s 263 of the Income Tax Act, 1961 (hereinafter called the Act ) by the Ld. CIT-Central-1, New Delhi for Assessment Year 2003-04. 2. The show-cause notice dated 10/8/2011 issued u/s 263 of the Income Tax Act, 1961 is repro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent records for the year under consideration it was observed that the assessee company had received sum of ₹ 1,79,00,000/- by way of share application money. In this regard the assessee had produced details viz. Form No. 2 filed with the Registrar of Company and share application money forms received from the parties concerned. However it is also seen from the record that the AO has not carried out any further investigation as to the genuineness of such transactions as well as credit worthiness of the parties investing in such shares. Since the AO has not carried proper inquires in the matter his order is erroneous in so far as it is prejudicial to the interest of the revenue and consequently notice u/s 263 was sent to the party to show cause as to why the action u/s 263 should not be taken, in view of the above. 2. It is pertinent to note that at the time of verification of record it was also found that a CD was received from the investigating wing Delhi containing the list of several beneficiaries who had taken accommodation entries from different entry operators. On perusal of the said list it was also found that the assessee was also one of the beneficiary of such entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly given entries and not the actual amount as has been claimed there is all the more reason to invoke the provisions of section 263 of the Act. XXXXX 7.Thus considering the facts of the case, I am satisfied that the order passed by the AO is erroneous in so far as it is prejudicial to the interest of the revenue and hence the same is set aside and the AO is directed to verify in details of the cash credit received by the assessee company in terms of share application money should be properly scrutinized after giving proper and due opportunity to the assessee of being heard. 4. In the revised grounds of appeal, the assessee has taken as many as five grounds of appeal but the main effective ground is Ground No. 4 which reads as under: The Ld. CIT has erred in ignoring that the order of the assessing officer passed under section 153C r.w.s. 143(3) of the Income tax Act, 1961 was unsustainable in the eyes of law for not meeting the requirements of section 153C of the Income tax Act and has further erred in giving the directions to the assessing officer to carry out enquiries/ assessment of income beyond the scope of assessments u/s 153C/153A of the Income tax Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. 8. It will be expedient to reiterate the governing principles laid down by the Hon ble Courts with regard to the exercise of power by the Commissioner under the provisions of Section 263 of the Act. The power of suo moto revision exercisable by the Commissioner is undoubtedly supervisory in nature. The opening words of Section 263 empower the Commissioner to call for and examine the record of any proceedings under the Act. A bare reading of Section 263 also makes it clear that the Commissioner has to be satisfied of twin conditions, namely, (i) the order of the assessing officer sought to be revised is erroneous; and (ii) it is prejudicial to the interest of the revenue. If one of them is absent - if the order of the Assessing Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but it is prejudicial to the revenue - recourse cannot be had to Section 263(1) of the Act [See Malabar Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and unchartered arbitrary power. The exercise of the power is limited to cases where the Commissioner on examining the records comes to the conclusion that the earlier finding of the AO was erroneous and prejudicial to the interest of the revenue and that a fresh determination of the case is warranted. There must be material to justify the Commissioner's finding that the order of the assessment was erroneous insofar as it was prejudicial to the interest of the revenue. 11. It is also trite that there is a fine, though subtle distinction, between lack of inquiry and inadequate inquiry . It is only in cases of lack of inquiry that the Commissioner is empowered to exercise his revisional powers by calling for and examining the records of any proceedings under the Act and passing orders thereon. In Gabriel India Ltd. (supra), it was expressly observed:- The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of the revenue, will not suffice. The exercise of the power being quasi-judicial in nature, the reasons must be such as to show that the enhancement or modification of the assessment or cancellation of the assessment or directions issued for a fresh assessment were called for, and must irresistibly lead to the conclusion that the order of the Income- tax Officer was not only erroneous but was prejudicial to the interest of the revenue. Thus, while the AO is not called upon to write an elaborate judgment giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suo moto revisional powers unless supported by adequate reasons for doing so. 13. In the instant appeal before us, it is not the Department s case that no information regarding the share application money was called for by the AO. That relevant details and documents were furnished by the assessee during the assessment proceedings has been acknowledged by the Ld. CIT in the impugned order also. Hence, no inference can be drawn that the AO has not examined the issue although he has not expressed it it in as many terms as may be cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion, such a conclusion cannot be considered erroneous simply because the commissioner does not feel satisfied with the conclusion. It may be that in the opinion of the commissioner, the order in question is prejudicial to the interests of the revenue. But that by itself would not be enough to vest the commissioner with the powers of suo motu revision because the first requirement, namely, that the order is erroneous, is lacking. 14. The Hon ble Delhi High Court in CIT vs. Sunbeam Auto Ltd 332 ITR 167 (Del) has opined in Para 17 of its order as under:- 17. 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 consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Income- tax Act. As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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