TMI Blog2019 (9) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT that subsequent decision had come for which he referred to the decision of Hon ble Delhi High Court in the case of Nova Promoters Finlease [ 2012 (2) TMI 194 - DELHI HIGH COURT] is concerned we find the Hon ble Delhi High Court pronounced the said decision on 15.02.2012 whereas the AO in the instant case has passed the order u/s. 143(3)/147 on 13.12.2011. Therefore, we do not find any merit in the allegation of the Ld. CIT of non consideration of the above decision since the same was not available at the time of passing of the assessment order. So far as the allegation of the Ld. CIT that the AO should have conducted further enquiry which were necessary to gather relevant material which the AO failed to do and there was non application of mind on the part of the AO is concerned, we find in the instant case thorough enquiries were conducted by the AO both at the time of original assessment and at the time of reassessment proceedings. Full details giving the names, addresses, number of shares of nominal value and share premium amount of all the share holders alongwith their bank statements, copy of IT returns, PAN etc. were filed before the AO. Even if the share holders we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port which is relevant far the Financial year 2008-09 i.e. assessment, year 2009- 10. The assessee paid taxes thereon at Delhi. Out of total tax liability on the surrendered amount of Rs. .7 crore for F.Y. 2008-09 relevant to Asstt. Year 2009-10, the assessee has already paid ₹ 1 Crore of Income tax (₹ 50 lakh vide BSR Code 0302275 Chnllan Sr. No. 00571 dated 12.12.2008 and ₹ 50 lakh vide BSR Code 0302275 Chaikin No. 00144 dated 31.01.2009} From the perusal of the documents found and impounded from the office of M/s Dwarkadhis Buildwell Pvt. Ltd. At BN 57 East, Shalimar Bagh, New Delhi, during the course of Survey operation under section 133A of the Income tax Act, 1961, it reveals that the assessee has received share capital at huge premium from a number of Companies in the F.Y. 2005-06. Most of these companies have address at 13/34 WEA, Karol Bagh, which is controlled by Shri Tarun Goel who is an Entry Operator as established by the Search Seizure operation conducted by the Unit IV of DIT (Inv.) on 15.09.2008. M/s Dwarkadhis Buildwell Pvt. Ltd. has 710000 shares of ₹ 7.10 crore. Th'e whole of the share capital pertains to the finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Shri Tarun Goyal and were fictitious. He has made an annexure of such beneficiary companies and M/s Dwarkadhis Buildwell P Ltd. is one of them where an amount of ₹ 7.10 crore relevant for assessment year 2006-07 has been taken by this company from the following entry provider companies Sr. No. Name of the entry provider company Amount of share application money (in Rs.) 1. Adonis Financial Services Pvt, Ltd. 13/34, WEA, Arya Samaj Road, Karol Bagh, 2500000 2. Aries Crafts Pvt. Ltd, 13/34, WEA, Arya Samaj Road, Karol Bagh, 5000000 3. Bhawani Portfolio Pvt. Ltd, 13/34, WEA, Arya Saihaj Road, Kami Bagh, 3000000 4. Campari Fiscal Services Pvt. Ltd. 13/34, WEI, 4 Floor, Main Aryn Sttmuj Road. Karol Bagh. 6000000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-06 relevant to Asstt. Year 2006-07 which has escaped assessment. I have therefore, reasons to believe that income of ₹ 7,10,00,000/- has escaped assessment for the Asstt. Year 2006- 07 and also any other income- chargeable to tax which has escaped assessment and which comes to the notice of s the AO subsequently in the course of proceedings- under this, section. Issue notice u/s. 148 of the Income Tax Act, 1961. 3. The Assessing Officer completed the re-assessment proceedings u/s. 143 (3)/147 on 13.12.2011 at the returned income without making any addition. While doing so he accepted the plea of the assessee on the basis of various decisions including the decision of Hon ble Supreme Court in the case of CIT Vs. Lovely Exports (P) Ltd reported in 216 CTR 195 that if the identity of the investors is established, the assessment in the case of the investors can be re-opened as per law but no addition can be made in the hands of the company who has received the share application money. He accordingly dropped the proceedings initiated u/s. 147 of the IT Act, 1961 and accepted the returned income. 4. The Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ads as under :- 12.1 In view of discussion made in above paras, I am of the considered opinion that the A.O. ought to have appreciated the evidence gathered by the investigation wing and followed a course to confront these evidences to the assessee, including conducting further enquiries which were necessary to gather relevant material which AO failed to do. There has been non-application of mind on the part of the A.O. in not appreciating the material on record as well as in not following course of further inquiry to gather relevant material. Also, there is failure on part of the A.O. to apply provisions of the law, correctly. Therefore, assessment order passed by the A.O. is held as erroneous and prejudicial to the interest of revenue in respect of aforesaid issues. Had the consequent additions been made, there would have been substantial tax effect and thus the cause of the revenue has suffered. Further, the impugned order of the Assessing Officer is erroneous and prejudicial to the interest of the revenue in respect of aforesaid issues. Had the consequent additions been made, there would have been substantial tax effect and thus the cause of the revenue has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiated by him U/s 147 after considering assessee s objections and submission and show cause notice issued by Ld CIT - Hisar does not take into account validity of the jurisdiction assumed by Ld AO as per law and talks about only lack of inquiry and investigation on merits then order passed U/s 263 without setting aside the proceedings initiated U/s 147 dropped by Ld AO by stating in the order that Therefore the proceedings initiated U/s 147 by issuing notice U/s 148 to the assessee are hereby dropped is liable to be quashed. 5. That the Ld Commissioner of Income Tax - Hisar failed to appreciate the fact that the Ld AO dropped the proceedings initiated U/s 147 read with Sec 148 on a possible view, that the facts and circumstances of the case of appellant company are parallel and covered by the decision and ratio laid down by the Hon. Supreme Court in the case of Malabar Industrial Co. Ltd. 243 ITR 83 as such proceedings cannot be held as erroneous therefore Ld CIT has wrongly assumed and invoked provisions of Sec. 263 of the Income Tax Act 1961 which is contrary to the facts and provisions of law as such order U/s 263 is liable to be quashed. 6.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the record of the ACIT at the time of passing the order by the Ld. ACIT dropping the proceedings u/s 148 ignoring the pending proceedings us/s 154 on the based on the audit objection to meet with the audit objection and issuing specific direction to pass the order in a particular manner which cannot be done in proceedings u/s 263 of the Income Tax Act 1961 12. That the appellant craves right to amend, add, delete or withdraw any of the grounds of appeal either before or at the time of hearing of this appeal. 8. The Ld. Counsel for the assessee strongly challenged the order of the CIT. Referring para 12.1 of the order of the CIT he submitted that the Ld. CIT is not in doubt that the Assessing Officer has not conducted any enquiry. According to him the Assessing Officer should have made some further enquiries. Referring to the copy of the notice issued us/. 263 (1) dated 29.11.2012, copy of which is placed at page No.117-118 of the paper book, he submitted that it is the allegation of the ld. CIT that the assessee company has beneficially accepted the share application money from the companies controlled by Sh. Tarun Goyal who ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re incurred by assessee in replacement of dies and tools was to be treated as revenue expenditure or not and on being satisfied with assessee s explanation, he accepted the same, it could not be said to be a case of lack of enquiry. Accordingly the order of the Tribunal setting aside the order of the CIT passed u/s. 263 was upheld. 9. The ld. Counsel for the assessee referring to para 8.2.2. of the order of Ld. CIT submitted that the AO has followed the decision of Hon ble Supreme Court in the case of Lovely Exports (P) Limited (supra). Where as it is the allegation of the Ld. CIT that the Assessing Officer should have followed the decision of Hon ble Delhi High Court in the case of CIT Vs. Nova Promoters and Finlease Private Limited reported in 342 ITR 0169. He submitted that the assessment order in the instant case u/s. 143(3) / 147 was passed on 13.02.2011 where as the decision of Hon ble High Court in the case of Nova Promoters (supra) was pronounced on 15.02.2012. Therefore, the Assessing Officer could not have visualized the decision of Hon ble Delhi High Court in the case of Nova Promoters (supra). 9. Referring to the decision of Hon ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and moreover view taken by Assessing Officer was a plausible view, which was supported by various judicial precedents, assessment order passed could not be called to be erroneous though may be prejudicial to interest of revenue 12. Referring to the decision in the case of Dharam Pal [2017] 82 taxman.com 83 (Amritsar Trib) he submitted that the Tribunal in the said decision has held that where the Assessing Officer has examined a particular issue and has completed the assessment after taking a possible view, the commissioner is not permitted to assume powers u/s. 263 simply because he does not agree with the view taken by the Assessing Officer. 13. Referring to the decision of Hon ble Delhi High Court in the case of Director of Income Tax Vs. Jyoti Foundation (2013) 38 Taxmann.com 180 he submitted that the Hon ble High court in the said decision has held that where revisionary authority opined that further enquiry was required, such enquiry should have been conducted by revisionary authority himself to record finding that assessment order passed by the AO was erroneous and prejudicial to the interest of the revenue. 14. Refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferring to the decision of Hon ble Supreme Court in the case of Deniel Merchants Private Limited and another Vs. ITO vide order dated 29.11.2017 he submitted that Hon ble Supreme Court in the said decision has held that if no proper enquiry was conducted by the Assessing Officer while making the assessment and he accepts the explanation of the assessee in so far as receipt of share application money is concerned, the order of the CIT setting aside the order of the Assessing Officer with a direction to carry out a thorough and detailed enquiry is justified. The order of the Hon ble High Court was accordingly upheld. He accordingly submitted that since the AO in the instant case has not made any proper enquiry while making the assessment and accepted the explanation of the assessee on account of receipt of share application money, therefore, the Ld. CIT is justified in invoking the jurisdiction u/s. 263 of the IT Act. He also relied on the following decisions :- 1. Malabar Industrial Co. Ltd. Vs. Commissioner of Income Tax 243 ITR 83 (SC) 2. Bharat Overseas Bank Ltd. Vs. Commissioner of Income Tax 152 TTJ 546 (Chennai) 3. Pratap Foo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were gathered and the Assessing Officer should have conducted further enquiry which were necessary to gather relevant material which the AO failed to do. According to the Ld. CIT there was complete non application of mind on the part of the AO in not appreciating the material available on record as well as in not following course of further enquiry to gather relevant material. Since there was failure on the part of the AO to apply the provision of law correctly, therefore, he held that the order passed by the AO is both erroneous as well as pre-judicial to the interest of the revenue. 20.1 It is the submission of the ld. Counsel for the assessee that the AO had followed the correct proposition of law available at the time of passing of the order. As per decision of Hon ble Supreme Court in the case of Lovely Exports (P) Ltd. (supra) even if the share holders are bogus, addition cannot be made in the hands of the assesee and addition can be made only in the hands of such bogus share holders if their identity is known to the department. It is the submission of the Ld. Counsel for the assessee that for invoking jurisdiction u/s. 263 the order must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 Campari Fiscal Services Pvt. Ltd. 13/34, WEA, 4th Floor, Main Arya Samaj Road, Karol Bagh 6000000 5 Corporate Finlease Pvt Ltd. 13/34, WEA, Arya Samaj Road, Karol Bagh 5500000 6 Deep Sea Driling Pvt. Ltd. 13/34, WEA, Arya Samaj Road, Karol Bagh 5500000 7 DU Securities Pvt. Ltd. 13/34, WEA, Arya Samaj Road, Karol Bagh 3000000 8 Ebony Investment Pvt. Ltd. 13/34, WEA, Arya Samaj Road, Karol Bagh 2500000 9 Karol Bagh, Trading Ltd. 203 Dhaka Chambers 2069/39, Naiwala, Karol Bagh, New Delhi 5000000 10 Merta Finance Ltd. 13/34, WEA, Arya Samaj Road, Karol Bagh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Assessing Officer could not be said to have erred in law. The fact that this Court had subsequently reversed the decision of the High Court would not justify the CIT in treating the Assessing Officer s decision as erroneous. The power of the CIT under section 263 of the Act must be exercised on the basis of the material that was available to him when he exercised the power. At that time, there was no dispute that the issue whether the power subsidy should be treated as capital receipt had been concluded as against the revenue. The satisfaction of the CIT, therefore, was based on no material either legal or factual which would have given him the jurisdiction to take action under section 263 of the Act. 24. So far as the allegation of the Ld. CIT that the AO should have conducted further enquiry which were necessary to gather relevant material which the AO failed to do and there was non application of mind on the part of the AO is concerned, we find in the instant case thorough enquiries were conducted by the AO both at the time of original assessment and at the time of reassessment proceedings. Full details giving the names, addresses, number of shares of no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the AO had applied his mind to an issue in question, Commissioner could not invoke section 263 merely because he has different opinion. 27. So far as the decision relied on by Ld. DR in the case of Deniel Merchants (P) Ltd. (supra) is concerned, the Ld. DR could not controvert the submission of the Ld. Counsel for the assessee that no enquiry was conducted in the said case whereas in the case of the assessee enquiries were conducted twice i.e. during the original assessment proceedings and secondly during the reassessment proceedings. Therefore, the decision relied on by Ld. DR is not applicable to the facts of the present case. We find from a perusal of the paper book that the assessee during the course of original assessment proceedings as well as during reassessment proceedings had filed the requisite details as called for by the AO and the Assessing Officer after considering the same and following the decision of Hon ble Supreme Court in the case of Lovely Export (supra) which was prevailing at the time of passing of the order completed the assessment and he has informed the AO of the investor companies to pass appropriate order. Therefore, in view of our ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
