TMI Blog2020 (3) TMI 1167X X X X Extracts X X X X X X X X Extracts X X X X ..... he genuineness of the transaction. It has been held in various decisions that action u/s. 263 can be taken only when there is lack of enquiry or no enquiry. However, in the instant case necessary enquiry was conducted. Therefore, merely because CIT does not agree with the manner of enquiry conducted by the AO he cannot substitute his own reasons and held the order to be erroneous and prejudicial to the interest of the revenue. See DWARKADHIS BUILDWELL PVT. LTD C/O N.K. JAIN, ADVOCATE NAYA BAZAR, BHIWANI VERSUS CIT HISAR [ 2019 (9) TMI 91 - ITAT DELHI] - Decided in favour of assessee. - ITA No.5473/Del/2019 - - - Dated:- 3-3-2020 - Sh. R. K. Panda, Accountant Member And Sh. K. N. Chary, Judicial Member For the Appellant : Sh. Ranjan Chopra, Advocate For the Respondent : Sh. S. S. Rana, CIT DR ORDER PER R.K PANDA, AM: This appeal filed by the assessee is directed against the order dated 22.03.2019 passed u/s.263 of the IT Act for the A.Y.2009-10. 2. Facts of the case, in brief, are that the assessee is a company and filed its return of income on 29.09.2009 declaring total loss of ₹ 1,12,18,000/-. Subsequently, on the basis of information provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O, no proceeding u/s. 263 is possible. 5. However, the Ld. Pr.CIT was not satisfied with the arguments advanced by the assessee. He noted that as per the seized documents found from the premises of Sh. Surinder Kumar Jain and Sh. V. K. Jain, the assessee company has accepted accommodation entry of ₹ 40 lacs from M/s. Sri Amarnath Finance Pvt. Ltd. and the AO has not properly verified the identity of the party and its credit worthiness and genuineness of the so called loan of ₹ 40 lacs to the assessee company. The AO without taking proper care of the information received from the investigation wing has simply issued notice u/s. 133 (6) to the said company and placed its reply on record. No further enquiry / investigation was conducted by the AO in this regard though it is apparent from the audit report that this company is managed by Sh. Surinder Kumar Jain, who is one of the directors of this company. Since the AO completed the assessment without conducting proper enquiries / verification for determining the correct total income of the assessee, he held that the order passed by the AO is not only erroneous but also prejudicial to the interest of the revenue. He, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferring to page-6 to 9 of the paper book he drew the attention of the Bench to the reply given by the assessee during the course of assessment proceedings. Referring to page 10 of the paper book he drew the attention of the Bench to the letter issued u/s. 133 (6) to M/s. Sri Amarnath Finance Pvt. Ltd. wherein the AO has called for various details from the said party. Referring to page No.11 of the paper book he drew the attention of the Bench to the reply given by the said party in response to notice u/s. 133 (6). He submitted that the said party had filed the copy of the bank statement for loan given, copy of income tax return, copy of balance sheet and P L account, copy of ledger account etc. He submitted that the AO after conducting necessary enquiries to his satisfaction has accepted the returned loss filed by the assessee. Therefore, merely because the Ld. Pr. CIT does not agree with the findings of the AO, he cannot hold that the order is erroneous and prejudicial to the interest of the revenue. Referring to the decision of the Hon ble Delhi High Court in the case of CIT Vs. Software Consultants reported in 341 ITR 240 he submitted that the Hon ble High Court in the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial to the interest of the revenue must be satisfied. In the instant case the order cannot be treated as erroneous since the AO has taken a possible view. Therefore, merely because the order may be prejudicial to the interest of the revenue or that the Pr. CIT does not agree with the conclusion reached by the AO, the Pr.CIT could not have assumed jurisdiction u/s. 263 of the IT Act. 9. The Ld. DR on the other hand referred to the decision of Hon ble Supreme Court in the case of Daniel Merchants P. Ltd. and another Vs. ITO and submitted that the Hon ble Supreme Court in the said decision has dismissed the SLP filed by the assessee wherein the CIT had passed order u/s. 263 with observation that the AO did not make any proper enquiry while making the assessment and accepted the explanation of the assessee in so far as receipt of share application money is concerned. He also relied on various other decisions and submitted that the order passed u/s. 263 in the instant case is in accordance with law and, therefore, the same should be upheld. He also relied on the following decisions :- 1. Surya Jyoti Software P. Ltd. 2. Surya Financial Services Ltd. Vs. PCIT 3. Shanka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d issued notice u/s. 133 (6) to M/s. Sri Amarnath Finance Pvt. Ltd. who responded to such notice and filed the requisite documents as called for by the AO. We, therefore, find force in the arguments advanced by the Ld. Counsel for the assessee that the AO has examined the documents / confirmation in detail and adopted a possible view that the assessee has established the identity and creditworthiness of the lender and the genuineness of the transaction. It has been held in various decisions that action u/s. 263 can be taken only when there is lack of enquiry or no enquiry. However, in the instant case necessary enquiry was conducted. Therefore, merely because the Ld. Pr. CIT does not agree with the manner of enquiry conducted by the AO he cannot substitute his own reasons and held the order to be erroneous and prejudicial to the interest of the revenue. 13. We find under somewhat identical circumstances the coordinate Bench of the Tribunal in the case of Dwarkadhish Buildwell Private Limited Vs. CIT reported in 109 taxman.com 5 ( to which one of us is a party) has quashed the 263 proceedings by observing as under :- 20. We have considered the rival arguments made by both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of the revenue. The twin conditions must be satisfied and absence of any one cannot empower the CIT to invoke jurisdiction u/s. 263. It is also his submission that the Assessing Officer in the instant case had conducted thorough enquiry twice and it is not the case of no enquiry or lack of enquiry. 21. We find some force in the above arguments of the Ld. Counsel for the assessee. We find the AO in the order passed u/s. 143(3)/147 has followed the decision of Hon'ble Supreme Court in the case of Lovely Exports (P) Ltd (supra) in letter and spirit. In the office note, copy of which is available in the paper book, it is seen that the Assessing officer had forwarded information to the concerned AO of the investor companies for taking further necessary action against them. The relevant portion of the office note reads as under :- Office Note From the record, it is seen that the following company ahs deposited below mentioned amount of share application money with the assessee M/s. Dwarkadish Build Well Pvt. Ltd. C/o N.K. Jain, Advocate, Naya Bazar, Bhiwani. The assessee has furnished information alongwith supporting documentary evidence with regard to amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment Pvt. Ltd. Gohana Distt. Sonepat 5000000 15 Thar Steel Pvt. Ltd. 13/34, WEA, Arya Samaj Road, Karol Bagh 4500000 16 Volga Cresec Pvt. Ltd. 13/34, WEA, Arya Samaj Road, Karol Bagh 5500000 Total 71000000 22. Thus when the AO passed the order u/s. 147/143 (3), we find he has followed the decision of Hon'ble Supreme Court in the case of Lovely Exports (P) Ltd. {supra) in letter and spirit. So far as the allegations of the Ld. 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 {supra) 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. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Metro Express (P.) Ltd. [2018] 99 taxmann.com 382/[2017] 398 ITR 8 has held that for the purpose of exercising jurisdiction u./s 263 of the Act, the conclusion that the order of the AO is erroneous and prejudicial to the interest of the revenue has to be preceded by some minimal enquiry. If the PCIT is of the view that the AO did not undertake any enquiry, it becomes incumbent incumbent on the PCIT to conduct such enquiry. If the PCIT does not conduct such basic exercise then the CIT is not justified in setting aside the order u/s. 263 of the IT Act. 26. We find the Hon'ble Delhi High Court in the case of Jyoti Foundation (supra) 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 pre judicial to the interest of the revenue. We find Hon'ble Delhi High court in the case of Sunbeam Auto Limited (supra) has held that if the AO, while making an assessment, has made inadequate enquiry that would not by itself give occasion to the CIT to pass order u/s.263 merely because he has different opinion of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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