TMI Blog2021 (2) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... first order dt. 09/09/2016 passed u/s. 263 of the Act and has taken a plausible view. It is not a case of lack of enquiry, nor a case of inadequate enquiry. A decision was taken after examination of all evidences and documents. Such a view cannot be termed as erroneous insofar as it is prejudicial to the interest of the revenue. Assessee had discharged the onus upon it about the identity creditworthiness and genuineness of the share capital and premium collected by the assessee from the respective share subscribers. Since the aforesaid exercise was carried out by the second AO in the reassessment proceedings and the documents referred to above are in the assessment folder, the Second Ld. Pr. CIT erred in holding the reassessment order of the AO in respect of share capital and premium collected by the assessee as erroneous as well as prejudicial to the interest of the revenue. AO s action (reassessment) pursuant to the first revisional order of Ld. Pr. CIT dated 10.06.2016, to accept the share capital and premium as a possible view As specifically applying the decision of the Tribunal in the case of M/s. Amritrashi Infra Private Ltd. [ 2020 (8) TMI 407 - ITAT KOLKATA] and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se notice to the assessee u/s. 263 of the Act on 04/08/2016 proposing to revise of the original assessment order dt. 04/03/2015 u/s. 263 of the Act. Thereafter, the ld. Pr. CIT passed an order u/s. 263 of the Act on 09/09/2016, holding that the original assessment order passed on 04/03/2015 was erroneous, insofar as, prejudicial to the interest of the revenue (hereinafter, refer to this order as the 1st order u/s. 263 of the Act). At para 4(v) of his order, he held as follows:- Considering the above facts and circumstances of the case, the assessment order passed on 04.03.2015 is set aside denovo with a direction to AO to carry out proper examination of books of accounts and Bank accounts of assessee as well as investors. A.O. is also directed to examine the source of share application, identity of investor and its genuineness and issue of purchase sale of shares its valuation. The assessment proceedings may be initiated at the earliest and to be completed without waiting time barring date. The A.O. must provide sufficient opportunity of being heard to the assessee in order to meet natural justice, equity and fairness. Thereafter, the Assessing Officer passed an order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie suffers from lack of independent and adequate enquiry on the aforesaid issues. 2.2.1. The assessee filed a letter dt. 21/12/2019 replying to the above show cause notice wherein, he stated as follows:- Our submission is that the A O has initiated both tools that is notice under section 133(6) and Notice under section 131 to see the aspects referred to and has considered the submissions in details while framing order. Our submissions is that the ld. A O has very well covered this issue as well by categorically questioning this issue while recording the statements under oath and all of the applicants have answered these questions. Our submission is that the ld. A O has also put up this question before directors appearing in pursuance to notice under section 131. Moreover in view of the decision in the case of Green infra, share premium can not be questioned where there is no doubt about the basic three principles deciding a transaction as unexplained cash credit under section 68 of the Act. Our submission is that the share capital issued on last day of the previous year, for which there was no change in controlling interest and genuineness of share capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the circumstances of the case the Ld. Principal CIT was not justified in initiating proceedings u/s. 263. 3. (a) For that the Ld. Principal CIT erred in exercising the power of revision for the purpose of directing the A.O. to hold another investigation when the A.O. had complied with the directions of the predecessor Principal CIT, Kolkata-4 in the preceding order u/s. 263 passed on 09.09.2016. (b) Without prejudice to the preceding grounds, the issue before the Ld. CIT was debatable, as such, the Ld. Principal CIT did not have the jurisdiction to initiate another proceedings u/s. 263. 4. For that the Ld. Principal CIT ought to have appreciated that requisite enquiries were done by the A.O. while passing order u/s. 143(3)/263/143(3) dated 26.12.2016, were ousting jurisdiction to invoke section 263 once again. 5. For that the Ld. Principal CIT wrongly held that an order passed consequent to order u/s. 263 is automatically in favour of the revenue. 6. For that the Ld. Principal CIT was not justified in prescribing as to how to conduct the enquiries to ascertain the identity and creditworthiness of shareholders. 7. For that the appellant craves lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.1. He argued that the Assessing Officer was bound by the directions of the ld. Pr. CIT given in the first round of revisionary proceedings u/s. 263 of the Act and that the Assessing Officer has followed each of these directions and after conducting detailed enquiries and obtaining necessary documents has taken a plausible view and it cannot be said that this is a case where there was lack of enquiry or a case of inadequate enquiry and hence that the ld. Pr. CIT has erred in invoking his powers u/s. 263 of the Act. He relied on a number of case-law for each of the propositions cited by him. He submitted that its case in question is squarely covered in his favour by the decision of the Kolkata 'B' Bench of the Tribunal in the case of Amritrashi Infra Private Ltd. Vs. Principal Commissioner of Income-tax in ITA No. 838/Kol/2019; Assessment Year: 2012-13 order dt. 12.08.2020 and the decision of the Kolkata 'A' Bench of the Tribunal in the case M/s. Omkar Infracon Private vs ITO, Ward-12(2), Kolkata in ITA No. 896/Kol/2019; Assessment Year 2012-13, order dt. 18/03/2020, wherein under similar circumstances the order of the ld. Pr. CIT u/s. 263 of the Act, was quashed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n oath from them and that they filed all necessary documents including assessment orders passed in their cases u/s. 143(3) of the Act, by the Department in their cases, copies of the final accounts, copies of the returns of income filed by them, copies of the bank account statements and also evidence of sources of investments etc. He submitted that when the assessments of the share applicant companies have been completed by the Department u/s. 143(3) of the Act, and when nothing adverse was found, no addition u/s. 68 of the Act, can be made in the case of the assessee company, which is a recipient of the share application money. For this proposition, he relied on a number of case-law, which we will be referring to, as and when required. 5.1.1. He once again relied on the order of the Co-ordinate Bench of the Tribunal in the case of Amritrashi Infra Private Ltd. vs. Principal Commissioner of Income-tax (supra) and submitted that the facts of the assessee's case are identical to the facts in the case of Amritrashi Infra Private Ltd. (supra) and under those circumstances, the decision of the Tribunal in the case of Amritrashi Infra Private Ltd. (supra), has to be followed, spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was completed in a very casual manner and hurried manner flouting all established procedures. The assessee had discharged its onus by furnishing/documents before the AO. Further, the First Ld. Pr. CIT mainly found fault with the AO's order for non-issuance of notice u/s. 133(6) of the Act to the shareholders. The First Ld. Pr. CIT found fault with the AO' s order in not discussing the basis of evidence on which adverse inference was drawn against the assessee. Moreover, the First Ld. Pr. CIT found fault with the AO for not bothering to examine the contention of the assessee or to bring on record anything against the assessee and thus according to him, the AO with a pre-determined mind has simply jumped to the conclusion that the share capital collected by assessee as unexplained cash credit u/s. 68 of the Act. Therefore, according to the First Ld. Pr. CIT, the first original assessment order framed u/s. 143(3) of the Act dated 26-03-2015 was against the principle of natural justice and, therefore, he found it fit to order denovo assessment and gave specific direction in respect of share capital premium collected by assessee. 48. Thereafter, the ld. Pr. CIT was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yes 6. M/s. Shivashiv Pvt. Ltd. U74999WB2012PTC 173749 AARCS0094C yes 7. M/s. Flowtop Agency Pvt. Ltd. U52190WB2012PTC 173352 AABCF9036D yes 8. M/s. SukhSagar Residency Pvt. Ltd. U45400WB2011PTC170958 AARCS1553N yes 9. M/s. Kamaldhan Developers Pvt. Ltd. U45400WB2011PTC170944 AAECK6810D yes 10 . M/s. LabhdhanImpex Pvt. Ltd. U51909WB2011PTC171524 AACCL2111J yes 11 . M/s. SubhsreeImpex Pvt. Ltd. U51909WB2011PTC171513 AARCS1845D yes 12 M/s. Maharaja Merchants U51109WB2005PTC102343 AAECM224E yes . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identity of the share applicant which is available in the website of Ministry of Corporate Affairs and the ITR Acknowledgments filed by them, will enable the AO to cross verify and collect details from the AO of the respective share applicants and independently from the Revenue's departmental data base. We note that all the share subscribing parties filed all the documents called for by the AO [PB-2] and were also examined by the AO along with audited accounts from which these details show their identity. 51. Thus, we note that the AO after verification as aforesaid, has not drawn any adverse opinion or doubted the identity of the share applicants which view of AO is a possible view in the light of the documents referred to and we also by applying the presumption in section 114 of Indian Evidence Act 1872, we presume that the quasi-judicial act of the second AO have been regularly performed. Coming to the contention of Ld. CIT, DR, that order sheet maintained by the Second AO does not reveal that AO had issued notice u/s. 133(6) of the Act to the share subscribers, we note that the AO in his reassessment/second assessment order has clearly asserted that he had issued notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2012 as well as the sum invested by them in the assessee is discernible as under: Name Source of investment Capital Reserves Sum invested in assessee s business M/s. K. R. Overseas Pvt. Ltd. Page 8 Paper Book-2 ₹ 66,77,47,921 (page 22 PB-2 ) ₹ 1,30,000/- M/s. Kakrania Trading Pvt. Ltd. Page 45Paper Book-2 ₹ 66,52,71,914 (page 62 PB-2 ) ₹ 1,39,00,000/- M/s. AmbalaTrafinpvt. Ltd. Page 88Paper Book-2 ₹ 624,711,003 (page 101 PB- 2 ) ₹ 4,40,00,000/- M/s. Subhiksha Pvt. Ltd. Page 115Paper Book- 2 ₹ 222,397,317 (page 128 PB-2 ) ₹ 45,00,000/- M/s. Shivarshi Construction Pvt. Ltd. Page 146Paper Book-2 ₹ 53,89,95,046 ( page 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharged the onus on it about the creditworthiness of the share- holders. So we note that the source of the investments has been clearly brought to the notice of the second AO during the assessment/reassessment proceedings. Further, the bank statements of all the shareholders as well as that of assessee were filed before the AO, which revealed that the share capital and premium have been subscribed by them through banking channel (NEFT or cheque) which goes on to show that the assessee has discharged the onus in respect of genuineness of the transaction. Based on the documents and materials called for by the AO who accepted the same after verification is an act of enquiry. And we note that revenue has not brought on record any material to challenge the veracity of the documents referred to above. Moreover, the second Ld. Pr. CIT in his impugned order has not brought any material to rebut the presumption of second AO to justify his intervention u/s. 263 of the Act and which would have upset the decision of the second AO's factual view on the identity, creditworthiness and genuinity of the share transaction. In such a scenario, the second AO's view based on the documents re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fund as well as financial statement available in the PB-page 39 to 77. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. This company has furnished the details of source of Funds and has duly filed financial statements and thus we note that the assessee had duly discharged its onus to prove the identity of the share applicant by adducing PAN as well as income-tax returns. The financial statement shows that the share applicants had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Further, it is noted that the share applicant had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. (iii) We note from a perusal of the paper book-2 pages 78 to 111, the details of share applicant M/s. Ambala Trafin Pvt. Ltd. It is a Private Limited Company which has a PAN AACCA1184G and its CIN number is U67120WB1995PTCO74397 and the Net worth of this company as on 31.3.2012 ₹ 62,47,11,003- (PB-page 101) and investment made in the assessee company is to the tune of ₹ 4,40,00,000/- and this share applicant has mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is noted that the share applicants had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. (v) We note from a perusal of the paper book-2, pages 138 to 159 the details of share applicant M/s. Shivarshi Construction Pvt. Ltd. It is a Private Limited Company which has a PAN AAQCS7848M and its CIN number is U45400WB2011PTC170957 and the net worth of this company as on 31.3.2012 ₹ 53,89,95,046/- (PB-page 153) and investment made in the assessee company is to the tune of ₹ 4,66,00,000/- and this share applicant has made the transaction through banking channel on 29.03.2012 ₹ 4,66,00,000/- through Cheque. There is board resolution for investment in assessee's company and Share Application Form Bank statement, ITR acknowledgement, explanation of source of fund as well as financial statement available in the PB-page 139 to 159 in the PB. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. This company has furnished the details of source of Funds and has duly filed financial statements. This share applicant regularly filed Income Tax Return (ITR) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h has a PAN AABCF9036D and its CIN number is U52190WB2012PTC 173352 and the net worth of this company as on 31.3.2012 ₹ 15,38,94,946/- (PB-page 200) and investment made in the assessee company is to the tune of ₹ 4,49,00,000/- and this share applicant has made the transaction through banking channel on 30.03.2012 ₹ 4,49,00,000/- through Cheque.. There is board resolution for investment in assessee's company and Share Application Form, Bank statement, ITR acknowledgement, explanation of source of fund as well as financial statement available in the PB-page 186 to 206 n the PB. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statements and thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Thus the assessee has discharged the onus to prove the identity, creditworthiness and genuineness of the transactions. Further, it is noted that the share applicants had furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s financial statement available in the PB-page 228 to 261 in the PB. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. This company has furnished the details of source of Funds and has duly filed financial statements. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. This company has furnished the details of source of Funds and has duly filed financial statements. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Thus the assessee has discharged the onus to prove the identity, creditworthiness and genuineness of the transactions. Further, it is noted that the share applicants had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. (x) We note from a perusal of the paper book-2, pages 262 to 283 the details of share applicant M/s. Labhdhan Impext Pvt. Ltd. It is a Private Limited Company which has a PAN AACCL2111J and its CIN number is U51909WB2011PTC171524 and the net worth of this company as on 31.3.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions. Further, it is noted that the share applicants had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. (xii) We note from a perusal of the paper book-2, pages 304 to 326 the details of share applicant M/s. Maharaja Merchants Pvt. Ltd. It is a Private Limited Company which has a PAN AAECM224E and its CIN number is U51109WB2005PTC102343 and the net worth of this company as on 31.3.2012 ₹ 1,54,58,399/- (page 313 of P.B-2) and investment made in the assessee company is to the tune of ₹ 50 lakhs and this share applicant has made the transaction through banking channel on 28.02.2012 a sum of ₹ 50 lakhs through Cheque. There is Share Application Form, Bank statement, ITR acknowledgement, financial statement available in the PB-page 304 to 326 in the PB. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Thus the assessee has discharged the onus to prove the identity, creditworth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26.03.2016. In other words, in the impugned order the second Ld. Pr. CIT has not found fault with the action of the second AO in giving effect to the specific directions given by him while passing the first revisional order on 23.08.2016. Thus, we note that when the second AO while framing the reassessment order pursuant to the specific direction of the First Ld. Pr. CIT's order dated 23.08.2016 (first revisional order) has complied with the specific directions of the First Ld. Pr. CIT and based on the inquiry conducted and after perusal of the documents running more than 352 pages which reveals the identity, creditworthiness and genuineness of the share capital and premium collected by the assessee from the share subscribers, the satisfaction of AO as envisaged in sec. 68 of the Act is a plausible view and the fact that the share subscribers responded to sec. 133(6) notice and produced all documents along with the audited financial statements and other documents referred supra, the assessee had discharged the onus upon it about the identity creditworthiness and genuineness of the share capital and premium collected by the assessee from the respective share subscribers. Since t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to upset the AO's satisfaction in respect of identity, creditworthiness or genuineness of the share subscribers and thus recorded a finding of fact that the decision of AO's enquiry was faulted or wrong and in that process tried to show that it has resulted in a view which is unsustainable in law which would have justified his action of passing the impugned order u/s. 263 of the Act, which unfortunately is not the case. Since the AO's view on the facts collected and discussed is definitely a possible view, so in the factual background discussed in detail, we are of the considered opinion that Ld. second Pr. CIT ought not to have interfered with the AO's reassessment order which in any case can be classified as 'unsustainable in law' since it is in line with plethora of judicial decisions of the subject. 56. To sum up, we find from the above said facts that the Second AO has conducted enquiry as directed by the First Ld. Pr. CIT on the specific subject matter i.e. share capital and premium collected by the assessee-company. Therefore, the finding of Second Pr. CIT that the Second AO has not conducted enquiry is incorrect and is flowing from suspicion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho is a quasi- judicial office has discharged his dual role as an investigator as well as an adjudicator. Looking from another angle of doctrine of merger canvassed before us, we note from the facts of this case that the second Ld. Pr. CIT - 4 by passing the second revisional order dated 14.03.2019 has substituted the First Pr. CIT's order passed u/s. 263 of the Act dated 23.08.2016 with his own order which he cannot do since the second assessment order/re-assessment of the Second AO dated 07.12.2016 was pursuant to the first revisional order of the First Ld. Pr. CIT and on the very same subject matter on which specific directions/instructions were given by the First Ld. Pr. CIT, which direction since having been complied by the AO, brings into operation the doctrine of merger the subject matter i.e. share capital premium collected by assessee company. Resultantly the second Ld. Pr. CIT, again cannot rake-up the same subject matter without the second Ld. Pr. CIT in the second revisional order spells out where the error happened to second AO as an investigator or adjudicator, which exercise the Second Ld. Pr. CIT has not done, so the second Ld. Pr. CIT cannot be permitted to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to us, the Ld. Pr. CIT did not appreciate the facts in the proper perspective and did not had taken notice of the important fact that these were the promoters who started the company in the year 2010 for the business of making ash-fly bricks and the only new shareholder individual was father of an existing director; and the assessee company in this assessment year had started expansion activities of the business of making/manufacturing fly ash bricks. We note that the share capital infused into the company has yielded result. And moreover the investor companies were group companies and shares allotted this year was to existing shareholders and only new shareholders was the father of a director. As stated earlier, the promoter and group companies found potential of growth in the business and had made the investment and premium which was agreed upon mutually by all the existing shareholders taking into consideration the expansion and future return expected of it. After appreciating these facts and taking into consideration the financial results of the assessee company as on the date of reassessment order, the AO had accepted the genuinity of the transaction, so nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. We note that earlier contribution made by them have been accepted in previous years, and also the fact remains that the earlier years of assessment have not been reopened though there was sufficient time for the same. In the light of the documents discussed supra, we are of the opinion that assessee has discharged the onus on it. (g) The last fault taken note by the Ld. Pr. CIT is that the reassessment order prima facie suffers from independent and adequate enquiry. We do not countenance this allegation of the Ld. Pr. CIT. We have already discussed in detail about how the AO has called the individual share holders and the directors of the corporate shareholders and recorded their statements and gone through the voluminous documents filed by the assessee. Thus, the shareholders had discharged the onus on it to prove the identity, creditworthiness and genuinity of the share transaction who are none other than the promoters, directors and group companies and the AO after examining and satisfying himself about the share capital and premium has accepted it. Thus it is noted that independent and adequate enquiry was made and further it is not pointed out by Ld. Pr. CIT as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting in the reassessment proceedings along with the audited financial statements and other documents referred supra, the assessee had discharged the onus on it about the identity, creditworthiness and genuineness of the share capital and premium collected by the assessee from the respective share subscribers. Since the aforesaid exercise was carried out by the AO in the original as well as reassessment proceedings and the documents are in the assessment folder and the statements have been recorded of the individual share subscribers and directors of the Group company share subscribers, the Ld. Pr. CIT erred in holding the reassessment order of the AO in respect of share capital and premium collected by the assessee as erroneous as well as prejudicial to the interest of the revenue unless the Ld. Pr. CIT based on an enquiry conducted by himself in the second round atleast is able to upset the AO's satisfaction in respect of identity, creditworthiness and genuineness of the share subscribers and his decision not to make any addition under section 68 of the Act. In the light of the aforesaid discussions and on perusal of the documents, we are of the view that AO's view to acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., assessment order 25/03/2015 When the assessments of the share applicant companies have been passed u/s. 143(3) of the Act, by the Department, it cannot be said that the identity and creditworthiness of the share applicant companies have not been proved. It is so held by the ITAT Kolkata Bench in the following cases:- 1) M/s. Omkar Infracon (P) Ltd. vs. ITO in ITA No. 896/Kol/2019, Assessment Year: 2012-13, order dt. 18/03/2020 2) Amritrashi Infra Private Ltd. vs. Pr. CIT in ITA No. 838/Kol/2019, Assessment Year: 2012-13, order dt. 12/08/2020 9.1. Persons representing the share applicant companies have appeared before the Assessing Officer in the second round of assessment proceedings, in response to notice u/s. 131 of the Act, and their statements were recorded on oath. The share applicant companies have also responded to notice u/s. 133(6) of the Act by furnishing the information called for. The information filed by the creditor share applicant companies are as follows:- 1) Copy of I.T. Return/Acknowledgment 2) Copy of annual audited accounts 3) Balance sheet and profit loss a/c statement 4) Copy of Bank Statement These documents pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the Revenue. Rampyaridevi Saraogi v. CIT (1968) 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal V. CIT (1973) 88 ITR 323 (SC) . 25. In Max India Ltd. (Supra), reiterated the view in Malabar Industrial Co. Ltd. (Supra) and observed that every loss of Revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income Tax Officer is unsustainable in law. On the facts of that case, Sec. 80HHC(3) as it then stood was interpreted by the Assessing Officer but the Revenue contended that in view of the 2005 Amendment which is clarificatory and retrospective in nature, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision. 27. In Sunbeam Auto Ltd.(Supra), the Delhi High Court held that the Assessing Officer in the assessment order is not required to give a detailed reason in respect of each and every item of deduction, etc.; that whether there was application of mind before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Sec. 263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made by the Income Tax Officer cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately; there must be some prima facie material on record to show that the tax which was lawfully exigible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his mind to the facts and circumstances of the case and determines the income either by accepting the account or by making some estimate himself; that the Commissioner, on perusal of the record, may be of the opinion that the estimate made by the Officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income Tax Officer; but that would not vest the Commissioner with power to reexamine the accounts and determine the income himself at a higher figure; there must be material available on the record called for by the Commissioner to satisfy him prima facie that the order is both erroneous and prejudicial to the interests of the Revenue. Otherwise, it would amount to giving unbridled and arbitrary power to the revising authority to initiate proceedings for revision in every case and start re-examination and fresh inquiry in matters which have already been concluded under law. 29. In M.S. Raju (Supra), this Court has held that the power of the Commissioner under Sec. 263 (1) is not limited only to the material which was available before the Assessing Officer and, in order to protect the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income-tax Officer is unsustainable in law. c) To invoke suo motu revisional powers to reopen a concluded assessment under Sec. 263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the and must irresistibly lead to the conclusion that the order of the Income Tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income Tax Officer 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 motu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her inquiry/investigation was required or deeper or further scrutiny should be undertaken. INCOME TAX OFFICER vs. DG HOUSING PROJECTS LTD. 343 ITR 329 (Delhi) Revenue does not have any right to appeal to the first appellate authority against an order passed by the Assessing Officer. S. 263 has been enacted to empower the CIT to exercise power of revision and revise any order passed by the Assessing Officer, if two cumulative conditions are satisfied. Firstly, the order sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the Revenue. The expression prejudicial to the interest of the Revenue is of wide import and is not confined to merely loss of tax. The term erroneous means a wrong/incorrect decision deviating from law. This expression postulates an error which makes an order unsustainable in law. The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power. As an investigator, it is incumbent upon the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustainable. In most cases of alleged inadequate investigation , it will be difficult to hold that the order of the Assessing Officer, who had conducted enquiries and had acted as an investigator, is erroneous, without CIT conducting verification/inquiry. The order of the Assessing Officer may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. It may be noticed that the material which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record as it stands at the time of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 28th March, 2008 did not adversely affect any right of the assessee nor was any civil right of the assessee prejudiced. He was as such under no obligation in law to give reasons. The fact, that all requisite papers were summoned and thereafter the matter was heard from time to time coupled with the fact that the view taken by him is not shown by the revenue to be erroneous and was also considered both by the Tribunal as also by us to be a possible view, strengthens the presumption under Clause (e) of Section 114 of the Evidence Act. A prima facie evidence, on the basis of the aforesaid presumption, is thus converted into a conclusive proof of the fact that the order was passed by the assessing officer after due application of mind. Meerut Roller Flour Mills Pvt. Ltd. vs. C.I.T., ITA No. 116/Coch/2012; CIT vs. Infosys Technologies Ltd., 341 ITR 293 (Karnataka); S.N. Mukherjee vs. Union of India, AIR 1990 SC 1984; A.A. Doshi vs. JCIT, 256 ITR 685; Hindustan Tin Works Ltd. Vs. CIT, 275 ITR 43 (Del), distinguished. (Paras 90-92, 102) COMMISSIONER OF INCOME TAX vs. SOHANA WOOLLEN MILLS 296 ITR 238 (P H HC) A reference to the provisions of s. 263 shows that jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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