TMI Blog2021 (8) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. - I.T.A. No. 194/Kol/2021 - - - Dated:- 19-8-2021 - P. M. Jagtap , Vice President And A.T . Varkey , Member ( J ) For the Appellant : S. M. Surana , Advocate For the Respondents : Dinesh Aibor Jayal Sawkuie , CIT ORDER A. T. Varkey , Member ( J ) 1. This is an appeal filed by the Assessee company against the order of Ld. PCIT, Kolkata-1, Kolkata dated 25.05.2021 passed u/s. 263 of Income Tax Act, 1961 (hereinafter referred to as the Act) for Assessment year 2016-17. 2. At the outset, the Ld. A.R. of the assessee Shri S.M. Surana assailed the action of Ld. PCIT to have usurped the revisional jurisdiction u/s. 263 of the Act without satisfying the condition precedent as stipulated u/s.263 of the Act i.e. without validly holding that the AO's action in respect of receipt of share capital by the assessee is erroneous as well as prejudicial to the revenue. According to Ld. AR., the Ld. PCIT has accepted in para 5 of his impugned order that the AO has enquired from the assessee company the details of share and share premium quoted. And that the same was raised from the directors of the assessee company and their wives. The Ld. PCIT has also taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid 142(1) notice (supra) the assessee replied by giving following details in respect of share capital premium: 5. It was brought to the notice of the AO that during the year 51,500 shares were issued (refer balance sheet page 30 to 54 of PB). And that the shares were issued to the directors and their relatives out of which 31,900 shares were issued to the director of the assessee company Shri Kishan Gopal Biyani (page 55 of PB) who already held 3,68,950 shares; and 2600 shares were issued to Mr. Samir Biyani who already held 1,17,850 shares in the assessee company (refer 30 to 55 of PB). It was also brought to the notice of the AO that apart from 3050 shares were allotted to Mrs. Lila Devi Biyani (wife of Shri Kishan Gopal Biyani); and 14050 shares were allotted to Smt. Varsha Biyani (wife of Shri Samir Biyani) (refer 49 to 50 of PB). In order to substantiate the identity, creditworthiness and genuineness of the transaction, the assessee had filed PAN of all the share holders their respective ROI, copy of bank statement, computation of income, balance sheet etc. and that the share subscription along with share premium were paid by account payee cheques. The so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eet. From a perusal of the aforesaid documents of Shri Kishan Gopal Biyani it is revealed that he has a capital of ₹ 1.60 crores, share holding in blue chip companies, immovable property, income over ₹ 91 lakhs, and that the immediate source of the money of share subscription was from the sale of shares in NSE exchange which was duly submitted along with the contract note in respect of sale of shares and deposits of the same in the bank account. Similarly for Shri Samir Biyani copy of acknowledgement of filing of return, copy of bank statement, computation of income balance sheet reveals capital over 1.60 crores, shareholding in blue chip companies, immoveable properties, income over ₹ 20 lakhs and the immediate source being sale of shares of blue-chip companies in NSE which is evidenced by contract notes for sale of shares and receipt were deposited into bank accounts. In respect of Smt. Lila Devi Biyani evidences filed viz copy of acknowledgement of filing of return, copy of bank statement, computation of income balance sheet, reveals shareholding in blue chip companies, and immoveable properties, and profit and loss account reveals that she had shown income ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company vide submission dated 20/12/2018 furnished the certificate obtained from a Chartered Accountant regarding the computation of fair market value of the shares for the purpose of allotment to various allottees and a perusal of the same reveals that the fair market value of unquoted equity shares of the assessee company has been computed as ₹ 209.00 under Rule 11UA(2)(c) of the I.T. Rules, 1962 read with Section 56(2)(viib) of the Act, 1961. The assessee company has produced copy of the Board Resolution passed in this regard. However the AO failed to conduct enquiries u/s. 133(6) of the I.T. Act regarding sources of investment of such huge share capital of the Directors and their wives. Thereby the order passed by the AO in the instant case was erroneous and prejudicial to the interest of the revenue. [Emphasis given by us] 7. Aggrieved by the aforesaid action of Ld. PCIT the assessee is before us. 8. We have heard both the parties and perused the records. We note that the Ld. PCIT issued show cause notice proposing to invoke revisional jurisdiction u/s. 263 on two issues. However we note that after hearing the assessee and reproducing its reply, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue. The Hon'ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. prejudicial to the interest of the revenue'' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law . 10. We find from the discussion at para 5 (supra) of this order and the finding of Ld. PCIT given below para 5 corroborates that the AO in fact had issued notice ..... 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